10KSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

 (Mark One)

x

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to _________

Commission file number 000-14542

SECURED INVESTMENT RESOURCES FUND, L.P. II

(Name of small business issuer in its charter)

Delaware	48-0979566
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	(Identification No.)

199 South Los Robles Avenue, Suite 200

Pasadena, California 91101

(Address of principal executive offices)

Issuer’s telephone number    (626) 585-5920

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Units of Limited Partnership Interest

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

State issuer’s revenues for its most recent fiscal year. $6,363,209

State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of December 31, 2006. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined.

DOCUMENTS INCORPORATED BY REFERENCE

None

The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant’s financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The reader is further cautioned that the current general partner of the Registrant did not assume control of the Partnership until March 2005. While the current general partner has attempted to verify records and data it obtained for periods prior to March 2005, and believes it has done so to the extent reasonably possible and that such records and data in its possession do accurately reflect the condition of the Registrant for those periods prior to March 2005, the current general partner cannot assure the reader that such records and data are entirely complete and accurate, because the current general partner was not a party to the compilation of such records and data. With the foregoing admonition, the current general partner does believe that it has controlled the Partnership long enough to reasonably state that the consolidated financial statements contained herein present fairly, in all material respects, the consolidated financial position and results of operation of the Partnership for the periods presented.

PART I

Item 1. Description of Business

Secured Investment Resources Fund, L.P. II (the “Partnership” or “Registrant”) was organized on July 1, 1986 as a limited partnership under the Delaware Uniform Limited Partnership Act. The Partnership is governed by an Amended and Restated Agreement of Limited Partnership dated September 25, 1986. Millenium Management, LLC (“Millenium”), a California limited liability company, is the sole general partner (the “General Partner”) of the Partnership, having taken over the management of the Partnership from a receiver in March 2005. Any information contained in the 10KSB for dates prior to March 2005 is based solely on records received from the prior general partners and the prior receiver and may not have been capable of independent verification by the General Partner, although the General Partner is not aware of any material inaccuracy in such information. . Millenium’s ownership consists of two California limited liability companies, Everest Properties II, LLC (“Everest II”) and Everest Properties, LLC (“Everest”). Everest II owns 99.0% of Millenium and Everest owns 1.0% of Millenium. Millenium, Everest II and Everest have the same executive officers. Millenium and Everest II are also limited partners of the Partnership. The Partnership Agreement provides that the Partnership is to terminate on September 25, 2046 unless terminated prior to such date.

On September 26, 1986, the Partnership commenced a public offering for the sale of units (the “Units”). The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on September 24, 1988, with 53,661 Units sold at $500 each, or gross proceeds of $26,830,500 to the Partnership. Since its initial offering, the Partnership has not received, nor are limited partners required to make, additional capital contributions.

The Partnership’s primary business and only industry segment is real estate related operations. The Partnership is engaged in the business of operating and holding real estate properties for investment. As of the close of fiscal year 2006, the Partnership owned, directly or indirectly through other entities, one commercial shopping center in Kansas City, Missouri, and residential apartment complexes in Las Vegas, Nevada, Springfield, Illinois and Topeka, Kansas. The commercial property is approximately 20 years old and the residential apartment complexes range in age from 20 to 32 years. The apartment complex in Las Vegas is in bankruptcy proceedings. See “Item 2. Description of Properties” and Item 3. “Legal Proceedings”. The apartment complex in Topeka was acquired by the Partnership through non-judicial foreclosure. See “Item 2. Description of Properties”.

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Risk Factors

The real estate business in which the Partnership is engaged is highly competitive. There are numerous other properties within the market area of the Partnership’s properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the General Partner, in such market area could have a material effect on the rental market for commercial shopping centers (in the case of the Partnership’s commercial shopping center) and for apartments (in the case of the Partnership’s residential apartment complexes) and the rents that may be charged for such shopping centers or apartments, as the case may be. The Partnership’s properties represent an insignificant percentage of total commercial shopping centers and apartment units in the United States and competition for both shopping centers and apartments is local.

Laws benefiting disabled persons may result in the Partnership’s incurrence of unanticipated expenses. Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to the Partnership’s properties, or restrict renovations of the properties. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although the General partner is not aware of any violations or noncompliance with these laws and believes that the Partnership’s properties are substantially in compliance with the present requirements, the Partnership may nonetheless incur unanticipated expenses to comply with the ADA and/or the FHAA.

Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership’s control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating both commercial shopping centers and residential properties because both such property types are susceptible to the impact of economic and other conditions outside of the control of the Partnership.

From time to time, the Federal Bureau of Investigation, or FBI, and the United States Department of Homeland Security issue alerts regarding potential terrorist threats involving both commercial buildings and residential apartment buildings. Threats of future terrorist attacks, such as those announced by the FBI and the Department of Homeland Security, could have a negative effect on rent and occupancy levels at the Partnership’s properties. The effect that future terrorist activities or threats of such activities could have on the Partnership’s operations is uncertain and unpredictable. If the Partnership were to incur a loss at a property as a result of an act of terrorism, the Partnership could lose all or a portion of the capital invested in the property, as well as the future revenue from the property.

There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership.

The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed which resulted in no material adverse conditions or liabilities. To the knowledge of the General Partner, the Partnership has not received any notices that the Partnership is a potentially responsible party with respect to an environmental clean up site.

The Partnership has no employees. Property management is provided by independent third parties and administrative services are provided by the General Partner and by agents of the General Partner.

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            A further description of the Partnership’s business is included in “Management’s Discussion and Analysis or Plan of Operation” included in “Item 6” of this Form 10-KSB.

Item 2. Description of Properties

As of December 31, 2006, the Partnership, directly or through other entities, owned three residential apartment complexes and one commercial shopping center. Additional information about the properties is found in “Item 7. Financial Statements”.

Property	Type of Ownership	Use
Bayberry (1)	Fee ownership, subject to	Shopping
Lee’s Summit, Missouri	a first mortgage	Center
Cascade Apts. (1)	Fee ownership, subject to	Apartment
Topeka, Kansas	a first mortgage	86 units
Oak Terrace (1)	Fee ownership, subject to	Apartment
Springfield, Illinois	a first mortgage	129 units
Sunwood Village Apts. (2)(3)	Fee ownership, subject to	Apartment
Las Vegas, Nevada	a first mortgage	252 units

(1) Property is held by a limited partnership in which the Partnership owns 100%of the limited partner interest.

(2) Property is held by a limited partnership in which the Partnership owns 100% of the original limited partner interest, but which also has Class A limited partners that are entitled to a preferred return.

(3) Property is held by a limited partnership that is the subject of a bankruptcy reorganization under Chapter 11.

Schedule of Properties

Set forth below for each of the Partnership’s properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation as of December 31, 2006.

	Gross
	Carrying	Accumulated	Depreciable	Method of
Property	Value	Depreciation	Life	Depreciation
Bayberry	$    5,403,174	$2,670,401	5-30 yrs	S/L
Lees Summit, Missouri
Cascade Apartments	4,642,824	1,945,590	5-30 yrs	S/L
Topeka, Kansas
Oak Terrace	9,286,939	5,533,765	5-30 yrs	S/L
Springfield, Illinois
Sunwood Village Apts	12,606,385	7,244,650	5-30 yrs	S/L
Las Vegas, Nevada
Corporate Offices	8,479	8,479	5-30 yrs	S/L
Total	$    31,947,801	$   17,402,885

See “Note 1 – Summary of Significant Accounting Policies” to the consolidated financial statements included in “Item 7. Financial Statements” for a description of the Partnership’s capitalization and depreciation policies.

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Schedule of Property Indebtedness

The following table sets forth certain information relating to the loans encumbering the Partnership’s properties.

	Principal				Principal
	Balance At	Stated			Balance
	December 31,	Interest	Period	Maturity	Due At
Property	2006	Rate	Amortized	Date	Maturity (d)
Bayberry (a)	$ 3,116,585	6.240%	10 yrs	09/16	$  2,632,743
Lees Summit, MO
Cascade Apartments (a)	2,537,358	5.770%	10 yrs	10/16	2,052,705
Topeka, KS
Oak Terrace (b)	9,000,000	5.940%	5 yrs	01/12	9,000,000
Springfield, IL
Sunwood Village Apartments (c)	9,401,527	7.15%	5 yrs	09/06	9,401,527
Las Vegas, NV
Totals	$24,055,470				$23,086,975

(a) Fixed rate mortgage.

(b) Fixed rate mortgage interest only.

(c) Fixed rate mortgage currently in default. Aggregate default rate is 11.125%. An affiliate of the General Partner, Everest II, purchased the loan from the original lender on April 23, 2007.

(d) See “Note 5 – Mortgage Loans and Bonds Payable” to the consolidated financial statements included in “Item 7. Financial Statements” for information with respect to the Partnership’s ability to prepay these loans and other specific details about the loans.

On August 15, 2006, the Partnership refinanced the first mortgage encumbering one of its investment properties, Bayberry Crossing Shopping Center. The new mortgage loan, in the principal amount of $3,125,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $2,371,506. Closing costs of approximately $73,000 were capitalized during 2006 and are included in other assets. The new mortgage requires monthly payments of principal and interest of $19,220 beginning on September 11, 2006 until the loan matures on September 11, 2016 with a fixed interest rate of 6.24% and a balloon payment of approximately $2,633,000 due at maturity.

On October 4, 2006, the Partnership refinanced the first mortgage encumbering one of its investment properties, Cascade Apartments. The new mortgage loan, in the principal amount of $2,540,000 replaced the existing mortgage loan, which had an outstanding balance at the time of the refinancing of $2,243,204. Closing costs of approximately $81,307 were capitalized during 2006 and are included in other assets. The new mortgage requires monthly payments of principal and interest of approximately $14,855, beginning on December 1, 2006 until the loan matures on October 1, 2016, with a fixed interest rate of 5.77% and a balloon payment of approximately $2,053,000 due at maturity.  

On December 29, 2006, the Partnership refinanced bonds encumbering one of its investment properties, Oak Terrace Apartments. The Partnership recognized a loss on early extinguishment of debt of approximately $545,906 during the year ended December 31, 2006 due to the write off of unamortized loan costs. The new mortgage loan, in the principal amount of $9,000,000 replaced the existing bonds, which had an outstanding balance

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at the time of the refinancing of $9,000,000. Closing costs of approximately $137,000 were capitalized during 2006 and are included in other assets. The new mortgage requires monthly payments of interest beginning on February 10, 2007 until the loan matures on January 10, 2012, at which time the entire principal balance of $9,000,000 is due. The loan has a fixed interest rate of 5.94%

Rental Rates and Occupancy

The following table sets forth the average annual rental rates and occupancy for 2006 and 2005 for each property.

	Average Annual		Average
	Rental Rates		Occupancy
Property	2006	2005	2006	2005
Cascade Apartments (1)(3)	$    7,608	N/A	95%	N/A
Oak Terrace Community (2)(3)	22,490	19,731	90%	92%
Sunwood Apartments (3)	8,817	8,683	96%	93%
Bayberry Crossing (4)	$    10.05	$    9.82	92%	90%

(1) Cascade Apartments was acquired by the Partnership in October of 2006. These numbers are annualized quarter-ended December 31, 2006 results.

(2) Oak Terraces is a seniors community, and rental rates include additional services such as food, transportation, activities, etc.

(3) Average Annual Rental Rates per unit

(4) Average Annual Rental Rates per square foot

As noted under “Item 1. Description of Business”, the real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area (or other commercial retail space in the case of the Partnership’s shopping center). The General Partner believes that all of the properties are adequately insured. Each residential property is an apartment complex or seniors community which leases units for lease terms of one year or less. No residential tenant leases 10% or more of the available rental space. The commercial property consists generally of small retail tenants with lease terms generally under between one and five years. Two tenants each rent 10% or more of the available commercial space. All of the properties are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age.

Real Estate Taxes and Rates

Real estate taxes and rates in 2006 for each property were:

	2006
Bayberry Crossing	$	120,652
Cascade Apartments (1)		62,636
Oak Terrace Community		144,409
Sunwood Apartments		89,882

(1) Cascade Apartments was acquired by the Partnership in October of 2006. These numbers are annualized quarter-ended December 31, 2006 results.

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Capital Improvements

Bayberry Crossing

During the year ended December 31, 2006, the Partnership completed approximately $388,000 of capital improvements at the property, consisting primarily of new roofing, exterior painting, parking lot repairs, sign repairs, landscaping upgrades and concrete walk repairs. These improvements were funded from a replacement reserve set up upon refinancing of the property. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Cascade Apartments

During the year ended December 31, 2006, the Partnership completed approximately $113,000 of capital improvements at the property, consisting primarily of carpet and appliance upgrades, and parking lot, sidewalks and carport improvements. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Oak Terrace Community

During the year ended December 31, 2006, the Partnership completed approximately $125,000 of capital improvements at the property, consisting primarily of a new roof replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

Sunwood Apartments

During the year ended December 31, 2006, the Partnership completed approximately $198,000 of capital improvements at the property, consisting primarily of plumbing replacement, air conditioning upgrades, furniture, fixture, and floor covering replacements and landscaping. These improvements were funded from operating cash flow and replacement reserves. The Partnership regularly evaluates the capital improvement needs of the property. However, given that the property is the subject of bankruptcy proceedings, all capital expenditures during the bankruptcy period must be approved by the U.S. Bankruptcy Court. See “Item 3, Legal Proceedings”. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property and the approval of the U.S. Bankruptcy Court.

Item 3. Legal Proceedings

Sunwood Village Bankruptcy

On September 12, 2006, Sunwood Village Joint Venture, Limited Partnership (“Sunwood”), a Nevada limited partnership, filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada, Case No. BK-S-06-12463. The Partnership holds a limited partnership interest in Sunwood that represents a material portion, but not substantially all of, the assets of the registrant.

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The bankruptcy is occasioned by the maturity of the mortgage loan on Sunwood’s property at the same time Sunwood is effectively prevented from selling or refinancing the property because of the lis pendens recorded by Mega Ventures against the property relating to the litigation over their attempt to purchase the property.

Pursuant to Chapter 11 of the U.S. Bankruptcy Code, Sunwood retains possession and control of its assets and is operating its business as a debtor in possession while being subject to the jurisdiction of the Bankruptcy Court.

Sunwood Village Litigation

On March 8, 2005, Mega Ventures, LLC filed Case No. A500656 in the District Court of Clark County, Nevada to enforce an alleged agreement to sell the Sunwood Village Apartments. The Partnership believes that the agreement was terminated or is otherwise not enforceable and that it is in the best interest of the Partnership not to allow a sale of Sunwood Village for the price in the disputed agreement. The outcome of this litigation cannot be predicted; however, if Mega prevails in enforcing the alleged agreement or receiving a substantial award of damages, then the Partnership may not be able to realize any significant net proceeds from a sale of the Sunwood Village Apartments after repayment of outstanding obligations. If Sunwood JV prevails, then the Partnership would expect to realize significant proceeds from a sale of Sunwood Village Apartments, if it were subsequently sold.

Litigation Against Former General Partner

On November 9, 2005, the Partnership filed Case No. 05CV08810 in the District Court of Johnson County, Kansas, alleging that the Partnership’s former general partner, James R. Hoyt, failed to make the first required payment on a promissory note Mr. Hoyt signed in order to repay $2,500,000 that he owes to the Partnership. This litigation was settled in January 2007. Pursuant to the settlement, Mr. Hoyt agreed to have judgment entered in the Partnership’s favor in the amount of $2,750,000, and to pay $100,000 to the Partnership in cash immediately. As part of the settlement, Mr. Hoyt has provided information regarding his assets and income that, if true, indicates that the Partnership is unlikely to be able to collect any significant portion of the balance of the judgment. The settlement requires Mr. Hoyt to provide documents and to testify under oath regarding his financial situation, and provides the Partnership with a year to investigate further in order to attempt to verify such information. If Mr. Hoyt misrepresented his financial condition, the Partnership will be entitled to attempt to collect the balance of the judgment. Otherwise, the judgment will be discharged at the end of such time. The general partner believes the settlement is more favorable to the Partnership than what the Partnership would likely have been able to achieve through contested litigation. The Partnership does not believe that the ultimate outcome of this litigation will have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

There are no other pending or outstanding litigation matters involving the Partnership or its properties, other than matters of a routine nature arising in the ordinary course of business.

Item 4. Submission of Matters to a Vote of Security Holders

During the quarter ended December 31, 2006, no matters were submitted to a vote of unitholders through the solicitation of proxies or otherwise.

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PART II

Item 5. Market for the Registrant’s Units of Limited Partnership and Related Security Holder Matters

No established trading market for the Units exists, nor is one expected to develop.

Title of Class	Number of Unitholders of Record
Limited Partnership Units	1,658 as of December 31, 2006

There were 53,661 Units outstanding at December 31, 2006, of which the General Partner and an affiliate owned 18,854 Units or approximately 35.14%.

The Partnership made no distributions to its limited partners during the years ended December 31, 2006 and 2005.

The Partnership made an odd lot offer of redemption during the first half of 2007 as a result of which approximately 6,000 Units were cancelled in the first half of 2007 and as a further result the General Partner and an affiliate currently own 39.87% of the Units outstanding.

Future cash distributions will depend on the levels of cash generated from operations, and the timing of debt maturities, refinancings, and/or property sales. The Partnership’s cash available for distribution is reviewed on a periodic basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit additional distributions to its partners in the year 2007 or subsequent periods. See “Item 2. Capital Improvements” for information relating to anticipated capital expenditures at the properties.

A number of the Units owned by the General Partner and its affiliate were generally acquired pursuant to tender offers made by the General Partner or its affiliate. It is possible that General Partner or its affiliates will acquire additional Units, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner may have a conflict of interest because of its significant ownership interest in the Units.

Item 6. Management’s Discussion and Analysis or Plan of Operation

This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report.

The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership’s financial results.

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RESULTS OF OPERATIONS

The Partnership’s net loss was approximately $1,378,000 for the year ended December 31, 2006, compared to $3,685,000 for the year ended December 31, 2005. The decrease in net loss was primarily due to the Partnership writing off a receivable due from the former general partner in 2005 in the amount of $2,842,922.

Total expenses, excluding the previously-described write-off of the receivable due from the former general partner, increased for the year ended December 31, 2006. Operating expenses increased due to increases in depreciation and amortization, employment costs, contract services, property management fees and insurance expenses. Amortization increased due to the write-off of deferred loan costs on the refinancing of debt in the Oak Terrace and Bayberry properties. Property management fees rose because of an increase in rental income. Other expense increases were caused by the acquisition of Cascade Apartments.

Total revenue increased due to rises in rental and other income, and the acquisition of Cascade Apartments. Rental income rose due to increases in average rental rates at all properties and an increase in occupancy in two of the four properties.

Included in general and administrative expenses for the years ended December 31, 2006 and 2005 are management reimbursements to the General Partner as allowed under the Partnership Agreement. Also included in general and administrative expenses for both periods are costs associated with the quarterly and annual communications with the investors and regulatory agencies and the annual audit required by the partnership agreement.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2006, the Partnership and it subsidiaries had cash and cash equivalents of approximately $1,953,000 compared to approximately $423,000 at December 31, 2005. Cash and cash equivalents increased approximately $1,530,000 since December 31, 2005 due to approximately $686,000 of cash provided by financing activities and cash provided by operating activities of approximately $837,000 The refinancing of the debt on Oak Terrace Community and the Bayberry Shopping Center generated approximately $1,120,000 in funds together with contributing to the reduction in restricted cash balances of approximately $827,000 and loan cost payments associated with the refinancings was approximately $264,000 and debt repayments were approximately $170,000. Cash used in investing activities consisted mainly of the purchase of property, plant and equipment.

The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the various properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. The Partnership regularly evaluates the capital improvement needs of the properties. The Partnership has no other material commitments for property improvements and replacements, however certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the properties as well as replacement reserves and cash flow generated by the properties. Capital expenditures will be incurred only if cash is available from operations, Partnership reserves or refinancing proceeds. To the extent that capital improvements are completed, the Partnership’s distributable cash flow, if any, may be adversely affected at least in the short term.

The Partnership’s assets are thought to be generally sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership’s investment properties is approximately $24,055,000. Of such amounts, $9,402,000 matured in 2006 and balloon payments of approximately $9,500,000 and $4,685,448 are due in 2012, and 2016, respectively. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If a property cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such property through foreclosure. As has been previously described, Sunwood Village has filed for bankruptcy reorganization, occasioned by the maturity of

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the mortgage loan on the Sunwood property at the same time Sunwood is effectively prevented from selling or refinancing the property because of the lis pendens recorded by Mega Ventures against the property relating to the litigation over their attempt to purchase the property. See Item 3 “Legal Proceedings”. The Partnership believes that when such litigation and the resultant bankruptcy are concluded, Sunwood will have sufficient assets to either refinance its mortgage encumbrances or to sell the property and pay off such mortgage encumbrances.

Critical Accounting Policies and Estimates

A summary of the Partnership’s significant accounting policies is included in “Note 1 – Summary of Significant Accounting Policies” to the consolidated financial statements included in “Item 7. Financial Statements”. The General Partner believes that the consistent application of these policies enables the Partnership to provide readers of the consolidated financial statements with useful and reliable information about the Partnership’s operating results and financial condition. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Judgments and assessments of uncertainties are required in applying the Partnership’s accounting policies in many areas. As previously described, the General Partner may not have been capable of independently verifying the accuracy of certain information it has for the Partnership prior to the current General Partner being installed in March 2005. Such inability to account for the accuracy of prior Partnership data which may also impact the General Partner’s ability to make certain judgments and assessments of uncertainties. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.

Impairment of Long-Lived Assets

Investment properties are recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property.  If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

Real property investment is subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership’s investment properties. These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; competition from other commercial retail space providers; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing or commercial retail space. Any adverse changes in these factors could cause impairment of the Partnership’s assets.

Revenue Recognition

The Partnership generally leases apartment units for twelve-month terms or less and commercial retail space for a term averaging sixty months. The Partnership may adjust rents during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases is recognized on a straight-line basis over the term of the lease. The Partnership considers all accounts receivable from residents as uncollectible and establishes an allowance in the full amount of the receivable.

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Item 7.Financial Statements

SECURED INVESTMENT RESOURCES FUND, L.P. II

LIST OF FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheet - December 31, 2006 and 2005

Consolidated Statements of Operations - Years ended December 31, 2006 and 2005

Consolidated Statements of Changes in Partners’ Deficit - Years ended December 31, 2006 and 2005

Consolidated Statements of Cash Flows - Years ended December 31, 2006 and 2005

Notes to Consolidated Financial Statements

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SECURED INVESTMENT RESOURCES FUND, L.P. II

December 31, 2006 and 2005

Consolidated Financial Statements

With

Report of Independent Registered Public Accounting Firm

12

Report of Independent Registered Public Accounting Firm

Partners

Secured Investment Resources Fund, L.P. II

Pasadena, California

We have audited the accompanying consolidated balance sheets of Secured Investment Resources Fund, L.P. II as of December 31, 2006 and 2005, and the related consolidated statements of operations, changes in partners’ capital (deficit) and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Secured Investment Resources Fund, L.P. II as of December 31, 2006 and 2005, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/S/ MOORE STEPHENS FROST

Independent Registered Public Accounting Firm

Little Rock, Arkansas

September 7, 2007

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SECURED INVESTMENT RESOURCES FUND, L.P. II

Consolidated Balance Sheets

For the Years Ended December 31, 2006 and 2005

Assets	2006			2005
Investment property
Land	$	2,868,921		$	2,281,958
Building and improvements		29,078,880			24,318,382
		31,947,801			26,600,340
Less accumulated depreciation		(17,402,885	)		(14,576,046	)
Total investment property, net		14,544,916			12,024,294
Cash and cash equivalents		1,953,608			423,304
Restricted escrows and reserves		784,907			1,527,755
Accounts receivable, net of allowance for doubtful
accounts of $65,295 in 2006 and $7,844 in 2005		11,239			918,118
Advance to affiliate
Prepaid expenses		234,019			64,577
Debt financing costs, net		286,590			586,116
Other assets, net		96,691			110,487
Total assets	$	17,911,970		$	15,654,801
Liabilities and Partners’ Capital (Deficit)
Liabilities
Mortgage loans payable and Bonds Payable	$	24,055,470		$	20,932,378
Accounts payable		123,130			66,094
Deferred revenue		55,238			81,083
Accrued interest		296,994			118,041
Accrued real estate taxes		174,489			118,106
Accrued other expense		439,967			230,019
Tenant security deposits payable		166,578			130,904
Total liabilities		25,311,866			21,676,625
Minority Interest – Class A Limited Partners		801,000			801,000
Partners’ capital (deficit)
General Partner		(71,773	)		(57,993	)
Limited Partners		(8,129,123	)		(6,764,831	)
Total partners’ capital (deficit)		(8,200,896	)		(6,822,824	)
Total liabilities and partners’ capital (deficit)	$	17,911,970		$	15,654,801

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SECURED INVESTMENT RESOURCES FUND, L.P. II

Consolidated Statements of Operations

Years Ended December 31, 2006 and 2005

	2006			2005
Revenue
Rent	$	5,908,937		$	4,821,985
Other property income		454,272			364,916
Total revenue		6,363,209			5,186,901
Expenses
Salaries		818,898			710,617
Maintenance and repairs		202,106			206,530
Utilities		491,339			476,322
Real estate taxes		417,579			432,090
General administrative		1,314,773			1,007,423
Contract services		698,374			631,655
Insurance		160,262			125,474
Depreciation and amortization		1,637,683			975,318
Property management fees		239,592			188,658
Total expenses		5,980,606			4,754,087
Net operating income (loss)		382,603			432,814
Other income (expense)
Interest income		58,215			181,906
Interest expense		(1,818,890	)		(1,494,062	)
Write-off of note receivable		-			(2,842,922	)
Total other expense		(1,760,675	)		(4,155,078	)
Net loss	$	(1,378,072	)	$	(3,722,264	)
Net loss attributable to
Limited Partners	$	(1,364,291	)	$	(3,685,041	)
General Partner		(13,781	)		(37,223	)
Total	$	(1,378,072	)	$	(3,722,264	)
Net loss per unit	$	(25.68	)	$	(69.37	)
Partnership units outstanding		53,661			53,661

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SECURED INVESTMENT RESOURCES FUND, L.P. II

Consolidated Statements of Changes in Partners’ Deficit

Years Ended December 31, 2006 and 2005

	General Partner			Limited Partners			Total
Balance - January 1, 2005	$	(20,770	)	$	(3,079,790	)	$	(3,100,560	)
Net loss		(37,223	)		(3,685,041	)		(3,722,264	)
Balance - December 31, 2005		(57,993	)		(6,764,831	)		(6,822,824	)
Net loss		(13,781	)		(1,364,291	)		(1,378,072	)
Balance - December 31, 2006	$	(71,773	)	$	(8,129,123	)	$	(8,200,896	)

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SECURED INVESTMENT RESOURCES FUND, L.P. II

Consolidated Statements of Cash Flows

Years Ended December 31, 2006 and 2005

	2006			2005
Cash flows from operating activities
Net loss	$	(1,378,072	)	$	(3,722,264	)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities
Depreciation and amortization		1,637,683			975,318
Loss on disposal of assets		7,089			-
Write-off of accounts receivable		338,553			-
Write-off of notes receivable		-			2,842,922
Changes in accounts affecting operations
Accounts receivable		(9,011	)		232,522
Prepaid expenses		(162,722	)		(13,108	)
Other Assets		(12,474	)		12,006
Accounts payable		40,851			66,094
Deferred revenue		(25,845	)		64,558
Accrued interest		148,615			(991,430	)
Real estate taxes payable		29,026			(17,518	)
Accrued other expense		209,948			(137,245	)
Security deposit liability		13,097			(8,270	)
Net cash provided (used) by operating activities		836,738			(696,415	)
Cash flows from investing activities
Changes in restricted cash		827,483			(333,072	)
Purchases of property, plant and equipment		(824,206	)		(379,065	)
Foreclosure - Cascade		4,512			-
Net cash used by investing activities		7,789			(712,137	)
Cash flows from financing activities
Proceeds from long-term borrowings		1,119,962			-
Proceeds from issuance of Class A limited partnership units - Sunwood		-			801,000
Principal repayments on mortgage loans payable		(170,371	)		(404,974	)
Loan costs		(263,814	)		-
Net cash provided by financing activities		685,777			396,026
Increase (decrease) in cash and cash equivalents		1,530,304			(1,012,526	)
Cash and cash equivalents - beginning of year		423,304			1,435,830
Cash and cash equivalents - end of year	$	1,953,608		$	423,304

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Supplementary disclosure of cash flow information
Cash paid during the year for interest	$	1,639,937	$	2,485,492
Supplementary disclosures of non-cash transactions
Refinance bonds with mortgage payable	$	9,000,000	$	-
Basis adjustment on foreclosure		1,511,183		-

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SECURED INVESTMENT RESOURCES FUND, L.P. II

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

a. Organization – Secured Investment Resources Fund, L.P. II (the “Partnership) operates real estate investment partnerships that rent multi-family residential housing and commercial shopping center space. The Partnership consists of the following:

		State of	Year
Partnership	Location	Formation	Formed	Property
Sunwood	Las Vegas, NV	Nevada	2001	Residential
Oak Terrace	Springfield, IL	Kansas	1999	Residential
Cascade	Topeka, KS	Kansas	1999	Residential
Bayberry	Lee’s Summit, MO	California	2006	Commercial

Secured Investment Resources Fund, L.P. II, (“SIR”) represents the headquarters for the Partnership and is located in Pasadena, California. Effective March 2005, the Partnership changed general partners to Millenium Management, LLC (“General Partner”) a California limited liability company.

b. Reorganization –Bayberry was formed March 21, 2006 for the purpose of spinning off the Bayberry real estate, and related assets and liabilities, which were previously held in the SIR limited partnership. The spin-off was made at net book value, and has no effect on the consolidated financial statements. After the spin-off, the Partnership’s relationship consisted of partnership management activities.

c. Allocation of profits, gains and losses – Profits, gains and losses of the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement.

d. Use of estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates.

e. Cash and cash equivalents – For purposes of the consolidated statements of cash flows, the Partnership considers all highly liquid cash investments purchased with an original maturity of three months or less to be cash equivalents.

f. Restricted cash – Restricted cash consists of escrow accounts for taxes, insurance and replacement costs. These costs are expected to be incurred and paid within 12 months.

g. Accounts receivable – The Partnership reviews their tenant accounts on a periodic basis and records a reserve for specific amounts that management feels may not be collected. In addition, the Partnership has established a general reserve for potential uncollectible accounts based on historical bad debts. Past due status is determined based upon contractual terms. Amounts are written off at the point when collection attempts on the accounts have been exhausted. Management uses significant judgment in estimating uncollectible amounts. In estimating uncollectible amounts, management considers factors such as current overall economic conditions, industry-specific economic conditions, historical customer performance and anticipated customer performance. While management believes the Partnership’s processes effectively address its exposure to doubtful accounts, changes in economic, industry or specific customer conditions may require adjustment to the allowance recorded by the Partnership.

h. Property – Property is stated at cost less accumulated depreciation. The costs of repairs and maintenance that do not improve or extend asset lives are expensed as incurred. Depreciation is provided primarily by the straight-line method based upon the estimated useful lives of the related assets, which are as follows:

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Buildings	30 years
Improvements	15 years
Furniture and fixtures	5 years

i. Amortization – Loan costs are deferred and amortized using the straight-line method over the term of the loan and are stated at $286,590 and $586,116, net of accumulated amortization of $19,921 and $200,350, as of December 31, 2006 and 2005, respectively.

Aggregate amortization expense of loan costs is as follows:

2007	$	41,461
2008		41,461
2009		41,461
2010		41,461
2011		41,461
Thereafter		79,285
	$	286,590

The Partnership recognized amortization expense of $599,537 for the year ended December 31, 2006 due to the write-off of loan costs on mortgages that were refinanced.

Prepaid commissions, included in other assets, are recorded at cost and amortized over the life of the lease and are stated at $73,187 and $88,323, net of accumulated amortization of $220,359 and $200,350, at December 31, 2006 and 2005, respectively.

Aggregate amortization expense of prepaid commissions is as follows:

2007	$	21,425
2008		16,188
2009		9,488
2010		8,343
2011		6,956
Thereafter		10,778
	$	73,187

j. Long-lived assets – The Partnership reviews the carrying value of long-lived assets for impairment whenever triggering events or changes in circumstances indicate that the carrying amounts of any asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the excess of the carrying amount over the fair value of the assets.

During 2006, Sunwood filed for a petition for relief under Chapter 11 of the United States Bankruptcy Code as more fully described in Note 9. Management reviewed the assets held by Sunwood for impairment and determined that the fair value of the assets exceeded the claims filed with the court. Based on management’s estimates, these consolidated financial statements do not reflect an adjustment to the basis of the assets held by Sunwood at December 31, 2006. No triggering events or changes in circumstances were identified by management for the year ended December 31, 2005.

k. Income taxes – The Partnership is taxed as a partnership for federal and state income tax purposes. Therefore, the results of operations of the Partnership are included in the individual partners’ tax returns. Accordingly, no provision for income taxes related to operations has been made for the in the accompanying consolidated financial statements.

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l. Revenue recognition – The Partnership recognizes revenue from real estate lease agreements as operating leases, and rentals from such leases are reported as revenue on a straight-line basis over the terms of the leases.

Other property income includes concessions, application fees, damage charges and late fees.

m. Deferred revenue – Rent received in advance is reported as a liability and recognized as income in the month the rent is due.

n. Security deposits – The Partnership requires security deposits from lessees for the duration of the lease. Deposits are refunded when the tenant vacates, provided the tenant has not damaged the space and is current on rental payments.

o. Fair value – The carrying amounts of long-term debt and other receivables approximate fair value as current interest rates approximates those currently available for similar debt instruments of comparable maturities from the Partnership’s creditors.

p. Advertising – The Partnership expenses advertising as incurred. Advertising expense for the years ended December 31, 2006 and 2005 was $87,640 and $81,320, respectively.

q. New accounting pronouncements – In May 2005, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections.” This statement replaces Accounting Principles Board Opinion No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements,” and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. The implementation of this pronouncement did not have a significant impact on the consolidated financial statements in the current year.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. The Partnership’s management does not anticipate that this pronouncement will have a significant impact on the consolidated financial statements.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effect of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB No. 108 requires that registrants quantify errors using both a consolidated balance sheet and consolidated statement of income approach and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and qualitative factors are considered, is material. SAB No. 108 is effective for the Partnership in fiscal 2006 and did not have a material impact on the Partnership’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Partnership has not yet determined whether it will elect the fair value option for any of its financial instruments.

2. Notes Receivable

On March 3, 2005, the Partnership accepted a promissory note from the former general partner initially set at $2,500,000 payable over 10 years at prime plus 1%. The former general partner defaulted on the first payment and an

21

action was filed against the former general partner and related companies. During 2005 the Partnership deemed the note and all other receivables, including accrued interest, to be uncollectible and the outstanding balance due the Partnership of $2,842,922 was written off. At the date this determination was made the Partnership discontinued accruing interest.

3. Foreclosure

On August 1, 2006, a Full Recourse Promissory Note (the “Note”) was entered into between Secured Investment Resources Fund, L.P. (“SIR I”) and the Partnership regarding the aggregate amount of $999,656 then owed to the Partnership by SIR I.

The Note provided SIR I with the time and opportunity to try to sell its property in order to repay the Note and was due and payable on September 30, 2006, unless SIR I entered into or was negotiating a contract to sell its property.

By October 1, 2006, SIR I had done neither and had not made the required payment of principal and interest called for by the Note and had thus defaulted on the payment of both the principal and interest due on the Note. The Partnership exercised its remedies in respect to the collateral of the Note, acquiring SIR I’s 100% interest in Cascade, the limited partnership that owns Cascade Apartments. SIR I consented to this action in full satisfaction of its obligations to the Partnership.

4. Minority Interest – Class A Limited Partners (Sunwood)

A dispute arose between Sunwood and the lender regarding the amount owed on the mortgage. Sunwood and the lender entered into a settlement agreement dated June 6, 2005 whereby Sunwood agreed to pay the lender a settlement payment of $800,000. A new class of partners, “Class A Limited Partners,” was created and the Partnership received $801,000 in June 2005 of which $401,000 was received from related parties. These funds were used as the settlement payment to the lender. The Class A Limited Partners have no voting rights and are not allocated operating income and losses of the Partnership, except an allocation of income equal to any distributions received that are not a return of capital.

The Class A Limited Partners accrue a cumulative preferred return at a rate of ten percent (10%) per annum compounded monthly on the outstanding balance. The cumulative preferred return payments are allowed if there is cash available for distributions from operations, on a quarterly basis, which is defined as net cash realized after all operating expenses, fees to General Partner, management fees, debt payments and reasonable cash reserves determined by the General Partner. The cumulative preferred return on those instruments will not be recorded until such time as it is evident Sunwood will disburse the funds.

Preferred return payments from cash available as a result of a sale or refinancing the mortgage debt are available for distributions in the following order:

1.	Accrued preferred return to Class A Limited Partners
2.	Repay the capital contributed by Class A Limited Partners.
3.	The greater of 50% of the capital contributed by Class A Limited Partners or twenty-five percent (25%) of the remaining cash available from the sale or refinancing.

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5.Mortgage Loans and Bonds Payable

Mortgage loans and bonds payable consist of the following:

	2006		2005
Mortgage payable – Sunwood, bearing interest at
7.125%, due August 2006, secured by real estate	$	9,401,527	$	9,539,055
Mortgage payable – Oak Terrace, interest only
payable monthly at 5.94%, due January 2012,
secured by real estate		9,000,000		-
Mortgage payable – Cascade, payable $14,855
monthly including interest, at 5.77%, due
November 2016, secured by real estate		2,537,358		-
Mortgage payable – Bayberry, payable $19,221
Monthly including interest, at 6.24%, due
September 2016, secured by real estate		3,116,585		-
Mortgage payable – SIR, payable $20,433 monthly
including interest, at 6.5%, due June 2006, secured
by real estate		-		2,393,323
Bonds payable – Oak Terrace, interest only payable
monthly at 5.94%, due January 2012, secured by
real estate		-		9,000,000
Total mortgage loans and bonds payable	$	24,055,470	$	20,932,378

Aggregate maturities of long-term debt are as follows:

2007	$	9,466,681
2008		69,244
2009		73,590
2010		78,210
2011		83,120
Thereafter		14,284,626
	$	24,055,471

The mortgage payable by SIR II was transferred to Bayberry during 2006 and refinanced by Bayberry.

The mortgage payable by Sunwood matured in 2006, but Sunwood filed for bankruptcy protection, as described in Note 9.

6. Related Party Transactions

The General Partner performs various professional services for the Partnership, primarily tax accounting, audit preparation, Securities and Exchange Commission (“SEC”) report preparation, and investor services. They were also general partner for SIR I which had the following balance due to the Partnership.

	2006		2005
Advances to affiliate	$	-	$	817,411

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In 2005, the General Partner and certain employees of the General Partner subscribed for $401,000 of the Class A Limited Partnership interests issued by Sunwood. See Note 4.

Transactions with related parties consist of the following:

	2006		2005
Management fees	$	36,911	$	23,970
Investor services		6,556		-
Reimbursement costs to replace
former general partner		-		145,162
	$	43,467	$	169,132

The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.

No affiliate of the General Partner receives any compensation from the Partnership for providing management services.

The Partnership carries insurance (where applicable) for property/excess property risks, boiler and machinery risks, earthquake, and general/access liability through insurance policies obtained by Everest Properties II, LLC (“Everest”), an affiliate of the General Partner, from insurers unaffiliated with the General Partner. The Partnership paid directly to AON, an insurance broker engaged by Everest, $139,701 and $103,594 for its insurance coverage for the years ended December 31, 2006 and 2005, respectively. These payments reflect coverage for the Partnership for the periods from May 1, 2005 to April 30, 2007.

7. Concentrations of Credit Risk

At December 31, 2006 and 2005 and at various times throughout these years, the Partnership maintained cash balances with certain financial institutions in excess of the federal deposit insurance limit. This risk is managed by maintaining all deposits in sound financial institutions.

8. Cash Distributions

No cash distributions have been made since October 1998. Future distributions will only be made from excess cash flow exceeding working capital reserves.

9. Bankruptcy Protection

On September 12, 2006, Sunwood filed a petition for relief under Chapter 11 of the United States Bankruptcy Code. The filing was made as Sunwood’s mortgage matured in August 2006 with a lis pendens filed upon the property to prevent a sale or refinancing. Under Chapter 11, Sunwood will act as debtor-in-possession under court protection from their creditors and claimants, while using the Chapter 11 process to allow Sunwood to sell or refinance the real estate. Claims filed with the court are as follows:

Schedule D secured claims	$	9,576,786
Schedule F unsecured claims		87,889
Total claims	$	9,664,675

Management’s estimate of the fair value in the amount of $15,400,000 exceeds the total claims of $9,664,675 filed with the court. All the foregoing claims have been accrued in the consolidated financial statements.

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10. Contingencies

Environmental

Various federal, state and local laws subject property owners or operators to liability for management, and the costs of removal and remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of properties, the Partnership could potentially be liable for environmental liabilities or costs associated with their properties or properties the Partnership acquires or manages in the future.

Management is not aware of any environmental liabilities.

Mold

The Partnership has not been named as a defendant in any lawsuits that have alleged personal injury and property damage as a result of the presence of mold. However, we are aware of lawsuits against owners and managers of other multi-family properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. We do not have insurance coverage for property damage loss claims specifically arising from the presence of mold and for personal injury claims related to mold exposure. We believe our current policies and procedures will prevent or eliminate mold exposure from our properties and will minimize the effects that mold may have on our residents. To date, we have not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.

Litigation

Sunwood Village Litigation

On March 8, 2005, Mega Ventures, LLC filed Case No. A500656 in the District Court of Clark County, Nevada to enforce an alleged agreement to sell the Sunwood Village Apartments. The Partnership believes that the agreement was terminated or is otherwise not enforceable and that it is in the best interest of the Partnership not to allow a sale of Sunwood Village for the price in the disputed agreement. The outcome of this litigation cannot be predicted; however, if Mega prevails in enforcing the alleged agreement or receiving a substantial award of damages, then the Partnership may not be able to realize any significant net proceeds from a sale of the Sunwood Village Apartments after repayment of outstanding obligations. If Sunwood JV prevails, then the Partnership would expect to realize significant proceeds from a sale of Sunwood Village Apartments, if it were subsequently sold.

Litigation Against Former General Partner

On November 9, 2005, the Partnership filed Case No. 05CV08810 in the District Court of Johnson County, Kansas, alleging that the Partnership’s former general partner, James R. Hoyt, failed to make the first required payment on a promissory note Mr. Hoyt signed in order to repay $2,500,000 that he owes to the Partnership. This litigation was settled in January 2007. Pursuant to the settlement, Mr. Hoyt agreed to have judgment entered in the Partnership’s favor in the amount of $2,750,000, and to pay $100,000 to the Partnership in cash immediately. As part of the settlement, Mr. Hoyt has provided information regarding his assets and

25

income that, if true, indicates that the Partnership is unlikely to be able to collect any significant portion of the balance of the judgment. The settlement requires Mr. Hoyt to provide documents and to testify under oath regarding his financial situation, and provides the Partnership with a year to investigate further in order to attempt to verify such information. If Mr. Hoyt misrepresented his financial condition, the Partnership will be entitled to attempt to collect the balance of the judgment. Otherwise, the judgment will be discharged at the end of such time. The general partner believes the settlement is more favorable to the Partnership than what the Partnership would likely have been able to achieve through contested litigation. The Partnership does not believe that the ultimate outcome of this litigation will have a material adverse effect on the Partnership’s consolidated financial condition or results of operations. The entire receivable was reserved as of December 31, 2004 and written off against the reserve during 2005.

There are no other pending or outstanding litigation matters involving the Partnership or its properties, other than matters of a routine nature arising in the ordinary course of business.

Sunwood Bankruptcy

On September 12, 2006, Sunwood filed for protection under Chapter 11 of the United States Bankruptcy Code, as more fully described in Note 9. .

11. Capital Resources

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Partnership as a going concern. However, the Partnership has incurred losses in recent years and has negative capital.

In view of these matters, realization of a major portion of the assets in the accompanying consolidated balance sheets is dependent upon continued operations of the Partnership, which in turn is dependent upon the Partnership’s ability to meet its financing requirements, and the success of its future operations. Management anticipates that positive operating cash flows for the year ended December 31, 2007, along with cash balances of approximately $2 million at December 31, 2006, provide the Partnership with the ability to continue as a going concern.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

(a) Controls and Procedures

(a)        Disclosure Controls and Procedures. The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures had material weaknesses in that the Partnership did not have sufficient financial and human resources available and allocated to preparation of consolidated financial statements, required disclosures and reports, and independent audit requirements, resulting in an inability to make such financial statements, disclosures and reports available on a timely basis and meet public reporting deadlines. Management believes that it is remediating the foregoing weaknesses by obtaining and allocating the necessary financial and human resources, obtaining the independent audit required for this report on Form 10KSB, and engaging independent auditors on an ongoing basis.

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(b)        Internal Control Over Financial Reporting. There have not been any changes in the Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2006 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Item 8b. Other Information

None.

PART III

Item 9.Directors, Executive Officers, Promoters and Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act

The Registrant has no directors or officers. Millenium manages and controls the Partnership and has general responsibility and authority in all matters affecting its business.

The names of the directors and officers of the General Partner, their ages and the nature of all positions presently held by them are set forth below.

Name	Age	Position
W. Robert Kohorst	54	President
David I. Lesser	54	Executive Vice President
Christopher K. Davis	43	Vice President and General Counsel
Peter Wilkinson	47	Vice President and Chief Financial Officer

W. Robert Kohorst. Mr. Kohorst has been the President of Everest since its founding in 1996 and of Millenium since its establishment in 1998. He is a lawyer by profession. From 1984 through 1990, Mr. Kohorst was the President of the Private Placement Group for Public Storage, Inc., a national U.S. real estate syndicator. Mr. Kohorst’s responsibilities included all structuring, marketing, investor services and accounting services for private placement syndications for Public Storage, Inc., and its affiliates. Upon leaving Public Storage, Inc. in 1990, Mr. Kohorst was the Chief Executive Officer and principal of two businesses, Tiger Shark Golf, Inc., a golf equipment manufacturer, and Masquerade International, Inc., a manufacturer of costumes. In 1991 Mr. Kohorst co-founded KH Financial, Inc., which has been engaged in the acquisition of general partner interests, real estate companies and related assets. Mr. Kohorst has been the President of KH Financial, Inc. from its inception to the present. Mr. Kohorst holds a Juris Doctor from the University of Michigan and a Bachelor of Science degree in accounting from the University of Dayton.

David I. Lesser. Mr. Lesser has been the Executive Vice President of Everest since 1996 and of Millenium since its establishment in 1998. He is a lawyer by profession. From 1979 through 1986, Mr. Lesser practiced corporate and real estate law with Kadison, Pfaelzer, Woodard, Quinn & Rossi and Johnsen, Manfredi & Thorpe, two prominent Los Angeles law firms. From 1986 through 1995, Mr. Lesser was a principal and member of Feder, Goodman & Schwartz and its predecessor firm, co-managing the firm’s corporate and real estate practice. Between 1990 and 1992, Mr. Lesser was counsel to Howard, Rice, Nemerovski, Robertson, Canady & Falk. Mr. Lesser is also a Vice President of KH Financial, Inc. Mr. Lesser holds a Juris Doctor from Columbia University and a Bachelor of Arts degree from the University of Rochester.

Christopher K. Davis. Mr. Davis is a Vice President and the General Counsel of Everest, which he joined in 1998. He has been a Vice President and the General Counsel of Millenium since its establishment in 1998. He is a lawyer by profession. From 1991 to 1995, he practiced securities and corporate law with Gibson, Dunn & Crutcher, a prominent national law firm headquartered in Los Angeles. From 1995 through 1997, he served as Senior Staff Counsel and then Director of Corporate Legal of Pinkerton’s, Inc., a worldwide provider of security, investigation and related services. At Pinkerton, Mr. Davis was responsible for directing the corporate section of the legal

27

department. Mr. Davis holds a Juris Doctor from Harvard Law School and a Bachelor of Science degree in Business Administration from the University of California, Berkeley.

Peter J. Wilkinson. Mr. Wilkinson is a Vice President and the Chief Financial Officer of Everest, which he joined in 1996 and of Millenium since its establishment in 1998. He is an accountant by profession. From 1981 through 1987, he worked for Deloitte Haskins and Sells and Coopers and Lybrand in London and Sydney in their audit divisions, gaining significant experience in a variety of industry segments. From 1987 to 1990, he was the company secretary and controller of Gresham Partners, an Australian investment bank where, in addition to being responsible for all financial, tax and administrative matters, he was involved with analyzing leveraged buyout, property finance and business acquisitions. Mr. Wilkinson joined BankAmerica in the United States and from 1991 to 1996 held a number of positions, culminating in being the Division Finance Officer for the Corporate Trust and Mortgage and Asset Backed divisions. In this capacity, he was responsible for presentation of all financial information and financial due diligence during their divestiture. Mr. Wilkinson holds a Bachelor of Science degree from Nottingham University and is an English chartered accountant.

Mr. Kohorst is also a director of a Maxus Realty Trust, Inc., a real estate investment trust which has a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 and is subject to the reporting requirements of Sections 13 or 15(d) of such Act.

The Partnership’s General Partner is managed by Everest II and as such does not have a board of directors nor a separate audit committee; nor does Everest II. However, the executive officers of the General Partner have determined that Peter Wilkinson meets the requirement of an “audit committee financial expert” but is not independent of management of the General Partner.

The officers of the General Partner with authority over the Partnership are officers of Everest II. Additionally, all are also the officers of Everest, of which Mr. Kohorst beneficially owns, through the Kohorst Family Trust, 83.48% and Mr. Lesser owns 13.56%. Everest in turn owns 85% of Everest II. Neither the Partnership, Everest nor Everest II has adopted a code of ethics that applies to such officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Messrs. Kohorst, Lesser, Davis and Wilkinson each failed to file a report on Form 3 on a timely basis when Millenium became the general partner of the partnership in March 2005.

Millenium failed to file a Form 3 on June 28, 2005, when, pursuant to a registered tender offer, Millenium had acquired more than 10% of the outstanding units of the Partnership. Since such date, Millenium has failed to file reports on Form 4 for forty-one purchase transactions for which reports were required.

Item 10. Executive Compensation

None of the officers of the General Partner received any remuneration from the Partnership during the year ended December 31, 2006.

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Item 11.Security Ownership of Certain Beneficial Owners and Management

(a) Security Ownership of Certain Beneficial Owners

Except as provided below, as of December 31, 2006, no person or group was known to Millenium to own of record or beneficially more than five percent of the Units of the Partnership:

Entity	Number of Units	Percentage
Millenium Management, LLC	18,628	34.7%
Everest Properties II, LLC	226	*%
(an affiliate of Millenium)

* Less than 1%.

Everest II owns 99% of Millenium. Everest II’s business address is 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101.

(b) Beneficial Owners of Management

Millenium is the beneficial owner of 18,628 Units of the Partnership. Everest II is the beneficial owner of 226 Units of the Partnership. None of the officers or associates of Millenium or Everest II own any Units of the Partnership of record or beneficially. Neither Millenium nor Everest II has any directors.

(c) Changes in Control

Beneficial Owners of Millenium

As of December 31, 2006, the following persons or entities were known to Millenium to be the beneficial owners of (or the affiliates of owners of) more than five percent (5%) of its partnership interests:

	Percent
Name and Address	Of Total
Everest Properties II, LLC	99.0%
199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101
Everest Properties, LLC	1.0%
199 S. Los Robles Avenue, Suite 200
Pasadena, California 91101
(Affiliate of Everest Properties II, LLC)

Item 12. Certain Relationships and Related Transactions, and Director Independence

The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and for reimbursements of certain expenses incurred by affiliates on behalf of the Partnership.

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In accordance with the terms of the solicitation that was made to, and passed by a majority of, limited partners of the Partnership to remove the prior general partner, the Partnership reimbursed affiliates of the current general partner the costs of making that solicitation. The cost of such solicitation and the amount paid for such solicitation by the Partnership in calendar 2005 was approximately $145,000.

Affiliates of the General Partner charged the Partnership for reimbursement of investor services expenses amounting to approximately $7,000 and $0 and management services amounting to approximately $37,000 and $24,000 for the years ended December 31, 2006 and 2005, respectively. These reimbursements are included in general and administrative expenses.

Both the General Partner and its affiliate owned Units in the Partnership representing 35.14% of the outstanding Units at December 31, 2006. A number of these Units were generally acquired pursuant to tender offers made by the General Partner or its affiliate. It is possible that the General Partner or its affiliates will acquire additional Units, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner may have a conflict of interest because of its significant ownership interest in the Units.

Neither the Registrant, the General Partner nor the General Partner’s managing company have directors. The executive officers of the General Partner and the General Partner’s managing company are the same and therefore they do not act in an independent capacity as would qualify them as independent under the independence standards established for New York Stock Exchange listed companies.

Item 13. Exhibits

See Exhibit Index.

Item 14. Principal Accounting Fees and Services

The General Partner has reappointed Moore Stephens Frost as independent auditors to audit the consolidated financial statements of the Partnership for 2007. The aggregate fees billed for services rendered by Moore Stephens Frost for 2006 and 2005 are described below.

Audit Fees. Fees for audit services totaled approximately $14,000 and $14,000 for 2006 and 2005, respectively. The General Partner has reappointed GSK Financial (which is owned by Garry S. Kohorst, the brother of W. Robert Kohorst) to provide tax services for 2007, the aggregate fees billed for services rendered to the Partnership by GSK Financial for 2006 and 2005 are described below:

Tax Fees. Fees for tax services totaled approximately $7,000 and $13,000 for 2006 and 2005, respectively.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SECURED INVESTMENT RESOURCES FUND, L.P. II

By:   Millenium Management, LLC

General Partner

By:   /s/W. Robert Kohorst

W. Robert Kohorst

President

Date: September 13, 2007

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/David I. Lesser	Executive	Date: September 13, 2007
David I. Lesser	Vice President
/s/Christopher K. Davis	General Counsel and	Date: September 13, 2007
Christopher K. Davis	Vice President
/s/Peter Wilkinson	Chief Financial Officer and	Date: September 13, 2007
Peter Wilkinson	Vice President

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SECURED INVESTMENT RESOURCES FUND, L.P. II

EXHIBIT INDEX

Exhibit Number	Description
3.1	Amended and Restated Agreement of Limited Partnership. (Previously filed on September 25, 1986 in the Prospectus as part of Amendment #1 to Registration Statement and incorporated herein by reference.)
3.2	Second Amendment to Restated Certificate and Agreement of Limited Partnership. (Previously filed as an Exhibit to the Supplement Prospectus dated August 13, 1987 as part of Post-effective Amendment No. 4 to the Registration Statement on Form S-11 [file No. 33-7302] and incorporated herein by reference.)
3.3	Certificate of Limited Partnership. (Previously filed on July 17, 1986 as an Exhibit to the Registration Statement on Form S-11 [file no. 33-7302] such Exhibit and Registration Statement incorporated herein by reference.)
3.4	Everest Bayberry, LP Limited Partnership Agreement dated March 21, 2006.
3.5	Agreement of Limited Partnership of Cascade Joint Venture, L.P. dated February 24, 1999.
3.6	Everest Hickory Glen, LP Amended and Restated Agreement of Limited Partnership dated December 6, 2006
3.7	Amended Agreement of Limited Partnership of Sunwood Village Joint Venture, Limited Partnership dated August 9, 2001 by and between Sunwood Village, Inc., as General Partner, and Secured Investment Resources Fund, L.P. II, as Limited Partner
3.8	Amendment dated June 6, 2005 to Amended Agreement of Limited Partnership of Sunwood Village Joint Venture, Limited Partnership by and among Millenium Management, LLC, Secured Investment Resources Fund, L.P. II, Keith A. Kohorst, David I. Lesser and Continental American Properties, Ltd.
10.1	Property Management Agreement between the Partnership and The Hoyt Group Limited Partnership. (Previously filed on July 17, 1986 as an Exhibit to the Registration Statement on Form S-11 [file no. 33-7302] such Exhibit and Registration Statement incorporated herein by reference.)
10.2	Escrow Agreement between the Partnership and The Mission Bank. (Previously filed on September 25, 1986 as an Exhibit to Amendment #1 to the Registration Statement of Form S-11 such Exhibit and Registration Statement incorporated herein by reference.)
10.3	Administrative Services Agreement between Secured Investment Resources II, Inc. and the Partnership. (Previously filed on July 17, 1986 as an Exhibit to the Registration Statement on Form S-11 [file no. 33-7302] such Exhibit and Registration Statement incorporated herein by reference.)

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10.4	Real Estate Contract of Sale and Exhibit for Sunwood Apartments. (Previously filed as an exhibit to Form 8-K dated June 2, 1987 and incorporated herein by reference.)
10.5	Deed of Trust, Promissory Note and Exhibits for Sunwood Apartments. (Previously filed as an exhibit to Registration Statement on Form S-11 [file No. 33-7302] dated August 13, 1987 and incorporated herein by reference.)
10.6	Real Estate Contract of Sale and Exhibits for Bayberry Crossing Shopping Center. (Previously filed as an exhibit to Form 8-K dated June 5, 1987 and incorporated herein by reference.)
10.7	Deed of Trust, Promissory Note and Exhibits for Bayberry Crossing Shopping Center. (Previously filed as an exhibit to Registration Statement on Form S-11 [file No. 33-7302] dated August 13, 1987 and incorporated herein by reference.)
10.8	Real Estate Purchase Agreement and Exhibits for Country Club Place Shopping Center. (Previously filed as an exhibit to Registration Statement on Form S-11 [file No. 33-7302] dated August 13, 1987 and incorporated herein by reference.)
10.9	Deed of Trust, Promissory Note and Exhibits for Country Club Place Shopping Center. (Previously filed as an exhibit to Registration Statement on Form S-11 [file No. 33-7302] dated August 13, 1987 and incorporated herein by reference.)
10.10	Real Estate Purchase Agreement and Exhibits for In The Pines Apartments. (Previously filed as an Exhibit to Form 8-K dated January 13, 1988 and incorporated herein by reference.)
10.11	Deed of Trust, Promissory Note and Exhibits for In The Pines Apartments. (Previously filed as an Exhibit to Form 8-K dated January 13, 1988 and incorporated herein by reference.)
10.12	Asset Purchase Agreement and Exhibits for Oak Terrace Active Retirement Community. (Previously filed as an Exhibit to Form 8-K dated September 14, 1988 and incorporated herein by reference.)
10.13	Asset Purchase Agreement and Exhibits for Oak Terrace Health Care Center. (Previously filed as an Exhibit to Form 8-K dated September 14, 1988 and incorporated herein by reference.)
10.14	Lease for Oak Terrace Health Care Center. (Previously filed as an Exhibit to Form 8-K dated September 14, 1988 and incorporated herein by reference.)
10.15	Loan Agreement for Bond Financing on Oak Terrace Active Retirement Community. (Previously filed as an Exhibit to Form 8-K dated September 14, 1988 and incorporated herein by reference.)
10.16	Real Estate Contract of Sale and Exhibits for Forest Park Shopping Center. (Previously filed as an Exhibit to Form 8-K dated December 7, 1988 and incorporated herein by reference.)

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10.17	Real Estate Contract of Sale and Exhibits for Thomasbrook Apartments. (Previously filed as an Exhibit to Form 10-K dated March 30, 1989 and incorporated herein by reference.)
10.18	Loan Assumption Documents for Thomasbrook Apartments. (Previously filed as an Exhibit to Form 8-K dated December 4, 1989 and incorporated herein by reference.)
10.19	Property Management Agreement (Bayberry Crossing) dated March 15, 2005 between Secured Investment Resources Fund, L.P. II and Winbury Realty of K.C., Inc.
10.20	Exclusive Right to Lease Agreement (Missouri) by and between Secured Investment Resources Fund, L.P. II and Winbury Realty of K.C., Inc.
10.21	Assignment of Agreements, Permits and Contracts dated August __, 2006, by Everest Bayberry, LP to Lehman Brothers Bank, FSB
10.22	Assignment of Leases dated August __, 2006 by Secured Investment Resources Fund, L.P. to Everest Bayberry, LP
10.23	Assignment of Leases and Rents dated August __, 2006 by Everest Bayberry, LP to Lehman Brothers Bank, FSB
10.24	Assignment of Management Agreement and Exclusive Right to Lease Agreement dated April __, 2006 by and among Secured Investment Resources Fund, L.P. and Everest Bayberry, LP
10.25	Assignment of Management Agreement and Subordination of Management Fees dated August __, 2006 by Everest Bayberry, LP to Lehman Brothers Bank, FSB and acknowledged and consented to by Winbury Realty of K.C., Inc.
10.26	Bill of Sale dated August __, 2006 form Secured Investment Resources Fund, L.P. II to Everest Bayberry, LP
10.27	Deed of Trust and Security Agreement dated August __, 2006 by Everest Bayberry, LP (Trustor) to Walter C. Whisler (Trustee) for the benefit of Lehman Brothers Bank, FSB, as Beneficiary (Lender).
10.28	Environmental Indemnity Agreement dated August __, 2006 by Everest Bayberry, LP to Lehman Brothers Bank, FSB.
10.29	Promissory Note in the amount of $3,125,000 dated August __, 2006 from Everest Bayberry, LP to Lehman Brothers Bank, FSB.
10.30	Property Management Agreement dated as of March 14, 2005 by and between Cascade Joint Venture, L.P. and Maxus Properties, Inc.
10.31	Cascade Joint Venture, L.P. Assignment of Partnership Interest dated October 3, 2006 by and between Secured Investment Resources Fund, L.P. and Secured Investment Resources Fund, L.P. II.

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10.32	Guaranty (Multistate) dated October 4, 2006 by and between NorthMarq Capital, Inc. (Lender), Cascade Joint Venture, L.P. (Borrower) and Maxus Properties, Inc. (Agent).
10.33	Multifamily Mortgage, Assignment of Rents and Security Agreement dated October 4, 2006 between Cascade Joint Venture, L.P. (Borrower) and NorthMarq Capital, Inc. (Lender).
10.34	Multifamily Note (Multistate Fixed to Float) in the amount of $2,540,000 dated October 4, 2006 between Cascade Joint Venture, L.P. as Borrower and NorthMarq Capital, Inc. as Lender, with Exhibit A “Modification to Multifamily Note” dated October 30, 2006
10.35	Exhibit A dated October 30, 2006 to Multifamily Note (Cascade)
10.36	Assignment of Security Instrument dated and effective October 4, 2006 with NorthMarq Capital, Inc. as Assignor and Federal Home Loan Mortgage Corporation as Assignee, assigning a Security Instrument dated October 4, 2006 and entered into by Cascade Joint Venture, L.P. for the benefit of NorthMarq Capital, Inc.
10.37	Management Fee Subordination Agreement dated October 4, 2006 by and between NorthMarq Capital, Inc (Lender), Cascade Joint Venture, L.P. and Maxus Properties, Inc. (Agent).
10.38	Property Management Agreement dated as of July 16, 2006 by and between Oak Terrace Joint Venture, L.P. and Grace Management, Inc.
10.39	Assignment of Leases and Rents dated December __, 2006 by Everest Hickory Glen, LP (Borrower), as Assignor, and Lehman Brothers bank, FSB (Lender, as Assignee.
10.40	Mortgage and Security Agreement made as of December __-, 2006 by Everest Hickory Glen, LP, as Mortgagor, to Lehman Brothers Bank, FSB, as Mortgagee
10.41	Environment Indemnity Agreement dated ______, 20__ by Everest Hickory Glen, LP, as Borrower, Secured Investment Resources Fund, L.P. II, as Principal, and Lehman Brothers bank, FSB, as Indemnitee.
10.42	Guaranty of Recourse Obligations of Borrower dated ______, 20__ with Secured Investment Resources Fund, L.P. II, as Guarantor guaranteeing the obligations of Everest Hickory Glen, LP as Borrower, under a $9,000,000 Note.
10.43	Oak Terrace Active Retirement Community Food Service Proposal (Contract) between Arena Food Service and Oak Terrace.
10.44	Promissory Note in the amount of $9,000,000 dated _____, 20__ from Everest Hickory Glen, LP to Lehman Brothers Bank, FSB.
10.45	Termination Agreement (Oak Terrace Joint Venture, L.P. Project) dated December 29, 2006 by and among Everest Hickory Glen, LP (formerly known as Oak Terrace Joint Venture, L.P.); Secured Investment Resources Fund, L.P. II; Credit Suisse (formerly Credit Suisse First Boston); and Creditre Mortgage Capital, L.L.C.

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10.46	Change in Terms Agreement dated December 10, 2005 for a Loan dated November 11, 1996 in the amount of $2,628,691.32 with Secured Investment Resources Fund, L.P. II as Borrower and Bank of the West as Lender.
10.47	Amendment to Promissory Note dated September _, 2001 by Sunwood Village Joint Venture, Limited Partnership, as Maker, and First Union National Bank, as Lender.
10.48	Assignment of Leases and Rents dated August 1, 2001 between Sunwood Village Joint Venture, Limited Partnership, as Assignor, and First Union National Bank, as Assignee.
10.49	Deed of Trust and Security Agreement dated August 1, 2001 from Sunwood Village Joint Venture, Limited Partnership, as Guarantor, to United Title of Nevada, as Trustee, for the benefit of First Union National Bank.
10.50	Allonge dated April 23, 2007 to the Promissory Note dated August 1, 2001 in the principal amount of $10,080,000, made by Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership, and payable to First Union National Bank, such Allonge payable to the order of East West Bank.
10.51	Collateral Assignment of Deed of Trust dated April 23, 2007 with Everest Properties II, LLC, as Assignor, and East West Bank, as Assignee.
10.52	Guaranty dated April 23, 2007, by W. Robert Kohorst, as Guarantor, in favor of East West Bank, a California, as Lender.
10.53	Promissory Note in the amount of $9,000,000 dated April 23, 2007 from Everest Properties II, LLC, as Maker, to East West Bank, as Payee.
10.54	Security Agreement dated April 23, 2007 by Everest Properties II, LLC, as Debtor, for the benefit of East West Bank.
10.55	Allonge dated April 23, 2007 to the Promissory Note dated August 1, 2001 in the principal amount of $10,080,000, made by Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership, and payable to First Union National Bank, such Allonge payable to the order of Everest Properties II, LLC.
10.56	Assignment of Deed of Trust and Security Agreement and Assignment of Leases and Rents made and entered into April 23, 2007, by Wells Fargo Bank, N.A., successor by merger to Wells Fargo Bank Minnesota, N.A., as Trustee for the Registered Holders of First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificate, Series 2001-C4, as Assignor, in favor of Everest Properties II, LLC.
10.57	Omnibus Assignment dated April 23, 2007 by Wells Fargo Bank, N.A., successor by merger to Wells Fargo Bank Minnesota, N.A., as Trustee for the Registered Holders of First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificate, Series 2001-C4, as Assignor, to Everest Properties II, LLC, as Assignee.

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10.58	Management Agreement dated July 1, 1996 between Sunwood Village joint Village, L.P., as Owner, and SPECS, Inc., as Manager.
10.59	Escrow Agreement dated April 23, 2007 between Everest Properties II, LLC, East West Bank, and Wells Fargo Bank, N.A., successor by merger to Wells Fargo Bank Minnesota, N.A., as Trustee for the Registered Holders of First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificate, Series 2001-C4, as Assignor.
10.60	Hazardous Substances Indemnity Agreement dated August 1, 2001 by Sunwood Village Joint Venture, Limited Partnership and Sunwood Village, Inc. in favor of First Union National Bank.
10.61	Indemnity and Guaranty Agreement dated August 1, 2001 by Sunwood Village, Inc. in favor of First Union National Bank.
10.62	Promissory Note in the amount of $10,800,000 dated August 1, 2001 from Sunwood Village Joint Venture, Limited Partnership, as Maker, to First Union National Bank, as Payee.
10.63	Property Management Agreement (Sunwood Village) dated March 11, 2005 between Sunwood Village Joint Venture, Limited Partnership, as Owner, and ConAm Management Corporation, as Manager.
10.64	Property Management Agreement (Sunwood Village Chapter 11 Debtor In Possession) dated September 12, 2006 between Sunwood Village Joint Venture, Limited Partnership, as Debtor and Debtor In Possession, and ConAm Management Corporation, as Manager.
31.1	Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Exhibit 31.1

CERTIFICATION

I, W. Robert Kohorst, certify that:

1. I have reviewed this annual report on Form 10-KSB of Secured Investment Resources Fund, L.P. II;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  September 13, 2007

/s/W. Robert Kohorst

W. Robert Kohorst

President of Millenium Management, LLC, equivalent of the chief executive officer of the Partnership

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Exhibit 31.2

CERTIFICATION

I, Peter Wilkinson, certify that:

1. I have reviewed this annual report on Form 10-KSB of Secured Investment Resources Fund, L.P. II;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date:  September 13, 2007

/s/Peter Wilkinson

Peter Wilkinson

Vice President of Millenium Management, LLC, equivalent of the chief financial officer of the Partnership

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Exhibit 32.1

Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-KSB of Secured Investment Resources Fund, L.P. II (the “Partnership”), for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), W. Robert Kohorst, as the equivalent of the chief executive officer of the Partnership, and Peter Wilkinson, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

/s/W. Robert Kohorst

Name: W. Robert Kohorst

Date: September 13, 2007

/s/Peter Wilkinson

Name: Peter Wilkinson

Date: September 13, 2007

This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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EX-99

EVEREST BAYBERRY, LP

LIMITED PARTNERSHIP AGREEMENT

This Limited Partnership Agreement, effective as of March 21, 2006, is entered into by and among the Partners set forth below, pursuant to the Act on the following terms and conditions.

1. Organization.

1.1       Formation. On or about March 21, 2006, Lisa L. Longo organized the Partnership as a California limited partnership by executing and delivering a Certificate of Limited Partnership to the Secretary of State in accordance with and pursuant to the Act.

1.2       Name and Place of Business. The name of the Partnership shall be Everest Bayberry, LP, (the “Partnership”) and its principal place of business shall be 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91 101. The General Partner may change the principal place of business of the Partnership as the General Partner may reasonably determine to be necessary or desirable.

1.3       Business and Purpose: The business of the Company shall be (a) to accomplish any lawful business whatsoever, conducive to or expedient for the protection or benefit of the Company and its assets and related, directly or indirectly, to the acquisition, management or disposition of the Property (as defined below), (b) the exercise of all other powers necessary to or reasonably connected with the Partnership’s business which may be legally exercised by a limited partnership under the Act, and (c) to engage in all activities necessary, customary, convenient, or incidental to any of the foregoing.

1.4       Term. The Partnership commenced on the filing of the Certificate of Limited Partnership with the Secretary of State and shall continue for a period of thirty (30) years from the date of this Agreement or for such longer period as may be agreed upon by the Partners and permitted by the Act, unless earlier terminated in accordance with the provisions of this Agreement or the Act.

1.5       Registered Agent. The Partnership’s initial registered agent shall be as provided in the Certificate of Limited Partnership. The registered agent may be changed from time to time by filing the name of the new registered agent pursuant to the Act.

1.6       Qualification. The General Partner shall cause the Partnership to be qualified or authorized to do business in any state in which such qualification or authorization is necessary in connection with the conduct of the Partnership’s business.

1.7       Tax Classification. It is the intention of the Partners that the Partnership shall be classified as a partnership for federal income tax purposes. The Partners shall make such amendments to this Agreement as are reasonably necessary to ensure that the Partnership will be so classified.

1.8       Certain Transactions. Any Owner, General Partner or any Affiliate, or any equity holder, officer, director, employee or any person owning a legal or beneficial interest therein, may engage in or possess an interest in any other business or venture of any nature or description, whether or not such ventures are competitive with the Partnership and no Owner, General Partner or other person or entity shall have any interest in such other business or venture by reason of their interest in the Partnership.

2. Definitions.

The definitions in this Agreement shall have the following meanings:

“Act” shall mean the California Revised Limited Partnership Act, as hereafter amended from time to time.

“Affiliate” shall mean (a) any person directly or indirectly controlling, controlled by or under common control with another person; (b) a person owning or controlling 10% or more of the outstanding voting securities of such other person; (c) any officer, director, member or partner of such other person; and ( d ) i f such other person is an officer, director, member or partner, any company for which such person acts in any capacity. As used herein, the term “person” includes any natural person, corporation, trust, partnership, limited liability company, unincorporated association or other legal entity.

“Agreement” shall mean this Limited Partnership Agreement, as amended from time to time.

“Assignee” shall mean a person who has acquired an Economic Interest in the Partnership but who has not been admitted as a Substituted Partner.

“Capital Account” with respect to any Partner (or such Partner’s assignee) shall mean such Partner’s initial Capital Contribution adjusted as follows: (a) a Partner’s Capital Account shall be increased by: (i) such Partner’s share of Net Income; and (ii) any additional cash Capital Contribution made by such Partner to the Partnership; and (b) a Partner’s Capital Account shall be reduced by: (i) such Partner’s share of Net Loss; and (ii) any Distributions to such Partner; provided that, upon Liquidation of the Partnership or of the Interest of any Partner, unsold Property will be valued for Distribution at its fair market value and the Capital Account of each Partner before such Distribution shall be adjusted to reflect the allocation of gain or loss that would have been realized had the Partnership then sold the Property for its fair market value. Such fair market value shall not be less than the amount of any nonrecourse indebtedness that is secured by the Property. The Capital Account of a Substituted Partner or an Assignee shall include the Capital Account of its transferor. Notwithstanding anything to the contrary in this

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Agreement, Capital Accounts shall be maintained in accordance with Treasury Regulations Section 1.704-l(b). References in this Agreement to the Treasury Regulations shall include corresponding subsequent provisions.

“Capital Contribution” shall mean the amount of cash, or the agreed upon value of the Property, actually contributed by a Partner to the capital of the Partnership pursuant to Section 3.1; provided, however, that for any property contributed to the Partnership in connection with a non-taxable reorganization or similar transaction, the amount of Capital Contribution ascribed to such Partner for such property shall be determined in accordance with the Code and the rules and regulations thereunder in effect at the time of such reorganization.

“Cash Available For Distribution” shall mean the net cash realized by the Partnership from all sources (exclusive of Capital Contributions) calculated on a calendar-quarter basis, including but not limited to the operations of the Partnership and the sale or financing of all or any portion of the Property, after payment of all cash expenditures of the Partnership, including but not limited to operating expenses, all fees and costs payable to the General Partner or Affiliates, all asset management fees, all payments of principal and interest on indebtedness (including payments on loans from Partners), expenses for repairs and maintenance, capital improvements and replacements, and such reserves and retentions as the General Partner and all of the Partners reasonably determine to be necessary and desirable in connection with the Partnership’s operations, its existing assets and any anticipated acquisitions.

“Certificate of Limited Partnership” shall mean, the Certificate of Limited Partnership of Everest Bayberry, LP, as filed with the Secretary of State, as the same may be amended or restated from time to time.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequently enacted federal revenue laws.

“Distribution” shall refer to any money or the fair market value of other Property transferred without consideration to Partners with respect to their interests in the Partnership, but shall not include any amounts paid pursuant to Section 5.4.

“Economic Interest” shall mean an interest in the Net Income, Net Loss and Distributions of the Partnership but shall not include any right to vote or to participate in the management of the Partnership. The initial Economic Interests are held only by the Partners and are equal to their Partnership Interests.

“Event of Insolvency” shall occur when an order for relief against a Partner is entered under Chapter 7 of the federal bankruptcy law, or (a) a Partner: (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary petition under the federal bankruptcy law, (iii) files a petition or answer seeking for that Partner a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, (iv) files an answer or other pleading

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admitting or failing to contest the material allegations of a petition filed against a Partner in any proceeding of this nature, or (v) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of that Partner or of all or a substantial part of that Partner’s properties; or (b) the expiration of 60 days after either (i) the commencement of any proceeding against a Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law, or regulation, if the proceeding has not been dismissed, or (ii) the appointment without a Partner’s consent or acquiescence of a trustee, receiver, or liquidator of a Partner or of all or any substantial part of a Partner’s properties, if the appointment has not been vacated or stayed (or if within 60 days after the expiration of any such stay, the appointment is not vacated); or (c) becomes “bankrupt” within the meaning of the Act.

“General Partner” shall refer to Millenium Bayberry, so long as Millenium Bayberry is General Partner hereunder. The term General Partner shall also refer to any successor General Partner who is elected to such position, so long as such successor is General Partner hereunder.

“Interest” shall mean a Partnership Interest or an Economic Interest, “Liability Event” shall have the meaning ascribed to it in Section 6.7 below.

“Limited Partner” shall mean SIR II, and any person or entity who is issued units of Partnership Interest by the Partnership and admitted to the Partnership as a limited partner, and any Substituted Partner that is the transferee or other successor to the Partnership Interest thereof.

“Liquidation” shall mean in respect to the Partnership the earlier of the date upon which the Partnership is terminated under Section 708(b)(l) of the Code or the date upon which the Partnership ceases to be a going concern (even though it may exist for purposes of winding up its affairs, paying its debts and distributing any remaining balance to its Partners), and in respect to a Partner where the Partnership is not in Liquidation, “Liquidation” means the date upon which occurs the termination of the Partner’s entire interest in the Partnership by means of a Distribution or the making of the last of a series of Distributions (in one or more years) to the Partner by the Partnership.

“Majority in Interest” shall mean the Partners owning more than fifty percent (50%) of the Partnership Voting Rights of all Partners who are entitled to approve the issue in question. “Millenium Bayberry” shall refer to Millenium Bayberry, LLC, a California limited liability company, 199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID: 20-4596460.

“Net Income” or “Net Loss” shall mean, respectively, for each taxable year of the partnership the taxable income and ‘taxable loss of the Partnership as determined for federal income tax purposes in accordance with Section 703(a) of the Code (including all

items of income, gain, loss, or deduction required to be separately stated pursuant to Section 703(a)(l) of the Code).

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“Notice of Transfer” shall mean the notice described in Section 10.2.1

“Organization Expenses” shall mean all expenses incurred in connection with the organization and formation of the Partnership including, but not limited to, legal, accounting, tax planning fees, promotional fees or expenses, filing or recording fees, property inspections and research, and other costs or expenses in connection therewith.

“Owner” shall mean a Partner or the holder of an Economic Interest.

“Partner” shall refer to any person or entity who is admitted to the Partnership as a General Partner, Limited Partner or Substituted Partner and who has not ceased to be a Partner.

“Partnership Interest” shall mean a Partner’s entire interest in the Partnership including such Partner’s Economic Interest and Partnership Voting Rights. The initial Partnership Interests are 53.661 equal units of Partnership Interest to be issued to SIR II. Nothing herein shall imply any restriction on the General Partner’s ability to issue additional units of Partnership Interest in accordance with this Agreement and the Act.

“Partnership Voting Rights” shall mean the voting and other rights and privileges that the Partner may enjoy by being a Partner, other than the Partner’s Economic Interest. The initial Partnership Voting Rights are held only by the Partners on the date hereof and are equal to their Partnership Interests.

“Prime Rate” shall mean the reference rate announced from time-to-time by East West Bank, and changes in the Prime Rate shall be deemed to occur on the date that changes in such rate are announced.

“Principal” shall mean any direct or indirect owner of not less than fifteen percent (15%) of the voting interests or economic benefits of the General Partner or any Partner.

“Property” shall mean Bayberry Crossing Retail Center, located at 523 SE Melody Lane, Lee’s Summit, MO 64063 and/or any or all of such tangible or intangible personal property as may be acquired by the Partnership for the operation of the Property.

“Secretary of State” shall mean the Secretary of State of California.

“SIR II” shall mean Secured Investment Resources Fund, L.P. I1 a Delaware limited partnership, 199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID: 36- 3451000.

“Substitute Partner” shall mean an Assignee who has become a Partner in accordance with the procedures specified in Article 10.

“Total Capitalization” shall mean the sum of (a) the outstanding principal balance of any debt obligations of the Partnership (not including short-term accounts payable) and

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(b) the outstanding, Unreturned Capital Contributions, as calculated as of the last day of the preceding calendar month.

“Unreturned Capital Contribution” shall mean the aggregate Capital Contributions made by a Partner from time to time less the aggregate Distributions to such Partner made pursuant to Section 5.1 (b).

3. Capitalization and Financing.

3.1       Partner’s Capital Contribution. The initial capital shall be contributed by SIR II in the form of all right, title and interest in Bayberry Crossing, a shopping center located in Lee’s Summit, MO for which the legal description is attached hereto as Exhibit A,together with the other assets and liabilities related to such property (collectively, the “Property”). In consideration for the Property, SIR II will receive 53,661 units of Partnership Interest.

3.2       Liabilities of Partners. Except as specifically provided in this Agreement, Partners shall not be required to make any contributions to the Partnership and no Partner shall be liable for the debts, liabilities, contracts, or any other obligations of the Partnership except with regard to their Capital Contributions as indicated herein, nor shall the Partners be required to lend any funds to the Partnership or to repay to the Partnership, any Partner, or any creditor of the Partnership any portion or all of any deficit balance in a Partner’s Capital Account.

3.3       Partner Loans. The General Partner or an Affiliate may make an unsecured loan to the Partnership to the extent required to pay the Partnership’s operating expenses, including debt service or capital expenditures. Any such loan shall bear interest at a rate not to exceed the Prime Rate plus one percent (1%) and provide for the payment of principal and any accrued but unpaid interest in accordance with the terms of the promissory note evidencing such loan, but in no event later than upon dissolution of the Partnership. Such advances shall not be deemed a Capital Contribution. No Partner shall be liable to any other Partner for unpaid advances or unpaid interest on any such loan. Any unpaid advances, together with accrued and unpaid interest, shall be payable solely out of Cash Available For Distribution as provided in Section 5.1 and Section 12.3. Loan repayments under Section 5.1 and Section 12.3 shall be made in the priority that the most recently made Partner loan shall be repaid first, and payments shall first be applied to unpaid interest and then to unpaid principal.

3.4       No Withdrawal of Capital Contributions. Except upon dissolution and liquidation of the Partnership, no Owner shall have the right to withdraw its Capital Contribution.

3.5       No Interest on Capital Contributions. No Owner shall be entitled to interest of any kind on its Capital Contribution.

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4. Allocation of Tax Items.

4.1       Net Income Allocations. Net Income for any fiscal year shall be allocated as follows: (a) first, among the Owners in proportion to and to the extent of Net Loss allocated to the Owners under Section 4.2 until the aggregate Net Income allocated to the Owners under this Section 4.1 for such fiscal year and all previous fiscal years is equal to the aggregate Net Loss allocated to the Owners pursuant to Section 4.2 for all previous fiscal years; and (b) the balance, if any, among the Owners in proportion to their respective Economic Interests.

4.2       Net Loss Allocations. Net Loss for any fiscal year shall be allocated as follows: (a) first, among the Owners in proportion to and to the extent of Net Income allocated to the Owners under Section 4.1 until the aggregate Net Loss allocated pursuant to this Section 4.2 for such fiscal year and all previous fiscal years equals the aggregate Net Income allocated to the Owners pursuant to Section 4.1 for all previous fiscal years; and (b) the balance, if any, among the Owners in proportion to their respective Economic Interests.

4.3       Allocation of Partnership Items. Whenever a proportionate part of Net Income or Net Loss is allocated to an Owner, every item of income, gain, loss or deduction entering into the computation of such Net Income or Net Loss, and every item of credit or tax preference related to such allocation and applicable to the period during which such Net Income or Net Loss was realized shall be allocated to the Owner in the same proportion.

4.4       Assignment. Except to the extent the Code requires otherwise, in the event of the assignment of an Interest, the Net Income and Net Loss arising from other than a sale or refinancing of Property shall be apportioned as between the assigning Owner and his Assignee based upon the number of months of their respective ownership during the year in which the assignment occurs, without regard to the results of the Partnership’s operations during the period before or after such assignment, and Net Income, Net Loss and Distributions from a sale or refinancing of the Property will be allocated among the Owners as of the date of any such transaction.

4.5       Provisions of Regulations. Notwithstanding the foregoing, allocations required to be made under the regulations under Code Section 704 shall be made as required therein, including allocations constituting qualified income offsets and minimum gain chargebacks.

5. Distributions / Expenses.

5.1       Cash Available For Distribution. Except as otherwise provided in Article 12, Cash Available For Distribution shall be distributed in the following order of priority: (a) first, to repay any Partner loans made pursuant to Section 3.3; (b) second, the balance, if any, among the Owners in proportion to their Economic Interests. Distributions of Cash

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Available For Distribution shall be reviewed within twenty (20) days after the end of each calendar quarter and made as soon thereafter as possible.

5.2       Asset Management Fee. The Partnership shall pay, as an operating expense, a monthly asset management fee to the General Partner of $1,000.

5.3       Compensation to the Partners, General Partner and Affiliates. The Partners, the General Partner and their Affiliates shall receive compensation from the Partnership for services rendered or to be rendered only as specified in this Agreement.

5.4       Partnership Expenses. Subject to the limitations set forth in Section 5.3, the Partnership shall pay directly, or reimburse the General Partner or the Partners, as the case may be, for all of the reasonable costs and expenses of the Partnership’s operations, including, without limitation, the following costs and expenses: (a) all Organization Expenses advanced or otherwise paid by the General Partner or the Partners; (b) all reasonable costs of personnel employed by the Partnership and directly involved in the Partnership’s business; (c) all compensation due to any Partner or its Affiliate; (d) all costs of personnel employed by any Partner or the General Partner or their Affiliates to the extent of their direct involvement in the business of the Partnership (provided, however, that such costs shall not include compensation to the Principals); (e) all costs of borrowed money and taxes applicable to the Partnership; (f) legal, accounting, audit, brokerage, and other fees; (g) fees and expenses paid to independent contractors, mortgage bankers, real estate brokers, and other agents; (h) costs of acquiring, owning, developing, improving, operating, and disposing of Property; (i) expenses incurred in connection with the alteration, maintenance, repair, remodeling, refurbishment, leasing and operation of Property; (j) all expenses incurred in connection with the maintenance of Partnership books and records, the preparation and dissemination of reports, financial statements, tax returns or other information to Partners and the making of Distributions to Partners; (k) expenses incurred in preparation and filing reports, returns or other information with appropriate regulatory agencies; (1) expenses of insurance as required in connection with the business of the Partnership; (m) costs incurred in connection with any litigation, or any examination, investigation, or other proceedings conducted by any regulatory agency, including legal and accounting fees, in which the Partnership may become involved; (n) the actual costs of goods and materials used by or for the Partnership; (o) costs of services that could be performed directly for the Partnership by independent parties such as legal, accounting, secretarial or clerical, reporting, transfer agent, data processing and duplicating services but which are in fact performed by the General Partner or its Affiliates, but not in excess of the lesser of: (i) the actual costs to the General Partner or its Affiliates of providing such services; or (ii) the amounts which the Partnership would otherwise be required to pay to independent parties for comparable services in the same geographic locale; @) expenses of Partnership administration, accounting, documentation and reporting, (q) expenses of revising, amending, modifying, or terminating this Agreement; (r) reasonable travel expenses of the General Partner or any Partner incurred in connection with the business of the Partnership; (s) taxes and other governmental fees and charges payable by the Partnership; and (t) all other costs

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and expenses incurred in connection with the business of the Partnership reasonably approved in budgets.

5.5       Property Management. From and after the date hereof, the General Partner shall provide or arrange for the provision of property management services for the Partnership. The Partnership will pay the General Partner, and General Partner shall accept as compensation in full for the performance of property management services, a management fee in an amount equal to five percent (5%) of the gross revenue of the real property owned by the Partnership. The General Partner is permitted to retain an independent third-party or an Affiliate to provide property management services at no additional cost to the Company, and retain any difference between the cost thereof and the General Partner’s fee as compensation for the General Partner’s supervision of such other party.

6. Authority and Responsibilities of the General Partner.

6.1       Management. The business and affairs of the Partnership shall be managed by its General Partner. Except as otherwise provided in Section 6.4 and Section 8.2, the General Partner shall have full and complete authority, power and discretion to manage and control the business, affairs and Properties of the Partnership, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Partnership’s business. All actions taken by General Partner in good faith shall not constitute a breach of its fiduciary duty to the Partnership and its Partners. Liability for actions taken by General Partner in good faith shall only apply as set forth in Section 6.7.

6.2       Number, Tenure and Qualifications. The Partnership shall have one General Partner. The initial General Partner shall be Millenium Bayberry. Neither the initial General Partner nor any successor General Partner shall be removed except as provided in Section 7.2. The General Partner need not be a resident of the State of California or an Owner.

6.3       General Partner’s Authority. The General Partner shall have all authority, rights and powers conferred by law (subject only to Sections 6.4 and 6.5) and those required or appropriate to the management of the Partnership’s business, which, by way of illustration but not by way of limitation, shall include the right, authority and power to cause the Partnership to: (a) acquire, hold, develop, lease, rent, operate, sell, exchange and otherwise dispose of Property; (b) borrow money, pledge or mortgage or subject any Property to any mortgage or security device on any Property; (c) enter into such contracts and agreements as the General Partner determines to be reasonably necessary or appropriate in connection with the Partnership’s business and purpose (including contracts with Affiliates of the General Partner), and any contract of insurance that the General Partner deems necessary or appropriate for the protection of the Partnership and the General Partner, including errors and omissions insurance, for the conservation of Partnership assets, or for any purpose convenient or beneficial to the Partnership; (d) employ persons, who may be Affiliates of the General Partner, in the operation and

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management of the business of the Partnership; (e) prepare or cause to be prepared reports, statements, and other relevant information for distribution to Partners; (f)open accounts and deposit and maintain funds in the name of the Partnership in banks, savings and loan associations, “money market” mutual funds and in such other entities or instruments as the General Partner may deem in its discretion to be necessary or desirable; (g) select as its accounting year a calendar year; (h) determine the appropriate accounting method or methods to be used by the Partnership; (i) require in any Partnership contract that the General Partner and the Partners shall not have any personal liability, but that the person or entity contracting with the Partnership is to look solely to the Partnership and its assets for satisfaction; (j) lease personal property for use by the Partnership; (k) establish reserves from income in such amounts as duly approved by the Partners; (1) temporarily invest the proceeds from sale of Partnership Interests and Cash Available For Distribution in short-term, highly-liquid investments; (m) represent the Partnership and the Partners as “tax matters partner” within the meaning of the Code; (n) hold an election for a successor General Partner before the resignation, expulsion or dissolution of a General Partner; (o) initiate legal actions, settle legal actions and defend legal actions on behalf of the Partnership; (p) reimburse the General Partner and its Affiliates for purchases of shares or limited partnership interests and due diligence costs incurred on behalf of Partnership prior to its formation; and (q) execute, acknowledge and deliver any and all instruments to effectuate the foregoing and to take all such lawful action in connection therewith as the General Partner may deem necessary or appropriate. Any and all documents or instruments may be executed on behalf and in the name of the Partnership by the General Partner.

6.4       Restrictions on General Partner’s Authority. Except as authorized pursuant to Section 8.2, no General Partner or Affiliate shall have authority to: (a) use or permit any other person to use Partnership funds or assets in any manner except for the exclusive benefit of the Partnership; (b) receive from the Partnership a rebate or give-up or participate in any reciprocal business arrangements which would enable it or any Affiliate to do so; (c) sell or lease to the Partnership any real property in which any General Partner or Affiliate has any interest; (d) cause the Partnership to invest in any partnership, limited liability company or any other entity in a manner which commits the Partnership to an investment in each such partnership or venture exceeding $20,000; (e) admit another person as a General Partner; (f)reinvest Cash Available For Distribution in any additional properties; (g) cause the Partnership to lend to any General Partner or Affiliates Partnership assets; (h) sell, exchange or otherwise dispose of substantially all the Property of the Partnership; (i) cause the Partnership to enter into any agreements with an Affiliate except as specifically provided in this Agreement; (j) cause the Partnership to make or revoke any of the elections referred to in the Code; (k) dissolve or liquidate the Partnership or consummate any agreement for the merger of the Partnership with any other entity; or (1) make any in-kind distribution of Property.

6.5       Responsibilities of General Partner. The General Partner shall cause its officers, employees and agents to devote to the management of the Partnership such time as is necessary and appropriate to cause the affairs of the Partnership to be conducted in an efficient and businesslike manner as directed under this Agreement. The foregoing

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shall not limit General Partner’s rights and authority to cause the Partnership to employ directly other persons or to contract with independent contractors for services to the Partnership. The General Partner acknowledges that it is under a common law fiduciary duty to conduct the affairs of the Partnership in the best interests of the Partnership and of the Partners and consequently must exercise good faith and integrity in handling Partnership affairs.

6.6       Tax Matters Partner. The Partners hereby appoint the General Partner to act as the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code. Any successor tax matters partner shall be approved by a Majority in Interest. No tax matters partner shall enter into any settlement on behalf of the Partnership with any taxing authority or extend the statute of limitations for any Partner or the Partnership with respect to Partnership items without the approval of all Partners.

6.7       Indemnification of General Partner. The General Partner and any partners, shareholders, members, Affiliates, officers, directors, employees, agents and assigns of any General Partner, shall not be liable for, and shall be indemnified, defended and held harmless by the Partnership (to the extent of the Partnership’s assets) from, any loss or damage incurred by them, the Partnership or the Partners in connection with the business of the Partnership, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage resulting from any act or omission performed or omitted in good faith, in pursuance of the authority granted, to promote the interests of the Partnership. Moreover, the General Partner shall not be liable to the Partnership or the Partners because any taxing authorities disallow or adjust any deductions or credits in the Partnership income tax returns. Any of the following (each a “Liability Event”) shall not be considered to be performed or omitted in good faith under any circumstances: fraud, gross negligence, willful malfeasance, or a material breach of this Agreement which is not cured with ten (10) days after notice thereof. The General Partner shall be liable for actual damages suffered by the Partnership or the Partners, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage, resulting from Liability Events of the General Partner.

6.8       No Personal Liability for Return of Capital. The General Partner shall not be personally liable or responsible for the return or repayment of all or any portion of the capital of any Partner or for the repayment of all or any portion of any loan made by any Partner to the Partnership, it being expressly understood that any such return of capital or repayment of any loan shall be made solely from the assets (which shall not include any right of contribution from any Partner) of the Partnership.

6.9 Authority as to Third Persons.

(a)       No third party dealing with the Partnership shall be required to investigate the authority of the General Partner or secure the approval or confirmation by any of the Partners of any act of the General Partner in connection with the Partnership business. No purchaser of any property or interest owned by the Partnership shall be

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required to determine the right to sell or the authority of the General Partner to sign and deliver any instrument of transfer on behalf of the Partnership, or to see to the application or distribution of revenues or proceeds paid or credited in connection therewith.

(b)       The General Partner shall have full authority to execute on behalf of the Partnership any and all agreements, contracts, conveyances, deeds, mortgages and other instruments, and the execution thereof by the General Partner executing on behalf of the Partnership shall be the only execution necessary to bind the Partnership thereto. No signature of any Partner other than the General Partner shall be required.

7. Resignation or Removal of General Partner.

7.1      Resignation. The General Partner may resign at any time by giving written notice to the Partners of the Partnership. The resignation of the General Partner shall take effect upon the election of a successor General Partner or at such earlier time as specified in such notice but in any event not less than 30 days after giving written notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of a General Partner shall not affect such Partner’s rights as a Partner with respect to its Partnership Interest and shall not constitute a withdrawal of that Partner. The General Partner agrees to cooperate with the Partnership in completing the business plan for transactions that are undertaken by the Partnership prior to General Partner’s resignation.

7.2      Removal. The Limited Partners may, by approval of Limited Partners holding a Majority in Interest, remove and replace the General Partner only for cause. If the General Partner is removed with cause, it shall have its interest in unearned asset management fees and any other fees (including as such amounts relate to future activities of the Partnership) adjusted pursuant to the procedures set forth in subparagraph (b) below.

(a) Cause for removal shall occur if at any time the General Partner has committed or suffered a Liability Event or an Event of Insolvency.

(b) The electing Limited Partners shall give notice to the General Partner of their intention to remove the General Partner for any of the reasons stated in subparagraph (a), which notice shall specify in reasonable detail the grounds for the removal. Within ten (10) business days from the date the notice of intention to remove is given, the General Partner shall cure or rectify the default, dereliction or impairment that was stated as the ground(s) for the intended removal and shall certify to the Limited Partners in writing that the default, dereliction or impairment has been cured or rectified. If the default, dereliction or impairment has not been cured or rectified and written certification of cure or rectification has not been given to the Limited Partners within ten (10) business days, then the Limited Partners may remove the General Partner immediately, effective automatically upon receipt by the General Partner of notice from such Limited Partners. If the Limited Partners seek to adjust the asset management fees or any other fees due to the General Partner, including fees relating to future activities of

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the Partnership, they may do so by filing for arbitration with the American Arbitration Association within thirty (30) days from the date the General Partner is removed. The Limited Partners and the General Partner shall each appoint an arbitrator from such Association by notice to the Partnership and the other party within 10 days of the filing and such arbitrators shall together appoint a third arbitrator within 10 days of their appointment by notice to the Partnership, General Partner and Limited Partners. All such arbitrators shall have experience, whether directly or as an attorney, accountant or other professional, in the organization or management of real estate investment entities. The decision of two of the three arbitrators shall be binding on both parties. The cost of arbitration (not including the parties’ attorneys’ fees) shall be borne by the Partnership. In rendering their decision, the arbitrators shall determine whether the alleged facts justify removal of the General Partner for cause, and, if so, the extent, if any, to which the interest of the General Partner in the asset management fees or other fees shall be reduced. The arbitrator shall take into consideration, among other things, the length of time the General Partner has served the Partnership, the extent of any default in any obligation of performance, or representation, made or imposed upon the General Partner under this Agreement, the General Partner’s efforts and accomplishments on behalf of the Partnership, the nature, severity and extent of the default, dereliction or impairment by the General Partner, the amount of the resulting damages to the Partnership, any mitigating circumstances, and the amount of the interest of the General Partner which may be assigned to a successor General Partner if elected by the Limited Partners, as adequate compensation for such General Partner succeeding to the duties and obligations of the removed General Partner. The arbitration shall be limited to consideration of whether cause (as defined above) existed for removal of the General Partner and whether adjustments, if any, should be made to General Partner’s asset management fees or other fees. The arbitration shall be binding on all parties.

7.3       Replacement. Upon the resignation or removal of the General Partner, a new General Partner may be elected by approval of a Majority in Interest.

8. Rights. Authority and Voting of the Partners.

8.1       Partners Shall Not Participate in Control. No Partner or Assignee, except if it also is the General Partner, in its capacity as General Partner, shall have any right or authority to act for or bind the Partnership.

8.2       Voting by Partners. Partners shall have the right to approve or consent to actions of the Partnership only in those cases where specifically authorized voting rights are contained in this Agreement or otherwise required by law. Except as otherwise specifically provided in this Agreement, Partners (but not holders of Economic Interests only) shall have the right to vote only upon the following matters: (a) the amendment of this Agreement, which shall require approval of a Majority in Interest; (b) the authorization of a General Partner to do any act specified in Section 6.4, which shall require approval of a Majority in Interest; (c) removal of a General Partner as specified in Section 7.2 and replacement of a removed General Partner as specified in Section 7.3, which shall require the approval described in such Sections; and (d) the authorization of a

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General Partner or a Partner to do any act on behalf of the Partnership that contravenes this Agreement, which in each case shall require approval of a Majority in Interest. All approvals shall be in writing and signed by Partners having not less than the minimum number of votes that would be necessary to authorize or take that action.

8.3       Rights of Partners. No Partner shall have the right or power to: (a) withdraw or reduce its Capital Contribution, except as a result of the termination of the Partnership or as otherwise provided in this Agreement; (b) bring an action for partition against the Partnership; or (c) demand or receive property in any distribution other than cash. Except as provided in this Agreement, no Partner shall have priority over any other Partner either as to the return of Capital Contributions or as to allocations of the Net Income, Net Loss or Distributions of the Partnership. Other than upon the termination of the Partnership as provided by this Agreement, there has been no time agreed upon when the contribution of each Partner or Owner is to be returned.

8.4       Restrictions on the General Partner and the Partners. Except as required by law, neither the General Partner, any Partner nor any Affiliate of the General Partner or any Partner shall: (a) disclose to any non-Partner other than their lawyers, accountants or consultants and/or commercially exploit any of the Partnership’s business practices, trade secrets or any other information not generally known to the business community, including the identity of suppliers utilized by the Partnership; (b) do any other act or deed with the intention of harming the business operations of the Partnership; (c) do any act contrary to the Agreement, except with the prior express approval required by Section 8.2; or (d) do any act which would make it impossible to carry on the intended purposes or ordinary business of the Partnership (other than pursuant to a termination and liquidation permitted by the terms of this Agreement).

8.5       Return of Distributions to Partners. In accordance with the Act, a Partner may, under certain circumstances, be required to return to the Partnership, for the benefit of the Partnership’s creditors, amounts previously distributed to the Partner. If any court of competent jurisdiction holds that any Partner is obligated to make any such payment, such obligation shall be the obligation of such Partner and not of the Partnership, the General Partner or any other Partner.

8.6        Indemnification of Partners. Each of the Partners and any of their partners, shareholders, members, Affiliates, officers, directors, employees, agents and assigns, shall not be liable for, and shall be indemnified, defended and held harmless by the Partnership (to the extent of the Partnership’s assets) from, any loss or damage incurred by them, the Partnership or the Partners in connection with the business of the Partnership in their capacity as Partners other than any loss of their Capital Contributions, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage resulting from any act or omission performed or omitted in good faith, which shall not include a Liability Event with respect to such Partner or its Affiliates. Partners shall be liable for actual damages suffered by the Partnership, General Partner or the other Partners, including costs and reasonable

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attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage, resulting from Liability Events of such Partner or its Affiliates.

9. Resignation or Withdrawal of Partner.

9.1       Resignation or Withdrawal of Partner. Subject to the Act, Article 7 and Article 10, a Partner shall not resign or withdraw as a Partner. This provision shall not affect any claim for damages the Partnership may have against the withdrawing Partner if such withdrawal or resignation is in violation of this Agreement. The Partnership shall have the right to offset any payments due to a Partner or its Affiliates under this Agreement or any other contract with the Partnership by any damages that the Partnership may incur as a result of a withdrawal or resignation of a Partner in contravention of this Agreement.

9.2       Conversion to Economic Interest. Upon the occurrence of any event that would cause a person to cease to be a Partner under this Agreement or the Act, the withdrawing Partner’s Partnership Interest shall be converted into an Economic Interest which will entitle such Partner to its share of Net Income, Net Loss and Distributions in accordance with this Agreement, but no voting or other rights with respect to management or operation of the Partnership other than those granted to any Assignee.

10. Assignment of Partnership Interest.

10.1     Permitted Assignments. An Owner may not sell, assign, hypothecate, encumber or otherwise transfer any part or all of his Interest in the Partnership without the approval of the General Partner, which may not be unreasonably withheld. If the General Partner consents to the transfer, the Interest may only be transferred to the proposed transferee pursuant to the terms and conditions contained in this Article 10. All costs of the transfer, including reasonable attorneys’ fees (if any), shall be borne by the assigning Owner. Notwithstanding anything to the contrary contained in this Section 10.1, but subject to Sections 10.2 through 10.9, any Partner may transfer its Economic Interest in the Partnership to an Affiliate upon written notification to the General Partner without the consent of the General Partner, unless such transfer would alter or significantly risk altering the tax status of the Partnership. Any such Assignee shall take subject to all the terms of this Agreement.

10.1.1  Written Assignment. Any such transfer shall be by a written instrument of assignment, the terms of which arc not in contravention of any of the provisions of this Agreement, and which has been duly executed by the Owner and accepted by the General Partner in writing. Upon such acceptance, such Assignee shall take subject to all terms of this Agreement and shall become an Assignee.

10.1.2  Transfer Fee. A transfer fee shall be paid by the transferring Owner in such amount as may be required to cover all reasonable expenses connected with such assignment:

10.2 Substituted Partners.

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10.2.1  Conditions to be Satisfied. Notwithstanding any other provision of this Agreement, no Assignee shall have the right to become a Substituted Partner unless the General Partner shall consent thereto in accordance with Section 10.3.2 and all of the following conditions are satisfied:

(a) a duly executed and acknowledged written instrument of assignment shall have been filed with the Partnership, which instrument shall specify the Interest being assigned and set forth the intention of the assignor that the Assignee succeed to the assignor’s interest as a Substituted Partner in its place;

(b) the assignor and Assignee shall have executed, acknowledged and delivered such other instruments as the General Partner may deem necessary or desirable to effect such substitution, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include the written acceptance and adoption by the Assignee of the provisions of this Agreement; and

(c) a transfer fee sufficient to cover all reasonable expenses connected with such substitution shall have been paid to the Partnership.

10.2.2  Consent of General Partner. The written consent of the General Partner shall be required to admit an Assignee as a Substituted Partner. The granting or withholding of such consent shall be within the sole and absolute discretion of the General Partner.

10.3     Loss of Rights. A Partner shall cease to have the power to exercise any rights with respect to any assigned portion of a Partner’s Partnership Interest with respect to which the Assignee becomes a Substitute Partner. and. in the event the Partner has assigned all of the Partner’s Partnership Interest, when the Assignee becomes a Substitute Partner, the assigning Partner automatically shall cease to be a Partner and shall cease to have the power to exercise any rights of a Partner.

10.4     Rights of Assignee. An Assignee shall be entitled to receive Distributions from the Partnership attributable to the Interest acquired by reason of such assignment from and after the effective date of the assignment; provided, however, that anything herein to the contrary notwithstanding, the Partnership shall be entitled to treat the assignor of such Interest as the absolute owner thereof in all respects, and shall incur no liability for allocations of Net Income and Net Loss or Distributions, or for the transmittal of reports or accounting until the written instrument of assignment has been received by the Partnership and recorded on its books. The effective date of such assignment shall be the last day of the calendar month of the date on which all of the requirements of this Article 10 have been complied with.

10.5     Right to Inspect Books. Assignees shall have no right to inspect the Partnership’s books or records, to vote on Partnership matters, or to exercise any other right or privilege as Partners, unless and until they are admitted to the Partnership as

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Substituted Partners. Partners assigning their Partnership Interest or an Economic Interest may not, as a condition of such assignment or otherwise, agree to obligate themselves to act on behalf of or under the direction of the Assignee of such Partnership Interest or an Economic Interest, and any attempt to act in such capacity shall be void and shall not be recognized by the Partnership.

10.6     Assignment of 50% or More of Interests. No assignment of any Interest may be made if the Interest to be assigned, when added to the total percentage of all other Interests assigned within the 12 immediately preceding months, would, in the opinion of legal counsel for the Partnership, result in the termination of the Partnership for Federal income tax purposes.

10.7     Transfer Subject to Law. No assignment, sale, transfer, exchange or other disposition of any Interest may be made except in compliance with the applicable governmental laws and regulations, including state and federal securities laws.

10.8     Transfer Resulting in Treatment as an Association. No assignment, sale, transfer, exchange or other disposition of any Interest may be made if in the opinion of legal counsel for the Partnership, it may, taking into account all circumstances, result in the Partnership being treated as an association taxable as a corporation.

10.9     Transfer in Violation Not Recognized. Any assignment, sale, transfer, exchange or other disposition of any Interest in contravention of the provisions of this Article 10 or which would cause the Partnership to terminate pursuant to Section 708 of the Code shall be void and ineffectual, ab initio, and shall not be binding upon or be recognized by the Partnership.

11. Books, Records, Accounting and Reports.

11.1     Records, Audits and Reports. At the expense of the Partnership, the General Partner shall maintain records and accounts of all operations and expenditures of the Partnership including the following: (a) a current list in alphabetical order of the full name and last known business, residence, or mailing address of each Partner and Assignee, both past and present, and each Partner’s and Assignee’s Interest; (b) a copy of the Certificate of Limited Partnership of the Partnership and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed; (c) copies of the Partnership’s Federal, state, and local income tax returns and reports, if any, for the four most recent years; (d) copies of this Agreement and all prior amendments; (e) copies of any financial statements of the Partnership for the four most recent years; and (0 any written consents obtained from Partners for actions taken by Partners without a meeting. The General Partner shall provide to each Partner, as soon as practical after the end of each six-month period, the balance sheet and income statement of the Partnership for such period. The Partners may, by approval of a Majority in Interest, require the Partnership to have an annual audited financial statement prepared by a certified public accountant as well as a closing audit upon the liquidation and dissolution of the Partnership.

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11.2     Return and Other Elections. The General Partner will cause the Partnership, at the Partnership’s expense, to prepare and timely file income tax returns for the Partnership with the appropriate authorities, and shall cause all Partnership information necessary in the preparation of the Partners’ or Assignees’ individual income tax returns to be distributed to the Partners or Assignees not later than 75 days after the end of the Partnership’s fiscal year. All elections permitted to be made by the Partnership under federal or state laws shall be made by the General Partner. If requested by any Partner following any year-end, the Partnership shall provide a copy of its income tax returns to such Partner within a reasonable time after filing such return.

11.3      Delivery to Partners and Inspection. Upon written request of any Partner, the General Partner shall provide a list showing the names, addresses and Interests of all Partners and Assignees. Upon reasonable request, each Partner shall have the right, during ordinary business hours, to inspect and copy Partnership documents at the requesting Partner’s expense. Each Partner has the right, upon reasonable request, to obtain, at the Partnership’s expense, from the General Partner, promptly after becoming available, a copy of the Partnership’s federal, state and local income tax or information returns for each year.

11.4     Meetings. No meetings of the Partners shall be required unless requested in a written notice to the General Partner by Partners holding at least 10% of the Partnership Interests. Upon such request, the General Partner shall set the time and place for a meeting .

12. Termination and Dissolution of the Partnership.

12.1     Dissolution. The Partnership shall dissolve and terminate upon the earliest to occur of the following events: (a) the expiration of the term of the Partnership; (b) by approval of a Majority in Interest; (c) upon the sale of all Property and receipt of cash proceeds; and (d) upon an Event of Insolvency of the General Partner.

12.2     Statement of Intent to Dissolve. Upon a dissolution of the Partnership, the appropriate representative of the Partnership shall execute a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State and file same with the Secretary of State’s office. Upon the filing by the Secretary of State of a statement of intent to dissolve, the Partnership shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, but its separate existence shall continue until a certificate of dissolution has been issued by the Secretary of State or until a decree dissolving the Partnership has been entered by a court of competent jurisdiction.

12.3     Winding Up and Distribution of Assets. Upon a dissolution of the Partnership for any reason, the General Partner (or a liquidating agent or trustee designated by a Majority in Interest) shall take full account of the Partnership assets and liabilities, shall liquidate the assets as promptly as is consistent with obtaining the fair

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market value thereof, and shall apply and distribute the proceeds therefrom in the following order: (a) to the payment of creditors of the Partnership, including Partners who are creditors to the extent permitted by law (including Partner loans as provided in Section 3.3), but excluding secured creditors whose obligations will be assumed or otherwise transferred on the liquidation of Partnership assets; (b) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations of the Partnership; provided, however, that said reserves shall be deposited with a bank or trust company in an interest bearing escrow account for the purpose of disbursing such reserves for the payment of any of the aforementioned contingencies and, at the expiration of a reasonable period, for the purpose of distributing the balance remaining in accordance with remaining provisions of this Section 12.3; and (c) to the Partners and Assignees of record in proportion to the order of priority set forth in Section 5.1. Reasonable compensation for dissolution of the Partnership is already included in the amounts due General Partner and Partners under this Agreement.

12.4     Certificate of Dissolution. When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Partners, a certificate of dissolution shall be executed by the General Partner or other authorized person, which certificate shall set forth the information required by the Act. Such certificate of dissolution shall be delivered to the Secretary of State as required by the Act.

12.5     Effectiveness of Dissolution. Upon the issuance of the certificate of dissolution, the existence of the Partnership shall cease, except for the purpose of suits, other proceedings and appropriate action as provided in the Act. The General Partner shall have authority to distribute any Partnership property discovered after dissolution, convey real estate and take such other action as may be necessary on behalf of and in the name of the Partnership.

12.6     Return of Contribution. Each Partner shall look solely to the assets of the Partnership for all Distributions of its Capital Contribution (which shall be made only as provided in this Agreement) and shall have no recourse therefor (upon dissolution or otherwise) against the General Partner or any other Partner.

13. Relationship of this Agreement to the Act.

Many of the terms of this Agreement are intended to alter or extend provisions of the Act as they may apply to the Partnership or the Partners. Any failure to mention or specify the relationship of such terms to provisions of the Act that may affect the scope or application of such terms shall not be construed to mean that any of such terms is not intended to be a provision authorized or permitted by the Act or which in whole or in part alters, extends or supplants provisions of the Act as may be allowed thereby. If a conflict arises between this Agreement and the Act, the provisions of this Agreement control.

14. Representations of Partners.

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Each Partner represents as follows: (a) the Partner is thoroughly informed concerning the Property to be owned by the Partnership and has asked and had answered such questions relating thereto as the Partner deems necessary, and understands that no return of, on, or with respect to the amount paid for the Partner’s interest is represented, warranted or promised in any way by the General Partner or the Partnership; (b) the Partner has read this Agreement and understands and agrees to its terms; (c) the Partner is capable of evaluating the risks and merits of acquiring Partnership Interests, has no need for liquidity of investment with respect to the purchase price of such Partnership Interest, and can afford to sustain a complete loss of such purchase price; (d) the Partner understands that the interests represented by the Partnership Interest issued to the Partner have not been registered or qualified and have been offered and sold in reliance on exemptions from registration and qualification requirements of applicable federal and state securities laws and that no governmental agency has passed on the merits or risks of acquiring an interest in the Partnership; (e) the Partner understands that neither the General Partner nor its counsel have represented the interests of the Partner in connection with this Agreement or the transactions contemplated hereby, and the Partner is free (and encouraged) to seek independent counsel of the Partner’s choosing; (f) the Partner is acquiring the Partnership Interest for investment purposes only and not with a view to resell or distribute to any other person; and (g) the person executing the Agreement on behalf of the Partner has full authority to bind such Partner to this Agreement.

15. Miscellaneous.

15.1     Counterparts. This Agreement may be executed in several counterparts, and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart.

15.2     Successors and Assigns. The terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the respective Partners.

15.3     Severability. In the event any provision of this Agreement is declared by a court of competent jurisdiction to be void, such provision shall be deemed severed from the remainder of this Agreement and the balance of this Agreement shall remain in full force and effect.

15.4     Notices. All notices under this Agreement shall be in writing and shall be given to the Partners or Assignee of record entitled thereto, by personal service, facsimile or by mail, at posted to the address maintained by the Partnership for such person or at such other address as it may specify in writing. Notices shall be deemed given when properly sent; time to respond shall begin when notice is actually received.

15.5      Names and Addresses of General Partner. The name and address of the General Partner is as follows:

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Millenium Bayberry, LLC

199 S. Los Robles Avenue, Suite 200,

Pasadena, California 91 101

15.6     Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws, but not the laws governing conflicts of law, of the State of California.

15.7     Captions. Section titles or captions contained in this Agreement are inserted only as a matter of convenience and reference. Such titles and captions in no way define, limit, extend or describe the scope of this Agreement nor the intent of any provisions hereof.

15.8     Gender. Whenever required by the context hereof, the singular shall include the plural, and vice versa, the masculine gender shall include the feminine and neuter genders, and vice versa; and the word “person” shall include a corporation, partnership, firm or other form of association.

15.9 Time. Time is of the essence with respect to this Agreement.

15.10   Additional Documents. Each Partner, upon the request of the General Partner, shall perform any further acts and execute and deliver any documents which may be reasonably necessary to carry out the provisions of this Agreement, including, but not limited to, providing acknowledgment before a Notary Public of any signature heretofore or hereafter made by a Partner.

15.1 1 [RESERVED]

15.12   Venue. Any action relating to or arising out of this Agreement shall be brought only in a court of competent jurisdiction located in Los Angeles County, California. Each Partner hereby consents to personal jurisdiction over it in any such court.

15.13   Partition. The Partners agree that the assets of the Partnership are not and will not be suitable for partition. Accordingly, each of the Partners hereby irrevocably waives any and all rights that he may have, currently or in the future, to maintain any action for partition of any of the assets of the Partnership.

15.14   Amendment. This Agreement may be amended only in writing by a document duly approved in accordance with Section 8.2 and executed by the General Partner. No Partner acting alone shall have the power to amend or alter the terms of this Agreement. Notwithstanding the foregoing, the Limited Partners hereby authorize the General Partner to amend this Agreement as the General Partner reasonably determines is necessary or prudent to correct errors of a typographical or ministerial nature or to cause the Partnership or this Agreement to comply with any laws applicable to the Partnership

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or the Agreement, including without limitation the Code, the Securities Exchange Act of 1934, or the Securities Act of 1933, or any rule or regulation under any such laws.

IN WITNESS WHEREOF, the undersigned have set their hands to this Agreement as of the date first set forth in the preamble hereof

LIMITED PARTNER		GENERAL PARTNER
Secured Investment Resources Fund, LP II		Millenium Bayberry, LLC
a Delaware limited partnership		a California limited liability company
By:	Millenium Management, LLC, Its Manager	By:	Millenium Management, LLC, Its Manager
By:	/S/ W. ROBERT KOHORST	By:	/S/ W. ROBERT KOHORST
	W. Robert Kohorst, President		W. Robert Kohorst, President

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EXHIBIT A

Legal Description

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri, described as follows: A tract of land being part of Tract “E” and part of Tract “B”, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract E”, said point also being on the Southerly Right-of-way Line of 5^th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E”; thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E”, 673.18 feet; thence North 16 degrees 38 minutes 21 seconds East 235.73 feet to a point on the Southerly Right-of-way of 5^th Street Terrace, (the following three courses are along said Right-Of-Way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet to the Point of Beginning, EXCEPT that part in Bayberry Lane.

EX-99

AGREEMENT OF LIMITED PARTNERSHIP

OF CASCADE JOINT VENTURE, L.P.

This Agreement is made and entered into on this 24^th day of February, 1999, by and between James R. Hoyt and Secured Investment Resources Fund, L.P., a Kansas limited partnership (collectively the “General Partners”) and Secured Investment Resources Fund, L.P., a Kansas limited partnership (“Limited Partner’). The General Partners and Limited Partner may be referred to collectively as the “Partners”.

WITNESSETH

WHEREAS, the partners desire to form a Limited Partnership under the Kansas Revised Uniform Limited Partnership Act known as Cascade Joint Venture, L.P., to hold and manage a single income-producing apartment complex known as Cascade Apartments located in the city of Topeka, county of Shawnee, state of Kansas (hereinafter the “Property”).

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties hereto agree as follows:

A. Name, Place of Business. Registered Office and Registered Agent

1. Name. The name of the Partnership is Cascade Joint Venture, L.P., or such other name as the General Partners shall hereafter designate in writing to the Limited Partners.

2. Place of Business. T he Partnership’s principal place of business is 5453 West 61st Place, Mission, Kansas 66205, or such other place or places as the General Partners may hereafter determine.

3.        Registered Office and Agent. The Partnership’s registered office shall be 5453 West 61st Place, Mission, Kansas 66205 and the name of the registered agent at such address is James R. Hoyt.

B. Business and Purpose.

1. The sole purpose of the Partnership is to acquire, own, hold, maintain, and operate Cascade Apartments, 3441 Burlingame, Topeka, Kansas (the “Property”), together with such other activities as may be necessary or advisable in connection with the ownership of the Property. Notwithstanding anything contained herein to the contrary, the Partnership shall not engage in any business, and it shall have no purpose, unrelated to the property and shall not acquire any real property or own assets other than those related to the Property and/or otherwise in furtherance of the purposes of the Partnership.

2. Any additional or substitute general partner of the Partnership (other than the current General Partners), may not be an individual and shall at all times have as its sole purpose to act as the General Partner of the Partnership, and shall be engaged in no other business or have any other purpose.

3. Anything in this Agreement to the contrary notwithstanding, the General Partners shall have no authority to perform any act in respect of the Partnership in violation of any (a) applicable laws or regulations or (b) any agreement between the Partnership and First Union National Bank or its successors or assigns (collectively, the “Lender”).

4. Anything in this Agreement to the contrary notwithstanding, so long as any indebtedness remains outstanding by the Partnership to the Lender, the Partnership shall not:

(a) make any loans to the General Partners or their Affiliates;

(b) except as permitted by the Lender in writing, sell, encumber (except with respect to the Lender) or otherwise dispose of all or substantially all of the properties of the Partnership (a sale or disposition will be deemed to be “all or substantially all of the properties of the Partnership” if the sale or disposition includes the Property or if the total value of the properties sold or disposed of in such transaction and during the twelve months preceding such transaction is 66-2/3% or more in value of the Partnership’s total assets as of the end of the most recently completed Partnership fiscal year);

(c) dissolve, wind-up, or liquidate the Partnership;

(d) merge, consolidate or acquire substantially all the assets of another person or entity;

(e) change the nature of the business conducted by the Partnership; or

(f) except as permitted by the Lender in writing, amend or modify this Agreement.

For purposes of this Agreement, Affiliate means any person or entity which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a Partner. For purposes hereof, the terms “control”, “controlled”, or “controlling” shall include, without limitation, (i) the ownership, control or power to vote ten percent (10%) or more of (x) the outstanding shares of any class of voting securities or (y) the Partnership or beneficial interests of any such person or entity, as the case may be, directly or indirectly, or acting through one or more persons or entities, (ii) the control in any manner over the general partner(s) or the election of more than one director or trustee (or persons exercising similar functions) of such person or entity, or (iii) the power to exercise, directly or indirectly, control over the management or policies of such person or entity.

5. All funds of the Partnership shall be deposited in such checking accounts, savings accounts, time deposits, or certificates of deposit in the Partnership’s name or shall be invested in the Partnership’s name, in such manner as shall be designated by the General Partners from time to time. Partnership funds shall not be commingled with those of any other person or entity. Partnership funds shall be used by the General Partners only for the business of the Partnership.

6. Title to Partnership assets shall be held in the Partnership’s name.

7. The Partnership shall not, without the affirmative vote of 100 percent of the Partners, institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable federal or

state law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Partnership or a substantial part of its property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due; or take any action in furtherance of any such action.

8. The Partnership shall have no indebtedness or incur any liability other than (a) debts and liabilities for trade payables and accrued expenses incurred in the ordinary course of business of operating the Property and (b) the loan made or to be made to the Partnership by the Lender.

9. The Partnership shall not terminate or dissolve solely as a consequence of the bankruptcy, insolvency, appointment of a receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of a General Partner of the Partnership or a substantial part of such General Partner’s property, or assignment for the benefit of its creditors, or an admission in writing of the inability to pay its debts generally as they become due, or any similar action, of one or more of the General Partners so long as there remains a solvent general partner of the Partnership.

B. Incorporation of Prior Agreement. The Partnership was formed due to the requirement of the new lender that the Property be placed in a single asset partnership, a typical requirement of commercial lenders in order to obtain financing for the Property. It is the intent of the Partners that the provisions of the partnership agreement from Secured Investment Resources Fund, L.P. be incorporated herein to the extent that it is not in conflict with any provision set forth herein. Therefore, the Partners adopt such partnership agreement, a copy of which is attached hereto as Exhibit A, as the remaining terns of this Agreement.

GENERAL PARTNERS:

James R. Hoyt

/S/ JAMES R. HOYT

Individual limited partner

Secured Investment Resources Fund, L.P.

By: /S/ JAMES R. HOYT

James R. Hoyt, President

LIMITED PARTNER:

SECURED INVESTMENT RESOURCES FUND, L.P.

By: /S/ JAMES R. HOYT

James R. Hoyt, General Partner

RESTATED CERTIFICATE AND AGREEMENT OF

LIMITED PARNTERSHIP OF

SECURED INVESTMENT RESOURCES FUND, L.P.

THIS RESTATED CERTIFICATE AND AGREEMENT is made and entered into this 27th day of July, 1984, by and between JAMES R. HOYT, an individual resident of the state of Kansas, and SECURED INVESTMENT RESOURCES, INC., a Kansas corporation (hereinafter referred to as the “General Partners”); and JAMES R. HOYT, an individual resident of the State of Kansas (hereinafter referred to as the Original Limited Partner) and those other parties who from time to time execute this Agreement or counterparts hereof as Limited Partners (sometimes hereinafter collectively referred to as the “Limited Partners”). The General Partners and Limited Partners are hereinafter sometimes collectively referred to as the “Partners”.

WITNESSETH THAT:

WHEREAS, the Partners desire to form a Limited Partnership under the Kansas Revised Uniform Limited Partnership Act, known as Secured Investment Resources Fund, L.P., to invest in, hold and manage income-producing real estate which is improved or which will be improved within a reasonable period after acquisition, with emphasis on the acquisition of existing apartment complexes and commercial properties including, but not limited to, shopping centers, office buildings, industrial buildings, hotels, motels, warehouses, mobile home parks and other properties located in the United States; and

WHEREAS, it is the intent of the Partners to admit Additional Limited Partners to the Partnership for the purpose of acquiring the additional capital needed to acquire the above real estate.

NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties hereto agree as follows:

1. Name, Place of Business, Registered Of the and Registered Agent

1.1  “Name.” The name of the Partnership is Secured Investment Resources Fund, L.P. or such other name as the General Partners shall hereafter designate in writing to the Limited Partners.

1.2  “Place of Business.” The partnership’s principal place of business is 5453 West 61st Place, Mission, Kansas 66205, or such other place or places as the General Partners may hereafter determine.

1.3 “Registered Office and Agent.” The Partnership’s registered office shall be 2100 Silver Avenue, Kansas City, Kansas 66106. Its registered agent for service of process shall be PW&S Agent Service of Kansas, Inc., 2100 Silver Avenue, Kansas City, Kansas 66106.

2. Definitions and Glossary of Terms

2.1  The following terms used in this Partnership Agreement shall (unless otherwise expressly provided herein or unless the context otherwise requires) have the following respective meanings as set out below. Other terms may be defined throughout this Agreement as well.

2.1.1 “Acquisition Agent” shall refer to Secured Investment Resources, Inc., a Kansas corporation, Corporate General Partner of the Partnership and an Affiliate of the Individual General Partner, or to any other person or corporation who succeeds it in such capacity or Affiliates of the General Partners.

2.1.2 “Acquisition Expenses” shall mean those expenses including, but not limited to legal fees and expenses, travel and communication expenses, costs of appraisals, non-refundable option payments on property not acquired, accounting fees and expenses, title insurance, and miscellaneous expenses related to selection and acquisition of properties, whether or not acquired.

2.1.3 “Acquisition Fees” shall mean the total of all fees and commissions paid by any party in connection with the purchase or development of property by the Partnership, except a certain development fee paid to a person not affiliated with a Sponsor in connection with the actual development of a project after acquisition of the land by the Partnership. Included in the computation of such fees shall be any real estate commission, selection fee, nonrecurring management fee, or any fee of a similar nature, however designated, but not any origination or transfer fee paid to a non-affiliated lender or any other type of loan fee (“points”).

2.1.4 “Adjusted Invested Capital” of a Holder shall be the Original Invested Capital paid for his Units reduced by the total of cash distributed to him and prior Holders of his Units from Cash From Sales, Financing, Refinancing or Liquidation, Cash From Initial Working Capital Reserves and distributions from uninvested Net Proceeds pursuant to Paragraph 11.13.

2.1.5 “Administrator” shall refer to the official or agency administering the securities law of a state.

2.1.6 “Affiliate” shall refer to: (i) any person directly or indirectly controlling, controlled by or under common control with another person, (ii) any person owning or controlling 10 percent or more of the outstanding voting securities of such other person, (iii) any officer, director or partner of such person, and (iv) if such person is an officer, director or partner, any company for which such person acts in any such capacity.

2.1.7 “Agents” shall refer to such other persons or firms as the General Partners shallselect and contract with in the event that the Acquisition Agent or Property Management Agent is unable to serve with respect to any one or more Properties of the Partnership for performance of the services that it is to perform.

2.1.8 “Agreement” or “Partnership Agreement” means this Restated Certificate and Agreement of Limited Partnership dated July 27,1984 as amended, modified, supplemented or restated from time to time.

2.1.9 “Assignee” shall mean a person who has acquired a beneficial interest in one or more Units from a third party but who is neither a substituted Limited Partner nor an Assignee of Record.

2.1.10 “Assignee of Record” shall mean an Assignee who has acquired a beneficial interest in one or more Units whose ownership of such Units has been recorded on the books of the Partnership and which ownership is the subject of a written instrument of assignment, the effective date for which assignment has passed.

2.1.11 “Cash Flow From Operations” means the net cash provided by the Partnership’s normal operations (without deduction for depreciation) after the general expenses and current liabilities of the Partnership (other than the Partnership Management Fee) are paid and reserves are funded or decreased in an amount deemed appropriate by the General Partners. Cash Flow From Operations shall also include, but not be limited to: (1) Working Capital Reserves (established pursuant to Paragraph 3.2herein) in excess of Initial Working Capital Reserves and funded from Cash Flow From Operations, which are determined by the General Partners to be in excess of the amount deemed sufficient in connection with the operation of the Partnership properties; and (2)funds allocated, if any, for capital additions and improvements from Cash Flow From Operations. Cash Flow From Operations does not include any Cash From Sales, Financing, Refinancing or Liquidation or Cash From Initial Working Capital Reserves.

2.1.12 “Cash From Initial Working Capital Reserves” shall mean the cash to be distributed from Initial Working Capital Reserves (as defined in Paragraph 3.2 herein); provided, however, that any amount distributed from Working Capital Reserves in excess of Initial Working Capital Reserves and funded from Cash Flow From Operations shall not be distributed as Cash From Initial Working Capital Reserves but rather shall be distributed as a part of Cash Flow From Operations. A distribution of Cash From Initial Working Capital Reserves will result in a decrease in the amount of Original Invested Capital contributed by an Investor.

2.1.13 “Cash From Sales, Financing, Refinancing or Liquidation” shall mean the net cash realized by the Partnership from any Partnership transaction not in the ordinary course of business, including but without limitation, liquidations (pursuant to Paragraph 20 of this Partnership Agreement), sales, exchanges or other dispositions of real or personal property, any borrowings or mortgage financings or refinancings, condemnations, or recoveries of damage awards and insurance proceeds (other than proceeds applied to restoration, business or rental interruption insurance proceeds) after retirement of applicable mortgage debt and all expenses related to the transaction including any Subordinated Real Estate Commissions payable to the General Partners, and also after any reserves for contingent liabilities to the extent deemed reasonable by the General Partners provided that at the expiration of such period as the General Partners deem advisable, the balance of such reserves remaining after payment of such contingencies shall be distributed in the manner provided in this Partnership Agreement for Cash From Sales, Financing, Refinancing and Liquidations. Cash From Sales, Financing, Refinancing or Liquidation shall not include Cash From Initial Financing. The disposition of a Partnership Property by transfer back to the seller or an Affiliate thereof, whether in the form of a rescission, exchange or resale OY pursuant to an option or other similar arrangement entered into at or prior to the time of taking title to the Property shall not, if the proceeds from such transfer back are reinvested in other Property, result in Cash From Sales, Financing, Refinancing or Liquidation. In the event the Partnership takes back a mortgage note in connection with the sale of a Property, all payments subsequently received in cash by the Partnership with respect to such note shall be included in Cash From Sales, Financing, Refinancing or Liquidations, irrespective of the extent to which any portion of such cash payments shall be treated by the Partnership as principal or interest for tax or accounting purposes.

2.1.14 “Close of the Offering Date” shall mean such date designated by the General Partners, but not later than one year from the effective date of the Prospectus.

2.1.15 “Code” shall mean the Internal Revenue Code of 1954, as amended, or corresponding provisions of subsequent revenue laws.

2.1.16 “Consumer Price Index” (hereinafter “C.P.I.”) shall mean that number published by the U.S. Department of Labor, Bureau of Labor Statistics, which reflects “The Consumer Price Index for the entire United States; All Urban Consumers; All Items; Index 1967 = 100”, as amended, or such other index as may succeed the C.P.I. as the same or similar indicator.

2.1.17 “Cost of Partnership Property” with respect to each Partnership Property means the total consideration paid and capitalized for Federal income tax purposes-by the Partnership in connection with the purchase of such Property, whether paid to the seller, the General Partners or any other person, either in cash or by way of promissory notes, including payments for Acquisition Fees paid by the Partnership, if any. Reference to “Cost Of All Partnership Properties” shall be the total of such consideration paid by the Partnership for all Partnership Properties.

2.1.18 “Development Fee” shall mean a fee paid to third parties for the packaging of the Partnership’s Property, including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the specific Property, either initially or at a later date.

2.1.19 “Distributions” shall refer to any cash -or other property, valued at its fair market value at date of distribution, distributed to Holders and the General Partners arising from their Interests in the Partnership, but shall not include any payments to the General Partners under the provisions of Paragraph 9, (“Compensation and Fees to the General Partners and Affiliates”), or Paragraph 10, (“Partnership Expenses”), of this Partnership Agreement.

2.1.20 “Financing” shall be defined as the indebtedness encumbering Partnership Properties, the principal amount of which is scheduled to be paid over a period of not less than 48 months, and not more than 50% of the principal amount of which is scheduled to be paid during the first 24 months. Nothing in this definition shall be construed as prohibiting a bonafide prepayment provision in the financing agreement.

2.1.21 “Front-End Fees” shall mean those fees and expenses paid by any party for any services rendered during the Partnership’s organizational or acquisition phase, including organization and offering expenses, which are those expenses incurred in connection with and in preparing the Partnership for registration and subsequently offering and distributing the Units to the public, including sales commissions paid to broker-dealers in connection with the distribution of Units and all advertising expenses, Acquisition Fees, Acquisition Expenses, and any other similar fees, however designated by the Sponsors.

2.1.22 “General Partners” or “General Partner” shall refer to James R. Hoyt, an individual, and Secured Investment Resources, Inc., a Kansas corporation, or to any other person or corporation who succeeds any of them in such capacity.

2.1.23 “General Partners’ Interest in Cash From Sales, Financing, Refinancing or Liquidation” shall mean the General Partners’ share of Cash From Sales, Financing, Refinancing, or Liquidation payable to them under the provisions of Paragraph 9.6.2.

2.1.24 “Gross Proceeds” shall mean the aggregate total of the Original Invested Capital of all additional Limited Partners.

2.1.25 “Gross Revenues” shall mean all revenues from the operation of Partnership Properties and all revenues from investments made pursuant to Paragraph 15.1.17. The term “Gross Revenues” shall not include revenues from sale, financing, refinancing, liquidation or other disposition of Partnership Properties.

2.1.26 “Holders” shall refer to owners of Units who are either Limited Partners or Assignees of Record, and reference to a “Holder” shall be to any one of them.

2.1.27 “Initial Working Capital” shall mean those cash reserves established pursuant to Paragraph 3.2 herein in the aggregate equal to 5% or less of the Gross Proceeds applicable to the acquisition of Partnership Properties and not funded from Cash Flow From Operations.

2.1.28 “Investment in Properties” shall mean the amount of Gross Proceeds actually paid or allocated to the purchase, development, construction or improvement of Properties acquired by the Partnership, including the purchase of Properties, Working Capital Reserves established in accordance with the provisions of Paragraph 3.2-hereof allocable to such properties (except that Working Capital Reserves so established in excess of 5% and Working Capital Reserves determined to be in excess of the amount deemed to be sufficient in connection with the operation of the Partnership Properties shall not be included), and other cash payments such as interest and taxes, but excluding Front-end Fees.

2.1.29 “Limited Partners” shall refer to the original Limited Partner and to any other persons who are admitted to the Partnership as additional or substituted Limited Partners. Reference to a “Limited Partner” shall refer to any one of them.

2.1.30 “Majority Vote” shall mean the vote of Limited Partners who own more than 50 percent of the Total Outstanding Units at a given time.

2.1.31 “Minimum Subscription Closing Date” shall mean that date which is the first full business day following the Minimum Subscription Date or such date thereafter as the General Partners, in their discretion, may designate.

2.1.32 “Minimum Subscription Date” shall mean that date on which the Partnership has received and accepted subscriptions for 2,500 Units (exclusive of subscriptions from New York residents).

2.1.33“Net Cash Flow From Operations” shall mean Cash Flow From Operations less the Partnership Management Fee.

2.1.34 “Net Income” or “Net Loss” shall mean the net income or net loss of the Partnership, as determined in accordance with the accounting methods followed for Federal income tax purposes. -

2.1.35 “Net Proceeds” shall mean the total Gross Proceeds less expenses incurred and to be paid by the Partnership in organizing the Partnership and in offering the Units to the public.

2.1.36 “Original Invested Capital” shall mean the amount in cash contributed by the original and each additional Limited Partner to the capital of the Partnership for his Units, which amount shall be attributed to such Units in the hands of a subsequent Holder

provided, however that the Original Limited Partner’s Interest shall be redeemed by the Partnership at the Minimum Subscription Closing Date.

2.1.37 “Original Limited Partner” shall refer to James R. Hoyt whose Interest in the Partnership shall be redeemed at the Minimum Subscription Closing Date.

2.1.38 “Partners” shall refer collectively to the General Partners and to the Limited Partners, when no distinction is required by the context in which the term is used herein, and reference to a “Partner” shall be to any one of the Partners.

2.1.39 “Partnership” shall refer to the limited partnership created under this Partnership Agreement.

2.1.40 “Partnership Interest” or “Interest” means the interest in the capital of the Partnership.

2.1.41 “Partnership Management Fee” shall refer to the fee or fees paid to the Sponsor or other Persons for management and administration of the Partnership’s normal operations pursuant to Paragraph 9.5 herein.

2.1.42 “Partnership Properties” or “Properties” shall refer to all properties or any interest therein acquired directly or indirectly by the Partnership. Reference to “Partnership Property” or “Property” shall be to any one of them.

2.1.43 “Percentage Increase In C.P.I.” shall mean that percentage which reflects the annual increase in C.P.I. (as that term is defined in paragraph 2.1.17). For the purpose of determining the Percentage Increase In C.P.I., the base C.P.I. shall be the C.P.I. published for the month in which the Prospectus becomes effective. The Percentage Increase in C.P.I. shall be determined annually on the anniversary of the date of the Prospectus and shall be that percentage which reflects the numerical increase in the C.P.1 on the present anniversary date from the immediately preceding anniversary date, divided by the C.P.1 on the immediately preceding anniversary date.

2.1.44 “Percentage Interest7’ shall mean the total of a Partner’s limited Partnership Units in relation to the Total Outstanding Units at any given time.

2.1.45 “Person7’ shall mean any natural person, partnership, corporation, association, trust, estate or other legal entity.

2.1.46 “Property Management Agent” shall refer to En-Com Properties, Ltd., a Missouri corporation and an Affiliate of the General Partners, or to any other person or corporation who succeeds it in such capacity.

2.1.47 “Property Management Fee7’ shall refer to the fee payable to the Property Management Agent under the provisions of Paragraph 9.4.1 of this Partnership Agreement.

2.1.48 “Prospectus” shall have the meaning given to that term by Section 2(10) of the Securities Act of 1933, including a preliminary Prospectus; provided, however, that such term as used herein shall also include an offering circular as described in Rule 256 of the General Rules and Regulations under the Securities Act of 1933 or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of . offering and selling securities to the public.

2.1.49 “Sponsor” shall mean any Person directly or indirectly instrumental in organizing, wholly or in part, the Partnership or any Person who will manage or participate in the management of the Partnership including the General Partners and their Affiliates, but .excluding (i) any Person whose only relationship with the-Partnership or the General Partners is that of an independent property manager whose only compensation from the Partnership is as such, and (ii) wholly independent third parties such as attorneys, accountants and underwriters whose only compensation from the Partnership is for professional services rendered in connection with the offering of Units, the acquisition, sale, financing or refinancing of Properties, or the operations of the Partnership.

2.1.50 “Total Loans and Cash Attributable To A Property” shall mean with respect to each Partnership Property the total consideration paid by the Partnership in connection with the purchase of such Property, whether paid to the seller, the General Partners or any other Person either in cash or by way of promissory note including additional cash considerations in the form of payments for Acquisition Fees, initial cash reserves, Acquisition Expenses and financing expenses and charges, but excluding any points and prepaid interest, if any. Reference to “Total Loans and Cash Attributable To All Properties” shall be the total of such consideration paid or allocated by the Partnership for all Partnership Properties.

2.1.51 “Total Outstanding Units7’ shall mean the number of all Units issued at any given point in time.

2.1.52 “Working Capital Reserves” shall refer to the aggregate of all cash reserves established for Partnership Properties pursuant to Paragraph 3.2 of this Partnership Agreement. 2.1.53 A “Unit” shall represent a capital contribution of $500 to the Partnership in exchange for a limited Partnership Interest.

3. Business and Purpose

3.1Purpose. The primary purpose (character of business) of the Partnership is to invest in, hold and manage income-producing real estate which is improved or which will be improved within a reasonable period after acquisition, with emphasis planned to be upon the acquisition of existing apartment complexes and commercial properties including, but not limited to, shopping centers, office buildings, industrial buildings, hotels, motels, warehouses and mobile home parks. The Partnership may enter into ventures, partnerships, and other business arrangements with respect to real estate deemed prudent by the General Partners in order to achieve successful operations for the Partnership; subject, however, to the provisions of Paragraph 15.3.8 of this Partnership Agreement.

3.2 Working Capital Reserves. For the Partnership Properties, the Partnership shall establish a cash reserve designated as Working Capital Reserves for normal repairs, replacements, contingencies and related items. Working Capital Reserves shall initially be an amount equal to in the aggregate at least five percent (5%) of the Gross Proceeds applicable to the acquisition of Partnership Properties and this five percent (5%) shall be designated as “Initial Working Capital Reserves.” However, the General Partners may subsequently increase these reserves (by funding from Cash Flow From Operations) or decrease these reserves if in their opinion additional reserves are necessary or the reserves are deemed to be in excess of the amount deemed sufficient in connection with the operation of the Partnership Properties.

If in any fiscal quarter the General Partners should determine that Initial Working Capital Reserves are in excess of the amount deemed sufficient in connection with the operation of the Partnership Properties, such reserves may be reduced and the amount of such reduction for a particular quarter may be distributed as a portion of Cash From Initial Working Capital Reserves thus reducing the amount of Original Invested Capital contributed by the Limited Partners. If in any fiscal quarter the General Partners should determine that reserves established by them in excess of Initial Working Capital Reserves and funded from Cash Flow From Operations are in excess of that amount deemed sufficient in connection with the operation of Partnership Properties, such reserves may be reduced and the amount of such reduction distributed as a portion of Cash Flow From Operations: provided, however, that a reduction below the Initial Working Capital Reserves level shall be distributed as a part of Cash From Initial Working Capital Reserves (as set out above) and not as a portion of Cash Flow From Operations.

Upon the sale, financing, refinancing or liquidation of any Partnership Property, any Working Capital Reserves applicable to that property need not be maintained thereafter, but may be distributed in the same manner as set out above in this Paragraph 3.2 (i.e., Working Capital Reserves in excess of Initial Working Capital Reserves and funded from Cash Flow From Operations shall be distributed as Cash Flow From Operations and Initial Working Capital Reserves shall be distributed as Cash From Initial Working Capital Reserves).

In all events, however, the General Partners may apply any funds to be distributed from Working Capital Reserves toward reserves for other Partnership Properties rather than distributing such funds according to this Paragraph 3.2.

3.3 Initial Financing. Subject to the provisions of Paragraph 11 of this Partnership Agreement, during that portion of the term of the Partnership after the Close of the Offering Date, the Partnership may obtain initial financing on any Partnership Property purchased for all or substantially all cash (over 75% of the purchase price consists of cash), and all proceeds therefrom may be reinvested by the Partnership. Proceeds from such financing occurring after said 24 month period will not be reinvested and.wil1 be available for and used in Distributions.

4. Term of the Partnership

4.1 Term. The Partnership shall commence as of the date of this Agreement and shall continue for a period ending the earlier of:

4.1.1 That date which is 180 days after the date of the Prospectus provided that on said date the Partnership has not received a minimum of $1,250,000 of Gross Proceeds

from Limited Partners;

4.1.2 Sixty (60) years from the date of this Partnership Agreement;

4.1.3 The date on which all of the assets (Properties, notes, receivables, etc.) acquired by the Partnership are sold and converted to cash;

4.1.4 Subject to the provisions of Articles 16 and 20, the date on which the Partnership is voluntarily dissolved by agreement of the Limited Partners or by operation of law;

4.1.5 The date on which the Partnership is dissolved by judicial decree; or

4.1.6 Subject to the provisions of Article 20, the date on which the last remaining General Partner retires, dies, becomes legally incapacitated, dissolves, withdraws, is removed, or is adjudicated bankrupt, unless within ninety (90) days after such event the Limited Partners holding a majority of the Units agree to continue the Partnership business and, by written consent or vote, effective as of the date of such event, elect one or more new General Partners to continue the Partnership business.

5. General Partners

5.1 Contribution. The General Partners have contributed an aggregate of $1,000 in cash to the Partnership and they shall on or before the Close of the Offering Date contribute additional cash in the sum of $95,000, as Limited Partners, both amounts allocated among the General Partners pursuant to paragraph 5.2 below, and shall receive 190 Units for such additional cash contribution (which 190 Units acquired by the General Partners and the 5 Units acquired by James R. Hoyt, a General Partner, as Original Limited Partner pursuant to Paragraph 6.1 shall not be sold, hypothecated or. otherwise transferred in any manner; provided, however, that the Original Limited Partner’s 5 units shall be redeemed by the Partnership at the Minimum Subscription Closing Date), and at all times during the existence of the Partnership, have a present and continuing interest in Net Income, Net Loss and Distributions according to the provisions of Article 11, of this Partnership Agreement.

5.2 Allocation Among General Partners. As between the General Partners, their interest in Net Income, Net Loss and Distributions shall be allocated to the General Partners, so long as they act as such, in a proportion to be determined by them.

5.3Restoration of Deficit in General Partners’ Capital Accounts. In the event that, immediately prior to the dissolution of the Partnership referred to in Paragraph 20.1, the General Partners shall have a deficiency, if any, in their capital accounts, the General Partners shall contribute in cash to the capital of the Partnership an amount equal to whichever is the lesser of (a) the deficiency in the General Partners’ capital accounts or (b) 1.01% of the Original Invested Capital which has not been returned pursuant to Paragraph 11 below. Any further deficit payment shall be borne by the General Partners in a proportion as determined by them.

5.4Admission of Additional General Partners. After the filing of the Partnership’s initial certificate of limited partnership, additional General Partners may be admitted only with a Majority Vote.

6. Original and Additional Limited Partners

6.1 Original Limited Partners. The Original Limited Partner (James R. 30yt) has contributed the sum of $2,500 to the capita1 of the Partnership and has received 5 Units for such contribution. The Original Limited Partner’s interest will be redeemed by the Partnership on or before the Minimum Subscription Closing Date.

6.2 Additional Limited Partners. The Partnership intends to sell and issue not less than 2,500 nor more than 100,000 Units in addition to those Units issued in accordance with Paragraphs 5.1 and 6.1, and to admit as additional Limited Partners the persons who contribute cash to the capital of the Partnership for such Units.

6.3Requirements to Becoming Limited Partner. Each person who acquires any such additional Units shall become a Limited Partner in the Partnership at such time as: (i) he has

purchased 5 or more Units (except that the required purchase shall only be four Units for an Individual Retirement Account established under Section 408 of the Code), (ii) he has contributed the sum of $500 in cash for each Unit purchased, (iii) he has executed and filed with the Partnership a written instrument which sets forth an intention to become a Limited Partner, represents that he satisfies the net worth and/or income suitability standards set forth in the Prospectus, and requests admission to the Partnership in that capacity, together with such other instruments as the General Partners may deem necessary or desirable to effect such admission, including the written acceptance and adoption by such person of the provisions of this Partnership Agreement, and the execution, acknowledgement and delivery to the General Partners of a special power of attorney, the form, style and content of which are more fully described herein, and (iv) the Partnership Agreement shall have been amended to reflect the fact of the additional Limited Partner. The investors shall be admitted as additional Limited Partners not later than 15 days after the release from escrow of the capital contributions received up to that time, and thereafter investors shall be admitted into the Partnership not later than the last day of the calendar month following the date their subscription was accepted by the Partnership. Subscriptions shall be accepted or rejected within 30 days of their receipt; if rejected, all funds should be returned to the investors within 10 business days.

6.4 Amendment of Partnership Agreement. Within 15 days of the release from escrow of ail capital contributions, and thereafter within 30 days following the date of acceptance of the additional Limited Partners’ subscriptions, the General Partners shall in timely fashion amend this Partnership Agreement and any separate certificate of limited partnership filed for record to reflect the admission of a person as an additional Limited Partner.

6.5 Issuance ofAdditiona1 Units. The Partnership shall not issue any additional Units after the Close of the Offering Date. Subscriptions shall be accepted or rejected by the Partnership within 30 days of their receipt; if rejected, all subscription monies shall be returned to the subscriber within ten (10) business days with any interest earned thereon on a per diem basis from the date of subscription.

6.6Escrow Account. All Original Invested Capital of Holders received by the Partnership until the Minimum Subscription Closing Date shall be held in trust, and shall be deposited in an escrow account in any of the branches of Mission Bank of Mission, Kansas as escrow holder for the Original Invested Capital (except for Original Invested Capital received from New York residents which shall be separately escrowed) and shall be temporarily invested in short term interest bearing bank accounts where there is appropriate safety of principal. The Partnership will commence admitting purchasers of Units (except New York purchasers) into the Partnership as additional Limited Partners on the Minimum Subscription Closing Date. And thereafter, additional Limited Partners shall be admitted into the Partnership not later than the last day of the calendar month following the date their subscription was accepted by the Partnership. At the time the purchaser is admitted as a Limited Partner, the escrow holder shall transfer such person’s Original Invested Capital to the Partnership. If the Minimum Subscription Date has not been reached within 180 days from the date of the Prospectus, all Original Invested Capital will be refunded within ten (10) business days to the purchasers with any interest earned on such Original Invested Capital on a per diem basis from the date of subscription.

7. Status of Limited Partners

7.1 Liability of Limited Partners

7.1.1 Liability For Partnership Obligations. A Limited Partner is not liable for the obligations of the Partnership unless the Limited Partner is also a General Partner, or in

addition to the exercise of the rights and powers of a Limited Partner, the Limited Partner participates in the control of the business. However, if the Limited Partner does participate in the control of the business, the Limited Partner is liable only to Persons who transact business with the Partnership reasonably believing, based upon the Limited Partner’s conduct, that the Limited Partner is a General Partner.

7.1.2 Personal Liability. If the certificate of limited partnership or certificate of amendment or cancellation of such certificate of limited partnership contains a materially false statement, one who suffers loss by reliance on such statement may recover damages for the loss from any Person, including a Limited Partner, who executes the certificate or causes another to execute it on the Person’s behalf, and who knew the statement to be false in any material respect at the time the certificate was executed. However, no person, including a Limited Partner, shall have any liability for failing to cause the amendment or cancellation of a certificate to be filed or failing to file petition for its-amendment or cancellation if the certificate of amendment or cancellation or petition is filed within thirty (30)days of when that Person knew or should have known that the statement in the certificate was inaccurate in any material respect.

7.1.3. Liability As A General Partner.

7.1.3.a Except as provided in subsection 7.1.3.b, a Person who makes a contribution to a Partnership and who erroneously but in good faith believes that that Person has become a Limited Partner in the Partnership is not a General Partner in the Partnership and is not bound by its obligations by reason of making the contribution, receiving distributions from the Partnership or exercising any rights of a Limited Partner if, on ascertaining the mistake:

(1) In the case of a Person who wishes to be a Limited Partner, the Person causes an appropriate certificate to be executed and filed; or

(2) Withdraws from future equity participation in the enterprise by executing and filing in the office of the secretary of state a certificate declaring withdrawal under this section.

7.1.3.b A person who makes a contribution under the circumstances described in subsection 7.1.3.a is liable as a General Partner to any third party who transacts business with the Partnership prior to the occurrence of either of the events referred to in subsection ‘7.1.3.a:

(1) If the person knew or should have known either that no certificate has been filed or that the certificate inaccurately refers to the Person as a General Partner; and

(2) If the third party actually believed in good faith that the Person was a General Partner at the time of the transaction and acted in reliance on such belief.

8. Status of Units. Each Unit shall be fully paid and nonassessable.

9. Compensation and Fees to the General Partners and Affiliates

9.1 Compensation. The General Partners and their Affiliates shall receive compensation only as specified by this Partnership Agreement.

9.2 Compensation on Acquisition

9.2.1 Acquisition Fees. Subject to the provisions of Paragraph 9.3, the Acquisition Agent and all other Persons shall receive an aggregate amount of Acquisition Fees not to exceed the lesserof: (i) 11.5% of the Gross Proceeds, or (ii) 6%: of the Total Loans and Cash Attributable To All Partnership Properties.

9.2.1.a. The amount of the Acquisition Fee with respect to each separate Partnership Property shall not exceed the lesser of: (i) 11.5% of the Gross Proceeds, applied separately to the purchase of each Property and computed on that portion of the Gross Proceeds included in the Total Loans and Cash Attributable To A Property, reduced for a pro-rata amount of all sales commissions and organizational expenses paid by the Partnership and Working Capital Reserves established with respect to each Property in accordance with the provisions of Paragraph 3.2, or (ii) 6% of the Total Loans And Cash Attributable To A Property.

9.2.1.b. The Acquisition Fee shall be paid by the Partnership or by the seller of the Property acquired and shall be payable at the close of escrow or, if there is no escrow, at the time legal title to such Property is transferred to the Partnership, or later if the General Partners determine that it is in the best interest of the Partnership.

9.2.l.c. No Acquisition Fee shall be paid by the Partnership to any Affiliate of the Partnership, nor shall any Affiliate of the Partnership receive a fee, commission, or other benefit from any Person upon any reinvestment of Cash From Sales, Financing, Refinancing or Liquidation of Property by the Partnership other than any Acquisition Fees in connection with the investment of Cash From Initial Financing.

9.2.1.d. Except as set forth in Paragraph 9 of this Partnership Agreement, no other real estate commission, property purchase fee, or finder’s fee shall be paid or payable by the Partnership to the General Partners or to any other Person in connection with the acquisition of specific real properties.

9.3 Investment In Properties. The Partnership shall commit a portion, as set out below, of the Gross Proceeds toward Investment in Properties. At a minimum, the Partnership shall commit an amount of the Gross Proceeds to Investment in Properties which is equal to the greater of: (i) 80% of the Gross Proceeds reduced by .1625% for each 1%of indebtedness encumbering Partnership Properties, (ii) 67% of the Gross Proceeds, or (iii) $1,000,000. The remaining Gross Proceeds may be used by the Partnership to pay Front-end Fees; provided, however, that when any Front-end Fees, including any Acquisition Fees, are paid by the seller of Properties acquired, such fees shall not be included in satisfying the required minimum Investment in Properties..

9.4Operating Stage (Operating Compensation)

9.4.1 Property Management Fee. The Property Management Agent shall be entitled to a Property Management Fee for services in providing continuing professional property management of the Partnership Properties. Such fee shall be paid monthly and shall be equal to the lesser of the maximum fees set forth in (i) through (iii) below: (i) in the case of a residential property, the lesser of 5% of the Gross Revenues from such Property or the normal and competitive fee for similar services in the same geographic area (including all rent-up, leasing and re-leasing fees and bonuses, and leasing related services, paid to any person): (ii) in the case of an industrial and commercial Property, except as set forth in subparagraph (iii) below, the lesser of 5% of the Gross Revenues from such Property (where the General Partners or their Affiliates provide leasing, re-leasing and leasing related services) or the normal and competitive fees for similar services in the same geographic area; provided,

however, that the Property Management Fee payable according to this subparagraph (ii) shall not exceed 3% of the Gross Revenues from such Property where the General Partners or their Affiliates do not perform the leasing, re-leasing and leasing related services with respect to the Property; and (iii) in the case of an industrial and commercial property which is leased on a long-term (ten or more years), net or similar basis, the lesser of 1% of the Gross Revenues or the normal and competitive fee for similar services in the same geographic area; provided, however, that the Property Management Agent may also receive a one-time initial leasing fee of 3% of the Gross Revenues on each lease payable over the first five full years of the original term of such lease.

9.4.1.a In the event the Property Management Agent retains third parties to perform a portion or all of the services set forth below, the Property Management Agent will be solely responsible for any fees charged by such persons which will be paid by the Property Management Agent without cost to the Partnership.

9.4.1.b The Property Management Fee shall be paid on a monthly basis as compensation for the services of the Property Management Agent in overall management of the Partnership Properties, including, but not limited to: (i) review of the maintenance, repair, remodeling, and refurbishing of all Partnership Properties, (ii) review of rental schedules and recommendations with respect to changes thereto, (iii) employment and supervision of on-site property managers together with the establishment of procedures and preparation of operational manuals regarding the management of Partnership Properties, (iv) review of rental surveys, (v) review of historical and projected performance and variation analyses, (vi) review of leases management agreements and maintenance agreements, (vii) review of reserves and working capital and recommendations with respect to changes thereto, (viii) review of regional economic surveys, (ix) review of budgets and cash flow projections for each project and the Partnership as a whole over the term of the Partnership, (x) review of working capital levels, (xi) periodic physical inspections and market surveys, (xii) determination and implementation of capital improvements, (xiii) continuing review to recommend to the General Partners when Properties should be sold and acceptable terms of sale, (xiv) initiation of any necessary litigation, and (xv) providing reports at certain intervals and in such form as the General Partners may require with respect to the operation of Partnership Properties. Property management services to be rendered by the Property Management Agent, or by third parties retained by the Property Management Agent, do not include the salaries of on-site property managers or maintenance and security personnel, contract services and materials: professional fees paid to accountants or attorneys, supplies, repair, furniture and equipment costs and such other costs as are directly attributable to the Partnership’s Property operations.

9.5Partnership Management Fees. The General Partners shall receive fees designated as Partnership Management Fees for managing the Partnerships normal operations, in an amount equal to five percent (5%) of Cash Flow From Operations.

9.6Liquidating Stage (Final Compensation)

9.6.1 Subordinated Real Estate Commission. The Acquisition Agent or such other Affiliate as the General Partners may designate shall be paid by the Partnership for real estate brokerage services in connection with the sale of Partnership Properties in whichthe Acquisition Agent or such Affiliate provided a substantial amount of the services in the sales effort, one-half of the real estate brokerage commission which is reasonable, customary and competitive in light of the size, type and location of the Property, but in no event shall such subordinated real estate commission exceed three percent (3%) of the contract price of a

Property. Said real estate brokerage fee shall be payable upon the completion or” the sale of each Property; provided, however, the payment thereof to the Acquisition Agent or to any Affiliate of the General Partners shall be made only after the Partnership has distributed cash in accordance with Paragraph 11.7.2. There is no subordination far any real estate commission paid only to non-Affiliates. If the Acquisition Agent or any of the General Partners participates with a non-Affiliated broker, the limitations contained in this Paragraph 9.6.1 shall apply to commissions paid by the Partnership to the Acquisition Agent or to any such Affiliate involved in the transaction. However, the aggregate real estate commission paid to all parties involved in the sale of a Partnership Property shall be limited to the commission which is reasonable, customary and competitive in light of the size, type and location of the Property, and in no event shall such commission exceed 6% of the contract price of the Property.

9.6.2 General Partners’ Interest in Cash From Sales, Financing, Refinancing or Liquidation. The General Partners shall be entitled to receive an amount equal to fifteen percent(15%) of the remaining Cash From Sales, Financing, Refinancing or Liquidation after the Partnership has distributed (a) to Holders in an amount in cash which is equal to Payout as defined in Paragraph 11.4 herein less all prior cash distributions and (b) to the General Partners in (i) an amount equal to their Original Invested Capital plus any additional contributions less the amount of all prior cash distributions and (ii) an amount equal to the subordinated real estate commission payable in accordance with Paragraph 9.6.1. The amount distributed to the General Partners as the General Partners’ Interest in Cash From Sales, Financing, Refinancing or Liquidation shall be distributed to the General Partners as determined between them.

9.7 Interest on Loans on Expulsion of General Partner. Should a General Partner be expelled from the Partnership, such Partner shall be entitled to interest on any loans made subject to the provisions of the Partnership Agreement. However, the General Partner may not receive interest in excess of the amounts which would be charged by unrelated lending institutions on comparable loans for the same purpose’ in the same locality.

9.8 Payment of Fees on Expulsion or Termination. Should a Genera1 Partner be expelled from the Partnership according to provisions of Paragraph 17 of this Partnership Agreement, or any agreement with the Acquisition Agent or Property Management Agent terminated according to the provisions of Paragraph 15.1.5 of this Partnership Agreement, any portion of the Acquisition Fee, Property Management Fee, Partnership Management Fee, subordinated real estate commission, General Partners’ Interest in Cash From Sales, Financing, Refinancing or Liquidation or any other fee or commission payable according to the provisions of this Paragraph 9 which is then accrued and due, but not yet paid, shall be paid by the Partnership to the General Partners, the Acquisition Agent or Property Management Agent or any other Person entitled to receive a commission or fee according to this Paragraph 9, in cash, within 90 days of the date of expulsion as stated in the written notice of expulsion. The payments to the General Partners shall be made according to Paragraph 17.4 herein.

10. Partnership Expenses

10.1 Reimbursement, other than for organization and offering expenses (which shall mean those expenses incurred in connection with and in preparing the Partnership for qualification under the Federal and state securities laws and subsequently offering and distributing the Units to the public) to the General Partners or their Affiliates shall not be made except for reimbursement of the actual cost to the General Partners or their Affiliates of goods and materials used for or by the Partnership and obtained from entities unaffiliated with the General Partners or their Affiliates. Pursuant to an Administrative Services Agreement, the General Partners or their

Affiliates may also be reimbursed for the administrative services necessary to the prudent operation of the Partnership provided that the reimbursement shall be at the lower of the General Partners’ or their Affiliates’, as the case may be, actual cost or 90% of the competitive price which would be charged by non-Affiliated persons rendering similar services in the same or comparable geographic location. No reimbursement shall be permitted for services for which a General Partner is entitled to compensation by way of a separate fee.

10.2 Items Paid by General Partners. The General Partners will pay: (i) salaries and other compensation (including fringe benefits, travel expenses and other administrative items of (a) executive officers and directors of the General Partners or their Affiliates, (b) those persons holding 5% or more equity interest in the General Partners or their Affiliates, and (c) any persons having the power to direct or cause the direction of the General Partners or their Affiliates, whether through the ownership of voting securities, by contract, or otherwise, (ii) expenses incurred by the General Partners or their Affiliates in connection with the administration of the Partnership to the extent such expenses exceed the limitations contained in paragraph 10.1, (iii) expenses incidental to the organization of the Partnership and marketing of Units (exclusive of sales commissions payable in connection with the sale of Units to those Persons who are admitted to the Partnership as additional Limited Partners therein), which expenses are in excess of three and one-half percent (3.5%)of Gross Proceeds, (iv) expenses related to the performance of those services for which the General Partners or their Affiliates are entitled to compensation by way of the Acquisition Fee, Property Management Fee, subordinated real estate commission and General Partners7 Interest in Cash From Sales, Financing, Refinancing or Liquidation, (v) the cost of rent or depreciation, utilities, capital equipment and other administrative items incurred by the General Partners or their Affiliates, and (vi) all other expenses which are unrelated to the business of the Partnership.

10.3 Items Paid by Partnership. Subject to Paragraphs 10.1 and 10.2 preceding, the Partnership shall pay all expenses (which expenses shall be billed directly to the Partnership) of the Partnership which may include, but are not limited to: (i) costs of personnel employed. by the Partnership, (ii) all costs of borrowed money, taxes and assessments on Partnership Properties and other taxes applicable to the Partnership, (iii) legal, audit, accounting, brokerage and other fees, (iv) printing, engraving and other expenses, and taxes incurred in connection with the issuance, distribution, transfer, registration and recording of documents evidencing ownership of an interest in the Partnership, (v) fees and expenses paid to independent contractors, mortgage bankers, brokers and servicers, consultants, on-site managers, real estate brokers, insurance brokers and other agents, (vi) expenses in connection with the disposition, replacement, maintenance, alteration, repair, remodeling, refurbishment, refinancing and operation of Partnership Properties (including the costs and expenses of foreclosures, insurance premiums and real estate brokerage), vii) expenses and fees incurred in connection with the leasing of industrial and commercial property, including leasing commissions, where the General Partners or their Affiliates do not perform the leasing, re-leasing and leasing related services with respect to the property, (viii) the cost of insurance as required in connection with the business of the Partnership, (ix) expenses of organizing, revising, amending, converting, modifying or terminating the Partnership, (x) expenses in connection with Distributions made by the Partnership to, and communications and bookkeeping and clerical work necessary in maintaining relations with Holders, including the cost of printing and mailing to such persons certificates for Units and reports of’ meetings of the Partnership, and of preparation of proxy statements and solicitations of proxies in connection therewith, (xi) expenses in connection with preparing and mailing reports required to be furnished to Unit Holders for investor, tax reporting or other purposes, or which reports the General Partners deem the furnishing thereof to Unit Solders to be in the best interests or” the Partnership, (xii) costs of any accounting, statistical or bookkeeping equipment necessary for the maintenance of the books and records of’ the Partnership, (xiii) the cost of preparation and dissemination of the informational material and documentation relating to potential sale financing, refinancing or other

disposition of partnership Property, (xiv) costs incurred in connection with any litigation in which the Partnership is involved, as well as in the examination, investigation or other proceedings conducted by any regulatory agency with jurisdiction of the Partnership, including legal and accounting fees incurred in connection therewith, and (xv) supervision and expense of professionals employed by the Partnership in connection with any of the foregoing, including attorneys, accountants and appraisers.

11. Allocation of Income, Loss, and Distributions

11.1 Method of Accounting. Net Income and Net Loss of the Partnership shall be determined for each fiscal year of the Partnership in accordance with the accounting methods followed for Federal income tax purposes. Whenever a proportionate part of Net Income or Net Loss is credited or charged to a Partner, every item of income, gain, loss, or deduction entering into the computation of such Net Income or Net Loss shall be considered either credited or charged, as the case may be, and every item of credit or tax preference related to such Net Income or Net Loss and applicable to the period during which such Net Income or Net Loss was realized shall be allocated to such Partner in the same proportion. Any increase or decrease in the amount of any item of income, gain, loss or deduction attributable to an adjustment to the basis of Partnership assets made pursuant to a valid election under Sections 734, 743 and 754 of the Code and pursuant to corresponding provisions of applicable state and local income tax laws, shall be charged or credited, as the case may be, and any increase or decrease in the amount of any item of credit or tax preference attributable to any such adjustment shall be allocated to those Partners entitled thereto under such laws.

11.2 Allocation Based on Units Held. Net Income and Net Loss allocated in accordance with this Paragraph 11 shall be apportioned among the Unit Holders in the ratio the number of Units owned by each of them on the last day of each month of each fiscal year of the Partnership in which such Net Income or Net Loss was realized bears to the total number of Units owned by all of them as of that date, without regard to capital accounts or the number of days during such month in which a person was a Holder. For purposes of the preceding sentence, a Unit Holder shall be deemed to; be the owner of his Units on the day which his subscription for Units is accepted by the General Partners; provided, however, that any such Net Income or Net Loss attributable to a Unit assigned during a fiscal year of the Partnership shall be apportioned among the Holders of such Unit during such fiscal year in proportion to the number of months during such fiscal year that each such Holder was recognized as the owner of such Unit during such fiscal year (for the purpose of such apportionment, ownership of Units for each month will be determined as of the last day of such month).

11.3 Capital Accounts. A separate capital account shall be established for each Partner and shall be credited with the cash and adjusted basis of property which the Partner contributes to the Partnership (plus any gain recognized on the contribution) increased by the Partner’s share of Partnership income or gain and reduced by the Partner’s share of Partnership losses and deductions and actual distributions from the Partnership to the Partner.

11.4 Payout. Payout to the Unit Holders shall occur when the Unit Holders receive cash distributions in an amount equal to: (i) their Original Invested Capital, such cash distributions to be payable only from Cash From Sale, Financing, Refinancing and Liquidation of Partnership Properties, Cash From Initial Working Capital Reserves and distributions from uninvested net proceeds; and (ii) the amount which is equal to the greater of the Percentage Increase in C.P.I. or eight percent (8%) per annum cumulative noncompounded on their Adjusted Invested Capital, commencing at the time each Holder is admitted to the Partnership.

11.5 Allocation of’ Partnership Net Income and Net Loss. Net Income and Net Loss, other than Net Income and Net Loss from sales, financing, refinancing or liquidation of Partnership Properties for tax purposes shall be allocated as follows:

	Prior to Payout To Unit Holders Profit/Loss	After Payout To Unit Holder Profit/Loss
General Partners	1%	15%
Unit Holders	99%	85%
Total	100%	100%

Net Income and Net Losses for all purposes of this Agreement shall be determined in accordance with the accounting method followed by the Partnership for federal income tax purposes, except that any adjustments made pursuant to Section 743 of the Code shall not be taken into account.

11.6 Distribution of Net Cash Flow From Operations. No Cash Flow From Operations or Net Cash Flow From Operations shall be reinvested in Properties. The Partnership shall distribute Net Cash Flow From Operations to the Partners within thirty (30) days after the close of each fiscal quarter commencing no later than December 31, 1985. Such Net Cash Flow From Operations. shall be distributed 9910 to the Limited Partners and 1% to the General Partners; provided however, that:

(1)  no distributions shall be made to the General Partners until the Unit Holders have received cash distributions in an amount equal to Payout as defined in Paragraph 11.4 above less all prior cash distributions; and

(2) the General Partners, in the exercise of reasonable business judgment, may determine to retain in the Partnership all or any part of such amount to meet the working capital needs of the Partnership.

11.7 Allocations and Distributions on Sale, Financing, Refinancing or Liquidation of the Partnership Property

11.7.1 Allocation of Net Income and Net Loss for Tax Purposes Attributable to Sales, Financing Refinancing or Liquidation. Net Income recognized by the Partnership upon the sale, financing, refinancing or liquidation of all or any part of Partnership Property shall be allocated in the following manner:

11.7.1.a All Net Income (but not Net Losses) shall be allocated to the Partners until the amount of such Net Income equals said Partner’s negative balance in their respective capital accounts at the time of the sale, financing, refinancing or liquidation. If there is not sufficient Net Income to equal all such negative balances, then the available Net Income shall be allocated first to the negative balances in the capital accounts of the Unit Holders (in their respective Percentage Interests) and the remaining Net Income, if any, shall be allocated to the General Partners, prorata, to restore their deficits;

11.7.1.b If Payout, as defined in Paragraph 11.4 has occurred, then all Net Income (but not Net Losses) in excess of the amount of Net Income set forth in Paragraph 11.7.1.a shall be allocated first to the Partners such that the General Partners and the Unit Holders have capital accounts in the proportion of 15% and 85% respectively, then all Net Income shall be allocated 85% to the Unit Holders and 15% to the General Partners. If such Payout has not occurred, then all Net Income (but not Net Losses) in excess of the amount of Net Income set forth in Paragraph 11.7.1.a shall be allocated 99% to the Unit Holders and 1% to the General Partners;

11.7.l.c A11 Net Losses shall be allocated 99% to the Unit Holders and 1% to the General Partners, unless Payout as defined in Paragraph 11.4 has occurred and the Partners have positive capital accounts, at which time all Net Losses shall be allocated 85% to the Unit Holders and 15% to the General Partners; provided, however, that if the Partners have positive capital accounts but such capital accounts are not in the proportion of 85% to the Limited Partners and 15% to the General Partners, Net Losses shall be allocated first to the Partners so that the General Partners and the Unit Holders have capital accounts in the proportion of 15% and 85% respectively, before Net Losses are allocated 85% to the Unit Holders and 15% to the General Partners as stated above in this Paragraph 11.7.l.c.

11.7.1.d All gains, losses and profits allocated to the General Partners shall be allocated to them in a proportion as determined by them. All gains, losses and profit allocated to the Unit Holders shall be allocated according to each Unit Holder’s Percentage Interest.

11.7.l.e In all events, there shall be allocated to the General Partners for tax purposes, not less than one percent (1%) of Net Income and Net Loss attributable to Cash. From Sales, Financing, Refinancing or Liquidation under this Paragraph 11.

11.7.2 Distribution of Cash From Sale, Financing, Refinancing or Liquidation. Cash From Sale, Financing, Refinancing or Liquidation shall be determined by the General Partners as of the last day of each fiscal quarter, and shall be distributed (.subject to determination by the General Partners that the Partnership’s cash for working capital needs is at last time adequate) within thirty (30) days after the close of each fiscal quarter in which there has been a sale, financing, refinancing or liquidation (pursuant to Paragraph 20) of Partnership Property. Cash From Sales, Financing, Refinancing or Liquidation of Partnership Property or a portion thereof shall be distributed and applied by the Partnership in the. following order of priority:

(a) To the payment of debts and liabilities of the Partnership (including all expenses of the Partnership incident to any such sale, financing, refinancing or liquidation) excluding, debts and liabilities or” the Partnership to Partners or any-Affiliates, but including all unpaid fees owing to the General Partners under this Agreement;

b) To the setting up of any reserves which the liquidator deems reasonably necessary for contingent, unmatured or unforeseen liabilities or obligations of the Partnership;

(c) To the repayment of the balance due on advances or cash loans necessary to the Partnership made by any Partner;

(d) If Payout (as defined in Paragraph 11.4 of the Partnership Agreement) has not occurred, then to the Unit Holders in an amount such that Payout shall occur;

(e) To the General Partners in an amount equal to their Original Invested Capital plus any additional capital contributions;

(f) To the General Partners in an amount equal to the subordinated real estate commission payable in accordance with Paragraph 9.6.1;

(g) The remainder to be distributed 85qr to the Limited Partners and 15% to the General

Partners as their Interest in Cash From Sales, Financing, Refinancing or Liquidation, pursuant to Paragraph 9.6.2 of this Partnership Agreement, which amount shall be distributed to the General Partners as agreed between themselves.

All distributions made to the General Partners shall be allocated and paid to them in a proportion as determined between the^. All distributions made to the Unit Holders shall be allocated to each Unit Holder according to that Unit Holder’s Percentage Interest.

11.8 Distribution of Cash From Initial Working Capital Reserves. Cash From Initial Working Capital Reserves shall be determined by the General Partners as of the last day of each fiscal quarter, and shall be distributed within thirty (30) days after the close of each fiscal quarter in which there has been a determination that a distribution shall be made from Initial Working Capital Reserves. Cash From Initial Working Capital Reserves shall be distributed to the Unit Holders in the ratio in which the number of Units owned by each of them on the last day of each fiscal quarter of each fiscal year of the Partnership in which there is a distribution of Cash From Initial Working Capital Reserves bears to the total number of Units owned by all of them as of that date, without regard to capital accounts or the number of days during such quarter in which a person was a Holder

.

11.9 Distribution of Cash From Initial Financing Where Such Amounts Are Not Reinvested. Cash From Initial Financing not reinvested pursuant to paragraph 15.1.15, shall be distributed in the same manner as distribution of Cash From Sale, Financing, Refinancing or Liquidation in accordance with Paragraph 11.7.2.

11.10 Distribution Restrictions. The Partnership may be restricted from making distributions under the terms of notes, mortgages or other types of debt obligation which it may issue or assume in conjunction with borrowed funds and distributions may also be restricted or suspended in circumstances when the General Partners determine, in their absolute discretion, that such action is in the best interests of the Partnership.

11.11 Consent by Partners. The methods hereinabove set forth by which distributions and allocations of Net Income and Net Loss are made and apportioned are hereby expressly consented to by each Partner as an express condition to becoming a Partner.

11.12 Distributions Subject to Certain Expenses. All distributions are subject to the payment of Partnership expenses, and to the maintenance of reasonable reserves for alterations, repairs, improvements, maintenance, and replacement of furniture and fixtures, contingencies and any capital improvements.

11.13    Uninvested Proceeds. In the event that any portion of the Net Proceeds is not invested or committed for investment within 24 months from the effective date of the Prospectus (except for any amounts utilized to pay Partnership operating expenses and also except amounts set aside for reserves as set forth in Paragraph 3.2 of this Partnership Agreement,, such portion of the Net Proceeds shall be distributed to the Unit Holders by the Partnership as a return of capital. For the purposes of this Paragraph 11.13, funds will be deemed to have been committed to investment and will not be returned to the unit Holders to the extent written contractual

agreements have been executed prior to the 24 month period, regardless of whether any such investment may or may not be consummated pursuant to the written contractual agreements and also pursuant to written contractual agreements or pursuant to the decision of the General Partners that additional reserves are necessary in connection with the Property to the extent any funds have been reserved to make contingent payments in connection with any Property regardless of whether any such payments may or may not be made.

11.14 Minimum Interest of General Partners. In no event shall the General Partners’ interests in each material item of Partnership income, gain, loss, deduction or credit be less than one percent (1%) of each such item at all times during the existence of the Partnership. For this purpose, Units held by the General Partners as Limited Partners shall not be taken into account.

11.15 Partner as a Creditor. At the time a Partner becomes entitled to receive distributions the Partner has the status of, and is entitled to all remedies available to, a creditor of the Partnership with respect to the distributions. However, a Partner may not receive distributions from the Partnership to the extent that, after giving effect to the distributions, all liabilities of the Partnership, other than liabilities to Partners on account of the Partnership interests exceed the fair market value of the Partnership assets.

12. Assignment of Partnership Units

12.1 Holders’ Right to Assignment. Subject to the provisions of Paragraph 12.3, Holders shall have the right to assign five (5) or more whole units (provided, however, that unless prohibited by any applicable state securities laws, four Units may be acquired or assigned by an Individual Retirement Account established under Section 408 of the Code and further provided that a Holder other than an Individual Retirement Account, must assign all of his Units if he retains less than five Units) by a written instrument of assignment, the terms of which are not in contravention of any of the provisions of this Partnership Agreement, which instrument has been duly executed by the assignor of such Units. A Limited Partner shall notify the General Partners for any assignment of a beneficial interest in any Units which occurs without a transfer of record ownership.

12.2 Assignees of Record. An Assignee of Record shall be entitled to receive distributions of ash or other property from the Partnership in accordance with the provisions of Paragraph 11 attributable to the Units acquired by reason of such assignment from and after the effective date of the assignment of such Units to him; however, anything herein to the contrary notwithstanding, the Partnership and the General Partners shall be entitled to treat the assignor of such Units as the absolute owner thereof in all respects, and shall incur no liability for allocations of Net Income, Net Loss, or Distributions, or transmittal of reports and notices required to be given to Holders hereunder which are made in good faith to such assignor until such time as the written instrument of assignment has been received by the Partnership and recorded on its books and the effective date of the assignment has passed. Provided the Partnership has actual notice of an assignment of Units, the effective date of such assignment on which the Assignee shall be deemed an Assignee of Record shall be the last day of the calendar month following receipt of notice of assignment and required documentation.

12.3 Restriction on Assignment. No assignment of any Units by a Holder may be made ifthe Units sought to be assigned, when added to the total of all other Units assigned within the period of twelve consecutive months prior to the proposed date of assignment would, in the opinion of counsel for the Partnership, result in the termination of the Partnership under Section 708 of the Code. However, such assignment may be made if upon the application and at the expense of the Holder desiring to assign his Units in the Partnership, there shall have been granted to the transferring Holder and the Partnership a private ruling by the Internal Revenue Service that the proposed assignment will not cause such a termination.

12.4 Governmental Compliance. No- assignment, sale; transfer, exchange or other disposition of any Units in the Partnership may be made except in compliance with the then applicable rules of any applicable governmental authority.

12.5 When Assignment is Void and Ineffectual. Anyassignment, sale, exchange or other transfer in contravention of any of the provisions of this Paragraph 12 shall be void and ineffectual, and shall not bind or be recognized by the Partnership.

13. Substituted Limited Partners

13.1 Requirements. No Assignee or Assignee of Record shall have the right to become a substituted Limited Partner in place of his assignor unless all of the following conditions are first satisfied:

13.1.1 A duly executed and acknowledged written instrument of assignment covering no less than five (5) Units (provided, however, unless prohibited by any applicable state securities laws, four (4)U nits may be assigned by an Individual Retirement Account) shall have been filed with the Partnership which instrument shall specify the number of Units being assigned and set forth the intention of the assignor that the Assignee succeed to assignor’s interest as a substituted Limited Partner in his place;

13.1.2 The assignor and Assignee shall have executed and acknowledged such other instruments the General Partners may deem necessary or desirable to effect such substitution, including the written acceptance and adoption by the Assignee of the provisions of this Partnership Agreement and his execution, acknowledgement and delivery to the General Partners of a special power of’ attorney, the form and content of which are described herein;

13.1.3 The written consent of all General Partners to such substitution shall have been obtained;

13.1.4 A transfer fee shall have been paid to the Partnership which is sufficient to cover all reasonable expenses connected with such substitution:

13.1.5 The provisions of Paragraphs 13.3 and 12.4 of this Partnership Agreement are complied with; and

13.1.6 The amendment of the Partnership Agreement reflecting the substituted Limited Partner.

13.2 Limited Partners Consent. By executing or adopting this Partnership Agreement, each Limited Partner hereby consents to the admission of additional or substituted Limited Partners by the General. Partners and to any Assignee of his Units becoming a substituted Limited Partner.

13.3Rights, Powers and Duties of Substituted Limited Partner and Assignees. An assignee who has become a substituted Limited Partner has, to the extent assigned, the rights and powers and is subject to the restrictions and liabilities of a Limited Partner under the Partnership Agreement and Kansas law. An assignee who becomes a Limited Partner also is liable for the obligations of the assignor to make and return distributions as provided in this Partnership Agreement. However, the assignee is not obligated for liabilities unknown to the assignee at the time the assignee became a Limited Partner and which could not be ascertained from the Partnership Agreement. If an assignee of a Partnership Interest becomes a Limited Partner, the

assignor is not released from the assignor’s liability to the Limited Partnership under Paragraph 7.1.2.

14. Books, Records, Accountings and Reports

14.1Access. The Partnership Agreement and all amendments thereto, any separate certificates of limited partnership, the Partnership’s books and records and tax returns and copies of each appraisal of Partnership Property shall be maintained at the principal office of the Partnership or such other place as the General Partners may determine and shall be open to inspection and examination by the Limited Partners or their duly authorized representatives at all reasonable times. Upon written request, a Limited Partner or his duly authorized representative will be provided a copy of the certificate and agreement of limited, partnership and all amendments thereto containing the most recent listing of Partners’ names, addresses and capital contributions. Each appraisal of Partnership Property will be maintained by the General Partners and will be available for inspection and examination by any Limited Partner or his duly authorized representative for a period of at least five years following the date of acquisition of the Property upon which the appraisal was made.

14.2 Financial Statement. The General Partners shall prepare at least annually, at Partnership expense, financial statements (balance sheet, statement of income or loss, partners’ equity, and changes in financial position) prepared in accordance with generally accepted accounting principles and accompanied by a report thereon containing an opinion of an independent certified public accounting firm of recognized standing. Copies of such statements and report shall be distributed to each Limited Partner within 90 days after the close of each fiscal year of the Partnership. The financial information contained in such reports will not be reconciled with respect to information furnished to Limited Partners for income tax purposes.

14.3 Other Reports. The General Partners shall prepare at least annually, at Partnership expense: (i) a statement of cash flow, (ii) Partnership information necessary in the preparation of the Limited Partners’ Federal and state income tax returns, (iii) a report of the business of the Partnership, (iv) a quarterly statement as to the compensation or other benefits paid or accrued to, and any transactions with, the General Partners and their Affiliates, from the Partnership, which statement shall set forth the services rendered or to be rendered by the General Partners and the amount of fees received, and a report identifying distributions from: (a) Net Cash Flow From Operations of that year, (b) cash from Working Capital Reserves and other sources, and (v) a report containing a breakdown of the costs reimbursed to the General Partners or their Affiliates in accordance with Paragraph 10.1. Copies of such report shall be distributed to each Limited Partner within 90 days after the close of each taxable year of the Partnership provided, however, all Partnership information necessary in the preparation of the Limited Partner’s Federal income tax returns shall be distributed to each Limited Partner not later than 75 days after the close of each taxable year of the Partnership and the statement of General Partners’ and Affiliates’ compensation shall be prepared quarterly and distributed to the Limited Partners within 60 days of each quarter.

14.4Special Report. The General Partners shall prepare, at Partnership expense, after the end of each quarter in which Partnership Properties are acquired, a“Special Report” which shall describe therein: (i) each real Property so acquired, (ii) the geographic area in which such Property is located and the market upon which the General Partners are relying for successful operations of the real Property acquired, and (iii) such other relevant information with respect to the acquisition of such Property as the General Partners deem appropriate (including by way of illustration the date and appraised value of the real property, the purchase price of the Property including the terms of purchase, the total cash expended by the Partnership for the property and the amount of Net Proceeds remaining uncommitted, in terms of dollars and percentage of Gross

Proceeds). Copies of such Special Report shall be distributed to each Limited Partner within 60days after the end of such quarter if deemed appropriate by the Genera1 Partners such Special Report may be prepared and distributed to each Limited Partner more frequently than quarterly.

14.5Income Tax Returns. The General Partners, at Partnership expense, shall cause income tax returns for the Partnership to be prepared and timely filed with the appropriate authorities.

14.6Other Compliance. The General Partners, at Partnership expense, shall cause to prepared and timely filed, with appropriate Federal and state regulatory and administrative bodies, all reports required to be filed with such entities under then current applicable laws, rules and regulations. Such reports shall be prepared on the accounting or reporting basis required by such regulatory bodies. Any Limited Partner shall be provided with a copy of any such report upon request without expense to him. The information specified by Form 10Q will be furnished to Limited Partners within 45 days after the close of each quarterly fiscal period (if such report is required to be filed with the S.E.C.). In addition, the Partnership shall make all filings required pursuant to the Partnership’s commitments as set out in the section entitled “Undertakings” in Part II of the Partnership’s Registration Statement.

14.7 Suitability Standard Records. The General Partners, at Partnership expense, shall maintain for a period of at least four years a record of the information obtained to indicate that a Limited Partner meets with the suitability standards set forth in the Prospectus.

14.8 State Securities Administration. To the extent required by any state securities Administrator, the General Partners shall submit to such Administrator any or all reports and statements required to be distributed to Limited Partners in accordance with any of the provisions of Paragraph 14.

15. Rights, Authority, Powers, Responsibilities and Duties of the General Partners

15.1 Rights. The General Partners shall have all authority, rights and powers conferred by law and those required or appropriate to the management of the Partnership business which by way of illustration bat not by way of limitation, shall, subject only to the provisions of Paragraph 15.3 following, include the right, authority and power:,

15.1.1 To acquire, develop, hold and dispose of real property, interests therein or appurtenances thereto, as well as personal or mixed property connected therewith, including the purchase, lease, development, improvement, maintenance, exchange, trade or sale of such properties, at such price, rental or amount, for cash, securities (in compliance with appropriate securities regulations) or other property, and upon terms, as the General Partners deem in their sole discretion, to be in the best interests of the Partnership;

15.1.2 To borrow money and, if security is required therefor, to mortgage or subject any Partnership investment to any other security device, to obtain replacements of any mortgage or other security device, and to prepay, in whole or in part, refinance, increase, modify, consolidate or extend any mortgage or other security device, all of the foregoing at such terms and in such amounts as the General Partners, in their sole discretion, deem to be in the best interests of the Partnership;

15.1.3 To place record title to, or the right to use Partnership assets in, the name or names of a nominee or nominees, trustee or trustees for any purpose convenient or beneficial to the Partnership;

15.1.4 To acquire and enter into any contract of insurance which the General Partners deem necessary or appropriate for the protection of the Partnership and the General Partners for the conservation of Partnership assets, or for any purpose convenient or beneficial to the Partnership;

15.1.5 To employ persons in the operation and management of the business of the Partnership including, but not limited to, the Acquisition and Property Management Agents, supervisory managing agents, building management agents, insurance brokers real estate brokers .and loan brokers, on such terms and for such compensation as the General Partners shall determine, subject, however, to the limitations with respect thereto as set forth in Paragraph 9 of this Partnership Agreement and provided that agreements with the Acquisition and Property Management Agents for the services set forth in said Paragraph 9 shall contain the terms and limitations as to fees and expenses as set forth in said Paragraph 9 and provided further that any of such agreements shall be terminated immediately upon dissolution of the Partnership under Paragraph 20.1;

15.1.6 To prepare or cause to be prepared reports, statements and other relevant information for distribution to Holders, including annual and quarterly interim reports;

15.1.7 To open accounts and deposit and maintain funds in the name of the Partnership in banks or savings and loan associations; provided, however, that the Partnership funds shall not be commingled with the funds of any other Person;

15.1.8 To cause the Partnership to make or revoke any of the elections referred to in Sections 108, 709, 754, 1017, and other elections of the Internal Revenue Code of 1954 or any similar provisions enacted in lieu thereof deemed desirable by the General Partners;

15.1.9 To select as its accounting year a calendar year or such fiscal year as approved by the Internal Revenue Service;

15.1.10 To determine the appropriate accounting method or methods to be used by the Partnership;

15.1.11 To offer and sell Units in the Partnership to the public directly or through any licensed Affiliate of the General Partners and to employ personnel, agents and dealers for such purpose;

15.1.12 To amend this Partnership Agreement to reflect the addition or substitution of Limited Partners or the reduction of capital accounts upon the return of capital to

Partners;

15.1.13 To require in all Partnership obligations that the General Partners shall not have any personal liability thereon but that the person or entity contracting with the Partnership is to look solely to the Partnership and its assets for satisfaction;

15.1.14 To execute, acknowledge and deliver any and all instruments to effectuate the foregoing, including the granting of powers of attorney, and to take all such action in connection therewith as the General Partners shall deem necessary or appropriate;

15.1.15 To reinvest all Cash From Initial Financing;

15.1.16 To purchase Property in their own names (and assume loans in connection therewith) and temporarily hold title thereto for the purpose of facilitating the acquisition of

such Property or the borrowing of money or obtaining of financing for the Partnership, or completion of construction of the Property, or any other purpose related to the business of the Partnership; provided that such Property is purchased by the Partnership for a purchase price no greater than the cost of such Property to the General Partners; and further provided that there is no difference in interest rates of the loans secured by the Property at the time acquired by the General Partners and the time acquired by the Partnership, nor any other benefit arising out of such transaction to the General Partners or their affiliates;

15.1.17 To invest the Gross Proceeds or Net Proceeds temporarily (prior to investment in Properties) in short term, highly liquid investments where- there is appropriate safety of principal;

15.1.18 Any Person dealing with the Partnership or the General Partners may rely upon a certificate signed by the General Partner therein to duly authorize as to: (i) the Identity of any General Partner or Limited Partner hereof; (ii) the existence or non-existence of any fact or facts which constitute a condition precedent to acts by a General Partner or in any other manner germaine to the affairs of the Partnership; (iii) the Persons who are authorized to execute and deliver any instrument or document of the Partnership; or (iv) any act or failure to act by the Partnership or as to any other matter whatsoever involving the Partnership or any Partner;

15.1.19 To use best efforts to obtain level payment financing on the most favorable terms available to the Partnership;

15.1.20 To withdraw from the Partnership at any time by giving written notice to the other Partners;

15.1.21 To redeem Partnership Interests, or any part thereof, including the redemption of the Original Limited Partner’s interest on or before the Minimum Subscription Closing Date, pursuant to paragraph 6.1 of this Partnership Agreement, provided that:

(1)        the redemption does not impair the capital or the operation of the Partnership;

(2) the redemption is deemed by the General Partners, in their absolute discretion, to be desirable based on unforeseen or extraordinary circumstances affecting the redeemed Partner;

(3) the Partnership has sufficient cash to make the purchase;

(4) the purchase will not be in violation of applicable legal requirements; and

(5) not more than fifteen percent (15%) of the Total Outstanding Units are redeemed in any year.

15.2 Rights of General Partners in a General Partnership. The General Partners shall, except as otherwise provided in the Partnership Agreement, have all the rights and powers and shall be subject to all the restrictions and liabilities of a partner in a partnership without limited partners, and shall be liable as such to Persons other than the Partnership, to the other Partners and to the Partnership.

15.3 Limitations. Neither the General Partners nor any Affiliate shall have the authority to:

15.3.1 Subject to the provisions of paragraph 9, enter into contracts with the Partnership which would bind the Partnership after the expulsion, adjudication of bankruptcy or insolvency, or death of a General Partner, or continue the business with Partnership assets after the occurrence of such event;

15.3.2 Grant to themselves or any Affiliate an exclusive listing for the sale of Partnership assets, including Partnership Properties;

15.3.3 Sell all, or substantially all, of the assets of the Partnership at any one time without the prior consent of the Limited Partners pursuant to a Majority Vote;

15.3.4 Pledge or encumber substantially all of the assets of the Partnership at one time, other than in connection with the acquisition or improvement of assets or the refinancing of previous obligations;

15.3.5 Alter the primary purpose of the Partnership as set forth in Paragraph 3,

“Business and Purpose”, of this Partnership Agreement;

15.3.6 Receive from the Partnership a rebate or give-up or participate in any reciprocal business arrangements which would enable them or an Affiliate to do so;

15.3.7 Sell or net lease real property to any entity in which the General Partners or any Affiliate has an interest;

15.3.8 Cause the Partnership to invest in any program, partnership or other venture unless; (i) it is a general partnership or a joint venture: (ii) the other partner or joint owner is not one of the General Partners or an Affiliate; (iii) the management of such general partnership or joint venture (subject to the exception below) is under the control of General Partners of the Partnership; (iv) the Partnership, as a .result of such joint ownership or partnership ownership of a property, is not charged directly or indirectly, more than once for the same service; (v) the agreement of partnership or joint venture does not authorize the Partnership to do anything as a partner or joint venturer with respect to the property which the Partnership, or the General Partners, could not do directly because of the policies set forth in this Partnership Agreement; (vi) the General Partners and their Affiliates are prohibited from receiving any compensation, fees or expenses which are not permitted to be paid under the terms of this Partnership Agreement; and (vii) the Partnership has a right of first refusal to buy if the other program, partnership or venture wishes to sell property held in the joint venture;

15.3.9 Except as permitted in Section 15.1.16 of this Partnership Agreement, purchase or lease real property from the Partnership or sell or lease real property to the Partnership in which the General Partners or an Affiliate has an interest;

15.3.10 Cause the Partnership to exchange Units for real property;

15.3.11 Provide Financing to the Partnership or make long-term loans to the Partnership and with regard to short-term loans made to the Partnership, receive interest or other financing charges or fees in excess of those amounts which would be charged by third party

financing institutions on comparable loans for the same purpose in the same geographic area, but in no event in excess of 2% above the prime rate of Mission Bank of Mission, Kansas:

15.3.12 Cause the Partnership to finance the purchase of Partnership Property by use of a wraparound note and mortgage i”al1-inclusive” note and deed of trust) unless; (i) neither the General Partners nor any Affiliate thereof shall receive interest in excess of that payable to the lender on such underlying encumbrances; ( i i ) all payments on the underlying obligation shall be made by the Partnership or, in the alternative, payments by the Partnership on the wraparound note are made to a third party collecting agent which in turn disburses such payment, first to the holder of such underlying obligation, and thereafter to the holder of the wraparound note; and (iii) the Partnership shall receive credit on its obligation under the all-inclusive note for payments made directly on the underlying encumbrance;

15.3.13 Do any act in contravention of this Partnership Agreement or which would make it impossible to carry on the ordinary business of the Partnership;

15.3.14 Confess a judgment against the Partnership in connection with any threatened or pending legal action;

15.3.15 Possess any Partnership Property or assign the rights of the Partnership in specific Partnership Property for other than a Partnership purpose;

15.3.16 Admit a Person as a General Partner except with the consent of the Limited Partners as provided for in this Partnership Agreement;

15.3.17 Perform any act (other than an act required by this Agreement or any act taken in good faith reliance upon counsel’s opinion) which would, at the time such act occurred, subject any Limited Partner to liability as a general partner in any jurisdiction;

15.3.18 Reinvest in real estate any Cash Flow From Operations or Net Cash Flow From Operations,-.or reinvest in real estate any Cash From Sales, Financing, Refinancing or Liquidation. Additionally, neither the General Partners nor an Affiliate may reinvest in real estate any Cash From Initial Financing, unless sufficient cash will be distributed to allow a Unit Holder in a 36% federal tax bracket to pay any state or Federal income tax liability created by the financing of the Partnership Property;

15.3.19 Invest any of the Gross Proceeds in Properties which are non-income producing;

15.3.20 Receive any insurance brokerage fee or write any insurance policy covering the

General Partners or any of the Partnership Properties;

15.3.21 Employ, or permit to employ, the funds or assets of the Partnership in any manner except for the exclusive benefit of the Partnership;

15.3.22 Incur any non-recourse indebtedness wherein the lender will have or acquire, at any time as a result of making the loan, any direct or indirect interest in the profit, capital or Property of the Partnership other than as secured creditor;

15.3.23 Incur aggregate borrowings of the Partnership in excess of 80% of the purchase price of all Partnership Properties on a combined basis or in excess of 80% of the aggregate value as determined by the lender as of the date of refinancing as to all Properties which have been refinanced. Purchase price for purposes of this Paragraph 15.3.23 shall mean the sum of the price for all Partnership Properties by the Partnership plus all costs of improvements, if

any, reasonably and properly allocable to all Partnership Properties made at the time of the acquisition or within one year thereafter, but does not include loan points, prepaid interest, or other expenses;

15.3.24 Commingle the Partnership funds with those of any other Person;

15.3.25 Cause the Partnership to enter into any transactions with any other partnership in which the General Partners or Affiliates have an interest, including, but not limited to, any transaction involving the sale, lease or purchase of any property to or from the Partnership, the rendering of services to or from the Partnership, or the lending of any monies or other property to or from the Partnership;

15.3.26 Receive any commission or fee for the placement of mortgage loans or trust deed loans on the Partnership Property or otherwise act as a finance broker on behalf of the Partnership;

15.3.27 Directly or indirectly pay or award any finder’s fees, commissions or other compensation to any Person engaged by a potential investor for investment advice as an inducement to such advisor to advise the purchaser regarding the purchase of Units; provided, however, that the General Partners shall not be prohibited from paying the normal sales commissions payable to a registered broker-dealer or other properly licensed person for selling Units;

15.3.28 Operate the Partnership in such a manner as to have the Partnership classified as an “investment company” for purposes of the Investment Company Act of 1940;

15.3.29 Invest any of the Gross Proceeds in junior mortgages, deeds of trust or other similar obligations;

15.3.30 Incur short term borrowings except for Partnership short term construction loans, short term “gap” financing, repairs, replacements or working capital;

15.3.31 Cause the Partnership to enter into any agreements with the General Partners or their Affiliates which shall not be subject to termination without penalty by either party upon not more than 60 days7 written notice;

15.3.32 Cause the Partnership to enter into any contracts with the General Partners orwith any Affiliates of the General Partners to construct or develop Partnership Properties or to render -any services in connection with such construction or development;

15.3.33 Cause the Partnership to enter into any contracts to construct Partnership Property without such contract being guaranteed at the price contracted by an adequate completion bond or other satisfactory arrangements;

15.3.34 Cause the Partnership to purchase any Property without first having obtained an appraisal with respect to the value thereof, rendered by an independent appraiser who is a member of a nationally recognized society of appraisers, which provides that the Cost of Partnership Property and any Acquisition Fees paid with respect to such Property by any person other than the Partnership equals or is less than the appraised value;

15.3.35 Cause the Partnership to loan money or property to any Affiliate, General Partner or Sponsor; or

15.3.36 Except as specifically provided for in Paragraphs 15.1.17 and 15.3.8, cause the Partnership to invest in or underwrite the securities of other issuers.

15.4 Preparation of Statements on Removal of a General Partner. Within 90 days after the Limited Partners have voted to remove a General Partner, the General Partners shall have prepared, at Partnership expense, a Partnership financial statement (balance sheet, statement of income or loss, partners7 equity, and changes in financial position) prepared, in accordance with generally accepted accounting principles and accompanied by a report thereon containing an opinion of an independent certified public accounting firm of recognized standing and shall cause such statement to be mailed to the Limited Partners as soon as possible after receipt thereof.

15.5 Rights With Respect to Functions of Partnership. The General Partners shall have the duty and responsibility for providing continuing administrative and executive support, advice, consultation, analysis and supervision with respect to the functions of the Partnership as an owner of Partnership Property, including decisions regarding adjustments to rental schedules, the sale, financing or refinancing or other disposition of property, and compliance with federal, state and local regulatory requirements and procedures.

15.6 Fiduciary Responsibility. The General Partners shall have a fiduciary responsibility for the safekeeping and use of all funds and assets of the Partnership, whether or not in the General Partners’ immediate possession or control and shall not employ or permit another person to employ such funds or assets in any manner except for the exclusive benefit of the Partnership. In addition, Unit Holders shall not be permitted to enter into any agreement with the General Partners which exculpates the General Partners from their fiduciary responsibility.

15.7 No Personal Liability. The General Partners shall have no personal liability for the repayment of the Original Invested Capital of any Holder or to repay the Partnership any portion of any negative balance in their capital accounts, except as otherwise provided in Paragraph 5.3.

15.8 Duties Relative to Lack ofPersona1 Liability. Each of the General Partners shall at all times conduct his or its affairs and the affairs of the Partnership and all of its Affiliates in such a manner that neither the Partnership nor any Partner nor any Affiliate of any Partner will have any personal liability under any mortgage on any of the Partnership Properties, unless, in the opinion of the General Partners it would be in the best interest of the Limited Partners. The General Partners shall use their best efforts, in the conduct of the Partnership’s business, to put all suppliers and other persons with whom the Partnership does business on notice that the Limited Partners are not liable for Partnership obligations and all agreements to which the Partnership is a party shall include a statement to the effect that the Partnership is a limited partnership organized under the Revised Uniform Limited Partnership Act of Kansas, but the General Partners shall not be liable to the Limited Partners for any failure to give such notice to such suppliers or other persons.

15.9 Services Performed by General Partners. No other services other than as set out in this Partnership Agreement may be performed by the General Partners for the Partnership except in extraordinary circumstances fully justified to the Administrator. As a minimum, self-dealing arrangements must meet the following criteria;

a. the compensation, price or fee therefore must be comparable and competitive with the compensation, price or fee of any other Person who is rendering comparable services or selling or leasing comparable goods which could reasonably be made available to the Partnership and shall be on competitive terms, and

b. the fees and other terms of the contract shall be fully disclosed, and .

c. the General Partners must be previously engaged in the business of rendering such services or selling or leasing such goods, independently of the Partnership and as an ordinary and ongoing business, and

d. all services or goods for which the General Partners are to receive compensation shall be embodied in a written contract which precisely describes the services to be rendered and all compensation to be paid, which contract may only be modified by a vote of the majority of the Limited Partners. Said contract shall contain a clause allowing termination without penalty on 60 days notice.

16. Rights, Powers and Voting Rights of the Limited Partners

16.1 No Management Control. Limited Partners shall take no part in or interfere in any manner with the control, conduct or operation of the Partnership and shall have no right or authority to act or bind the Partnership.

16.2 Right to Vote on Certain Matters. Limited Partners shall have the right to vote, by Majority Vote, only upon the following matters affecting the basic structure of the Partnership;

16.2.1 Removal of a General Partner;

16.2.2 Election of a successor General Partner;

16.2.3 Termination and dissolution of the Partnership;

16.2.4 Amendment of the Partnership Agreement, provided such amendment is not for the purpose of reflecting the addition or substitution of Limited Partners or the reduction of capital accounts upon the return of capital to Partners;

16.2.5 The sale of all or substantially all of the assets of the Partnership at any one time;

16.2.6 The pledge or encumbrance of all or substantially all of the assets of the Partnership at one time, other than in connection with the acquisition or improvement of assets, initial financing of a Partnership Property, or the refinancing of’ previous obligations; and

16.2.7 The extension of the term of the Partnership;

16.2.8 Assignment of a General Partner’s interest in the Partnership; and

16.2.9 Termination or material modification of all contracts between the Partnership and the General Partners for services or goods provided to the Partnership.

16.3 One Vote Per Unit. In any such vote each Limited Partner shall be entitled to cast one Vote for each Unit which he owns and the Procedures set forth in Paragraph 16.5 of this Partnership Agreement shall be applicable.

16.4 Meetings. The General Partners may at any time call a meeting of the Limited Partners, or for a vote without a meeting of the Limited Partners on matters which they are entitled to vote, and shall call for such meeting or vote following receipt of written request therefor of Limited Partners holding 10 percent or more of the Units held by all Limited Partners as of the date of

receipt of such written request (“notice date”). Within 10 days of such notice date, the General Partners shall notify in writing all Limited Partners of record as of the notice date as of the time and place of the Partnership meeting if called, and the general nature of the business to be transacted thereat, or if no such meeting has been called, of the matter or matters to be called upon and the date upon which the votes will be counted. Included with the notice shall be detailed statement of the action proposed, including a verbatim statement of the wording of any resolution proposed for adoption by the Limited Partners and of any proposed amendment of the Partnership Agreement. Any Partnership meeting or the date upon which such votes, without a meeting, will be counted regardless of whether the General Partners have called for such meeting or vote upon he request of Limited Partners or have initiated such event without such request) shall be not less than 15 nor more than 60 days following mailing of the notice hereof by the General Partners. All expenses of the voting and such notification shall be borne by the Partnership.

16.5 Voting Rights. A Limited Partner shall be entitled to cast one vote for each Unit which he owns: (i) at a meting, in person, by written proxy or by a signed writing directing the manner in which he desires that his vote be cast, which writing must be received by the General Partners prior to such meeting, or (ii) without a meeting , by a signed writing directing the manner in which he desires that his vote be cast, which writing must be received by the General Partners prior to the date upon which the votes of Limited Partners are to be counted. Only the votes of Limited Partners of record on the notice date, whether at a meeting or otherwise, shall be counted. The General Partners shall not be entitled to vote, except that a General Partner who is also a Limited Partner shall be entitled to cast one vote for each Unit for which he has paid the full subscription price for said Unit, in cash, prior to or on the Close of the Offering Date, or for Units acquired from Limited Partners or Holders subsequent to the Close of the Offering Date. The laws of the State of Kansas pertaining to the validity and use of corporate proxies shall govern the validity and use of proxies given by Limited Partners.

16.6 Limitation on Rights. No Limited Partner shall have the right or power to: (i) withdraw or reduce his contribution to the capital of the Partnership except as a result of the dissolution of the Partnership, as otherwise provided by law, or as otherwise provided in this Partnership Agreement; provided, however, that the original Limited Partner’s Units may be redeemed by the Partnership on or before the Minimum Subscription Closing Date, (ii) bring an action for partition against Partnership , (iii) cause the termination and dissolution of the Partnership by court decree or otherwise, except as set forth in this Partnership Agreement, or (iv) demand or receive property other than cash in return for his contribution. No Limited Partner shall have priority over any other Limited Partner either as to the return of contributions of capital or as to Net Income, Net Los or Distributions other than as set out in this Partnership Agreement. Other than upon the termination and dissolution of the Partnership as provided by this Partnership Agreement, there has been no time agreed upon when the contribution of each Limited Partner may be returned.

16.7 Amendments to Partnership Agreement. In addition to any amendments otherwise authorized herein, this Agreement may be amended from time to time by the General Partners, without the consent of any of the Limited Partners, (i) to add to the representations, duties or obligations of the General Partners or Affiliates or surrender any right or power granted to the General Partners or their Affiliates herein, for the benefit of the Limited Partners; and (ii) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Agreement which will not be inconsistent with the provisions of this Agreement. Notwithstanding anything to the contrary contained in this Partnership Agreement, this Agreement may not be amended without the consent of the Partners to be adversely affected by any amendment that:

16.7.1 Converts a Limited Partner into a General Partner;

16.7.2 Modifies the limited liability of a Limited Partner; -

16.7.3 Alters the interest of the General or Limited Partners in Net Income or Net Loss or Distributions from the Partnership;

16.7.4 Affects the status of the Partnership as a partnership for Federal income tax purposes.

16.8 List ofLimited Partners. Upon the written request of a Limited Partner, the General Partners will provide such Partner, or his representative, at his expense, a copy of the list containing the name and address of and Units held of record by each Limited Partner.

16.9 Limited Partner’s Right to Bring Derivative Suit. A Limited Partner may bring an action in the right of the Partnership to recover a judgment in the Partnership’s favor if General Partners with authority to do so have refused to bring the action or if an effort to cause those General Partners to bring the action is not likely to succeed.

17. Expulsion, Bankruptcy, Dissolution or Death of a General Partner

17.1 Expulsion. Any General Partner may be expelled from the Partnership upon a Majority Vote of the Limited Partners.

17.2 Notice of Expulsion. Written notice of the expulsion of a General Partner shall be served upon him either by certified or by registered mail, return receipt requested, or by personal service Such notice shall set forth the date upon which the expulsion is to become effective.

17.3 Purchase of Terminated General Partner’s Interest. Upon any of the following events relative to a General Partner, the interest of such “Terminated General Partner” in the Net Income, Net Loss and Distributions of the Partnership shall be purchased by the Partnership for a purchase price determined according to the provisions of Paragraph 17.4, following:

17.3.1 Withdrawal from the Partnership;

17.3.2 Cessation as a member of the Partnership pursuant to Paragraph 12;

17.3.3 Removal as a General Partner in accordance with Paragraphs 16.2.1 and 17.1;

17.3.4 The making of an assignment for the benefit of creditors by a General Partner, unless there is specific written consent of all Partners;

17.3.5 The filing of a voluntary petition in bankruptcy by a General Partner, unless there is specific written consent of all Partners;

17.3.6 An adjudication as bankrupt or insolvent of a General Partner or the General Partner has had entered against himself or itself an order for relief in any bankruptcy or - insolvency proceeding, unless there is specific written consent of all Partners;

17.3.7 Filing of a petition or answer by a General Partner seeking for himself or itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or rules and regulations, unless there is specific written consent of all Partners;

17.3.8 Filing of an answer or other pleading by a General Partner admitting or failing to contest the material allegations of a petition filed against the General Partner in any proceeding of this nature, unless there is specific written consent of all Partners;

17.3.9 A General Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the General Partner or of all or any substantial part of the General Partner’s properties, unless there is specific written consent of all Partners;

17.3.10 Unless otherwise provided in this Partnership Agreement or with the specific written consent of all Partners, if:

17.3.10.a Within 120 days after the commencement of any proceeding against the General Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or rules and regulations, the proceeding has not been dismissed; or

17.3.10.b Within 90 days after the appointment, without the General Partner’s consent or acquiescence, of a trustee, receiver or liquidator of the General Partner or of all or any substantial part of the General Partner’s properties, the appointment is not vacated or stayed or, within 90 days after the expiration of any such stay, the appointment is not vacated;

17.3.11 In the case of a General Partner who is a natural person:

17.3.11.a The General Partner’s death; or

17.3.11.b The entry by a court of competent jurisdiction of an order adjudicating the General Partner incompetent to manage the General Partner’s person or property;

17.3.12 In the case of a General Partner who is acting as a General Partner by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee;

17.3.13 In the case of a General Partner that is a separate partnership, the dissolution and commencement of winding up the affairs of the separate partnership;

17.3.14 In the case of a General Partner that is a corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; or

17.3.15 In the case of a General Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership.

17.4 Terms of Purchase. The Terminated General Partner shall receive from the remaining General Partners or new general partner or partners (“Acquiring Partner”), as the case may be, the fair market value of his interest in the Partnership, determined by agreement between the Terminated General Partner and the Acquiring Partner, or if they cannot agree, then by arbitration in accordance with the then current rules of the American Arbitration Association. The expenses of arbitration shall be borne equally by the Terminated General Partner and the Acquiring Partner. The fair market value of the Terminated General Partner’s interest shall be the amount the Terminated General Partner would receive upon dissolution and termination of the Partnership assuming that such dissolution or termination occurred on the date of the terminating event and the assets of the Partnership were sold for their then fair market value without any compulsion on the part of the Partnership to sell such assets. Where the termination is voluntary, payment shall

be made by a promissory note bearing nine percent (9%) simple interest per annum on the unpaid principal amount of the promissory note, secured by assignment by the Acquiring Partner to the Terminated General Partner of the future distributions by the Partnership to the Acquiring Partner attributable to the acquired interest which principal amount together with accrued interest shall be payable at the times and in the amounts equal to 100% of such distributions until such time as the principal amount together with accrued interest is paid in full, but shall become due and payable in full by the Acquiring Partner at such times as the Partnership is finally wound up and liquidated; provided, however, that if the Terminated General Partner requests, to the extent required, the sale and payments shall be made on terms and conditions that will allow such sale to qualify for the installment method as provided in Section 453of the Code. Where termination is involuntary, payment will be made by a promissory note bearing nine percent (9%) simple interest per annum on the unpaid principal amount of the promissory note, such note coming due in no less than 5 years with equal installments each year. The Terminated General Partner shall be required to sell and the Acquiring Partner shall be required to purchase the Terminated General Partner’s interest in the Partnership no later than 60 days after the occurrence of the terminating event.

17.5 Assignability of a General Partner’s Interest. A General Partner’s interest in the Partnership shall not be assignable without a Majority Vote. Any entity to which the entire interest of a General Partner in the Partnership is assigned in compliance with this Paragraph 17.5 shall be substituted by the General Partners (by the filing of appropriate amendments to the partnership Agreement) in the former General Partner’s stead as a General Partner of the

Partnership.

18. Return of Contribution

18.1 If a Partner has received the return of any part of the Partner’s contribution without violation of the Partnership Agreement or Kansas law, the Partner is liable to the Partnership for a period of one year thereafter for the amount of the returned contribution, but only to the extent necessary to discharge the Partnership’s liabilities to creditors who extended credit to the Partnership during the period the contribution was held by the Partnership.

18.2 If a Partner has received the return of any part of the Partner’s contribution in violation of the Partnership Agreement or law, the Partner is liable to the Partnership for a period of six (6) years thereafter for the amount of the contribution wrongfully returned.

18.3 A Partner receives a return of the Partner’s contribution to the extent that a distribution to the Partner reduces the Partner’s share of the fair value of the net assets of the Partnership below the value, as set forth in this Partnership Agreement, of the Partner’s contribution which has not been distributed to the Partner.

19. Other Businesses and Transactions. The General Partners, any Holder, any Affiliates, any shareholder, officer, director or employee thereof, or any person owning a legal or beneficial interest therein, may engage in or possess an interest in any other business or venture of every nature and description, independently or with others including, but not limited to, the ownership, financing, leasing, operation, management, brokerage and development of real property. Neither the General Partners nor any Affiliate of a General Partner shall be obligated to present any particular investment opportunity to the Partnership (unless such investment opportunity is presented to the General Partners or any Affiliate in their capacity as such), even if such opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership and each of them shall have the right to make for its own account (individually or as trustees) or to recommend to others any such particular investment opportunity. Nothing in this section shall be deemed to diminish the General Partners’’ overriding

fiduciary obligation to the Partnership or as a waiver of any right or remedy the Partnership or Limited Partners may have in the event of a breach by a General Partner of such obligation.

20. Termination and Dissolution of the Partnership

20.1 Events Triggering Termination and Dissolution. The Partnership shall be terminated and dissolved upon the earlier to occur of the following:

20.1.1 The retirement (provided there has been 90 days’ prior written notice to the Limited Partners), expulsion, adjudication of bankruptcy, insolvency, dissolution, death or withdrawal of a General Partner, unless (i) the remaining General Partners, within 90 days of the date of such event, elect to continue the business of the Partnership or (ii) the General Partner elected in place thereof within 120 days of the date of such event by Majority Vote of the Limited Partners, elects to continue the business of the Partnership or (iii) in the case of withdrawal within 90 days after such withdrawal, all Partners agree in writing to continue the business of the Partnership. Expenses incurred in the reformation, or attempted reformation, of the Partnership shall be deemed expenses of the General Partners.

20.1.2 A Majority Vote in favor of dissolution and termination of the Partnership;

20.1.3 The sale of all or substantially all of the assets of the Partnership unless the General Partners elect to continue the Partnership business for the purpose of the receipt and collection of a note and payments thereon or the collection of any other consideration to be received in exchange for the assets of the Partnership (which activities shall be deemed to be a part of such sale or other disposition and the winding-up of the affairs of the Partnership).

20.1.4 The expiration of the term of the Partnership;

20.1.5 The written decision, subsequent to the Close of the Offering Date, oF any General Partner to dissolve the Partnership, provided there has been 90 days prior written notice to the Limited Partners and abject to the rights of the Limited Partners set forth in Paragraph 16; or

20.1.6 Entry of a decree of judicial dissolution.

20.2 Procedure Upon Termination and Dissolution. Upon a termination and dissolution of the Partnership for any reason, the General Partners shall take full account of the Partnership assets and liabilities, shall liquidate the assets as promptly as is consistent with obtaining the fair value thereof, and shall apply 2nd distribute the proceeds therefrom pursuant to Paragraph 11 herein.

21. Special Power of Attorney

21.1 Powers Appointed. Concurrently with the execution of written acceptance and adoption of the provisions of this Partnership Agreement, each Limited Partner shall execute, acknowledge and deliver to the General Partners a special power of attorney in form acceptable to the General Partners in which each General Partner is constituted and appointed as the attorney-in-fact for such Limited Partner, with power and authority to act in his name and on his behalf to execute, acknowledge and swear to in the execution, acknowledgement and filing of documents, which shall include, by way of illustration but not of limitation, the following:

21.1.1 The Partnership Agreement, any separate certificates of limited partnership, as well as any amendments to the foregoing which, under the laws of the State of Kansas or the

laws of any other state, are required to be filed or which the General Partners deem to be advisable to file;

21.1.2 Any other instrument or document which may be required to be filed by the Partnership under the laws of any state or by any governmental agency, or which the General Partners deem advisable to file; and

21.1.3 Any instrument or document which may be required to effect the continuation of the Partnership, the admission of an additional or substituted Limited Partner, or the dissolution and termination of the Partnership (provided such continuation, admission or dissolution and termination are in accordance with the terms of the Partnership Agreement), or to reflect any reductions in amount of contributions of Partners.

21.2 Terns of Special Power of Attorney. The special power of attorney to be concurrently granted by each Limited Partner:

21.2.1 Is a special power of attorney coupled with an interest, is irrevocable, shall survive, the death of the granting-Limited Partner; and is limited to those matters herein set forth;

21.2.2 May be exercised by either General Partner acting alone for each Limited Partner by a facsimile signature of the General Partner or by one of its officers, or by listing all of the Limited Partners executing any instrument with a single signature of the General Partner or one of its officers acting as an attorney-in-fact for all of them; and

21.2.3 Shall survive an assignment by a Limited Partner of all or any portion of his Units except that, where the Assignee of the Units owned by a Limited Partner has been approved by either General Partner for admission to the Partnership as a substitute Limited Partner, the special power of attorney shall survive such assignment for the sole purpose of enabling either General Partner to execute, acknowledge and file any instrument or document necessary to effect such substitution.

22. Indemnification

22.1 General Partners. The Partnership, its receiver or its trustee, shall indemnify, save harmless and pay all judgments and claims against the General Partners, their officers, directors. employees, agents, subsidiaries and assigns, from any liability, loss or damage incurred-by them or by the Partnership by reason of any act performed or omitted to be performed by them in connection with the business of the Partnership, including costs and attorney’s fees (which attorney’s fees may be paid as incurred) and any amounts expended in the settlements of any claims of liability, loss or damage provided that, if such liability, loss or claims arises out of any action or inaction of the General Partners, such course of conduct was in the best interest of the Partnership and did not constitute fraud, negligence, breach of fiduciary duty or misconduct by the General Partners and, provided further, that any such indemnification shall be recoverable only from the assets of the Partnership and not the assets of the Holders. All judgments against the Partnership and a General Partner, wherein a General Partner is entitled to indemnification, must first be satisfied from Partnership assets before such General Partner is responsible for these obligations. The Partnership shall not pay for any insurance covering liability of the General Partners, their officers, directors, employees, agents, subsidiaries and assigns for actions or omissions for which indemnification is not permitted hereunder; provided, however, that nothing contained herein shall preclude the Partnership from purchasing and paying for such types of insurance, including fire and extended coverage liability, vandalism and malicious mischief, casualty insurance protection and workmen’s compensation, as would be customary for any

person owning comparable property and engaged in a similar business or from naming the General Partners and any of their Affiliates as additional insured parties thereunder, provided that such addition does not add to the premiums payable by the Partnership. Nothing contained herein shall constitute a waiver by any Limited Partner or any right which he may have against any party under Federal or state securities laws.

22.2 Exception. Notwithstanding the foregoing Paragraph 22.1, neither the General Partners nor any officer, director, employee, agent, subsidiary or assign of the General Partners or of the Partnership shall be indemnified from any liability, loss or damage incurred by them in connection with (i) any claim or settlement involving allegations that the Securities Act of 1933 or any state securities laws were violated by the General Partners or by any such other person or entity unless: (a) the General Partners or other persons or entities seeking indemnification are successful in defending such action; and (b) such indemnification is specifically approved by a court of law which shall have been advised as to the current position of the Securities and Exchange Commission and the California Commissioner of Corporations regarding indemnification for violations of securities law or (ii) any liability imposed by law, including liability for fraud, bad faith or negligence.

23. Miscellaneous

2.3.1 Counterparts. This Partnership Agreement may be executed in several counterparts and all so executed shall constitute one Partnership Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart.

23.2 Successors and Assigns. The terms and provisions of this Partnership Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the respective Partners.

23.3 Severability. In the event any sentence or paragraph of this Partnership Agreement is declared by a court of competent jurisdiction to be void, such sentence or paragraph shall be deemed severed from the remainder of the Partnership Agreement and the balance of the Partnership Agreement shall remain in effect.

23.4 Notices. All notices under this Partnership Agreement shall be in writing and shall be given to the Holder entitled thereto, by personal service or by mail, posted to the address maintained by the Partnership for such person or at such other address as he may specify in writing.

23.5 Headings. Paragraph titles or captions contained in this Partnership Agreement are inserted only as a matter of convenience and for reference. Such titles and captions in no way define, limit, extend or describe the scope of this Partnership Agreement nor the intent of any provision hereof.

23.6 Words Used. Whenever required by the context hereof, the singular shall include the plural, and vice-versa; the masculine gender shall include the feminine and neuter genders, and vice-versa; and the word “person” shall include a corporation, partnership, firm or other form of association.

23.7 General Partner Names and Addresses. The names and addresses of the General Partners are:

James R. Hoyt

5453 West 61st Place

Mission, Kansas 66205

Secured Investment Resources, Inc.

5453 West 61st Place

Mission, Kansas 66205

23.8 Limited Partner Data. The names, addresses and capital contributions of the Limited Partners are set forth on Exhibit A attached hereto, which exhibit shall be maintained at principal place of business of the Partnership.

23.9 Construction. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Kansas and that the Revised Uniform Limited Partnership Act of the State of Kansas as now adopted or as may be hereafter amended shall govern the partnership aspects of this Agreement.

23.10 Foreign Partnership Filing. In the event the business of the Partnership is carried on or conducted in states in addition to the State of Kansas, then the parties agree that this Partnership shall exist under the laws of each state in which business is actually conducted by the Partnership and they severally agree to execute such other and further documents as may be required or requested in order that the General Partners legally may qualify this Partnership in such states. The power of attorney granted to the General Partners by each Limited Partner in Paragraph 20 shall constitute the authority of the General Partners to perform the ministerial duty of qualifying this Partnership under the laws of any state in which it is necessary to file document or instruments of qualification. A Partnership office or principal place of business in any state may be designated from time to time by the General Partners.

GENERAL PARTNERS:

S/ JAMES R. HOYT

James R. Hoyt, Individual General Partner

ATTEST:	SECURED INVESTMENT RESOURCES, INC. Corporate General Partner
s/ BILL P. CHARCUT	S/ JAMES R. HOYT
Secretary	President

ORIGINAL LIMITED PARTNER:

S/ JAMES R. HOYT

James R. Hoyt, Individual General Partner

EXHIBIT A

Restated Certificate and Agreement of

Limited Partnership of

Secured Investment Resources Fund, L.P.

Limited Partners

Name	Address	Capital Contribution	Units
James R. Hoyt	5453 West 61st Place	$2,500	5
	Mission, Kansas 66205

EX-99

EVEREST HICKORY GLEN, LP

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

This Amended and Restated Agreement of Limited Partnership of Everest Hickory Glen, LP (the “Partnership”), effective as of December 6, 2006, is entered into by and among the Partners set forth below, pursuant to the Kansas Revised Uniform Limited Partnership Act (the “Act”) on the following terms and conditions.

1. Organization.

1.1       Formation. On or about March 26, 1999, the Partnership was organized as a Kansas limited partnership under the name “Oak Terrace Joint Venture, L.P.” by executing and delivering a Certificate of Limited Partnership to the Secretary of State in accordance with and pursuant to the Act, which was filed on March 26, 1999 (the “Original Certificate”). The original Agreement of Limited Partnership of the Partnership was made and entered into as of March 31, 1999. On or about December 6, 2006, an Amended and Restated Certificate of Limited Partnership was filed with the Secretary of State in accordance with and pursuant to Section 56-la160 of the Act.

1.2       Name and Place of Business. The name of the Partnership shall be Everest Hickory Glen, LP (the “Partnership”), and its principal place of business shall be 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101. The General Partner may change the name and or the principal place of business of the Partnership as the General Partner may reasonably determine to be necessary or desirable.

1.3       Business and Purpose: The business of the Company shall be (a) to accomplish any lawful business whatsoever, conducive to or expedient for the protection or benefit of the Company and its assets and related, directly or indirectly, to the acquisition, management or disposition of the Property (as defined below), (b) the exercise of all other powers necessary to or reasonably connected with the Partnership’s business which may be legally exercised by a limited partnership under the Act, and (c) to engage in all activities necessary, customary, convenient, or incidental to any of the foregoing.

1.4       Term. The Partnership commenced on the filing of the Original Certificate with the Secretary of State, and shall continue for the period ending December 31, 2040 or for such longer period as may be agreed upon by the Partners and permitted by the Act, unless earlier terminated in accordance with the provisions of this Agreement or the Act.

1.5       Registered Agent. The Partnership’s registered agent shall be as provided in the Amended and Restated Certificate of Limited Partnership. The registered agent may be changed from time to time by filing the name of the new registered agent pursuant to the Act.

1.6       Qualification. The General Partner shall cause the Partnership to be qualified or authorized to do business in any state in which such qualification or authorization is necessary in connection with the conduct of the Partnership’s business.

1.7       Tax Classification. It is the intention of the Partners that the Partnership shall be classified as a partnership for federal income tax purposes. The Partners shall make such amendments to this Agreement as are reasonably necessary to ensure that the Partnership will be so classified.

1.8        Certain Transactions. Any Owner, General Partner or any Affiliate, or any equity holder, officer, director, employee or any person owning a legal or beneficial interest therein, may engage in or possess an interest in any other business or venture of any nature or description, whether or not such ventures are competitive with the Partnership and no Owner, General Partner or other person or entity shall have any interest in such other business or venture by reason of their interest in the Partnership.

2. Definitions.

The definitions in this Agreement shall have the following meanings:

“Act” shall mean the Kansas Revised Uniform Limited Partnership Act, as hereafter amended from time to time.

“Affiliate” shall mean (a) any person directly or indirectly controlling, controlled by or under common control with another person; (b) a person owning or controlling 10% or more of the outstanding voting securities of such other person; (c) any officer, director, member or partner of such other person; and (d) if such other person is an officer, director, member or partner, any company for which such person acts in any capacity. As used herein, the term “person” includes any natural person, corporation, trust, partnership, limited liability company, unincorporated association or other legal entity.

“Agreement” shall mean this Amended and Restated Agreement of Limited Partnership, as amended from time to time.

“Assignee” shall mean a person who has acquired an Economic Interest in the Partnership but who has not been admitted as a Substituted Partner.

“Capital Account” with respect to any Partner (or such Partner’s assignee) shall mean such Partner’s initial Capital Contribution adjusted as follows: (a) a Partner’s Capital Account shall be increased by: (i) such Partner’s share of Net Income; and (ii) any additional cash Capital Contribution made by such Partner to the Partnership; and (b) a Partner’s Capital Account shall be reduced by: (i) such Partner’s share of Net Loss; and (ii) any Distributions to such Partner; provided that, upon Liquidation of the Partnership or of the Interest of any Partner, unsold Property will be valued for Distribution at its fair market value and the Capital Account of each Partner before such Distribution shall be

adjusted to reflect the allocation of gain or loss that would have been realized had the Partnership then sold the Property for its fair market value. Such fair market value shall not be less than the amount of any nonrecourse indebtedness that is secured by the Property. The Capital Account of a Substituted Partner or an Assignee shall include the Capital Account of its transferor. Notwithstanding anything to the contrary in this Agreement, Capital Accounts shall be maintained in accordance with Treasury Regulations Section 1.704-l(b). References in this Agreement to the Treasury Regulations shall include corresponding subsequent provisions.

“Capital Contribution” shall mean the amount of cash, or the agreed upon value of the Property, actually contributed by a Partner to the capital of the Partnership pursuant to Section 3.1; provided, however, that for any property contributed to the Partnership in connection with a non-taxable reorganization or similar transaction, the amount of Capital Contribution ascribed to such Partner for such property shall he determined in accordance with the Code and the rules and regulations thereunder in effect at the time of such reorganization.

“Cash Available For Distribution” shall mean the net cash realized by the Partnership from all sources (exclusive of Capital Contributions) calculated on a calendar-quarter basis, including but not limited to the operations of the Partnership and the sale or financing of all or any portion of the Property, after payment of all cash expenditures of the Partnership, including but not limited to operating expenses, all fees and costs payable to the General Partner or Affiliates, all asset management fees, all payments of principal and interest on indebtedness (including payments on loans from Partners), expenses for repairs and maintenance, capital improvements and replacements, and such reserves and retentions as the General Partner and all of the Partners reasonably determine to be necessary and desirable in connection with the Partnership’s operations, its existing assets and any anticipated acquisitions.

“Certificate of Limited Partnership” shall mean the Amended and Restated Certificate of Limited Partnership of Oak Terrace Joint Venture, L.P., as filed with the Secretary of State on December 6, 2006, as the same may be amended or restated from time to time.

“Code” shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequently enacted federal revenue laws.

“Distribution” shall refer to any money or the fair market value of other Property transferred without consideration to Partners with respect to their interests in the Partnership, but shall not include any amounts paid pursuant to Section 5.4.

“Economic Interest” shall mean an interest in the Net Income, Net Loss and Distributions of the Partnership but shall not include any right to vote or to participate in the management of the Partnership. The Economic Interests are held only by the Partners and are equal to their Partnership Interests.

“Event of Insolvency” shall occur when an order for relief against a Partner is entered under Chapter 7 of the federal bankruptcy law, or (a) a Partner: (i) makes a general assignment for the benefit of creditors, (ii) files a voluntary petition under the federal bankruptcy law, (iii) files a petition or answer seeking for that Partner a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, (iv) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against a Partner in any proceeding of this nature, or (v) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of that Partner or of all or a substantial part of that Partner’s properties; or (b) the expiration of 60 days after either (i) the commencement of any proceeding against a Partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law, or regulation, if the proceeding has not been dismissed, or (ii) the appointment without a Partner’s consent or acquiescence of a trustee, receiver, or liquidator of a Partner or of all or any substantial part of a Partner’s properties, if the appointment has not been vacated or stayed (or if within 60 days after the expiration of any such stay, the appointment is not vacated); or (c) becomes “bankrupt” within the meaning of the Act.

“General Partner” shall refer to Millenium Oak Terrace, so long as Millenium Oak Terrace is General Partner hereunder. The term General Partner shall also refer to any successor General Partner who is elected to such position, so long as such successor is General Partner hereunder.

“Interest” shall mean a Partnership Interest or an Economic Interest

“Liability Event” shall have the meaning ascribed to it in Section 6.7 below.

“Limited Partner” shall mean SIR 11, and any person or entity who is issued units of Partnership Interest by the Partnership and admitted to the Partnership as a limited partner, and any Substituted Partner that is the transferee or other successor to the Partnership Interest thereof.

“Liquidation” shall mean in respect to the Partnership the earlier of the date upon which the Partnership is terminated under Section 708(b)(l) of the Code or the date upon which the Partnership ceases to be a going concern (even though it may exist for purposes of winding up its affairs, paying its debts and distributing any remaining balance to its Partners), and in respect to a Partner where the Partnership is not in Liquidation, “Liquidation” means the date upon which occurs the termination of the Partner’s entire interest in the Partnership by means of a Distribution or the making of the last of a series of Distributions (in one or more years) to the Partner by the Partnership.

“Majority in Interest’’ shall mean the Partners owning more than fifty percent (50%) of the Partnership Voting Rights of all Partners who are entitled to approve the issue in question.

“Millenium Oak Terrace” shall refer to Millenium Oak Terrace, LLC, a California limited liability company, 199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID: 20-4104138.

“Net Income” or “Net Loss” shall mean, respectively, for each taxable year of the Partnership the. taxable income and taxable loss of the Partnership as determined for federal income tax purposes in accordance with Section 703(a) of the Code (including all items of income, gain, loss, or deduction required to be separately stated pursuant to Section 703(a)(l) of the Code).

“Notice of Transfer” shall mean the notice described in Section 10.2.1.

“Organization Expenses” shall mean all expenses incurred in connection with the organization and formation of the Partnership including, but not limited to, legal, accounting, tax planning fees, promotional fees or expenses, filing or recording fees, property inspections and research, and other costs or expenses in connection therewith.

“Owner” shall mean a Partner or the holder of an Economic Interest

“Partner” shall refer to any person or entity who is admitted to the Partnership as a General Partner, Limited Partner or Substituted Partner and who has not ceased to be a Partner.

“Partnership Interest” shall mean a Partner’s entire interest in the Partnership including such Partner’s Economic Interest and Partnership Voting Rights. The initial Partnership Interests were issued to SIR 11. Nothing herein shall imply any restriction on the General Partner’s ability to issue additional units of Partnership Interest in accordance with this Agreement and the Act.

“Partnership Voting Rights” shall mean the voting and other rights and privileges that the Partner may enjoy by being a Partner, other than the Partner’s Economic Interest. The initial Partnership Voting Rights are held only by SIR I1 on the date hereof and are equal to its Partnership Interests.

“Prime Rate” shall mean the reference rate announced from time-to-time by East West Bank, and changes in the Prime Rate shall be deemed to occur on the date that changes in such rate are announced.

“Principal” shall mean any direct or indirect owner of not less than fifteen percent (15%) of the voting interests or economic benefits of the General Partner or any Partner.

“Property” shall mean Hickory Glen Apartments, an independent living community located at 1700 W. Washington, City of Springfield, County of Sangamon, State of Illinois (formerly known as “Oak Terrace Active Retirement Center”) and/or any or all of such tangible or intangible personal property as may be acquired by the Partnership for the operation of the Property.

“Secretary of State” shall mean the Secretary of State of Kansas

“SIR II” shall mean Secured Investment Resources Fund, L.P. I1 a Delaware limited partnership, 199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID: 36- 3451000.

“Substitute Partner” shall mean an Assignee who has become a Partner in accordance with the procedures specified in Article 10.

“Total Capitalization” shall mean the sum of (a) the outstanding principal balance of any debt obligations of the Partnership (not including short-term accounts payable) and (b) the outstanding, Unreturned Capital Contributions, as calculated as of the last day of the preceding calendar month.

“Unreturned Capital Contribution” shall mean the aggregate Capital Contributions

made by a Partner from time to time less the aggregate Distributions to such Partner made pursuant to Section 5.l(b).

3. Capitalization and Financing.

3.1       Partner’s Capital Contribution. The initial capital was contributed by SIR II in the form of all right, title and interest in the Property, for which the legal description is attached hereto as Exhibit A, together with the other assets and liabilities related to such Property. In consideration for the Property, SIR I1 received 100% of the Partnership Interest.

3.2       Liabilities of Partners. Except as specifically provided in this Agreement, Partners shall not be required to make any contributions to the Partnership and no Partner shall be liable for the debts, liabilities, contracts, or any other obligations of the Partnership except with regard to their Capital Contributions as indicated herein, nor shall the Partners be required to lend any funds to the Partnership or to repay to the Partnership, any Partner, or any creditor of the Partnership any portion or all of any deficit balance in a Partner’s Capital Account.

3.3       Partner Loans. The General Partner or an Affiliate may make an unsecured loan to the Partnership to the extent required to pay the Partnership’s operating expenses, including debt service or capital expenditures. Any such loan shall bear interest at a rate not to exceed the Prime Rate plus one percent (1%) and provide for the payment of principal and any accrued but unpaid interest in accordance with the terms of the promissory note evidencing such loan, but in no event later than upon dissolution of the Partnership. Such advances shall not be deemed a Capital Contribution. No Partner shall be liable to any other Partner for unpaid advances or unpaid interest on any such loan. Any unpaid advances, together with accrued and unpaid interest, shall be payable solely out of Cash Available For Distribution as provided in Section 5.1 and Section 12.3.Loan repayments under Section 5.1 and Section 12.3 shall be made in the priority that the most

recently made Partner loan shall be repaid first, and payments shall first be applied to unpaid interest and then to unpaid principal.

3.4       No Withdrawal of Capital Contributions. Except upon dissolution and liquidation of the Partnership, no Owner shall have the right to withdraw its Capital Contribution.

3.5       No Interest on Capital Contributions. No Owner shall be entitled to interest of any kind on its Capital Contribution.

4. Allocation of Tax Items.

4.1       Net Income Allocations. Net Income for any fiscal year shall be allocated as follows: (a) first, among the Owners in proportion to and to the extent of Net Loss allocated to the Owners under Section 4.2 until the aggregate Net Income allocated to the Owners under this Section 4.1 for such fiscal year and all previous fiscal years is equal to the aggregate Net Loss allocated to the Owners pursuant to Section 4.2 for all previous fiscal years; and (b) the balance, if any, among the Owners in proportion to their respective Economic Interests.

4.2       Net Loss Allocations. Net Loss for any fiscal year shall be allocated as follows: (a) first, among the Owners in proportion to and to the extent of Net Income allocated to the Owners under Section 4.1 until the aggregate Net Loss allocated pursuant to this Section 4.2 for such fiscal year and all previous fiscal years equals the aggregate Net Income allocated to the Owners pursuant to Section 4.1 for all previous fiscal years; and (b) the balance, if any, among the Owners in proportion to their respective Economic Interests.

4.3       Allocation of Partnership Items. Whenever a proportionate part of Net Income or Net Loss is allocated to an Owner, every item of income, gain, loss or deduction entering into the computation of such Net Income or Net Loss, and every item of credit or tax preference related to such allocation and applicable to the period during which such Net Income or Net Loss was realized shall be allocated to the Owner in the same proportion.

4.4       Assignment. Except to the extent the Code requires otherwise, in the event of the assignment of an Interest, the Net Income and Net Loss arising from other than a sale or refinancing of Property shall be apportioned as between the assigning Owner and his Assignee based upon the number of months of their respective ownership during the year in which the assignment occurs, without regard to the results of the Partnership’s operations during the period before or after such assignment, and Net Income, Net Loss and Distributions from a sale or refinancing of the Property will be allocated among the Owners as of the date of any such transaction.

4.5 Provisions of Regulations. Notwithstanding the foregoing, allocations required to be made under the regulations under Code Section 704 shall be made as

required therein, including allocations constituting qualified income offsets and minimum gain chargebacks.

5. Distributions / Expenses.

5.1       Cash Available For Distribution. Except as otherwise provided in Article 12, Cash Available For Distribution shall be distributed in the following order of priority: (a) first, to repay any Partner loans made pursuant to Section 3.3; (b) second, the balance, if any, among the Owners in proportion to their Economic Interests. Distributions of Cash Available For Distribution shall be reviewed within twenty (20) days after the end of each calendar quarter and made as soon thereafter as possible.

5.2       Asset Management Fee. The Partnership shall pay, as an operating expense, a monthly asset management fee (“Asset Management Fee”) to the General Partner, or its designated Affiliate, of $2,000. The Asset Management Fee shall be increased on January 1, 2008 and each January 1 thereafter by the percentage change in the Consumer Price Index from the prior January 1.

5.3       Compensation to the Partners. General Partner and Affiliates. The Partners, the General Partner and their Affiliates shall receive compensation from the Partnership for services rendered or to be rendered only as specified in this Agreement. 5.4 Partnership Expenses. Subject to the limitations set forth in Section 5.3, the Partnership shall pay directly, or reimburse the General Partner or the Partners, as the case may be, for all of the reasonable costs and expenses of the Partnership’s operations, including, without limitation, the following costs and expenses: (a) all Organization Expenses advanced or otherwise paid by the General Partner or the Partners; (b) all reasonable costs of personnel employed by the Partnership and directly involved in the Partnership’s business; (c) all compensation due to any Partner or its Affiliate; (d) all costs of personnel employed by any Partner or the General Partner or their Affiliates to the extent of their direct involvement in the business of the Partnership (provided, however, that such costs shall not include compensation to the Principals); (e) all costs of borrowed money and taxes applicable to the Partnership; (f)legal, accounting, audit, brokerage, and other fees; (g) fees and expenses paid to independent contractors, mortgage bankers, real estate brokers, and other agents; (h) costs of acquiring, owning, developing, improving, operating, and disposing of Property; (i) expenses incurred in connection with the alteration, maintenance, repair, remodeling, refurbishment, leasing and operation of Property; (i) all expenses incurred in connection with the maintenance of Partnership books and records, the preparation and dissemination of reports, financial statements, tax returns or other information to Partners and the making of Distributions to Partners; (k) expenses incurred in preparation and filing reports, returns or other information with appropriate regulatory agencies; (I) expenses of insurance as required in connection with the business of the Partnership; (m) costs incurred in connection with any litigation, or any examination, investigation, or other proceedings conducted by any regulatory agency, including legal and accounting fees, in which the Partnership may become involved; (n) the actual costs of goods and materials used by or for the Partnership; (o) the costs of services that could be performed directly for the Partnership

by independent parties such as legal, accounting, secretarial or clerical, reporting, transfer agent, data processing and duplicating services but which are in fact performed by the General Partner or its Affiliates, but not in excess of the lesser of: (i) the actual costs to the General Partner or its Affiliates of providing such services; or (ii) the amounts which the Partnership would otherwise be required to pay to independent parties for comparable services in the same geographic locale; (p) expenses of Partnership administration, accounting, documentation and reporting, (q) expenses of revising, amending, modifying, or terminating this Agreement; (r) reasonable travel expenses of the General Partner or any Partner incurred in connection with the business of the Partnership; (s) taxes and other governmental fees and charges payable by the Partnership; and (t) all other costs and expenses incurred in connection with the business of the Partnership reasonably approved in budgets.

5.5       Property Management. From and after the date hereof, the General Partner shall provide or arrange for the provision of property management services for the Partnership, which may be provided by an independent third-party. If the General Partner or an Affiliate provides property management services, then the General Partner or its Affiliate shall accept as compensation in full for the performance of such services, a management fee in an amount equal to the lesser of (a) five percent (5%) of the gross revenue of the real property owned by the Partnership, and (b) the fee that an independent, third-party property management company would charge.

6. Authority and Responsibilities of the General Partner.

6.1       Management. The business and affairs of the Partnership shall be managed by its General Partner. Except as otherwise provided in Section 6.4 and Section 8.2, the General Partner shall have full and complete authority, power and discretion to manage and control the business, affairs and Properties of the Partnership, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Partnership’s business. All actions taken by General Partner in good faith shall not constitute a breach of its fiduciary duty to the Partnership and its Partners. Liability for actions taken by General Partner in good faith shall only apply as set forth in Section 6.7.

6.2       Number. Tenure and Qualifications. The Partnership shall have one General Partner. The initial General Partner shall be Millenium Oak Terrace. Neither the initial General Partner nor any successor General Partner shall be removed except as provided in Section 7.2. The General Partner need not be a resident of the State of Kansas or an Owner.

6.3       General Partner’s Authority. The General Partner shall have all authority, rights and powers conferred by law (subject only to Sections 6.4 and 6.5) and those required or appropriate to the management of the Partnership’s business, which, by way of illustration but not by way of limitation, shall include the right, authority and power to cause the Partnership to: (a) acquire, hold, develop, lease, rent, operate, sell, exchange and otherwise dispose of Property; (b) borrow money, pledge or mortgage or subject any

Property to any mortgage or security device on any Property; (c) enter into such contracts and agreements as the General Partner determines to be reasonably necessary or appropriate in connection with the Partnership’s business and purpose (including contracts with Affiliates of the General Partner), and any contract of insurance that the General Partner deems necessary or appropriate for the protection of the Partnership and the General Partner, including errors and omissions insurance, for the conservation of Partnership assets, or for any purpose convenient or beneficial to the Partnership; (d) employ persons, who may be Affiliates of the General Partner, in the operation and management of the business of the Partnership; (e) prepare or cause to be prepared reports, statements, and other relevant information for distribution to Partners; (f) open accounts and deposit and maintain funds in the name of the Partnership in banks, savings and loan associations, “money market” mutual funds and in such other entities or instruments as the General Partner may deem in its discretion to be necessary or desirable; (g) select as its accounting year a calendar year; (h) determine the appropriate accounting method or methods to be used by the Partnership; (i) require in any Partnership contract that the General Partner and the Partners shall not have any personal liability, but that the person or entity contracting with the Partnership is to look solely to the Partnership and its assets for satisfaction; (j) lease personal property for use by the Partnership; (k) establish reserves from income in such amounts as duly approved by the Partners; (1) temporarily invest the proceeds from sale of Partnership Interests and Cash Available For Distribution in short-term, highly-liquid investments; (m) represent the Partnership and the Partners as “tax matters partner” within the meaning of the Code; (n) hold an election for a successor General Partner before the resignation, expulsion or dissolution of a General Partner; (0) initiate legal actions, settle legal actions and defend legal actions on behalf of the Partnership; (p) reimburse the General Partner and its Affiliates for purchases of shares or limited partnership interests and due diligence costs incurred on behalf of Partnership prior to its formation; and (q)execute, acknowledge and deliver any and all instruments to effectuate the foregoing and to take all such lawful action in connection therewith as the General Partner may deem necessary or appropriate. Any and all documents or instruments may be executed on behalf and in the name of the Partnership by the General Partner.

6.4       Except as authorized pursuant to Section 8.2, no General Partner or Affiliate shall have authority to: (a) use or permit any other person to use Partnership funds or assets in any manner except for the exclusive benefit of the Partnership; (b) receive from the Partnership a rebate or give-up or participate in any reciprocal business arrangements which would enable it or any Affiliate to do so; (c) sell or lease to the Partnership any real property in which any General Partner or Affiliate has any interest; (d) cause the Partnership to invest in any partnership, limited liability company or any other entity in a manner which commits the Partnership to an investment in each such partnership or venture exceeding $20,000; (e) admit another person as a General Partner; (f)reinvest Cash Available For Distribution in any additional properties; (g) cause the Partnership to lend to any General Partner or Affiliates Partnership assets; (h) sell, exchange or otherwise dispose of substantially all the Property of the Partnership; (i) cause the Partnership to enter into any agreements with an Affiliate except as specifically provided in this Agreement; (i) cause the Partnership to make or revoke any of the

elections referred to in the Code; (k) dissolve or liquidate the Partnership or consummate any agreement for the merger of the Partnership with any other entity; or (I) make any in-kind distribution of Property.

6.5       Responsibilities of General Partner. The General Partner shall cause its officers, employees and agents to devote to the management of the Partnership such time as is necessary and appropriate to cause the affairs of the Partnership to be conducted in an efficient and businesslike manner as directed under this Agreement. The foregoing shall not limit General Partner’s rights and authority to cause the Partnership to employ directly other persons or to contract with independent contractors for services to the Partnership. The General Partner acknowledges that it is under a common law fiduciary duty to conduct the affairs of the Partnership in the best interests of the Partnership and of the Partners and consequently must exercise good faith and integrity in handling Partnership affairs.

6.6        Tax Matters Partner. The Partners hereby appoint the General Partner to act as the “tax matters partner” within the meaning of Section 6231(a)(7) of the Code. Any successor tax matters partner shall be approved by a Majority in Interest. No tax matters partner shall enter into any settlement on behalf of the Partnership with any taxing authority or extend the statute of limitations for any Partner or the Partnership with respect to Partnership items without the approval of all Partners.

6.7 Indemnification of General Partner. The General Partner and any partners, shareholders, members, Affiliates, officers, directors, employees, agents and assigns of any General Partner, shall not he liable for, and shall be indemnified, defended and held harmless by the Partnership (to the extent of the Partnership’s assets) from, any loss or damage incurred by them, the Partnership or the Partners in connection with the business of the Partnership, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage resulting from any act or omission performed or omitted in good faith, in pursuance of the authority granted, to promote the interests of the Partnership. Moreover, the General Partner shall not be liable to the Partnership or the Partners because any taxing authorities disallow or adjust any deductions or credits in the Partnership income tax returns. Any of the following (each a “Liability Event”) shall not be considered to be performed or omitted in good faith under any circumstances: fraud, gross negligence, willful malfeasance, or a material breach of this Agreement which is not cured with ten (10) days after notice thereof. The General Partner shall be liable for actual damages suffered by the Partnership or the Partners, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage, resulting from Liability Events of the General Partner.

6.8       No Personal Liability for Return of Capital. The General Partner shall not be personally liable or responsible for the return or repayment of all or any portion of the capital of any Partner or for the repayment of all or any portion of any loan made by any Partner to the Partnership, it being expressly understood that any such return of capital or

repayment of any loan shall be made solely from the assets (which shall not include any right of contribution from any Partner) of the Partnership.

6.9 Authority as to Third Persons.

(a)        No third party dealing with the Partnership shall be required to investigate the authority of the General Partner or secure the approval or confirmation by any of the Partners of any act of the General Partner in connection with the Partnership business. No purchaser of any property or interest owned by the Partnership shall be required to determine the right to sell or the authority of the General Partner to sign and deliver any instrument of transfer on behalf of the Partnership, or to see to the application or distribution of revenues or proceeds paid or credited in connection therewith.

(b)       The General Partner shall have full authority to execute on behalf of the Partnership any and all agreements, contracts, conveyances, deeds, mortgages and other instruments, and the execution thereof by the General Partner executing on behalf of the Partnership shall be the only execution necessary to bind the Partnership thereto. No signature of any Partner other than the General Partner shall be required.

7. Resignation or Removal of General Partner.

7.1 Resignation. The General Partner may resign at any time by giving written notice to the Partners of the Partnership. The resignation of the General Partner

shall take effect upon the election of a successor General Partner or at such earlier time as specified in such notice but in any event not less than 30 days after giving written notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The resignation of a General Partner shall not affect such partner’s rights as a Partner with respect to its Partnership Interest and shall not constitute a withdrawal of that Partner. The General Partner agrees to cooperate with the Partnership in completing the business plan for transactions that are undertaken by the Partnership prior to General Partner’s resignation.

7.2       Removal. The Limited Partners may, by approval of Limited Partners holding a Majority in Interest, remove and replace the General Partner only for cause. If the General Partner is removed with cause, it shall have its interest in unearned asset management fees and any other fees (including as such amounts relate to future activities of the Partnership) adjusted pursuant to the procedures set forth in subparagraph (b) below.

(a)       Cause for removal shall occur if at any time the General Partner has committed or suffered a Liability Event or an Event of Insolvency.

(b)       The electing Limited Partners shall give notice to the General Partner of their intention to remove the General Partner for any of the reasons stated in subparagraph (a), which notice shall specify in reasonable detail the grounds for the removal. Within ten (10) business days from the date the notice of intention to remove is

given, the General Partner shall cure or rectify the default, dereliction or impairment that was stated as the ground(s) for the intended removal and shall certify to the Limited Partners in writing that the default, dereliction or impairment has been cured or rectified. If the default, dereliction or impairment has not been cured or rectified and written certification of cure or rectification has not been given to the Limited Partners within ten (10) business days, then the Limited Partners may remove the General Partner immediately, effective automatically upon receipt by the General Partner of notice from such Limited Partners. If the Limited Partners seek to adjust the asset management fees or any other fees due to the General Partner, including fees relating to future activities of the Partnership, they may do so by filing for arbitration with the American Arbitration Association within thirty (30) days from the date the General Partner is removed. The Limited Partners and the General Partner shall each appoint an arbitrator from such Association by notice to the Partnership and the other party within 10 days of the filing and such arbitrators shall together appoint a third arbitrator within 10 days of their appointment by notice to the Partnership, General Partner and Limited Partners. All such arbitrators shall have experience, whether directly or as an attorney, accountant or other professional, in the organization or management of real estate investment entities. The decision of two of the three arbitrators shall be binding on both parties. The cost of arbitration (not including the parties’ attorneys’ fees) shall be borne by the Partnership. In rendering their decision, the arbitrators shall determine whether the alleged facts justify removal of the General Partner for cause, and, if so, the extent, if any, to which the interest of the General Partner in the asset management fees or other fees shall be reduced. The arbitrator shall take into consideration, among other things, the length of time the General Partner has served the Partnership, the extent of any default in any obligation of performance, or representation, made or imposed upon the General Partner under this Agreement, the General Partner’s efforts and accomplishments on behalf of the Partnership, the nature, severity and extent of the default, dereliction or impairment by the General Partner, the amount of the resulting damages to the Partnership, any mitigating circumstances, and the amount of the interest of the General Partner which may be assigned to a successor General Partner if elected by the Limited Partners, as adequate compensation for such General Partner succeeding to the duties and obligations of the removed General Partner. The arbitration shall be limited to consideration of whether cause (as defined above) existed for removal of the General Partner and whether adjustments, if any, should be made to General Partner’s asset management fees or other fees. The arbitration shall be binding on all parties.

7.3        Replacement. Upon the resignation or removal of the General Partner, a new General Partner may be elected by approval of a Majority in Interest.

8. Rights, Authority and Voting of the Partners.

8.1       Partners Shall Not Participate in Control. No Partner or Assignee, except if it also is the General Partner, in its capacity as General Partner, shall have any right or authority to act for or bind the Partnership.

8.2       Voting by Partners. Partners shall have the right to approve or consent to actions of the Partnership only in those cases where specifically authorized voting rights are contained in this Agreement or otherwise required by law. Except as otherwise specifically provided in this Agreement, Partners (but not holders of Economic Interests only) shall have the right to vote only upon the following matters: (a) the amendment of this Agreement, which shall require approval of the General Partner and a Majority in Interest except as specified in Section 15.14; (b) the authorization of a General Partner to do any act specified in Section 6.4, which shall require approval of a Majority in Interest; (c) removal of a General Partner as specified in Section 7.2 and replacement of a removed General Partner as specified in Section 7.3, which shall require the approval described in such Sections; and (d) the authorization of a General Partner or a Partner to do any act on behalf of the Partnership that contravenes this Agreement, which in each case shall require approval of the General Partner and a Majority in Interest. All approvals shall be in writing and signed by Partners having not less than the minimum number of votes that would be necessary to authorize or take that action.

8.3        Rights of Partners. No Partner shall have the right or power to: (a) withdraw or reduce its Capital Contribution, except as a result of the termination of the Partnership or as otherwise provided in this Agreement; (b) bring an action for partition against the Partnership; or (c) demand or receive property in any distribution other than cash. Except as provided in this Agreement, no Partner shall have priority over any other Partner either as to the return of Capital Contributions or as to allocations of the Net Income, Net Loss or Distributions of the Partnership. Other than upon the termination of the Partnership as provided by this Agreement, there has been no time agreed upon when the contribution of each Partner or Owner is to be returned.

8.4       Restrictions on the General Partner and the Partners. Except as required by law, neither the General Partner, any Partner nor any Affiliate of the General Partner or any Partner shall: (a) disclose to any non-Partner other than their lawyers, accountants or consultants and/or commercially exploit any of the Partnership’s business practices, trade secrets or any other information not generally known to the business community, including the identity of suppliers utilized by the Partnership; (b) do any other act or deed with the intention of harming the business operations of the Partnership; (c) do any act contrary to the Agreement, except with the prior express approval required by Section 8.2; or (d) do any act which would make it impossible to carry on the intended purposes or ordinary business of the Partnership (other than pursuant to a termination and liquidation permitted by the terms of this Agreement).

8.5       Return of Distributions to Partners. In accordance with the Act, a Partner may, under certain circumstances, be required to return to the Partnership, for the benefit of the Partnership’s creditors, amounts previously distributed to the Partner. If any court of competent jurisdiction holds that any Partner is obligated to make any such payment, such obligation shall be the obligation of such Partner and not of the Partnership, the General Partner or any other Partner.

8.6        Indemnification of Partners. Each of the Partners and any of their partners, shareholders, members, Affiliates, officers, directors, employees, agents and assigns, shall not be liable for, and shall be indemnified, defended and held harmless by the Partnership (to the extent of the Partnership’s assets) from, any loss or damage incurred by them, the Partnership or the Partners in connection with the business of the Partnership in their capacity as Partners other than any loss of their Capital Contributions, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage resulting from any act or omission performed or omitted in good faith, which shall not include a Liability Event with respect to such Partner or its Affiliates. Partners shall be liable for actual damages suffered by the Partnership, General Partner or the other Partners, including costs and reasonable attorneys’ fees and any amounts expended in the settlement of any claims of loss or damage, resulting from Liability Events of such Partner or its Affiliates.

9. Resignation or Withdrawal of Partner.

9.1       Resignation or Withdrawal of Partner. Subject to the Act, Article 7 and Article 10, a Partner shall not resign or withdraw as a Partner. This provision shall not affect any claim for damages the Partnership may have against the withdrawing Partner if such withdrawal or resignation is in violation of this Agreement. The Partnership shall have the right to offset any payments due to a Partner or its Affiliates under this Agreement or any other contract with the Partnership by any damages that the Partnership may incur as a result of a withdrawal or resignation of a Partner in contravention of this Agreement.

9.2       Conversion to Economic Interest. Upon the occurrence of any event that would cause a person to cease to be a Partner under this Agreement or the Act, the withdrawing Partner’s Partnership Interest shall be converted into an Economic Interest which will entitle such Partner to its share of Net Income, Net Loss and Distributions in accordance with this Agreement, but no voting or other rights with respect to management or operation of the Partnership other than those granted to any Assignee.

10. Assignment of Partnership Interest.

10.1     Permitted Assignments. An Owner may not sell, assign, hypothecate, encumber or otherwise transfer any part or all of his Interest in the Partnership without the approval of the General Partner and a Majority in Interest, which may not be unreasonably withheld. If the General Partner and a Majority in Interest consent to the transfer, the Interest may only be transferred to the proposed transferee pursuant to the terms and conditions contained in this Article 10. All costs of the transfer, including reasonable attorneys’ fees (if any), shall be borne by the assigning Owner. Notwithstanding anything to the contrary contained in this Section 10.1, but subject to Sections 10.2 through 10.9, any Partner may transfer its Economic Interest in the Partnership to an Affiliate upon written notification to the General Partner without the consent of the General Partner or a Majority in Interest, unless such transfer would alter

or significantly risk altering the tax status of the Partnership. Any such Assignee shall take subject to all the terms of this Agreement.

10.1.1   Written Assignment. Any such transfer shall be by a written instrument of assignment, the terms of which are not in contravention of any of the provisions of this Agreement, and which has been duly executed by the Owner and acknowledged by the General Partner in writing. Upon such acknowledgement, such Assignee shall take subject to all terms of this Agreement and shall become an Assignee.

10.1.2   Transfer Fee. A transfer fee shall be paid by the transferring Owner in such amount as may be required to cover all reasonable expenses connected with such assignment.

10.2 Substituted Partners.

10.2.1   Conditions to be Satisfied. Notwithstanding any other provision of this Agreement: (i) no non-Affiliate Assignee shall have the right to become a Substituted Partner unless the General Partner and a Majority in Interest shall consent thereto in accordance with Sections 10.2.2 and 10.2.3; and (ii) except as provided in Section 10.2.4, no Affiliate Assignee shall have the right to become a Substituted Partner unless the General Partner shall consent thereto in accordance with Section 10.2.2, and in both cases, all of the following conditions are satisfied:

(a) a duly executed and acknowledged written instrument of assignment shall have been filed with the Partnership, which instrument shall specify the Interest being assigned and set forth the intention of the assignor that the Assignee succeed to the assignor’s interest as a Substituted Partner in its place;

(b) the assignor and Assignee shall have executed, acknowledged and delivered such other instruments as the General Partner may deem necessary or desirable to effect such substitution, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include the written acceptance and adoption by the Assignee of the provisions of this Agreement; and

(c) a transfer fee sufficient to cover all reasonable expenses connected with such substitution shall have been paid to the Partnership.

10.2.2   Consent of General Partner. The written consent of the General Partner shall be required to admit an Assignee as a Substituted Partner under Subsections

102.1   (i) and (ii). The granting or withholding of such consent shall be within the sole and absolute discretion of the General Partner.

10.2.3   Consent of a Majority in Interest. The consent of a Majority in Interest shall be required to admit an Assignee as a Substituted Partner under Subsection 10.2.1 (i).

10.2.4  Notice to General Partner. Notwithstanding the foregoing, an Affiliate Assignee that is a revocable family trust or who becomes an Assignee by reason of bequest or inheritance or for estate planning purposes shall become a Substituted Partner upon written notice to the General Partner and the satisfaction of all of the following conditions:

(a)        a duly executed and acknowledged written instrument of assignment shall have been filed with the Partnership, which instrument shall specify the Interest being assigned and set forth the intention of the assignor that the Assignee succeed to the assignor’s interest as a Substituted Partner in its place;

(b) the assignor and Assignee shall have executed, acknowledged and delivered such other instruments as the General Partner may deem necessary or desirable to effect such substitution, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include the written acceptance and adoption by the Assignee of the provisions of this Agreement; and

(c)       a transfer fee sufficient to cover all reasonable expenses connected with such substitution shall have been paid to the Partnership.

10.3     Loss of Rights. A Partner shall cease to have the power to exercise any rights with respect to any assigned portion of a Partner’s Partnership Interest with respect to which the Assignee becomes a Substitute Partner, and, in the event the Partner has assigned all of the Partner’s Partnership Interest, when the Assignee becomes a Substitute Partner, the assigning Partner automatically shall cease to be a Partner and shall cease to have the power to exercise any rights of a Partner.

10.4      Rights of Assignee. An Assignee shall be entitled to receive Distributions from the Partnership attributable to the Interest acquired by reason of such assignment from and after the effective date of the assignment; provided, however, that anything herein to the contrary notwithstanding, the Partnership shall be entitled to treat the assignor of such Interest as the absolute owner thereof in all respects, and shall incur no liability for allocations of Net Income and Net Loss or Distributions, or for the transmittal of reports or accounting until the written instrument of assignment has been received by the Partnership and recorded on its books. The effective date of such assignment shall be the last day of the calendar month of the date on which all of the requirements of this Article 10 have been complied with.

10.5     Right to Inspect Books. Assignees shall have no right to inspect the Partnership’s books or records, to vote on Partnership matters, or to exercise any other right or privilege as Partners, unless and until they are admitted to the Partnership as Substituted Partners. Partners assigning their Partnership Interest or an Economic Interest may not, as a condition of such assignment or otherwise, agree to obligate themselves to act on behalf of or under the direction of the Assignee of such Partnership Interest or an Economic Interest, and any attempt to act in such capacity shall be void and shall not be recognized by the Partnership.

10.6      Assignment of 50% or More of Interests. No assignment of any Interest may be made if the Interest to be assigned. when added to the total percentage of all other Interests assigned within the 12 immediately preceding months, would, in the opinion of legal counsel for the Partnership, result in the termination of the Partnership for Federal income tax purposes.

10.7      Transfer Subject to Law. No assignment, sale, transfer, exchange or other disposition of any Interest may be made except in compliance with the applicable governmental laws and regulations, including state and federal securities laws.

10.8     Transfer Resulting in Treatment as an Association. No assignment, sale, transfer, exchange or other disposition of any Interest may be made if in the opinion of legal counsel for the Partnership, it may, taking into account all circumstances, result in the Partnership being treated as an association taxable as a corporation.

10.9     Transfer in Violation Not Recognized. Any assignment, sale, transfer, exchange or other disposition of any Interest in contravention of the provisions of this Article 10 or which would cause the Partnership to terminate pursuant to Section 708 of the Code shall be void and ineffectual, ab initio, and shall not be binding upon or be recognized by the Partnership.

11. Books, Records, Accounting and Reports.

11.1     Records, Audits and Reports. At the expense of the Partnership, the General Partner shall maintain records and accounts of all operations and expenditures of the Partnership including the following: (a) a current list in alphabetical order of the full name and last known business, residence, or mailing address of each Partner and Assignee, both past and present, and each Partner’s and Assignee’s Interest; (b) a copy of the Original Certificate, the Certificate of Limited Partnership of the Partnership and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed; (c) copies of the Partnership’s Federal, state, and local income tax returns and reports, if any, for the four most recent years; (d) copies of this Agreement and all prior amendments; (e) copies of any financial statements of the Partnership for the four most recent years; and (f) any written consents obtained from Partners for actions taken by Partners without a meeting. The General Partner shall provide to each Partner, as soon as practical after the end of each six-month period, the balance sheet and income statement of the Partnership for such period. The Partners may, by approval of a Majority in Interest, require the Partnership to have an annual audited financial statement prepared by a certified public accountant as well as a closing audit upon the liquidation and dissolution of the Partnership.

11.2      Return and Other Elections. The General Partner will cause the Partnership, at the Partnership’s expense, to prepare and timely file income tax returns for the Partnership with the appropriate authorities, and shall cause all Partnership information necessary in the preparation of the Partners’ or Assignees’ individual income

tax returns to be distributed to the Partners or Assignees not later than 75 days after the end of the Partnership’s fiscal year. All elections permitted to be made by the Partnership under federal or state laws shall be made by the General Partner. If requested by any Partner following any year-end, the Partnership shall provide a copy of its income tax returns to such Partner within a reasonable time after filing such return.

11.3      Delivery to Partners and Inspection. Upon written request of any Partner, the General Partner shall provide a list showing the names, addresses and Interests of all Partners and Assignees. Upon reasonable request, each Partner shall have the right, during ordinary business hours, to inspect and copy Partnership documents at the requesting Partner’s expense. Each Partner has the right, upon reasonable request, to obtain, at the Partnership’s expense, from the General Partner, promptly after becoming available, a copy of the Partnership’s federal, state and local income tax or information returns for each year.

11.4    Meetings. No meetings of the Partners shall be required unless requested in a written notice to the General Partner by Partners holding at least 10% of the Partnership Interests. Upon such request, the General Partner shall set the time and place for a meeting.

12. Termination and Dissolution of the Partnership.

12.1      Dissolution. The Partnership shall dissolve and terminate upon the earliest to occur of the following events: (a) the expiration of the term of the Partnership; (b) by approval of a Majority in Interest; (c) upon the sale of all Property and receipt of cash proceeds; and (d) upon an Event of Insolvency of the General Partner.

12.2     Statement of Intent to Dissolve. Upon a dissolution of the Partnership, the appropriate representative of the Partnership shall execute a statement of intent to dissolve in such form as shall be prescribed by the Secretary of State and file same with the Secretary of State’s office. Upon the filing by the Secretary of State of a statement of intent to dissolve, the Partnership shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, but its separate existence shall continue until a certificate of dissolution has been issued by the Secretary of State or until a decree dissolving the Partnership has been entered by a court of competent jurisdiction.

12.3     Winding Up and Distribution of Assets. Upon a dissolution of the Partnership for any reason, the General Partner (or a liquidating agent or trustee designated by a Majority in Interest) shall take full account of the Partnership assets and liabilities, shall liquidate the assets as promptly as is consistent with obtaining the fair market value thereof, and shall apply and distribute the proceeds therefrom in the following order: (a) to the payment of creditors of the Partnership, including Partners who are creditors to the extent permitted by law (including Partner loans as provided in Section 3.3), but excluding secured creditors whose obligations will be assumed or otherwise transferred on the liquidation of Partnership assets; (b) to the setting up of any reserves reasonably necessary for any contingent or unforeseen liabilities or obligations

of the Partnership; provided, however, that said reserves shall be deposited with a bank or trust company in an interest bearing escrow account for the purpose of disbursing such reserves for the payment of any of the aforementioned contingencies and, at the expiration of a reasonable period, for the purpose of distributing the balance remaining in accordance with remaining provisions of this Section 12.3; and (c) to the Partners and Assignees of record in proportion to the order of priority set forth in Section 5.1. Reasonable compensation for dissolution of the Partnership is already included in the amounts due General Partner and Partners under this Agreement.

12.4     Certificate of Dissolution. When all debts, liabilities and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property and assets have been distributed to the Partners, a certificate of dissolution shall be executed by the General Partner or other authorized person, which certificate shall set forth the information required by the Act. Such certificate of dissolution shall be delivered to the Secretary of State as required by the Act.

12.5     Effectiveness of Dissolution. Upon the issuance of the certificate of dissolution, the existence of the Partnership shall cease, except for the purpose of suits, other proceedings and appropriate action as provided in the Act. The General Partner shall have authority to distribute any Partnership property discovered after dissolution, convey real estate and take such other action as may be necessary on behalf of and in the name of the Partnership.

12.6      Return of Contribution. Each Partner shall look solely to the assets of the Partnership for all Distributions of its Capital Contribution (which shall be made only as provided in this Agreement) and shall have no recourse therefor (upon dissolution or otherwise) against the General Partner or any other Partner.

13. Relationship of this Agreement to the Act.

Many of the terms of this Agreement are intended to alter or extend provisions of the Act as they may apply to the Partnership or the Partners. Any failure to mention or specify the relationship of such terms to provisions of the Act that may affect the scope or application of such terms shall not be construed to mean that any of such terms is not intended to be a provision authorized or permitted by the Act or which in whole or in part alters, extends or supplants provisions of the Act as may be allowed thereby. If a conflict arises between this Agreement and the Act, the provisions of this Agreement control.

14. Representations of Partners.

Each Partner represents as follows: (a) the Partner is thoroughly informed concerning the Property to be owned by the Partnership and has asked and had answered such questions relating thereto as the Partner deems necessary, and understands that no return of, on, or with respect to the amount paid for the Partner’s interest is represented, warranted or promised in any way by the General Partner or the Partnership; (b) the Partner has read this Agreement and understands and agrees to its terms; (c) the Partner is

capable of evaluating the risks and merits of acquiring Partnership Interests, has no need for liquidity of investment with respect to the purchase price of such Partnership Interest, and can afford to sustain a complete loss of such purchase price; (d) the Partner understands that the interests represented by the Partnership Interest issued to the Partner have not been registered or qualified and have been offered and sold in reliance on exemptions from registration and qualification requirements of applicable federal and state securities laws and that no governmental agency has passed on the merits or risks of acquiring an interest in the Partnership; (e) the Partner understands that neither the General Partner nor its counsel have represented the interests of the Partner in connection with this Agreement or the transactions contemplated hereby, and the Partner is free (and encouraged) to seek independent counsel of the Partner’s choosing; (f) the Partner is acquiring the Partnership Interest for investment purposes only and not with a view to resell or distribute to any other person; and (g) the person executing the Agreement on behalf of the Partner has full authority to bind such Partner to this Agreement.

15. Miscellaneous.

15.1     Counterparts. This Agreement may be executed in several counterparts, and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart.

15.2     Successors and Assigns. The terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the respective Partners.

15.3     Severability. In the event any provision of this Agreement is declared by a court of competent jurisdiction to be void, such provision shall be deemed severed from the remainder of this Agreement and the balance of this Agreement shall remain in full force and effect.

15.4     Notices. All notices under this Agreement shall be in writing and shall be given to the Partners or Assignee of record entitled thereto, by personal service, facsimile or by mail, at posted to the address maintained by the Partnership for such person or at such other address as it may specify in writing. Notices shall be deemed given when properly sent; time to respond shall begin when notice is actually received.

15.5      Names and Addresses of General Partner. The name and address of the General Partner is as follows:

Millenium Oak Terrace, LLC

199 S. Los Robles Avenue, Suite 200,

Pasadena, California 91101

15.6      Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws, but not the laws governing conflicts of law, of the State of Kansas.

15.7     Captions. Section titles or captions contained in this Agreement are inserted only as a matter of convenience and reference. Such titles and captions in no way define, limit, extend or describe the scope of this Agreement nor the intent of any provisions hereof.

15.8     Gender. Whenever required by the context hereof, the singular shall include the plural, and vice versa, the masculine gender shall include the feminine and neuter genders, and vice versa; and the word “person” shall include a corporation, partnership, firm or other form of association.

15.9 Time. Time is of the essence with respect to this Agreement.

15.10 Additional Documents. Each Partner, upon the request of the General Partner, shall perform any further acts and execute and deliver any documents which may be reasonably necessary to carry out the provisions of this Agreement, including, but not limited to, providing acknowledgment before a Notary Public of any signature heretofore or hereafter made by a Partner.

15.1 1 [RESERVED]

15.12   Venue. Any action relating to or arising out of this Agreement shall be brought only in a court of competent jurisdiction located in Los Angeles County, California. Each Partner hereby consents to personal jurisdiction over it in any such court.

15.13    Partition. The Partners agree that the assets of the Partnership are not and will not be suitable for partition. Accordingly, each of the Partners hereby irrevocably waives any and all rights that he may have, currently or in the future, to maintain any action for partition of any of the assets of the Partnership.

15.14    Amendment. This Agreement may be amended only in writing by a document duly approved in accordance with Section 8.2 and executed by the General Partner and a Majority in Interest. Notwithstanding the foregoing, the Limited Partners hereby authorize the General Partner to amend this Agreement as the General Partner reasonably determines is necessary or prudent to correct errors of a typographical or ministerial nature or to cause the Partnership or this Agreement to comply with any laws applicable to the Partnership or the Agreement, including without limitation the Code, the Securities Exchange Act of 1934, or the Securities Act of 1933, or any rule or regulation under any such laws.

IN WITNESS WHEREOF, the undersigned have set their hands to this Agreement as of the date first set forth in the preamble hereof.

LIMITED PARTNER Secured Investment Resources Fund, LP II, a Delaware limited partnership		GENERAL PARTNER Millenium Oak Terrace, LLC a California limited liability company
By:	Millenium Management, LLC, Its Manager	By:	Millenium Management, LLC, Its Manager
By:	/S/ CHRISTOPHER K. DAVIS	By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis Vice President and General Counsel		Christopher K. Davis Vice President and General Counsel

EXHIBIT A

Legal Description

PART OF THE EAST HALF OF THE NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 16 NORTH, RANGE 5 WEST OF THE THIRD PRINCIPAL MERIDIAN, SANGAMON COUNTY, ILLINOIS. SAID PART BEING FURTHER DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT AT THE INTERSECTION OF THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, SAID POINT BEING 40.00 FEET SOUTH OF AN AXLE AT THE NORTHEAST CORNER OF SAID NORTHWEST QUARTER OF SECTION 32; THENCE WESTERLY ALONG THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.32 FEET TO A DRILL HOLE; THENCE SOUTHERLY ALONG A LINE MAKING AN INTERIOR ANGLE OF 90 DEGREES 16 MINUTES 50 SECONDS WITH THE LAST DESCRIBED COURSE, A DISTANCE OF 370.00 FEET TO A DRILL HOLE; THENCE EASTERLY PARALLEL WITH THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.59 FEET TO THE EAST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 32; THENCE NORTHERLY ALONG SAID EAST LINE OF THE NORTHWEST QUARTER AND WEST LINE OF STANGE AVENUE, 370.00 FEET TO THE POINT OF BEGINNING, CONTAINING 1.80 ACRES, MORE OR LESS.

EXCEPT ALL COAL, MINERALS AND MINING RIGHTS HERETOFORE

CONVEYED OR RESERVED OF RECORD.

SITUATED IN SANGAMON COUNTY, ILLINOIS.

EX-99

AMENDED AGREEMENT OF LIMITED PARTNERSHIP

OF SUNWOOD VILLAGE JO INT VENTURE LIMITED PARTNERSHIP

This Agreement is made and entered into on this 9^th day of August, 2001 by and between Sunwood Village Inc., a Nevada corporation (“General Partner”) and Secured Investment Resources Fund, L.P. II, Delaware limited partnership (“Limited Partner”). The General Partner and Limited Partner may be referred to collectively as the “Partners”.

WITNESSETH THAT:

WHEREAS, the partners desire to form a Limited Partnership under the Nevada Revised Uniform Limited Partnership Act known as Sunwood Village Joint Venture, Limited Partnership, to hold and manage a single income-producing apartment complex known as Sunwood Village Apartments located in Las Vegas, Nevada (hereinafter the “Project”).

NOW, THEREOFRE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties hereto agree as follows:

1. Name, Place of Business, Registered Office and Registered Agent

1.1 Name. The name of the Partnership is Sunwood Village Joint Venture, Limited Partnership or such other name as the General Partner shall hereafter designate in writing to the Limited Partners.

1.2 Place of Business.. The Partnership’s principal place of business and the address of the General Partner is Suite LH-06, 4200 Blue Ridge Blvd,. Kansas City, Missouri, 64113, or such other place or places as the General Partner may hereafter determine.

1.3 Registered Office and Agent. The Partnership’s registered office shall be 2300 W. Sahara Ave., Third Floor, Box 8, Las Vegas, Clark County, Nevada 89102 and the name of the registered agent at such address is Robert D. Martin.

2. Business and Purpose.

2.1 Purpose. The business and purpose of the Partnership is to own, maintain, operate and manage the Project, to lease the space therein and to acquire an own such personal property as may be necessary to effectuate the foregoing purposes.

2.2 Additional Property. The Partnership may operate, maintain, improve, buy, own, sell, convey, assign, rent or lease any personal property necessary or incidental to the operation of the Project. The Partnership will not, however, purchase or mortgage any real estate other than the Project itself.

2.3 Incorporation of Prior Agreement. The Partnership was formed due to the requirement that the Project be placed in a single asset partnership, a requirement of the new lender in order to obtain refinancing for the Project. It is the intent of Partners that the provisions of the partnership agreement from Secured Investment Resources Fund, L.P. II, to the extent not inconsistent with the provisions contained herein be incorporated herein. Therefore, the Partners adopt such partnership agreement, a copy of which is attached hereto as Exhibit A, as the remaining terms of this Agreement to the extent that such partnership agreements is not inconsistent with terms hereof.

3. Additional Provisions.

3.1 Sunwood Village, Inc. is designated as the general partner of the Partnership (the “General Partner”). The General Partner, and any additional or substitute general partner of the Partnership, may not be an individual and shall at all times have as its sole purpose to act as the General Partner of the Partnership, and shall be engaged in no other business or have any other purpose. Additionally, any additional or substitute General Partner of the Partnership shall have organizational documents which (a) conform in all material respects to the organizational documents of the General Partner, inclusive of all single purpose/bankruptcy remote provisions, and which (b) are acceptable to the Lender.

3.2 Notwithstanding any other provision of this Agreement, the General Partner shall have no authority to perform any act in respect of the Partnership in violation of (i) any applicable laws or regulations, or (ii) any agreement between the Partnership and first Union National Bank or its successors and/or assigns (collectively, the “Lender”)

3.3 The Partnership shall not:

(a) make any loans to the General Partner or other Partners or the Partnership’s or any Partner’s Affiliates (as defined below);

(b) except as permitted by the Lender in writing, sell encumber (except with respect to the Lender) or otherwise transfer or dispose of all or substantially all of the properties of the Partnership (a sale or disposition will be deemed to be “all or substantially all of the properties of the Partnership” if the sale or disposition includes the Property or if the total value of the properties sold or disposed of in such transaction and during the twelve months preceding such transaction is 66-23% or more in value of the Partnership’s total assets as of the end of the most recently completed Partnership fiscal year.

(c) to the fullest extent permitted by law, dissolve, wind-up, or liquidate the Partnership:

(d) merge, consolidate or acquire all or substantially all of the assets of an Affiliate or other entity or person.

(e) change the nature of the business conducted by the Partnership; or

(f) except as permitted by the Lender in writing, amend, modify or otherwise change this Agreement (or, after securitization of the Loan, only if the Partnership receives (i) confirmation from each of the applicable rating agencies that such amendment, modification or change would not result in the qualification, withdrawal or downgrade of any securities rating and (ii) permission of the Lender in writing.

For purposes of this Agreement, Affiliate means any person or entity which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a Partner. For purposes hereof, the terms “control”, “controlled” or “controlling” shall include, without limitation, (i) the ownership, control or power to vote ten percent (10%) or more of (x) the outstanding shares of any class of voting securities or (y) the Partnership or beneficial interests of any such person or entity, as the case may be directly or indirectly, or acting through one or more persons or entities, (ii) the control in any manner of the general partner(s) or the election or more than one director or trustee (or persons exercising similar functions) of such person or entity or (iii) the power to exercise, directly or indirectly, control over the management or policies of such person or entity.

3.4 All funds of the Partnership shall be deposited in such checking accounts, savings accounts, time deposits, or certificates of deposit in the

Partnership’s name or shall be invested in the Partnership’s name, in such manner as shall be designated by the General Partner from time-to-time. Except with respect to the operating account in the name of Limited Partnership. Partnership funds shall not be commingled with those of any other person or entity. Partnership funds shall be used by the General Partner only for the business of the Partnership.

3.5 Title to the Partnership assets shall be held in the Partnership’s name.

3.6 The Partnership shall not, and no Partner or other person or entity on behalf of the Partnership shall, without the prior written affirmative vote of 100 percent of the Partners, and the prior written affirmative vote of the Independent Director (as defined below) of the General Partner (a) institute proceedings to be adjudicated bankrupt or insolvent; (b) consent to the consenting to, reorganization or relief under any applicable federal or state law relating to bankruptcy; (d) consent to the appointment of a receiver, liquidator, assignee, trustee, make any assignment for the benefit of creditors; (f) admit in writing its inability to pay its debts generally as they become due; or (g) take any action in furtherance of any such action provided, however, that none of the foregoing actions may be taken or authorized unless there is at least one Independent Director then serving in such capacity ((a) through (g) above, with respect to any individual or entity, collectively, a “Bankruptcy Action”).

3.7 The Partnership shall have no indebtedness or incur any liability other than (a) unsecured debts and liabilities for trade payables and accrued expenses incurred in the ordinary course of its business of operating the Property, provided, however, that such unsecured indebtness or liabilities (i) are in amounts that are normal and reasonable under the circumstances, but in no event to exceed three (3%) of the original principal amount of the loan and (ii) are not evidenced by a note and are paid when due, but in no event for more than sixty (60) days from the date that such debts are incurred and (b) the loan by the Lender to the Partnership (the “Loan”). No indebtedness other than the Loan shall be secured (senior, subordinated or pari passu) by the Property.

3.8 A Bankruptcy Action by or against any Partner shall not cause such Partner to cease to be a partner of the Partnership and upon the occurrence of such an event, the Partnership shall continue without dissolution.

3.9 The Partnership shall at all times observe the applicable legal requirements for the recognition of the Partnership as a legal entity separate from any Partners or Affiliates of same, including, without limitation, as follows:

(a) At least one (1) of the directors of the General Partner shall be an Independent Director. Independent Director means a natural person who has not been, and during the continuation of his or her services as Independent Director (i) except in the capacity as an Independent Director of the General Partner, is not and has never been an employee, officer, director, shareholder, partner, member, counsel or agent of any Partner, the Partnership or any Affiliate of either of same, (ii) is not a present or former customer or supplier of any Partner, the Partnership or any Affiliate of either of same, or other person or entity who derives or is entitled to derive any of its profits or revenues or any payments (other than any fee paid to such director as to serve as an Independent Director) from any Partner, the Partnership or any Affiliate of either of same, (iii) is not (and is not affiliated with an entity that is) a present or former advisor or consultant to any Partner, the Partnership or any Affiliate of either of same, (iv) is not a spouse, parent, child, grandchild or sibling of, or otherwise related to (by blood or by law), any of (i), (ii) or (iii) above, and (v) is not affiliated with a person or entity of which any Partner, the Partnership or any Affiliate of either of same is a present or former customer or supplier, provided, however, that an entity that provides independent directors as a service for a fee is not prohibited under this paragraph 3.9(a) from providing one or more independent directors to the General Partner. In the event of the death, incapacity, resignation or removal of an Independent Director, the Board of Directors of the General Partner shall promptly appoint a replacement Independent Director and no action requiring the consent of the Independent Director shall be taken until a replacement Independent Director has been appointed. In addition, no Independent Director may be removed unless his or her successor satisfying the definition hereunder has been appointed.

(b)To the extent the Partnership utilizes office space, it shall maintain its principal executive office separate from that of any Affiliate and shall conspicuously identify such office as its own or shall allocate by written agreement fairly and reasonable any rent, overhead and expenses for shared office space.

(c) The Partnership shall maintain correct and complete financial statements, accounts, books and records and other entity documents separate from those of any Affiliate or any other entity or person. The Partnership shall prepare unaudited monthly and annual financial statements, and the Partnership’s financial statements shall substantially comply with generally accepted accounting principles.

(d)The Partnership shall maintain its own separate bank accounts, payroll, if any, and correct, complete and separate books of account.

(e)The Partnership shall file or cause to be filed its own separate tax returns.

(f)The Partnership shall hold itself out to the public (including any of its Affiliates’ creditors) under the Partnership’s own name and as a separate and distinct entity and not as a department division or otherwise of any Affiliate.

(g)The Partnership shall observe all customary formalities regarding the existence of the Partnership, including holding meetings and maintaining current and accurate minute books separate from those of any Affiliate.

(h)The Partnership shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers and agents. No Affiliate shall be appointed or act as agent of the Partnership, other than, as applicable, a property manager with respect to the Property.

(i)Investments shall be made in the name of the Partnership directly by the Partnership or on its behalf by brokers engaged and paid by the Partnership or its agents.

(j)Except as required by Lender, the Partnership shall not guarantee, pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any Partner or any Affiliate of the Partnership, nor shall it make any loan, except as permitted in the loan agreement with the Lender.

(k)The Partnership is and will be solvent and shall pay its own liabilities, indebtedness and obligations of any kind, including all administrative expenses, form its own separate assets.

(l)Assets of the Partnership shall be separately identified, maintained and readily segregatable. The Partnership’s assets shall at all times be held by or on behalf of the Partnership and if held on behalf of the Partnership by another entity, shall at all times be kept identifiable (in accordance with customary usages) as assets owned by the Partnership. This restriction requires, among other things, that (i) Partnership funds shall

be deposited in the Partnership’s name, (ii) except with respect to the operating account in the name of the Limited Partner, Partnership funds shall not be commingled with the funds of any Affiliate or other entity or person, (iii) the Partnership shall maintain all accounts in its own name and with its own tax identification number, separate from those of any Affiliate or other entity or person.

(m)The Partnership shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets form those of any Affiliate or other entity or person.

(n)The Partnership shall pay or cause to be paid its own liabilities and expenses, including but not limited to salaries of its employees, out of its own funds and assets or out of the operating account in the name of the Limited Partner, which may contain the funds of the Borrower or other entities affiliated with the Limited Partner, not to exceed $30,000.00.

(o)The Partnership shall at all times be adequately capitalized to engage in the transactions contemplated at its formation.

(p)The Partnership shall not do any act which would make it impossible to carry on the ordinary business of the Partnership.

(q)All data and records (including computer records) used by the Partnership or any Affiliate in the collection and administration of any loan shall reflect the Partnership’s ownership interest therein.

(r)None of the Partnership’s funds shall be invested in securities issued by, nor shall the Partnership acquire obligations or liabilities of, any Affiliate.

(s)The Partnership shall maintain an arm’s length relationship with each of its Affiliates and may enter into contracts or transact business with its Affiliates only on commercially reasonable terms that are no less favorable to the Partnership than is obtainable in the market from an entity or individual that is not an Affiliate.

(t)The Partnership shall correct any misunderstanding that is known by the Partnership regarding its name or separate identity.

For purposes of this Agreement, Affiliate means any person or entity which directly or indirectly through one or more intermediaries controls, is

controlled by or is under common control with a specified person or entity. For purposes hereof, the terms “control”, “controlled” or “controlling” with respect to a specified person or entity shall include, without limitation, (i) the ownership, control or power to vote ten (10%) percent or more of (x) the outstanding shares of any class of voting securities or (y) beneficial interests, of any such person or entity, as the case may be, directly or indirectly or acting through one or more persons or entities, (ii) the control in any manner over the general partner(s) or the election of more than one director or trustee (or persons exercising similar functions) of such person or entity, or (iii) the power to exercise, directly or indirectly, control over the management or policies of such person or entity.

3.10 So long as the Loan remains outstanding by the Partnership to the Lender any indemnification obligation of the Partnership shall (a) be fully subordinated to the Loan and (b) not constitute a claim against the Partnership or its assets until such time as the Loan has been indefeasibly paid in accordance with its terms and otherwise has been fully discharged.

3.11 No transfer of any direct or indirect ownership in the Partnership may be made such that the transferee owns, in the aggregate with the ownership in the Partnership may be made such that the transferee owns, in the aggregate with the ownership interests in the Partnership of transferee’s Affiliates, more than a forty-nine percent (49%) interest in the Partnership unless such transfer is conditioned upon the delivery of an acceptable nonconsolidation opinion to the Lender and any applicable rating agency.

	GENERAL PARTNER: SUNWOOD VILLAGE, INC.
Attest: /S/ Candice S. Dennis	BY: /S/ JAMES R. HOYT
Asst. Secretary	James R. Hoyt, President LIMITED PARTNERS:

STATE OF KANSAS

COUNTY OF JOHNSON

On this 9TH day of August, 2001, before me appeared James R. Hoyt, to personally known, who, being duly sworn, did say that he is President of Sunwood Village, Inc., and that the instrument was signed for the purposes contained therein on behalf of said corporation and by authority of its Board of Directors, and he further acknowledges the instrument to be the free act and deed of said corporation.

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

/S/ CANDICE S. DENNIS

Notary Public

My commission expires:

5/1/04

SECURED INVESTMENT RESOURCES FUND, L.P. II

By:

/S/ JAMES R. HOYT

James R. Hoyt, General Partner

STATE OF KANSAS

COUNTY OF JOHNSON

On this 9th day of August, 2001, before me appeared James R. Hoyt, to personally known, who, being duly sworn, did say that he is General; Partner of Secured Investment Resources Fund, L.P. II, and that the instrument was signed for the purposes contained therein on behalf of said corporation and by authority of its Board of Directors, and he further acknowledges the instrument to be the free act and deed of said corporation.

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

/S/ CANDICE S. DENNIS

Notary Public

My commission expires:

5/1/04

EX-99

AMENDMENT TO AMENDED AGREEMENT OF LIMITED PARTNERSHIP

OF

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP

This Amendment (“Amendment”) to Amended Agreement of Limited Partnership of Sunwood Village Joint Venture, Limited Partnership (the “Partnership” or “Sunwood”) is made and entered into as of June 6, 2005, by and among Millenium Management, LLC, a California limited liability company (“Millenium” or “General Partner”), Secured Investment Resources Fund, L.P. II (“SIR-2”), Keith A. Kohorst, David I. Lesser and Continental American Properties, Ltd. (“Con-Am).

RECITALS

A. The Amended Agreement of Limited Partnership of Sunwood Village Joint Venture, Limited Partnership (“Sunwood LPA”) was made and entered into on August 9, 2001, and Section 2.3 thereof incorporates by reference the provisions of the Amended and Restated Agreement of Limited Partnership of Secured Investment Resources Fund, L.P. II, dated September 25, 1986.

B. On or about August 1, 2001, Sunwood entered into certain loan agreements, including a Promissory Note in the amount of $10,080,000 (“Loan”), which Loan is now held by Wells Fargo Bank; with LNR Partners as the Special Servicer of the Loan and Wachovia Bank, N.A. as the Master Servicer of the Loan (Wells Fargo, LNR and Wachovia are referred to collectively as “Lender”).

C. A dispute arose between Sunwood and Lender regarding the amount of money owing from Sunwood to Lender.

D. Sunwood and Lender entered into a Settlement Agreement dated June 6, 2005, whereby Sunwood agreed to pay Lender, and Lender agreed to accept, the sum of $800,000 (“Settlement Payment”) in settlement of the dispute, and Lender consented to Millenium as the new General Partner of Sunwood, and to ConAm Management Corporation as the new property manager of Sunwood Village.

E. Millenium, Con-Am, Keith A. Kohorst, and David I. Lesser (referred to hereafter as the “Class A Limited Partners”) have agreed to fund the Settlement Payment plus additional amounts as a Capital Contribution (the “Settlement Capital Contribution”) in exchange for Class A Partnership Interests in Sunwood.

F. Any capitalized terms not defined herein shall have the meanings ascribed to such terms in the Sunwood LPA.

AMENDMENT

Sections 4, 5 and 6 are hereby added to the Sunwood LPA as follows:

4. Issuance of Class A Limited Partner Interests.

4.1      Class A Limited Partners’ Capital Contributions. Each Class A Limited Partner shall contribute to the capital of the Partnership the amount set forth on Exhibit A and shall receive the Class A Partnership Interest set forth on such Exhibit. The term “Partners” in the Sunwood LPA shall hereafter include the Class A Limited Partners. No Partner shall be required to make any contributions to the Partnership in excess of the amounts set forth on Exhibit A and no Partner shall be liable for the debts, liabilities, contracts, or any other obligations of the Partnership except with regard to their Capital Contributions as indicated on Exhibit A, nor shall any Partner be required to lend any funds to the Partnership or to repay to the Partnership, any Partner, or any creditor of the Partnership any portion or all of any deficit balance in a Partner’s capital account.

4.2      No Voting Rights for Class A Limited Partners. The Class A Limited Partners shall have no voting rights regarding the affairs of the Partnership, unless specifically required by law that the class of Partners has a right to vote on a matter, in which case the approval of the Class A Limited Partners shall be deemed obtained after a notice is sent to such Partners, at their address of record, describing the matter on which they are entitled to vote and stating that their approval shall be deemed given unless the written objection of Class A Limited Partners holding 50% or more of the Class A Limited Partners’ interest (based on capital contributions) is received by the Partnership by a specified date, which date shall be no less than 15 days from the date the notice is sent.

4.3      SIR-2 Limited Partner. “Limited Partner” or “Limited Partners” in the Sunwood LPA (including provisions incorporated by reference) refers to SIR-2 only.

5. Allocation of Tax Items.

5.1      Income and Loss Allocations. Each Class A Limited Partner shall receive an allocation of income in each fiscal year equal to the amount of cash distributions received from the Partnership that are not a return of their Capital Contribution. All other allocations of income and loss, including any allocations necessary to offset the allocations made to the Class A Limited Partners, shall be made to the Limited Partner.

5.2      Allocation of Partnership Items. Whenever a proportionate part of income or loss is allocated to a Partner, every item of income, gain, loss or

deduction entering into the computation of such income or loss, and every item of credit or tax preference related to such allocation and applicable to the period during which such income or loss was realized shall be allocated to the Partner in the same proportion.

5.3      Assignment. Except to the extent the Code requires otherwise, in the event of the assignment of an interest in the Partnership, the income and loss arising from other than a sale or refinancing of Property shall be apportioned as between the assigning Partner and his assignee based upon the number of months of their respective ownership during the year in which the assignment occurs, without regard to the results of the Partnership’s operations during the period before or after such assignment, and income, loss and distributions from a sale or refinancing of the Property will be allocated among the Partners as of the date of any such transaction.

5.4      Provisions of Regulations. Notwithstanding the foregoing, allocations required to be made under the regulations under Code Section 704 shall be made as required therein, including allocations constituting qualified income offsets and minimum gain chargebacks.

6. Distributions/Expenses.

6.1      Cash Available For Distribution from Operations. Cash Available for Distribution from Operations shall be distributed in the following order of priority: (a) first, to pay a ten percent (10%) per annum, compounded monthly, cumulative, preferred return on the Settlement Capital Contribution to the Class A Limited Partners (the “Class A Preferred Return”), pro rata based on their respective Capital Contributions; and (b) second, to the Limited Partner, if the Class A Preferred Return is fully paid through the date of distribution.

6.2      Cash Available For Distribution from Sale or Refinancings. Cash Available for Distribution from Sale or Refinancings shall be distributed in the following order of priority: (a) first, to pay in full any amount due on the Class A Preferred Return through the date of the sale or refinancing event; (b) second, to repay to the Class A Limited Partners their respective portion of the Settlement Capital Contribution; (c) third, to pay the Class A Limited Partners, pro rata based on their respective Capital Contributions, an amount equal to the greater of (i) fifty percent (50%) of the Settlement Capital Contribution, and (ii) 25% of the remaining Cash Available for Distribution from Sale or Refinancings; and (d) fourth, to the Limited Partner.

6.3       Definitions. “Cash Available for Distribution from Operations” means the net cash realized by the Partnership from all sources other than capital contributions or sale or refinancing proceeds, calculated on a calendar-quarter basis, after payment of all cash expenditures of the Partnership, including but not limited to operating expenses, all fees and costs payable to the General Partner or affiliates, all

asset management fees, all payments of principal and interest on indebtedness (including payments on loans from the General Partner or affiliates), expenses for repairs and maintenance, capital improvements and replacements, and such reserves and retentions as the General Partner reasonably determines to be necessary and desirable in connection with the Partnership’s operations. “Cash Available for Distribution from Sale or Refinancings” means the net cash realized by the Partnership from all property sale or refinancing proceeds, or similar capital items, after payment of all related cash expenditures of the Partnership, and such reserves and retentions as the General Partner reasonably determines to be necessary and desirable in connection with the Partnership’s operations.

IN WITNESS WHEREOF, the undersigned have executed and delivered this Amendment as of the date first set forth in the preamble hereof.

GENERAL PARTNER:		CLASS A LIMITED PARTNERS:
Millenium Management, LLC		Millenium Management, LLC
By:	/S/ W. ROBERT KOHORST	By:	/S/ W. ROBERT KOHORST
Name:	W. Robert Kohorst, President	Name:	W. Robert Kohorst, President
LIMITED PARTNER: Secured Investment Resources Fund, L.P. II			/S/ DAVID I. LESSER
			David I. Lesser
By:	Millenium Management, LLC, General Partner		/S/ KEITH A. KOHORST
			Keith A. Kohorst
By:	/S/ W. ROBERT KOHORST
Name:	W. Robert Kohorst, President		Continental American Properties, Ltd. By: DJE Financial Corp., its general partner
		By:	/S/ RALPH W. TILLEY
			Ralph W. Tillery, Vice President

EXHIBIT A

CLASS A LIMITED PARTNERS

Limited Partner Name & Address	Capital Contribution	Class A Partnership Interest
Continental American Properties, Ltd. 3990 Ruffin Road, Suite 100 San Diego, CA 92123 Tax ID:	$400,000	49.9376%
Keith A. Kohorst 283 Apple Seed Circle Henderson, NV 89121 Tax ID:	$200,000	24.9688%
David I. Lesser 3 Sunnyfield Drive Rolling Hills Est., CA 90274 Tax ID:	$100,000	12.4844%
Millenium Management, LLC 199 S. Los Robles Ave., Suite #200 Pasadena, CA 91101 Tax ID:	$101,000	12.6092%
TOTAL	$801,000	100%

EX-99

PROPERTY MANAGEMENT AGREEMENT

BAYBERRY CROSSING

This PROPERTY/MANAGEMENT AGREEMENT (the “Agreement”) is dated as of March 15,2005 between SECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“Owner”), and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Manager”).

Owner owns the retail shopping center commonly known as Bayberry Crossing, located at 523 SE Melody Lane, Lee’s Summit, MO 64063 (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1      Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1      Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2      Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3      Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)    Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)    Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)    Manager shall have responsibility and, to the extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)    Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)    Manager shall furnish to Owner no later than the end of the third (31d) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)    Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable judgment, required for the operation of the Property.

(c)    During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5      Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. All leases are subject to prior review and approval by Owner, in its sole discretion. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)    Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)    Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. At the request of Owner, Manager shall obtain a personal or other guaranty regarding any prospective tenant. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)    Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In

addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7      Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning, painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)    Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8      Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000,Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000,Owner

may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b)    Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c)    Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9      Service Contracts, Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3.Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)    If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)    Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)    Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such

discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10    Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.1 1   Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12    Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13 Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof; (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the

performance by the tenant under its lease with respect to each premises vacated; (f)check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1      Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)    In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)    Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)    Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating

to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2      Employees, Contractor’s, Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1      Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or

fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2      Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner an income statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accrual basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3      Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f)summaries of adjusting journal entries as part of the annual audit process; (g) supporting documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (i) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (i), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1      Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner.

(b)    Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1      Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4      Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from

Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1 Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1      Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by

Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; provided that the maintenance staff shall be reimbursed out of the Operating Account for documented travel to and from the Property at the then-current IRS standard mileage rate for automobile business travel (40.5 cents per mile for 2005) ; (t)cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j) all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2      Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3      Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without

limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1        Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to four percent (4%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERMINATION

10.1    Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this Agreement.

In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager. In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2    Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3    Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4    Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in

notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to fulfil such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1    Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1    Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1    Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER:	Winbury Realty of K.C., Inc. 4520 Main Street, Suite 1000 Kansas City, Missouri 64111 Tel.: 816.531.5303 Fax: 816.531.5409 Attention: Michael Conn, Senior Vice President, Principal
OWNER:	Secured Investment Resources Fund, L.P. II By: Millenium Management, LLC Its General Partner 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Tel.: 626.585.5920 Fax: 626.585.5929 Attention: John Anderson Vice President

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1) business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3)business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1    Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the of the Agreement.

14.2    Consent and Approvals. Each party may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates Ted Murray and Michael Conn.

14.3    Gender: Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest or the voting power of the appropriate entity.

14.4    Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing.

14.5    Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6    Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the in personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7    Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8    Representations. Manager represents and warrants that it is fully qualified and licensed, to the extentrequired by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement; and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance

maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b) Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10  Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only to the extent of Owner’s interest in the Property, and: (i) only to the extent such Claims are not covered by insurance maintained by Owner or Manager; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel . If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.1 1 Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12  Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13  Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to

be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14  No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or be construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15  Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16 Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as

of the date first written above.

“OWNER”
Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
By:	Millenium Management, LLC,
	a California limited liability company its general partner
By:	/S/ W. ROBERT KOHORST
	W. Robert Kohorst President

“MANAGER”
Winbury Realty of K.C. Inc., a Missouri Corporation
By:	/S/ TED MURRAY
Name:	Ted Murray
Its:	Chief Executive Officer

EX-99

EXCLUSIVE RIGHT TO LEASE AGREEMENT (MISSOURI)

THIS AGREEMENT is made by and betweenSECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“OWNER”) and WINBURY REALTY OF KANSAS CITY, INC. (“BROKER”). By this Agreement OWNER retains and appoints BROKER asOWNER’S Exclusive Agent to assist OWNER with the lease by OWNER of the property described herein (“Property”). OWNER and BROKER expressly agree that BROKER shall have the sole and exclusive right to lease the Property during the term of this Agreement. OWNER agrees to refer all inquiries and prospects OWNER may receive, directly or indirectly, to BROKER, and OWNER hereby gives permission to BROKER to enter the property at reasonable times to show it to prospects.

I. GENERAL DESCRIPTION OF PROPERTY LEASE PRICE LEASE TERMS.

a Legal Description: To be attached

b Street Address of Property: 507-579 SE Melody Lane, Lee’s Summit, MO 64063

c. Lease Price: $11.00sq. ft. to $14.00 sq. ft.

d. Lease Terms: NNN

e. Other Important Terms under which Property is to be leased: All leases will be subject to review and approval by Landlord prior to lease execution.

2. TERM OF AGREEMENT. This Agreement shall begin March1, 2005 and shall continue until midnight February 28, 2006. The Landlord has the right to terminate 30 days after given notice.

3. Agency Disclosure. Attached hereto and incorporated by reference an Agency Disclosure Addendum notifying OWNER of the alternative agency relationship applicable to this Agreement. Owner confirms it has read and signed the Addendum and confirms receiving the Missouri Broker Disclosure Form.

OWNER consents to BROKER’S DUAL AGENCY ______(OWNER’S initials)

OWNER consents to BROKER as TRANSACTIONAL BROKER ______(OWNER’S initials)

OWNER consents to the DESIGNATED AGENT below /s/JA (OWNER’S initials)

Name of Designated Agent designated by BROKER: Anita Bates

_________________

Signature of Broker

NOTICE TO OWNER: MISSOURI LAW PRESUMES THAT, ABSENT SOME OTHER RELATIONSHIP BEING ESTABLISHED, A LICENSEE WORKING WITH A TENANT REPRSENTS THE TENANT. AS A RESULT, ANY LICENSEE WORKING WITH A TENANT MAY BE REQUIRED TO DSICLOSE ANY INFORAMTION GIVEN TO THEM BY OWNER.

4.   BROKER’S DUTIES. (a) BROKER agrees to use reasonable efforts to lease the Property at the lease price and at the terms stated above or later agreed upon by OWNER and tenant. In furtherance of its duties, BROKER will (1) Perform the terms of this Agreement; (2) Exercise reasonable skill and care for OWNER; (3) Promote the interests of OWNER with the utmost good faith, loyalty, and fidelity, including: (a) seeking a price and terms which are acceptable to OWNER, except that BROKER shall not be obligated to seek additional offers to lease the Property while the Property is subject to a lease or letter of intent to lease; (b) presenting all written offers to and from OWNER in a timely manner regardless of whether the Property is subject to a lease or letter of intent to lease; (c) disclosing to OWNER all adverse material facts actually known or that should have been known by BROKER; and (d) advising OWNER to obtain expert advice as to material matters about which BROKER knows but the specifics of which are beyond the expertise of BROKER; (4) Account in a timely manner for all money and property received; (5) Comply with all requirements of §§ 339.710 to 339.860 R.S.Mo., subsection 2 of §339.10 R.S.Mo., and any rules and regulation promulgated pursuant to those sections; and (6) comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes and regulations. BROKER may show properties not owned by OWNER to prospective tenants and may list competing properties for sale or lease without breaching any duty or obligations to OWNER. BROKER shall cooperate with Property Manager and Owner in investigating all prospective tenants in accordance with credit standards approved by Owner, and shall not present any person not meeting those standards. At the request of Property Manager and/or Owner, BROKER shall cooperate with Property Manager to obtain a personal or other guaranty regarding any prospective tenant.

(b) BROKER shall not disclose any confidential information about OWNEWR unless disclosure is required by statute, rule or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend BROKER or an affiliated licensee against an action of wrongful conduct in a n administrative or judicial proceeding or before a professional committee. BROKER owes no duty or obligations to OWNER except that BROKER shall disclose to any customer all adverse material facts actually known or that should have been known by BROKER. BROKER owes no duty to conduct an independent inspection or discover any adverse material facts for the benefit of the customer and owes no duty to independently verify the accuracy or completeness of any statement made by OWNER or any independent inspector.

(c) BROKER and an affiliated licensee owe no further duty or obligation to OWNER after termination, expiration, completion or performance of this Agreement, except the duties of: (1) accounting in a timely manner for all money and property related to, and received during, the term of this Agreement; and (2) treating as confidential information provided by OWNER during the term of this Agreement that may reasonably be expected to have a negative impact on OWNER’S real estate activity unless: (i) OWNER grants written content; (ii) disclosure of the information is required by law; (iii) the information is made public or becomes public by the words or conduct of OWNER or from a source other than the BROKER; and (iv) disclosure is necessary to defend the BROKER or an affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or a professional committee.

5. ADVERTISING. [Intentionally omitted]

6.   OTHER BROKERS. BROKER may make offers of subagency, cooperation, and/or compensation to other brokers so that the Property will receive maximum exposure. OWNER authorizes BROKER to cooperate and share its commission with other brokers, including brokers representing the tenant, sub-agents, and transaction brokers. OWNER understands and acknowledges that the broker, if any, representing the tenant may represent solely the interest of such tenant, even if compensated by BROKER. BROKER is authorized to show the Property to prospective tenants whom BROKER represents and to arrange showings of the Property to prospective tenants represented by their own brokers or agents. Compensation to any cooperating broker shall be due and payable only upon receipt of the commission fee by BROKER.

7.   FEES TO BROKER. (a) When and if BROKER produces a prospect ready, willing and able to lease the Property at the sale price and on the terms above or later agreed upon between OWNER and Tenant on such terms, OWNER agrees to pay BROKER a commission fee of (*see following page) of the lease price. Such commission shall be due and payable at the later of the Lease Commencement Date or Tenant move in. The parties recognize that BROKER is not authorized to bind OWNER to execute a lease agreement unless so empowered by OWNER in writing. In the event a deposit s made and is then forfeited, on-held of the deposit shall be paid to or retained by (as the case may be) BROKER, but said payment shall not be in excess of the fee to which BROKER otherwise would have been entitled to receive. OWENR’S obligation to pay the above-described commission shall survive the expiration of this Agreement.

(b)  OWNER further agrees to pay BROKER the above-described commission if the Property is leased by OWNER or any other party during the term of this Agreement, or if the Property is leased within sixty (60) days after the expiration of this Agreement to any party to whom the Property was submitted and whose name was disclosed to OWNER by BROKER, in writing, by certified or regular mail during the term of this Agreement or within 10 days after the expiration of this Agreement. In the event the Property is sold during the term of any lease for which commissions are payable hereunder, OWNER agrees that the terms of such sale shall include the assumption by the purchaser of OWNER’S obligation to pay commission hereunder.

8.   OWNER’S REPRESENTAIONS; INDEMINIFICATION. OWNER hereby states and affirms that to the best of OWNER’S actual knowledge, and except as otherwise specified below: OWNER has good an marketable title to the Property; there are no material physical, structural, or mechanical defects in the Property; there are no hazardous substances, pollutants, or contaminants on the Property, the presence or disposal of which is subject to federal, state, or local environmental regulation; there is no equipment, storage tank, container or structural element on the Property that contains or utilizes and has released or could release, any such hazardous substance, pollutant or contaminant into the environment or the interior of any building on the Property. OWNER agrees to defend, indemnify and hold harmless BROKER and its agents, subagents, licensees, employees and contractors from any and all claims, demands, suits, damages, losses or expense (including attorney’s fees and related expenses) arising out of any misrepresentation, non-disclosure or concealment by OWNER in connection with the lease of the Property.

9.   GOVERNING LAW; ATTORNEY’S FEES. This Agreement shall be governed and interpreted by the laws of the State of Missouri. In the event of litigation concerning the rights of OWENR or BROKER pursuant to this Agreement, the parties agree that the non-prevailing party shall be obligated to pay all such reasonable attorney’s fees and court costs incurred by the prevailing party in such litigation.

10.  ENTIRE AGREEMENT; NON-ASSIGNMENT. This Agreement constitutes the entire agreement between the parties and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. There shall be no modification of any of the terms of this Agreement unless such modification has been agreed to in writing and signed and/or initialed by all parties to this Agreement and dated. Neither OWNER nor BROKER may assign this Agreement; provided, however, BROKER shall have the right to assign this Agreement to another broker upon receipt of the express written consent of all parties to this Agreement.

OWNER ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREMENT SIGNED BY THE BROKER OR HIS/HER AGENT.

CAREFULLY READ THE TERMS OF THIS CONTRACT AND THE ADDENDUMS HEREOF BEFORE SIGNING, WHEN SIGNED BY AL PARTIES, THIS IS A LEGALLY BINDING CONTRACT. IF NOT UNDERSTOOD, CONSULT AN ATTORNEY BEFORE SIGNING.

This Agreement is made and executed this 24^th day of March, 2006

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ Anita Bates 2/26/07	By:	Millenium Management, LLC,
AGENT         Anita Bates                          Date		a California limited liability company
		its general partner
/S/ WINBURY	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date 4520 Main Street, Suite 1000 Kansas City, MO 64111 816.531.5303		W. Robert Kohorst President 199 S. Los Robles Ave., #200 Pasadena, CA 91101 626.585.5920
ADDRESS                                                  Phone		ADDRESS                                       Phone

Approved by Legal Counsel for use in Missouri

*Fee Structure (per Section 7)

New:	Years 1 – 5:	Six percent (6%) of gross rent for the primary term.
	Years 6 -10:	Three percent (3%) of gross rent for the primary term, not to exceed ten (10) years.
Renewal:	Years 1 – 5:	With Tenant’s broker’s cooperation: Three percent (3%) of gross rent for the primary term. Without Tenant’s broker: Two percent (2%) of gross rent for the primary term.
	Years 6 – 10:	With Tenant’s broker’s cooperation: One and a half percent (1½%) of gross rent for the primary term, not to exceed ten (10) years. Without Tenant’s Broker: One percent (1%) of gross rent for the primary term, not to exceed ten (10)
.	No fee.

AGENCY DISCLOSURE ADDENDUM (MISSOURI)

This Addendum is an integral part of the Agreement between OWENR/BUYER/TENANT and BROKER dated __________. By signing below, OWNER/BUYER/TENANT acknowledges receipt of this Addendum and acknowledges this Addendum is part of the attached Agreement. BROKER is duly licensed under the laws of the state of MISSOURI as a Real Estate Broker. OWNER/BUYER/TENANT acknowledges receiving the required Missouri Broker Disclosure Form regarding the disclosure of alternative agency relationships.

1.   A “dual agent” is a limited agent who, with the written consent of all parties, has entered into an agency brokerage relationship, and not a transaction brokerage relationship, with and therefore represents both the seller and buyer or both the landlord and tenant. A “dual agency” is a form of agency which results when an agent licensee or someone affiliated with the agent licensee represents another party to the same transaction. A licensee may act as a dual agent only with the written consent of all parties to the transaction. A dual agent shall be a limited agent for both seller and buyer or the landlord and tenant and shall have the duties and obligations required b y R.S.Mo §§ 339.730 and 339.740 unless otherwise provided for in § 339.750 R.S.Mo.

2.   Except as provided in this paragraph 2, a dual agent may disclose any information to one client that the licensee gains from the other client if the information is material to the transaction unless it is confidential information as defined in R.S.Mo. § 339.710. the following information shall not be disclosed by a dual agent without the consent of the client to whom the information pertains: (1) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (2) that a seller or landlord is willing to accept less than the asking price or lease rate for the property; (3) What the motivating factors are for any client buying, selling, or leasing the property; (4) That a client will agree to financing terms other than those offered, and (5) The terms of any prior offers or counter offers made by any party. A dual agent shall not disclose to one client any confidential information about the other client unless the disclosure is required by statute, rule, or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend the affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or before a professional committee. No cause of action for any person shall arise against a dual agent for making any required or permitted disclosure. A dual agent does not terminate the dual agency relationship by making any required or permitted disclosure.

3.   In a dual agency relationship there shall be no imputation of knowledge or information between the client and the dual agent or among persons within an entity engaged as dual agent.

TRANSACTION BROKER

A “Transaction Broker” is any licensee acting pursuant to R.S.Mo. §§ 339.710 to 339.860, who (a) Assists the parties to a transaction without an agency or fiduciary relationship to either party and is, therefore, neutral, serving neither as an advocate or advisor for either party to the transaction; (b) Assists one or more parties to a transaction and who has not entered into a specific written agency agreement to represent one or more of the parties; (c) Assists another party to the same transaction either solely or through licensee affiliates. Such license shall be deemed to be a transaction broker and not a dual agent, provided that, notice of assumption of transaction broker status is provided to the buyer and seller immediately upon such default to transaction broker status, to be confirmed in writing prior to execution of the contract. A transaction broker may cooperate with other brokers and such cooperation shall not establish an agency or subagency relationship.

1.   A transactional broker shall have the following duties and obligations: (a) to perform the terms of any written or oral agreement made with any party to the transaction; (b) To exercise reasonable skill, care and diligence as a transaction broker, including but limited to: (i) presenting all written offers and counteroffers in a timely manner regardless of whether the property subject to a contract for sale or lease or letter of intent unless otherwise provided in the agreement entered with the party; (ii) informing the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction broker knows but the specifics of which are beyond the expertise of such broker; (iii) accounting in a timely manner for all money and property received; (iv) disclosing to each party to the transaction any adverse material facts of which the licensee has actual notice or knowledge; (v) assisting the parties in complying with the terms and conditions of any contract; (c) To comply with all applicable requirements of R.S.Mo. §§ 339.710 and 339.860, subsection 2 of R.S.Mo. §§ 339.010 and all rules and regulations promulgated pursuant to such sections; and (d) To comply with any applicable federal, state and local laws, rules, regulations and ordinances, including fair housing and civil rights statutes and regulations. The parties to a transaction brokerage transaction shall not be liable for acts of the transaction broker.

2.   The following information shall not be disclosed by a transaction broker without the informed consent of the party or parties disclosing such information to the broker: (a) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (b) That a seller or landlord is willing to accept less than the asking price or lease rate for the property; (c) What the motivating factors are for any party buying, selling or leasing the property; (d) that a seller or buyer will agree to financing terms other than those offered; (c) any confidential information about the other party, unless disclosure of such information is required by law; statutes, rules or regulations or failure to disclose such information would constitute fraud or dishonest dealing.

3. A transaction broker has no duty to conduct an independent inspection of, or discover any defects in, the property. A transaction broker has no duty to conduct an independent investigation of the buyers’ financial condition.

4.    A transaction broker may do the following without breaching any obligation or responsibility: (a) show alternative properties not owned by the seller or landlord to a prospective buyer or tenant; (b) List competing properties for sale or lease; (c) show properties in which the buyer or tenant is interested to other prospective buyers or tenants; (d) serve a s a single agent,

subagent or designated agent or broker, limited agent, disclosed dual agent for the same or for different parties in other real estate transactions.

5.   A transaction broker may cooperate with other brokers and such cooperation does not establish an agency or subagency relationship.

6.   In a transaction broker relationship each party and the transaction broker, including all persons within an entity engaged as the transaction broker if the transaction broker is an entity, are considered to possess only actual knowledge and information. There is no imputation of knowledge or information by operation of law between any party and the transaction broker or between any party and any person within an entity engaged as the transaction broker if the transaction broker is an entity.

7.   Nothing in § 339.755 R.S.Mo, prohibits a transaction broker for acting as a single limited agent, dual agent, or subagent whether on behalf of a buyer or seller, as long as the requirements governing disclosure of such fact are met. Nothing in § 339.755 R.S.Mo. alters or eliminates the responsibility of a broker as set forth in such statues for the conduct and actions of a licensee operating under the broker’s license.

8.   If any licensee who represents another party to the same transaction either solely or through affiliate licenses refuses transaction broker statutes and wants to continue an agency relationship with both parties to the transaction, such licensee shall have the right to become a designated agent or a dual agent as provided for in §§ 339.730 to 339.860 R.S.Mo.

9.   In any transaction a licensee may without liability withdraw from representing a client who has not consented to a conversion to transaction brokerage. Such withdrawal shall not prejudice the ability of the licensee or affiliated licensee to continue to represent the other client in the transaction or limit the licensee form representing the client who refused the transaction brokerage representation in another transaction not involving transaction brokerage.

DESIGNATED AGENCY

A designated broker entering into a limited agency agreement or written transaction brokerage agreement with a client or party for the listing or property or for the purpose of representing or assisting that person in the buying, selling, exchanging, renting, or leasing or real estate may appoint n writing affiliated licensees as designated agents or designated transaction brokers to the exclusion of all other affiliated licensees. If a designated broker has made an appointment pursuant to this section, an affiliated licensee assisting a party without a written agreement shall be presumed to be a transaction broker to the exclusion of all other affiliated licensees, unless a different brokerage relationship status has been disclosed to or established with that party. A designated broker shall both be considered to be a dual agent or transaction broker solely because such broker makes an appointment of a designated agent, except that any licensee who is not a transaction broker and who personally represents both the seller and buyer or both the landlord and tenant in a particular transaction shall be a dual agent or transaction broker and shall be required to comply with the provisions governing dual agents or transaction brokers. All designated agents or transaction brokers to the extent allow allowed by their licenses shall have the same duties and responsibilities to the client and customer pursuant to in §§ 339.730 to 339.755 R.S.Mo. as the designated broker except as provided above.

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ Anita Bates 2/26/06	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
/s/	By:	/S/ John Anderson 3/23/06
BROKER                                                       Date 4520 Main Street, Suite 1000 Kansas City, MO 64111 816.531.5303		John D. Anderson Authorized Representative 199 S. Los Robles Ave., #200 Pasadena, CA 91101 626.585.5920
ADDRESS                                                  Phone		ADDRESS                                       Phone
BROKER                                                       Date Approved by Legal Counsel for use in Missouri.

EX-99

ASSIGNMENT OF AGREEMENTS,

PERMITS AND CONTRACTS

THIS ASSIGNMENT OF AGREEMENTS, PERMITS AND CONTRACTS (“Assignment”) is made as of the ___day of August, 2006, by EVEREST BAYBERRY, LP, a California limited partnership, having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst (“Borrower”), to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801 (“Lender”).

RECITALS:

A.        Borrower, by its promissory note of even date herewith given to Lender (the note together with all extensions, renewals, modifications, substitutions and amendments thereof shall collectively be referred to as the “Note”), is indebted to Lender in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00) in lawful money of the United States of America, with interest from the date thereof at the rates set forth in the Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as the “Loan”), principal and interest to be payable in accordance with the terms and conditions provided in the Note.

B.        The Loan is secured by, among other things, the Security Instrument (as defined in the Note), which grants Lender a first lien on the property encumbered thereby (the “Property”).

C.        Lender was unwilling to make the Loan to Borrower unless Borrower in the manner hereinafter set forth assigned to Lender as additional security for the payment of the Loan and the observance and performance by Borrower of the terms, covenants and conditions of the Note, the Security Instrument and the other Loan Documents (as defined in the Note) on the part of Borrower to be observed and performed, all of Borrower’s right, title and interest in and to all permits, license agreements, operating contracts, licenses (including liquor licenses, to the extent assignable by Borrower), franchise agreements and all management, service, supply and maintenance contracts and agreements, and any other agreements, permits or contracts of any nature whatsoever now or hereafter obtained or entered into by Borrower with respect to the ownership, operation, maintenance and administration of the Property (collectively, the “Agreements”).

AGREEMENT:

For good and valuable consideration the parties hereto agree as follows:

1.         Assignment of the Agreements. As additional collateral security for the Loan and the observance and performance by Borrower of the terms, covenants and conditions of the Note, the Security Instrument and the other Loan Documents on the part of Borrower to be observed or performed, Borrower hereby transfers, sets over and assigns to Lender all of Borrower’s right, title and interest in and to the Agreements.

2.        Borrower’s Covenants. Borrower hereby covenants to Lender that during the term of this Assignment: (a) Borrower shall fulfill and perform each and every term, covenant and provision of the Agreements to be fulfilled or performed by Borrower thereunder, if any, (b) Borrower shall, in the manner provided for in this Assignment, give prompt notice to Lender of any notice received by Borrower under any of the Agreements, together with a complete copy of any such notice, (c) Borrower shall enforce, short of termination thereof, the performance and observance of each and every term, covenant and provision of the Agreements to be performed or observed, if any, and (d) Borrower shall not terminate or amend any of the terms or provisions of any of the Agreements, except as may be permitted pursuant to the terms of the Agreements and done in the ordinary course of business, without the prior written consent of Lender, which consent may be withheld by Lender in Lender’s sole discretion. In the event Borrower has terminated an Agreement, Borrower agrees to enter into another Agreement containing terms and conditions no less favorable to Borrower than the terminated Agreement. Borrower shall notify Lender in the event Borrower does not replace the terminated Agreement.

3.         Governing Law. This Assignment shall be deemed to be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

4.         Notices. All notices or other written communications hereunder shall be deemed to have been properly given if given in the same manner provided for the delivery of notices and other written communications in the Security Instrument.

5.         No Oral Change. This Assignment, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

6.         Liability. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

7.        Inapplicable Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

8.Headings, Etc. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

9.         Duplicate Originals; Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment.

10.Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

11.Exculpation. Borrower’s obligations under this Agreement are subject to the provisions of Article 13 of the Security Instrument.

12.Miscellaneous. Wherever pursuant to this Assignment (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

BORROWER:
Everest Bayberry, L.P.,
a California limited partnership
	By:	Millenium Bayberry, LLC, a
		California limited liability company
		Its General Partner
		By:	Millenium Management, LLC, a
			California limited liability company
			its Manager
		By:	/S/ CHRISTOPHER K. DAVIS
			Christopher K. Davis
		Its:	Vice President and General Counsel

EX-99

ASSIGNMENT OF LEASES

KNOW ALL PERSONS BY THESE PRESENTS, that Secured Investment Resources Fund, L.P. II, as (“Assignor”), for the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Assignor, hereby assigns, transfers and sets over to Everest Bayberry, LP, a California limited partnership (“Assignee”), all of Assignor’s right, title and interest in and to all of those certain leases (“Leases”) with the tenants described on the rent roll attached hereto as Exhibit “A”and made a part hereof, all in connection with the real estate and improvements thereto described in Exhibit “B” attached hereto and made a part hereof. Assignor has no knowledge of any Leases in connection with the real property and improvements thereto known as Bayberry Crossing, 523 S.E. Melody Lane, Lee’s Summit, Missouri, other than as set forth above.

Assignee hereby accepts the foregoing assignment and, by its acceptance, Assignee hereby assumes and covenants and agrees to keep and to perform all of the terms, conditions, covenants, agreements, and provisions of the Leases to be kept and performed by Assignor.

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year written below.

Dated: August ___, 2006

[SIGNATURES ARE ON FOLLOWING PAGE]

SECURED INVESTMENT RESOURCES FUND II, L.P.,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California limited liability company
		Its General Partner
	By:	/S/ CHRISTOPHER K. DAVIS
	Name:	Christopher K. Davis
	Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On August 10^th, 2006, before me, Charlie Lam

Name and Title of Officer personally appeared Christopher K. Davis:

|  | personally known to me

|x|proved to me on the basis of satisfactory evidence to be the person whose name is

subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

/S/ CHARLIE LAM

Signature of Notary Public

ASSIGNEE
EVEREST BAYBERRY, LP
a California limited partnership
By: Millenium Bayberry, LLC, a California limited liability company, its general partner
By:	Millenium Management, LLC,
	a California limited liability company
	Its manager
	By:	/S/ CHRISTOPHER K. DAVIS
	Name:	Christopher K. Davis
	Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On August 10^th, 2006, before me, Charlie Lam

Name and Title of Officer personally appeared Christopher K. Davis:

|  | personally known to me

|x|proved to me on the basis of satisfactory evidence to be the person whose name is

subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

/S/ CHARLIE LAM

Signature of Notary Public

THIS INSTRUMENT WAS DRAFTED BY:

SUSAN E. SPAR

Everest Properties

199 S. Los Robles Ave., Suite 200

Pasadena, CA 91101

EXHIBIT “A”

LEASES

Database	RETAIL	Rent Roll BAYBERRY CROSSING 7/31/2006									Page	1
Bldg Status	Active only										Date	8/31/2006
											Time	10 17 AM
										Future Rent Increases
Bldg id- Sun id	Occupant Name	Rent start	Expiration	GLA Sqft	Monthly Base rent	Annual Rate PSF	Monthly Cost Recovery	Expiration Stop	Monthly Other Income	Cat	Date	Monthly Amount	PSF
Vacant Suites
WR0029-553	Vacant			1,222
WR0029-569	Vacant			3,252
Occupied Suites
WR0029-507	The Tax Shoppe	1/01/2006	12/31/06	1,170	1,037.50	10.64	300.00		323.00
WR0029-511	Jazz, A Louisiana Kitchen	11/1/1998	10/31/08	5,109	4,63.94	10.25	671.00
Wr0029-515	Check into Cash	3/15/2001	8//31/2009	2,800	2,050.00	8.83	19.00			RNT	9/1/2006	2,121.80	9.09
										RNT	9/1/2007	2,184.45	9.36
										RNT	9/1/2008	2,251.02	9.65
WR0029-519	PPG Architectural Finishes	10/27/2005	10/31/2010	2,400	1,900.00	9.50	600.00		636.00	RNT	11/1/2006	1,957.00	9.79
										RNT	11/1/2007	2,015.75	10.08
										RNT	11/1/2008	2,076.17	10.38
										RNT	11/1/2009	2,138.50	10.69
WR0029-527	Pizza Street	1/15/2003	4/30/2014	4,930	4,313.75	10.50	1,104.00
WR0029-527	Homebrew Pro Shoppe	10/1/2002	7/31/2005	930	736.25	9.50	239.00
WR0029-533	Midwest Discount Vacuum & Si	10/1/2002	9/30/2007	1,587	1,388.62	10.50	355.00
WR0029-535	Nature’s Market	12/1/2005	11/30/2008	2,633	2,194.17	10.00	676.00		426.00
WR0029-537	Gleason’s Flowers & Gifts	2/1/2006	1/31/2009	2,633	2,084.45	9.50	676.00		726.00
WR0029-539	Lee’s Nails	5/1/2004	7/31/2007	1,235	1,003.43	9.75	277.00		25.00
WR0029-541	China 88	9/1/2005	8/31/2010	2,200	1,925.00	10.50	565.00		507.00	RNT	9/1/2007	2,015.00	10.99
WR0029-543	Tan-Talizer, inc.	3/1/1995	12/31/2003	1,557	500.00	3.85	400.00
WR0029-547	El maguey	9/1/2001	8/31/2006	3,938	3,762.76	11.47	882.00		2.00
WR0029-551	Direct General Insurance	2/1/2005	1/31/2008	1,735	1,518.12	10.50	389.00		35.00
WR0029-555	Kim’s Bridal & Tailor	1/1/2006	12/31/2008	2,587	2,263.63	10.50	664.00		714.00
WR0029-558	Edward D. Jones & Co.	11/1/1996	10/31/2006	953	938.54	11.82	245.00		263.00
WR0029-51	Rent A Center	10/1/2005	6/30/2010	4,665	2,993.00	7.70	645.00		1,178.00	RNT	7/1/2007	3,110.00	8.00
WR0029-565	Curve’s For Women	7/1/2005	7/31/2010	2,666	2,332.75	10.50	684.00		736.00	RNT	8/1/2007	2,443.83	11.00

Database

RETAIL

Rent Roll BAYBERRY CROSSING 7/31/2006

Page

1

Bldg Status

Active only

Date

8/31/2006

Time

10 17 AM

Future Rent Increases

Bldg id- Sun id

Occupant Name

Rent start

Expiration

GLA Sqft

Monthly Base rent

Annual Rate PSF

Monthly Cost Recovery

Expiration Stop

Monthly Other Income

Cat

Date

Monthly Amount

PSF

RNT

8/1/2009

2,554.92

11.50

WR0029-571

Discount Smoke Shop

10/1/1997

9/30/1998

933

816.38

10.50

240.00

WR0029-579

Berbiglia

9/1/2002

10/31/2007

3,343

3,064.42

11.00

749.00

Totals:

Occupied Sqft:

91.79%

20 Units

50,004

41,196.71

11,080.00

5,998.00

Leased/Unoccupied Sqft:

8 Units

0

Vacant Sqft:

8.21%

2 Units

4,474

Total Sqft:

22 Units

54,478

41,196.71

Total BAYBERRY CROSSING:

Occupied Sqft:

91.79%

20 Units

50,004

41,196.71

11,080.00

5,998.00

Leased/Unoccupied Sqft:

0 Units

0

Vacant Sqft:

8.21%

2 Units

4,474

Total Sqft:

22 Units

54,478

41,196.71

Grand Total:

Occupied Sqft:

91.79%

20 Units

50,004

41,196.71

11,080.00

5,998.00

Leased/Unoccupied Sqft:

0 Units

0

Vacant Sqft:

8.21%

2 Units

4,474

Total Sqft:

22 Units

54,478

41,196.71

EXHIBIT “B”

LEGAL DESCRIPTION

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri, described as follows: A tract of land being part of Tract “E”and part of Tract “B”, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract “E, said point also being on the Southerly Right-Of-Way Line of 5th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E”, thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E”, 673.18 feet; thence North 16 degrees 38 minutes 21 seconds East 235.73 feet to a point on the Southerly Right-Of- Way of 5^th Street Terrace, (the following three courses are along said Right-Of-Way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet to the Point of Beginning, EXCEPT that part in Bayberry Lane.

Together with a non-exclusive access and ingress easement established by the instrument recorded April 29, 1988 as Document No. 1-840559 in Book 1-1795 at Page 1421.

EX-99

Space Above Line Reserved for Recorder’s Use

1. Title of Document: Assignment of Leases and Rents

2. Date of Document: August -, 2006

3. Grantor(s): Everest Bayberry, LP

4. Grantee(s): Lehman Brothers Bank, FSB

5. Statutory Mailing Address: Grantor:

Everest Bayberry, LP

C/O Everest Properties

199 S. Los Robles Avenue, Suite 200

Pasadena, California 9 1 101

Grantee:

Lehman Brothers Bank, FSB

C/O Lehman Brothers, Inc.

1000 West Street

Wilmington, Delaware 19801

6. Legal Description: See Exhibit A annexed to the document.

7. Reference(s) to Book(s) and Pages): Not Applicable

EVEREST BAYBERRY, LP, as Assignor

(BORROWER)

to

LEHMAN BROTHERS BANK, FSB, as Assignee

(LENDER)

ASSIGNMENT

OF LEASES AND RENTS

Dated: August ____, 2006

Location: Bayberry Crossing

523 S.E. Melody Lane

Lee’s Summit, Missouri 64063

County: Jackson

DRAFTED BY AND UPON

RECORDATION RETURN TO:

Oppenheimer Wolff & Donnelly LLP

3300 Plaza VII

45 South Seventh Street

Minneapolis, Minnesota 55402-1609

Attention: Daniel R. Tyson

Telephone: (612) 607-7000

THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”) is made as of the ____day of August, 2006, by EVEREST BAYBERRY, LP, a California limited partnership, as assignor, having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst (“Borrower”) to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, as assignee, having an address at do Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801 (“Lender”).

RECITALS:

Borrower, by its promissory note of even date herewith given to Lender, is indebted to Lender in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00), in lawful money of the United States of America (the note, together with all extensions, renewals, modifications, substitutions and amendments thereof, the “Note”), with interest from the date thereof at the rates set forth in the Note, principal and interest to be payable in accordance with the terms and conditions provided in the Note.

Borrower desires to secure the payment and performance of the Obligations as defined in Article 2 of the Security Instrument (defined below).

1. ASSIGNMENT

1.1       PROPERTY ASSIGNED. Borrower hereby absolutely and unconditionally assigns and grants to Lender the following property, rights, interests and estates, now owned, or hereafter acquired by Borrower:

(a)       Leases.All existing and future leases affecting the use, enjoyment, or occupancy of all or any part of that certain lot or piece of land, more particularly described in Exhibit “A”annexed hereto and made a part hereof, together with the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter located thereon (collectively, the “Property”) and the right, title and interest of Borrower, its successors and assigns, therein and thereunder.

(b)       Other Leases and Agreements. All other leases and other agreements, whether or not in writing, affecting the use, enjoyment or occupancy of the Property or any portion thereof now or hereafter made, whether made before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”), together with any extension, renewal or replacement of the same, this Assignment of other present and future leases and present and future agreements being effective without further or supplemental assignment. The leases described in Subsection 1.1(a) and the leases and other agreements described in this Subsection 1.1(b), together with all other present and future leases and present and future agreements and any extension or renewal of the same are collectively referred to as the “Leases”.

(c)       Rents. All rents, additional rents, revenues, income, issues and profits arising from the Leases and renewals and replacements thereof and any cash or security

deposited in connection therewith and together with all rents, revenues, income, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the use, enjoyment and occupancy of the Property whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the “Rents”).

(d)       Bankruptcy Claims. All of Borrower’s claims and rights (the “Bankruptcy Claims”) to the payment of damages arising from any rejection by a lessee of any Lease under the Bankruptcy Code, 11 U.S.C. §101 et seq., as the same may be amended (the “Bankruptcy Code”).

(e)       Lease Guaranties. All of Borrower’s right, title and interest in and claims under any and all lease guaranties, letters of credit and any other credit support given by any guarantor in connection with any of the Leases (individually, a ‘‘Lease Guarantor” and collectively, the “Lease Guarantors”) to Borrower (individually, a “Lease Guaranty” and collectively, the “Lease Guaranties”).

(f)        Proceeds. All proceeds from the sale or other disposition of the Leases, the Rents, the Lease Guaranties and the Bankruptcy Claims.

(g)       OtherAll rights, powers, privileges, options and other benefits of Borrower as lessor under the Leases and beneficiary under the Lease Guaranties, including without limitation the immediate and continuing right to make claim for, receive, collect and receipt for all Rents payable or receivable under the Leases and all sums payable under the Lease Guaranties or pursuant thereto (and to apply the same to the payment of the Debt (as hereinafter defined)), and to do all other things which Borrower or any lessor is or may become entitled to do under the Leases or the Lease Guaranties.

(h)       Entry.The right, at Lender’s option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court-appointed receiver, to collect the Rents.

(i)        Power of Attorney. Borrower’s irrevocable power of attorney, coupled with an interest, to take any and all of the actions set forth in Section 3.1 of this Assignment and any or all other actions designated by Lender for the proper management and preservation of the Property.

(j)        Other Rights and Agreements. Any and all other rights of Borrower in and to the items set forth in subsections (a) through (i) above, and all amendments, modifications, replacements, renewals and substitutions thereof.

1.2       CONSIDERATION. This Assignment is made in consideration of that certain loan (the “Loan”) made by Lender to Borrower evidenced by the Note and secured by that certain deed of trust and security agreement given by Borrower to or for the benefit of Lender, dated the date hereof, in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00), covering the Property and intended to be duly recorded in the public records of the county where the Properly is located (the “Security

Instrument”). The principal sum, interest and all other sums due and payable under the Note, the Security Instrument, this Assignment and the other Loan Documents (as defined in the Security Instrument) are collectively referred to as the “Debt.”

2. TERMS OF ASSIGNMENT

2.1       PRESENT ASSIGNMENT AND LICENSE BACK. It is intended by Borrower that this Assignment constitute a present, absolute assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1, Lender grants to Borrower a revocable license to collect and receive the Rents and other sums due under the Lease Guaranties. Borrower shall hold the Rents and all sums received pursuant to any Lease Guaranty, or a portion thereof sufficient to discharge all current sums due on the Debt, in trust for the benefit of Lender for use in the payment of such sums.

2.2       NOTICE TO LESSEES. Borrower hereby agrees to authorize and direct the lessees named in the Leases or any other or future lessees or occupants of the Property and all Lease Guarantors to pay over to Lender or to such other party as Lender directs all Rents and all sums due under any Lease Guaranties upon receipt from Lender of written notice to the effect that Lender is then the holder of the Security Instrument and that a Default (defined below) exists, and to continue so to do until otherwise notified

by Lender.

2.3       INCORPORATION BY REFERENCE. All representations, warranties, covenants, conditions and agreements contained in the Security Instrument as same may be modified, renewed, substituted or extended are hereby made a part of this Assignment to the same extent and with the same force as if fully set forth herein.

3. REMEDIES

3.1       REMEDIES OF LENDER. Upon or at any time after the occurrence of a default under this Assignment or an Event of Default (as defined in the Security Instrument) (a “Default”), the license granted to Borrower in Section 2.1 of this Assignment shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents and sums due under any Lease Guaranties, whether or not Lender enters upon or takes control of the Property. In addition, Lender may, at its option, without waiving such Default, without notice and without regard to the adequacy of the security for the Debt, either in person or by agent, nominee or attorney, with or without bringing any action or proceeding, or by a receiver appointed by a court, dispossess Borrower and its agents and servants from the Property, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of the Property and all books, records and accounts relating thereto and have, hold, manage, lease and operate the Property on such terms and for such period of time as Lender may deem proper and either with or without taking possession of the Property in its own name, demand, sue for or otherwise collect and receive all Rents and sums due under all Lease Guaranties, including those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to

Lender and may apply the Rents and sums received pursuant to any Lease Guaranties to the payment of the following in such order and proportion as Lender in its sole discretion may determine, any law, custom or use to the contrary notwithstanding: (a) all expenses of managing and securing the Property, including, without being limited thereto, the salaries, fees and wages of a managing agent and such other employees or agents as Lender may deem necessary or desirable and all expenses of operating and maintaining the Property, including, without being limited thereto, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance which Lender may deem necessary or desirable, and the cost of all alterations, renovations, repairs or replacements, and all expenses incident to taking and retaining possession of the Property; and (b) the Debt, together with all costs and reasonable attorneys’ fees. In addition, upon the occurrence of a Default, Lender, at its option, may (1) complete any construction on the Property in such manner and form as Lender deems advisable, (2) exercise all rights and powers of Borrower, including, without limitation, the right to negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents from the Property and all sums due under any Lease Guaranties, (3) either require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupancy of such part of the Property as may be in possession of Borrower or (4) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise.

3.2       OTHER REMEDIES. Lender shall have the right to have all Rents paid to a Lock-Box Account (as defined in the Security Instrument) pursuant to the terms and conditions of Section 4.4 of the Security Instrument. Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the power and rights granted to Lender hereunder shall be deemed to be a waiver by Lender of its rights and remedies under the Note, the Security Instrument, or the other Loan Documents and this Assignment is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof. The right of Lender to collect the Debt and to enforce any other security therefor held by it may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Borrower hereby absolutely, unconditionally and irrevocably waives any and all rights to assert any setoff, counterclaim or crossclaim of any nature whatsoever with respect to the obligations of Borrower under this Assignment, the Note, the Security Instrument, the other Loan Documents or otherwise with respect to the Loan in any action or proceeding brought by Lender to collect same, or any portion thereof, or to enforce and realize upon the lien and security interest created by this Assignment, the Note, the Security Instrument, or any of the other Loan Documents (provided, however, that the foregoing shall not be deemed a waiver of Borrower’s right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure, nor shall the foregoing be deemed a waiver of Borrower’s right to assert any claim which would constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever against Lender in any separate action or proceeding).

3.3       OTHER SECURITY. Lender may take or release other security for the payment of the Debt, may release any party primarily or secondarily liable therefor and may apply any other security held by it to the reduction or satisfaction of the Debt without prejudice to any of its rights under this Assignment.

3.4       NON-WAIVER. The exercise by Lender of the option granted it in Section 3.1 of this Assignment and the collection of the Rents and sums due under the Lease Guaranties and the application thereof as herein provided shall not be considered a waiver of any default by Borrower under the Note, the Security Instrument, the Leases, this Assignment or the other Loan Documents. The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Assignment. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (a) the failure of Lender to comply with any request of Borrower or any other party to take any action to enforce any of the provisions hereof or of the Security Instrument, the Note or the other Loan Documents, (b) the release regardless of consideration, of the whole or any part of the Property, or (c) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of this Assignment, the Note, the Security Instrument or the other Loan Documents. Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take any action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to enforce its rights under this Assignment. The rights of Lender under this Assignment shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.

3.5 BANKRUPTCY.

(a)       Upon or at any time after the occurrence of a Default, Lender shall have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under the Bankruptcy Code.

(b)       If there shall be filed by or against Borrower a petition under the Bankruptcy Code, and Borrower, as lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender not less than ten (10) days’ prior notice of the date on which Borrower shall apply to the bankruptcy court for authority to reject the Lease. Lender shall have the right, but not the obligation, to serve upon Borrower within such ten-day period a notice stating that (i)Lender demands that Borrower assume and assign the Lease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate assurance of future performance under the Lease. If Lender serves upon Borrower the notice described in the preceding sentence, Borrower shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after the notice shall have been given, subject to the performance by Lender of the covenant provided for in clause (ii) of the preceding sentence.

4. NO LIABILITY, FURTHER ASSURANCES

4.1       NO LIABILITY OF LENDER. This Assignment shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender. Lender shall not be liable for any loss sustained by Borrower resulting from Lender’s failure to let the Property after a Default or from any other act or omission of Lender in managing the Property after a Default unless such loss is caused by the willful misconduct and bad faith of Lender. Lender shall not be obligated to perform or discharge any obligation, duty or liability under the Leases or any Lease Guaranties or under or by reason of this Assignment and Borrower shall, and hereby agrees, to

indemnify Lender for, and to hold Lender harmless from, any and all liability, loss or damage which may or might be incurred under the Leases, any Lease Guaranties or under or by reason of this Assignment and from any and all claims and demands whatsoever, including the defense of any such claims or demands which may be asserted against Lender by reason of any alleged obligations and undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases or any Lease Guaranties. Should Lender incur any such liability, the amount thereof, including costs, expenses and reasonable attorneys’ fees, shall be secured by this Assignment and by the Security Instrument and the other Loan Documents and Borrower shall reimburse Lender therefor immediately upon demand and upon the failure of Borrower so to do Lender may, at its option, declare all sums secured by this Assignment and by the Security Instrument and the other Loan Documents immediately due and payable. This Assignment shall not operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases or any Lease Guaranties; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by any lessee or any other parties, or for any dangerous or defective condition of the Property, including without limitation the presence of any Hazardous Substances (as defined in that certain Environmental Indemnity Agreement executed by Borrower in favor of Lender as of even date herewith), or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger.

4.2       NO MORTGAGEE IN POSSESSION. Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession” in the absence of the taking of actual possession of the Property by Lender. In the exercise of the powers herein granted Lender, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Borrower.

4.3       FURTHER ASSURANCES. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, require for the better assuring, conveying, assigning, transferring and confirming unto Lender the property and rights hereby assigned or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Assignment or for filing, registering or recording this Assignment and, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower to the extent Lender may lawfully

do so, one or more financing statements, chattel mortgages or comparable security instruments, to evidence more effectively the lien and security interest hereof in and upon the Leases.

5. MISCELLANEOUS PROVISIONS

5.1       CONFLICT OF TERMS. In case of any conflict between the terms of this Assignment and the terms of the Security Instrument, the terms of the Security Instrument shall prevail.

5.2       NO ORAL CHANGE. This Assignment and any provisions hereof may not be modified, amended, waived, extended, changed, discharged or terminated orally, or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

5.3CERTAIN DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Assignment may be used interchangeably in singular or plural form and the word “Borrower “ shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein,” the word “Lender” shall mean “Lender, its servicer, and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder; whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

5.4      AUTHORITY. Borrower represents and warrants that it has full power and authority to execute and deliver this Assignment and the execution and delivery of this Assignment has been duly authorized and does not conflict with or constitute a default under any law, judicial order or other agreement affecting Borrower or the Property.

5.5INAPPLICABLE PROVISIONS. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

5.6      DUPLICATE ORIGINALS; COUNTERPARTS. This Assignment may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a

single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

5.7CHOICE OF LAW. This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

5.8TERMINATION OF ASSIGNMENT. Upon payment in full of the Debt and the delivery and recording of a satisfaction or discharge of Security Instrument duly executed by Lender, this Assignment shall become and be void and of no effect.

5.9      NOTICES. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed to Borrower or Lender at their addresses set forth in the Security Instrument or addressed as such party may from time to time designate by written notice to the other parties. For purposes of this Section 5.9, the term “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York. Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

5.10    WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS ASSIGNMENT, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

5.1 1    SUBMISSION TO JURISDICTION. With respect to any claim or action arising hereunder, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State in which the Property is located and the United States District Court located in the county in which the Property is located, and appellate courts from any thereof, and (b) irrevocably waives any objection which it may have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Assignment brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

5.12     LIABILITY. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

5.13     HEADINGS, ETC. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

5.14     NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

5.15     SOLE DISCRETION OF LENDER. Wherever pursuant to this Assignment (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

5.16    EXCULPATION. Borrower’s obligations under this Assignment are subject to the provisions of Article 13 of the Security Instrument.

THIS ASSIGNMENT, together with the covenants and warranties therein contained, shall inure to the benefit of Lender and any subsequent holder of the Security Instrument and shall be binding upon Borrower, its heirs, executors, administrators, successors and assigns and any subsequent owner of the Property.

IN WITNESS WHEREOF, Borrower has executed this instrument the day and year first above written.

EVEREST BAYBERRY, LP,
a California limited partnership
By:	Millenium Bayberry, LLC, a California limited liability company, Its general partner
	By:	Millenium Management, LLC, a
		California limited liability company,
		Its Manager
		By:	/S/ CHRISTOPHER K. DAVIS
		Name:	Christopher K. Davis
		Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 10th day of August, in the year 2006, before me, Charlie Lam, a Notary Public in and for said state, personally appeared Christopher K. Davis, the Vice President and General Counsel of MILLENIUM MANAGEMENT, LLC, a California limited liability company, the Manager of MILLENIUM BAYBERRY, LLC, a California limited liability company, the General Partner of EVEREST BAYBERRY, LP, a California limited partnership, known to be the person who executed the within instrument on behalf of said MILLENIUM MANAGEMENT, LLC, the Manager of said MILLENIUM BAYBERRY, LLC, General Partner of EVEREST BAYBERRY, LP, and acknowledged to me that he executed the same for the purposes therein stated.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

/S/ CHARLIE LAM

Notary Public

Print Name: Charlie Lam

My Commission Expires: 11-26-06

EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri described as follows:

A tract of land being part of Tract “E” and part of Tract “B”, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract “E”, said point also being on the Southerly Right-of-way Line of 5th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West, 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E; thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E, 673.18 feet; thence North 16 degrees 38 minutes 21 seconds East, 235.73 feet to a point on the Southerly Right-of-way of 5th Street Terrace, (the following three courses are along said Right-of-way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left, a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet of the Point of Beginning, EXCEPT that part in Bayberry

Lane.

Together with a non-exclusive access and ingress easement established by the instrument recorded April 29, 1988 as Document No. 1-840559 in Book 1-1795 at Page 1421.

EX-99

ASSIGNMENT OF MANAGEMENT AGREEMENT AND EXCLUSIVE RIGHT TO LEASE AGREEMENT

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND EXCLUSIVE RIGHT TO LEASE AGREEMENT (“Assignment”) is made as of the ____ day of April, 2006, by and among SECURED INVESTMENT RESOURCES FUND, L.P. II,a Delaware limited partnership (“SIR II”), and EVEREST BAYBERRY, LP, a California limited partnership (“Borrower”), each having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91 101 Attn: W. Robert Kohorst, and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Agent”).

RECITALS:

A. Borrower has requested a loan (the “Loan”) from LEHMAN BROTHERS

BANK, FSB, a federal stock savings bank (“Lender”) in the principal sum of Two Million Nine Hundred Twenty-Five Thousand and 00/100 Dollars ($2,925,000.00).

B.        The Loan is secured by, among other things, that certain Security Instrument, which grants Lender a first lien on the property encumbered thereby (the “Property”).

C.        SIR II and Agent entered into that certain Property Management Agreement dated as of March 15, 2005 (the “Management Agreement”) (a true and correct copy of which is attached hereto as Exhibit “A), pursuant to which SIR II employed Agent exclusively to rent, lease, operate and manage the Property and Agent is entitled to certain management fees (the “Management Fees”).

D.        SIR II and Agent entered into that certain Exclusive Right to Lease Agreement dated as of March 1, 2005 (the “Broker Agreement”) (a true and correct copy of which is attached hereto as Exhibit “B”), and Agent is entitled to certain broker fees (“Broker Fees”).

E.        As a condition to making the Loan, Lender is requiring that: (i) SIR II assign its interest in the Property, the Management Agreement, the Management Fees, the Broker Agreement, and the Broker Fees to Borrower, which is a wholly owned, single purpose subsidiary of SIR II; and (ii) Borrower assign the Management Agreement and the Broker Agreement, and subordinate its interest in the Management Fees and the Broker Fees in lien and payment to the Security Instrument as set forth in that certain Assignment Of Management Agreement And Subordination Of Management Fees, dated as of the date hereof (“Assignment and Subordination”).

AGREEMENT:

For good and valuable consideration the parties hereto agree as follows:

1 .        Assignment of Management Agreement Broker Agreement Management Fees, and Broker Fees. SIR II hereby unconditionally transfers, sets over and assigns to Borrower, and Borrower hereby assumes, all of SIR II’s right, title and interest in and to and obligations under the Management Agreement, the Management Fees, the Broker Agreement, the Broker Fees.

2.Estoppel. SIR II, Borrower and Agent each represents and warrants that (a) the Management Agreement and the Broker Agreement are in full force and effect and have not been modified, amended or assigned with respect to the Property, (b) neither Agent, SIR II, nor Borrower is in default under any of the terms, covenants or provisions of the Management Agreement or the Broker Agreement with respect to the Property and Agent knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under the Management Agreement or the Broker Agreement with respect to the Property, (c) neither Agent, SIR II, nor Borrower has commenced any action or given or received any notice for the purpose of terminating the Management Agreement or the Broker Agreement with respect to the Property and (d) the Management Fees and all other sums due and payable to the Agent under the Management Agreement have been paid in full with respect to the Property.

3.         Agreement by Borrower and Agent. Borrower and Agent hereby acknowledge and agree that during such periods as an Event of Default (as defined in the Security Instrument) may exist under the Security Instrument during the term of this Assignment, Lender may, at its option by written notice to Borrower and Agent in the manner described in the Assignment and Subordination: (a) require that all rents, security deposits, issues, proceeds and profits of the Property collected by Agent, after payment of all costs and expenses of operating the Property (including, without limitation, operating expenses, real estate taxes, insurance premiums and repairs and maintenance) shall be applied in accordance with Lender’s written directions to Agent; and (b) immediately terminate the Management Agreement and/or the Broker Agreement and require Agent to transfer its responsibility for the management of the Property to a management company selected by Lender in Lender’s sole and absolute discretion. During such time period, Agent shall not collect or be entitled to any Management Fees or Broker Fees or other fee or commission due under the Management Agreement or the Broker Agreement.

4.         Authority to Make Assignment. SIR II and Borrower represent and warrant that they have the power and authority to make and enter into the aforementioned assignment.

5.         Consent and Agreement by Agent. Agent hereby acknowledges and consents to this Assignment and agrees that Agent will act in conformity with the provisions of this Assignment and Borrower’s rights hereunder or otherwise related to the Management Agreement and the Broker Agreement. In the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions hereof, Agent shall, and hereby agrees to, fully cooperate in transferring its responsibility to a new management company and effectuate such transfer no later than thirty (30) days from the date the Management Agreement and/or Broker Agreement is

terminated. Further, Agent hereby agrees not to contest or impede the exercise by Borrower of any right it has under or in connection with this Assignment.

6.         Governing Law. This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

7.Notices. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintain d by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to SIR II and/or Borrower:	Everest Bayberry, LP C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91 101 Tel.: 626.585.5920 Fax: 626.585.5929 Attention: W. Robert Kohorst
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8th Floor New York, New York 10022 Attention: John Herman
With a copy to	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
and	Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson
If to Agent:	Winbury Realty of K.C., Inc. 4520 Main Street, Suite 1000 Kansas City, Missouri 641 11 Tel.: 816.531.5303 Fax: 816.531.5409 Attention: Mike Conn, Chief Financial Officer

or addressed as such party may from time to time designate by written notice to the other parties. For purposes of this Section 7, the term “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York. Any party by notice to the others may designate additional or different addresses for subsequent notices or communications.

8. No Oral Change. This Assignment, and any provisions hereof, may not be

modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower, SIR II or Agent, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

9.         Inapplicable Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

10.       Headings, Etc. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof

11.       Duplicate Originals; Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

12        Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

[SIGNATURES ARE ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

SECURED INVESTMENT RESOURCES FUND, II, L.P.,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California limited liability company,
		Its General Partner
	By:		/S/ W. ROBERT KOHORST
			Name: W. Robert Kohorst
			Its:         President

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
	By:	Millenium Bayberry, LLC,
		a California limited liability company,
	By:	Millenium Management, LLC,
		a California Limited Liability Company
		Its Manager
	By:		/S/ W. ROBERT KOHORST
			Name: W. Robert Kohorst
			Its:         President

AGENT:
WINBURY REALTY OF K.C. INC.,
a Missouri corporation
	By:
	Name:	Mike Conn
	Its:	Senior Chief Financial Officer

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

SECURED INVESTMENT RESOURCES FUND, II, L.P.,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California limited liability company,
		Its General Partner
	By:
			Name: W. Robert Kohorst
			Its:         President

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
	By:	Millenium Bayberry, LLC,
		a California limited liability company,
	By:	Millenium Management, LLC,
		a California Limited Liability Company
		Its Manager
	By:
			Name: W. Robert Kohorst
			Its:         President

AGENT:
WINBURY REALTY OF K.C. INC.,
a Missouri corporation
	By:	/S/ MIKE CONN
	Name:	Mike Conn
	Its:	Senior Chief Financial Officer

EXHIBIT “A”

MANAGEMENT AGREEMENT

PROPERTY MANAGEMENT AGREEMENT

BAYBERRY CROSSING

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as March 15, 2005 between SECURED INVESTMENT RESOURCES FUND, L.P.II, a Delaware limited partnership (“Owner”), and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Manager”).

Owner owns the retail shopping center commonly known as Bayberry Crossing, located at 523 SE Melody Lane, Lee’s Summit, MO 64063 (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2       Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)       Manager shall have responsibility and, tothe extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or

materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable

judgment, required for the operation of the Property. (c) During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. All leases are subject to prior review and approval by Owner, in its sole discretion. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b) Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. At the request of Owner, Manager shall obtain a personal or other guaranty regarding any prospective tenant. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning,

painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8      Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b) Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c) Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9Service Contracts. Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to

exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.1 1    Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13     Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f) check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1       Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager

obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2       Employees, Contractor’s. Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall

obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3       Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall h i s h to Owner anincome statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accrual basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3       Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof; (f)summaries of adjusting journal entries as part of the annual audit process; (g) supporting

documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (j) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (j), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1       Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner.

(b)       Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1       Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which

Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be

reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; provided that the maintenance staff shall be reimbursed out of the Operating Account for documented travel to and from the Property at the then-current LRS standard mileage rate for automobile business travel (40.5 cents per mile for 2005) ; (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j) all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1        Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to four percent (4%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERM[NATION

10.1     Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this

Agreement. In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager.

In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the

operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1     Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER: Winbury Realty of K.C., Inc.
4520 Main Street, Suite 1000
Kansas City, Missouri 641 11
Tel.: 816.531.5303
Fax: 816.531.5409
Attention: Michael Conn,
Senior Vice President, Principal

OWNER: Secured Investment Resources Fund, L.P. II
By: Millenium Management, LLC
Its General Partner
199 S. Los Robles Avenue, Suite 200
Pasadena, California 91101
Tel.: 626.585.5920
Fax: 626.585.5929
Attention: John Anderson
Vice President

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1)business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approval. Each pasty may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates Ted Murray and Michael Conn.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest

or the voting power of the appropriate entity. 14.4 Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing. 14.5 Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out’ of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement, and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b) Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10   Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and

against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only to the extent of Owner’s interest in the Property, and: (i) only to the extent such Claims are not covered by insurance maintained by Owner or Manager; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel . If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or he construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or

approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16    Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date fist written above.

Secured Investment Resources Fund, L.P. II,
a Delaware limited partnership
By:	Millenium Management, LLC,
	a California limited liability company
	Its General Partner
By:	/S/ W. ROBERT KOHORST
	W. Robert Kohorst
	President

“MANAGER”
Winbury Realty of K.C. Inc., a Missouri Corporation
By:	/S/ TED MURRAY
Name:	Ted Murray
Its:	Chief Executive Officer

EXCLUSIVE RIGHT TO LEASE AGREEMENT (MISSOURI)

THIS AGREEMENT is made by and betweenSECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“OWNER”) and WINBURY REALTY OF KANSAS CITY, INC. (“BROKER”). By this Agreement OWNER retains and appoints BROKER asOWNER’S Exclusive Agent to assist OWNER with the lease by OWNER of the property described herein (“Property”). OWNER and BROKER expressly agree that BROKER shall have the sole and exclusive right to lease the Property during the term of this Agreement. OWNER agrees to refer all inquiries and prospects OWNER may receive, directly or indirectly, to BROKER, and OWNER hereby gives permission to BROKER to enter the property at reasonable times to show it to prospects.

I. GENERAL DESCRIPTION OF PROPERTY LEASE PRICE LEASE TERMS.

a Legal Description: To be attached

b Street Address of Property: 501-579 SE Melody Lane, Lee’s Summit, MO 64063

c. Lease Price: $11.00sq. ft. to $14.00 sq. ft.

d. Lease Terms: NNN

e. Other Important Terms under which Property is to be leased:

All leases will be subject to review and approval by Landlord prior to lease execution.

2. TERM OF AGREEMENT. This Agreement shall begin March1, 2005 and shall continue until midnight February 28, 2006. The Landlord has the right to terminate 30 days after given notice.

3. Agency Disclosure. Attached hereto and incorporated by reference an Agency Disclosure Addendum notifying OWNER of the alternative agency relationship applicable to this Agreement. Owner confirms it has read and signed the Addendum and confirms receiving the Missouri Broker Disclosure Form.

OWNER consents to BROKER’S DUAL AGENCY ______(OWNER’S initials)

OWNER consents to BROKER as TRANSACTIONAL BROKER ______(OWNER’S initials)

OWNER consents to the DESIGNATED AGENT below /s/WRK (OWNER’S initials)

Name of Designated Agent designated by BROKER: Scott Jerwick

/S/ SCOTTT JERWICK

Signature of Broker

NOTICE TO OWNER: MISSOURI LAW PRESUMES THAT, ABSENT SOME OTHER RELATIONSHIP BEING ESTABLISHED, A LICENSEE WORKING WITH A TENANT REPRSENTS THE TENANT. AS A RESULT, ANY LICENSEE WORKING WITH A TENANT MAY BE REQUIRED TO DSICLOSE ANY INFORAMTION GIVEN TO THEM BY OWNER.

4.   BROKER’S DUTIES. (a) BROKER agrees to use reasonable efforts to lease the Property at the lease price and at the terms stated above or later agreed upon by OWNER and tenant. In furtherance of its duties, BORKER will (1) Perform the terms of this Agreement; (2) Exercise reasonable skill and care for OWNER; (3) Promote the interests of OWNER with the utmost good faith, loyalty, and fidelity, including: (a) seeking a price and terms which are acceptable to OWNER, except that BROKER shall not be obligated to seek additional offers to lease the Property while the Property is subject to a lease or letter of intent to lease; (b) presenting all written offers to and from OWNER in a timely manner regardless of whether the Property is subject to a lease or letter of intent to lease; (c) disclosing to OWNER all adverse material facts actually known or that should have been known by BROKER; and (d) advising OWNER to obtain expert advice as to material matters about which BORKER knows but the specifics of which are beyond the expertise of BROKER; (4) Account in a timely manner for all money and property received; (5) Comply with all requirements of §§ 339.710 to 339.860 R.S.Mo., subsection 2 of §339.10 R.S.Mo., and any rules and regulation promulgated pursuant to those sections; and (6) comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes and regulations. BROKER may show properties not owned by OWNER to prospective tenants and may list competing properties for sale or lease without breaching any duty or obligations to OWNER. BROKER shall cooperate with Property Manager and Owner in investigating all prospective tenants in accordance with credit standards approved by Owner, and shall not present any person not meeting those standards. At the request of Property Manager and/or Owner, BROKER shall cooperate with Property Manager to obtain a personal or other guaranty regarding any prospective tenant.

(b) BROKER shall not disclose any confidential information about OWNEWR unless disclosure is required by statute, rule or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend BROKER or an affiliated licensee against an action of wrongful conduct in a n administrative or judicial proceeding or before a professional committee. BROKER owes no duty or obligations to OWNER except that BROKER shall disclose to any customer all adverse material facts actually known or that should have been known by BROKER. BROKER owes no duty to conduct an independent inspection or discover any adverse material facts for the benefit of the customer and owes no duty to independently verify the accuracy or completeness of any statement made by OWNER or any independent inspector.

(c) BROKER and an affiliated licensee owe no further duty or obligation to OWNER after termination, expiration, completion or performance of this Agreement, except the duties of: (1) accounting in a timely manner for all money and property related to, and received during, the term of this Agreement; and (2) treating as confidential information provided by OWNER during the term of this Agreement that may reasonably be expected to have a negative impact on OWNER’S real estate activity unless: (i) OWNER grants written content; (ii) disclosure of the information is required by law; (iii) the information is made public or becomes public by the words or conduct of OWNER or from a source other than the BORKER; and (iv) disclosure is necessary to defend the BROKER or an affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or a professional committee.

5. ADVERTISING. [Intentionally omitted]

6.   OTHER BROKERS. BROKER may make offers of subagency, cooperation, and/or compensation to other brokers so that the Property will receive maximum exposure. OWNER authorizes BROKER to cooperate and share its commission with other brokers, including brokers representing the tenant, sub-agents, and transaction brokers. OWNER understands and acknowledges that the broker, if any, representing the tenant may represent solely the interest of such tenant, even if compensated by BROKER. BROKER is authorized to show the Property to prospective tenants whom BROKER represents and to arrange showings of the Property to prospective tenants represented by their own brokers or agents. Compensation to any cooperating broker shall be due and payable only upon receipt of the commission fee by BROKER.

7.   FEES TO BROKER. (a) When and if BROKER produces a prospect ready, willing and able to lease the Property at the sale price and on the terms above or later agreed upon between OWNER and Tenant on such terms, OWNER agrees to pay BORKER a commission fee of (*see following page) of the lease price. Such commission shall be due and payable at the later of the Lease Commencement Date or Tenant move in. The parties recognize that BROKER is not authorized to bind OWNER to execute a lease agreement unless so empowered by OWNER in writing. In the event a deposit s made and is then forfeited, on-held of the deposit shall be paid to or retained by (as the case may be) BROKER, but said payment shall not be in excess of the fee to which BROKER otherwise would have been entitled to receive. OWENR’S obligation to pay the above-described commission shall survive the expiration of this Agreement.

(b)  OWNER further agrees to pay BROKER the above-described commission if the Property is leased by OWNER or any other party during the term of this Agreement, or if the Property is leased within sixty (60) days after the expiration of this Agreement to any party to whom the Property was submitted and whose name was disclosed to OWNER by BROKER, in writing, by certified or regular mail during the term of this Agreement or within 10 days after the expiration of this Agreement. In the event the Property is sold during the term of any lease for which commissions are payable hereunder, OWNER agrees that the terms of such sale shall include the assumption by the purchaser of OWNER’S obligation to pay commission hereunder.

8.   OWNER’S REPRESENTAIONS; INDEMINIFICATION. OWNER hereby states and affirms that to the best of OWNER’S actual knowledge, and except as otherwise specified below: OWNER has good an marketable title to the Property; there are no material physical, structural, or mechanical defects in the Property; there are no hazardous substances, pollutants, or contaminants on the Property, the presence or disposal of which is subject to federal, state, or local environmental regulation; there is no equipment, storage tank, container or structural element on the Property that contains or utilizes and has released or could release, any such hazardous substance, pollutant or contaminant into the environment or the interior of any building on the Property. OWNER agrees to defend, indemnify and hold harmless BROKER and its agents, subagents, licensees, employees and contractors from any and all claims, demands, suits, damages, losses or expense (including attorney’s fees and related expenses) arising out of any misrepresentation, non-disclosure or concealment by OWNER in connection with the lease of the Property.

9.   GOVERNING LAW; ATTORNEY’S FEES. This Agreement shall be governed and interpreted by the laws of the State of Missouri. In the event of litigation concerning the rights of OWENR or BROKER pursuant to this Agreement, the parties agree that the non-prevailing party shall be obligated to pay all such reasonable attorney’s fees and court costs incurred by the prevailing party in such litigation.

10.  ENTIRE AGREEMENT; NON-ASSIGNMENT. This Agreement constitutes the entire agreement between the parties and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. There shall be no modification of any of the terms of this Agreement unless such modification has been agreed to in writing and signed and/or initialed by all parties to this Agreement and dated. Neither OWNER nor BROKER

may assign this Agreement; provided, however, BROKER shall have the right to assign this Agreement to another broker upon receipt of the express written consent of all parties to this Agreement.

OWNER ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREMENT SIGNED BY THE BROKER OR HIS/HER AGENT.

CAREFULLY READ THE TERMS OF THIS CONTRACT AND THE ADDENDUMS HEREOF BEFORE SIGNING, WHEN SIGNED BY AL PARTIES, THIS IS A LEGALLY BINDING CONTRACT. IF NOT UNDERSTOOD, CONSULT AN ATTORNEY BEFORE SIGNING.

This Agreement is made and executed this ________ day of ___________, 20__

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

Approved by Legal Counsel for use in Missouri

*Fee Structure (per Section 7)

New:	Years 1 – 5:	Six percent (6%) of gross rent for the primary term.
	Years 6 -10:	Three percent (3%) of gross rent for the primary term, not to exceed ten (10) years.
Renewal:	Years 1 – 5:	With Tenant’s broker’s cooperation: Three percent (3%) of gross rent for the primary term. Without Tenant’s broker: Two percent (2%) of gross rent for the primary term.
	Years 6 – 10:	With Tenant’s broker’s cooperation: One and a half percent (1½%) of gross rent for the primary term, not to exceed ten (10) years.
.	No fee.

AGENCY DISCLOSURE ADDENDUM (MISSOURI)

This Addendum is an integral part of the Agreement between OWENR/BUYER/TENANT and BROKER dated __________. By signing below, OWNER/BUYER/TENANT acknowledges receipt of this Addendum and acknowledges this Addendum is part of the attached Agreement. BROKER is duly licensed under the laws of the state of MISSOURI as a Real Estate Broker. OWNER/BUYER/TENANT acknowledges receiving the required Missouri Broker Disclosure Form regarding the disclosure of alternative agency relationships.

1.   A “dual agent” is a limited agent who, with the written consent of all parties, has entered into an agency brokerage relationship, and not a transaction brokerage relationship, with and therefore represents both the seller and buyer or both the landlord and tenant. A “dual agency” is a form of agency which results when an agent licensee or someone affiliated with the agent licensee represents another party to the same transaction. A licensee may act as a dual agent only with the written consent of all parties to the transaction. A dual agent shall be a limited agent for both seller and buyer or the landlord and tenant and shall have the duties and obligations required b y R.S.Mo §§ 339.730 and 339.740 unless otherwise provided for in § 339.750 R.S.Mo.

2.   Except as provided in this paragraph 2, a dual agent may disclose any information to one client that the licensee gains from the other client if the information is material to the transaction unless it is confidential information as defined in R.S.Mo. § 339.710. the following information shall not be disclosed by a dual agent without the consent of the client to whom the information pertains: (1) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (2) that a seller or landlord is willing to accept less than the asking price or lease rate for the property; (3) What the motivating factors are for any client buying, selling, or leasing the property; (4) That a client will agree to financing terms other than those offered, and (5) The terms of any prior offers or counter offers made by any party. A dual agent shall not disclose to one client any confidential information about the other client unless the disclosure is required by statute, rule, or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend the affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or before a professional committee. No cause of action for any person shall arise against a dual agent for making any required or permitted disclosure. A dual agent does not terminate the dual agency relationship by making any required or permitted disclosure.

3.   In a dual agency relationship there shall be no imputation of knowledge or information between the client and the dual agent or among persons within an entity engaged as dual agent.

TRANSACTION BROKER

A “Transaction Broker” is any licensee acting pursuant to R.S.Mo. §§ 339.710 to 339.860, who (a) Assists the parties to a transaction without an agency or fiduciary relationship to either party and is, therefore, neutral, serving neither as an advocate or advisor for either party to the transaction; (b) Assists one or more parties to a transaction and who has not entered into a specific written agency agreement to represent one or more of the parties; (c) Assists another party to the same transaction either solely or through licensee affiliates. Such license shall be deemed to be a transaction broker and not a dual agent, provided that, notice of assumption of transaction broker status is provided to the buyer and seller immediately upon such default to transaction broker status, to be confirmed in writing prior to execution of the contract. A transaction broker may cooperate with other brokers and such cooperation shall not establish an agency or subagency relationship.

1.   A transactional broker shall have the following duties and obligations: (a) to perform the terms of any written or oral agreement made with any party to the transaction; (b) To exercise reasonable skill, care and diligence as a transaction broker, including but limited to: (i) presenting all written offers and counteroffers in a timely manner regardless of whether the property subject to a contract for sale or lease or letter of intent unless otherwise provided in the agreement entered with the party; (ii) informing the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction broker knows but the specifics of which are beyond the expertise of such broker; (iii) accounting in a timely manner for all money and property received; (iv) disclosing to each party to the transaction any adverse material facts of which the licensee has actual notice or knowledge; (v) assisting the parties in complying with the terms and conditions of any contract; (c) To comply with all applicable requirements of R.S.Mo. §§ 339.710 and 339.860, subsection 2 of R.S.Mo. §§ 339.010 and all rules and regulations promulgated pursuant to such sections; and (d) To comply with any applicable federal, state and local laws, rules, regulations and ordinances, including fair housing and civil rights statutes and regulations. The parties to a transaction brokerage transaction shall not be liable for acts of the transaction broker.

2.   The following information shall not be disclosed by a transaction broker without the informed consent of the party or parties disclosing such information to the broker: (a) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (b) That a seller or landlord is willing to accept less than the asking price or lease rate for the property; (c) What the motivating factors are for any party buying, selling or leasing the property; (d) that a seller or buyer will agree to financing terms other than those offered; (c) any confidential information about the other party, unless disclosure of such information is required by law; statutes, rules or regulations or failure to disclose such information would constitute fraud or dishonest dealing.

3. A transaction broker has no duty to conduct an independent inspection of, or discover any defects in, the property. A transaction broker has no duty to conduct an independent investigation of the buyers’ financial condition.

4.    A transaction broker may do the following without breaching any obligation or responsibility: (a) show alternative properties not owned by the seller or landlord to a prospective buyer or tenant; (b) List competing properties for sale or lease; (c) show properties in which the buyer or tenant is interested to other prospective buyers or tenants; (d) serve a s a single agent, subagent or designated agent or broker, limited agent, disclosed dual agent for the same or for different parties in other real estate transactions.

5.   A transaction broker may cooperate with other brokers and such cooperation does not establish an agency or subagency relationship.

6.   In a transaction broker relationship each party and the transaction broker, including all persons within an entity engaged as the transaction broker if the transaction broker is an entity, are considered to possess only actual knowledge and information. There is no imputation of knowledge or information by operation of law between any party and the transaction broker or between any party and any person within an entity engaged as the transaction broker if the transaction broker is an entity.

7.   Nothing in § 339.755 R.S.Mo, prohibits a transaction broker for acting as a single limited agent, dual agent, or subagent whether on behalf of a buyer or seller, as long as the requirements governing disclosure of such fact are met. Nothing in § 339.755 R.S.Mo. alters or eliminates the responsibility of a broker as set forth in such statues for the conduct and actions of a licensee operating under the broker’s license.

8.   If any licensee who represents another party to the same transaction either solely or through affiliate licenses refuses transaction broker statutes and wants to continue an agency relationship with both parties to the transaction, such licensee shall have the right to become a designated agent or a dual agent as provided for in §§ 339.730 to 339.860 R.S.Mo.

9.   In any transaction a licensee may without liability withdraw from representing a client who has not consented to a conversion to transaction brokerage. Such withdrawal shall not prejudice the ability of the licensee or affiliated licensee to continue to represent the other client in the transaction or limit the licensee form representing the client who refused the transaction brokerage representation in another transaction not involving transaction brokerage.

DESIGNATED AGENCY

A designated broker entering into a limited agency agreement or written transaction brokerage agreement with a client or party for the listing or property or for the purpose of representing or assisting that person in the buying, selling, exchanging, renting, or leasing or real estate may appoint n writing affiliated licensees as designated agents or designated transaction brokers to the exclusion of all other affiliated licensees. If a designated broker has made an appointment pursuant to this section, an affiliated licensee assisting a party without a written agreement shall be presumed to be a transaction broker to the exclusion of all other affiliated licensees, unless a different brokerage relationship status has been disclosed to or established with that party. A designated broker shall both be considered to be a dual agent or transaction broker solely because such broker makes an appointment of a designated agent, except that any licensee who is not a transaction broker and who personally represents both the seller and buyer or both the landlord and tenant in a particular transaction shall be a dual agent or transaction broker and shall be required to comply with the provisions governing dual agents or transaction brokers. All designated agents or transaction brokers to the extent allow allowed by their licenses shall have the same duties and responsibilities to the client and customer pursuant to in §§ 339.730 to 339.755 R.S.Mo. as the designated broker except as provided above.

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

EXHIBIT “B”

BROKER AGREEMENT

EXCLUSIVE RIGHT TO LEASE AGREEMENT (MISSOURI)

THIS AGREEMENT is made by and betweenSECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“OWNER”) and WINBURY REALTY OF KANSAS CITY, INC. (“BROKER”). By this Agreement OWNER retains and appoints BROKER asOWNER’S Exclusive Agent to assist OWNER with the lease by OWNER of the property described herein (“Property”). OWNER and BROKER expressly agree that BROKER shall have the sole and exclusive right to lease the Property during the term of this Agreement. OWNER agrees to refer all inquiries and prospects OWNER may receive, directly or indirectly, to BROKER, and OWNER hereby gives permission to BROKER to enter the property at reasonable times to show it to prospects.

I. GENERAL DESCRIPTION OF PROPERTY LEASE PRICE LEASE TERMS.

a Legal Description: To be attached

b Street Address of Property: 501-579 SE Melody Lane, Lee’s Summit, MO 64063

c. Lease Price: $11.00sq. ft. to $14.00 sq. ft.

d. Lease Terms: NNN

e. Other Important Terms under which Property is to be leased:

All leases will be subject to review and approval by Landlord prior to lease execution.

2. TERM OF AGREEMENT. This Agreement shall begin March1, 2005 and shall continue until midnight February 28, 2006. The Landlord has the right to terminate 30 days after given notice.

3. Agency Disclosure. Attached hereto and incorporated by reference an Agency Disclosure Addendum notifying OWNER of the alternative agency relationship applicable to this Agreement. Owner confirms it has read and signed the Addendum and confirms receiving the Missouri Broker Disclosure Form.

OWNER consents to BROKER’S DUAL AGENCY ______(OWNER’S initials)

OWNER consents to BROKER as TRANSACTIONAL BROKER ______(OWNER’S initials)

OWNER consents to the DESIGNATED AGENT below /s/WRK (OWNER’S initials)

Name of Designated Agent designated by BROKER: Scott Jerwick

/S/ SCOTTT JERWICK

Signature of Broker

NOTICE TO OWNER: MISSOURI LAW PRESUMES THAT, ABSENT SOME OTHER RELATIONSHIP BEING ESTABLISHED, A LICENSEE WORKING WITH A TENANT REPRSENTS THE TENANT. AS A RESULT, ANY LICENSEE WORKING WITH A TENANT MAY BE REQUIRED TO DSICLOSE ANY INFORAMTION GIVEN TO THEM BY OWNER.

4.   BROKER’S DUTIES. (a) BROKER agrees to use reasonable efforts to lease the Property at the lease price and at the terms stated above or later agreed upon by OWNER and tenant. In furtherance of its duties, BORKER will (1) Perform the terms of this Agreement; (2) Exercise reasonable skill and care for OWNER; (3) Promote the interests of OWNER with the utmost good faith, loyalty, and fidelity, including: (a) seeking a price and terms which are acceptable to OWNER, except that BROKER shall not be obligated to seek additional offers to lease the Property while the Property is subject to a lease or letter of intent to lease; (b) presenting all written offers to and from OWNER in a timely manner regardless of whether the Property is subject to a lease or letter of intent to lease; (c) disclosing to OWNER all adverse material facts actually known or that should have been known by BROKER; and (d) advising OWNER to obtain expert advice as to material matters about which BORKER knows but the specifics of which are beyond the expertise of BROKER; (4) Account in a timely manner for all money and property received; (5) Comply with all requirements of §§ 339.710 to 339.860 R.S.Mo., subsection 2 of §339.10 R.S.Mo., and any rules and regulation promulgated pursuant to those sections; and (6) comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes and regulations. BROKER may show properties not owned by OWNER to prospective tenants and may list competing properties for sale or lease without breaching any duty or obligations to OWNER. BROKER shall cooperate with Property Manager and Owner in investigating all prospective tenants in accordance with credit standards approved by Owner, and shall not present any person not meeting those standards. At the request of Property Manager and/or Owner, BROKER shall cooperate with Property Manager to obtain a personal or other guaranty regarding any prospective tenant.

(b) BROKER shall not disclose any confidential information about OWNEWR unless disclosure is required by statute, rule or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend BROKER or an affiliated licensee against an action of wrongful conduct in a n administrative or judicial proceeding or before a professional committee. BROKER owes no duty or obligations to OWNER except that BROKER shall disclose to any customer all adverse material facts actually known or that should have been known by BROKER. BROKER owes no duty to conduct an independent inspection or discover any adverse material facts for the benefit of the customer and owes no duty to independently verify the accuracy or completeness of any statement made by OWNER or any independent inspector.

(c) BROKER and an affiliated licensee owe no further duty or obligation to OWNER after termination, expiration, completion or performance of this Agreement, except the duties of: (1) accounting in a timely manner for all money and property related to, and received during, the term of this Agreement; and (2) treating as confidential information provided by OWNER during the term of this Agreement that may reasonably be expected to have a negative impact on OWNER’S real estate activity unless: (i) OWNER grants written content; (ii) disclosure of the information is required by law; (iii) the information is made public or becomes public by the words or conduct of OWNER or from a source other than the BORKER; and (iv) disclosure is necessary to defend the BROKER or an affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or a professional committee.

6. ADVERTISING. [Intentionally omitted]

6.   OTHER BROKERS. BROKER may make offers of subagency, cooperation, and/or compensation to other brokers so that the Property will receive maximum exposure. OWNER authorizes BROKER to cooperate and share its commission with other brokers, including brokers representing the tenant, sub-agents, and transaction brokers. OWNER understands and acknowledges that the broker, if any, representing the tenant may represent solely the interest of such tenant, even if compensated by BROKER. BROKER is authorized to show the Property to prospective tenants whom BROKER represents and to arrange showings of the Property to prospective tenants represented by their own brokers or agents. Compensation to any cooperating broker shall be due and payable only upon receipt of the commission fee by BROKER.

7.   FEES TO BROKER. (a) When and if BROKER produces a prospect ready, willing and able to lease the Property at the sale price and on the terms above or later agreed upon between OWNER and Tenant on such terms, OWNER agrees to pay BORKER a commission fee of (*see following page) of the lease price. Such commission shall be due and payable at the later of the Lease Commencement Date or Tenant move in. The parties recognize that BROKER is not authorized to bind OWNER to execute a lease agreement unless so empowered by OWNER in writing. In the event a deposit s made and is then forfeited, on-held of the deposit shall be paid to or retained by (as the case may be) BROKER, but said payment shall not be in excess of the fee to which BROKER otherwise would have been entitled to receive. OWENR’S obligation to pay the above-described commission shall survive the expiration of this Agreement.

(b)  OWNER further agrees to pay BROKER the above-described commission if the Property is leased by OWNER or any other party during the term of this Agreement, or if the Property is leased within sixty (60) days after the expiration of this Agreement to any party to whom the Property was submitted and whose name was disclosed to OWNER by BROKER, in writing, by certified or regular mail during the term of this Agreement or within 10 days after the expiration of this Agreement. In the event the Property is sold during the term of any lease for which commissions are payable hereunder, OWNER agrees that the terms of such sale shall include the assumption by the purchaser of OWNER’S obligation to pay commission hereunder.

8.   OWNER’S REPRESENTAIONS; INDEMINIFICATION. OWNER hereby states and affirms that to the best of OWNER’S actual knowledge, and except as otherwise specified below: OWNER has good an marketable title to the Property; there are no material physical, structural, or mechanical defects in the Property; there are no hazardous substances, pollutants, or contaminants on the Property, the presence or disposal of which is subject to federal, state, or local environmental regulation; there is no equipment, storage tank, container or structural element on the Property that contains or utilizes and has released or could release, any such hazardous substance, pollutant or contaminant into the environment or the interior of any building on the Property. OWNER agrees to defend, indemnify and hold harmless BROKER and its agents, subagents, licensees, employees and contractors from any and all claims, demands, suits, damages, losses or expense (including attorney’s fees and related expenses) arising out of any misrepresentation, non-disclosure or concealment by OWNER in connection with the lease of the Property.

9.   GOVERNING LAW; ATTORNEY’S FEES. This Agreement shall be governed and interpreted by the laws of the State of Missouri. In the event of litigation concerning the rights of OWENR or BROKER pursuant to this Agreement, the parties agree that the non-prevailing party shall be obligated to pay all such reasonable attorney’s fees and court costs incurred by the prevailing party in such litigation.

10.  ENTIRE AGREEMENT; NON-ASSIGNMENT. This Agreement constitutes the entire agreement between the parties and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. There shall be no modification of any of the terms of this Agreement unless such modification has been agreed to in writing and signed and/or initialed by all parties to this Agreement and dated. Neither OWNER nor BROKER

may assign this Agreement; provided, however, BROKER shall have the right to assign this Agreement to another broker upon receipt of the express written consent of all parties to this Agreement.

OWNER ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREMENT SIGNED BY THE BROKER OR HIS/HER AGENT.

CAREFULLY READ THE TERMS OF THIS CONTRACT AND THE ADDENDUMS HEREOF BEFORE SIGNING, WHEN SIGNED BY AL PARTIES, THIS IS A LEGALLY BINDING CONTRACT. IF NOT UNDERSTOOD, CONSULT AN ATTORNEY BEFORE SIGNING.

This Agreement is made and executed this ________ day of ___________, 20__

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

Approved by Legal Counsel for use in Missouri

*Fee Structure (per Section 7)

New:	Years 1 – 5:	Six percent (6%) of gross rent for the primary term.
	Years 6 -10:	Three percent (3%) of gross rent for the primary term, not to exceed ten (10) years.
Renewal:	Years 1 – 5:	With Tenant’s broker’s cooperation: Three percent (3%) of gross rent for the primary term. Without Tenant’s broker: Two percent (2%) of gross rent for the primary term.
	Years 6 – 10:	With Tenant’s broker’s cooperation: One and a half percent (1½%) of gross rent for the primary term, not to exceed ten (10) years.
.	No fee.

AGENCY DISCLOSURE ADDENDUM (MISSOURI)

This Addendum is an integral part of the Agreement between OWENR/BUYER/TENANT and BROKER dated __________. By signing below, OWNER/BUYER/TENANT acknowledges receipt of this Addendum and acknowledges this Addendum is part of the attached Agreement. BROKER is duly licensed under the laws of the state of MISSOURI as a Real Estate Broker. OWNER/BUYER/TENANT acknowledges receiving the required Missouri Broker Disclosure Form regarding the disclosure of alternative agency relationships.

1.   A “dual agent” is a limited agent who, with the written consent of all parties, has entered into an agency brokerage relationship, and not a transaction brokerage relationship, with and therefore represents both the seller and buyer or both the landlord and tenant. A “dual agency” is a form of agency which results when an agent licensee or someone affiliated with the agent licensee represents another party to the same transaction. A licensee may act as a dual agent only with the written consent of all parties to the transaction. A dual agent shall be a limited agent for both seller and buyer or the landlord and tenant and shall have the duties and obligations required b y R.S.Mo §§ 339.730 and 339.740 unless otherwise provided for in § 339.750 R.S.Mo.

2.   Except as provided in this paragraph 2, a dual agent may disclose any information to one client that the licensee gains from the other client if the information is material to the transaction unless it is confidential information as defined in R.S.Mo. § 339.710. the following information shall not be disclosed by a dual agent without the consent of the client to whom the information pertains: (1) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (2) that a seller or landlord is willing to accept less than the asking price or lease rate for the property; (3) What the motivating factors are for any client buying, selling, or leasing the property; (4) That a client will agree to financing terms other than those offered, and (5) The terms of any prior offers or counter offers made by any party. A dual agent shall not disclose to one client any confidential information about the other client unless the disclosure is required by statute, rule, or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend the affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or before a professional committee. No cause of action for any person shall arise against a dual agent for making any required or permitted disclosure. A dual agent does not terminate the dual agency relationship by making any required or permitted disclosure.

3.   In a dual agency relationship there shall be no imputation of knowledge or information between the client and the dual agent or among persons within an entity engaged as dual agent.

TRANSACTION BROKER

A “Transaction Broker” is any licensee acting pursuant to R.S.Mo. §§ 339.710 to 339.860, who (a) Assists the parties to a transaction without an agency or fiduciary relationship to either party and is, therefore, neutral, serving neither as an advocate or advisor for either party to the transaction; (b) Assists one or more parties to a transaction and who has not entered into a specific written agency agreement to represent one or more of the parties; (c) Assists another party to the same transaction either solely or through licensee affiliates. Such license shall be deemed to be a transaction broker and not a dual agent, provided that, notice of assumption of transaction broker status is provided to the buyer and seller immediately upon such default to transaction broker status, to be confirmed in writing prior to execution of the contract. A transaction broker may cooperate with other brokers and such cooperation shall not establish an agency or subagency relationship.

1.   A transactional broker shall have the following duties and obligations: (a) to perform the terms of any written or oral agreement made with any party to the transaction; (b) To exercise reasonable skill, care and diligence as a transaction broker, including but limited to: (i) presenting all written offers and counteroffers in a timely manner regardless of whether the property subject to a contract for sale or lease or letter of intent unless otherwise provided in the agreement entered with the party; (ii) informing the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction broker knows but the specifics of which are beyond the expertise of such broker; (iii) accounting in a timely manner for all money and property received; (iv) disclosing to each party to the transaction any adverse material facts of which the licensee has actual notice or knowledge; (v) assisting the parties in complying with the terms and conditions of any contract; (c) To comply with all applicable requirements of R.S.Mo. §§ 339.710 and 339.860, subsection 2 of R.S.Mo. §§ 339.010 and all rules and regulations promulgated pursuant to such sections; and (d) To comply with any applicable federal, state and local laws, rules, regulations and ordinances, including fair housing and civil rights statutes and regulations. The parties to a transaction brokerage transaction shall not be liable for acts of the transaction broker.

2.   The following information shall not be disclosed by a transaction broker without the informed consent of the party or parties disclosing such information to the broker: (a) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (b) That a seller or landlord is willing to accept less than the asking price or lease rate for the property; (c) What the motivating factors are for any party buying, selling or leasing the property; (d) that a seller or buyer will agree to financing terms other than those offered; (c) any confidential information about the other party, unless disclosure of such information is required by law; statutes, rules or regulations or failure to disclose such information would constitute fraud or dishonest dealing.

3. A transaction broker has no duty to conduct an independent inspection of, or discover any defects in, the property. A transaction broker has no duty to conduct an independent investigation of the buyers’ financial condition.

4.    A transaction broker may do the following without breaching any obligation or responsibility: (a) show alternative properties not owned by the seller or landlord to a prospective buyer or tenant; (b) List competing properties for sale or lease; (c) show properties in which the buyer or tenant is interested to other prospective buyers or tenants; (d) serve a s a single agent, subagent or designated agent or broker, limited agent, disclosed dual agent for the same or for different parties in other real estate transactions.

5.   A transaction broker may cooperate with other brokers and such cooperation does not establish an agency or subagency relationship.

6.   In a transaction broker relationship each party and the transaction broker, including all persons within an entity engaged as the transaction broker if the transaction broker is an entity, are considered to possess only actual knowledge and information. There is no imputation of knowledge or information by operation of law between any party and the transaction broker or between any party and any person within an entity engaged as the transaction broker if the transaction broker is an entity.

7.   Nothing in § 339.755 R.S.Mo, prohibits a transaction broker for acting as a single limited agent, dual agent, or subagent whether on behalf of a buyer or seller, as long as the requirements governing disclosure of such fact are met. Nothing in § 339.755 R.S.Mo. alters or eliminates the responsibility of a broker as set forth in such statues for the conduct and actions of a licensee operating under the broker’s license.

8.   If any licensee who represents another party to the same transaction either solely or through affiliate licenses refuses transaction broker statutes and wants to continue an agency relationship with both parties to the transaction, such licensee shall have the right to become a designated agent or a dual agent as provided for in §§ 339.730 to 339.860 R.S.Mo.

9.   In any transaction a licensee may without liability withdraw from representing a client who has not consented to a conversion to transaction brokerage. Such withdrawal shall not prejudice the ability of the licensee or affiliated licensee to continue to represent the other client in the transaction or limit the licensee form representing the client who refused the transaction brokerage representation in another transaction not involving transaction brokerage.

DESIGNATED AGENCY

A designated broker entering into a limited agency agreement or written transaction brokerage agreement with a client or party for the listing or property or for the purpose of representing or assisting that person in the buying, selling, exchanging, renting, or leasing or real estate may appoint n writing affiliated licensees as designated agents or designated transaction brokers to the exclusion of all other affiliated licensees. If a designated broker has made an appointment pursuant to this section, an affiliated licensee assisting a party without a written agreement shall be presumed to be a transaction broker to the exclusion of all other affiliated licensees, unless a different brokerage relationship status has been disclosed to or established with that party. A designated broker shall both be considered to be a dual agent or transaction broker solely because such broker makes an appointment of a designated agent, except that any licensee who is not a transaction broker and who personally represents both the seller and buyer or both the landlord and tenant in a particular transaction shall be a dual agent or transaction broker and shall be required to comply with the provisions governing dual agents or transaction brokers. All designated agents or transaction brokers to the extent allow allowed by their licenses shall have the same duties and responsibilities to the client and customer pursuant to in §§ 339.730 to 339.755 R.S.Mo. as the designated broker except as provided above.

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

EX-99

ASSIGNMENT OF MANAGEMENT AGREEMENT AND

SUBORDINATION OF MANAGEMENT FEES

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND SUBORDINATION OF MANAGEMENT FEES (“Assignment”) is made as of the ____ day of August, 2006, by EVEREST BAYBERRY, LP, a California limited partnership, having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst (“Borrower”), to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801 (“Lender”), and is acknowledged and consented to by WINBURY REALTY OF K.C., INC., a Missouri corporation having its principal place of business at 4520 Main Street, Suite 1000, Kansas City, Missouri 641 11 (“Agent”), for the benefit of Lender.

RECITALS:

A.        Borrower, by its promissory note of even date herewith given to Lender (the note together with all extensions, renewals, modifications, substitutions and amendments thereof shall collectively be referred to as the “Note”), is indebted to Lender in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00) in lawful money of the United States of America, with interest from the date thereof at the rates set forth in the Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as the “Loan”), principal and interest to be payable in accordance with the terms and conditions provided in the Note.

B.        The Loan is secured by, among other things, the Security Instrument (as defined in the Note), which grants Lender a first lien on the property encumbered thereby (the “Property”).

C.        Pursuant to a certain Management Agreement dated March 15, 2005, between Secured Investment Resources Fund, LP II, a Delaware limited partnership, and Agent assigned to Borrower pursuant to an Assignment of Management Agreement dated even date herewith (“Assignment”) (collectively the “Management Agreement”) (a true and correct copy of which Management Agreement and Assignment are attached hereto as Exhibit “A-1 and A-2” respectively), Borrower employed Agent exclusively to rent, lease, operate and manage the Property and Agent is entitled to certain management fees (the “Management Fees”) thereunder.

D.        Lender requires as a condition to the making of the Loan that Borrower assign the Management Agreement and subordinate its interest in the Management Fees in lien and payment to the Security Instrument as set forth below.

AGREEMENT:

For good and valuable consideration the parties hereto agree as follows:

1.         Assignment of Management Agreement. As additional collateral security for the Loan, Borrower hereby conditionally transfers, sets over and assigns to Lender all of Borrower’s right, title and interest in and to the Management Agreement, said transfer and assignment to automatically become a present, unconditional assignment, at Lender’s option, in the event of a default by Borrower under the Note, the Security Instrument or any of the other Loan Documents (as defined in the Note) and the failure of Borrower to cure such default within any applicable grace period.

2.Subordination of Management Fees. The Management Fees and all rights and privileges of Agent to the Management Fees are hereby and shall at all times continue to be subject and unconditionally subordinate in all respects in lien and payment to the lien and payment of the Security Instrument, the Note, and the other Loan Documents and to any renewals, extensions, modifications, assignments, replacements, or consolidations thereof and the rights, privileges, and powers of Lender thereunder.

3.         Termination. At such time as the Loan is paid in full and the Security Instrument is released or assigned of record, this Assignment and all of Lender’s right, title and interest hereunder with respect to the Management Agreement shall terminate.

4.Estoppel. Agent represents and warrants that (a) the Management Agreement is in full force and effect and has not been modified, amended or assigned with respect to the Property, (b) neither Agent nor Borrower is in default under any of the terms, covenants or provisions of the Management Agreement with respect to the Property and Agent knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under the Management Agreement with respect to the Property, (c) neither Agent nor Borrower has commenced any action or given or received any notice for the purpose of terminating the Management Agreement with respect to the Property and (d) the Management Fees and all other sums due and payable to the Agent under the Management Agreement have been paid in full with respect to the Property.

5.         Borrower’s Covenants. Borrower hereby covenants with Lender that during the term of this Assignment: (a) Borrower shall not transfer the responsibility for the management of the Property from Agent to any other person or entity without prior written notification to Lender and the prior written consent of Lender, which consent may be withheld by Lender in Lender’s sole discretion; (b) Borrower shall not terminate or amend any of the terms or provisions of the Management Agreement without the prior written consent of Lender, which consent may be withheld by Lender in Lender’s sole discretion; and (c) Borrower shall, in the manner provided for in this Assignment, give notice to Lender of any notice or information that Borrower receives which indicates that Agent is terminating the Management Agreement or that Agent is otherwise discontinuing its management of the Property. Provided that it is commercially

reasonable to do so, Borrower shall exercise each individual option, if any, to extend or renew the term of the Management Agreement while the Loan isoutstanding.

6.         Agreement by Borrower and Agent. Borrower and Agent hereby agree that during such periods as an Event of Default (as defined in the Security Instrument) may exist during the term of this Assignment, at the option of Lender exercised by written notice to Borrower and Agent: (a) all rents, security deposits, issues, proceeds and profits of the Property collected by Agent, after payment of all costs and expenses of operating the Property (including, without limitation, operating expenses, real estate taxes, insurance premiums and repairs and maintenance) shall be applied in accordance with Lender’s written directions to Agent; (b) Agent shall not collect or be entitled to any Managers Fee or other fee or commission due under the Management Agreement; and (c) Lender may exercise its rights under this Assignment and may immediately terminate the Management Agreement and require Agent to transfer its responsibility for the management of the Property to a management company selected by Lender in Lender’s sole and absolute discretion.

7. [INTENTIONALLY DELETED]

8.         Receipt of Management Fees. Borrower and Agent hereby agree that Agent shall not be entitled to receive any Management Fees or other fee, commission or other amount payable to Agent under the Management Agreement for and during any period of time that any Event of Default has occurred and is continuing; provided, however, that Agent shall not be obligated to (i) return or refund to Lender any Management Fee or other fee, commission or other amount already received by Agent prior to the occurrence of the Event of Default, and to which Agent was entitled under this Assignment, or (ii) render any services pursuant to the Management Agreement during any period in which the Agent’s right to receive Management Fees and other fees, commissions and other amounts payable to Agent under the Management Agreement has been suspended pursuant to this Assignment.

9.         Consent and Agreement by Agent. Agent hereby acknowledges and consents to this Assignment and agrees that Agent will act in conformity with the provisions of this Assignment and Lender’s rights hereunder or otherwise related to the Management Agreement. In the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions hereof, Agent shall, and hereby agrees to, fully cooperate in transferring its responsibility to a new management company and effectuate such transfer no later than thirty (30) days from the date the Management Agreement is terminated. Further, Agent hereby agrees (a) not to contest or impede the exercise by Lender of any right it has under or in connection with this Assignment; and (b) that it shall, in the manner provided for in this Assignment, give at least thirty (30)day prior written notice to Lender of its intention to terminate the Management Agreement or otherwise discontinue itsmanagement of the Property.

10.        Lender’s Agreement. So long as no Event of Default shall have occurred and remain continuing, Lender agrees to permit any sums due to Borrower under the Management Agreement to be paid directly to Borrower.

11.       Governing Law. This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located a d the applicable laws of the United States of America.

12.       Notices. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	Everest Bayberry, LP C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst
With a copy to	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8” Floor New York, New York 10022 Attention: John Herman
With a copy to:	NorthMarq Capital, Inc. 3500 American boulevard West, Suite 500 Bloomington, Minnesota 55431-4435 Attention: Servicing Manager Oppenheimer Wolff & Donnelly LLP Plaza VII 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson
If to Agent:	Winbury Realty of K.C., Inc. 4520 Main Street, Suite 1000 Kansas City, Missouri 64111 Attention: Mike Conn, Chief Financial Officer

or addressed as such party may from time to time designate by written notice to the other parties. For purposes of this Section 12, the term “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

Any party by notice to the others may designate additional or different addresses for subsequent notices or communications.

13. No Oral Change. This Assignment, and any provisions hereof, may not be

modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the patty against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

14.       Liability. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

15.       Inapplicable Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

16.Headings, Etc. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

17.       Duplicate Originals: Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any patty hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

18.       Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

19.       Exculpation. Borrower’s obligations under this Assignment are subject to the provisions of Article 13 of the Security Instrument.

20.Miscellaneous. Wherever pursuant to this Assignment (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements

or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
By:	Millenium Bayberry, LLC, a California limited liability company, its General Partner
	By:	Millenium Management, LLC, a
		California limited liability company
		its Manager
	By:		/S/ W. ROBERT KOHORST
			W. Robert Kohorst
	Its:		President

LENDER:

LEHMAN BROTHERS BANK, FSB,

a federal stock savings bank

By:

Its:       

AGENT:
WINBURY REALTY OF K.C. INC.,
a Missouri corporation
By:	/S/ Mike Conn
	Mike Conn
Its:	Chief Financial Officer

EXHIBIT “A”

MANAGEMENT AGREEMENT

PROPERTY MANAGEMENT AGREEMENT

BAYBERRY CROSSING

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as March 15, 2005 between SECURED INVESTMENT RESOURCES FUND, L.P.II, a Delaware limited partnership (“Owner”), and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Manager”).

Owner owns the retail shopping center commonly known as Bayberry Crossing, located at 523 SE Melody Lane, Lee’s Summit, MO 64063 (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2       Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)       Manager shall have responsibility and, tothe extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or

materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable

judgment, required for the operation of the Property. (c) During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. All leases are subject to prior review and approval by Owner, in its sole discretion. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)       Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. At the request of Owner, Manager shall obtain a personal or other guaranty regarding any prospective tenant. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning,

painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8      Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b) Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c) Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9Service Contracts. Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to

exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.1 1    Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13     Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f) check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1       Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager

obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2       Employees, Contractor’s. Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall

obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3       Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner anincome statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accrual basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3       Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof; (f)summaries of adjusting journal entries as part of the annual audit process; (g) supporting

documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (j) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (j), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1       Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner.

(b)       Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1       Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which

Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be

reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; provided that the maintenance staff shall be reimbursed out of the Operating Account for documented travel to and from the Property at the then-current LRS standard mileage rate for automobile business travel (40.5 cents per mile for 2005);(f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j) all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (l) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1        Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to four percent (4%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERM[NATION

10.1     Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this

Agreement. In the event of a Default described in clauses (a), (b), (c)and (d), Owner may terminate this Agreement immediately upon notice to Manager.

In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the

operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1     Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER: Winbury Realty of K.C., Inc.
4520 Main Street, Suite 1000
Kansas City, Missouri 641 11
Tel.: 816.531.5303
Fax: 816.531.5409
Attention: Michael Conn,
Senior Vice President, Principal

OWNER: Secured Investment Resources Fund, L.P. II
By: Millenium Management, LLC
Its General Partner
199 S. Los Robles Avenue, Suite 200
Pasadena, California 91101
Tel.: 626.585.5920
Fax: 626.585.5929
Attention: John Anderson
Vice President

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1)business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approval. Each pasty may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates Ted Murray and Michael Conn.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest

or the voting power of the appropriate entity. 14.4 Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing. 14.5 Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out’ of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement, and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b) Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10   Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and

against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only to the extent of Owner’s interest in the Property, and: (i) only to the extent such Claims are not covered by insurance maintained by Owner or Manager; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel . If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement . This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or he construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or

approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16    Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date fist written above.

Secured Investment Resources Fund, L.P. II,
a Delaware limited partnership
By:	Millenium Management, LLC,
	a California limited liability company
	Its General Partner
By:	/S/ W. ROBERT KOHORST
	W. Robert Kohorst
	President

“MANAGER”
Winbury Realty of K.C. Inc., a Missouri Corporation
By:	/S/ TED MURRAY
Name:	Ted Murray
Its:	Chief Executive Officer

ASSIGNMENT OF MANAGEMENT AGREEMENT AND EXCLUSIVE RIGHT TO LEASE AGREEMENT

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT AND EXCLUSIVE RIGHT TO LEASE AGREEMENT (“Assignment”) is made as of the ____ day of April, 2006, by and among SECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership ((“SIR II”), and EVEREST BAYBERRY, LP, a California limited partnership (“Borrower”), each having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91 101 Attn: W. Robert Kohorst, and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Agent”).

RECITALS:

A. Borrower has requested a loan (the “Loan”) from LEHMAN BROTHERS

BANK, FSB, a federal stock savings bank (“Lender”) in the principal sum of Two Million Nine Hundred Twenty-Five Thousand and 001100 Dollars ($2,925,000.00).

B.        The Loan is secured by, among other things, that certain Security Instrument, which grants Lender a first lien on the property encumbered thereby (the “Property”).

C.        SIR II and Agent entered into that certain Property Management Agreement dated as of March 15, 2005 (the “Management Agreement”) (a true and correct copy of which is attached hereto as Exhibit “A), pursuant to which SIR II employed Agent exclusively to rent, lease, operate and manage the Property and Agent is entitled to certain management fees (the “Management Fees”).

D.        SIR II and Agent entered into that certain Exclusive Right to Lease Agreement dated as of March 1, 2005 (the “Broker Agreement”) (a true and correct copy of which is attached hereto as Exhibit “B”), and Agent is entitled to certain broker fees (“Broker Fees”).

E.        As a condition to making the Loan, Lender is requiring that: (i) SIR II assign its interest in the Property, the Management Agreement, the Management Fees, the Broker Agreement, and the Broker Fees to Borrower, which is a wholly owned, single purpose subsidiary of SIR II; and (ii) Borrower assign the Management Agreement and the Broker Agreement, and subordinate its interest in the Management Fees and the Broker Fees in lien and payment to the Security Instrument as set forth in that certain Assignment Of Management Agreement And Subordination Of Management Fees, dated as of the date hereof (“Assignment and Subordination”).

AGREEMENT:

For good and valuable consideration the parties hereto agree as follows:

1 .        Assignment of Management Agreement Broker Agreement Management Fees, and Broker Fees. SIR I1 hereby unconditionally transfers, sets over and assigns to Borrower, and Borrower hereby assumes, all of SIR II’s right, title and interest in and to and obligations under the Management Agreement, the Management Fees, the Broker Agreement, the Broker Fees.

2.Estoppel. SIR II, Borrower and Agent each represents and warrants that (a) the Management Agreement and the Broker Agreement are in full force and effect and have not been modified, amended or assigned with respect to the Property, (b) neither Agent, SIR II, nor Borrower is in default under any of the terms, covenants or provisions of the Management Agreement or the Broker Agreement with respect to the Property and Agent knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under the Management Agreement or the Broker Agreement with respect to the Property, (c) neither Agent, SIR II, nor Borrower has commenced any action or given or received any notice for the purpose of terminating the Management Agreement or the Broker Agreement with respect to the Property and (d) the Management Fees and all other sums due and payable to the Agent under the Management Agreement have been paid in full with respect to the Property.

3.         Agreement by Borrower and Agent. Borrower and Agent hereby acknowledge and agree that during such periods as an Event of Default (as defined in the Security Instrument) may exist under the Security Instrument during the term of this Assignment, Lender may, at its option by written notice to Borrower and Agent in the manner described in the Assignment and Subordination: (a) require that all rents, security deposits, issues, proceeds and profits of the Property collected by Agent, after payment of all costs and expenses of operating the Property (including, without limitation, operating expenses, real estate taxes, insurance premiums and repairs and maintenance) shall be applied in accordance with Lender’s written directions to Agent; and (b) immediately terminate the Management Agreement and/or the Broker Agreement and require Agent to transfer its responsibility for the management of the Property to a management company selected by Lender in Lender’s sole and absolute discretion. During such time period, Agent shall not collect or be entitled to any Management Fees or Broker Fees or other fee or commission due under the Management Agreement or the Broker Agreement.

4.         Authority to Make Assignment. SIR II and Borrower represent and warrant that they have the power and authority to make and enter into the aforementioned assignment.

5.         Consent and Agreement by Agent. Agent hereby acknowledges and consents to this Assignment and agrees that Agent will act in conformity with the provisions of this Assignment and Borrower’s rights hereunder or otherwise related to the Management Agreement and the Broker Agreement. In the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions hereof, Agent shall, and hereby agrees to, fully cooperate in transferring its responsibility to a new management company and effectuate such transfer no later than thirty (30) days from the date the Management Agreement and/or Broker Agreement is

terminated. Further, Agent hereby agrees not to contest or impede the exercise by Borrower of any right it has under or in connection with this Assignment.

6.         Governing Law. This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

7.Notices. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintain d by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to SIR II and/or Borrower:	Everest Bayberry, LP C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91 101 Tel.: 626.585.5920 Fax: 626.585.5929 Attention: W. Robert Kohorst
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8” Floor New York, New York 10022 Attention: John Herman
With a copy to	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
and	Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson
If to Agent:	Winbury Realty of K.C., Inc. 4520 Main Street, Suite 1000 Kansas City, Missouri 641 11 Tel.: 816.531.5303 Fax: 816.531.5409 Attention: Mike Conn, Chief Financial Officer

or addressed as such party may from time to time designate by written notice to the other parties. For purposes of this Section 7, the term “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York. Any party by notice to the others may designate additional or different addresses for subsequent notices or communications.

8. No Oral Change. This Assignment, and any provisions hereof, may not be

modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower, SIR 11 or Agent, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

9.         Inapplicable Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

10.       Headings, Etc. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof

11.       Duplicate Originals; Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

12        Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

[SIGNATURES ARE ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

SECURED INVESTMENT RESOURCES FUND, II, L.P.,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California limited liability company,
		Its General Partner
	By:		/S/ W. ROBERT KOHORST
			Name: W. Robert Kohorst
			Its:         President

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
	By:	Millenium Bayberry, LLC,
		a California limited liability company,
	By:	Millenium Management, LLC,
		a California Limited Liability Company
		Its Manager
	By:		/S/ W. ROBERT KOHORST
			Name: W. Robert Kohorst
			Its:         President

AGENT:
WINBURY REALTY OF K.C. INC.,
a Missouri corporation
	By:
	Name:	Mike Conn
	Its:	Senior Chief Financial Officer

IN WITNESS WHEREOF, the undersigned have executed this Assignment as of the date and year first written above.

SECURED INVESTMENT RESOURCES FUND, II, L.P.,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California limited liability company,
		Its General Partner
	By:
			Name: W. Robert Kohorst
			Its:         President

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
	By:	Millenium Bayberry, LLC,
		a California limited liability company,
	By:	Millenium Management, LLC,
		a California Limited Liability Company
		Its Manager
	By:
			Name: W. Robert Kohorst
			Its:         President

AGENT:
WINBURY REALTY OF K.C. INC.,
a Missouri corporation
	By:	/S/ MIKE CONN
	Name:	Mike Conn
	Its:	Senior Chief Financial Officer

EXHIBIT “A”

MANAGEMENT AGREEMENT

PROPERTY MANAGEMENT AGREEMENT

BAYBERRY CROSSING

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as March 15, 2005 between SECURED INVESTMENT RESOURCES FUND, L.P.II, a Delaware limited partnership (“Owner”), and WINBURY REALTY OF K.C., INC., a Missouri corporation (“Manager”).

Owner owns the retail shopping center commonly known as Bayberry Crossing, located at 523 SE Melody Lane, Lee’s Summit, MO 64063 (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2       Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)       Manager shall have responsibility and, tothe extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or

materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable

judgment, required for the operation of the Property. (c) During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. All leases are subject to prior review and approval by Owner, in its sole discretion. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b) Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. At the request of Owner, Manager shall obtain a personal or other guaranty regarding any prospective tenant. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning,

painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8      Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b) Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c) Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9Service Contracts. Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to

exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.1 1    Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13     Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f) check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1       Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager

obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2       Employees, Contractor’s. Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall

obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3       Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner anincome statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accrual basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3       Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof; (f)summaries of adjusting journal entries as part of the annual audit process; (g) supporting

documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (j) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (j),on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1       Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner.

(b)       Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1       Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which

Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be

reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; provided that the maintenance staff shall be reimbursed out of the Operating Account for documented travel to and from the Property at the then-current LRS standard mileage rate for automobile business travel (40.5 cents per mile for 2005); (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j)all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1        Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to four percent (4%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j)discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERM[NATION

10.1     Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this

Agreement. In the event of a Default described in clauses (a), (b), (c)and (d), Owner may terminate this Agreement immediately upon notice to Manager.

In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the

operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1     Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER: Winbury Realty of K.C., Inc.
4520 Main Street, Suite 1000
Kansas City, Missouri 641 11
Tel.: 816.531.5303
Fax: 816.531.5409
Attention: Michael Conn,
Senior Vice President, Principal

OWNER: Secured Investment Resources Fund, L.P. II
By: Millenium Management, LLC
Its General Partner
199 S. Los Robles Avenue, Suite 200
Pasadena, California 91101
Tel.: 626.585.5920
Fax: 626.585.5929
Attention: John Anderson
Vice President

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1)business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approval. Each pasty may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates Ted Murray and Michael Conn.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest

or the voting power of the appropriate entity. 14.4 Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing. 14.5 Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out’ of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement, and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b) Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10   Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and

against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only to the extent of Owner’s interest in the Property, and: (i) only to the extent such Claims are not covered by insurance maintained by Owner or Manager; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel . If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or he construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or

approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16    Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date fist written above.

Secured Investment Resources Fund, L.P. II,
a Delaware limited partnership
By:	Millenium Management, LLC,
	a California limited liability company
	Its General Partner
By:	/S/ W. ROBERT KOHORST
	W. Robert Kohorst
	President

“MANAGER”
Winbury Realty of K.C. Inc., a Missouri Corporation
By:	/S/ TED MURRAY
Name:	Ted Murray
Its:	Chief Executive Officer

EXHIBIT “B”

BROKER AGREEMENT

EXCLUSIVE RIGHT TO LEASE AGREEMENT (MISSOURI)

THIS AGREEMENT is made by and betweenSECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“OWNER”) and WINBURY REALTY OF KANSAS CITY, INC. (“BROKER”). By this Agreement OWNER retains and appoints BROKER asOWNER’S Exclusive Agent to assist OWNER with the lease by OWNER of the property described herein (“Property”). OWNER and BROKER expressly agree that BROKER shall have the sole and exclusive right to lease the Property during the term of this Agreement. OWNER agrees to refer all inquiries and prospects OWNER may receive, directly or indirectly, to BROKER, and OWNER hereby gives permission to BROKER to enter the property at reasonable times to show it to prospects.

I. GENERAL DESCRIPTION OF PROPERTY LEASE PRICE LEASE TERMS.

a Legal Description: To be attached

b Street Address of Property: 501-579 SE Melody Lane, Lee’s Summit, MO 64063

c. Lease Price: $11.00sq. ft. to $14.00 sq. ft.

d. Lease Terms: NNN

e. Other Important Terms under which Property is to be leased:

All leases will be subject to review and approval by Landlord prior to lease execution.

2. TERM OF AGREEMENT. This Agreement shall begin March1, 2005 and shall continue until midnight February 28, 2006. The Landlord has the right to terminate 30 days after given notice.

3. Agency Disclosure. Attached hereto and incorporated by reference an Agency Disclosure Addendum notifying OWNER of the alternative agency relationship applicable to this Agreement. Owner confirms it has read and signed the Addendum and confirms receiving the Missouri Broker Disclosure Form.

OWNER consents to BROKER’S DUAL AGENCY ______(OWNER’S initials)

OWNER consents to BROKER as TRANSACTIONAL BROKER ______(OWNER’S initials)

OWNER consents to the DESIGNATED AGENT below /s/JA (OWNER’S initials)

Name of Designated Agent designated by BROKER: Anita Bates

_________________

Signature of Broker

NOTICE TO OWNER: MISSOURI LAW PRESUMES THAT, ABSENT SOME OTHER RELATIONSHIP BEING ESTABLISHED, A LICENSEE WORKING WITH A TENANT REPRSENTS THE TENANT. AS A RESULT, ANY LICENSEE WORKING WITH A TENANT MAY BE REQUIRED TO DSICLOSE ANY INFORAMTION GIVEN TO THEM BY OWNER.

4.   BROKER’S DUTIES. (a) BROKER agrees to use reasonable efforts to lease the Property at the lease price and at the terms stated above or later agreed upon by OWNER and tenant. In furtherance of its duties, BROKER will (1) Perform the terms of this Agreement; (2) Exercise reasonable skill and care for OWNER; (3) Promote the interests of OWNER with the utmost good faith, loyalty, and fidelity, including: (a) seeking a price and terms which are acceptable to OWNER, except that BROKER shall not be obligated to seek additional offers to lease the Property while the Property is subject to a lease or letter of intent to lease; (b) presenting all written offers to and from OWNER in a timely manner regardless of whether the Property is subject to a lease or letter of intent to lease; (c) disclosing to OWNER all adverse material facts actually known or that should have been known by BROKER; and (d) advising OWNER to obtain expert advice as to material matters about which BROKER knows but the specifics of which are beyond the expertise of BROKER; (4) Account in a timely manner for all money and property received; (5) Comply with all requirements of §§ 339.710 to 339.860 R.S.Mo., subsection 2 of §339.10 R.S.Mo., and any rules and regulation promulgated pursuant to those sections; and (6) comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes and regulations. BROKER may show properties not owned by OWNER to prospective tenants and may list competing properties for sale or lease without breaching any duty or obligations to OWNER. BROKER shall cooperate with Property Manager and Owner in investigating all prospective tenants in accordance with credit standards approved by Owner, and shall not present any person not meeting those standards. At the request of Property Manager and/or Owner, BROKER shall cooperate with Property Manager to obtain a personal or other guaranty regarding any prospective tenant.

(b) BROKER shall not disclose any confidential information about OWNEWR unless disclosure is required by statute, rule or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend BROKER or an affiliated licensee against an action of wrongful conduct in a n administrative or judicial proceeding or before a professional committee. BROKER owes no duty or obligations to OWNER except that BROKER shall disclose to any customer all adverse material facts actually known or that should have been known by BROKER. BROKER owes no duty to conduct an independent inspection or discover any adverse material facts for the benefit of the customer and owes no duty to independently verify the accuracy or completeness of any statement made by OWNER or any independent inspector.

(c) BROKER and an affiliated licensee owe no further duty or obligation to OWNER after termination, expiration, completion or performance of this Agreement, except the duties of: (1) accounting in a timely manner for all money and property related to, and received during, the term of this Agreement; and (2) treating as confidential information provided by OWNER during the term of this Agreement that may reasonably be expected to have a negative impact on OWNER’S real estate activity unless: (i) OWNER grants written content; (ii) disclosure of the information is required by law; (iii) the information is made public or becomes public by the words or conduct of OWNER or from a source other than the BROKER; and (iv) disclosure is necessary to defend the BROKER or an affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or a professional committee.

5. ADVERTISING. [Intentionally omitted]

6.   OTHER BROKERS. BROKER may make offers of subagency, cooperation, and/or compensation to other brokers so that the Property will receive maximum exposure. OWNER authorizes BROKER to cooperate and share its commission with other brokers, including brokers representing the tenant, sub-agents, and transaction brokers. OWNER understands and acknowledges that the broker, if any, representing the tenant may represent solely the interest of such tenant, even if compensated by BROKER. BROKER is authorized to show the Property to prospective tenants whom BROKER represents and to arrange showings of the Property to prospective tenants represented by their own brokers or agents. Compensation to any cooperating broker shall be due and payable only upon receipt of the commission fee by BROKER.

7.   FEES TO BROKER. (a) When and if BROKER produces a prospect ready, willing and able to lease the Property at the sale price and on the terms above or later agreed upon between OWNER and Tenant on such terms, OWNER agrees to pay BROKER a commission fee of (*see following page) of the lease price. Such commission shall be due and payable at the later of the Lease Commencement Date or Tenant move in. The parties recognize that BROKER is not authorized to bind OWNER to execute a lease agreement unless so empowered by OWNER in writing. In the event a deposit s made and is then forfeited, on-held of the deposit shall be paid to or retained by (as the case may be) BROKER, but said payment shall not be in excess of the fee to which BROKER otherwise would have been entitled to receive. OWENR’S obligation to pay the above-described commission shall survive the expiration of this Agreement.

(b)  OWNER further agrees to pay BROKER the above-described commission if the Property is leased by OWNER or any other party during the term of this Agreement, or if the Property is leased within sixty (60) days after the expiration of this Agreement to any party to whom the Property was submitted and whose name was disclosed to OWNER by BROKER, in writing, by certified or regular mail during the term of this Agreement or within 10 days after the expiration of this Agreement. In the event the Property is sold during the term of any lease for which commissions are payable hereunder, OWNER agrees that the terms of such sale shall include the assumption by the purchaser of OWNER’S obligation to pay commission hereunder.

8.   OWNER’S REPRESENTAIONS; INDEMINIFICATION. OWNER hereby states and affirms that to the best of OWNER’S actual knowledge, and except as otherwise specified below: OWNER has good an marketable title to the Property; there are no material physical, structural, or mechanical defects in the Property; there are no hazardous substances, pollutants, or contaminants on the Property, the presence or disposal of which is subject to federal, state, or local environmental regulation; there is no equipment, storage tank, container or structural element on the Property that contains or utilizes and has released or could release, any such hazardous substance, pollutant or contaminant into the environment or the interior of any building on the Property. OWNER agrees to defend, indemnify and hold harmless BROKER and its agents, subagents, licensees, employees and contractors from any and all claims, demands, suits, damages, losses or expense (including attorney’s fees and related expenses) arising out of any misrepresentation, non-disclosure or concealment by OWNER in connection with the lease of the Property.

9.   GOVERNING LAW; ATTORNEY’S FEES. This Agreement shall be governed and interpreted by the laws of the State of Missouri. In the event of litigation concerning the rights of OWENR or BROKER pursuant to this Agreement, the parties agree that the non-prevailing party shall be obligated to pay all such reasonable attorney’s fees and court costs incurred by the prevailing party in such litigation.

10.  ENTIRE AGREEMENT; NON-ASSIGNMENT. This Agreement constitutes the entire agreement between the parties and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. There shall be no modification of any of the terms of this Agreement unless such modification has been agreed to in writing and signed and/or initialed by all parties to this Agreement and dated. Neither OWNER nor BROKER

may assign this Agreement; provided, however, BROKER shall have the right to assign this Agreement to another broker upon receipt of the express written consent of all parties to this Agreement.

OWNER ACKNOWLEDGES RECEIPT OF A COPY OF THIS AGREMENT SIGNED BY THE BROKER OR HIS/HER AGENT.

CAREFULLY READ THE TERMS OF THIS CONTRACT AND THE ADDENDUMS HEREOF BEFORE SIGNING, WHEN SIGNED BY AL PARTIES, THIS IS A LEGALLY BINDING CONTRACT. IF NOT UNDERSTOOD, CONSULT AN ATTORNEY BEFORE SIGNING.

This Agreement is made and executed this ________ day of ___________, 20__

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

Approved by Legal Counsel for use in Missouri

*Fee Structure (per Section 7)

New:	Years 1 – 5:	Six percent (6%) of gross rent for the primary term.
	Years 6 -10:	Three percent (3%) of gross rent for the primary term, not to exceed ten (10) years.
Renewal:	Years 1 – 5:	With Tenant’s broker’s cooperation: Three percent (3%) of gross rent for the primary term. Without Tenant’s broker: Two percent (2%) of gross rent for the primary term.
	Years 6 – 10:	With Tenant’s broker’s cooperation: One and a half percent (1½%) of gross rent for the primary term, not to exceed ten (10) years.
.	No fee.

AGENCY DISCLOSURE ADDENDUM (MISSOURI)

This Addendum is an integral part of the Agreement between OWENR/BUYER/TENANT and BROKER dated __________. By signing below, OWNER/BUYER/TENANT acknowledges receipt of this Addendum and acknowledges this Addendum is part of the attached Agreement. BROKER is duly licensed under the laws of the state of MISSOURI as a Real Estate Broker. OWNER/BUYER/TENANT acknowledges receiving the required Missouri Broker Disclosure Form regarding the disclosure of alternative agency relationships.

1.   A “dual agent” is a limited agent who, with the written consent of all parties, has entered into an agency brokerage relationship, and not a transaction brokerage relationship, with and therefore represents both the seller and buyer or both the landlord and tenant. A “dual agency” is a form of agency which results when an agent licensee or someone affiliated with the agent licensee represents another party to the same transaction. A licensee may act as a dual agent only with the written consent of all parties to the transaction. A dual agent shall be a limited agent for both seller and buyer or the landlord and tenant and shall have the duties and obligations required b y R.S.Mo §§ 339.730 and 339.740 unless otherwise provided for in § 339.750 R.S.Mo.

2.   Except as provided in this paragraph 2, a dual agent may disclose any information to one client that the licensee gains from the other client if the information is material to the transaction unless it is confidential information as defined in R.S.Mo. § 339.710. the following information shall not be disclosed by a dual agent without the consent of the client to whom the information pertains: (1) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (2) that a seller or landlord is willing to accept less than the asking price or lease rate for the property; (3) What the motivating factors are for any client buying, selling, or leasing the property; (4) That a client will agree to financing terms other than those offered, and (5) The terms of any prior offers or counter offers made by any party. A dual agent shall not disclose to one client any confidential information about the other client unless the disclosure is required by statute, rule, or regulation or failure to disclose the information would constitute a misrepresentation or unless disclosure is necessary to defend the affiliated licensee against an action of wrongful conduct in an administrative or judicial proceeding or before a professional committee. No cause of action for any person shall arise against a dual agent for making any required or permitted disclosure. A dual agent does not terminate the dual agency relationship by making any required or permitted disclosure.

3.   In a dual agency relationship there shall be no imputation of knowledge or information between the client and the dual agent or among persons within an entity engaged as dual agent.

TRANSACTION BROKER

A “Transaction Broker” is any licensee acting pursuant to R.S.Mo. §§ 339.710 to 339.860, who (a) Assists the parties to a transaction without an agency or fiduciary relationship to either party and is, therefore, neutral, serving neither as an advocate or advisor for either party to the transaction; (b) Assists one or more parties to a transaction and who has not entered into a specific written agency agreement to represent one or more of the parties; (c) Assists another party to the same transaction either solely or through licensee affiliates. Such license shall be deemed to be a transaction broker and not a dual agent, provided that, notice of assumption of transaction broker status is provided to the buyer and seller immediately upon such default to transaction broker status, to be confirmed in writing prior to execution of the contract. A transaction broker may cooperate with other brokers and such cooperation shall not establish an agency or subagency relationship.

1.   A transactional broker shall have the following duties and obligations: (a) to perform the terms of any written or oral agreement made with any party to the transaction; (b) To exercise reasonable skill, care and diligence as a transaction broker, including but limited to: (i) presenting all written offers and counteroffers in a timely manner regardless of whether the property subject to a contract for sale or lease or letter of intent unless otherwise provided in the agreement entered with the party; (ii) informing the parties regarding the transaction and suggesting that such parties obtain expert advice as to material matters about which the transaction broker knows but the specifics of which are beyond the expertise of such broker; (iii) accounting in a timely manner for all money and property received; (iv) disclosing to each party to the transaction any adverse material facts of which the licensee has actual notice or knowledge; (v) assisting the parties in complying with the terms and conditions of any contract; (c) To comply with all applicable requirements of R.S.Mo. §§ 339.710 and 339.860, subsection 2 of R.S.Mo. §§ 339.010 and all rules and regulations promulgated pursuant to such sections; and (d) To comply with any applicable federal, state and local laws, rules, regulations and ordinances, including fair housing and civil rights statutes and regulations. The parties to a transaction brokerage transaction shall not be liable for acts of the transaction broker.

2.   The following information shall not be disclosed by a transaction broker without the informed consent of the party or parties disclosing such information to the broker: (a) That a buyer or tenant is willing to pay more than the purchase price or lease rate offered for the property; (b) That a seller or landlord is willing to accept less than the asking price or lease rate for the property; (c) What the motivating factors are for any party buying, selling or leasing the property; (d) that a seller or buyer will agree to financing terms other than those offered; (c) any confidential information about the other party, unless disclosure of such information is required by law; statutes, rules or regulations or failure to disclose such information would constitute fraud or dishonest dealing.

3. A transaction broker has no duty to conduct an independent inspection of, or discover any defects in, the property. A transaction broker has no duty to conduct an independent investigation of the buyers’ financial condition.

4.    A transaction broker may do the following without breaching any obligation or responsibility: (a) show alternative properties not owned by the seller or landlord to a prospective buyer or tenant; (b) List competing properties for sale or lease; (c) show properties in which the buyer or tenant is interested to other prospective buyers or tenants; (d) serve a s a single agent, subagent or designated agent or broker, limited agent, disclosed dual agent for the same or for different parties in other real estate transactions.

5.   A transaction broker may cooperate with other brokers and such cooperation does not establish an agency or subagency relationship.

6.   In a transaction broker relationship each party and the transaction broker, including all persons within an entity engaged as the transaction broker if the transaction broker is an entity, are considered to possess only actual knowledge and information. There is no imputation of knowledge or information by operation of law between any party and the transaction broker or between any party and any person within an entity engaged as the transaction broker if the transaction broker is an entity.

7.   Nothing in § 339.755 R.S.Mo, prohibits a transaction broker for acting as a single limited agent, dual agent, or subagent whether on behalf of a buyer or seller, as long as the requirements governing disclosure of such fact are met. Nothing in § 339.755 R.S.Mo. alters or eliminates the responsibility of a broker as set forth in such statues for the conduct and actions of a licensee operating under the broker’s license.

8.   If any licensee who represents another party to the same transaction either solely or through affiliate licenses refuses transaction broker statutes and wants to continue an agency relationship with both parties to the transaction, such licensee shall have the right to become a designated agent or a dual agent as provided for in §§ 339.730 to 339.860 R.S.Mo.

9.   In any transaction a licensee may without liability withdraw from representing a client who has not consented to a conversion to transaction brokerage. Such withdrawal shall not prejudice the ability of the licensee or affiliated licensee to continue to represent the other client in the transaction or limit the licensee form representing the client who refused the transaction brokerage representation in another transaction not involving transaction brokerage.

DESIGNATED AGENCY

A designated broker entering into a limited agency agreement or written transaction brokerage agreement with a client or party for the listing or property or for the purpose of representing or assisting that person in the buying, selling, exchanging, renting, or leasing or real estate may appoint n writing affiliated licensees as designated agents or designated transaction brokers to the exclusion of all other affiliated licensees. If a designated broker has made an appointment pursuant to this section, an affiliated licensee assisting a party without a written agreement shall be presumed to be a transaction broker to the exclusion of all other affiliated licensees, unless a different brokerage relationship status has been disclosed to or established with that party. A designated broker shall both be considered to be a dual agent or transaction broker solely because such broker makes an appointment of a designated agent, except that any licensee who is not a transaction broker and who personally represents both the seller and buyer or both the landlord and tenant in a particular transaction shall be a dual agent or transaction broker and shall be required to comply with the provisions governing dual agents or transaction brokers. All designated agents or transaction brokers to the extent allow allowed by their licenses shall have the same duties and responsibilities to the client and customer pursuant to in §§ 339.730 to 339.755 R.S.Mo. as the designated broker except as provided above.

Winbury Realty of Kansas City, Inc.	Secured Investment Resources Fund, L.P. II, a Delaware limited partnership
/S/ SCOTT JERWICK	By:	Millenium Management, LLC,
Scott Jerwick                                                Date		a California limited liability company
		its general partner
	By:	/S/ W. ROBERT KOHORST
BROKER                                                       Date		W. Robert Kohorst President
ADDRESS                                                  Phone
	199 S. Los Robles Ave., #200 Pasadena, CA 91101 Tel: (626) 585-5920

EX-99

BILL OF SALE

KNOW ALL MEN BY THESE PRESENTS, that SECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership (“Seller”) for and in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has granted, bargained, sold and delivered, and by these presents does grant, bargain, sell and deliver, unto EVEREST BAYBERRY, LP, a California limited partnership (“Purchaser”), all fixtures, equipment and personal property which are located on the real property described on Exhibit Aattached hereto (collectively the “Personal Property”).

Seller sells and delivers the Personal Property “as is” to Purchaser, and Seller has not made, nor shall Seller be deemed to have made, any representation or warranty, express or implied, as to the value, merchantability, quality or fitness for use or purpose of the Personal Property. Seller does hereby bind itself and its successors and assigns to WARRANT AND FOREVER DEFEND Purchaser’s title to the Personal Property, against every person whomsoever lawfully claiming or to claim the same or any part thereof.

Seller and Purchaser agree as follows:

A.The Personal Property is furnished “AS IS,” “WHERE IS,” AND WITH ALL FAULTS AND WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE WHATSOEVER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, AND IN PARTICULAR, WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE; AND EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS BILL OF SALE, SELLER DISCLAIMS AND PURCHASER HEREBY WAIVES ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR DEMAND IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND PATENT WRINGEMENT), STRICT LIABILITY OR OTHERWISE WITH RESPECT TO THEPERSONAL PROPERTY. Without limiting the generality of the foregoing, Purchaser acknowledges and agrees: (i) that Seller neither represents nor warrants that the Personal Property conveyed under this Bill of Sale will operate satisfactorily, (ii) that Seller shall not have any liability or responsibility for the condition and/or operation of the Personal Property after transfer to Purchaser, its agents, representatives and/or contractors, and (iii) that Purchaser is purchasing the Personal Property based solely upon its own inspection, evaluation, review and analysis and Purchaser assumes the entire risk associated with such inspection, evaluation, review and analysis being incomplete or inaccurate.

B.        Inno event, whether occasioned by breach of contract, breach of warranty, tort (including negligence), strict liability or otherwise, shall Seller be liable to Purchaser for incidental, indirect, special or consequential damages.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

IN WITNESSWHEREOF, the undersigned have executed this Bill of Sale as of this ____ day of August, 2006.

“Seller”
SECURED INVESTMENT RESOURCES FUND, L.P. II,,
a Delaware limited partnership
	By:	Millenium Management, LLC,
		a California Limited Liability Company,
		Its General Partner
	By:		/S/ CHRISTOPHER K. DAVIS
			Name: Christopher K. Davis
			Its:        Vice President and General Counsel

“Purchaser”
EVEREST BAYBERRY, LP,
a California limited partnership
	By:	Millenium Bayberry, LLC, a California limited liability company, its General Partner
	By:	Millenium Management, LLC, a
		California limited liability company
		its Manager
		By:	/S/ CHRISTOPHER K. DAVIS
		Name:	Christopher K. Davis
		Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 10^th day of August, inthe year 2006, before me Charlie Lam, a Notary Public in and for said State, personally appeared Christopher K. Davis, Vice President and General Counsel of MILLENIUM MANAGEMENT, LLC, the general partner of SECURED INVESTMENT RESOURCES FUND, L.P. II(“partnership”), known to me to be the person who executed the within Bill of Sale on behalf of said partnership; and acknowledged to me that he executed the same for the purposes therein stated.

IN TESTIMONY WHEREOF, Ihave hereunto set my hand and affixed my official seal in the County or City and State aforesaid, the day and year first above written.

/S/ CHARLIE LAM

Notary Public

Print Name: Charlie Lam

Commission Expires: 11-26-06

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 10^th day of August, inthe year 2006, before me Charlie Lam, a Notary Public in and for said State, personally appeared Christopher K. Davis, Vice President and General Counsel of MILLENIUM MANAGEMENT, LLC, the general partner of SECURED INVESTMENT RESOURCES FUND, L.P. II(“partnership”), known to me to be the person who executed the within Bill of Sale on behalf of said partnership; and acknowledged to me that he executed the same for the purposes therein stated.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County or City and State aforesaid, the day and year first above written.

/S/ CHARLIE LAM

Notary Public

Print Name: Charlie Lam

Commission Expires: 11-26-06

EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri described as follows:

A tract of land being part of Tract “E” and part of Tract “B”, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract “E”, said point also being on the Southerly Right-of-way Line of 5th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West, 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E; thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E, 673.18 feet; thence North 16 degrees 38 minutes 21 seconds East, 235.73 feet to a point on the Southerly Right-of-way of 5th Street Terrace, (the following three courses are along said Right-of-way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left, a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet of the Point of Beginning, EXCEPT that part in Bayberry

Lane.

Together with a non-exclusive access and ingress easement established by the instrument recorded April 29, 1988 as Document No. 1-840559 in Book 1-1795 at Page 1421.

EX-99

Space Above Line Reserved for Reorder’s Use

 

1.	Title of Document:	Deed of Trust and Security Agreement
2.	Date of Document:	August ___, 2006
3.	Grantor(s):	Everest Bayberry, LP
4.	Grantee(s):	Lehman Brothers Bank, FSB
5.	Statutory Mailing Address(es):	Grantor:
		Everest Bayberry, LP C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Grantee: Lehman Brothers Bank, FSB C/O Lehman Brothers, Inc. 1000 West Street Wilmington, Delaware 19801
6.	Legal Description:	See Exhibit A annexed to the document.
7.	Reference(s) to Book(s) and Page(s):	Not Applicable

EVEREST BAYBERRY, LP, as Trustor

(Borrower)

WALTER C. WHISLER

(Trustee)

for the benefit of

LEHMAN BROTHERS BANK, FSB, as Beneficiary

(Lender)

DEED OF TRUST AND

SECURITY AGREEMENT

 

Dated:	August -, 2006
Location:	Bayberry Crossing 523 S.E. Melody Lane Lee’s Summit, Missouri 64063
County:	Jackson

DRAFTEDBYANDUPON

RECORDATION RETURN TO:

Oppenheimer Wolff & Donnelly LLP

Plaza VII, Suite 3300

45 South Seventh Street

Minneapolis, Minnesota 55402-1609

Attention: Daniel R. Tyson, Esq.

Telephone No. (612) 607-7000

TABLE OF CONTENTS

1 – GRANTS OF SECURITY
	1.1	PROPERTY GRANTED
	1.2	ASSIGNMENT OF RENTS
	1.3	SECURITY AGREEMENT
	1.4	PLEDGE OF MONIES HELD
2 – DEBT AND OBLIGATIONS SECURED
	2.1	DEBT AND OBLIGATIONS SECURED
3 – BORROWER COVENANTS
	3.1	PAYMENT OF DEBT
	3.2	INSURANCE
	3.3	PAYMENT OF TAXES, ETC.
	3.4	RESERVES
	3.5	CONDEMNATION
	3.6	LEASES AND RENTS
	3.7	MAINTENANCE OF PROPERTY
	3.8	WASTE
	3.9	COMPLIANCE WITH LAWS
	3.10	BOOKS AND RECORDS
	3.11	PAYMENT FOR LABOR AND MATERIALS
	3.12	[SECTION INTENTIONALLY DELETED]
	3.13	PERFORMANCE OF OTHER AGREEMENTS
	3.14	CHANGE OF NAME, IDENTITY OR STRUCTURE
	3.15	EXISTENCE
	3.16	OFAC
4 – SPECIAL COVENANTS
	4.1	PROPERTY USE
	4.2	SINGLE PURPOSE ENTITY
	4.3	RESTORATION
	4.4	LOCK BOX ACCOUNT
5 – REPRESENTATIONS AND WARRANTIES
	5.1	WARRANTY OF TITLE
	5.2	AUTHORITY
	5.3	LEGAL STATUS AND AUTHORITY
	5.4	VALJDITY OF DOCUMENTS
	5.5	LITIGATION
	5.6	STATUS OF PROPERTY
	5.7	NO FOREIGN PERSON

	5.8	SEPARATE TAX LOT
	5.9	ERISA COMPLIANCE
	5.10	LEASES
	5.1 1	FINANCIAL CONDITION
	5.12	BUSINESS PURPOSES
	5.13	TAXES
	5.14	MAILING ADDRESS
	5.15	NO CHANGE IN FACTS OR CIRCUMSTANCES
	5.16	DISCLOSURE
	5.17	THIRD PARTY REPRESENTATIONS
	5.18	ILLEGAL ACTIVITY
	5.19	OFAC
6 – OBLIGATIONS AND RELIANCES
	6.1	RELATIONSHIP OF BORROWER AND LENDER
	6.2	NO LENDER OBLIGATIONS
7 – FURTHER ASSURANCES
	7.1	RECORDING OF SECURITY INSTRUMENT, ETC.
	7.2	FURTHER ACTS, ETC.
	7.3	CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
	7.4	ESTOPPEL CERTIFICATES
	7.5	REPLACEMENT DOCUMENTS
8 – DUE ON SALEENCUMBRANCE
	8.1	LENDER RELIANCE
	8.2	NO SALE/ENCUMBRANCE
	8.3	SALEIENCUMBRANCE DEFINED
	8.4	LENDER’S RIGHTS
	8.5	ONE TIME TRANSFER
	8.6	ONE TIME TRANSFER OF MORE THAN 49% OF LIMITED PARTNERSHIP INTERESTS OF BORROWER
9 – DEFAULT
	9.1	EVENTS OF DEFAULT
10 – RIGHTS AND REMEDIES
	10.1	REMEDIES
	10.2	APPLICATION OF PROCEEDS
	10.3	RIGHT TO CURE DEFAULTS

	10.4	ACTIONS AND PROCEEDINGS
	10.5.	RECOVERY OF SUMS REQUIRED TO BE PAID
	10.6	EXAMINATION OF BOOKS AND RECORDS
	10.7	OTHER RIGHTS, ETC.
	10.8	RIGHT TO RELEASE ANY PORTION OF THE PROPERTY
	10.9	VIOLATION OF LAW
	10.10	RECOURSE AND CHOICE OF REMEDIES
	10.11	RIGHT OF ENTRY
	10.12	DEFAULT INTEREST AND LATE CHARGES
11 – INDEMNIFICATION
	11.1	GENERAL INDEMNIFICATION
	11.2	MORTGAGE AND/OR INTANGIBLE TAX
	11.3	ERISA INDEMNIFICATION
	11.4	DUTY TO DEFEND; ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES
12 – WAIVERS
	12.1	WAIVER OF COUNTERCLAIM
	12.2	MARSHALLING AND OTHER MATTERS
	12.3	WAIVER OF NOTICE
	12.4	SOLE DISCRETION OF LENDER
	12.5	SURVIVAL
	12.6	WAIVER OF TRIAL BY JURY
13 – EXCULPATION
	13.1	EXCULPATION
	13.2	RESERVATION OF CERTAIN RIGHTS
	13.3	EXCEPTIONS TO EXCULPATION
	13.4	RECOURSE
	13.5	BANKRUPTCY CLAIMS
14 – NOTICES
	14.1	NOTICES
15 – APPLICABLE LAW
	15.1	CHOICE OF LAW
	15.2	USURY LAWS
	15.3	PROVISIONS SUBJECT TO APPLICABLE LAW

16 – SECONDARY MARKET
	16.1	TRANSFER OF LOAN
17 – COSTS
	17.1	PERFORMANCE AT BORROWER’S EXPENSE
	17.2	ATTORNEYS’ FEES FOR ENFORCEMENT
18 – DEFINITIONS
	18.1	GENERAL DEFINITIONS
19 – MISCELLANEOUS PROVISIONS
	19.1	NO ORAL CHANGE
	19.2	LIABILITY
	19.3	INAPPLICABLE PROVISIONS
	19.4	HEADINGS, ETC.
	19.5	DUPLICATE ORIGINALS; COUNTERPARTS
	19.6	NUMBER AND GENDER
	19.7	SUBROGATION
	19.8	ENTIRE AGREEMENT
	19.9	SUBSTITUTION OF TRUSTEE
	19.10	THE TRUSTEE’S FEES
	19.11	CERTAIN RIGHTS
	19.12	RETENTION OF MONEY
	19.13	PERFECTION OF APPOINTMENT
	19.14	SUCCESSION INSTRUMENTS
	19.15	RELIANCE OF TRUSTEE
	19.16	BROKERS
20 – STATE SPECIFIC PROVISIONS
	20.1	FURTHER REMEDIES OF LENDER
	20.2	FURTHER WAIVER BY BORROWER
	20.3	DUTIES AND SUBSTITUTION OF TRUSTEE
	20.4	RIGHTS PERTAINING TO SALES
	20.5	TRUSTEE’S APPOINTMENT
	20.6	FURTHER NOTICE REGARDING INSURANCE
	20.7	FURTHER NOTICE REGARDING AGREEMENTS WITH LENDER
	20.8	FUTURE ADVANCES

THIS DEED OF TRUST AND SECURITY AGREEMENT (the “Security Instrument”) is made as of the - day of August, 2006, by EVEREST BAYBERRY, LP, a California limited partnership, having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst, as trustor (“Borrower”), to Walter C. Whisler having an address at 700 NE Mize Road, Suite 200, Blue Springs, Missouri 64014 as trustee (“Trustee”) for the benefit of LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801, as beneficiary (“Lender”).

RECITALS:

Borrower, by its promissory note of even date herewith given to Lender, is indebted to Lender in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00) in lawful money of the United States of America (the note together with all extensions, renewals, modifications, substitutions and amendments thereof shall collectively be referred to as the “Note”), with interest from the date thereof at the rates set forth in the Note, principal and interest to be payable in accordance with the terms and conditions provided in the Note.

Borrower desires to secure the payment and performance of the Obligations (as defined in Section 2.1 hereof).

1. GRANTS OF SECURITY

1.1       PROPERTY GRANTED. Borrower does hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to Trustee for the benefit of Lender, and grant a security interest to Trustee for the benefit of Lender in, the following property, rights, interests and estates now owned, or hereafter acquired by Borrower (collectively, the “Property”): (a) the real property described in Exhibit “A” attached hereto and made a part hereof (the “Land”); (b) all additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Security Instrument; (c) the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (the “Improvements”); (d) all easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, courtesy and rights of courtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto; (e) all furnishings, machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or

appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “Personal Property”), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), superior in lien to the lien of this Security Instrument and all proceeds and products of the above; (f)leases and other agreements affecting the use, enjoyment or occupancy of the Land and the Improvements heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”) (the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, (including, but not limited to, any payments made by tenants under the Leases in connection with the termination of any Lease), issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt (as hereinafter defined); (g) any and all lease guaranties, letters of credit and any other credit support (individually, a “Lease Guaranty” and collectively, the “Lease Guaranties”) given by any guarantor in connection with any of the Leases (individually, a “Lease Guarantor” and collectively, the “Lease Guarantors”); (h) all rights, powers, privileges, options and other benefits of Borrower as lessor under the Leases and beneficiary under all Lease Guaranties; (i) all awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property; (j) all proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property; (k) all refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction; (l) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims; (m) the right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property; (n) all agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder; (o) all tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property; and (p) any and all other rights of Borrower in and to the items set forth in Subsections (a) through (o) above.

CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto Trustee, as trustee for the benefit of Lender, to its successors in the trust created by this Security Instrument and to Lender’s respective assigns, forever, in trust, upon the terms and conditions set forth herein;

IN TRUST, WITH THE POWER OF SALE, to secure payment to Lender of the Debt at the time and in the manner provided for its payment in the Note and in this Security Instrument.

1.2       ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally assigns to Lender Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 1.2 and Section 3.6, Lender grants to Borrower a revocable license to collect and receive the Rents, which license shall be automatically revoked upon the occurrence of an Event of Default (as hereinafter defined). Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

1.3       SECURITY AGREEMENT. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code.

As to those items of Property described in Section 1.1 of this Security Instrument that are, or are to become fixtures related to the Land, it is intended as to those items that THIS SECURITY INSTRUMENT BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILMG from the date of its filing in the real estate records of the County where the Property is situate. The name of the record owner of said real estate is Borrower. Information concerning the security interest created by this instrument may be obtained from the Lender, as secured party, at its address as set forth in Section 14 of this Security Instrument. The address of the Borrower as debtor, is as set forth in Section 14 of this Security Instrument This document covers goods which are or are to become fixtures. Borrower’s jurisdiction of organization is the State of California and its organization identification number is CA-200608200005. Subject to the covenants of Section 4.2, Borrower shall give Lender at least thirty (30) days’ written notice of any proposed change in Borrower’s name, address, identity, state of registration for a registered organization, principal place of business, or structure and hereby authorizes Lender to file prior to or concurrently with such change all additional financing statements that Lender may require to establish and perfect the priority of Lender’s security interest in the Property. Borrower by signing this Security Instrument authorizes Lender to file such financing statements, amendments or continuation statements, either before, on or after the date hereof, as Lender determines necessary or desirable to perfect or to continue the lien of the Lender’s security interest in the Property.

1.4       PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender, including, without limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4), the Deferred Maintenance Deposit (as defined on Exhibit “B”) attached hereto and made a part hereof), the Reserve (as defined on Exhibit “B”),Net Proceeds (as defined in Section 4.3), the Lock-Box Account (as defined in Section 4.4) and condemnation awards or payments described in Section 3.5 (collectively, “Deposits”), as additional security for the Obligations until expended or applied as provided in this Security Instrument.

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note and this Security Instrument, shall well and truly perform the Other Obligations (as defined in Section 2.1 hereto) as set

forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, these presents and the estate hereby granted shall cease, terminate and be void.

2. DEBT AND OBLIGATIONS SECURED

2.1       DEBT AND OBLIGATIONS SECURED. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the payment of the Debt and the performance of the Other Obligations, in such order of priority as Lender may determine in its sole discretion. For purposes hereof, the term “Debt” shall mean the aggregate of the indebtedness evidenced by the Note in lawful money of the United States of America, interest, default interest, late charges, prepayment premiums and other sums, as provided in the Note, this Security Instrument or the other Loan Documents (defined below), all other moneys agreed or provided to be paid by Borrower in the Note, this Security Instrument or the other Loan Documents and all sums advanced pursuant to this Security Instrument to protect and preserve the Property and the lien and the security interest created hereby. For purposes hereof, the term “Other Obligations” shall mean the obligations of Borrower (other than the obligation to repay the Debt) contained in this Security Instrument, the Note and the other Loan Documents (as hereinafter defined). For purposes hereof, the term “Loan Documents” shall mean the Note, this Security Instrument and any other documents or instruments which now or shall hereafter wholly or partially secure or guarantee payment of the Note or which have otherwise been executed or are hereafter executed by Borrower and/or any other person or entity in connection with the loan (the “Loan”) evidenced by the Note and in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part thereof. Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively below as the “Obligations.” All the covenants, conditions and agreements contained in the Note and the other Loan Documents are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein. Anything to the contrary herein or in any other Loan Document notwithstanding, the obligations of any guarantor under the Guaranty of Recourse Obligations of Borrower or any Guarantor or Indemnitor under any other separate guaranty or indemnity accepted by Lender shall not be secured by this Security Instrument, any separate assignment of leases or assignment of rents, or any other lien encumbering the Property; provided however that the obligations of Borrower under the Environmental Indemnity Agreement and under any separate indemnity of Borrower shall be so secured, subject to the rights of Lender to proceed on an unsecured basis thereunder pursuant to applicable law.

3. BORROWER COVENANTS

Borrower covenants and agrees that:

3.1       PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the manner provided in the Note, this Security Instrument and the other Loan Documents.

3.2 INSURANCE.

(a)        Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the coverages set forth herein:

(i)        comprehensive all risk insurance on the Improvements and the Personal Property in each case (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes

of this Security Instrument shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing either an agreed amount endorsement or a waiver of all co-insurance provisions; (C)providing for a deductible of not greater than $25,000.00; and (D) if any of the Improvements or the use of the Property shall at any time constitute a legal non-conforming structure or use, Borrower shall obtain an “Ordinance or Law Coverage” or “Enforcement” endorsement, which shall include sufficient coverage for (1) costs to comply with building and zoning codes and ordinances, (2) demolition costs, and (3) increased costs of construction. If any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area,” Borrower shall obtain flood hazard insurance in such an amount as Lender shall require, but in no event less than the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended. In addition, in the event the Property is located in the State of California or in a “seismic zone” 3 or 4 as defined in the Uniform Building Code published by the International Conference of Building Officials, Borrower shall obtain earthquake insurance in amounts and in form and substance satisfactory to Lender;

(ii)       commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the “occurrence” form with a combined single limit (including “umbrella” coverage in place) of not less than (1) $3,000,000.00 and a general aggregate limit of not less than $4,000,000.00; or (2) if any of the Improvements contain elevators, a combined single limit of not less than $5,000,000.00 and a general aggregate limit of $6,000,000.00; (B) to continue at not less than the aforesaid limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; and (4) blanket contractual liability for all written and oral contracts, to the extent the same is available;

(iii)      business income insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in Subsection 3.2(a)(i); (C) on an agreed value actual loss sustained basis in an amount equal to 100% of the projected gross income from the Property for a period of twelve (12) months; and (D) if the Borrower is required to obtain an “Ordinance or Law Coverage” or “Enforcement” endorsement pursuant to Subsection 3.2(a)(i)(D), coverage for the increased period of restoration. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the gross income from the Property for the succeeding twelve (12) month period. All insurance proceeds payable to Lender pursuant to this Subsection shall be held by Lender and shall be applied to the obligations secured hereunder from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its obligations to pay the obligations secured hereunder on the respective dates of payment provided for in the Note except to the extent such amounts are actually paid out of the proceeds of such business income insurance;

(iv)      (A) at all times during which structural construction, material repairs or alterations are being made with respect to the Improvements, owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) during new construction the

insurance provided for in Subsection 3.2(a)(i) written in a so-called builder’s risk completed value form on a non-reporting basis;

(v)       if Borrower has employees, workers’ compensation, subject to the statutory limits of the state in which the Property is located, and employer’s liability insurance with a limit of at least $1,000,000.00 per accident and per disease per employee, and $1,000,000.00 aggregate coverage for disease in respect of any work or operations on or about the Property, or in connection with the Property or its operation;

(vi)      if the Property contains HVAC or other equipment not covered by the comprehensive all risk insurance, comprehensive boiler and machinery insurance, in amounts as shall be reasonably required by Lender;

(vii)     if Borrower owns or operates motor vehicles, motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits reasonably acceptable to Lender; and

(viii)    such other insurance and in such amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.

(b)       All insurance provided for in Subsection 3.2(a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), and shall be subject to the approval of Lender as to insurance companies, policy limits and any sub-limits thereof, forms (including exclusions and exceptions), deductibles, loss payees and insureds. Whether or not covered by the express terms of any Policy, Borrower shall not decline, elect not to accept, allow to lapse or fail to pay the required premium for any insurance coverage required to be extended or offered by any insurer by applicable law, rule or regulation without Lender’s prior written consent. The insurance companies must be approved, authorized or licensed to provide insurance in the state in which the Property is located and have a rating of “A” or better for claims paying ability assigned by Moody’s Investors Service, Inc. and Standard & Poor’s Rating Group or a general policy rating of “A-” or better and a financial class of VIII or better assigned by A.M. Best Company, Inc. Each such insurer shall be referred to herein as a “Qualified Insurer.”

(c)        Borrower shall not obtain (i) any umbrella or blanket liability or casualty Policy unless, in each case, Lender’s interest is included therein as provided in this Security Instrument and such Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Subsection 3.2(a) to be furnished by, or which may be reasonably required to be furnished by, Borrower. In the event Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause certified copies of each Policy to be delivered as required in Subsection 3.2(e). Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Subsection 3.2(a).

(d)       All Policies of insurance provided for or contemplated by Subsection 3.2(a), except for the Policy referenced in Subsection 3.2(a)(v), shall name Lender and Borrower as the insured or additional insured, as their respective interests may appear, and in the case of property damage, boiler and

machinery, flood and earthquake insurance, shall contain a “mortgagee clause” in form acceptable to Lender providing, among other things, that Lender shall receive at least thirty (30) days prior written notification of any termination, cancellation or reduction of insurance and that the loss thereunder shall be payable to Lender.

(e)        If not previously delivered to Lender, Borrower shall deliver to Lender no later than thirty (30) days after the date hereof certified copies of the existing Policies providing the insurance coverage required under Section 3.2(a) marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”) annually in advance. In addition, no later than thirty (30) days prior to the expiration dates of the Policies which Borrower is now or hereafter required to maintain hereunder, Borrower shall deliver to Lender certified copies of new or renewal Policies (also marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the Insurance Premiums due thereunder annually in advance), together with certificates of insurance therefor, setting forth, among other things, the amounts of insurance maintained, the risks covered by such insurance and the insurance company or companies which carry such insurance. If requested by Lender, Borrower shall furnish verification of the adequacy of such insurance by an independent insurance broker or appraiser acceptable to Lender. Under no circumstances shall Borrower be permitted to finance the payment of any portion of the Insurance Premiums.

(f)        If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by this Security Instrument and shall bear interest in accordance with Section 10.3 hereof.

(g)       If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such fire or other casualty, with such alterations as may be approved by Lender (the “Restoration”) and otherwise in accordance with Section 4.3 of this Security Instrument, except in instances where Lender has failed or elected not to disburse Net Proceeds to Borrower under such Section 4.3 (provided that such exception shall not apply if the failure to disburse is attributable to Borrower’s failure to comply with the conditions set forth in Clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or any other conditions set forth in Section 4.3 which Borrower has the practical ability to satisfy). Lender may, but shall not be obligated to make proof of loss if not made promptly by Borrower.

(h)       In the event of foreclosure of this Security Instrument, or other transfer of title to the Property in extinguishment in whole or in part of the Debt all right, title and interest of Borrower in and to such policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.

3.3       PAYMENT OF TAXES. ETC. Borrower shall promptly pay all taxes, assessments, water rates, sewer rents, governmental impositions, and other charges including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Land, now or hereafter levied or assessed or imposed against the Property or any part thereof (the “Taxes”), all ground

rents, maintenance charges and similar charges, now or hereafter levied or assessed or imposed against the Property or any part thereof (the “Other Charges”), and all charges for utility services provided to the Property prior to the time same become delinquent. Borrower will deliver to Lender, promptly upon Lender’s request, evidence satisfactory to Lender that the Taxes, Other Charges and utility service charges have been so paid or are not then delinquent. Borrower shall not suffer and shall promptly cause to be paid and discharged any lien or charge whatsoever which may be or become a lien or charge against the Property (“Liens”). Except to the extent sums sufficient to pay all Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument, Borrower shall furnish to Lender paid receipts for the payment of the Taxes and Other Charges prior to the date the same shall become delinquent. Borrower shall not be required to pay any Taxes, Other Charges or Liens so long as Borrower shall in good faith contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection of the Taxes, Other Charges or Liens so contested and the sale of the Property, or any part thereof to satisfy the same, provided that borrower shall, prior to any such contest, have given such security as may be reasonably required by Lender to ensure such payments and prevent any sale or forfeiture of the Property by reason of such nonpayment. Any such contest shall be prosecuted in accordance with the laws and rules pertaining to such contests and in all events with due diligence and Borrower shall promptly after final determination thereof pay the amount of any such Tax, Other Charge or Lien so determined, together with all interest and penalties, which may be payable in connection therewith. Notwithstanding the provisions of this Section, Borrower shall (and if Borrower shall fail so to do, Lender may but shall not be required to) pay any such Taxes, Other Charges or Liens notwithstanding such contest if in the reasonable opinion of Lender, the Property shall be in jeopardy or in danger of being forfeited or foreclosed.

3.4 RESERVES.

(a)        Borrower shall pay to Lender on each date that a regularly scheduled payment of principal or interest is due under the Note (a) one-twelfth of an amount which would be sufficient to pay the Taxes payable, or estimated by Lender to be payable, during the next ensuing twelve (12) months and (b) one-twelfth of an amount which would be sufficient to pay the Insurance Premiums due for the renewal of the coverage afforded by the Policies upon the expiration thereof (the amounts in (a) and (b) above shall be called the “Escrow Fund”). Borrower agrees to notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any Taxes and Insurance Premiums of which it has obtained knowledge and authorizes Lender or its agent to obtain the bills for Taxes and Other Charges directly from the appropriate taxing authority. Borrower may, on its own behalf, also engage a third party tax service provider, so long as Lender continues to receive such bills for Taxes and Other Charges uninterrupted. The Escrow Fund and the payments of interest or principal or both, payable pursuant to the Note shall be added together and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the Escrow Fund to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to Sections 3.2 and 3.3 hereof. If the amount of the Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 3.2 and 3.3 hereof, Lender shall, in its discretion, return any excess to Borrower or credit such excess against future payments to be made to the Escrow Fund. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Property. If the Escrow Fund is not sufficient to pay the items set forth in (a) and (b) above, Borrower shall promptly pay to Lender, upon demand, an amount which Lender shall estimate as sufficient to make up the deficiency. The Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by Lender. No earnings or interest on the Escrow Fund shall be payable to Borrower.

(b) Borrower shall comply with the Replacement Reserve and Leasing Reserve Requirements set forth on Exhibit “B” attached hereto and made a part hereof.

3.5       CONDEMNATION. Borrower shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding and shall deliver to Lender copies of any and all papers served in connection 4^th such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Security Instrument and the Debt shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 4.3 of this Security Instrument, except in instances where Lender has failed or elected not to disburse Net Proceeds to Borrower under such Section 4.3 (provided that such exception shall not apply if the failure to disburse is attributable to Borrower’s failure to comply with the conditions set forth in Clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or any other conditions set forth in Section 4.3 which Borrower has the practical ability to satisfy). If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the award or payment, or a portion thereof sufficient to pay the Debt.

3.6 LEASES AND RENTS.

(a)        Except as otherwise consented to by Lender, all Leases shall be written on the standard form of lease which shall have been approved by Lender. Upon request, Borrower shall furnish Lender with executed copies of all Leases. No material changes may be made to the Lender-approved standard lease without the prior written consent of Lender, which approval shall not be unreasonably withheld or delayed. In addition, all renewals of Leases and all proposed leases shall provide for rental rates and terms comparable to existing local market rates and terms and shall be arms-length transactions with bona fide, independent third party tenants. All proposed leases and renewals of existing Leases, other than Minor Leases (hereinafter defined), shall be subject to the prior approval of Lender and its counsel, at Borrower’s expense, which approval shall not be unreasonably withheld or delayed if the proposed Lease or renewal Lease (i) is on the Lender-approved form, subject only to commercially reasonable variations therefrom, (ii) is negotiated in an arms-length transaction with an independent third party tenant and (iii)provides for rental rates and terms comparable to existing local market terms. All Leases entered into after the date hereof shall provide that they are subordinate to this Security Instrument and that the lessee agrees to attorn to Lender. Borrower (i) shall observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of the Leases as security for the Obligations; (ii) shall promptly send copies to Lender of all notices of default which Borrower shall send or receive thereunder; (iii) shall enforce all of the terms, covenants and conditions contained in the Leases upon the part of the lessee thereunder to be observed or performed, short of termination thereof; Borrower may terminate, however, Minor Leases as the result of a default by lessee

thereunder; (iv) shall not collect any of the Rents more than one (1)month in advance; (v) shall not execute any other assignment of the lessor’s interest in the Leases or the Rents; (vi) shall not alter, modify or change the terms of the Leases without the prior written consent of Lender, or cancel or terminate the Leases or accept a surrender thereof or convey or transfer or suffer or permit a conveyance or transfer of the Land or of any interest therein so as to effect a merger of the estates and rights of, or a termination or diminution of the obligations of, lessees thereunder; (vii) shall not alter, modify or change the terms of any guaranty, letter of credit or other credit support with respect to the Leases (the “Lease Guaranty”) or cancel or terminate such Lease Guaranty without the prior written consent of Lender; and (viii) shall not consent to any assignment of or subletting under the Leases not in accordance with their terms, without the prior written consent of Lender.

For purposes of this Subsection 3.6(a), any failure of Lender to respond to Borrower’s written request for consent or approval within fifteen (15) business days of the date of said request shall be deemed to constitute Lender’s consent or approval, provided that Borrower’s request (i) is made in accordance with the notice provisions of this Security Instrument; (ii) is accompanied by a copy of the lease, memorandum, modification or other document or instrument for which consent is being requested together with Borrower’s certification to Lender that the same constitutes a true and complete copy thereof; and (iii) states prominently in bold capital letters on the face thereof: WE HEREBY NOTIFY YOU THAT, PURSUANT TO SUBSECTION 3.6(a) OF THE DEED OF TRUST AND SECURITY AGREEMENT, IF EVEREST BAYBERRY. LP DOES NOT RECEIVE A RESPONSE FROM LENDER TO THIS REQUEST FOR CONSENT WITHIN FIFTEEN (15) BUSINESS DAYS AFTER RECEIPT BY LENDER OF THIS REQUEST, THE REQUEST REFERRED TO HEREIN SHALL BE DEEMED APPROVED.

(b)       Notwithstanding the provisions of Subsection 3.6(a) above, renewals of existing commercial Leases and proposed leases for commercial space covering less than fifteen percent (15%) of the total rentable space for the Property and accounting for rental income which in the aggregate is less than fifteen percent (15%) of the total rental income for the Property shall not be subject to the prior approval of Lender provided that (i) the renewal Lease or proposed lease shall have a lease term not to exceed ten (10) years including options to renew, (ii) the renewal Lease or proposed lease shall provide for rental rates and terms comparable to existing local market rates and terms, and (iii) the renewal Lease or proposed lease shall be an arms-length transaction with a bona fide, independent third party tenant (leases meeting the foregoing requirements shall be referred to herein as “Minor Leases”). Borrower shall deliver to Lender copies of all Leases which are entered into pursuant to the preceding sentence together with Borrower’s certification that it has satisfied all of the conditions of the preceding sentence within thirty (30) days after the execution of the Lease.

(c) [Subsection Intentionally Deleted]

(d)       All security deposits of tenants, whether held in cash or any other form, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower at such commercial o r savings bank or banks as may be reasonably satisfactory to Lender. Borrower shall, upon request, provide Lender with evidence reasonably satisfactory to Lender of Borrower’s compliance with the foregoing. Following the occurrence and during the continuance of any Event of Default, Borrower shall, upon Lender’s request, if permitted by any applicable legal requirements, turn over to Lender the security deposits (and any interest theretofore earned thereon) with respect to all or any portion of the Property, to be held by Lender subject to the terms of the Leases.

3.7       MAINTENANCE OF PROPERTY. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property and tenant improvements made in connection with a Lease which has been entered into by Borrower in accordance with the terms hereof) without the consent of Lender. Subject to the provisions of Subsection 3.2(g) and Section 3.5, Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.5 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Borrower shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof. If under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Borrower will not cause or permit the nonconforming use to be discontinued or abandoned without the express written consent of Lender.

3.8       WASTE. Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Security Instrument.

3.9       COMPLIANCE WITH LAWS. Borrower shall (i) promptly comply with all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting the Property, or the use thereof including, but not limited to, the Americans with Disabilities Act (“ADA”) (collectively, the “Applicable Laws”), (ii) from time to time, upon Lender’s request, provide Lender with evidence satisfactory to Lender that the Property complies with all Applicable Laws or is exempt from compliance with Applicable Laws, (iii) give prompt notice to Lender of the receipt by Borrower of any notice related to a violation of any Applicable Laws and of the commencement of any proceedings or investigations which relate to compliance with Applicable Laws, and (iv) take appropriate measures to prevent and will not engage in or knowingly permit any illegal activities at the Property.

3.10 BOOKS AND RECORDS.

(a) Borrower shall keep adequate books and records of account in accordance with methods of accounting reasonably acceptable to Lender and furnish to Lender:

(i)        quarterly operating statements of the Property, prepared and certified by Borrower in the form required by Lender, detailing the revenues received, the expenses incurred and the net operating income before and after debt service (principal and interest) and major capital improvements for that quarter and containing appropriate year to date information, within thirty (30) days after the end of each fiscal quarter;

(ii)       certified rent rolls for the last month of each fiscal quarter signed and dated by Borrower, detailing the names of all tenants of the Improvements, the portion of Improvements occupied by each tenant, the base rent and any other charges payable under each Lease and the term of each Lease, including the expiration date, and any other information as is reasonably required by Lender, within thirty (30) days after the end of each fiscal quarter;

(iii)      an annual operating statement of the Property detailing the total revenues received, total expenses incurred, total cost of all capital improvements, total debt service and total cash flow, to be prepared and certified by Borrower in the form required by Lender, within ninety (90) days after the close of each fiscal year of Borrower and if available, any operating statements prepared by an independent certified public accountant within thirty (30) days of the date the same are made available to Borrower;

(iv)      an annual balance sheet and profit and loss statement of Borrower in the form required by Lender, to be prepared and certified by Borrower within ninety (90) days after the close of each fiscal year of Borrower, and, if available, any financial statement prepared by an independent certified public accountant with respect to Borrower within thirty (30) days of the date the same are made available to any such persons; and

(v)       copies of Borrower’s federal income tax returns within fifteen (15) days of the date such returns are filed.

(b)       Upon Lender’s request, Borrower shall cause each Guarantor (as hereinafter defined) and each Indemnitor other than Borrower (an “Indemnitor”) under the Environmental Indemnity (as hereinafter defined) to furnish to Lender no later than ninety (90) days after the end of the fiscal year for the applicable Guarantor or Indemnitor a financial statement for said fiscal year certified to Lender and prepared on a form reasonably acceptable to Lender.

(c)        Borrower, its affiliates, any Guarantor and any Indemnitor shall furnish Lender with such other additional financial or management information as may, from time to time, be reasonably required by Lender in form and substance reasonably satisfactory to Lender. Lender may commission new or updated appraisals, phase I and phase II environmental reports, property condition surveys and (if the Property is located in an area with a high degree of seismic activity) seismic risk assessments of the Property to be prepared by third parties (each a “Third Party”) designated by Lender after the date hereof (each, a “Third Party Report”). Borrower shall cooperate with each Third Party and Lender in the preparation of the Third Party Reports and shall reimburse Lender within ten (10) days of Lender’s demand for all costs incurred by Lender in connection with such Third Party Reports, provided that Borrower shall not be obligated to reimburse Lender for the cost of such Third Party Reports unless requested by Lender following the occurrence and during the continuance of any Event of Default.

3.11     PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with the Property and never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof, except for the Permitted Exceptions (defined below).

3.12 [INTENTIONALLY DELETED]

3.13     PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and perform each and every term to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property, or given by Borrower to Lender for the purpose of further securing an obligation secured hereby and any amendments, modifications or changes thereto.

3.14     CHANGE OF NAME IDENTITY OR STRUCTURE. Borrower will not change Borrower’s name, identity (including its trade name or names) or, if not an individual, Borrower’s corporate, limited liability company, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s structure, without first obtaining the prior written consent of Lender. Borrower will execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein, and to the extent permitted by applicable law, hereby authorizes Lender to file any such financing statement on Borrower’s behalf. At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

3.15     EXISTENCE. Borrower will continuously maintain its existence and its rights to do business in the state where the Property is located together with its franchises and trade names.

3.16     OFAC. At all times throughout the term of the Loan, Borrower and all of its respective Affiliates shall: (i) not be a Prohibited Person (defined below); and (ii) be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury. The term “Prohibited Person” shall mean any person or entity:

(a)        listed in the Annex to, or otherwise subject to the provisions of, the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

(b)       that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed to the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(c)        with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order;

(d)       who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(e)        that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, www.ustreas.gov/offices/enforcement/ofac,or at any replacement website or other replacement official publication of such list; or

(f) who is an Affiliate of or affiliated with a person or entity listed above.

The term “Affiliate,” as used herein, shall mean as to any person or entity, any other person or entity that, directly or indirectly, is in control of, is controlled by or is under common control with such person or entity or is a director or officer of such person or entity or of an Affiliate of such person or entity. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.

4. SPECIAL COVENANTS

Borrower covenants and agrees that:

4.1       PROPERTY USE. The Property shall be used only for a shopping center, and for no other use without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion.

4.2       SINGLE PURPOSE ENTITY. It has not and shall not: (a) engage in any business or activity other than the ownership, operation and maintenance of the Property, and activities incidental thereto; (b) acquire or own any material assets other than (i) the Property, and (ii) such incidental Personal Property as may be necessary for the operation of the Property; (c) merge into or consolidate with any person or entity or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure, without in each case Lender’s consent; (d) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation, or without the prior written consent of Lender, amend, modify, terminate or fail to comply with the provisions of Borrower’s partnership agreement, articles or certificate of incorporation, articles of organization, operating agreement, or similar organizational documents, as the case may be, as same may be further amended or supplemented, if such amendment, modification, termination or failure to comply would adversely affect the ability of Borrower to perform its obligations hereunder, under the Note or under the other Loan Documents; (e) own any subsidiary or make any investment in, any person or entity without the consent of Lender; (f)commingle its assets with the assets of any of its general partners, managing members, shareholders, affiliates, principals or of any other person or entity; (g) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the Debt, except with respect to trade payables incurred in the ordinary course of its business of owning and operating the Property, provided that such debt is paid when due; (h) fail to maintain its records, books of account and bank accounts separate and apart from those of the general partners, managing members, shareholders, principals and affiliates of Borrower, the affiliates of a general partner or managing member of Borrower, and any other person or entity; (i) enter into any contract or agreement with any general partner, managing member, shareholder, principal or affiliate of Borrower, Guarantor or Indemnitor, or any general partner, managing member, shareholder, principal or affiliate thereof, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any general partner, managing member, shareholder, principal or affiliate of Borrower, Guarantor or Indemnitor, or any general partner, managing member, shareholder, principal or affiliate thereof; (i) seek the dissolution or winding up in whole, or in part, of Borrower; (k) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any general partner, managing member, shareholder, principal or affiliate of Borrower, or any general partner, managing member, shareholder, principal or affiliate thereof or any other person; (l) hold itself out to be responsible for the debts of another person; (m) make any loans to any third party; (n) fail either to hold itself out to the public as a legal entity separate and distinct from any other entity or person or to conduct its business solely in its own name in order not (i) to mislead others as to the identity with which such other party is transacting business, or (ii) to suggest that Borrower is responsible for the debts of any third party (including any general partner, managing member, shareholder, principal or affiliate of Borrower, or any general partner, managing member, shareholder, principal or affiliate thereof); (o) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; or (p) file or consent to the filing of any petition, either voluntary or involuntary, to take

advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors.

4.3       RESTORATION. The following provisions shall apply in connection with the Restoration of the Property:

(a)        If the Net Proceeds shall be less than One Hundred Thousand and 00/100 Dollars ($100,000.00) and the costs of completing the Restoration shall be less than One Hundred Thousand and 00/100 Dollars ($100,000.00), the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Subsection 4.3(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Security Instrument.

(b)       If the Net Proceeds are equal to or greater than One Hundred Thousand and 00/00 Dollars ($100,000.00) or the costs of completing the Restoration are equal to or greater than One Hundred Thousand and 00/100 Dollars ($100,000.00) Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Subsection 4.3(b). The term “Net Proceeds” for purposes of this Section 4.3 shall mean: (i) the net amount of all insurance proceeds received by Lender pursuant to Subsections 3.2(a)(i), (iv), (vi) and (viii) of this Security Instrument as a result of such damage or destruction (or any proceeds of self-insurance maintained in lieu of such insurance policies), after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of all awards and payments received by Lender with respect to a taking referenced in Section 3.5 of this Security Instrument, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be.

(i)        The Net Proceeds shall be made available to Borrower for the Restoration provided that each of the following conditions are met: (A) no Event of Default shall have occurred and be continuing under the Note, this Security Instrument or any of the other Loan Documents; (B) (1) in the event the Net Proceeds are Insurance Proceeds, less than fifty percent (50%) of the total floor area of the Improvements has been damaged, destroyed, or rendered unusable as a result of such fire or other casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property; (C) Leases demising in the aggregate a percentage amount equal to or greater than fifty percent (50%) (with respect to casualties) or ninety percent (90%) (with respect to condemnation) of the total net rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such fire or other casualty, as the case may be, shall remain in full force and effect during and after the completion of the Restoration and Borrower shall have furnished to Lender evidence satisfactory to Lender that Pizza Street Enterprises, Inc. and Summit Notions, Inc. or qualified replacement tenants of such tenants whose leases each respectively cover ten percent (10%) or more of the total rental space for the Property and accounting for rental income which in the aggregate is ten percent (10%) or more of the total rental income for the Property shall continue to lease and operate their premises at the Property notwithstanding the occurrence of any such fire or other casualty or taking, whichever the case may be, and will make all necessary repairs and restorations thereto at their sole cost and expense; (D) Borrower shall have commenced the Restoration as soon as reasonably practicable (but in no event later than ninety (90) days after such damage or destruction or taking, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion; (E)

Lender shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note at the Applicable Interest Rate (as defined in the Note), which will be incurred with respect to the Property as a result of the occurrence of any such fire or other casualty or taking, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Subsection 3.2(a)(iii), if applicable, or (3) by other funds of Borrower; (F) Lender shall be satisfied that following the completion of the Restoration, the ratio of sustainable net cash flow for the Property (after deduction for underwritten reserves) to debt service payable under the Note shall be at least 1.25 to 1.0 (G) Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) twelve (12) months prior to the Maturity Date (as defined in the Note), (2) twelve (12) months after the occurrence of such fire or other casualty or taking, whichever the case may be, (3) the earliest date required for such completion under the terms of any Leases which are required in accordance with the provisions of this Subsection 4.3(b) to remain in effect subsequent to the occurrence of such fire or other casualty or taking, whichever the case may be, and the completion of the Restoration or (4) such time as may be required under any applicable zoning laws, ordinances, rules or regulations in order to repair and restore the Property to the condition it was in immediately prior to such fire or other casualty or to as nearly as possible the condition it was in immediately prior to such taking, as applicable; (H) the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable zoning laws, ordinances, rules and regulations; (I) the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable laws, rules and regulations; and (J) such fire or other casualty or taking, as applicable, does not result in the loss of access to the Property or the Improvements.

(ii)       The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Subsection 4.3(b), shall constitute additional security for the Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument.

(iii)      All plans and specifications required in connection with the Restoration shall be subject to prior review and approval in all respects by Lender and by an independent consulting engineer selected by Lender (the “Casualty Consultant”), which approval shall not be unreasonably withheld or delayed. Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to prior review and acceptance by Lender and the Casualty Consultant, which approval shall not be unreasonably withheld or delayed. All reasonable costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and reasonable Casualty Consultant’s fees, shall be paid by Borrower.

(iv)      In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage” as used in this Subsection 4.3(b) shall mean an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Subsection 4.3(b), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.3(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate governmental and quasi-governmental authorities, and Lender receives evidence reasonably satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage, provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, and the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company insuring the lien of this Security Instrument. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

(v)       Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(vi)      If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Subsection 4.3(b) shall constitute additional security for the Obligations. With respect to Restorations following a casualty in which the Improvements are restored to substantially the same condition as they existed prior to the casualty, the excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.3(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, this Security Instrument or any of the other Loan Documents.

(c)        All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Subsection 4.3(b)(vi) may be retained and

applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall designate, in its discretion. Provided no Event of Default exists under the Note, this Security Instrument or the other Loan Documents, Borrower shall not be obligated to pay any prepayment premium or other prepayment consideration in connection with a prepayment resulting from the application of Net Proceeds to the Debt pursuant to the preceding sentence. Any such prepayment shall be applied to the principal last due under the Note and shall not release Borrower from the obligation to pay the Constant Monthly Payments (as defined in the Note) next becoming due under the Note and the Constant Monthly Payment shall not be adjusted or recalculated as a result of such partial prepayment. If Lender shall receive and retain Net Proceeds, the lien of this Security Instrument shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.

4.4 LOCK BOX ACCOUNT.

(a)        Upon the occurrence of an Event of Default, provided a lock box procedure has not otherwise been instituted under any other provision of the Loan Documents, Lender shall have the right, upon written notice to Borrower to require that, from and after the next succeeding date of payment of an installment of principal and interest under the Note, all Rents with respect to the Property, at Lender’s discretion, be paid directly to the property manager for the Property (the “Manager”) and deposited daily by the Manager in the name designated by Lender directly to a designated lock box account (the “Lock Box Account”), opened by Lender at a bank (the “Lock Box Bank”), which account shall be within the exclusive control of Lender.

(b)       Upon receipt of notice from Lender as set forth in Subsection (a) above, Borrower shall enter into and shall cause Manager to enter into a lock-box agreement with Lender in a form reasonably satisfactory to Lender, which form shall substantially reflect the provisions of this Section (provided, however, that Borrower’s obligations under this Section 4.4 (including Borrower’s obligation to cause Manager to deposit Rents in the Lock-Box Account in accordance with Section 4.4(a) above) shall not be dependent upon the execution of any such lock box agreement. If in Lender’s judgment, the Manager’s performance in collecting Rents shall decline, Borrower shall irrevocably instruct and otherwise cause each party paying such Rents (including each tenant under any Lease) to make all payments (A) if by wire transfer, to the Lock Box Account, and (B) if by check, money order or similar manner of payment, by mail to a designated lock box (the “Lock Box”) within the exclusive control of Lender. Amounts deposited into the Lock-Box shall be collected and deposited daily by the Lock-Box Bank into the Lock-Box Account. Borrower agrees that if any Rents required to be deposited in the Lock Box Account shall be received by it or any affiliate or any manager of all or any portion of the Property, Borrower shall deposit or cause such Rents to be deposited in the Lock Box Account within one (1) Business Day of the receipt of such Rents by Borrower, any affiliate or any manager.

(c)        Amounts on deposit in the Lock Box Account on any date of payment of an installment of principal and interest under the Note shall be applied in the following order of priority: (i) to pay any Taxes, Other Charges or Insurance Premiums then due and payable; (ii) to pay the Lock Box Bank’s fees; (iii) to pay interest and principal due on such date with respect to the Note; (iv) to replenish all reserves and escrow funds required to be paid by Borrower to Lender under the Note, this Security Instrument and the other Loan Documents; (v) to pay normal and customary operating expenses of the Property which have been approved by Lender (which approval, if no Event of Default shall exist at the time, shall not be unreasonably withheld); and (vi) unless the Property is a multi-family, hotel, self-storage facility or nursing home property, provided no Event of Default shall exist at the time, to the Leasing Account (as

defined in Exhibit “B”). None of the sums contributed to the Leasing Account in accordance with (vi) above shall be counted towards any balance in the Leasing Account which serves to limit future contributions to the Leasing Account from Monthly Deposits.

(d)       In the event that Lender shall have the right to institute lock box procedures pursuant to any other provision of the Loan Documents, the terms and provisions of such provision shall supersede the provisions of this Section 4.4.

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

5.1       WARRANTY OF TITLE. Borrower has paid for and has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, set over, transfer and convey the same and that Borrower possesses an unencumbered fee simple absolute estate in the Land and the Improvements and that it owns the Property free and clear of all liens, encumbrances and charges whatsoever except for those exceptions shown in the title insurance policy insuring the lien of this Security Instrument (the “Permitted Exceptions”). Borrower shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

5.2       AUTHORITY. Borrower (and the undersigned representative of Borrower, if any) has full power, authority and legal right to execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant, set-over, transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the terms of this Security Instrument on Borrower’s part to be performed.

5.3LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of organization or incorporation; (b) is duly qualified to transact business and is in good standing in the State where the property is located; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own the Property and carry on its business as now conducted and proposed to be conducted. Borrower now has and shall continue to have the full right, power and authority to operate and lease the Property, to encumber the Property as provided herein and to perform all of the other obligations to be performed by Borrower under the Note, this Security Instrument and the other Loan Documents

5.4       VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance of the Note, this Security Instrument and the other Loan Documents and the borrowing evidenced by the Note (i) are within the corporate, partnership, trust or limited liability company (as the case may be) power of Borrower; (ii) have been authorized by all requisite corporate, partnership, trust or limited liability company (as the case may be) action; (iii) have received all necessary approvals and consents, corporate, governmental or otherwise; (iv) will not violate, conflict with, result in a breach of or constitute (with notice or lapse of time, or both) a default under any provision of law, any order or judgment of any court or governmental authority, the articles of incorporation, by-laws, partnership, trust, operating agreement or other governing instrument of Borrower, or any indenture, agreement or other instrument to which Borrower is a party or by which it or any of its assets or the Property is or may be bound or affected; (v) will not result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of its assets, except the lien and security interest created hereby; and (vi) will not require any authorization or license from, or any filing with, any governmental or other body (except for the recordation of this instrument in appropriate land records in the State where the Property is located and except for Uniform

Commercial Code filings relating to the security interest created hereby); and (b) the Note, this Security Instrument and the other Loan Documents constitute the legal, valid and binding obligations of Borrower.

5.5       LITIGATION. There is no action, suit or proceeding, judicial, administrative or otherwise (including any condemnation or similar proceeding), pending or, to the best of Borrower’s knowledge, threatened or contemplated against, or affecting, Borrower, a Guarantor, if any, an Indemnitor, if any, or the Property that has not been disclosed to Lender or is not adequately covered by insurance, as determined by Lender in its sole and absolute discretion.

5.6        STATUS OF PROPERTY. (a) No portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended, or any successor law, or, if located within any such area, Borrower has obtained and will maintain the insurance prescribed in Section 3.2hereof; (b) Borrower has obtained all necessary certificates, licenses and other approvals, governmental and otherwise, necessary for the operation of the Property and the conduct of its business and all required zoning, building code, land use, environmental and other similar permits or approvals, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification; (c) the Property and the present and contemplated use and occupancy thereof are in full compliance with all Applicable Laws, including, without limitation, zoning ordinances, building codes, land use and environmental laws, laws relating to the disabled (including, but not limited to, the ADA) and other similar laws; (d) the Property is served by all utilities (including, but not limited to, public water and sewer systems) required for the current or contemplated use thereof; (e) all utility service is provided by public utilities and the Property has accepted or is equipped to accept such utility service; (f) all public roads and streets necessary for service of and access to the Property for the current or contemplated use thereof have been completed, are serviceable and all-weather and are physically and legally open for use by the public; (g) the Property is, to the best of Borrower’s knowledge, free from damage caused by fire or other casualty; (h) all costs and expenses of any and all labor, materials, supplies and equipment used in the construction of the Improvements have been paid in full; (i) all liquid and solid waste disposal, septic and sewer systems located on the Property are in a good and safe condition and repair and in compliance with all Applicable Laws; and (j) all Improvements lie within the boundary of the Land.

5.7       NO FOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the related Treasury Department regulations, including temporary regulations.

5.8       SEPARATE TAX LOT. The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements are assessed and taxed together with the Property or any portion thereof.

5.9       ERISA COMPLIANCE. As of the date hereof and throughout the term of this Security Instrument, (i) Borrower is not and will not be an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA; (ii) the assets of Borrower do not and will not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA; (iii) Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; and (iv) transactions by or with Borrower are not and will not be subject to state statutes applicable to Borrower regulating investments of and fiduciary obligations with respect to governmental plans. Borrower shall deliver to

Lender such certifications or other evidence as requested by Lender from time to time of Borrower’s compliance with the foregoing representations and covenants.

5.10     LEASES. (a) Borrower is the sole owner of the entire lessor’s interest in the Leases except for the security interest in such Leases and Rents granted to Lender herein and under the Assignment of Leases and Rents in favor of Lender from Borrower and dated even date herewith (“Assignment of Leases”); (b) the Leases are valid and enforceable; (c) the terns of all alterations, modifications and amendments to the Leases are reflected in the certified occupancy statement delivered to and approved by Lender; (d) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated except for the security interest in such Leases and Rents granted to Lender herein and under the Assignment of Leases; (e) none of the Rents have been collected for more than one (1) month in advance; (f)the premises demised under the Leases have been completed and the tenants under the Leases have accepted the same and have taken possession of the same on a rent-paying basis; (g) there exist no offsets or defenses to the payment of any portion of the Rents; (h) no Lease contains an option to purchase, right of first refusal to purchase, or any other similar provision; and (i) no person or entity has any possessory interest in, or right to occupy, the Property except under and pursuant to a Lease.

5.11     FINANCIAL CONDITION. (a) Borrower is solvent, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to Borrower has been initiated, and (b) it has received reasonably equivalent value for the granting of this Security Instrument.

5.12     BUSINESS PURPOSES. The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

5.13     TAXES. Borrower has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by them and have paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by them. Borrower knows of no basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

5.14     MAILING ADDRESS. Borrower’s mailing address, as set forth in the opening paragraph hereof or as changed in accordance with the provisions hereof, is true and correct.

5.15     NO CHANGE IN FACTS OR CIRCUMSTANCES. All information submitted in connection with Borrower’s application for the loan and Lender’s issuance of a commitment for the Loan (collectively, the “Loan Application”) and the satisfaction of the conditions thereof including, but not limited to, all financial statements, rent rolls, reports, certificates and other documents, are accurate, complete and correct in all respects. There has been no adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading.

5.16     DISCLOSURE. To Borrower’s best knowledge, Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially misleading.

5.17     THIRD-PARTY REPRESENTATIONS. Each of the representations and the warranties made by each Guarantor and Indemnitor herein or in any other Loan Document(s) is true and correct in all material respects.

5.18     ILLEGAL ACTIVITY. No of the Property has been or will be purchased with proceeds of any illegal activity.

5.19     OFACBorrower represents and warrants that neither Borrower or any of its respective Affiliates is a Prohibited Person and Borrower and all of its respective Affiliates are in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.

Borrower acknowledges that in accepting the Note, this Security Instrument and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth above notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof; that the warranties and representations are a material inducement to Lender in making the Loan and that Lender would not make the Loan in the absence of such warranties.

6. OBLIGATIONS AND RELIANCES

6.1       RELATIONSHIP OF BORROWER AND LENDER. The relationship between Borrower and Lender is solely that of debtor and creditor and Lender has no fiduciary or other special relationship with Borrower and no term or condition of any of the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor. Borrower is not relying on Lender’s expertise, business acumen or advice in connection with the Property.

6.2 NO LENDER OBLIGATIONS.

(a)        Notwithstanding the provisions of Subsections 1.1(f) and (1) or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents.

(b)       By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Security Instrument, the Note or the other Loan Documents, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

7. FURTHER ASSURANCES

7.1       RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Except where prohibited by law, Borrower will pay all taxes, duties, imposts, assessments, filing, registration and recording fees, and any and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Loan Documents and any amendment or supplement thereto.

7.2       FURTHER ACTS. ETC. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, deeds to secure debt and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Applicable Laws. Borrower, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, and to file in the appropriate filing or recording offices, one or more financing statements, chattel mortgages or other instruments, to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity including, without limitation, such rights and remedies available to Lender pursuant to this Section 7.2.

7.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.

(a)        If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than ninety (90) days to declare the Debt immediately due and payable.

(b)       Borrower will not claim or demand or be entitled to any credit or credits against the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.

(c)        If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this Security Instrument, or any of the other Loan Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

7.4 ESTOPPEL CERTIFICATES.

(a)        After request by Lender, Borrower, within ten (10) days, shall furnish Lender or any proposed assignee an estoppel certificate in form and content as may be requested by Lender with respect to the status of the Loan and/or the Loan Documents.

(b)       Borrower shall use its best efforts to deliver to Lender, promptly upon request, duly executed estoppel certificates from any one or more lessees as required by Lender attesting to such facts regarding the Lease as Lender may reasonably require, provided that (i) Borrower shall not be required to

honor more than two requests made by Lender in any twelve month period and (ii) in no event shall Borrower be required to obtain estoppel certificates from lessees containing more information than that required to be certified pursuant to the terms of the related Lease.

7.5       REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

8. DUE ON SALE ENCUMBRANCE

8.1       LENDER RELIANCE. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its general partners, managing members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for payment and performance of the Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the payment or the performance of the Obligations, Lender can recover the Debt by a sale of the Property.

8.2       NO SALE ENCUMBRANCE. Borrower agrees that Borrower shall not, without the prior written consent of Lender, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred.

8.3       SALE ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Article 8 shall be deemed to include, but not be limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) if Borrower, any Guarantor, any Indemnitor, or any general partner or managing member of Borrower, Guarantor or Indemnitor is a corporation, the voluntary or involuntary sale, conveyance, transfer or pledge of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock by which an aggregate of more than forty-nine percent (49%) of such corporation’s stock shall become vested in another party; (d) if Borrower, any Guarantor or Indemnitor or any general partner or managing member of Borrower, any Guarantor or Indemnitor is a limited or general partnership or joint venture, the change, removal or resignation of a general partner or managing partner, or the transfer or pledge of the partnership interest of any general partner or managing partner of such partnership or any profits or proceeds relating to such partnership interest or the transfer or pledge of more than forty-nine percent (49%) in the aggregate of any limited partnership interests in such partnership or any profits or proceeds related to such interests whether in one transfer or pledge or a series of transfers or pledges; (e) if Borrower, any Guarantor or Indemnitor or any general partner or managing member of Borrower, any Guarantor or Indemnitor is a limited liability company, the change, removal or resignation of the managing member of such company, or the transfer or pledge of the membership interest of the managing member of such company or any profits or proceeds relating to such membership

interest or the transfer or pledge of more than forty-nine percent (49%) in the aggregate of any membership interests in such company or any profits or proceeds related to such interests whether in one transfer or pledge or a series of transfers or pledges; and (f)without limitation to the foregoing, any voluntary or involuntary sale, transfer, conveyance or pledge by any person or entity which directly or indirectly controls Borrower (by operation of law or otherwise) (a “Principal”) of its direct or indirect controlling interest in Borrower. Notwithstanding the foregoing, the following transfers shall not be deemed to be a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or transfer within the meaning of this Article 8: (A)transfer by devise or descent or by operation of law upon the death of a partner, member or stockholder of Borrower or any general partner thereof, and (B) a sale, transfer or hypothecation of a partnership, shareholder or membership interest in Borrower, whichever the case may be, by the current partner(s), shareholder(s) or member(s), as applicable, to an immediate family member (i.e., parents, spouses, siblings, children or grandchildren) of such partner, shareholder or member or to a Principal (or a trust for the benefit of any such persons). Notwithstanding the restrictions on transfer of ownership interests in Borrower contained in this Section 8.3 of Article 8 of the Security Instrument, transfers of direct or indirect ownership interests in Borrower or Secured Investment Resources Fund, LP II, a Delaware limited partnership, the current guarantor of the Loan, (“SIR II” and sometimes “Guarantor”) to “Permitted Transferees” will not be deemed to be a sale or transfer within the meaning of said Article 8 so long as (1)Millenium Bayberry, LLC, a California limited liability company, the current general partner of the Borrower, remains the general partner after such transfer and such company continues to be controlled by W. Robert Kohorst or an entity or entities which he controls, (2) Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Bayberry, LLC, a California limited liability company and/or SIR II own, directly or indirectly, no less than 33.78% of the limited partnership interests in the Borrower and the Guarantor and (3) no transfer to an Existing Individual Limited Partner (defined below) shall result in any Existing Individual Limited Partner owning more than 20% of the Borrower or the Guarantor after such transfer.

For purposes hereof, “Permitted Transferees” means one or more of the following:

(X) W. Robert Kohorst, Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Bayberry, LLC, a California limited liability company and/or Secured Investment Resources Fund, LP II, a Delaware limited partnership (each an “Existing Everest Owners”),

(Y) Any individual or entity limited partner of the Guarantor who currently owns a limited partnership interest and is neither an Existing Everest Owner nor an Owner-Controlled Entity (defined below), (“Existing Individual Limited Partner”), and

(Z) Any partnership, limited liability company, corporation or other entity at least fifty-one percent (51%) of the equity ownership and voting control of which is collectively held by one or more Existing Everest Owners (each such entity, an “Owner-Controlled Entity”).

8.4       LENDER’S RIGHTS. Lender reserves the right to condition the consent required hereunder upon a modification of the terms hereof and on assumption of the Note, this Security Instrument and the other Loan Documents as so modified by the proposed transferee, payment of a processing fee of Two Thousand and 00/100 Dollars ($2,000.00) upon any request for transfer, payment of a transfer fee of one percent (1%) of the principal balance of the Note and all of Lender’s expenses incurred in connection with such transfer, the approval by Lender of the proposed transferee, the proposed

transferee’s continued compliance with the representations, warranties and covenants set forth in Sections 4.2, 5.9 and 16.1 hereof, or such other conditions as Lender shall determine in its sole discretion to be in the interest of Lender. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property without Lender’s consent. This provision shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property regardless of whether voluntary or not, or whether or not Lender has consented to any previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property.

8.5       ONE-TIME TRANSFER. Notwithstanding anything to the contrary contained in this Article 8, and following the securitization of the Loan, Lender’s consent to a one-time sale, assignment, or other transfer of the Property shall not be withheld provided that Lender receives sixty (60) days prior written notice of such transfer hereunder and no Event of Default has occurred and is continuing, and further provided that, the following additional requirements are satisfied:

(a)        Borrower shall pay Lender a processing fee of Two Thousand and No/100 Dollars ($2,000.00) upon any request for transfer and a transfer fee equal to 1% of the outstanding principal balance of the Loan at the time of such transfer;

(b)       Borrower shall pay any and all out-of-pocket costs incurred in connection with the transfer of the Property (including, without limitation, Lender’s counsel fees and disbursements and all recording fees, title insurance premiums and mortgage and intangible taxes and the fees and expenses of the Rating Agencies pursuant to clause (i) below);

(c)        The proposed transferee (the “Transferee”) or Transferee’s Principals (hereinafter defined) must have demonstrated expertise in owning and operating properties similar in location, size and operation to the Property, which expertise shall be reasonably determined by Lender. The term “Transferee’s Principals” shall include Transferee’s (A) managing members, general partners or principal shareholders and (B) such other members, partners or shareholders which directly or indirectly shall own a 15% or greater interest in Transferee;

(d)       Transferee and Transferee’s Principals shall, as of the date of such transfer, have an aggregate net worth and liquidity reasonably acceptable to Lender;

(e)        Transferee, Transferee’s Principals and all other entities which may be owned or controlled directly or indirectly by Transferee’s Principals (“Related Entities”) must not have been a party to any bankruptcy proceedings, voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed transfer of the Property;

(f)        Transferee shall assume all of the obligations of Borrower under the Loan Documents in a manner satisfactory to Lender in all respects, including, without limitation, by entering into an assumption agreement in form and substance satisfactory to Lender and one or more Transferee’s Principals having an aggregate net worth and liquidity reasonably acceptable to Lender shall execute in favor of Lender a Guaranty of Recourse Obligations and Environmental Indemnity Agreement in form acceptable to Lender;

(g)       There shall be no material litigation or regulatory action pending or threatened against Transferee, Transferee’s Principals or Related Entities which is not reasonably acceptable to Lender;

(h)       Transferee, Transferee’s Principals and Related Entities shall not have defaulted under its or their obligations with respect to any other indebtedness in a manner which is not reasonably acceptable to Lender;

(i)        Transferee and Transferee’s Principals must be able to satisfy all the covenants set forth in Sections 4.2 and 5.9 hereof, no Event of Default or event which, with the giving of notice, passage of time or both, shall constitute an Event of Default, shall otherwise occur as a result of such transfer, and Transferee and Transferee’s Principals shall deliver (A) all organization documentation reasonably requested by Lender, which shall be reasonably satisfactory to Lender, and (B) all certificates, agreements and covenants reasonably required by Lender;

(j) Transferee shall be approved by the Rating Agencies selected by Lender; and

(k)       Borrower shall deliver, at its sole cost and expense, an endorsement to the existing title policy insuring the Security Instrument, as modified by the assumption agreement, as a valid first lien on the Property and naming the Transferee as owner of the Property, which endorsement shall insure that, as of the date of the recording of the assumption agreement, the Property shall not be subject to any additional exceptions or liens other than those contained in the title policy issued on the date hereof.

(l)        Immediately upon a transfer of the Property to a Transferee and the satisfaction of all of the above requirements, (i) Borrower shall be released from all liability under this Security Instrument, the Note and the other Loan Documents with respect to all actions taken or events first occurring after the date of such transfer, and (ii) Borrower’s Principals shall be released from all liability under the terms of the Guaranty of Recourse Obligations and the Environmental Indemnity Agreement with respect to all actions taken or events first occurring after the date of such transfer. The foregoing release shall be effective upon the date of such transfer, but Lender agrees to provide written evidence thereof reasonably requested by Borrower.

8.6       ONE-TIME TRANSFER OF MORE THAN 49% OF LIMITED PARTNERSHIP INTERESTS OF THE BORROWER. Notwithstanding anything to the contrary contained in this Article 8, and following the securitization of the Loan, Lender’s consent to a one-time sale, assignment, or other transfer of more than 49% of the limited partnership interests of the Borrower (“Restricted Interests”) to one or more third parties (“Transferee”) shall not be withheld provided that Lender receives sixty (60) days prior written notice of such transfer hereunder and no Event of Default has occurred and is continuing, and further provided that, the following additional requirements are satisfied:

(a)        Borrower shall pay Lender (i) Five Thousand and 00/00 Dollars ($5,000.00), and (ii) a transfer fee equal to zero percent (0%) of the outstanding principal balance of the Loan at the time of such transfer with respect to the transfer of the Restricted Interests to one or more third parties;

(b)       Borrower shall pay any and all out-of-pocket costs incurred in connection with the transfer of the Property (including, without limitation, Lender’s reasonable counsel fees and disbursements and all recording fees, title insurance premiums and mortgage and intangible taxes and the fees and expenses of any Rating Agencies, if any are required);

(c)        (A) Millenium Bayberry, LLC., a California limited liability company, the general partner of the Borrower remains the general partner after such transfer and such general partner continues to be controlled by W. Robert Kohorst or an entity which he controls, and (B) W. Robert Kohorst, Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Bayberry, LLC, a California limited liability company and/or Secured Investment Resources Fund, LP II, a Delaware limited partnership own, directly or indirectly, no less than thirty-three and seventy-eight one-hundredths percent (33.78%) of the limited partnership interests of Borrower;

(d)       Transferee and Transferee’s Principals shall, as of the date of such transfer, have an aggregate net worth and liquidity reasonably acceptable to Lender. The term “Transferee’s Principals” shall include Transferee’s (A) managing members, general partners or principal shareholders and (B) such other members, partners or shareholders which directly or indirectly shall own a 15% or greater interest in Transferee;

(e)        Transferee, Transferee’s Principals and all other entities which may be owned or controlled directly or indirectly by Transferee’s Principals (“Related Entities”) must not have been a party to any bankruptcy proceedings, voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed transfer of the Property (as evidenced by a certification of the general partner);

(f)        There shall be no material litigation or regulatory action pending or threatened against Transferee, Transferee’s Principals or Related Entities which is not reasonably acceptable to Lender; and,

(g)       Transferee and Transferee’s Principals shall deliver (A) all organization documentation reasonably requested by Lender, which shall be reasonably satisfactory to Lender, and (B) all certificates, agreements and covenants reasonably required by Lender.

(h)       Lender shall have received confirmation from any Rating Agencies assigning a rating to the securities issued in connection with the Loan that such transfer shall not result in a qualification, downgrade or withdrawal of any rating assigned by the Rating Agencies to such securities.

(i)        Lender shall receive a satisfactory credit check and background check on any partner of the Borrower that will increase their ownership interest to exceed 20% of the Borrower.

9. DEFAULT

9.1       EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”: (a) if any portion of the Debt is not paid on the day the same is due or if the entire Debt is not paid on or before the Maturity Date; (b) if any of the Taxes or Other Charges is not paid prior to the date the same becomes delinquent except to the extent sums sufficient to pay such Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument unless such Taxes, Other Charges or Liens are being contested in accordance with Section 3.3; (c) if the Policies are not kept in full force and effect, or if the Policies are not delivered to Lender upon request or Borrower has not delivered evidence of the renewal of the Policies thirty (30) days prior to their expiration as provided in Section 3.2(e); (d) if Borrower violates or does not comply with any of the provisions of Sections 3.6 or 4.2 or Articles 8 or 11; (e) if any representation or warranty of Borrower, Indemnitor or any person guaranteeing payment or performance of the Obligations or any portion thereof (a “Guarantor”), or any general partner, principal or beneficial owner of any of the foregoing, made

herein or in the Environmental Indemnity (defined below) or any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender shall have been false or misleading in any material respect when made; (f) if (i) Borrower or any general partner or managing member of Borrower shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, adjustment, liquidation, dissolution or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or Borrower or any general partner or managing member of Borrower shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower or any general partner or managing member of Borrower any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of sixty (60) days; or (iii) there shall be commenced against Borrower or any general partner or managing member of Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower or any general partner or managing member of Borrower shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower or any general partner or managing member of Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; (g) if Borrower shall be in default beyond any applicable notice or cure period under any other mortgage, deed of trust, deed to secure debt or other security agreement covering any part of the Property whether it be superior or junior in lien to this Security Instrument; (h) if the Property becomes subject to any mechanic’s, materialman’s or other lien other than a lien for local real estate taxes and assessments not then delinquent and the lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of thirty (30) days after Borrower has first received notice thereof; (i) if any federal tax lien is filed against the Property and same is not discharged of record within thirty (30) days after Borrower has first received notice thereof; (j)if within ten (10) days of Lender’s demand therefor Borrower fails to provide Lender with the written certification and evidence referred to in Section 5.9 hereof or Borrower fails to comply with its obligations under Section 16.1; (k) if Borrower or any other Indemnitor shall fail to perform any of its obligations under that certain environmental indemnity agreement of even date herewith (the “Environmental Indemnity”) after the expiration of applicable notice and grace periods, if any; (l) if any default beyond any applicable notice or cure period occurs under any guaranty or indemnity executed in connection herewith and such default continues after the expiration of applicable grace periods, if any; or (m) if for more than ten (10) days after notice from Lender, Borrower shall continue to be in default under any other term, covenant or condition of the Note, this Security Instrument or the other Loan Documents in the case of any default which can be cured by the payment of a sum of money or for thirty (30) days after notice from Lender in the case of any other default, provided that if such default cannot reasonably be cured within such thirty (30) day period and Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed that no such extension shall be for a period in excess of sixty (60) days.

10. RIGHTS AND REMEDIES

10.1     REMEDIES. Upon the occurrence of any Event of Default, Borrower agrees that Trustee or Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its

rights against Borrower and in and to the Property including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Trustee or Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Trustee or Lender: (a) declare the entire unpaid Debt to be immediately due and payable; (b) with or without entry, institute proceedings, judicial or otherwise, for the complete or partial foreclosure of this Security Instrument under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner, any partial foreclosure to be subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority; (c) sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale, judicial decree or otherwise, at one or more sales, as an entirety or in one or more parcels; (d) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note or in the other Loan Documents; (e) recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the other Loan Documents; (f) apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any Guarantor, Indemnitor or of any person, firm or other entity liable for the payment of the Debt; (g) enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may exercise all rights and powers of Borrower with respect to the Property including, without limitation, (1) the right to use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (2) the right to make or complete any construction, alterations, additions, renewals, replacements and improvements to or on the Property as Lender deems advisable; (3) the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (h) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (i) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; (j)apply the receipts from the Property, any Deposits and interest thereon and/or any unearned Insurance Premiums paid to Lender upon the surrender of any Policies maintained pursuant to Article 3 hereof (it being agreed that Lender shall have the right to surrender such Policies upon the occurrence of an Event of Default), to the payment of the Obligations, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion; (k) exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code including, without limiting the generality of the foregoing: (1) the right to take possession of the Personal Property or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Personal Property, and (2) request Borrower at its expense to assemble the Personal Property and make it available to Lender at a convenient place acceptable to Lender, or (l) require a Lock-Box Account pursuant to Section 4.4 and apply all sums in the Lock-Box Account to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its discretion. Any notice of sale, disposition or other intended action by Lender with respect to the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower. Upon any foreclosure or other sale of the Property pursuant

to the terms hereof, Lender may bid for and purchase the Property and shall be entitled to apply all or any part of the secured indebtedness as a credit against the purchase price.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Notwithstanding the provisions of this Section 10.1 to the contrary, if any Event of Default as described in clause (i) or (ii) of Subsection 9.l(f) shall occur, the entire unpaid Debt shall be automatically due and payable, without any further notice, demand or other action by Lender.

10.2     APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant to the Note, this Security Instrument or the other Loan Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper.

10.3     RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder or curing or being deemed to have cured any default hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 10.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate (as defined in the Note), for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan Documents

and shall be immediately due and payable upon demand by Lender therefor.

10.4     ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property.

10.5     RECOVERY OF SUMS REOUIREDTO BE PAID. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for a default or defaults’ by Borrower existing at the time such earlier action was commenced.

10.6     EXAMINATION OF BOOKS AND RECORDS. Lender, its agents, accountants and attorneys shall have the right to examine the records, books, management and other papers of Borrower and its affiliates or of any Guarantor or Indemnitor which reflect upon their financial condition, at the Property or at any office regularly maintained by Borrower, its affiliates or any Guarantor or Indemnitor where the books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, Lender, its agents, accountants and

attorneys shall have the right to examine and audit the books and records of Borrower and its affiliates or of any Guarantor or Indemnitor pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower, its affiliates or any Guarantor or Indemnitor where the books and records are located. This Section 10.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

10.7 OTHER RIGHTS, ETC.

(a)        The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower, any Guarantor or any Indemnitor to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Security Instrument or the other Loan Documents.

(b)       It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession.

(c)        Trustee or Lender may resort for the payment of the Debt to any other security held by Trustee or Lender in such order and manner as Trustee or Lender, in its discretion, may elect. Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Trustee or Lender thereafter to foreclose this Security Instrument. The rights of Lender and Trustee under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Trustee or Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender and Trustee shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

10.8     RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.

10.9     VIOLATION OF LAWS. If the Property is not in compliance with Applicable Laws, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents.

10.10   RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other provision of this Security Instrument including but not limited to Article 13 hereof, Lender and other Indemnified

parties (defined in Section 11.1 below) are entitled to enforce the obligations of Borrower, Guarantor and Indemnitor contained in Sections 11.2 and 11.3 without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, Lender is entitled to pursue a deficiency judgment with respect to such obligations against Borrower, Guarantor and Indemnitor. The provisions of Sections 11.2 and 11.3 are exceptions to any non-recourse or exculpation provisions in the Note, this Security Instrument or the other Loan Documents, and Borrower, Guarantor and Indemnitor are fully and personally liable for the obligations pursuant to Sections 11.2 and 11.3. The liability of Borrower, Guarantor and Indemnitor are not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing pursuant to this Security Instrument or exercising any other rights and remedies pursuant to the Note, this Security Instrument and the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower, whether or not action is brought against any other person or entity or whether or not any other person or entity is joined in the action or actions.

10.11   RIGHT OF ENTRY. Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

10.12   DEFAULT INTEREST AND LATE CHARGES. Borrower acknowledges that, without limitation to any of Lender’s rights or remedies set forth in this Security Instrument, Lender has the right following an Event of Default to demand interest on the principal amount of the Note at the Default Rate and late payment charges in accordance with the terms of the Note.

11. INDEMNIFICATION

11.1     GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties for, from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, attorneys’ fees and other costs of defense) (the “Losses”) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following, except to the extent the following relate solely to an Indemnified Party’s gross negligence or willful misconduct: (a) any Event of Default; (b) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Security Instrument or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any Guarantor or Indemnitor and/or any partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (c) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (d) any use, nonuse or condition in, on or about the Property or any part thereof; (e) any failure on the part of Borrower to perform or be in compliance with any of the terms of this Security Instrument; (f) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with the Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (g) any failure of the Property to be in compliance with any Applicable Laws; (h) the

enforcement by any Indemnified Party of the provisions of this Article 11; (i) the payment of any commission, charge or brokerage fee to anyone which may be payable in connection with the funding of the Loan; (i)any misrepresentation made by Borrower in this Security Instrument or any other Loan Document; or (k) any other transaction arising out of or in any way connected with the Property or the Loan. Any amounts payable to Lender by reason of the application of this Section 11.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid. For purposes of this Article 11, the term “Indemnified Parties” means Lender and any person or entity who is or will have been involved in the origination of the Loan, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by this Security Instrument is or will have been recorded and persons and entities who may hold or acquire or will have held a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan.

11.2     MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Security Instrument, the Note or any of the other Loan Documents.

11.3     ERISA INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Section 5.9.

11.4     DUTY TO DEFEND: ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of claim or proceeding. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

12. WAIVERS

12.1     WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Note, any of the other Loan Documents, or the Obligations. Any assignee of Lender’s interest in this Security Instrument and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents, and any

such rights to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

12.2     MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law.

12.3     WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any nature whatsoever from Trustee or Lender except with respect to matters for which this Security Instrument specifically and expressly provides for the giving of notice by Lender to Borrower and except with respect to matters for which Trustee or Lender is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Trustee or Lender with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Trustee or Lender to Borrower.

12.4     SOLE DISCRETION OF LENDER. Wherever pursuant to this Security Instrument (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

12.5     SURVIVAL. The indemnifications made pursuant to Section 11.3 shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender’s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender’s rights and remedies pursuant hereto including, but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Note or the other Loan Documents, and any act or omission that might otherwise be construed as a release

or discharge of Borrower from the obligations pursuant hereto.

12.6     WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURYIN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

13. EXCULPATION

13.1     EXCULPATION. Except as otherwise provided herein, in the Note or in the other Loan Documents, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note or this Security Instrument by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may sell the Property under any power of sale or right of non-judicial foreclosure or bring a foreclosure action, confirmation action, action for specific performance or other appropriate action or proceeding to enable Lender to enforce and realize upon the Note, this Security Instrument, the other Loan Documents, and the interest in the Property, the Rents and any other collateral given to Lender created by the Note, this Security Instrument and the other Loan Documents; provided, however, that any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender. Lender, by accepting the Note and this Security Instrument, agrees that it shall not, except as otherwise provided in Section 10.10, sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding, under or by reason of or under or in connection with the Note, the other Loan Documents or this Security Instrument.

13.2     RESERVATION OF CERTAIN RIGHTS. The provisions of Section 13.1 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by the Note, the other Loan Documents or this Security Instrument; (b) Intentionally Deleted; (c) impair the right of Lender to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Security Instrument; (d) affect the validity or enforceability of any indemnity, guaranty, master lease or similar instrument made in connection with the Note, this Security Instrument, or the other Loan Documents; (e) impair the right of Lender to obtain the appointment of a receiver; (f) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith; (g) impair the right of Lender to obtain a deficiency judgment or judgment on the Note against Borrower if necessary to obtain any insurance proceeds or condemnation awards to which Lender would otherwise be entitled under this Security Instrument, ‘provided, however, Lender shall only enforce such judgment against the insurance proceeds and/or condemnation awards; or (h) impair the right of Lender to enforce the provisions of Sections 10.10, 11.2 and 11.3 of this Security Instrument.

13.3     EXCEPTIONS TO EXCULPATION. Notwithstanding the provisions of this Article to the contrary, Borrower shall be personally liable to Lender for the Losses it incurs due to: (i) fraud or intentional misrepresentation by Borrower, its agents or principals; (ii) Borrower’s misapplication or misappropriation of (A) Rents received by Borrower after the occurrence of an Event of Default, (B) tenant security deposits or Rents collected in advance, or (C) insurance proceeds or condemnation awards; (iii) Borrower’s failure to pay Taxes, Insurance Premiums, Other Charges (except to the extent that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms of this Security Instrument), charges for labor or materials or other charges that can create liens on the Property, provided that Borrower’s liability under this clause (iii) shall not exceed an amount equal to the net operating income of the Property for the twelve (12) month period preceding the related failure to pay, less the amount of all Constant Monthly Payments (as defined in the Note) and required reserve payments made by Borrower in accordance with the Note, this Security Instrument and the other Loan Documents during such twelve (12) month period; (iv) Borrower’s failure to comply with the provisions of Sections 3.10, 5.9 or 16.1 of this Security Instrument; or (v) Borrower’s or any other Indemnitor’s failure to comply with the provisions of the Environmental Indemnity.

13.4     RECOURSE. Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability as set forth in Section 13.1 above SHALL BECOME NULL AND VOID and shall be of

no further force and effect in the event of Borrower’s default under Sections 4.2 or 8.2 of this Security Instrument or if the Property or any part thereof shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any party controlling, controlled by or under common control with Borrower (which shall include, but not be limited to any creditor or claimant acting in concert with Borrower or any the foregoing parties) (the “Borrowing Group”) or (B) in which any member of the Borrowing Group objects to a motion by Lender for relief from any stay or injunction from the foreclosure of this Security Instrument or any other remedial action permitted hereunder or under the Note or the other Loan Documents, or (iii) if a court of competent jurisdiction holds that the granting, execution or delivery of this Security Instrument or any other Loan Documents is or constitutes a fraudulent conveyance under any bankruptcy, insolvency or fraudulent conveyance law or is otherwise voidable under any such laws.

13.5     BANKRUPTCY CLAIMS. Nothing herein shall be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Note, this Security Instrument and the other Loan Documents.

14. NOTICES

14.1     NOTICES. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	Everest Bayberry, LP C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst
With a Copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Trustee	Walter C. Whisler 700 NE Mize Road, Suite 200 Blue Springs, Missouri 64014
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8” Floor New York, New York 10022 Attention: John Herman

With a copy to	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
and	Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addressees for subsequent notices or communications.

For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

15. APPLICABLE LAW

15.1     CHOICE OF LAW. This Security Instrument shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

15.2     USURY LAWS. This Security Instrument and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the Debt at a rate which could subject the holder of the Note to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Security Instrument or the Note, Borrower is at any time required or obligated to pay interest on the Debt at a rate in excess of such maximum rate, the rate of interest under the Security Instrument and the Note shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of the Note. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

15.3     PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

16. SECONDARY MARKET

16.1     TRANSFER OF LOAN. Lender may, at any time, sell, transfer or assign the Note, this Security Instrument and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Lender may forward to each purchaser, transferee, assignee, servicer, participant, investor in such Securities or any rating agency (a “Rating Agency”) rating such Securities (all of the foregoing entities collectively referred to as the “Investor”) and each prospective Investor, all documents and information which Lender now has or may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor and the Property, whether furnished by Borrower, any Guarantor, any Indemnitor or otherwise, as Lender determines necessary or desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section provided such cooperation does not require Borrower to incur any material cost or expense. Borrower shall also promptly furnish and Borrower, any Guarantor and any Indemnitor consent to Lender furnishing to such Investors or such prospective Investors or Rating Agency any and all available information concerning the Property, the Leases, the financial condition of Borrower, any Guarantor and any Indemnitor as may be requested by Lender, any Investor or any prospective Investor or Rating Agency (including, but not limited to, copies of information previously supplied to Lender) in connection with any sale, transfer or participation interest. In addition to any other obligations Borrower may have under this Section 16.1, Borrower shall execute such amendments to the Loan Documents and Borrower’s organizational documents as may be requested by the holder of the Note or any Investor to effect the assignment of the Note and the other Loan Documents and/or issuance of Securities including (i) bifurcating the Note into two or more notes, and/or splitting this Security Instrument into two or more mortgages, deeds of trust or deeds to secure debt (as the case may be) of the same or different priorities or otherwise as determined by and acceptable to Lender or (ii) dividing the Note into multiple components corresponding to tranches of certificates to be issued in a Securitization each having a notional balance and an interest rate determined by Lender; provided, however, that Borrower shall not be required to modify or amend any Loan Document if the overall effect of such modification or amendment would (y) change the initial weighted average interest rate, the maturity or the amortization of principal set forth in the Note, or (z) modify or amend any other material economic term of the Note or the other Loan Documents.

17. COSTS

17.1     PERFORMANCE AT BORROWER’S EXPENSE. Borrower acknowledges and confirms that Lender shall be entitled to impose certain administrative processing and/or commitment fees in connection with: (a) extensions, renewals, modifications, amendments and terminations of the Loan Documents requested by Borrower, and (b) the release or substitution of collateral for the Loan requested by Borrower, and that Lender shall be entitled to reimbursement for its reasonable out-of-pocket costs and expenses associated with its provision of consents, waivers and approvals under the Loan Documents (the occurrence of any of the above shall be called an “Event”) subject to any limitation provided under Section 16.1above. Borrower further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, which are required by law, regulation or any governmental or quasi-governmental authority. Borrower hereby acknowledges and agrees to pay, immediately, upon demand, all such fees, costs and expenses.

17.2     ATTORNEYS’ FEES FOR ENFORCEMENT. (a) Borrower shall pay all reasonable legal fees incurred by Lender in connection with the preparation of the Note, this Security Instrument and the other Loan Documents, up to a maximum amount of $12,000.00 and (b) Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Property or in collecting any amount payable hereunder or in enforcing its rights hereunder with respect to the Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

18. DEFINITIONS

18.1     GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Lender” shall mean “Lender, its servicer and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees,” “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder. The terms “include(s)” and “including” shall mean “include(s), without limitation” and “including, without limitation,” respectively.

19.MISCELLANEOUS PROVISIONS

19.1     NO ORAL CHANGE. This Security Instrument and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

19.2     LIABILITY. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

19.3     INAPPLICABLE PROVISIONS. If any term, covenant or condition of the Note or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Note and this Security Instrument shall be construed without such provision.

19.4     HEADINGS. ETC. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

19.5     DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an

original. This Security Instrument may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Security Instrument. The failure of any party hereto to execute this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

19.6     NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

19.7     SUBROGATION. If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the payment and performance of the Obligations.

19.8     ENTIRE AGREEMENT. The Note, this Security Instrument and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Debt and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, this Security Instrument and the other Loan Documents, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, this Security Instrument and the other Loan Documents.

19.9     SUBSTITUTION OF TRUSTEE. Lender shall have, and is hereby granted by Borrower with warranty of further assurances, the irrevocable power to appoint one or more persons or entities as a substitute Trustee hereunder, to be exercised at any time hereafter without specifying any reason therefor, by filing for record in the office where this Security Instrument is recorded a deed of appointment. Said power of appointment of one or more successor Trustees may be exercised as often and whenever Lender deems it advisable. The exercise of said power of appointment, no matter how often, shall not be an exhaustion thereof. Upon the recordation of such deed of appointment, the Trustee so appointed shall thereupon, without any further act or deed of conveyance, become fully vested with identically the same title and estate in and to the Property and with all the rights, powers, trusts and duties of their, his, hers or its predecessor in the trust hereunder with like effect as if originally named as Trustee. Whenever in this Security Instrument reference is made to Trustee, it shall be construed to mean each person or entity appointed as Trustee for the time being, whether original or successors or successor in trust. All title, estate, rights, powers, trusts and duties hereunder given or appertaining to or devolving upon Trustee shall be in each of the persons or entities appointed as Trustee so that any action hereunder or purporting to be hereunder of any one of the persons or entities appointed as Trustee shall for all purposes be considered to be, and as effective as, the action of Trustee.

19.10   THE TRUSTEE’S FEES. Borrower shall pay all reasonable costs, fees and expenses incurred by the Trustee and the Trustee’s agents and counsel in connection with the performance by the Trustee of the Trustee’s duties hereunder and all costs, fees and expenses shall be secured by this Security Instrument.

19.11   CERTAIN RIGHTS. With the approval of Lender, the Trustee shall have the right to take any and all of the following actions: (i) to select, employ, and advise with counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder, including the interpretation of the Note, this Security Instrument or the other Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of the Trustee, and the Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by the Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for the Trustee’s gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct the Trustee to take to protect or enforce Lender’s rights hereunder. The Trustee shall not be personally liable in case of entry by the Trustee, or anyone entering by virtue of the powers herein granted to the Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property. The Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting an action taken or proposed to be taken by the Trustee hereunder, believed by the Trustee in good faith to be genuine. The Trustee shall be entitled to reimbursement for actual expenses incurred by the Trustee in the performance of the Trustee’s duties hereunder and to reasonable compensation for such of the Trustee’s services hereunder as shall be rendered.

19.12   RETENTION OF MONEY. All moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law) and the Trustee shall be under no liability for interest on any moneys received by the Trustee hereunder.

19.13   PERFECTION OF APPOINTMENT. Should any deed, conveyance, or instrument of any nature be required from Borrower by any Trustee or substitute trustee to more fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Borrower.

19.14   SUCCESSION INSTRUMENTS. Any substitute trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as the Trustee herein; but nevertheless, upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall execute and deliver any instrument transferring to such substitute trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute trustee so appointed in the Trustee’s place.

19.15   RELIANCE OF TRUSTEE. As to all matters concerning the existence of defaults hereunder and the amount of indebtedness subject to the Note and secured hereby, as well as similar or related matters, the Trustee is hereby authorized by Borrower to rely conclusively upon, without further inquiry, the affidavit of any officer of Lender.

19.16   BROKERS. Borrower agrees to pay and to indemnify and hold Lender harmless from any and all loss, cost or expense (including attorneys’ fees and expenses) arising from the claims of any

brokers or anyone claiming a right to any fees in connection with the financing of the Property. Notwithstanding the foregoing, Borrower acknowledges that Lender or its affiliates may have a contractual relationship with the broker, if any, that arranged the Loan on Borrower’s behalf, and that such broker may be entitled to fees from Lender or its affiliates in connection with the origination, closing or servicing of the Loan, which fees shall be in addition to any brokerage fees owed by Borrower to such broker. Borrower shall not be responsible for any such additional fees. Borrower acknowledges and agrees that it has made and will make such inquiries of the broker, if any, that arranged the Loan with respect to the nature or existence of such arrangement. No agreement by Lender to pay any such fees or compensation to such broker (if any) shall be binding upon Lender unless it is set forth in separate written instrument that has been duly executed by Lender and such broker.

20. STATE SPECIFIC PROVISIONS

20.1 FURTHER REMEDIES OF LENDER.

(a)        At the option of Lender, all of the Debt then outstanding and unpaid and all accrued and unpaid interest thereon shall become and be due and payable immediately, anything in the Note or any other Loan Document to the contrary notwithstanding.

(b) Upon demand of Trustee or Lender, Borrower shall forthwith surrender to Lender the actual possession of all of the Property and it shall be lawful (whether or not Borrower has so surrendered possession) for Lender, either personally or by agents or attorneys, forthwith to enter into or upon the Property and to exclude Borrower, the agents and servants of Borrower, and all parties claiming by, through or under Borrower, wholly therefrom, and Lender shall thereupon be solely and exclusively entitled to possession of said Property and every part thereof, and to use, operate, manage and control the same, either personally or by managers, agents, servants or attorneys to the fullest extent authorized by law; and upon every such entry, Lender may, from time to time, at the expense of Borrower, make all necessary and proper repairs and replacements to the Property as Lender in its reasonable discretion sees fit, and any amounts so expended shall be due on demand, bear interest at the Default Rate and shall be secured hereby.

(c)        Lender may make demand for and collect and receive all rents and income from the Property, including rents and income accrued but unpaid prior to the date of such default, and the receipt of Lender therefore shall be binding on Borrower with respect to the amount so paid. All sums of money received by Lender from rents and income, after deducting therefrom the reasonable charges and expenses paid or incurred in connection with the collection and disbursement thereof, shall be applied to the payment of the Debt in such order and manner as Lender may elect, or applied to remedy any Default hereunder as Lender may direct. Any lessee of the Property, or any part thereof, shall be fully protected in relying and acting upon the written statement of Lender to the effect that this Security Instrument is in default and that Lender is entitled to receive the rents and income hereunder, notwithstanding any notice to or knowledge of said lessee to the contrary. Such lessee shall have no duty to determine that any sum paid to Lender hereunder is properly applied by Lender.

(d)       Trustee, at the request of Lender, shall proceed to sell, either by him or by agent or attorney, the Property or any part(s) thereof at public venue or outcry at the customary place to the highest bidder for cash after first giving notice as required by the statutes of the State of Missouri and upon such sale Trustee shall receive the proceeds of such sale and shall execute and deliver a deed or deeds or other instruments of conveyance, assignment and transfer to the property sold, to the purchaser or purchasers thereof.

(e)        Trustee or Lender or both may proceed by suit or suits at law or in equity to enforce the Debt and to foreclose the lien created by this Security Instrument and in such event Trustee shall be entitled to a reasonable fee for his services, and Trustee and Lender shall be entitled to be reimbursed for their respective attorneys’ fees and for all other expenses, costs and outlays.

(f)       Lender shall be entitled as a matter of right to the appointment of a receiver of the Property, without notice and without regard to the solvency or insolvency of Borrower at the time of the application for such receiver, and without regard to the then value of the Property, and Trustee, or Lender, may be appointed as such receiver. Such receiver shall have full power to (i) collect the rents, issues and profits from the Property, (ii) construct or complete the construction of any improvements on the Property, (iii) exercise any right or remedy granted to Lender under the Loan Documents with respect to completion of any work to the Property, and (iv) all other powers necessary or incidental for the protection, possession, control, development, management, leasing and operation of the Property.

20.2FURTHER WAIVER BY BORROWER. Borrower hereby expressly waives any right which Borrower may have to direct the order in which any of the Property shall be sold in the event of any sale or sales pursuant hereto.

20.3      DUTIES AND SUBSTITUTION OF TRUSTEE. Borrower agrees that: (a) the duties and obligations of Trustee shall be determined solely by the express provisions of this Security Instrument and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth herein, and no implied covenants or obligations shall be imposed upon Trustee; (b) no provision of this Security Instrument shall require Trustee to expend or risk its own funds, or otherwise incur any financial obligation in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not assured to it; (c) Trustee may consult with counsel of its own choosing and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in reliance thereon; and (d) Trustee shall not be liable for any action taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Security Instrument. Trustee hereby agrees with Lender that Trustee will act for a nominal consideration in routine matters (e.g., execution of partial release of security, extension agreements, modification agreements or satisfactions) with respect to this Security Instrument. In the event of foreclosure, Trustee will serve for a Trustee’s commission in an amount to be agreed upon and mutually satisfactory to Trustee and to Lender. If Lender determines that there shall be a substitute Trustee for any reason, Trustee will supply a recordable resignation at the request of Lender. The Lender may remove the Trustee at any time or from time to time, with or without cause, and appoint a successor trustee, and upon such appointment, all powers, rights, duties and authority of the Trustee, as aforesaid, shall thereupon become vested in such successor. Such substitute trustee shall be appointed by written instrument duly recorded in the county or counties where the real property covered hereby is located, which appointment may be executed by any authorized agent of the Lender or in any other manner permitted by applicable law. It is agreed that Trustee shall not be disqualified from acting as trustee hereunder or from performing any of the duties of the trustee, or from exercising the rights, powers and remedies herein granted, by reason of the fact that Trustee is an attorney, agent, officer, employee or stockholder of Lender or is otherwise affiliated with Lender in any respect. Upon any trustee’s sale, Trustee shall execute and deliver a deed or deeds of conveyance of the Property sold to the purchasers thereof, and any statement or recital or fact in such deed shall be prima facie evidence of the truth of such statement or recital, and Trustee shall pay the proceeds thereof in accordance with the terms hereof. The Lender shall have the right and power

successively to remove the above named Trustee or any successor Trustee and to appoint by writing (acknowledged and recorded) a successor to such Trustee, which successor shall succeed to the title and to all of the rights and powers of the original Trustee.

20.4 RIGHTS PERTAMING TO SALES

(a)        In any sale or sales made by Trustee under the power herein granted, or upon any sale or sales under or by virtue of any judicial proceedings: (i) the whole of the Property, real, personal and mixed, may be sold in one parcel as an entirety, or the Property may be sold in separate parcels as may be determined by Trustee in his discretion; (ii) all recitals contained in any deed or other instrument of conveyance, assignment or transfer made and delivered by Trustee in pursuance of the powers granted and conferred herein, shall be prima facie evidence of the facts therein set forth; (iii) such sale or sales shall operate to divest Borrower of all right, title, interest, claim and demand, either at law or in equity, under statute or otherwise, in and to the Property and every part thereof so sold and shall be a perpetual bar, both in law or equity, against Borrower and any and all persons claiming or to claim from, through or under Borrower; and (iv) Lender may bid for and purchase the Property or any part thereof and may make payment therefore by presenting to Trustee the Note secured hereby or the other evidences of the Debt so that there may be endorsed as paid thereon the amount of such bid which is to be applied to payment of the Debt as herein provided. Each time it shall become necessary to insert an advertisement of foreclosure, and sale is not had, Trustee shall be entitled to receive the sum of One Hundred Dollars ($100.00) for services and the amount of all advertising charges from Borrower, all of which shall be further secured hereby. Upon the foreclosure and sale of the Property, or any part thereof, the proceeds of such sale or sales shall be applied as follows: First, to the cost and expense of executing this trust, including without limitation, reasonable compensation of Trustee and Attorneys’ Fees and expenses, outlays for documentary stamps, cost of procuring title insurance commitments, continuing abstracts, title searches or examinations reasonably necessary or proper; and, next, to the payment of any and all advances made by Trustee or Lender, with interest thereon as hereinabove provided; next to the payment of the balance of the Debt, with interest thereon as provided in the Note; and any surplus thereafter shall be paid to Borrower or any other party legally entitled thereto; provided that in the event the net proceeds of such sale or sales shall not be sufficient to satisfy in full the Debt, Borrower hereby promises and agrees to pay any deficiency thereon on demand with interest at the Default Rate.

(b)       Borrower shall not apply for or avail itself of any appraisement, valuation, redemption, stay, extension or exemption Laws, or any so-called “moratorium laws”, now existing or hereafter enacted, in order to prevent or hinder the enforcement or foreclosure of this Security Instrument, and Borrower hereby waives the benefit of such Laws. Borrower, for itself, its successors and assigns, hereby wholly waives the period of redemption and any right of redemption provided under any existing or future Law in the event of a foreclosure of this Security Instrument. Borrower, for itself and all who may claim through or under it, hereby waives any and all right to have the property and estates comprising the Property marshaled upon any foreclosure of the lien hereof and hereby agrees that any court having jurisdiction to foreclose such lien may order the Property sold as an entirety. Borrower hereby waives any order or decree of foreclosure, pursuant to the rights herein granted, on behalf of Borrower, and each and every person acquiring any interest in or title to the Property, subsequent to the date of this Security Instrument, and on behalf of all other persons to the extent permitted by any Applicable Law.

20.5     TRUSTEE’S APPOINTMENT. The Trustee may resign at any time by written instrument to that effect delivered to Lender. Lender shall be entitled to remove, at any time and from time to time, the Trustee. In case of the death, removal, resignation, refusal to act or otherwise being unable to act of the Trustee, Lender shall be entitled to select and appoint a successor Trustee hereunder

by an instrument duly executed, acknowledged and recorded in the manner and form for conveyances of real estate in the State of Missouri, and any such successor Trustee shall thereupon succeed to Trustee as Trustee hereunder and to all of the rights, powers, duties, obligations and estate of said Trustee as if specifically named herein, provided no defect or irregularity in the resignation or removal of said Trustee or in the appointment of a successor Trustee or in the execution and recording of such instrument shall affect the validity of said resignation, removal or appointment or any act or thing done by such successor Trustee pursuant thereto. Trustee shall not be disqualified from acting as Trustee hereunder or from performing any of the duties of Trustee, or from exercising the rights, powers and remedies herein granted, by reason of the fact that Trustee is an officer, employee or stockholder of Lender, or is interested, directly or indirectly, as the holder of the Loan Documents, Borrower hereby expressly consenting to Trustee acting as Trustee irrespective of the fact that Trustee might be otherwise disqualified for any of the foregoing reasons, and that any interest which Trustee or any successor shall have or may acquire in the Debt, or the Property, shall neither interfere with nor prevent his acting as Trustee or from purchasing said property at said sale or sales, and all parties waive any objection to Trustee having or acquiring any such interest in the Debt or Property and continuing to act as Trustee. Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee’s gross negligence or willful misconduct. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder. Borrower shall protect, indemnify, defend and hold harmless Trustee and his heirs, successors and assigns (the “indemnified parties”) from and against any and all demands, losses, obligations, damages, claims, liabilities, suits, causes of action, judgments, settlements, fines, charges, penalties, costs and expenses (including without limitation attorneys’ fees and’ disbursements), of any type or nature whatsoever, which may be imposed on, or incurred by or asserted against any of the indemnified parties arising or resulting from or by reason of (whether directly or indirectly): (a) any misrepresentation or breach of covenant or warranty of Borrower herein or in the other Loan Instruments; (b) any Event of Default; (c) any personal injury, death or property damage arising out of the ownership, the use or occupation of the Property; (d) any condition of the Property, including without limitation, those conditions regulated by environmental, health, and/or safety saws, rules, regulations, ordinances or codes; (e) any damage or destruction of the Property or any portions thereof; (f)any condemnation or other taking of the Property or any portion thereof; (g) any Liens; or (h) any transaction in any way connected with the Property or the Loan Documents; provided, however, that Borrower shall not indemnify the Lender for any liability, loss or damage which the Lender may incur as a result of (i) the gross negligence or willful misconduct of Lender or its agents, employees, contractors or assigns, or (ii) matters first arising after Lender or its agents, employees, or assignees acquire title to the Property or after Lender or any such other parties acquire possession of the Property-as a mortgagee in possession or otherwise. The indemnities given herein and imposed hereby shall survive payment in full of the Debt, and the release, termination or foreclosure of this Security Instrument or any of the other Loan Documents.

20.6     FURTHER NOTICE REGARDING INSURANCE. The following notice is provided pursuant to Section 427.120, R.S.Mo. As used in this Section 20.6, the terms “you” and “your” shall refer to Borrower, and the terms “we” and “us” shall refer to Lender: UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY YOUR AGREEMENT WITH US, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE

COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY OUR AGREEMENT. IF WE PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE YOU MAY BE ABLE TO OBTAIN ON YOUR OWN.

20.7     FURTHER NOTICE REGARDING AGREEMENTS WITH LENDER. This notice is provided pursuant to Section 432.047, R.S.Mo. As used in this Section 20.7, “creditor” means Lender and “this writing” means this Agreement and all the other Loan Documents. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

20.8     FUTURE ADVANCES. THIS DEED OF TRUST AND SECURITY AGREEMENT SECURES FUTURE ADVANCES AND FUTURE OBLIGATIONS AND SHALL BE GOVERNED BY SECTION 443.055 R.S.MO., AS AMENDED FROM TIME TO TIME. THE TOTAL FACE AMOUNT OF THE PRESENT AND FUTURE ADVANCES AND OBLIGATIONS WHICH MAY BE SECURED HEREBY IS THREE MILLION ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS AND NO/100 ($3,125,000.00).

IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower as of the day and year first above written.

BORROWER:
EVEREST BAYBERRY, LP,
a California limited partnership
By:	Millenium Bayberry, LLC, a
	California limited liability company, its general partner
	By:	Millenium Management, LLC,
		a California Limited Liability Company
		Its Manager
	By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis
	Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 10th day of August, in the year 2006, before me, Charlie Lam, a Notary Public in and for said state, personally appeared Christopher K. Davis, the Vice President and General Counsel of MILLENIUM MANAGEMENT, LLC, a California limited liability company, the Manager of MILLENIUM BAYBERRY, LLC, a California limited liability company, the General Partner of EVEREST BAYBERRY, LP, a California limited partnership known to be the person who executed the within instrument on behalf of said MILLENIUM MANAGEMENT, LLC, the Manager of said MILLENIUM BAYBERRY, LLC, General Partner of EVEREST BAYBERRY, LP, and acknowledged to me that he executed the same for the purposes therein stated.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

/S/ CHARLIE LAM

Notary Public

Print Name: Charlie Lam

My Commission Expires: 11-26-2006

EXHIBIT “A”

DESCRIPTION OF LAND

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri described as follows:

A tract of land being part of Tract “E” and part of Tract “B, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract “E”, said point also being on the Southerly Right-of-way Line of 5th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West, 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E”; thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E”,673.18 feet; thence North 16 degrees 38 minutes 21 seconds East, 235.73 feet to a point on the Southerly Right-of-way of 5th Street Terrace, (the following three courses are along said Right-of-way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left, a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet of the Point of Beginning, EXCEPT that part in Bayberry Lane.

Together with a non-exclusive access and ingress easement established by the instrument recorded April 29, 1988 as Document No. 1-840559 in Book 1-1795 at Page 1421.

EXHIBIT “B”

REPLACEMENT RESERVE AND LEASING RESERVE REQUIREMENTS

1. Defined Terms.

All capitalized terms used herein and not defined in the Security Instrument shall have the meanings set forth in Section 7 of this Exhibit “B.” To the extent any Reserve Deposit is assigned the meaning “none” in the Reserve Letter, the provisions set forth in this Exhibit “B” specifically relating to the making or application of such Reserve Deposits shall be disregarded.

2. Reserve Deposits.

(a)        Concurrently with the execution of this Security Instrument, Borrower shall deposit with Lender the Deferred Maintenance Deposit. The Deferred Maintenance Deposit shall be applied as provided in Section 4.1 of this Exhibit “B.”

(b)       On the date hereof and on each date that a regularly scheduled payment of principal or interest is due under the Note, Borrower shall be required to make a Monthly Deposit.

(c)        Lender shall deposit each Monthly Deposit, as received, in an escrow account (the “Reserve”). Out of each Monthly Deposit, the Monthly Replacement Account Deposit shall be allocated to an account (the “Replacement Account”) for the payment of Replacements and the Monthly Leasing Account Deposit shall be allocated to an account (the “Leasing Account”) for the payment of Tenant Improvements and Leasing Commissions (as defined below) in conjunction with Leases (as hereinafter defined). Notwithstanding anything to the contrary contained herein, except as provided in Section 6 of this Exhibit B, Borrower shall not be required to make (i) the portion of the Monthly Deposit to be allocated to the Leasing Account at any time where the balance in the Leasing Account is equal to or greater than $30,456.00, or (ii) the portion of the Monthly Deposit to be allocated to the Replacement Account at any time where the balance in the Replacement Account is equal to or greater than $8,715.96.

(d)       Lender shall maintain a record of all deposits into and withdrawals from the Reserve and their allocation to the Replacement Account and the Leasing Account. Lender or a designated representative of Lender shall have the sole right to make withdrawals from such account.

(e)        No interest shall be paid on the Deferred Maintenance Deposit. Provided Borrower pays the account fees set forth below, the Reserve shall be held in an interest bearing account. Lender shall have no responsibility or liability for the amount of interest earned on the Reserve. All interest earned on funds in the Reserve shall be added to and become part of the Reserve, shall be allocated pro rata to the Replacement Account and the Leasing Account, and shall be for the benefit of Borrower, subject to Lender’s rights pursuant to the terms of this Security Instrument. In order for the Reserve to bear interest, Borrower shall be required to pay a one-time set-up fee on the date hereof of Three Hundred Fifty and 00/100 Dollars ($350.00) and an additional fee of Six Hundred and 00/100 Dollars ($600.00) on January 2 of each calendar year after the date hereof.

3. Disbursements.

(a)        Provided no Event of Default exists, Lender shall make disbursements of funds available in the Replacement Account to reimburse Borrower for Replacements.

(b)       Provided no Event of Default exists, Lender shall make disbursements of funds in the Leasing Account to reimburse Borrower for the cost of (i) tenant improvements required under any Lease (collectively, the “Tenant Improvements”); and (ii) leasing commissions incurred by Borrower in connection with any Lease, provided that (x) such leasing commissions are reasonable and customary for properties similar to the Property and the portion of the Property for which such leasing commission is due, (y) the amount of such leasing commissions are determined pursuant to arms length transactions between Borrower and any leasing agent to which a leasing commission is due, and excluding any leasing commissions which shall be due any general partner, or shareholder of Borrower or any affiliate of Borrower, and (z) the Tenant under the related Lease shall have taken occupancy of its entire leased premises and commenced the payment of its entire base minimum rent (collectively, “Leasing Commissions”).

(c)        Lender shall, upon written request from Borrower and satisfaction of the requirements set forth in this Section 3, disburse to Borrower amounts from the Reserve necessary to reimburse Borrower for the actual costs of (i) any Leasing Commissions and (ii) any work relating to Replacements or Tenant Improvements (collectively, “Work”).

(d)       Each request for disbursement from the Reserve shall be in a form specified or approved by Lender, and shall be accompanied by evidence of the full performance of the obligations of the leasing agent or satisfactory completion of the Work, as the case may be, and such bills, invoices and other evidence of the incurrence of the related costs and expenses as Lender may reasonably request.

(e)        Borrower shall not make a request for disbursement from the Reserve more frequently than once in any calendar quarter.

(f)        Borrower shall not make a request for disbursement from the Reserve in an amount less than the lesser of (i) Five Thousand and 00/100 Dollars ($5,000.00), and (ii) the total cost of the Replacement, Tenant Improvement or Leasing Commission for which the disbursement is requested.

4. Performance of Replacements.

(a)        Deferred Maintenance. Notwithstanding anything contained herein to the contrary, Borrower agrees to perform all of the Scheduled Repairs within the period of time, if any, set forth in the Escrow Agreement (Renovation Improvements) dated as of even date herewith between Lender and Borrower and as referenced in the Reserve Letter. In the event that the Borrower shall not complete the Scheduled Repairs within such period of time the Borrower shall pay to the servicer administering the Deferred Maintenance Deposit the sum of $150.00 per month until the Scheduled Repairs are completed and approved. The payment of such sums shall not be deemed to extend the period of time allowed herein for completion of the Scheduled Repairs. Such sum is intended to reimburse the servicer for the costs incurred in administering the deposit. The Deferred Maintenance Deposit shall be used solely for the payment of the actual costs of the Scheduled Repairs. Upon completion of the Scheduled Repairs in accordance with the Escrow Agreement (Renovation Improvements), the portion of the Deferred Maintenance Deposit remaining undisbursed, if any, shall be disbursed to Borrower. All other conditions, covenants and agreements set forth herein with respect to a disbursement from the Replacement Account shall apply to the disbursements from the Deferred Maintenance Deposit.

(b)       Entry, Onto Property: Inspections. Lender may inspect the Property in connection with any Work prior to disbursing funds from the Reserve with respect thereto. In connection with any Work that is (i) a structural repair or improvement, (ii) a replacement or repair of a major component or element of any part of the Property or (iii) Scheduled Repairs, Lender may require, at Borrower’s expense, one or more inspections and/or certificates of completion by an appropriate independent, qualified professional (e.g., architect, engineer, consultant) approved by Lender. In addition to Lender’s costs and expenses, Borrower shall pay Lender a reasonable inspection fee, provided, however, such fees shall not exceed Five Hundred and 00/100 Dollars ($500.00), in the aggregate, in any calendar year.

5. Borrower’s Records.

Borrower shall furnish such financial statements, invoices, records, papers and documents relating to the Property as Lender may reasonably require from time to time to make the determinations permitted or required to be made by Lender with respect to disbursements of the Deferred Maintenance Deposit and/or the Reserve.

6.         Insufficiency of Reserve Balances, Temporary Deferral of Monthly Deposits. The insufficiency of any balance in the Reserve or the Deferred Maintenance Deposit shall not abrogate Borrower’s agreement to fulfill its obligations contained in this Security Instrument. In the event Lender determines that (i) the balance in the Reserve is less than the current estimated cost to complete the Work and pay the Leasing Commissions which Borrower, in the prudent operation of the Property can reasonably be anticipated to incur during the succeeding twenty-four (24) months, or (ii) the balance of the Deferred Maintenance Deposit is less than the amount necessary to complete the Scheduled Repairs, Borrower shall deposit the shortage within ten (10) days of request by Lender. In the event Lender determines from time to time based on Lender’s inspections that the amount of the Monthly Deposit is insufficient to fund the cost of likely Work and Leasing Commissions and related contingencies that may arise during the remaining term of the Loan, Lender may require an increase in the amount of the Monthly Deposits upon thirty (30) days prior written notice to Borrower. Lender may approve a temporary deferral or a reduction in the amount of the Monthly Deposit; provided, however, that if Lender approves either a temporary deferral or reduction in the amount of the Monthly Deposit, such action by Lender shall not prevent Lender from requiring Borrower to resume payment of the Monthly Deposits on any date that Lender may deem appropriate.

7. Certain Defined Terms.

The following terms shall have the meanings assigned to them below:

(a) “Deferred Maintenance Deposit” means the Deferred Maintenance Deposit set forth in the Reserve Letter, if any.

(b) “Monthly Deposit” means the sum of the Monthly Leasing Account Deposit and the Monthly Replacement Account Deposit.

(c) “Monthly Leasing Account Deposit” means the Monthly Leasing Account Deposit set forth in the Reserve Letter, if any.

(d)       “Monthly Replacement Account Deposit” means the Monthly Replacement Account Deposit set forth in the Reserve Letter. If there is no Monthly Leasing Account Deposit, the Monthly Replacement Account Deposit shall have the same meaning as the Monthly Deposit.

(e)        “Replacements” means the costs of any repairs, improvements, equipment, alterations, additions, changes, replacements and other items which, under generally accepted accounting principles, consistently applied, are properly classified as capital expenditures or capital improvements (and, in the case of multifamily projects only shall include the costs of window treatments and carpeting, blinds, equipment and appliances, and painting of the exterior of the Property), but excluding (i) costs of routine maintenance to the Property; (ii) the costs of salaries, benefits and administrative expenses related to the employment of (A) officers and executives of Borrower, and of employees of Borrower above the level of building manager, and (B) employees of Borrower at or below the level of building manager, except in the case of those costs which Borrower can demonstrate to Lender’s satisfaction to be properly allocable to the work performed by such employees in connection with Replacements; (iii) the cost of any items for which Borrower is reimbursed by insurance or otherwise; (iv) the cost of any landscaping work to the Property; (v) the cost of any material additions or material alterations to the Property after the date hereof; and (vi) (except in the case of multifamily projects) the cost of any alterations, additions, changes, replacements and improvements that are made primarily in order to prepare space for occupancy by a tenant.

(f)        “Reserve Deposits” shall mean the Deferred Maintenance Deposit and the Monthly Deposit.

(g) “Reserve Letter” means a letter from Borrower to Lender of even date herewith confirming the amount of the Monthly Replacement Account Deposit, the Monthly Leasing Deposit Account Deposit (if any) and the Deferred Maintenance Deposit, if any, and the Scheduled Repairs, if any.

(h) “Scheduled Repairs” means the Scheduled Repairs described in the Reserve Letter, if any.

EXHIBIT “C”

The term “Debt Service Coverage Ratio” shall mean the ratio of (a) the NO1 (hereinafter defined) produced by the operation of the Property during the twelve (12) calendar month period immediately preceding the calculation to (b) the Annual Debt Service.

The Term “NOI” shall mean the Gross Income (as hereinafter defined) derived from the operation of the Property, less Expenses (hereinafter defined).

The term “Annual Debt Service” shall mean an amount equal to twelve (12) times the Constant Monthly Payment payable under the Note.

The term “Gross Income” means (and includes only) Rents (as defined in the Security Instruments) and such other income, including any rent loss or business interruption insurance proceeds, laundry, parking, vending or concession income, which are actually received by the Borrower or its agents or representatives. Notwithstanding the foregoing, Gross Income shall not include (a) condemnation or insurance proceeds (excluding rent or business interruption insurance proceeds); (b) any proceeds from the sale, exchange, transfer, financing or refinancing of all or any portion of the Property; (c) amounts received from tenants as a security deposit; (d) any other type of income otherwise includable in NO1 but paid directly by any tenant to a person or entity other than Borrower or its agents or representatives; or (e) interest income.

The term “Expenses” shall mean the aggregate of the following items: (a) real estate taxes, general and special assessments or similar charges; (b) sales, use and personal property taxes; (c) management fees of not less than five percent (5%) of the gross income derived from the operation of the Property and disbursements for management services whether such services are performed at the Property or off-site; (d) wages, salaries, pension costs and all fringe and other employee-related benefits and expenses, up to and including (but not above) the level of the on-site manager, engaged in the repair, operation and maintenance of the Property and service to tenants and on-site personnel engaged in audit and accounting functions performed by Borrower; (e) insurance premiums including, but not limited to, casualty, liability, rent and fidelity insurance premiums; (f) cost of all electricity, oil, gas, water, steam, HVAC and any other energy, utility or similar item and overtime services, the cost of building and cleaning supplies, and all other administrative, management, ownership, operating, advertising, marketing and maintenance expenses incurred in connection with the operation of Property; (g) cost of necessary cleaning, repair, replacement, maintenance, decoration or painting of existing improvements on the Property (including, without limitation, parking lots and roadways), of like kind and quality or such kind or quality which is necessary to maintain the Property to the same standards as competitive properties of similar size and location of the Property, together with adequate reserves for the repair and replacement of capital improvements on the Property acceptable to Lender; (h) the cost of such other maintenance materials, HVAC repairs, parts and supplies, and all equipment to be used in the ordinary course of business, which is not capitalized in accordance with generally accepted accounting principles (“GAAP”); (i) cost of leasing commissions and tenants concessions payable by Borrower pursuant to Leases in effect for the Property; (6) legal, accounting and other professional expenses incurred in connection with the Property; (k) casualty losses to the extent not reimbursed by a third party; and (l) all amounts that should be reserved, as reasonably determined by the Borrower with approval by the Lender in its reasonable discretion, for repair or maintenance of the Property and to maintain the value of the Property including replacement reserves in amounts not less than those required in Exhibit “B” of this Security Instrument. The Expenses shall be based on the above-described items actually incurred or payable on an accrual

basis in accordance with GAAP by Borrower during the twelve (12) month period ending one month prior to the date on which the NO1 is to be calculated (except the capital expenses and reserves set forth in subsection (g) above), with customary adjustments for items such as taxes and insurance which accrue but are paid periodically, as adjusted by Lender to reflect projected adjustments for the subsequent twelve (12) month period beginning on the date on which the NO1 is to be calculated.

Notwithstanding the foregoing, the term “Expenses” shall not include (i) depreciation, amortization or any other non-cash item of expense unless approved by Lender; (ii) interest, principal, fees, costs and expense reimbursements of Lender in administrating the Loan or exercising remedies under the Loan Documents; or (iii) any expenditure (other than leasing commissions and tenant concessions) properly treated as a capital item under GAAP and such expenditure is treated by Borrower as a capital item in Borrower’s financial statements.

EX-99

ENVIRONMENTAL INDEMNITY AGREEMENT

ENVIRONMENTAL INDEMNITY AGREEMENT (the “Agreement”) made as of the ____ day of August, 2006, by EVEREST BAYBERRY, LP, a California limited partnership, having an office at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst (“Borrower”), and SECURED INVESTMENT RESOURCES FUND, LP II,a Delaware limited partnership having an office at c/o Everest Properties, Inc., 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Principal;” Borrower and Principal hereinafter collectively referred to as “Indemnitor”), in favor of LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an office at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801 (“Indemnitee”) and other Indemnified Parties (defined below).

RECITALS:

A. Borrower is the fee owner of that certain real property located in the City of Lee’s Summit, County of Jackson and State of Missouri, known as Bayberry Crossing and more particularly described in Exhibit “A” attached hereto (said real property, together with any real property hereafter encumbered by the lien of the Security Instrument (as defined in the Note), being herein collectively referred to as the “Land”; the Land, together with all structures, buildings and improvements now or hereafter located on the Land, being collectively referred to as the “Property”).

B.        Indemnitee is prepared to make a loan (the “Loan”) to Borrower in the principal amount of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00), to be evidenced by a certain promissory note of even date herewith in the principal amount of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00) made by Borrower to Indemnitee (the “Note”) and secured by, among other things the Security Instrument (as defined in the Note) which will encumber the Property.

C.        Indemnitee is unwilling to make the Loan unless Indemnitor agrees to provide the indemnification, representations, warranties, and covenants and other matters described in this Agreement for the benefit of Indemnified Parties.

D.        SECURED INVESTMENT RESOURCES, LP IIis the sole limited partner of Borrower owning 100% of the partnership interests of Borrower and thus will derive substantial benefit from the Loan. Indemnitor enters into this Agreement to induce Indemnitee to make the Loan.

AGREEMENT

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,

Indemnitor hereby represents, warrants, covenants and agrees for the benefit of Indemnified Parties as follows:

1.         Environmental Representations and Warranties. To the best of Indemnitor’s knowledge, after due inquiry, (a) there are no Hazardous Substances (defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in compliance with all Environmental Laws (defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing pursuant to the written report(s) resulting from the environmental assessment(s) of the Property delivered to Indemnitee (such report(s) are identified in Exhibit “B” attached hereto and are referred to below collectively as the “Environmental Report”); (b) there are no past, present or threatened Releases (defined below) of Hazardous Substances in, on, under or from the Property except as described in the Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property, except as described in the Environmental Report; (e) Indemnitor does not know of, and has not received, any written notice or other communication from any person or entity (including, but not limited to, a governmental entity) relating to Hazardous Substances or Remediation (defined below) thereof, of possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Indemnitor has truthfully and fully provided to Indemnitee, in writing, any and all information relating to conditions in, on, under or from the Property that is known to any Indemnitor and that is contained in files and records of any Indemnitor including, but not limited to, any reports relating to Hazardous Substances in, on, under or from the Property and/or to the environmental condition of the Property.

2.        Environmental Covenants. Indemnitor covenants and agrees that: (a) all uses and operations on or of the Property, by Indemnitor or any other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on, under or from the Property by Indemnitor or anyone controlled by, controlling or under common control with Indemnitor; (c) Indemnitor shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Indemnitor or any other person or entity (the “Environmental Liens”); (d) Indemnitor shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any written request of Indemnitee (provided that such request is made based upon Indemnitee’s reasonable belief that there are Hazardous Substances in, or under the Property which are not in compliance with Environmental Laws), and share with Indemnitee the reports and other results thereof, and Indemnitee and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (e) Indemnitor shall, at its sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) reasonably effectuate Remediation of any condition (including, but not

limited to, a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (f) Indemnitor shall not do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (g) Indemnitor shall immediately notify Indemnitee in writing of (i) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards the Property; (ii) any non-compliance with any Environmental Laws related in any way to the Property; (iii) any actual or potential Environmental Lien; (iv) any required or proposed Remediation of environmental conditions relating to the Property; and (v) any written or oral notice or other communication of which any Indemnitor becomes aware from any source whatsoever (including, but not limited to, a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Agreement.

3.         Indemnified Parties’ Rights/Cooperation and Access. Indemnified Parties and any other person or entity designated by Indemnified Parties (including, but not limited to, any receiver, any representative of a governmental entity and any environmental consultant), shall have the right but not the obligation to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use including, but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in Indemnitee’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air or building materials, and conducting other invasive testing. Indemnitor shall cooperate with and provide access to Indemnified Parties and any such person or entity designated by Indemnified Parties. All such investigations shall be performed at Indemnitor’s sole cost and expense.

4.         Indemnification. Indemnitor covenants and agrees at its sole cost and expense, to protect, defend, indemnify, release and hold Indemnified Parties harmless from and against any and all Losses (defined below) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following (except to the extent the solely relate solely to Hazardous Substances first introduced to the Property by anyone other than Indemnitor or its respective agents or employees following the foreclosure of the Security Instrument (or the delivery and acceptance of a deed in lieu of such foreclosure), the expiration of any applicable right of redemption and the obtaining by the purchaser at such foreclosure sale or grantee under such deed of possession of the Property): (a) the past, present or future presence, Release or threatened Release of any Hazardous

Substances in, on, above, or under the Property; (b) any past, present or threatened noncompliance or violations of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with the Property or operations thereon; (c) any legal or administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement; (d) any personal injury, wrongful death, or property or other damage arising under any statutory or common law or tort law theory concerning Hazardous Substances; and (e) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations in this Agreement or any covenants or other obligations in the Security Instrument which are related to Hazardous Substances or Environmental Law.

5.Duty to Defend and Attorneys and Other Fees and Expenses. Upon written request by any Indemnified Party, Indemnitor shall defend and provide legal representation for such Indemnified Party with respect to any of the matters referenced in Section 4 above (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them with respect to such matters, and, at the option of Indemnified Parties, their attorneys shall control the resolution of such matters. Upon demand, Indemnitor shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

6.         Definitions. As used in this Agreement, the following terms shall have the following meanings:.

The term “Hazardous Substances” includes but is not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment including, but not limited to, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives.

The term “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. The term “Environmental Law” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive

Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including, but not limited to, Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term “Environmental Law” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the Property.

The term “Release” with respect to any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.

The term “Remediation” includes but is not limited to any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any Release of any Hazardous Substance; any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to herein.

The term “Legal Action” means any claim, suit or proceeding, whether administrative or judicial in nature.

The term “Indemnified Parties” includes Indemnitee, any person or entity who is or will have been involved in the origination of the Loan, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by the Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties.

The term “Losses” includes any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including, but not limited to, strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of Remediation (whether or not performed voluntarily), amounts paid in settlement, foreseeable and unforeseeable consequential damages, litigation costs, attorneys’ fees, engineers’ fees, environmental consultants’ fees, and investigation costs (including, but not limited to, costs for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards.

7.         Unimpaired Liability. The liability of Indemnitor under this Agreement shall in no way be limited or impaired by, and Indemnitor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Note, the Security Instrument or any of the other Loan Documents (as defined in the Security Instrument). In addition, the liability of Indemnitor under this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Note, the Security Instrument or any of the other Loan Documents, (ii) any sale or transfer of all or part of the Property, (iii) except as provided herein, any exculpatory provision in the Note, the Security Instrument, or any of the other Loan Documents limiting Indemnitee’s recourse to the Property or to any other security for the Note, or limiting Indemnitee’s rights to a deficiency judgment against Indemnitor, (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor under the Note, the Security Instrument or any of the other Loan Documents or herein, (v) the release of any Indemnitor or any other person from performance or observance of any of the agreements, covenants, terms or condition contained in any of the other Loan Documents by operation of law, Indemnitee’s voluntary act, or otherwise, (vi) the release or substitution in whole or in part of any security for the Note, or (vii) Indemnitee’s failure to record the Security Instrument or file any UCC financing statements (or Indemnitee’s improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Note; and, in any such case, whether with or without notice to Indemnitor and with or without consideration.

8.         Enforcement. Indemnified Parties may enforce the obligations of Indemnitor without first resorting to or exhausting any security or collateral or without first having recourse to the Note, the Security Instrument, or any other Loan Documents or any of the Property, through foreclosure proceedings or otherwise, provided, however, that nothing herein shall inhibit or prevent Indemnitee from suing on the Note, foreclosing, or exercising any power of sale under, the Security Instrument, or exercising any other rights and remedies thereunder. This Agreement is not collateral or security for the debt of Indemnitor pursuant to the Loan, unless Indemnitee expressly elects in writing to make this Agreement additional collateral or security for the debt of Indemnitor pursuant to the Loan, which Indemnitee is entitled to do in its sole and absolute discretion. It is not necessary for an Event of Default (as defined in the Security Instrument) to have occurred for Indemnified Parties to exercise their rights pursuant to

this Agreement. Notwithstanding any provision of the Security Instrument, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provision of the Security Instrument; Indemnitor is fully and personally liable for such obligations, and its liability is not limited to the original or amortized principal balance of the Loan or the value of the Property.

9.Survival. The obligations and liabilities of Indemnitor under this Indemnity shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instrument.

10.       Interest. Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on demand and, if not paid within thirty (30) days of such demand therefor, shall bear interest at a per annum rate equal to the lesser of (a) 5% plus the Applicable Interest Rate (as such term is defined in the Note) or (b) the maximum interest rate which Indemnitor may by law pay or Indemnified Parties may charge and collect, from the date payment was due.

11. Waivers.

(a)       Indemnitor hereby waives (i) any right or claim of right to cause a marshalling of any Indemnitor’s assets or to cause Indemnitee or other Indemnified Parties to proceed against any of the security for the Loan before proceeding under this Agreement against any Indemnitor; (ii) and relinquishes all rights and remedies accorded by applicable law to Indemnitor, except any rights of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including, without limitation, any claim that such subrogation rights were abrogated by any acts of Indemnitee or other Indemnified Parties; (iii) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose. Notwithstanding anything to the contrary contained herein, Indemnitor hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Loan until the Loan shall have been paid in full.

(b)       INDEMNITOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED

BY THE NOTE, THE NOTE, THE SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.

12. Subrogation. Indemnitor shall take any and all reasonable actions, including Institution of legal action against third-parties, necessary or appropriate to obtain reimbursement, payment or compensation from such persons responsible for the presence of any Hazardous Substances at, in, on, under or near the Property or otherwise obligated by law to bear the cost. Indemnified Parties shall be and hereby are subrogated to all of Indemnitor’s rights now or hereafter in such claims.

13.       Indemnitor’s Representations and Warranties. Indemnitor represents and warrants that:

(a)       If Indemnitor is a corporation, partnership or limited liability company, it has the full corporate/partnership/limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by Indemnitor has been duly and validly authorized; and all requisite corporate/partnership/limited liability company action has been taken by Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;

(b)       If Indemnitor is an individual, he/she is acting in an individual capacity and has full power and authority to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;

(c)       If Indemnitor is a corporation, partnership or limited liability company, its execution of, and compliance with, this Agreement is in the ordinary course of business of that Indemnitor and will not result in the breach of any term or provision of the charter, by-laws, partnership or trust agreement, articles of organization, operating agreement or other governing instrument of that Indemnitor or result in the breach of any term or provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under any agreement, indenture or loan or credit agreement or other instrument to which the Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Indemnitor or the Property is subject;

(d)       If Indemnitor is an individual, his/her execution of, and compliance with, this Agreement will not result in the breach of any term or provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under any agreement, indenture or loan or credit agreement or other instrument to which Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Indemnitor or the Property is subject;

(e)       There is no action, suit, proceeding or investigation pending or threatened against it which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of Indemnitor, or in any material impairment of the right or ability of Indemnitor to carry on its business substantially as now conducted, or in any material liability on the part of Indemnitor, or which would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of Indemnitor contemplated herein, or which would be likely to impair materially the ability of Indemnitor to perform under the terms of this Agreement;

(f)        It does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

(g) No approval, authorization, order, license or consent of, or registration or filing with, any governmental authority or other person, and no approval, authorization or consent of any other party is required in connection with this Agreement; and

(h) This Agreement constitutes a valid, legal and binding obligation of Indemnitor, enforceable against it in accordance with the terms hereof.

14.       No Waiver. No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such privilege, power or right.

15.       Notice of Legal Actions. Each party hereto shall, within five (5) business days of receipt thereof, give written notice to the other party hereto of (i) any notice, advice or other communication from any governmental entity or any source whatsoever with respect to Hazardous Substances on, from or affecting the Property, and (ii) any Legal Action brought against such party or related to the Property, with respect to which any Indemnitor may have liability under this Agreement. Such notice shall comply with the provisions of Section 19 hereof.

16.      Examination of Books and Records. Indemnified Parties and their accountants shall have the right to examine the records, books, management and other papers of Indemnitor which reflect upon its financial condition, at the Property or at any office regularly maintained by Indemnitor where the books and records are located. Indemnified Parties and their accountants shall have the right to make copies and extracts from the foregoing records and other papers. In addition, Indemnified Parties and their accountants shall have the right to examine and audit the books and records of Indemnitor pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Indemnitor where the books and records are located.

17. Transfer of Loan.

(a)       Indemnitee may, at any time, sell, transfer or assign the Note, the Security Instrument, this Agreement and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Indemnitee may forward to each purchaser, transferee, assignee, servicer, participant or investor in such Securities or any credit rating agency rating such Securities (the foregoing entities hereinafter collectively referred to as the “Investor”) and each prospective Investor, all documents and information (including, but not limited to, financial information), which Indemnitee now has or may hereafter acquire relating to Indemnitor and the Property, whether furnished by Indemnitor, any Guarantor (as defined in the Security Instrument), or otherwise, as Indemnitee determines necessary or desirable.

(b)       Upon any transfer or proposed transfer contemplated above and by Section 16.1 of the Security Instrument, at Indemnitee’s request, Indemnitor shall provide an estoppel certificate to the Investor or any prospective Investor in such form, substance and detail as Indemnitee, such Investor or prospective Investor may require.

18.       Taxes. Indemnitor has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it. Indemnitor does not know of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

19.       Notices. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) BusinessDays after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Indemnitor:	Everest Bayberry, LP c/o Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst Secured Investment Resources Fund, LP II c/o Everest Properties, Inc. 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Indemnitee:	Lehman Brothers Bank, FSB 399 Park Avenue, 8th Floor New York, New York 10022 Attention: John Herman
With a copy to	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
and	Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

For purposes of this Section, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

20.       Submission to Jurisdiction. With respect to any claim or action arising hereunder, Indemnitor (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State in which the property is located and the United States District Court located in the county in which the Property is located, and appellate courts from any thereof, and (b) irrevocably waives any objection which it may have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any such court, irrevocably waives any claim that any such suit,

action or proceeding brought in any such court has been brought in an inconvenient forum.

21.No Third-Party Beneficiary. The terms of this Agreement are for the sole and exclusive protection and use of Indemnified Parties. No party shall be a third-party beneficiary hereunder, and no provision hereof shall operate or inure to the use and benefit of any such third party. It is agreed that those persons and entities included in the definition of Indemnified Parties are not such excluded third party beneficiaries.

22.Duplicate Originals: Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

23.        No Oral Change. This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of any Indemnitor or any Indemnified Party, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

24.Headings, Etc. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

25.Number and Gender/Successors and Assigns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. Without limiting the effect of specific references in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and every person or entity comprising an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs, executors, administrators, legal representatives, successors and assigns of Indemnitor, all of whom shall be bound by the provisions of this Agreement, provided that no obligation of any Indemnitor may be assigned except with the written consent of Indemnitee. Each reference herein to Indemnitee shall be deemed to include its successors and assigns. This Agreement shall inure to the benefit of Indemnified Parties and their respective successors and assigns forever.

26.       Joint and Several Liability. If Indemnitor consists of more than one person or entity, the obligations and liabilities of each such person hereunder are joint and several.

27.Release of Liability. Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability of any party not so released.

28.       Rights Cumulative. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Security Instrument, or the other Loan Documents or would otherwise have at law or in equity.

29.       Inapplicable Provisions. If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

30.       Governing Law. This Agreement shall be deemed to be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

31.       Miscellaneous. Wherever pursuant to this Agreement (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by Indemnitor and is effective as of the day and year first above written.

INDEMNITOR: BORROWER
EVEREST BAYBERRY, LP,
a California limited partnership
By:	Millenium Bayberry, LLC, a
	California limited liability company, its general partner
	By:	Millenium Management, LLC, a
		California Limited Liability Company
		Its Manager
	By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis
	Its:	Vice President and General Counsel

INDEMNITOR: PRINCIPAL SECURED INVESTMENT RESOURCES FUND II, L.P.,
a Delaware limited partnership
By:	Millenium Management, LLC,
	a California limited liability company
	Its General Partner
	By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis
	Its:	Vice President and General Counsel

EXHIBIT “A”

DESCRIPTION OF THE PROPERTY

All that part of BAYBERRY CROSSING, a subdivision in Lee’s Summit, Jackson County, Missouri described as follows:

A tract of land being part of Tract “E” and part of Tract “B”, BAYBERRY, a subdivision in Lee’s Summit, Jackson County, Missouri, more particularly described as follows: Beginning at the Northeast comer of said Tract “E”, said point also being on the Southerly Right-of-way Line of 5th Street Terrace; thence South 0 degrees 37 minutes 58 seconds West, along the East line of Tract “E”, 340.00 feet; thence South 70 degrees 18 minutes 45 seconds East, 52.84 feet; thence South 0 degrees 37 minutes 58 seconds West, 455.84 feet; thence Due West 288.00 feet to a point on the West line of said Tract “E”, thence North 0 degrees 37 minutes 58 seconds East, along the West line of said Tract “E”, 673.18 feet; thence North 16 degrees 38 minutes 21 seconds East, 235.73 feet to a point on the Southerly Right-of-way of 5th Street Terrace, (the following three courses are along said Right-of-way); thence South 35 degrees 47 minutes 31 seconds East, 35.14 feet to a point of curve, said curve having a radius of 137.23 feet; thence Southeasterly along said curve to the left, a distance of 130.07 feet; thence North 89 degrees 54 minutes 06 seconds East, 40.00 feet of the Point of Beginning, EXCEPT that part in Bayberry Lane.

Together with a non-exclusive access and ingress easement established by the instrument

recorded April 29,1988 as Document No. 1-840559 in Book 1-1795 at Page 1421.

EXHIBIT “B”

IDENTIFICATION OF ENVIRONMENTAL REPORT

Phase I Environmental Site Assessment prepared by Underground Environmental Services, Inc., dated July 5, 2006, as Project No. 5269.06.3.

EX-99

PROMISSORY NOTE

$3,125,000.00 Lee’s Summit, Missouri

August __, 2006

FOR VALUE RECEIVED, EVEREST BAYBERRY, LP, a California limited partnership, as maker, having its principal place of business at c/o Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, California 91101 Attn: W. Robert Kohorst (“Borrower”), hereby unconditionally promises to pay to the order of LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801 (“Lender”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00), in lawful money of the United States of America with interest thereon to be computed from the date of disbursement under this Note at the Applicable Interest Rate (defined below), and to be paid in installments as provided herein.

1. CERTAIN DEFINED TERMS

As used herein, the following terms shall have the meanings set forth below:

(a)       “Accrual Period” shall mean the period commencing on the eleventh (1lth) day of a calendar month and ending on the tenth (10th) day of the succeeding calendar month; provided that if this Note is dated as of any date other than the eleventh (11th) day of a month, the first Accrual Period shall commence on the date hereof and shall end on the next tenth (10th) day of a calendar month to occur after the date hereof.

(b)       “Applicable Interest Rate” shall mean an interest rate equal to six and twenty-four hundredths percent (6.24%) per annum.

(c)       “Constant Monthly Payment” shall mean a payment equal to Nineteen Thousand Two Hundred Twenty and 84/100 Dollars ($19,220.84).

(d) “Loan” shall mean the loan evidenced by this Note.

(e)       “Loan Documents” shall mean this Note, the Security Instrument, and any other documents or instruments which now or shall hereafter wholly or partially secure or guarantee payment of this Note or which have otherwise been executed by Borrower and/or any other person in connection with the Loan.

(f)         “Lockout Period Expiration Date” shall mean the earlier of (a) the fourth (4^th) anniversary of the date of either (i) the date hereof, if this Note is dated as of the eleventh (11^th) day of a calendar month, or (ii) the next eleventh (11^th) day of a calendar month and (b) two years and one day from the “startup day” of any “real estate mortgage investment conduit” (as such terms are defined in Sections 860G and 860D, respectively,

of the Internal Revenue Code of 1986, as amended or any successor statute thereto) which may acquire the Loan.

(g) “Maturity Date” shall mean September 11, 2016.

(h)       “Monthly Payment Date” shall mean the eleventh (11^th) day of each calendar month prior to the Maturity Date commencing on (i) the eleventh (11^th) day of the next succeeding calendar month after the date hereof if this Note is dated on or prior to the eleventh (11^th) day of a month; or (ii) the eleventh (11^th) day of the second succeeding calendar month after the date hereof if this Note is dated after the eleventh (11^th) day of a month.

(i)        “Security Instrument” shall mean the Deed of Trust and Security Agreement dated the date hereof in the principal sum of Three Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($3,125,000.00) given by Borrower to (or for the benefit of) Lender covering the fee estate of Borrower in certain premises located in Jackson County, State of Missouri, and other property, as more particularly described therein (collectively, the “Property”).

2. PAYMENT TERMS

(a)       If this Note is dated as of a date other than the eleventh (11^th) day of a calendar month, a payment shall be due from Borrower to Lender on the date hereof on account of all interest scheduled to accrue on the principal sum from and after the date of disbursement hereunder through and including the last day of the current Accrual Period. The Constant Monthly Payment shall be due from Borrower to Lender on each Monthly Payment Date, with each Constant Monthly Payment to be applied as follows: (i) first, to the payment of interest which has accrued during the preceding Accrual Period computed at the Applicable Interest Rate, and (ii) the balance toward the reduction of the principal sum. The balance of the principal sum and all interest thereon shall be due and payable on the Maturity Date. Interest on the principal sum of this Note shall be calculated by multiplying the actual number of days elapsed in the period for which interest is being calculated by a daily rate based on a 360-day year.

(b)       Unless otherwise directed by Lender, in writing, at all times during which the Debt (defined below) shall remain outstanding, Borrower shall maintain (i) an account (“Borrower Account”) with a commercial bank that shall be a member of the automated clearing house system (the “ACH system”) and (ii) such authorizations as may be necessary to enable Lender or its designated collecting agent to obtain payments due under the Loan Documents from the Borrower Account through the ACH System. Borrower shall not terminate the Borrower Account or such authorizations at any time during the term of this Loan without having provided sixty (60) days’ prior written notice thereof to Lender, which notice shall specify the institution at which a substitute Borrower Account has been established and the account number of such substitute Borrower Account, and certifying that all authorizations necessary to enable Lender or its collecting agent to obtain payments due under the Loan Documents from such substitute

Borrower Account through the ACH System have been given and are then in effect. By not later than the opening of business on each day that any payments shall be due under the Loan Documents, Borrower shall cause an amount, in immediately available funds, equal to such payment to be available for withdrawal from the Borrower Account by Lender or its collecting agent.

(c)       Unless payments are made in the required amount in immediately available funds at the place where this Note is payable, remittances in payment of all or any part of the Debt (defined below) shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in funds immediately available at the place where this Note is payable (or any other place as Lender, in Lender’s sole discretion, may have established by delivery of written notice thereof to Borrower) and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks.

3. DEFAULT AND ACCELERATION

(a)       The whole of the principal sum of this Note, (b) interest, default interest, late charges and other sums, as provided in this Note, the Security Instrument or the other Loan Documents, (c) all other monies agreed or provided to be paid by Borrower in this Note, the Security Instrument or the other Loan Documents, (d) all sums advanced pursuant to the Security Instrument to protect and preserve the Property and the lien and the security interest created thereby, and (e) all sums advanced and costs and expenses incurred by Lender in connection with the Debt (defined below) or any part thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to in (a) through (e) above shall collectively be referred to as the “Debt”) shall without notice become immediately due and payable at the option of Lender if any payment required in this Note prior to the Maturity Date is not paid on the date when due or on the happening of any other default, after the expiration of any applicable notice and grace periods, herein or under the terms of the Security Instrument or any of the other Loan Documents (collectively, an “Event of Default”).

4. DEFAULT INTEREST

Borrower does hereby agree that upon the occurrence of an Event of Default, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal sum at a rate (the “Default Rate”) equal to (i) the greater of (a) the Applicable Interest Rate plus three percent (3%) and (b) the Prime Rate (as hereinafter defined) plus four percent (4%) or (ii) the maximum interest rate that Borrower may by law pay, whichever is lower. The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of the date upon which the Event of Default is cured or the date upon which the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt, and shall be deemed secured by the Security Instrument. This provision, however, shall not be construed as an agreement or privilege to extend the date

of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.

The “Prime Rate” shall mean the annual rate of interest publicly announced by Citibank, N.A. in New York, New York, as its base rate, as such rate shall change from time to time. If Citibank, N.A. ceases to announce a base rate, Prime Rate shall mean the rate of interest published in The Wall Street Journal from time to time as the Prime Rate. If more than one Prime Rate is published in The Wall Street Journal for a day, the average of the Prime Rates shall be used, and such average shall be rounded up to the nearest one-quarter of one percent (.25%).If The Wall Street Journal ceases to publish the “Prime Rate”, the Lender shall select an equivalent publication that publishes such “Prime Rate”, and if such prime rates are no longer generally published or are limited, regulated or administered by a governmental or quasigovernmental body, then Lender shall select a comparable interest rate index.

5. PREPAYMENT; DEFEASANCE

(a)       Borrower shall not have the right or privilege to prepay all or any portion of the unpaid principal balance of this Note until the Monthly Payment Date which is three (3) months prior to the Maturity Date. From and after such date, provided no Event of Default exists, the principal balance of this Note may be prepaid, in whole but not in part, upon: (i) not less than fifteen (15) days prior written notice (the “Prepayment Notice”) to Lender specifying the scheduled payment date on which prepayment is to be made (the “Prepayment Date”); (ii) payment of all accrued and unpaid interest on the outstanding principal balance of this Note to and including the Prepayment Date together with a payment of all interest which would have accrued on the principal balance of this Note to and including the last day of the Accrual Period in which the Prepayment Date occurs, if such prepayment occurs on a date which is not the eleventh (11^th) day of a calendar month (the “Shortfall Interest Payment”); and (iii) payment of all other sums then due under this Note, the Security Instrument and the other Loan Documents. Lender shall not be obligated to accept any prepayment of the principal balance of this Note unless it is accompanied by all sums due in connection therewith.

(b)

(i)        At any time from and after the Lockout Period Expiration Date and provided no Event of Default exists at the time, Borrower may obtain the release of the Property from the lien of the Security Instrument upon the satisfaction of the following conditions precedent:

(1) Borrower shall have provided Lender with not less than thirty (30) days and not more than sixty (60) days prior written notice specifying the date (the “Release Date”) on which the Defeasance Deposit (hereinafter defined) is to be made;

(2) Borrower shall have paid to Lender all interest accrued and unpaid on the principal balance of this Note to and including the Release Date;

(3) Borrower shall have paid to Lender all other sums due and payable under this Note, the Security Instrument and the other Loan Documents through and including the Release Date (including, but not limited to, any Constant Monthly Payment which may he due and payable on the Release Date);

(4) Borrower shall have paid to Lender the Defeasance Deposit (hereinafter defined);

(5) The transactions contemplated by this Section 5(b) shall not cause the Loan to lose its status as a “qualified mortgage” within the meaning of Sections 860D and 860G(a)(3) of the Internal Revenue Code of 1986, as amended, or any successor statute thereto; and

(6) Borrower shall have delivered to Lender the following:

(A) a security agreement, in form and substance satisfactory to Lender, creating a first priority lien on the Defeasance Deposit and the Government Securities (hereinafter defined) purchased on behalf of Borrower with the Defeasance Deposit in accordance with the provisions of this Section 5(b) (the “Pledge Agreement”), which Pledge Agreement shall provide, among other things, that any excess payments of principal and interest received by Lender under the Government Securities over the amount needed to make payments of principal and interest and other sums due from Borrower hereunder shall be refunded to Borrower;

(B) a release of the Property from the lien of the Security Instrument (for execution by Lender) in a form appropriate for the jurisdiction in which the Property is located;

(C) an officer’s certificate of Borrower certifying that the requirements set forth in this Section 5(b) have been satisfied;

(D) a certificate by Borrower’s independent public accountant certifying that the cash flow from the Government Securities will be sufficient to timely meet all Scheduled Defeasance Payments;

(E) an opinion of counsel for Borrower in form satisfactory to Lender stating, among other things, that Lender will have a perfected first priority security interest in the Defeasance Deposit and the Government Securities to be purchased on behalf of Borrower;

(F) evidence in writing from the applicable Rating Agencies (as defined in the Security Instrument) to the effect that such release will not result in a qualification, downgrade or withdrawal of any rating in effect immediately prior to such defeasance for any Securities (as defined in the Security Instrument) if the Defeasance Deposit is to be used to purchase Non-U.S. Treasury Obligations (as hereinafter defined); and

(G) such other certificates, documents or instruments as Lender may reasonably request.

The Defeasance Deposit shall be used to purchase Government Securities which provide payments which are (A) payable on or prior to, but as close as possible to, all successive Monthly Payment Dates after the Release Date and the Maturity Date and (B) in amounts necessary to meet the scheduled payments of principal and interest due under this Note on such dates (the “Scheduled Defeasance Payments”). Borrower, pursuant to the Pledge Agreement or other appropriate documents, shall authorize and direct that the payments received from the Government Securities be made directly to Lender and applied to satisfy the obligations of the Borrower under this Note.

(ii)       Upon compliance with the requirements of this Section 5(b), the Property shall be released from the lien of the Security Instrument and the pledged Defeasance Deposit and the Government Securities purchased therewith shall be the sole source of collateral securing this Note. In connection with such release, Lender, or its designee, shall establish or designate a successor entity (the “Successor Borrower”) and Borrower shall transfer and assign all obligations, rights and duties under and to this Note together with the Pledge Agreement and the pledged Defeasance Deposit and/or Government Securities to such Successor Borrower. At the time of such release, such Successor Borrower shall assume the obligations of Borrower under this Note and the Pledge Agreement, Borrower shall be relieved of its rights and obligations thereunder, and all references to Borrower herein or in the Pledge Agreement shall be deemed to refer to Successor Borrower. Borrower shall pay all costs and expenses incurred by Lender, including Lender’s attorneys’ fees and expenses and if paragraph 5(b)(i)(6)(F) above is applicable, and any Rating Agency fees incurred in connection with this Section 5(b).

(iii)      For purposes hereof, the following terms shall have the following meanings:

(1) The term “Defeasance Deposit” shall mean an amount equal to the sum of (1) the amount which will be sufficient to purchase Government Securities necessary to meet the Scheduled Defeasance Payments; and (2) any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of this Note or otherwise required to accomplish the agreements of this Section 5(b), all fees, costs and expenses incurred or to be incurred by Lender in the purchase of such Government Securities and the assumption payments referred to above;

(2) The term “Government Securities” shall mean (A) U.S. Treasury Obligations and (B) Won-U.S. Treasury Obligations;

(3) The term “U.S. Treasury Obligations” shall mean direct, non-callable, fixed rate obligations of the United States of America; and

(4) The term “Non-U.S. Treasury Obligations” shall mean non-callable, fixed rate obligations, other than U.S. Treasury Obligations, that are “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended.

(iv)      Following the delivery of the Defeasance Deposit to Lender, Borrower shall not have any right to prepay this Note.

(c)       Simultaneously with each Default Repayment (defined herein) occurring prior to the Maturity Date, Borrower shall pay to Lender an amount equal to the greater of: (A) three ‘(3%) percent of the principal amount of this Note being prepaid; and (B) the present value of a series of payments each equal to the Payment Differential (hereinafter defined) and payable on each Monthly Payment Date over the remaining original term of this Note and on the Maturity Date discounted at the Reinvestment Yield (hereinafter defined) for the number of months remaining from the date of the Default Repayment (the “Repayment Date”) to each such Monthly Payment Date and the Maturity Date. The term “Reinvestment Yield” as used herein shall be equal to the lesser of (a) the (i) yield on the U.S. Treasury issue (primary issue) with the same maturity date as the Maturity Date; or (ii) if no such U.S. Treasury issue is available, then the interpolated yield on the two U.S. Treasury issues (primary issues) with maturity dates (one prior to and one following) that are closest to the Maturity Date; or (b) the (i) yield on the U.S. Treasury issue (primary issue) with a term equal to the remaining average life of the Debt, or (ii) if no such U.S. Treasury issue is available, then the interpolated yield on the two U.S. Treasury issues (primary issues) with terms (one prior to and one following) that are closest to the remaining average life of the Debt, with each such yield being based on the bid price for such issue as published in The Wall Street Journal on the date that is 14 days prior to the Repayment Date (or, if such bid price is not published on

that date, the next preceding date on which such bid price is so published) and converted to a monthly compounded nominal yield. The term “Payment Differential” as used herein shall be equal to (x) the Applicable Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by (z) the principal sum being repaid on such Repayment Date after application of the Constant Monthly Payment (if any) due on the date of the Default Repayment, provided that the Payment Differential shall in no event be less than zero. In no event, however, shall Lender be required to reinvest any repayment proceeds in U.S. Treasury obligations or otherwise.

For purposes of this Note, the term “Default Repayment” shall mean a repayment of all or any portion of the principal amount of this Note made during the continuance of any Event of Default or after an acceleration of the Maturity Date under any circumstances, including, without limitation, a repayment occurring in connection with reinstatement of the Security Instrument provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory right of redemption exercised by Borrower or any other party having a statutory right to redeem or prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.

6. SECURITY

This Note is secured by the Security Instrument and the other Loan Documents. The Security Instrument is intended to be duly recorded in the public records of the county where the Property is located. All of the terms, covenants and conditions contained in the Security Instrument and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein.

7. SAVINGS CLAUSE

This Note is subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance due hereunder at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Note, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall he deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

8. LATE CHARGE

If any sum payable under this Note is not paid on the date on which it is due, regardless of whether such failure shall constitute an Event of Default, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of the unpaid sum or the maximum amount permitted by applicable law to defray the expenses incurred by Lender in handling and processing the delinquent payment and to compensate Lender for the loss of the use of the delinquent payment and the amount shall be secured by the Security Instrument and the other Loan Documents.

9. NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

10. JOINT AND SEVERAL LIABILITY

If Borrower consists of more than one person or party, the obligations and liabilities of each person or party shall be joint and several.

11. WAIVERS, ETC.

All payments required hereunder shall be made irrespective of, and without any deduction for, any setoff, defense or counterclaim. Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other notices of any kind, other than notices specifically required by the terms of this Note, the Security Instrument and the other Loan Documents. Except as otherwise provided in Section 5(b) relating to the Defeasance Deposit, no release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or the other Loan Documents made by agreement between Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under this Note, the Security Instrument or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Security Instrument or the other Loan Documents. In addition, acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default. If Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term “Borrower,” as used herein, shall

include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Borrower is a corporation or limited liability company, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders or members comprising, or the officers and directors or managers relating to, the corporation or limited liability company, and the term “Borrower” as used herein, shall include any alternative or successor corporation or limited liability company, but any predecessor corporation or limited liability company shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in a partnership, corporation or limited liability company which may be set forth in the Security Instrument or any other Loan Document.)

12. TRANSFER

Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Security Instrument and the other Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

13. WAIVER OF TRIAL BY JURY

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

14. EXCULPATION

(a)       Except as otherwise provided herein, in the Security Instrument or in the other Loan Documents, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in this Note or the Security Instrument by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may sell the Property under any power of sale or right of non-judicial foreclosure or bring a foreclosure action, confirmation action, action for specific performance or other appropriate action or proceeding to enable Lender to enforce and realize upon this Note, the Security Instrument, the other Loan Documents, and the interest in the Property, the Rents (as defined in the Security Instrument) and any other

collateral given to Lender created by this Note, the Security Instrument and the other Loan Documents; provided, however, that any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender. Lender, by accepting this Note and the Security Instrument, agrees that it shall not, except as otherwise provided in Section 10.10 of the Security Instrument, sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding, under or by reason of or under or in connection with this Note, the other Loan Documents or the Security Instrument. The provisions of this Article shall not, however, (i) constitute a waiver, release or impairment of any obligation evidenced or secured by this Note, the other Loan Documents or the Security Instrument; (ii) [Intentionally Deleted]; (iii) impair the right of Lender to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under the Security Instrument; (iv) affect the validity or enforceability of any indemnity, guaranty, master lease or similar instrument made in connection with this Note, the Security Instrument, or the other Loan Documents; (v) impair the right of Lender to obtain the appointment of a receiver; (vi) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith; (vii) impair the right of Lender to obtain a deficiency judgment or judgment on the Note against Borrower if necessary to obtain any insurance proceeds or condemnation awards to which Lender would otherwise be entitled under the Security Instrument; provided however, Lender shall only enforce such judgment against the insurance proceeds and/or condemnation awards; or (viii) impair the right of Lender to enforce the provisions of Sections 10.10, 11.2 and 11.3 of the Security Instrument.

(b)       Notwithstanding the provisions of this Article 14 to the contrary, Borrower shall be personally liable to Lender for the Losses (as defined in the Security Instrument) it incurs due to: (i) fraud or intentional misrepresentation by Borrower, its agents or principals, (ii) Borrower’s misapplication or misappropriation of (A) Rents received by Borrower after the occurrence of an Event of Default, (B) tenant security deposits or Rents collected in advance, or (C) insurance proceeds or condemnation awards, (iii) Borrower’s failure to pay Taxes (as defined in the Security Instrument), Insurance Premiums (as defined in the Security Instrument), Other Charges (as defined in the Security Instrument) (except to the extent that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms of the Security Instrument), charges for labor or materials or other charges that can create liens on the Property, provided that Borrower’s liability under this clause (iii) shall not exceed an amount equal to the net operating income of the Property for the twelve (12) month period preceding the related failure to pay, less the amount of all Constant Monthly Payments and required reserve payments made by Borrower in accordance with this Note, the Security Instrument and the other Loan Documents during such twelve (12) month period, (iv) Borrower’s failure to comply with the provisions of Sections 3.10, 5.9 or 16.1 of the Security Instrument, or (v) Borrower’s or any other Indemnitor’s failure to comply with the provisions of the Environmental Indemnity (as defined in the Security Instrument).

(c)       Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND VOID and shall be of no further force and effect (i) in the event of Borrower’s default under Sections 4.2 or 8.2 of the Security Instrument, or (ii) if the Property or any part thereof shall become an asset in (1)a voluntary bankruptcy or insolvency proceeding, or (2) an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any party controlling, controlled by or under common control with Borrower (which shall include, but not be limited to, any creditor or claimant acting in concert with Borrower or any of the foregoing parties) (the “Borrowing Group”) or (B) in which any member of the Borrowing Group objects to a motion by Lender for relief from any stay or injunction from the foreclosure of the Security Instrument or any other remedial action permitted hereunder or under the Security Instrument or the other Loan Documents, or (iii) if a court of competent jurisdiction holds that the granting, execution or delivery of the Security Instrument or any other Loan Documents is or constitutes a fraudulent conveyance under any bankruptcy, insolvency or fraudulent conveyance law or is otherwise voidable under any such laws.

(d)       Nothing herein shall be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 111l(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with this Note, the Security Instrument and the other Loan Documents.

15. AUTHORITY

Borrower (and the undersigned representative of Borrower, if any) represents that Borrower has full power, authority and legal right to execute and deliver this Note, the Security Instrument and the other Loan Documents and that this Note, the Security Instrument and the other Loan Documents constitute valid and binding obligations of Borrower.

16. APPLICABLE LAW

This Note shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

17. COUNSEL FEES

In the event that it should become necessary to employ counsel to collect the Debt or to protect or foreclose the security therefor, Borrower also agrees to pay all reasonable fees and expenses of Lender, including, without limitation, reasonable attorney’s fees for the services of such counsel whether or not suit be brought.

18. NOTICES

All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3)Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	Everest Bayberry, LP c/o Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8th Floor New York, New York 10022 Attention: John Herman
With a copy to	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
and	Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300 45 South Seventh Street Minneapolis, Minnesota 55402-1609 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

“Business Day” shall mean a day upon which commercial banks are not authorized or required by law to close in New York, New York.

19. MISCELLANEOUS

(a)       Wherever pursuant to this Note (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

(b)       Whenever used, the singular shall include the plural, the plural shall include the singular, and the words “Lender” and “Borrower” shall include their respective successors, assigns, heirs, executors and administrators.

20. FURTHER NOTICE REGARDING AGREEMENTS WITH LENDER.

This notice is provided pursuant to Section 432.047, R.S.Mo. As used herein, “creditor” means Lender and “this writing” means this Agreement and all the other Loan Documents. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

EVEREST BAYBERRY, LP,
a California limited partnership
By:	Millenium Bayberry, LLC, a
	California limited liability company, its general partner
	By:	Millenium Management, LLC, a
		California Limited Liability Company
		Its Manager
	By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis
	Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 10^th day of August, in the year 2006, before me, Charlie Lam, a Notary Public in and for said state, personally appeared Christopher K. Davis, the Vice President and General Counsel of MILLENIUM MANAGEMENT, LLC, a California limited liability company, the Manager of MILLENIUM BAYBERRY, LLC, a California limited liability company, the General Partner of EVEREST BAYBERRY, LP, a California limited partnership, known to be the person who executed the within instrument on behalf of said MILLENIUM MANAGEMENT, LLC, the Manager of said MILLENIUM BAYBERRY, LLC, General Partner of EVEREST BAYBERRY, LP, and acknowledged to me that he executed the same for the purposes therein stated.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

/S/ CHARLIE LAM

Notary Public

Print Name: Charlie Lam

(SEAL)

My Commission Expires: 11/26/2006

EX-99

PROPERTY MANAGEMENT AGREEMENT

Cascade Apartments

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as of March 14, 2005 by and between CASCADE JOINT VENTURE, L.P., a Kansas limited partnership (“Owner”), and MAXUS PROPERTIES, INC. a Missouri corporation (“Manager”).

Owner owns the apartment building commonly known as Cascade Apartments, located at 3441 SW Burlingame Road, Topeka, Kansas (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1 Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2      Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3       Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)       Manager shall have responsibility and, to the extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or

materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4       Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual

applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable judgment, required for the operation of the Property.

(c)       During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5       Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)       Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor hall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6       Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning, painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8       Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b)       Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c)       Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9       Service Contracts, Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent

for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b)be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.11     Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12     Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13     Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof; (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f) check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1       Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for

less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2       Employees, Contractor’s, Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand

Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3       Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner an income statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accruals basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3      Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f) summaries of adjusting journal entries as part of the annual audit process; (g) supporting documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (j)rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (j), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner. (b) Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1      Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement.

If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2       Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Cascade Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3       Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4       Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses

included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used -for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j)all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2       Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive

responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1       Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to five percent (5%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (h) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j)discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If Owner is required to refund to a tenant any amount paid by the tenant, Manager shall promptly pay to Owner, or subtract from the next month’s Management Fee, all Management Fees originally paid to Manager on the amount of the refund. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other h d s timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERMINATION

10.1     Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this Agreement.

In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager. In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of

termination, delivered within thirty (30) days after termination; (b)any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to fulfil such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1Lender Approval. This Agreement may be subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1     Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER	Maxus Properties, Inc. 104 Armour Road P.O. Box 34729 North Kansas City, MO 64116 Tel.: (816) 303-4500 Fax: (816) 221-1829 Attention: Dave Johnson
OWNWER:	Cascade Joint Venture, L.P. 199 S. Los Robles Avenue Suite 200 Pasadena, CA 91 10 1 Tel.: (626) 585-5920 Fax: (626) 585-5929 Attention: John Anderson

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States

registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1) business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approvals. Each party may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John Anderson and Peter J. Wilkinson. Manager hereby initially designates Dave Johnson and John Alvey.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest or the voting power of the appropriate entity.

14.4     Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing.

14.5     Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6     Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the inpersonam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal

proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement; and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b)Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10  Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only to the extent of Owner’s interest in the Property, and: (i) only to the extent such Claims are not covered by insurance maintained by Owner or Manager; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel . If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written

consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall he determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not he affected thereby, and each provision hereof shall he valid and shall he enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or he construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to he in exclusion of any other right or remedy. Any consent, waiver or approval by either party of any act or matter must he in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16   Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

“OWNER”
CASCADE JOINT VENTURE, L.P.,
a Kansas limited partnership
By:	Millenium Management, LLC
	a California limited liability company
	its general partner
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst
		President

“MANAGER”
MAXUS PROPERTIES, INC.
a Missouri corporation
	By:	/S/ MICHAEL P. MCROBERT
		Michael P. McRobert
		Chief Executive Officer

EX-99

CASCADE JOINT VENTURE, L.P.

ASSIGNMENT OF PARTNERSHIP INTEREST

1. THIS AGREEMENT,made and entered into this 3rd day of October, 2006, by and between Secured Investment Resources Fund, L.P. (“Assignor”) and Secured Investment Resources Fund, L.P. II (“Assignee” or “Substituted Limited Partner”).

2. Witnesseth

WHEREAS, FOR VALUE RECEIVED, Assignor(s) herein transfers partnership interests in the Cascade Joint Venture, L.P. (“the Partnership”) designated before (such transferred interests hereinafter referred to as “Assigned Assets” or “Units”), such partnership organized under the (Revised) Uniform Limited Partnership Act of the State of Kansas; and

WHEREAS, Assignor desires to assign to Assignee(s) all of Assignor’s right, title and interest in and to the Assigned Assets, to be held by Assignee as a Substituted Limited Partner; and

WHEREAS, Assignor, Assignee and General Partner all have an economic interest in having such transfer occur immediately (as opposed to the last day of the calendar month after the General Partner receives notice of this assignment as is currently specified in the Cascade JV Agreement);

NOW THEREFORE, Assignor(s) assigns and transfers to Assignee(s) all of his/her right, title and interest in and to the Assigned Assets from and after today’s date.

3. Partnership Units Transferred

100% of Units owned by Assignor which represents 100% of the outstanding Units in the Partnership.

4.         Intent, Power of Attorney, Suitability. It is the intent of both Assignor and Assignee that Assignor shall have no further interest in the Units hereby assigned to Assignee and described above as Assigned Assets, and Assignee shall be and become a Substituted Limited Partner (in accordance with the Limited Partnership Agreement, as amended (the “Agreement”)), for the Partnership. Assignor hereby consents to the admission of Assignee as a Substituted Limited Partner of the Partnership. If Assignor was a holder of Depositary Receipt, Assignor surrenders all interests assigned hereby and represented on said Depository Receipts for the Partnership.

Assignee hereby, and by these presents, accepts the Units hereby assigned and requests admission as a Substituted Limited Partner of the Partnership and as a Substituted Limited Partner in the Partnership agrees to he bound by the terms and conditions of the Partnership’s Agreement, represents that this assignment was made in accordance with all applicable laws and regulations and hereby grants the General Partner a power of attorney pursuant to the terms of the Partnership’s Agreement.

Assignee represents that it meets all of the applicable suitability standards of a Unit Holder as described in the Partnership Agreement. Assignee further represents that it is acquiring the Units for investment intent and, except where permitted by federal and state securities laws, not for the purpose of resale. Assignee has provided the Partnership with any and all requested documentation concerning the Assignee(s) suitability and compliance with applicable laws. This agreement shall bind the parties hereto, their heirs, successors, legal representatives and assigns.

Assignor and Assignee further represent that this transfer is in compliance with all applicable federal and state securities and tax laws and, upon the request of the General Partner, such parties shall provide the General Partner with all documentation necessary to support such compliance.

IN WITNESS WHEREOF, the parties hereto have set their hands as of the day and year noted above, each agreeing to the transfer and each agreeing to have such transfer be effective immediately, regardless of anything to the contrary contained in the Partnership Agreement.

ASSIGNOR			ASSIGNEE
Secured Investment Resource Fund, L.P.			Secured Investment Recourses Fund, L.P. II
a Delaware limited partnership			a Delaware limited partnership
By:	Millenium Management, LLC		By:	Millenium Management, LLC
	a California limited liability company			a California limited liability company
	By:	/S/ CHRISTOPHER K. DAVIS		By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis			Christopher K. Davis
		Vice President and General Counsel			Vice President and General Counsel

MILLENIUM MANAGEMENT, LLC

MILLENIUM MANAGEMENT, LLC, as transfer agent and General Partner of the Partnership, hereby accepts this assignment, consents to the admission of Assignee as a Substituted Limited Partner of the Partnership, and consents to having this assignment and admission of the Assignee as a Substituted Limited Partner of the Partnership be effective as of today’s date, regardless of anything to the contrary contained in the Partnership Agreement.

Millenium Management, LLC
a California limited liability company
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis
	Vice President and General Counsel

EX-99

FHLMC Loan No. 940972379

GUARANTY

MULTISTATE

(for use in all jurisdictions except California)

REVISION DATE 05/06/05

This Guaranty ("Guaranty") is entered into to be effective as of October 4, 2006, by the undersigned person(s) (the "Guarantor" jointly and severally if more than one), for the benefit of NorthMarq Capital, Inc., a Minnesota corporation (the "Lender").

RECITALS

A.       Cascade Joint Venture, L.P., a Kansas limited partnership (the “Borrower”) has requested that Lender make a loan to Borrower in the amount of $2,540,000.00 (the "Loan"). The Loan will be evidenced by a Multifamily Note from Borrower to Lender dated effective as of the effective date of this Guaranty (the "Note"). The Note will be secured by a Multifamily Mortgage, Assignment of Rents and Security Agreement dated effective as of the effective date of the Note (the "Security Instrument"), encumbering the Mortgaged Property described in

the Security Instrument.

B.        As a condition to making the Loan to Borrower, Lender requires that the Guarantor execute this Guaranty.

NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower, and in consideration thereof, Guarantor agrees as follows:

1. Defined Terms. "Indebtedness,""Loan Documents" and "Property Jurisdiction" and other capitalized terms used but not defined in this Guaranty shall have the meanings assigned to them in the Security Instrument.

2. Scope of Guaranty.

(a) Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender:

(i) the full and prompt payment when due, whether at the Maturity Date or earlier, by reason of acceleration or otherwise, and at all times thereafter, of each of the following:

(A) a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of the Note (the "Base Guaranty"); and

(B) in addition to the Base Guaranty, all other amounts for which Borrower is personally liable under Sections 9(c), 9(d) and 9(f) of the Note; and

(C) all costs and expenses, including reasonable Attorneys' Fees and Costs incurred by Lender in enforcing its rights under this Guaranty; and

(ii) the full and prompt payment and performance when due of all of Borrower's obligations under Section 18 of the Security Instrument.

(b) If the Base Guaranty stated in Section 2(a)(i)(A) is 100 percent of the original principal balance of the Note, then (i) the Base Guaranty shall mean and include the full and complete guaranty of payment of the entire Indebtedness and the performance of all Borrower's obligations under the Loan Documents: and (ii) for so long as the Base Guaranty remains in effect (there being no limit to the duration of the Base Guaranty unless otherwise expressly provided in this Guaranty), the obligations guaranteed pursuant to Sections 2(a)(i)(B), 2(a)(i)(C) and Section 3 shall be part of, and not in addition to or in limitation of, the Base Guaranty.

If the Base Guaranty stated in Section 2(a)(i)(A) is less than 100 percent of the original principal balance of the Note, then this Section 2(b) shall be completely inapplicable and shall be treated as if not a part of this Guaranty.

(c) If Guarantor is not liable for the entire Indebtedness, then all payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Security Instrument and the other Loan Documents (except this Guaranty) shall be applied first to the portion of the Indebtedness for which neither Borrower nor Guarantor has personal liability.

3. Additional Guaranty Relating to Bankruptcy.

(a) Notwithstanding any limitation on liability provided for elsewhere in this Guaranty, Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender the full and prompt payment when due, whether at the Maturity Date or earlier, by reason of acceleration or otherwise, and at all times thereafter, the entire Indebtedness, in the event that:

(i) Borrower voluntarily files for bankruptcy protection under the United States Bankruptcy Code; or

(ii) Borrower voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or-state law affecting debtor and-creditor rights; or

(iii) an order of relief is entered against Borrower pursuant to the United States Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a "Related Party."

PAGE 2

(b) For purposes of this Section, the term "Related Party" means:

(i) Borrower or Guarantor; and

(ii) any person or entity that holds, directly or indirectly, any ownership interest in or right to manage Borrower or Guarantor, including without limitation, any shareholder, member or partner of Borrower or Guarantor; and

(iii) any person or entity in which any ownership interest (direct or indirect) or right to manage is held by Borrower, Guarantor or any partner, shareholder or member of, or any other person or entity holding an interest in, Borrower or Guarantor; and

(iv) any other creditor of Borrower that is related by blood, marriage or adoption to Borrower, Guarantor or any partner, shareholder or member of, or any other person or entity holding an interest in, Borrower or Guarantor.

(c) If Borrower, Guarantor or any Related Party has solicited creditors to initiate or participate in any proceeding referred to in this Section, regardless of whether any of the creditors solicited actually initiates or participates in the proceeding, then such proceeding shall be considered as having been initiated by a Related Party.

4. Guarantor's Obligations Survive Foreclosure. The obligations of Guarantor under this Guaranty shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instrument, and, in addition, the obligations of Guarantor relating to Borrower's obligations under Section 18 of the Security Instrument shall survive any repayment or discharge of the Indebtedness. Notwithstanding the foregoing, if Lender has never been a mortgagee-in-possession of or held title to the Mortgaged Property, Guarantor shall have no obligation under this Guaranty relating to Borrower's obligations under Section 18 of the Security Instrument after the date of the release of record of the lien of the Security Instrument as a result of the payment in full of the Indebtedness on the Maturity Date or by voluntary prepayment in full.

5. Guaranty of Payment and Performance. Guarantor's obligations under this Guaranty constitute an unconditional guaranty of payment and performance and not merely a guaranty of collection.

6. No Demand by Lender Necessary; Waivers by Guarantor. The obligations of Guarantor under this Guaranty shall be performed without demand by Lender and shall be unconditional regardless of the genuineness, validity, regularity or enforceability of the Note, the Security Instrument, or any other Loan Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a mortgagor. Guarantor hereby waives, to the fullest extent permitted by applicable law:

PAGE 3

(a) the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and agrees that Guarantor's obligations shall not be affected by any circumstances, whether or not referred to in this Guaranty, which might otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a mortgagor;

(b) the benefits of any right of discharge under any and all statutes or other laws relating to a guarantor, a surety, a borrower or a mortgagor, and any other rights of a surety, a guarantor, a borrower or a mortgagor under such statutes or laws;

(c) diligence in collecting the Indebtedness, presentment, demand for payment, protest, all notices with respect to the Note and this Guaranty which may be required by statute, rule of law or otherwise to preserve Lender's rights against Guarantor under this Guaranty, including, but not limited to, notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, and notice of the incurring by Borrower of any obligation or indebtedness;

(d) all rights to cause a marshalling of the Borrower's assets or to require Lender to:

(i) proceed against Borrower or any other guarantor of Borrower's payment or performance under the Loan Documents (an "Other Guarantor");

(ii) proceed against any general partner of Borrower or any Other Guarantor if Borrower or any Other Guarantor is a partnership;

(iii) proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness; or

(iv) pursue any other remedy it may now or hereafter have against Borrower, or, if Borrower is a partnership, any general partner of Borrower;

(e) any right to object to the timing, manner or conduct of Lender's enforcement of its rights under any of the Loan Documents; and

(f) any right to revoke this Guaranty as to any future advances by Lender under the

terms of the Security Instrument to protect Lender's interest in the Mortgaged Property.

7. Modification of Loan Documents. At any time or from time to time and any number of times, without notice to Guarantor and without affecting the liability of Guarantor, Lender may:

(a) extend the time for payment of the principal of or interest on the Indebtedness or renew the Indebtedness in whole or in part;

PAGE 4

(b) extend the time for Borrower's performance of or compliance with any covenant or agreement contained in the Note, the Security Instrument or any other Loan Document, whether presently existing or hereinafter entered into, or waive such performance or compliance;

(c) accelerate the Maturity Date of the Indebtedness as provided in the Note, the Security Instrument, or any other Loan Document;

(d) with Borrower, modify or amend the Note, the Security Instrument, or any other Loan Document in any respect, including, but not limited to, an increase in the principal amount; and/or

(e) modify, exchange, surrender or otherwise deal with any security for the Indebtedness or accept additional security that is pledged or mortgaged for the Indebtedness.

8. Joint and Several Liability. The obligations of Guarantor (and each party named as a Guarantor in this Guaranty) and any Other Guarantor shall be joint and several. Lender, in its sole and absolute discretion, may:

(a) bring suit against Guarantor, or any one or more of the parties named as a Guarantor in this Guaranty, and any Other Guarantor, jointly and severally, or against any one or more of them;

(b) compromise or settle with Guarantor, any one or more of the parties named as a Guarantor in this Guaranty, or any Other Guarantor, for such consideration as Lender may deem proper;

(c) release one or more of the parties named as a Guarantor in this Guaranty, or any Other Guarantor, from liability; and

(d) otherwise deal with Guarantor and any Other Guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from Guarantor any amount guaranteed by Guarantor under this Guaranty.

9. Subordination of Borrower's Indebtedness to Guarantor. Any indebtedness of Borrower held by Guarantor now or in the future is and shall be subordinated to the Indebtedness and Guarantor shall collect, enforce and receive any such indebtedness of Borrower as trustee for Lender, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.

10. Waiver of Subrogation. Guarantor shall have no right of, and hereby waives any claim for, subrogation or reimbursement against Borrower or any general partner of Borrower by reason of any payment by Guarantor under this Guaranty, whether such right or claim arises at law or in equity or under any contract or statute, until the Indebtedness has been paid in full and there has expired the maximum possible period thereafter during which

PAGE 5

any payment made by Borrower to Lender with respect to the Indebtedness could be deemed a preference under the United States Bankruptcy Code.

11. Preference. If any payment by Borrower is held to constitute a preference under any applicable bankruptcy, insolvency, or similar laws, or if for any other reason Lender is required to refund any sums to Borrower, such refund shall not constitute a release of any liability of Guarantor under this Guaranty. It is the intention of Lender and Guarantor that Guarantor's obligations under this Guaranty shall not be discharged except by Guarantor's performance of such obligations and then only to the extent of such performance.

12. Financial Statements. Guarantor, from time to time upon written request by Lender, shall deliver to Lender such financial statements as Lender may reasonably require.

13. Assignment. Lender may assign its rights under this Guaranty in whole or in part and upon any such assignment, all the terms and provisions of this Guaranty shall inure to the benefit of such assignee to the extent so assigned. The terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors and assigns of such parties, and the term "Lender" shall also include any lawful owner, holder or pledgee of the Note. Reference in this Guaranty to "person" or "persons" shall be deemed to include individuals and entities.

14. Complete and Final Agreement. This Guaranty and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements. There are no unwritten oral agreements between the parties. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Guaranty and the other Loan Documents. Guarantor acknowledges that Guarantor has received a copy of the Note and all other Loan Documents. Neither this Guaranty nor any of its provisions may be waived, modified, amended, discharged, or terminated except by a writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that writing.

15. Governing Law. This Guaranty shall be governed by and enforced in accordance with the laws of the Property Jurisdiction, without giving effect to the choice of law principles of the Property Jurisdiction that would require the application of the laws of a jurisdiction other than the Property Jurisdiction.

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

PAGE 6

Guaranty against Guarantor or any of Guarantor's assets in any court of any other jurisdiction.

17. Guarantor's Interest in Borrower. Guarantor represents to Lender that Guarantor has a direct or indirect ownership or other financial interest in Borrower and/or will otherwise derive a material financial benefit from the making of the Loan.

18. State-Specific Provisions. N/A.

19. Residence; Community Property Provision. N/A.

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

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

|x| Exhibit A Modifications to Guaranty

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

PAGE 7

IN WITNESS WHEREOF, Guarantor has signed and delivered this Guaranty under seal or has caused this Guaranty to be signed and delivered under seal by its duly authorized representative.

Secured Investment Recourses Fund, L.P. II
a Delaware limited partnership
	By:	Millenium Management, LLC, a California
		limited liability company
	Its:	General Partner
		By:	/S/ W. ROBERT KOHORST
			W. Robert Kohorst
		Its:	President

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 3rd day of October, 2006, before me, the undersigned, a Notary Public in and for the State of California, duly commissioned and sworn, personally appeared W. Robert Kohorst, to me known to be the President of Millenium Management, LLC, a California limited liability company, the General Partner of Secured Investment Resources Fund, L.P. II, a Delaware limited partnership, described in the foregoing instrument, acknowledged to me that [s]he signed and sealed the foregoing instrument as the free and voluntary act and deed of the limited partnership, for the uses and purposes therein mentioned.

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

/S/ LISA LONGO

Notary Public

My Commission Expires: 10/24/08

Name and Address of Guarantor

Name:	Secured Investment Resources Fund L.P. II
Address:	c/o W. Robert Kohorst
	Everest Properties
	199 South Los Robles Avenue, Suite 200
	Pasadena, California 91101

PAGE 8

EXHIBIT A

MODIFICATIONS TO GUARANTY

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

NONE.

PAGE A-1

EX-99

Prepared by, and after recording

return to:

Moss & Bamett (EHK)

A Professional Association

4800 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

MULTIFAMILY MORTGAGE,

ASSIGNMENT OF RENTS

AND SECURITY AGREEMENT

(KANSAS - REVISION DATE 05-1 1-2004)

FHLMC Loan No. 940972379

MULTIFAMILY MORTGAGE,

ASSIGNMENT OF RENTS

AND SECURITY AGREEMENT

(KANSAS - REVISION DATE 05-11-2004)

THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the “Instrument”) is made as of October 4, 2006, between Cascade Joint Venture, L.P., a limited partnership organized and existing under the laws of Kansas, whose address is c/o W. Robert Kohorst, Everest Properties, 199 S. Los Robles Avenue, Suite 200, Pasadena, CA 91101, as mortgagor (“Borrower”), and NorthMarq Capital, Inc., a corporation organized and existing under the laws of Minnesota, whose address is 3500 American Boulevard West, Suite 500, Bloomington, Minnesota 55431, as mortgagee (“Lender”). Borrower’s organizational identification number, if applicable, is 2122828.

Borrower is indebted to Lender in the principal amount of $2,540,000.00, as evidenced by Borrower’s Multifamily Note payable to Lender, dated as of the date of this Instrument, and maturing on November 1, 2017 (the “Maturity Date”).

TO SECURE TO LENDER the repayment of the Indebtedness, and all renewals, extensions and modifications of the Indebtedness, and the performance of the covenants and agreements of Borrower contained in the Loan Documents, Borrower hereby mortgages,

warrants, grants, conveys and assigns to Lender the Mortgaged Property, including the Land located in Shawnee County, State of Kansas and described in Exhibit A attached to this Instrument.

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

UNIFORM COVENANTS

REVISION DATE 01-30-2006

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

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

(a)        “Attorneys’ Fees and Costs” means (i) fees and out-of-pocket costs of Lender’s and Loan Servicer’s attorneys, as applicable, including costs of Lender’s and Loan Servicer’s in-house counsel, support staff costs, costs of preparing for litigation, computerized research,

PAGE 1

telephone and facsimile transmission expenses, mileage, deposition costs, postage, duplicating, process service, videotaping and similar costs and expenses; (ii) costs and fees of expert witnesses, including appraisers; and (iii) investigatory fees.

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

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

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

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

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

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

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

(i)        “Fixtures” means all property owned by Borrower which is so attached to the Land or the Improvements as to constitute a fixture under applicable law, including: machinery, equipment, engines, boilers, incinerators, installed building materials; systems and equipment for the purpose of supplying or distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring and conduits used in connection with radio, television, security, fire prevention, or fire detection or otherwise used to carry electronic signals; telephone systems and

PAGE 2

equipment; elevators and related machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and other appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants; swimming pools; and exercise equipment.

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

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

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

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

et seq.,the Clean Water Act, 33 U.S.C. Section 1251, et seq.,and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101 et seq.,and their state analogs.

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

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

(p)       “Indebtedness” means the principal of, interest at the fixed or variable rate set forth in the Note on, and all other amounts due at any time under, the Note, this Instrument or any

PAGE 3

other Loan Document, including prepayment premiums, late charges, default interest, and advances as provided in Section 12 to protect the security of this Instrument.

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

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

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

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

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

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

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

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

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

(i) the Land;

(ii) the Improvements;

(iii) the Fixtures;

PAGE 4

(iv) the Personalty;

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

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

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

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

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

(x) all Rents and Leases;

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

(xii) all Imposition Deposits;

PAGE 5

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

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

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

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

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

(bb) “Personalty” means all:

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

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

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

(iv) any operating agreements relating to the Land or the Improvements;

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

(vi) all other intangible property, general intangibles and rights relating to the operation of, or used in connection with, the Land or the Improvements,

PAGE 6

including all governmental permits relating to any activities on the Land and including subsidy or similar payments received from any sources, including a governmental authority; and

(vii) any rights of Borrower in or under letters of credit.

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

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

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

(ff) “Transfer” is defined in Section 2 1.

2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

(a)        This Instrument is also a security agreement under the Uniform Commercial Code for any of the Mortgaged Property which, under applicable law, may be subjected to a security interest under the Uniform Commercial Code, whether such Mortgaged Property is owned now or acquired in the future, and all products and cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and Borrower hereby grants to Lender a security interest in the UCC Collateral. Borrower hereby authorizes Lender to prepare and file financing statements, continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest and Borrower agrees, if Lender so requests, to execute and deliver to Lender such financing statements, continuation statements and amendments. Borrower shall pay all filing costs and all costs and expenses of any record searches for financing statements and/or amendments that Lender may require. Without the prior written

consent of Lender, Borrower shall not create or permit to exist any other lien or security interest in any of the UCC Collateral.

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

PAGE 7

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

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

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

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

(b)       After the occurrence of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender. However, until the occurrence of an Event of Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender and to apply all Rents to pay the installments of interest and principal then due and payable under the Note and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities, Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing, the Rents remaining after application pursuant to the preceding sentence may be retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Instrument. From and after the occurrence of an Event of Default, and without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and Lender shall without Notice be entitled to all Rents as they become due and payable, including Rents then due and unpaid. Borrower shall pay to Lender upon demand all Rents to which Lender is entitled. At any time on or after the date of Lender’s demand for Rents, (i) Lender may give, and Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged

PAGE 8

Property instructing them to pay all Rents to Lender, (ii) no tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and (iii) no tenant shall be obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit. Borrower shall not interfere with and shall cooperate with Lender’s collection of such Rents.

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

(d)       If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter upon and take and maintain full control of the Mortgaged Property in order to perform all acts that Lender in its discretion determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents, the making of repairs to the Mortgaged Property and the execution or termination of contracts providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property or the security of this instrument, or for such other purposes as Lender in its discretion may deem necessary or desirable. Alternatively, if an Event of Default has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to Borrower’s solvency and without the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in the preceding sentence. If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Borrower, by its execution of this Instrument, expressly consents to the appointment of such receiver, including the appointment of a receiver exparte if permitted by applicable law. Lender or the receiver, as the case may be, shall be entitled to receive a reasonable fee for managing the Mortgaged Property. Immediately upon appointment of a receiver or immediately upon the Lender’s entering upon and taking possession and control of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the case may be, all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and prepaid Rents. In the event Lender takes possession and control of the Mortgaged Property, Lender may exclude Borrower and its representatives from the Mortgaged Property. Borrower acknowledges and agrees that the exercise by Lender of any of the rights conferred under this Section 3 shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.

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

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

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

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

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

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

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

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

(e)        Borrower shall, promptly upon Lender’s request, deliver to Lender an executed copy of each residential Lease then in effect. All Leases for residential dwelling units shall be on forms approved by Lender, shall be for initial terms of at least six months and not more than two years, and shall not include options to purchase. If Borrower is a cooperative housing corporation, association or other validly organized entity under municipal, county, state or federal law, notwithstanding anything to the contrary contained in this subsection, so long as Borrower is not in breach of any covenant of this Instrument, Lender hereby consents to the execution of leases of apartments for a term in excess of two years from Borrower to a tenant shareholder of Borrower, to the surrender or termination of such leases of apartments where the surrendered or terminated lease is immediately replaced or where the Borrower makes its best efforts to secure such immediate replacement by a newly executed lease of the same apartment to a tenant shareholder of the Borrower. However, no consent is hereby given by Lender to any execution, surrender, termination or assignment of a lease under terns that would waive or reduce the obligation of the resulting tenant shareholder under such lease to pay cooperative assessments in full when due or the obligation of the former tenant shareholder to pay any unpaid portion of such assessments.

(f)        Borrower shall not lease any portion of the Mortgaged Property for non-residential use except with the prior written consent of Lender and Lender’s prior written approval of the Lease agreement. Borrower shall not modify the terms of, or extend or terminate, any Lease for non-residential use (including any Lease in existence on the date of this Instrument) without

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

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

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

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

7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

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

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

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[Collect]	Taxes,
[Deferred]	water and sewer charges (that could become a lien on the Mortgaged Property),
[N/A]	ground rents,
[Deferred]	assessments or other charges (that could become a lien on the Mortgaged Property)

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

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

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

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

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

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

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

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

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

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

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materially impair the lien created by this Instrument or Lender’s interest in the Mortgaged Property. Borrower represents and warrants to Lender that no portion of the Mortgaged Property has been or will be purchased with the proceeds of any illegal activity.

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

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

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

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

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

13. INSPECTION.

(a)        Lender, its agents, representatives, and designees may make or cause to be made entries upon and inspections of the Mortgaged Property (including environmental inspections and tests) during normal business hours, or at any other reasonable time, upon reasonable notice to Borrower if the inspection is to include occupied residential units (which notice need not be in

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writing). Notice to Borrower shall not be required in the case of an emergency, as determined in Lender’s discretion, or when an Event of Default has occurred and is continuing.

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

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

Borrower has not received any written complaint, notice, letter or other written communication from tenants, management agent or governmental authorities regarding odors, indoor air quality, mold, fungus, microbial contamination or pathogenic organisms (“Mold”) or any activity, condition, event or omission that causes or facilitates the growth of Mold on or in any part of the Mortgaged Property or if Borrower has received any such written complaint, notice, letter or other written communication that Borrower has investigated and determined that no Mold activity, condition or event exists or alternatively has fully and properly remediated such activity, condition, event or omission in compliance with the Moisture Management Plan for the Mortgaged Property. If Borrower is unwilling or unable to provide such certification, Lender may require a professional inspection of the Mortgaged Property at Borrower’s expense.

14. BOOKS AND RECORDS; FINANCIAL REPORTING.

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

(b)       Within 120 days after the end of each fiscal year of Borrower, Borrower shall furnish to Lender a statement of income and expenses for Borrower’s operation of the Mortgaged

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

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

(i) a rent schedule for the Mortgaged Property showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender;

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

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

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

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

(ii) a quarterly or year-to-date income and expense statement for the

Mortgaged Property; and

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

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

(f)        An individual having authority to bind Borrower shall certify each of the statements, schedules and reports required by Sections 14(b) through 14(e) to be complete and accurate. Each of the statements, schedules and reports required by Sections 14(b) through 14(e) shall be in such form and contain such detail as Lender may reasonably require. Lender also may require that any of the statements, schedules or reports listed in Section 14(b) and 14(c)(i) and (ii) be audited at Borrower’s expense by independent certified public accountants acceptable to Lender, at any time when an Event of Default has occurred and is continuing or at any time that Lender, in its reasonable judgment, determines that audited financial statements are required for an accurate assessment of the financial condition of Borrower or of the Mortgaged Property.

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

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

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

15. TAXES; OPERATING EXPENSES.

(a)        Subject to the provisions of Section 15(c) and Section 1 S(d), Borrower shall pay, or cause to be paid, all Taxes when due and before the addition of any interest, fine, penalty or cost for nonpayment.

(b)       Subject to the provisions of Section 15(c), Borrower shall (i) pay the expenses of operating, managing, maintaining and repairing the Mortgaged Property (including utilities,

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repairs and replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added, and (ii) pay insurance premiums at least 30 days prior to the expiration date of each policy of insurance, unless applicable law specifies some lesser period.

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

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

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

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

17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF

MORTGAGED PROPERTY.

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

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(b) Borrower shall not abandon the Mortgaged Property.

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

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

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

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

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

18. ENVIRONMENTAL HAZARDS.

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

(i) the presence, use, generation, release, treatment, processing, storage (including storage in above ground and underground storage tanks),

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handling, or disposal of any Hazardous Materials on or under the Mortgaged Property or any other property of Borrower that is adjacent to the Mortgaged Property;

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

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

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

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

The matters described in clauses (i) through (v) above, except as otherwise provided in

Section 18(b), are referred to collectively in this Section 18as “Prohibited Activities or

Conditions.”

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

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

(d)       As required by Lender, Borrower shall also have established a written operations and maintenance program with respect to certain Hazardous Materials. Each such operations and maintenance program and any additional or revised operations and maintenance programs

PAGE 21

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

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

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

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

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

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

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

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

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

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

(i) Borrower’s discovery of any Prohibited Activity or Condition;

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

(iii) Borrower’s breach of any of its obligations under this Section 18 Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Instrument, the Note, or any other Loan Document.

(g)       Borrower shall pay promptly the costs of any environmental inspections, tests or audits, a purpose of which is to identify the extent or cause of or potential for a Prohibited Activity or Condition (“Environmental Inspections”), required by Lender in connection with any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to any Transfer under Section 2 1, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Any such costs incurred by Lender (including Attorneys’ Fees and Costs and the costs of technical consultants whether incurred in connection with any judicial or administrative process or otherwise) that Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in Section 12. As long as (i) no Event of Default has occurred and is continuing, (ii) Borrower has actually paid for or reimbursed Lender for all costs of any such Environmental Inspections performed or required by Lender, and (iii) Lender is not prohibited by law, contract or otherwise from doing so, Lender shall make available to Borrower, without representation of any kind, copies of Environmental Inspections prepared by third parties and delivered to Lender. Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental

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Inspections made by or for Lender with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections made by or for Lender. Borrower acknowledges that Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount that a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever as a result of delivering the results to any third party of any Environmental Inspections made by or for Lender, and Borrower hereby releases and forever discharges Lender from any and all claims, damages, or causes of action, arising out of, connected with or incidental to the results of, the delivery of any of Environmental Inspections made by or for Lender.

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

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

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

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Costs and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:

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

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

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

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

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

(k)       Counsel selected by Borrower to defend lndemnitees shall be subject to the approval of those Indemnitees. In any circumstances in which the indemnity under this Section 18 applies, Lender may employ its own legal counsel and consultants to prosecute, defend or negotiate any claim or legal or administrative proceeding and Lender, with the prior written consent of Borrower (which shall not be unreasonably withheld, delayed or conditioned) may settle or compromise any action or legal or administrative proceeding. However, unless an Event of Default has occurred and is continuing, or the interests of Borrower and Lender are in conflict, as determined by Lender in its discretion, Lender shall permit Borrower to undertake the actions referenced in this Section 18 in accordance with this Section 18(k) and Section 18(1) so long as Lender approves such action, which approval shall not be unreasonably withheld or delayed. Borrower shall reimburse Lender upon demand for all costs and expenses incurred by Lender, including all costs of settlements entered into in good faith, consultants’ fees and Attorneys’ Fees and Costs.

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

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

(i) any amendment or modification of any Loan Document;

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(ii) any extensions of time for performance required by any Loan Document;

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

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

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

(vi) the release or substitution in whole or in part of any security for the

Indebtedness; and

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

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

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

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

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

(o)       The provisions of this Section 18 shall be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee shall be entitled to indemnification under this Section 18

without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any other security, pursued any rights against any guarantor, or pursued any other rights available under the Loan Documents or applicable law. If Borrower consists of more than one person or entity, the obligation of those persons or entities to indemnify the Indemnitees under this Section 18 shall be joint and several. The obligation of Borrower to indemnify the Indemnitees under this Section 18 shall survive any repayment or discharge of the

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Indebtedness, any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the lien of this Instrument. Notwithstanding the foregoing, if Lender has never been a mortgagee-in-possession of, or held title to, the Mortgaged Property, Borrower shall have no obligation to indemnify the Indemnitees under this Section 18 after the date of the release of record of the lien of this Instrument by payment in full at the Maturity Date or by voluntary prepayment in full.

19. PROPERTY AND LIABILITY INSURANCE.

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

All insurance required pursuant to this Section 19(a) shall be referred to as “Hazard Insurance.”

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

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

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

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

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

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

(i) in the event of a casualty resulting in damage to the Mortgaged Property which will cost $1 0,000 or less to repair, the Borrower shall have the sole right to make proof of loss, adjust and compromise the claim and collect and receive any proceeds directly without the approval or prior consent of the Lender so long as the insurance proceeds are used solely for the Restoration of the Mortgaged Property; and

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

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

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

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

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

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

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

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

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

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

20. CONDEMNATION.

(a)        Borrower shall promptly notify Lender in writing of any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect (a “Condemnation”). Borrower shall appear in and prosecute or defend any action or proceeding relating to any Condemnation unless otherwise directed by Lender in writing. Borrower

authorizes and appoints Lender as attorney-in-fact for Borrower to commence, appear in and

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prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any Condemnation and to settle or compromise any claim in connection with any Condemnation, after consultation with Borrower and consistent with commercially reasonable standards of a prudent lender. This power of attorney is coupled with an interest and therefore is irrevocable. However, nothing contained in this Section 20 shall require Lender to incur any expense or take any action. Borrower hereby transfers and assigns to Lender all right, title and interest of Borrower in and to any award or payment with respect to (i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation.

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

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

APPROVAL].

(a) “Transfer” means

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

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

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

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

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

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

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(b) “Transfer” does not include

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

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

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

(c)        The occurrence of any of the following Transfers shall not constitute an Event of Default under this Instrument, notwithstanding any provision of Section 2 1(e) to the contrary:

(i) a Transfer to which Lender has consented;

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

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

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

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

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

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

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

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

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

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

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

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

(1) Borrower shall provide Lender with prior written Notice of the proposed Preapproved Transfer, which Notice must be accompanied by a non-refundable review fee in the amount of $3,000.00

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

(3) Either directly or indirectly, W. Robert Kohorst shall retain at all times a managing interest in the Borrower.

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

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

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

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

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

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

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

(iii) the merger of the Borrower with another entity when the Borrower is the surviving entity;

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

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

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

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

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

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

PAGE 33

(iv) if Borrower is a limited liability company, (A) a Transfer of any

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

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

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

(vii) if Borrower is a limited liability partnership, (A) a Transfer of any partnership interest in Borrower which would cause the Initial Owners to own less than a Controlling Interest of all partnership interests in Borrower, or (B) a transfer of any partnership or other interest of a managing partner in Borrower that results in a change of manager; and

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

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

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

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

(ii) the absence of any Event of Default;

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

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

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

(vi) in the case of a Transfer of all or any part of the Mortgaged Property, (A) the execution by the transferee of Lender’s then-standard assumption agreement that, among other things, requires the transferee to perform all obligations of Borrower set forth in the Note, this Instrument and any other Loan Documents, and may require that the transferee comply with any provisions of this Instrument or any other Loan Document which previously may have been waived or modified by Lender, (B) if Lender requires, the transferee causes one or more individuals or entities acceptable to Lender to execute and deliver to Lender a guaranty in a form acceptable to Lender, and (C) the transferee executes such additional Collateral Agreements as Lender may require;

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

(viii) Lender’s receipt of all of the following:

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

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

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

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

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

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

Section 19;

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

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

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

(f) any Event of Default under Section 2 1 ;

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

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

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

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

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

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

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

24. FORBEARANCE.

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

or any other Loan Document.

(b)       Any forbearance by Lender in exercising any right or remedy under the Note, this Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy, or the subsequent exercise of any right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, shall not

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be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender. Lender’s receipt of any awards or proceeds under Sections 19 and 20 shall not operate to cure or waive any Event of Default.

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

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

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

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

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

30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

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

(b)       Borrower agrees that any controversy arising under or in relation to the Note, this Instrument, or any other Loan Document may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have jurisdiction over all controversies that shall arise under or in relation to the Note, any security for the Indebtedness, or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this Section 30 is intended to limit Lender’s right to bring any suit, action or proceeding relating to matters under this Instrument in any court of any other jurisdiction.

31. NOTICE.

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

(b)       Any party to this Instrument may change the address to which Notices intended for it are to be directed by means of Notice given to the other party in accordance with this Section 3 1. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this Section 3 1, that it will acknowledge, in writing, the receipt of any Notice upon request

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by the other party and that any Notice rejected or refused by it shall be deemed for purposes of this Section 3 1 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service.

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

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

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

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

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

36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

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

(b)       No creditor of any party to this Instrument and no other person shall be a third party beneficiary of this Instrument or any other Loan Document. Without limiting the generality of the preceding sentence, (i) any arrangement (a “Servicing Arrangement”) between the Lender and any Loan Servicer for loss sharing or interim advancement of funds shall constitute a

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contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness, (ii) Borrower shall not be a third party beneficiary of any Servicing Arrangement, and (iii) no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

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

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

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

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

41.SUBROGATION. If, and to the extent that, the proceeds of the loan evidenced by the Note are used to pay, satisfy or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust or other lien encumbering the

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Mortgaged Property (a “Prior Lien”), such loan proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by the Prior Lien, whether or not the Prior Lien is released.

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

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

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

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

(iii) all rights of Borrower under any Cap Agreement and all rights of Borrower to all Cap Payments, including contract rights and general intangibles, whether existing now or arising after the date of this Instrument;

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

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

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

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

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

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

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

43.ACCELERATION; REMEDIES. At any time during the existence of an Event of Default, Lender, at Lender’s option, may declare the Indebtedness to be immediately due and payable without further demand, and may foreclose this Instrument by judicial proceeding and may invoke any other remedies permitted by applicable law or provided in this Instrument or in any other Loan Document. Lender shall be entitled to collect all costs and expenses incurred in pursuing such remedies, including costs of documentary evidence, abstracts, title reports and attorneys’ fees and out of pocket expenses.

44. RELEASE. Upon payment of the Indebtedness, Lender shall, at its cost, release this Instrument.

45.FINANCING STATEMENT. As provided in Section 2, this Instrument constitutes a financing statement with respect to any part of the Mortgaged Property which is or may become a Fixture and for the purposes of such financing statement: (a) the Debtor shall be Borrower and the Secured Party shall be Lender; (b) the addresses of Borrower as Debtor and of Lender as Secured Party are as specified above in the first paragraph of this Instrument; (c) the name of the record owner is Borrower; (d) the types or items of collateral consist of any part of the Mortgaged Property which is or may become a Fixture; and (e) the social security number or the federal employer identification number of Borrower as Debtor is 48-1148402.

46.APPOINTMENT OF RECEIVER. Section 3(b) and Section 4(d) are amended by (i) deleting the following phrase, each time it appears: “Lender entering upon and taking and maintaining control of the Mortgaged Property,” and (ii) inserting the following new phrase in its

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place: “Lender entering upon and taking and maintaining control or possession of the Mortgaged Property or any equivalent action.”

47.WAIVER OF REDEMPTION. Borrower waives all right of redemption of the Mortgaged Property.

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

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

|X|	Exhibit ADescription of the Land (required).
|X|	Exhibit B Modifications to Instrument

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

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

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BORROWER:
Cascade Joint Venture, L.P.,
a Kansas limited partnership
	By:	Millenium Cascade, LLC,
		a California limited liability company
	Its:	General Partner
		By:	Millenium Management, LLC
			a California limited liability company
		Its:	Manager
			By: /S/ W. ROBERT KOHORST
			W. Robert Kohorst      Its:   President

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On this 3rd day of October, 2006, before me, the undersigned, a Notary Public of said State, duly commissioned and sworn, personally appeared W. Robert Kohorst, personally known to me to be the person who executed the within instrument as President of Millenium Management, LLC, a California limited liability company, the Manager of Millenium Cascade, LLC, a California limited liability company, the General Partner of Cascade Joint Venture, L.P., a Kansas limited partnership, on behalf of the limited partnership, and acknowledged to me that such limited partnership executed the same.

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

/S/ LISA L. LONGO

Notary Public

My Commission Expires: 10/24/08

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EXHIBIT A

[DESCRIPTION OF THE LAND]

All of Lot 5, EXCEPT the North 33 feet thereof, AND EXCEPT that part of Lot 5 deeded to the City of Topeka as set out in Book 1741 Page 281, and all of Lot 6, EXCEPT that part of Lot 6 condemned in Case No. 115147, by the City of Topeka, all in Higinbotham and Mulvane’s Subdivision, in the City of Topeka, Shawnee County, Kansas.

EXHIBIT B

MODIFICATIONS TO INSTRUMENT

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

1. The last sentence of Section 2(a) shall be modified as follows:

“Without the prior written consent of Lender, Borrower shall not create or permit to exist any other lien or security interest in any of the UCC Collateral other than a mechanic’s, materialman’s, or judgment lien against the Mortgaged Property, provided such mechanic’s, materialman’s or judgment lien is released of record or otherwise remedied within 60 days of creation.”

2. The second sentence of Section 4(b) shall be modified as follows:

“Upon the occurrence, and during the continuance, of an Event of Default, the permission given to Borrower pursuant to the preceding sentence to exercise all rights, power and authority under Leases shall automatically be suspended.”

3. Section 12(a) is modified by adding the following sentence to the end of the subsection:

“Except in a case where Lender in its discretion determines that an emergency exists, Lender may (but shall not be obligated to) take actions specified in this Section 12(a) only if Lender has notified Borrower of Borrower’s failure to perform any of its obligations under this Instrument or any other Loan Document and Borrower does not cure the failure within ten (10) days after such notice. If Lender so determines that an emergency exists, Lender shall endeavor to notify Borrower of the action taken within ten (10) days after the action is taken.”

4. Section 15(d) shall be modified by adding the following sentence to the end of the

subsection:

“So long as Borrower is contesting the amount and validity of any Imposition other than the insurance premiums diligently and in good faith as described herein and all the clauses (i) through (iv) of this Section 15(d) are satisfied, Lender will refrain from applying Imposition Deposits to payment of the contested Imposition.; provided, in order for Lender to be obligated not to pay the Imposition, Lender must have received (i) written notice of such dispute from Borrower, and (ii) written request from Borrower instructing Lender to not pay the Imposition, received at least 21 days prior to the date on which the amount is due. It is further provided that Lender may apply the Imposition Deposits in the event of any disruption or interference of services or materials to the Mortgage Property which would impact its ability to operate as a multifamily residential dwelling with amenities identified to Lender.”

5.Section 42 is hereby deleted in its entirety

PAGE 1

EX-99

Freddie Mac Loan Number 940972379

MUILTIFAMILY NOTE

MULTISTATE - FIXED TO FLOAT

(REVISION DATE 03-30-2006)

US $2,540,000.00 Effective Date: as of October 4, 2006

FOR VALUE RECEIVED, the undersigned (together with such party’s or parties’ successors and assigns, “Borrower”), jointly and severally (if more than one) promises to pay to the order of NorthMarq Capital, Inc., a Minnesota corporation, the principal sum of Two Million Five Hundred Forty Thousand and No/100 Dollars (US $2,540,000.00), with interest on the unpaid principal balance, as hereinafter provided.

1. Defined Terms.

(a) As used in this Note:

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

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

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

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

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

“Extended Maturity Date” means, if the Extension Period becomes effective pursuant to this Note, the earlier of (i) November 1, 201 7 and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy thereunder.

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

“Fixed Interest Rate” means the annual interest rate of five and seventy seven hundredths percent (5.77%).

“Fixed Rate Period” means the period beginning on the date of this Note and continuing through October 31, 2016.

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

“Initial Maturity Date” means the earlier of (i) November 1, 2016 (the

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

“Installment Due Date” means, for any monthly installment of interest only or principal and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The “First Installment Due Date” under this Note is December 1, 2006.

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

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

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

“LIBOR Index Rate” means, for any Interest Adjustment Period after the first Interest Adjustment Period, the BBA’s LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of such Interest Adjustment Period, as such LIBOR Rate is displayed on the LIBOR Index Page. The LIBOR Index Rate for the first Interest Adjustment Period means the British Bankers Association’s (BBA) LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of the month in which the first Interest

Adjustment Period begins, as such LIBOR Rate is displayed on the LIBOR Index Page. “LIBOR Index Page” is the Bloomberg L.P., page “BBAM”, or such other page for the LIBOR Index as may replace page BBAM on that service, or at the

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

“Loan” means the loan evidenced by this Note.

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

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

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

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

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

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

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

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

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

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

“Treasury Security” means the 7.50% U.S. Treasury Security due November 15, 2016.

“Window Period” means the Extension Period.

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

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

2.         Address for Payment. All payments due under this Note shall be payable at 3500 American Boulevard West, Suite 500, Bloomington, Minnesota 5543 1, or such other place as may be designated by Notice to Borrower from or on behalf of Lender.

3. Payments.

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

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

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

(d)       Beginning on the First Installment Due Date, and continuing until and including the monthly installment due on the Initial Maturity Date, principal and accrued interest shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of principal and interest payable pursuant to this Section 3(d) on an Installment Due Date shall be Fourteen Thousand Eight Hundred Fifty Five and 041100 Dollars ($14,855.04).

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

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(f)        If the Extension Period becomes effective, beginning on December 1, 2016, and continuing until and including the monthly installment due on the Extended Maturity Date, principal and accrued interest shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of principal and interest payable pursuant to this Section 3(f)on an Installment Due Date shall be calculated so as to equal the monthly payment amount which would be payable on the Installment Due Date as if the unpaid principal balance of this Note as of the first day of the Interest Adjustment Period immediately preceding the Installment Due Date was to be fully amortized, together with interest thereon at the Adjustable Interest Rate in effect for such Interest Adjustment Period, in equal consecutive monthly payments paid on the first day of each calendar month over the Remaining Amortization Period.

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

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

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

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

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

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

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

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

7. Late Charge.

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

(b)       Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late charge payable pursuant to this Section represents a fair and reasonable estimate, taking into

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account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 8.

8. Default Rate.

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

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

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

9. Limits on Personal Liability.

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

(b) Borrower shall be personally liable to Lender for the amount of the Base

Recourse, plus any other amounts for which Borrower has personal liability under this Section 9.

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

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

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

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

(iv) Borrower fails to pay when due in accordance with the terms of the

Security Instrument the amount of any item below marked “Deferred”; provided however, that if no item is marked “Deferred”, this Section 9(c)(iv) shall be of no force or effect.

[Collect] Hazard Insurance premiums or other insurance premiums,

[Collect] Taxes,

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

[N/A] ground rents,

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

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

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

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

(iii) any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under

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this Section 9, including Attorneys’ Fees and Costs and the costs of conducting any independent audit of Borrower’s books and records to determine the amount for which Borrower has personal liability.

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

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

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

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

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

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

10. Voluntary and Involuntary Prepayments.

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

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

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

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

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

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

(B) the product obtained by multiplying:

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

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

(3) he Present Value Factor.

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

Monthly Note Rate: one-twelfth (1112) of the Fixed Interest Rate, expressed as a decimal calculated to five digits.

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

Assumed Reinvestment Rate: one-twelfth (1112) of the yield rate, as of the date 5 Business Days before the Prepayment Date, on the Treasury Security, as reported in The Wall Sheet Journal, expressed as a decimal calculated to five digits. In the event that no yield is published on the applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date. If the publication of such yield rates in The Wall Sheet Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security. The election of an alternate security pursuant to this Section shall be made in Lender’s discretion.

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

1 -	(	1	)	”
		1 + ARR
		ARR

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

ARR =Assumed Reinvestment Rate

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

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

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

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

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

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

14.Loan Charges.Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the Maximum Interest Rate. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or

PAGE 13

charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of this Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of this Note.

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

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

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

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

19. Notices; Written Modifications.

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

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

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

21.WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE

PAGE 14

ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF OMPETENT LEGAL COUNSEL.

22. State-Specific Provisions. N/A.

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

|X| Exhibit A Modifications to Multifamily Note

PAGE 15

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

Cascade Joint Venture, L.P.,
a Kansas limited partnership
	By:	Millenium Cascade, LLC,
		a California limited liability company
	Its:	General Partner
		By:	Millenium Management, LLC
			a California limited liability company
		Its:	Manager
			By: /S/ W. ROBERT KOHORST
			W. Robert Kohorst      Its:   President
Borrower’s Social Security/Employer ID Number: 48-1 148402

PAGE 16

PAY TO THE ORDER OF _________________________________________, WITHOUT RECOURSE, AS OF THE 4TH DAY OF OCTOBER, 2006.

NorthMarq Capital, Inc., a Minnesota corporation
By:
	Paul W. Cairns Its Vice President

PAGE 17

EXHIBIT A

MODIFICATIONS TO MULTIFAMILY NOTE

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

NONE.

PAGE 18

EX-99

EXHIBIT A

MODIFICATIONS TO MULTIFAMILY NOTE

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

1. Section 10(e)(B), the definition of “Assumed Reinvestment Rate” shall be deleted and replaced with the following:

Assumed Reinvestment Rate: one-twelfth (1/12) of the sum of the yield rate, as of the date 5 Business Days before the Prepayment Date, on the Treasury Security, as reported in The Wall Street Journal, expressed as a decimal calculated to five digits, plus 50 basis points. In the event that no yield is published on the applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date. If the publication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security. The selection of an alternate security pursuant to this Section shall be made in Lender’s discretion.

/S/WRK	/S/WRK
Borrower’s	Guarantor’s
Initials	Initials

October 30, 2006

Federal Home Loan Mortgage Corporation

333 West Wacker Drive, Suite 2500

Chicago, IL 60606-1287

Re: Cascade Apartments

3441 SW Burlingame, Topeka, KS 66611

FHLMC Loan No. 940972379

Dear Sir or Madam:

The undersigned Borrower and Guarantor do hereby authorize (i) Moss & Barnett, A Professional Association, as counsel for NorthMarq Capital, Inc. (ii) NorthMarq Capital, Inc., as Lender/Seller and (iii) Federal Home Loan Mortgage Corporation to replace the following pages:

1. Exhibit A to the Multifamily Note to include the provision required by the Commitment in Exhibit D, Item 6.

Borrower hereby acknowledges and agrees to substitute Exhibit Aof the Multifamily Note with the replacement page attached hereto. Afacsimile copy of this document shall constitute and be deemed an original.

Cascade Joint Venture, L.P.,
a Kansas limited partnership
	By:	Millenium Cascade, LLC,
		a California limited liability company
	Its:	General Partner
		By:	Millenium Management, LLC,
			a California limited liability company
		Its:	Manager
			By: /S/ W. ROBERT KOHORST
			W. Robert Kohorst      Its:   President

Guarantor hereby acknowledges and agrees to the terms of this letter.

Secured Investment Resources Fund, L.P. II,
a Delaware limited partnership
	By:	Millenium Management, LLC, a California
		limited liability company
	Its:	General Partner
		By:	/S/ W. ROBERT KOHORST
			W. Robert Kohorst
			Its:   President

EX-99

Shawnee County, Kansas

Register of Deeds

Marilyn L. Nichols

Book: 4414 Page: 102

Line #:20060026164

Date Recorded: 10/06/2006 03:31:00.787 PM

Lawyers Title of Topeka, Inc.

5715 SW 21^st St PO box 4046

Topeka, KS 66604

7707

Prepared by, and after recording

Return to:

Moss & Barnett (EHK)

A Professional Association

4800 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

FHLMC Loan No. 940972379

ASSIGNMENT OF SECURITY INSTRUMENT

(Revision Date 11-01-2000)

FOR VALUABLE CONSIDERATION, NorthMarq Capital, Inc., a corporation organized and existing under the laws of Minnesota (the “Assignor”), having its principal office at 3500 American Boulevard West, Suite 500, Bloomington, Minnesota 55431, hereby assigns, grants, sells and transfers to the FEDERAL HOME LOAN MORTGAGE CORPORATION, a corporation organized and existing under the laws of the United States (the “Assignee”), having its principal place of business at 8200 Jones Branch Drive, McLean, Virginia 22 102, and the Assignee’s successors, transferees and assigns forever, all of the right, title and interest of the Assignor in and to the Multifamily Mortgage, Assignment of Rents and Security Agreement dated/effective as of October 4, 2006, entered into by Cascade Joint Venture, L.P., a Kansas limited partnership (the “Borrower “) for the benefit of the Assignor, securing an indebtedness of the Borrower to the Assignor in the principal amount of $2,540,000.00 and recorded in the land records of Shawnee County, recorded immediately prior hereto at 4414-100 (the “Instrument”), which indebtedness is secured by the property described in Exhibit A, attached to this Assignment and incorporated into it by this reference.

Together with the note or other obligation described in the Instrument and all obligations secured by the Instrument now or in the future.

IN WITNESS WHEREOF, the Assignor has executed this Assignment /made effective as of October 4, 2006.

ASSIGNOR::
NorthMarq Capital, Inc., a Minnesota corporation
By:	/S/ PAUL W. CAIRNS
	Paul W. Cairns Its Vice President

STATE OF MINNESOTA	)
	)	ss.
COUNTY OF HENNEPHIN	)

On October 2, 2006, before me, the undersigned, a Notary Public in and for the State of Minnesota, duly commissioned and sworn, personally appeared Paul W. Cairns, to me known to be the Vice President of NorthMarq Capital, Inc., a Minnesota corporation, and acknowledged the foregoing instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.

Witness my hand and official seal hereto affixed the day and year first above written.

/S/ Lisa M. Saba

Notary Public in and for Minnesota

My Commission Expires: 1/31/10

PAGE 2

EXHIBIT A

Legal Description

All of Lot 5, EXCEPT the North 33 feet thereof, AND EXCEPT that part of Lot 5 deeded to the City of Topeka as set out in Book 1741 Page 281, and all of Lot 6, EXCEPT that part of Lot 6 condemned in Case No. 1 15147, by the City of Topeka, all in Higinbotham and Mulvane’s Subdivision, in the City of Topeka, Shawnee County, Kansas.

PAGE 3

EX-99

FHLMC Loan No. 940972379

MANAGEMENT FEE SUBORDINATION AGREEMENT

This Management Fee Subordination Agreement (“Agreement”), made and entered into as of October 4, 2006, by and between NorthMarq Capital, Inc., a Minnesota corporation (“Lender”), Cascade Joint Venture, L.P., a Kansas limited partnership (“Borrower”), and Maxus Properties, Inc., a Missouri corporation (“Agent”).

PRELIMINARY STATEMENT OF FACTS

A. Agent entered into a Management Agreement dated March 14, 2005 (“Management Agreement”) covering certain property in Topeka, Kansas, commonly known as Cascade Apartments, and which is legally described on Exhibit A attached hereto and made a part hereof (“Property”).

B.        Borrower owns or will own the Property and is the Owner under the Management Agreement, as defined therein.

C.        Borrower has secured a loan from Lender in the amount of Two Million Five Hundred Forty Thousand and No/100 Dollars ($2,540,000.00) (“Loan”), which is or will be secured by a Multifamily Mortgage, Assignment of Rents and Security Agreement covering the Property (“Mortgage”).

D.        As a condition to making the Loan to Borrower, Lender requires that the management fee to Agent not exceed four percent (4.0%) of the monthly gross receipts from the operation of the Property (“Management Fee”).

E.        The Management Agreement provides for a management fee to Agent equal to five percent (5.0%) of the monthly gross receipts from the operation of the Property (the excess one percent (1.0%) is hereinafter referred to as the “Excess Management Fee”).

F.        Lender has agreed to allow the payment and collection of the Excess Management Fee, provided Borrower and Agent comply with the conditions of this Agreement.

NOW, THEREFORE, in consideration of the above and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, it is agreed as follows:

1.         Subordination of Excess Management Fee to Debt Service. Borrower shall not pay and Agent shall not collect the Excess Management Fee unless and until Borrower has paid all operating expenses, including the Management Fee, monthly principal, interest, escrows, insurance, reserves or other required items or charges due under the Mortgage or any other documents executed in connection with the Loan.

2.         Subordination of Excess Management Fee to Loan Default. Agent shall not be entitled to receive payment of the Excess Management Fee after Agent has notice of or acquires actual knowledge of an Event of Default under the Mortgage, as defined therein (a “Default Notice”). In the event that payment of the Excess Management Fee is included with payment of the Management Fee, Agent, after a Default Notice, will be entitled to retain only that part of the payment equal to the Management Fee. Furthermore, if Agent receives payment of the Excess Management Fee after the Default Notice, it shall receive and hold such payment in trust for Lender, to be applied to amounts due under the Mortgage. In the event Lender determines that the Event of Default has been cured to its satisfaction, Agent shall thereafter be entitled to receive from Borrower the Excess Management Fee. Notwithstanding the above, the Management Agreement, and all fees due and paid in connection therewith, including but not limited to the Management Fee and the Excess Management Fee, are subordinate to the Loan, the lien of the Mortgage, and any and all other documents in connection with the Loan.

3.         Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties to this Agreement and their respective heirs, legal representatives, successors, successors-in-title and assigns.

4.         Counterparts. This Agreement may be executed in any number of counterparts, all of which when taken together will constitute one and the same instrument.

5. Conflict of Documents. Inthe event there is a conflict between the Management Agreement and this Agreement, this Agreement shall control.

[The remainder of this page intentionally left blank; signatures follow.]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written.

LENDER: NorthMarq Capital, Inc., a Minnesota corporation
By:
Name: Title:	Paul W. Cairns Vice President

STATE OF MINNESOTA

COUNTY OF HENNEPIN

On October ____, 2006, before me, the undersigned, a Notary Public in and for the State of Minnesota, duly commissioned and sworn, personally appeared Paul W. Cairns, to me known to be the Vice President of NorthMarq Capital, Inc., a Minnesota corporation, and acknowledged the foregoing instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument.

Witness my hand and official seal hereto affixed the day and year first above written.

______________________________

Notary Public in and for __________

My Commission Expires:_________

BORROWER:
Cascade Joint Venture, L.P.,
A Kansas limited partnership
	By:  Millenium Cascade, LLC, a California limited
	liability company
	Its: General Partner
		By:	Millenium Management, LLC
	a California limited liability company
		Its:	Manager
		By:	/S/ W. ROBERT KOHORST
			W. Robert Kohorst      Its:   President

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

On this 3^rd day of October, 2006, before me, the undersigned, a Notary Public of said State, duly commissioned and sworn, personally appeared W. Robert Kohorst, personally known to me to be the person who executed the within instrument as President of Millenium Management, LLC, a California limited liability company, the Manager of Millenium Cascade, LLC, a California limited liability company, the General Partner of Cascade Joint Venture, L.P., a Kansas limited partnership, on behalf of the limited partnership, and acknowledged to me that such limited partnership executed the same.

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

/S/ LISA L. LONGO

Notary Public in and for California

My Commission Expires: 10/24/08

AGENT: Maxus Properties, Inc. a Missouri corporation
By:	/S/ MICHAEL P. MCROBERT
Name: Title:	Michael P. McRobert CEO/President

STATE OF MISSOURI

COUNTY OF CLAY

On 0ctober2nd, 2006, before me, the undersigned, a Notary Public in and for said County and State, personally appeared Michael P. McRobert the CEO/Presidentof Maxus Properties, Inc., a Missouri corporation, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

/S/ CATHERINE WHORTON

Notary Public

EXHIBIT A

LEGAL DESCRIPTION

All of Lot 5, EXCEPT the North 33 feet thereof, AND EXCEPT that part of Lot 5 deeded to the City of Topeka as set out in Book 1741 Page 281, and all of Lot 6, EXCEPT that part of Lot 6 condemned in Case No. 115 147, by the City of Topeka, all in Higinbotham and Mulvane’s Subdivision, in the City of Topeka, Shawnee County, Kansas.

EX-99

PROPERTY MANAGEMENT AGREEMENT

OAK TERRACE ACTIVE RETIREMENT CENTER

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as of July 16th, 2006 (the “Start Date”) between OAK TERRACE JOINT VENTURE, L.P., a Kansas limited partnership (“Owner”), and GRACE MANAGEMENT, INC., a Texas corporation (“Manager”).

Owner owns the independent living facility commonly known as Oak Terrace Active Retirement Center, located at 1700 W. Washington Street, Springfield, Illinois 62702 (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2        Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3      Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements. Manager represents that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas, that it is authorized to do business and is in good standing in the State of Illinois, and that it has all licenses and permits required to perform its duties under this Agreement.

(a)        Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)        Except to the extent any existing violations resulted from the acts or omissions of Manager, Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cure any such existing violations.

(c)       Manager shall have responsibility and, to the extent of its or its agents’ acts or omissions, liability for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)        Manager shall furnish to Owner no later than the end of the third (3^rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4      Approved Budget, Business Plan, Five Year Capital Improvement Plan. (a) Manager shall, under Owner’s guidance, prepare an annual capital and operating budget, including Business Plan and Five Year Capital Improvement Plan (together, the “Plans”), on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property. The Plans shall be prepared on the budget cycle required by the Owner. Forms of the Plans are attached hereto as Exhibit A (Approved Budget) and Exhibit B (Business Plan and Five Year Plan). Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to

such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A)Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable judgment, required for the operation of the Property.

(c)       During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5       Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)        Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)        Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6       Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning, painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8       Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b)       Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c)       Manager shall ensure and verify that, as required, each entity providing services to the Property holds a valid license in, and meets all the requirements of, the state, county, and/or municipality where the work is to be performed.

2.9        Service Contracts, Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)        Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental

agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.11     Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain qualified existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12     Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or by any other person on or from the Property, including the on-site management offices.

2.13      Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof; (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f)check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1        Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2       Employees, Contractor’s, Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3       Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the twentieth (20th) day of each month, Manager shall furnish to Owner an income statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible

items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accruals basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3       Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f)summaries of adjusting journal entries as part of the annual audit process; (g) supporting documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (i) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (i), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1        Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner.

(b)        Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1       Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and

withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Oak Terrace Security Deposit Account. The Oak Terrace Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Oak Terrace Security Deposit Account is insured by the FDIC and which Oak Terrace Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4       Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating

Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing, including related Federal Express charges, provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement, to the extent in excess of what is included in the Approved Budget; (e) cost of routine travel by Manager’s employees to and from the Property; (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s employees; (j) all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2       Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (FICA.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3        Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1       Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) calculated as follows: three percent (3.0 %) of Gross Revenues (defined below) for the first Two Hundred Thousand Dollars ($200,000.00) of monthly Gross Revenues, and thereafter five percent (5.0%) of monthly Gross Revenues in excess of $200,000.00. (for example, if Gross Revenues for a given month are $250,000, then Manager would be entitled to a monthly Management Fee for that month equal to $8,500 ([3%x $200,000=$6,000] + [5% x $50,000=$2,500].) “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f)condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (i) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon

submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERMINATION

10.1      Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this Agreement.

In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager. In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination. Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to fulfil such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1     Lender Approval. This Agreement may be subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1     Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER:	Grace Management, Inc. 6225 42nd Avenue North Minneapolis, Minnesota 55422 Tel.: 763-544-9934 Fax: 763-544-9858 Attention: Eugene W. Grace
OWNER:	Oak Terrace Joint Venture, L.P. 199 S. Los Robles Avenue, Suite 200 Pasadena, CA 9 1 10 1 Tel.: 626.585.5920 Fax: 626.585.5929 Attention: John D. Anderson

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1) business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1      Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approvals. Each party may give notices or other communications only by representatives from time to time, designated in writing by such

party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates Eugene W. Grace, Mari Jo Grace and Jody Boedigheimer.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly,

or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest or the voting power of the appropriate entity.

14.4     Amendments. Each amendment, addition or deletion to this Agreement shall not he effective unless approved by the parties in writing.

14.5     Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6     Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement; and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent

such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then (a) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (b) Manager may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (c) neither Owner nor Manager shall settle any claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10    Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers., employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but only if the Claims arise out of Owner’s willful acts or omissions and: (i) only to the extent of Owner’s interest in the Property, and (ii) only to the extent such Claims are not covered by insurance maintained by Owner or Manager. If any person or entity makes a claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (a) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (b) Owner may defend such claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (c) neither Manager nor Owner shall settle any claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13    Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected

thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14    No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or be construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15    Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16    Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ARE ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the

date first written above.

“OWNER”
OAK TERRACE JOINT VENTURE, L.P., a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company
	its general partner
By:	Millenium Management, LLC
	a California limited liability company
By:	/S/ W. ROBERT KOHORST
Name:	W. Robert Kohorst
Its:	President

“MANAGER”
GRACE MANAGEMENT, INC., a Texas corporation
By:	/S/ EUGENE W. GRACE
Name:	Eugene W. Grace, CPM®
Its:	President

EXHIBIT A

FORM OF APPROVED BUDGET

EXHIBIT B

FORMS OF BUSINESS PLAN AND FIVE-YEAR PLAN

July 16, 2006

Eugene W. Grace

President

Grace Management, Inc.

6225 42nd Avenue North

Minneapolis, Minnesota 55422

Re: Property Management Agreement-Oak Terrace Active Retirement Center

Letter Agreement

Dear Mr. Grace:

This will confirm our understanding regarding that certain Property Management Agreement dated as of July 16th, 2006 (the “Agreement”) by and between Oak Terrace Joint Venture, L.P. (“Owner”) and Grace Management, Inc. (“Manager”). Any terms not defined herein shall have the meanings ascribed to them in the Agreement.

I . Notwithstanding the provisions of subsection 2.5(h), the parties agree that Manager’s regional and corporate management personnel who are visiting the Property for purposes of property and management inspection may occupy a guest apartment (provided one is available) for up to three (3) nights, for such purposes.

2. Notwithstanding the provisions of subsection 2.9(h), Owner acknowledges that Manager has entered into certain special purchasing programs and pricings listed on Exhibit I attached hereto and made a part hereof, which are non-assignable (the “Non-assignable Agreements”). Owner agrees that Manager shall not be obligated to assign to Owner or its assignee the Non-assignable Agreements to the extent it is prohibited from doing so.

3. Manager will apply for, obtain, and maintain in the name of the Owner and/or Manager, if required, all licenses and permits required for the Property or in connection with the management and operation of the Property. Owner will supply such information and materials as Manager may reasonably require to fulfill its obligations. The cost of complying with this provision shall he included in the Approved Budget and paid out the Operating Account.

4. Notwithstanding the provisions of subsection 4.2, the parties agree that upon the termination of this management agreement, the Manager will have 45 days to finalize the final accounting records. The parties

understand that it may take 30 days or longer to request a final workman’s compensation audit and confirm remaining liabilities and outstanding hank checks for the property.

5. Notwithstanding the provisions of subsection 6.1 the parties agree that the bank accounts for the property can be designed by Owner but will be in the name of the Manager, in trust of the property operating account will be a separate account maintaining a minimum balance equal to or greater than two weeks payroll responsibility. Excess cash will be deposited in Owner controlled account as instructed by Owner.

6. Except as set forth herein, the Agreement shall remain in full force and effect. Please acknowledge your agreement to the foregoing by signing this Letter Agreement in the space provided below.

OAK TERRACE JOINT VENTURE, L.P., a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company
	its general partner
By:	Millenium Management, LLC
	a California limited liability company
By:	/S/ W. ROBERT KOHORST
Name:	W. Robert Kohorst
Its:	President

ACCEPTED AND AGREED
GRACE MANAGEMENT, INC., a Texas corporation
By:	/S/ EUGENE W. GRACE
Name:	Eugene W. Grace, CPM®
Its: Date:	President July 6, 2006

EXHIBIT I

Grace Management, Inc. has established corporate purchasing programs based on our national purchasing activities with a number of national providers that offer preferred pricing to Grace Management, lnc. This benefits our clients during the time of our contractual responsibilities. These agreements are not transferable to others.

1. Tidewater Group Purchasing also referred to as Omnicare, Inc.

2. Sysco Supply, Inc.

3. Direct Supply, Inc.

4. Office Depot

5. United Laboratories, Inc.

6. Grainger

7. Home Depot Supply

8. Sherwin Williams

9. BB&T Insurance Services, Inc.

EX-99

EVEREST HICKORY GLEN, LP, as Assignor

(BORROWER)

LEHMAN BROTHERS BANK, FSB, as Assignee

(LENDER)

 

ASSIGNMENT

OF LEASES AND RENTS

Dated:	December __, 2006
Location:	1700-1750 West Washington Street Springfield, Illinois 62702
County:	Sangamon

PREPARED BY AND UPON

RECORDING RETURN TO:

Best & Flanagan LLP

225 South Sixth Street, Suite 4000

Minneapolis, Minnesota 55402-4690

Attention: Daniel R. Tyson

Telephone: (612) 339-7121

EVEREST HICKORY GLEN, LP, as Assignor

(BORROWER)

LEHMAN BROTHERS BANK, FSB, as Assignee

(LENDER)

ASSIGNMENT

OF LEASES AND RENTS

Dated:	December -, 2006
Location:	1700-1750 West Washington Street Springfield, Illinois 62702
County:	Sangamon
PREPARED BY AND UPON RECORDING RETURN TO: Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Attention: Daniel R. Tyson Telephone: (612) 339-7121

.

THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”) is made as of __________, ____20___, by EVEREST HICKORY GLEN, LP, a Kansas limited partnership, as assignor, having its principal place of business at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Borrower”) to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, as assignee, having an address at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801, Attention: John Herman (“Lender”).

RECITALS:

Borrower, by its promissory note of even date herewith given to Lender, is indebted to Lender in the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00), in lawful money of the United States of America (the note, together with all extensions, renewals, modifications, substitutions and amendments thereof, the “Note”), with interest from the date thereof at the rates set forth in the Note, principal and interest to be payable in accordance with the terms and conditions provided in the Note.

Borrower desires to secure the payment and performance of the Obligations as defined in Article 2 of the Security Instrument (defined below).

1. ASSIGNMENT

1.1       PROPERTY ASSIGNED. Borrower hereby absolutely and unconditionally assigns and grants to Lender the following property, rights, interests and estates, now owned, or hereafter acquired by Borrower:

(a)       Leases. All existing and future leases affecting the use, enjoyment, or occupancy of all or any part of that certain lot or piece of land, more particularly described in Exhibit “A” annexed hereto and made a part hereof, together with the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter located thereon (collectively, the “Property”) and the right, title and interest of Borrower, its successors and assigns, therein and thereunder.

(b)       Other Leases and Agreements. All other leases and other agreements, whether or not in writing, affecting the use, enjoyment or occupancy of the Property or any

(c)       portion thereof now or hereafter made, whether made before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. $101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”), together with any extension, renewal or replacement of the same, this Assignment of other present and future leases and present and future agreements being effective without further or supplemental assignment. The leases described in Subsection 1.1(a) and the leases and other agreements described in this Subsection 1.1(b), together with all other present and future leases and present and future Agreements and any extension or renewal of the same are collectively referred to as the “Leases”.

(d)       Rents. All rents, additional rents, revenues, income, issues and profits arising from the Leases and renewals and replacements thereof and any cash or security deposited in connection therewith and together with all rents, revenues, income, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the use, enjoyment and occupancy of the Property whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the “Rents”).

(e)       Bankruptcy Claims. All of Borrower’s claims and rights (the “Bankruptcy Claims”) to the payment of damages arising from any rejection by a lessee of any Lease under the Bankruptcy Code, 11 U.S.C. §101 etseq., as the same may be amended (the “Bankruptcy Code”).

(f)        Lease Guaranties. All of Borrower’s right, title and interest in and claims under any and all lease guaranties, letters of credit and any other credit support given by any guarantor in connection with any of the Leases (individually, a “Lease Guarantor” and collectively, the “Lease Guarantors”) to Borrower (individually, a “Lease Guaranty” and collectively, the “Lease Guaranties”).

(g)       Proceeds. All proceeds from the sale or other disposition of the Leases, the Rents, the Lease Guaranties and the Bankruptcy Claims.

(h)       Other. All rights, powers, privileges, options and other benefits of Borrower as lessor under the Leases and beneficiary under the Lease Guaranties, including without limitation the immediate and continuing right to make claim for, receive, collect and receipt for all Rents payable or receivable under the Leases and all sums payable under the Lease Guaranties or pursuant thereto (and to apply the same to the payment of the Debt (as hereinafter defined)), and to do all other things which Borrower or any lessor is or may become entitled to do under the Leases or the Lease Guaranties.

(i)        Entry. The right, at Lender’s option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court-appointed receiver, to collect the Rents.

(j)        Power of Attorney. Borrower’s irrevocable power of attorney, coupled with an interest, to take any and all of the actions set forth in Section 3.1 of this Assignment and any or all other actions designated by Lender for the proper management and preservation of the Property.

(k)       Other Rights and Agreements. Any and all other rights of Borrower in and to the items set forth in subsections (a) through (i) above, and all amendments, modifications, replacements, renewals and substitutions thereof.

1.2       CONSIDERATION. This Assignment is made in consideration of that certain loan (the “Loan”) made by Lender to Borrower evidenced by the Note and secured by that certain Mortgage and Security Agreement given by Borrower to or for the benefit of Lender, dated the date hereof, in the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00),

covering the Property and intended to be duly recorded in the public records of the county where the Property is located (the “Security Instrument”). The principal sum, interest and all other sums due and payable under the Note, the Security Instrument, this Assignment and the other Loan Documents (as defined in the Security Instrument) are collectively referred to as the “Debt.”

2. TERMS OF ASSIGNMENT

2.1       PRESENT ASSIGNMENT AND LICENSE BACK. It is intended by Borrower that this Assignment constitute a present, absolute assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1, Lender grants to Borrower a revocable license to collect and receive the Rents and other sums due under the Lease Guaranties. Borrower shall hold the Rents and all sums received pursuant to any Lease Guaranty, or a portion thereof sufficient to discharge all current sums due on the Debt, in trust for the benefit of Lender for use in the payment of such sums.

2.2       NOTICE TO LESSEES. Borrower hereby agrees to authorize and direct the lessees named in the Leases or any other or future lessees or occupants of the Property and all Lease Guarantors to pay over to Lender or to such other party as Lender directs all Rents and all sums due under any Lease Guaranties upon receipt from Lender of written notice to the effect that Lender is then the holder of the Security Instrument and that a Default (defined below) exists, and to continue so to do until otherwise notified by Lender.

2.3       INCORPORATION BY REFERENCE. All representations, warranties, covenants, conditions and agreements contained in the Security Instrument as same may be modified, renewed, substituted or extended are hereby made a part of this Assignment to the same extent and with the same force as if fully set forth herein.

3. REMEDIES

3.1       REMEDIES OF LENDER. Upon or at any time after the occurrence of a default under this Assignment or an Event of Default (as defined in the Security Instrument) (a “Default”), the license granted to Borrower in Section 2.1 of this Assignment shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents and sums due under any Lease Guaranties, whether or not Lender enters upon or takes control of the Property. In addition, Lender may, at its option, without waiving such Default, without notice and without regard to the adequacy of the security for the Debt, either in person or by agent, nominee or attorney, with or without bringing any action or proceeding, or by a receiver appointed by a court, dispossess Borrower and its agents and servants from the Property, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of the Property and all books, records and accounts relating thereto and have, hold, manage, lease and operate the Property on such terms and for such period of time as Lender may deem proper and either with or without taking possession of the Property in its own name, demand, sue for or otherwise collect and receive all Rents and sums due under all Lease Guaranties, including those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to

Lender and may apply the Rents and sums received pursuant to any Lease Guaranties to the payment of the following in such order and proportion as Lender in its sole discretion may determine, any law, custom or use to the contrary notwithstanding: (a) all expenses of managing and securing the Property, including, without being limited thereto, the salaries, fees and wages of a managing agent and such other employees or agents as Lender may deem necessary or desirable and all expenses of operating and maintaining the Property, including, without being limited thereto, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance which Lender may deem necessary or desirable, and the cost of all alterations, renovations, repairs or replacements, and all expenses incident to taking and retaining possession of the Property; and (b) the Debt, together with all costs and reasonable attorneys’ fees. In addition, upon the occurrence of a Default, Lender, at its option, may (1) complete any construction on the Property in such manner and form as Lender deems advisable, (2) exercise all rights and powers of Borrower, including, without limitation, the right to negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents from the Property and all sums due under any Lease Guaranties, (3) either require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupancy of such part of the Property as may be in possession of Borrower or (4) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise.

3.2       OTHER REMEDIES. Lender shall have the right to have all Rents paid to a Lock-Box Account (as defined in the Security Instrument) pursuant to the terms and conditions of Section 4.4 of the Security Instrument. Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the power and rights granted to Lender hereunder shall be deemed to be a waiver by Lender of its rights and remedies under the Note, the Security Instrument, or the other Loan Documents and this Assignment is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof. The right of Lender to collect the Debt and to enforce any other security therefor held by it may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Borrower hereby absolutely, unconditionally and irrevocably waives any and all rights to assert any setoff, counterclaim or crossclaim of any nature whatsoever with respect to the obligations of Borrower under this Assignment, the Note, the Security Instrument, the other Loan Documents or otherwise with respect to the Loan in any action or proceeding brought by Lender to collect same, or any portion thereof, or to enforce and realize upon the lien and security interest created by this Assignment, the Note, the Security Instrument, or any of the other Loan Documents (provided, however, that the foregoing shall not be deemed a waiver of Borrower’s right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure, nor shall the foregoing be deemed a waiver of Borrower’s right to assert any claim which would constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever against Lender in any separate action or proceeding).

3.3       OTHER SECURITY. Lender may take or release other security for the payment of the Debt, may release any party primarily or secondarily liable therefor and may apply any other security held by it to the reduction or satisfaction of the Debt without prejudice to any of its rights under this Assignment.

3.4       NON-WAIVER. The exercise by Lender of the option granted it in Section 3.1 of this Assignment and the collection of the Rents and sums due under the Lease Guaranties and the application thereof as herein provided shall not be considered a waiver of any default by Borrower under the Note, the Security Instrument, the Leases, this Assignment or the other Loan Documents. The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Assignment. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (a) the failure of Lender to comply with any request of Borrower or any other party to take any action to enforce any of the provisions hereof or of the Security Instrument, the Note or the other Loan Documents, (b) the release regardless of consideration, of the whole or any part of the Property, or (c) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of this Assignment, the Note, the Security Instrument or the other Loan Documents. Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take any action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to enforce its rights under this Assignment. The rights of Lender under this Assignment shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.

3.5 BANKRUPTCY.

(a)       Upon or at any time after the occurrence of a Default, Lender shall have the right to proceed in its own name or in the name of Borrower in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Borrower, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under the Bankruptcy Code.

(b)       If there shall be filed by or against Borrower a petition under the Bankruptcy Code, and Borrower, as lessor under any Lease, shall determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then Borrower shall give Lender not less than ten (10) days’ prior notice of the date on which Borrower shall apply to the bankruptcy court for authority to reject the Lease. Lender shall have the right, but not the obligation, to serve upon Borrower within such ten-day period a notice stating that (i) Lender demands that Borrower assume and assign the Lease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate assurance of future performance under the Lease. If Lender serves upon Borrower the notice described in the preceding sentence, Borrower shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after the notice shall have been given, subject to the performance by Lender of the covenant provided for in clause (ii) of the preceding sentence.

4. NO LIABILITY. FURTHER ASSURANCES

4.1       NO LIABILITY OF LENDER. This Assignment shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender. Lender shall not be liable for any loss sustained by Borrower resulting from Lender’s failure to let the Property after a Default or from any other act or omission of Lender in managing the Property after a Default unless such loss is caused by the willful misconduct and bad faith of Lender. Lender shall not be obligated to perform or discharge any obligation, duty or liability under the Leases or any Lease Guaranties or under or by reason of this Assignment and Borrower shall, and hereby agrees, to indemnify Lender for, and to hold Lender harmless from, any and all liability, loss or damage which may or might be incurred under the Leases, any Lease Guaranties or under or by reason of this Assignment and from any and all claims and demands whatsoever, including the defense of any such claims or demands which may be asserted against Lender by reason of any alleged obligations and undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases or any Lease Guaranties. Should Lender incur any such liability, the amount thereof, including costs, expenses and reasonable attorneys’ fees, shall be secured by this Assignment and by the Security Instrument and the other Loan Documents and Borrower shall reimburse Lender therefore immediately upon demand and upon the failure of Borrower so to do Lender may, at its option, declare all sums secured by this Assignment and by the Security Instrument and the other Loan Documents immediately due and payable. This Assignment shall not operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases or any Lease Guaranties; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by any lessee or any other parties, or for any dangerous or defective condition of the Property, including without limitation the presence of any Hazardous Substances (as defined in that certain Environmental Indemnity Agreement executed by Borrower in favor of Lender as of even date herewith), or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger.

4.2       NO MORTGAGEE IN POSSESSION. Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession” in the absence of the taking of actual possession of the Property by Lender. In the exercise of the powers herein granted Lender, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Borrower.

4.3       FURTHER ASSURANCES. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, require for the better assuring, conveying, assigning, transferring and confirming unto Lender the property and rights hereby assigned or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Assignment or for filing, registering or recording this Assignment and, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower to the extent Lender may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments, to evidence more effectively the lien and security interest hereof in and upon the Leases.

5. MISCELLANEOUS PROVISIONS

5.1       CONFLICT OF TERMS. In case of any conflict between the terms of this Assignment and the terms of the Security Instrument, the terms of the Security Instrument shall prevail.

5.2       NO ORAL CHANGE. This Assignment and any provisions hereof may not be modified, amended, waived, extended, changed, discharged or terminated orally, or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

5.3        CERTAIN DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Assignment may be used interchangeably in singular or plural form and the word “Borrower ‘‘ shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein,” the word “Lender” shall mean “Lender, its servicer, and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder; whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

5.4       AUTHORITY. Borrower represents and warrants that it has full power and authority to execute and deliver this Assignment and the execution and delivery of this Assignment has been duly authorized and does not conflict with or constitute a default under any law, judicial order or other agreement affecting Borrower or the Property.

5.5       INAPPLICABLE PROVISIONS. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.

5.6DUPLICATE ORIGINALS; COUNTERPARTS. This Assignment may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

5.7      CHOICE OF LAW. This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

5.8       TERMINATION OF ASSIGNMENT. Upon payment in full of the Debt and the delivery and recording of a satisfaction or discharge of Security Instrument duly executed by Lender, this Assignment shall become and be void and of no effect.

5.9       NOTICES. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one ( 1 ) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed to Borrower or Lender at their addresses set forth in the Security Instrument or addressed as such party may from time to time designate by written notice to the other parties. For purposes of this Section 5.9, the term “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York. Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

5.10     WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE. RELATING DIRECTLY OR INDIRECTLY TO THE LOAN THE NOTE, THIS ASSIGNMENT, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

5.11      SUBMISSION TO JURISDICTION. With respect to any claim or action arising hereunder, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State in which the Property is located and the United States District Court located in the county in which the Property is located, and appellate courts from any thereof, and (b) irrevocably waives any objection which it may have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Assignment brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

5.12     LIABILITY. If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

5.13     HEADINGS, ETC. The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

5.14     NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

5.15     SOLE DISCRETION OF LENDER. Wherever pursuant to this Assignment (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

5.16     EXCULPATION. Borrower’s obligations under this Assignment are subject to the provisions of Article 13 of the Security Instrument.

THIS ASSIGNMENT, together with the covenants and warranties therein contained, shall inure to the benefit of Lender and any subsequent holder of the Security Instrument and shall be binding upon Borrower, its heirs, executors, administrators, successors and assigns and any subsequent owner of the Property.

IN WITNESS WHEREOF, Borrower has executed this instrument the day and year first above written.

Everest Hickory Glen, LP, a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company, its general partner
By:	Millenium Management, LLC
	a California limited liability company, its manager
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis
Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On December 22, 2006, before me, Lisa L. Longo, a Notary Public, personally appeared Christopher K. Davis, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted. executed the instrument.

WITNESS my hand and official seal

/S/ Lisa L Longo

Notary Public

Print Name: Lisa L. Longo

My Commission expires: 10/24/08

PREPARED BY AND UPON

RECORDING RETURN TO:

Best & Flanagan LLP

225 South Sixth Street, Suite 4000

Minneapolis, Minnesota 55402-4690

Attention: Daniel R Tyson

Telephone: (612) 339-7121

EXHIBIT “A”

LEGAL DESCRIPTION OF PROPERTY

All of that certain lot, piece or parcel of land situate, lying and being in Sangamon County,

Illinois, and being more particularly described as follows:

EXHBIT A

Legal Description

PART OF THE EAST HALF OF THE NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 16 NORTH, RANGE 5 WEST OF THE THIRD PRINCIPAL MERIDIAN, SANGAMON COUNTY, ILLINOIS. SAID PART BEING FURTHER DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT AT THE INTERSECTION OF THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, SAID POINT BEING 40.00 FEET SOUTH OF AN AXLE AT THE NORTHEAST CORNER OF SAID NORTHWEST QUARTER OF SECTION 32; THENCE WESTERLY ALONG THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.32 FEET TO A DRILL HOLE; THENCE SOUTHERLY ALONG A LINE MAKING AN INTERIOR ANGLE OF 90 DEGREES 16 MINUTES 50 SECONDS WITH THE LAST DESCRIBED COURSE, A DISTANCE OF 370.00 FEET TO A DRILL HOLE; THENCE EASTERLY PARALLEL WITH THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.59 FEET TO THE EAST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 32; THENCE NORTHERLY ALONG SAID EAST LINE OF THE NORTHWEST QUARTER AND WEST LINE OF STANGE AVENUE, 370.00 FEET TO THE POINT OF BEGINNING, CONTAINING 1.80 ACRES, MORE OR LESS.

EXCEPT ALL COAL, MINERALS AND MINING RIGHTS HERETOFORE CONVEYED OR RESERVED OF RECORD.

SITUATED IN SANGAMON COUNTY, ILLINOIS.

EX-99

EVEREST HICKORY GLEN, LP, as Mortgagor

(Borrower)

LEHMAN BROTHERS BANK, FSB, as Mortgagee

(Lender)

MORTGAGE AND

SECURITY AGREEMENT

Dated:	December __, 2006
Location:	1700-1750 West Washington Street Springfield, Illinois 62702
County:	Sangamon

PREPARED BY AND UPON

RECORDING RETURN TO:

Best & Flanagan LLP

225 South Sixth Street, Suite 4000

Minneapolis, Minnesota 55402-4690

Attention: Daniel R. Tyson

Telephone: (612) 339-7121

EVEREST HICKORY GLEN, LP, as Mortgagor

(Borrower)

LEHMAN BROTHERS BANK, FSB, as Mortgagee

(Lender)

 

MORTGAGE AND

SECURITY AGREEMENT

Dated:	December -, 2006
Location:	1700-1750 West Washington Street Springfield, Illinois 62702
County:	Sangamon

PREPARED BY AND UPON

RECORDING RETURN TO:

Best & Flanagan LLP

225 South Sixth Street, Suite 4000

Minneapolis, Minnesota 55402-4690

Attention: Daniel R. Tyson

Telephone: (612) 339-7121

TABLE OF CONTENTS

1 - GRANTS OF SECURITY
	1.1	PROPERTY MORTGAGED
	1.2	ASSIGNMENT OF RENTS
	1.3	SECURITY AGREEMENT
	1.4	PLEDGE OF MONIES HELD
2 - DEBT AND OBLIGATIONS SECURED
	2.1	DEBT AND OBLIGATIONS SECURED
3 - BORROWER COVENANTS
	3.1	PAYMENT OF DEBT
	3.2	INSURANCE
	3.3	PAYMENTS
	3.4	RESERVES
	3.5	CONDEMNATION
	3.6	LEASES
	3.7	MAINTENANCE OF PROPERTY
	3.8	WASTE
	3.9	COMPLIANCE WITH LAWS
	3.10	BOOKS AND RECORDS
	3.11	PYAMENT FOR LABOR AND MATERIALS
	3.12	[SECTION INTENTIONALLY DELETED]
	3.13	PERFORMANCE FOR LABOR AND MATERIALS
	3.14	CHANGE OF NAME, IDENTITY OR STRUCTURE
	3.15	EXISTENCE
	3.16	OFAC
4 – SPECIAL COVENANTS
	4.1	PROPERTY USE
	4.2	SINGLE PURPOSE ENTITY
	4.3	RESTORATION
	4.4	LOCK BOX ACCOUNT
5 – REPRESENTATIONS AND WARRANTIES
	5.1	WARRANTY OF TITLE
	5.2	AUTHORITY
	5.3	LEGAL STATUS AND AUTHORITY
	5.4	VALIDITY OF DOCUMENTS

	5.5	LITIGATION
	5.6	STATUS OF PROPERTY
	5.7	NO FOREIGN PERSON
	5.8	SEPARATE TAX LOT
	5.9	ERISA COMPLIANCE
	5.10	LEASES
	5.11	FINANCIAL CONDITION
	5.12	BUSINESS PURPOSES
	5.13	TAXES
	5.14	MAILING ADDRESS
	5.15	NO CHANGE IN FACTS OR CIRCUMSTANCES
	5.16	DISCLOSURE
	5.17	THIRD PARTY REPRESENTATIONS
	5.18	ILLEGAL ACTIVITY
	5.19	OFAC
6 – OBLIGATIONS AND RELIANCES
	6.1	RELATIONSHIP OF BORROWER AND LENDER
	6..2	NO LENDER OBLIGATIONS
7 – FURTHER ASSURANCES
	7.1	RECORDING OF SECURITY INSTRUMENT, ETC.
	7.2	FURTHER ACTS, ETC.
	7.3	CHANGES IN TAQX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
	7.4	ESTOPPEL CERTIFICATES
	7.5	REPLACEMENT DOCUMENTS
8 – DUE ON SALE/ENCUMBRANCE
	8.1	LENDER RELIANCE
	8.2	NO SALE/ENCUMBRANCE
	8.3	SALE/ENCUMBRANCE DEFINED
	8.4	LENDER’S RIGHTS
	8.5	ONE-TIME TRANSFER
	8.6	ONE-TIME TRANSFER OF MORE THAN 49% OF LIMITED PARTNERSHIP INTERESTS OF THE BORROWER
9 – DEFAULT
	9.1	EVENTS OF DEFAULT
10 – RIGHTS AND REMEDIES

	10.1	REMEDIES
	10.2	APPLICATION OF PROCEEDS
	10.3	RIGHT TO CURE DEFAULTS
	10.4	ACTIONS AND PROCEEDINGS
	10.5	RECOVERY OF SUMS REQUIRED TO BE PAID
	10.6	EXAMINATION OF BOOKS AND RECORDS
	10.7	OTHER RIGHTS, ETC.
	10.8	RIGHT TO RELEASE ANY PORTION OF THE PROPERTY
	10.9	VIOLATION OF LAW
	10.10	RECOURSE AND CHOICE REMEDIES
	10.11	RIGHT OF ENTRY
	10.12	DEFAULT INTEREST AND LATE CHARGES
11 - INDEMNIFICATION
	11.1	GENERAL INDEMNIFICATION
	11.2	MORTGAGE AND/OR INTANGIBLE TAX
	11.3	ERISA INDEMNIFICATION
	11.4	DUTY TO DEFENDL; ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES
12 – WIAVERS
	12.1	WAIVER OF COUNTERCLAIM
	12.2	MARSHALLING AND OTHER MATTERS
	12.3	WAIVER OF NOTICE
	12.4	SOLE DISCRETION OF LENDER
	12.5	SURVIVAL
	12.6	WAIVER OF TRIAL BY JURY
13 – EXCULPATION
	13.1	EXCUPATION
	13.2	RESERVATION OF CERTAIN RIGHTS
	13.3	EXCEPTIONS TO EXCULPATION
	13.4	RECOURSE
	13.5	BANKRUPTCY CLAIMS
14 – NOTICES
	14.1	NOTICES
15 - APPLICABLE LAW

	15.1	CHOICE OF LAW
	15.2	USURY LAWS
	15.3	PROVISIONS SUBJECT TO APPLICABLE LAW
16 – SECONDARY MARKET
	16.1	TRANSFER OF LOAN
17 – COSTS
	17.1	PERFORMANCE AT BORROWER’S EXPENSE
	17.2	ATTORNEYS’ FEES FOR ENFORCEMENT
18 – DEFINITIONS
	18.1	GENERAL DEFINITIONS
19 – MISCELLANEOUS PROVISIONS
	19.1	NO ORAL CHANGE
	19.2	LIABILITY
	19.3	INAPPLICABLE PROVISIONS
	19.4	HEADINGS, ETC.
	19.5	DUPLICATE ORIGINALS; COUNTERPARTS
	19.6	NUMBER AND GENDER
	19.7	SUBROGATION
	19.8	ENTIRE AGREEMENT
	19.9	BROKERS
20 – STATE SPECIFIC PROVISIONS
	20.1	RIGHT TO PURCHASE
	20.2	WAIVER AND RIGHT TO REDEEM FROM SALE; WIAVER OF APPRAISEMENT AND VALUATION
	20.3	COSTS AND EXPENSES OF FORECLOSURE
	20.4	APPLICATION OF PROCEEDS
	20.5	LENDER’S REMEDIES CUMULATIVE – NO WAIVER
	20.6	COMPLIANCE WITH ILLINOIS MORTGAGE FORECLOSURE LAW
	20.7	BUSINESS EXCEPTION

THIS MORTGAGE AND SECUFUTY AGREEMENT (the “Security Instrument”) is made as of December-, 2006, by EVEREST HICKORY GLEN, LP, a Kansas limited partnership, having its principal place of business at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101, as mortgagor (“Borrower”), to LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an address of c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801, Attention: John Herman, as mortgagee (“Lender”).

RECITALS:

Borrower by its promissory note of even date herewith given to Lender is indebted to Lender in the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00) in lawful money of the United States of America (the note together with all extensions, renewals, modifications, substitutions and amendments thereof shall collectively be referred to as the “Note”), with interest from the date thereof at the rates set forth in the Note, principal and interest to be payable in accordance with the terms and conditions provided in the Note.

Borrower desires to secure the payment and performance of the Obligations (as defined in Section 2.1 hereof).

1. GRANTS OF SECURITY

1.1       PROPERTY MORTGAGED. Borrower does hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to Lender, and grant a security interest to Lender in, the following property, rights, interests and estates now owned, or hereafter acquired by Borrower (collectively, the “Property”): (a) the real property described in Exhibit “A” attached hereto and made a part hereof (the “Land”); (b) all additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Security Instrument; (c) the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (the “Improvements”); (d) all easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto; (e) all furnishings, machinery, equipment, fixtures (including, but not limited to, all heating, air conditioning, plumbing, lighting, communications and elevator fixtures) and other property of every kind and nature whatsoever owned by Borrower, or in

which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “Personal Property”), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), superior in lien to the lien of this Security Instrument and all proceeds and products of the above; (f) all leases and other agreements affecting the use, enjoyment or occupancy of the Land and the Improvements heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be amended from time to time (the “Bankruptcy Code”) (the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, (including, but not limited to, any payments made by tenants under the Leases in connection with the termination of any Lease), issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt (as hereinafter defined); (g) any and all lease guaranties, letters of credit and any other credit support (individually, a “Lease Guaranty” and collectively, the “Lease Guaranties”) given by any guarantor in connection with any of the Leases (individually, a “Lease Guarantor’’ and collectively, the “Lease Guarantors”); (h) all rights, powers, privileges, options and other benefits of Borrower as lessor under the Leases and beneficiary under all Lease Guaranties; (i) all awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property; (j) all proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property; (k) all refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction; (l) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims; (m) the right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property; (n) all agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof

and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder; (o) all tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property; and (p) any and all other rights of Borrower in and to the items set forth in Subsections (a) through (0) above.

1.2       ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally assigns to Lender Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 1.2 and Section 3.6, Lender grants to Borrower a revocable license to collect and receive the Rents, which license shall be automatically revoked upon the occurrence of an Event of Default (as hereinafter defined). Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.

1.3       SECURITY AGREEMENT. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the Obligations, a security interest in the Property to the full extent that the Property may be subject to the Uniform Commercial Code.

As to those items of Property described in Section 1 .I of this Security Instrument that are, or are to become fixtures related to the Land, it is intended as to those items that THIS SECURITY INSTRUMENT BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING from the date of its filing in the real estate records of the County where the Property is situate. The name of the record owner of said real estate is Borrower. Information concerning the security interest created by this instrument may be obtained from the Lender, as secured party, at its address as set forth in Section 14 of this Security Instrument. The address of the Borrower as debtor, is as set forth in Section 14 of this Security Instrument. This document covers goods which are or are to become fixtures. Borrower’s Federal Tax Identification Number is ___________. Borrower’s jurisdiction of organization is the State of Kansas and its organization identification number is _____________ (or Borrower has no organizational identification number). Subject to the covenants of Section 4.2, Borrower shall give Lender at least thirty (30) days’ written notice of any proposed change in Borrower’s name, address, identity, state of registration for a registered organization, principal place of business, or structure and hereby authorizes Lender to file prior to or concurrently with such change all additional financing statements that Lender may require to establish and perfect the priority of Lender’s security interest in the Properly. Borrower by signing this Security Instrument authorizes Lender to file such financing statements, amendments or continuation statements, either before, on or after the date hereof, as Lender determines necessary or desirable to perfect or to continue the lien of the Lender’s security interest in the Property.

1.4       PLEDGE OF MONIES HELD. Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender, including, without limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4), the Deferred Maintenance Deposit (as defined on Exhibit “B” attached hereto and made a part hereof), the Reserve (as defined on Exhibit “B”), Net Proceeds (as defined in Section 4.3), the Lock Box Account (as defined in Section 4.4) and condemnation awards or payments described in Section 3.5 (collectively, “Deposits”), as additional security for the Obligations until expended or applied as provided in this Security Instrument.

CONDITIONS TO GRANT

TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Lender, and the successors and assigns of Lender, forever;

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note and this Security Instrument, shall well and truly perform the Other Obligations (as defined in Section 2.1 hereof) as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, these presents and the estate hereby granted shall cease, terminate and be void.

2. DEBT AND OBLIGATIONS SECURED

2.1       DEBT AND OBLIGATIONS SECURED. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the payment of the Debt and the performance of the Other Obligations, in such order of priority as Lender may determine in its sole discretion. For purposes hereof, the term “Debt” shall mean the aggregate of the indebtedness evidenced by the Note in lawful money of the United States of America, interest, default interest, late charges, prepayment premiums and other sums, as provided in the Note, this Security Instrument or the other Loan Documents (defined below), all other moneys agreed or provided to be paid by Borrower in the Note, this Security Instrument or the other Loan Documents and all sums advanced pursuant to this Security Instrument to protect and preserve the Property and the lien and the security interest created hereby. For purposes hereof, the term “Other Obligations” shall mean the obligations of Borrower (other than the obligation to repay the Debt) contained in this Security Instrument, the Note and the other Loan Documents (as hereinafter defined). For purposes hereof, the term “Loan Documents” shall mean the Note, this Security Instrument and any other documents or instruments which now or shall hereafter wholly or partially secure or guarantee payment of the Note or which have otherwise been executed or are hereafter executed by Borrower and/or any other person or entity in connection with the loan (the “Loan”) evidenced by the Note and in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part thereof. Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively below as the “Obligations.” All the covenants, conditions and agreements contained in the Note and the other Loan Documents are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein. Anything to the contrary herein or in any other Loan Document notwithstanding, the

obligations of any guarantor under the Guaranty of Recourse Obligations of Borrower or any Guarantor or Indemnitor under any other separate guaranty or indemnity accepted by Lender shall not be secured by this Security Instrument, any separate assignment of leases or assignment of rents, or any other lien encumbering the Property; provided however that the obligations of Borrower under the Environmental Indemnity Agreement and under any separate indemnity of Borrower shall be so secured, subject to the rights of Lender to proceed on an unsecured basis thereunder pursuant to applicable law.

3. BORROWER COVENANTS

Borrower covenants and agrees that:

3.1       PAYMENT OF DEBT. Borrower will pay the Debt at the time and in the manner provided in the Note, this Security Instrument and the other Loan Documents.

3.2 INSURANCE.

(a)       Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the coverages set forth herein:

(i)        comprehensive all risk insurance on the Improvements and the Personal Property in each case (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Security Instrument shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing either an agreed amount endorsement or a waiver of all co-insurance provisions; (C) providing for a deductible of not greater than $10,000.00; and (D) if any of the Improvements or the use of the Property shall at any time constitute a legal non-conforming structure or use, Borrower shall obtain an “Ordinance or Law Coverage” or “Enforcement” endorsement, which shall include sufficient coverage for (1) costs to comply with building and zoning codes and ordinances, (2) demolition costs, and (3) increased costs of construction. If any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area”, Borrower shall obtain flood hazard insurance in such an amount as Lender shall require, but in no event less than the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended. In addition, in the event the Property is located in the State of California or in a “seismic zone” 3 or 4 as defined in the Uniform Building Code published by the International Conference of Building Officials, Borrower shall obtain earthquake insurance in amounts and in form and substance satisfactory to Lender;

(ii)       commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the “occurrence” form with a combined single limit (including “umbrella” coverage in place) of not less than (1) $3,000,000 AND A GENERAL AGGREGATE LIMIT OF NOT LESS THAN $4,000,000; or (2) if any of the

Improvements contain elevators, a combined single limit of not less than $5,000,000 and a general aggregate limit of $6,000,000; (B) to continue at not less than the aforesaid limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations (2) products and completed operations on an “if any” basis; (3) independent contractors; and (4) blanket contractual liability for all written and oral contracts, to the extent the same is available;

(iii)      business income insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in Subsection 3.2(a)(i); (C) on an agreed value actual loss sustained basis in an amount equal to 100% of the projected gross income from the Property for a period of twelve (12) months; and (D) if the Borrower is required to obtain an “Ordinance or Law Coverage” or “Enforcement” endorsement pursuant to Subsection 3.2(a)(i)(D), coverage for the increased period of restoration. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the gross income from the Property for the succeeding twelve (12) month period. All insurance proceeds payable to Lender pursuant to this Subsection shall be held by Lender and shall be applied to the obligations secured hereunder from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its obligations to pay the obligations secured hereunder on the respective dates of payment provided for in the Note except to the extent such amounts are actually paid out of the proceeds of such business income insurance;

(iv)      (A) at all times during which structural construction, material repairs or alterations are being made with respect to the Improvements, owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) during new construction the insurance provided for in Subsection 3.2(a)(i) written in a so-called builder’s risk completed value form on a non-reporting basis;

(v)       if Borrower has employees, workers’ compensation, subject to the statutory limits of the state in which the Property is located, and employer’s liability insurance with a limit of at least $1,000,000.00 per accident and per disease per employee, and 1,000,000.00 aggregate coverage for disease in respect of any work or operations on or about the Property, or in connection with the Property or its operation;

(vi)      if the Property contains HVAC or other equipment not covered by the comprehensive all risk insurance, comprehensive boiler and machinery insurance, in amounts as shall be reasonably required by Lender;

(vii)     if Borrower owns or operates motor vehicles, motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits reasonably acceptable to Lender; and

(viii)    such other insurance and in such amounts as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.

(b)       All insurance provided for in Subsection 3.2(a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), and shall be subject to the approval of Lender as to insurance companies, policy limits and any sub-limits thereof, forms (including exclusions and exceptions), deductibles, loss payees and insureds. Whether or not covered by the express terms of any Policy, Borrower shall not decline, elect not to accept, allow to lapse or fail to pay the required premium for any insurance coverage required to be extended or offered by any insurer by applicable law, rule or regulation without Lender’s prior written consent. The insurance companies must be approved, authorized or licensed to provide insurance in the state in which the Property is located and have a rating of “A” or better for claims paying ability assigned by Moody’s Investors Service, Inc. and Standard & Poor’s Rating Group or a general policy rating of “A-” or better and a financial class of VIII or better assigned by A.M. Best Company, Inc. Each such insurer shall be referred to herein as a “Qualified Insurer.”

(c)       Borrower shall not obtain (i) any umbrella or blanket liability or casualty Policy unless, in each case, Lender’s interest is included therein as provided in this Security Instrument and such Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Subsection 3.2(a) to be furnished by, or which may be reasonably required to be furnished by, Borrower. In the event Borrower obtains separate insurance or an umbrella or a blanket Policy, Borrower shall notify Lender of the same and shall cause certified copies of each Policy to be delivered as required in Subsection 3.2(e). Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Subsection 3.2(a).

(d)        All Policies of insurance provided for or contemplated by Subsection 3.2(a), except for the Policy referenced in Subsection 3.2(a)(v), shall name Lender and Borrower as the insured or additional insured, as their respective interests may appear, and in the case of property damage, boiler and machinery, flood and earthquake insurance, shall contain a “mortgagee clause” in form acceptable to Lender providing, among other things, that Lender shall receive at least thirty (30) days prior written notification of any termination, cancellation or reduction of insurance and that the loss thereunder shall be payable to Lender.

(e)       If not previously delivered to Lender, Borrower shall deliver to Lender no later than thirty (30) days after the date hereof certified copies of the existing Policies providing the insurance coverage required under Section 3.2(a) marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”) annually in advance. In addition, no later than thirty (30) days prior to the expiration dates of the Policies which Borrower is now or hereafter required to maintain hereunder, Borrower shall deliver to Lender certified copies of new or renewal Policies (also marked

“premium paid” or accompanied by evidence satisfactory to Lender of payment of the Insurance Premiums due thereunder annually in advance), together with certificates of insurance therefor, setting forth, among other things, the amounts of insurance maintained, the risks covered by such insurance and the insurance company or companies which carry such insurance. If requested by Lender, Borrower shall furnish verification of the adequacy of such insurance by an independent insurance broker or appraiser acceptable to Lender. Under no circumstances shall Borrower be permitted to finance the payment of any portion of the Insurance Premiums.

(f)        If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by this Security Instrument and shall bear interest in accordance with Section 10.3 hereof.

(g)       If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty, Borrower shall give prompt notice of such damage to Lender and shall promptly commence and diligently prosecute the completion of the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such fire or other casualty, with such alterations as may be approved by Lender (the “Restoration”) and otherwise in accordance with Section 4.3 of this Security Instrument, except in instances where Lender has failed or elected not to disburse Net Proceeds to Borrower under such Section 4.3 (provided that such exception shall not apply if the failure to disburse is attributable to Borrower’s failure to comply with the conditions set forth in Clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or any other conditions set forth in Section 4.3 which Borrower has the practical ability to satisfy). Lender may, but shall not be obligated to make proof of loss if not made promptly by Borrower.

(h)       In the event of foreclosure of this Security Instrument, or other transfer of title to the Property in extinguishment in whole or in part of the Debt all right, title and interest of Borrower in and to such policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.

3.3       PAYMENT OF TAXES. ETC. Borrower shall promptly pay all taxes, assessments, water rates, sewer rents, governmental impositions, and other charges, including without limitation vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Land, now or hereafter levied or assessed or imposed against the Property or any part thereof (the “Taxes”), all ground rents, maintenance charges and similar charges, now or hereafter levied or assessed or imposed against the Property or any part thereof (the “Other Charges”), and all charges for utility services provided to the Property prior to the time same become delinquent. Borrower will deliver to Lender, promptly upon Lender’s request, evidence satisfactory to Lender that the Taxes, Other Charges and utility service charges have been so paid or are not then delinquent. Borrower shall not suffer and shall promptly cause to be paid and

discharged any lien or charge whatsoever which may be or become a lien or charge against the Property (“Liens”). Except to the extent sums sufficient to pay all Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument, Borrower shall furnish to Lender paid receipts for the payment of the Taxes and Other Charges prior to the date the same shall become delinquent. Borrower shall not be required to pay any Taxes, Other Charges or Liens so long as Borrower shall in good faith contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection of the Taxes, Other Charges or Liens so contested and the sale of the Property, or any part thereof to satisfy the same, provided that borrower shall, prior to any such contest, have given such security as may be reasonably required by Lender to ensure such payments and prevent any sale or forfeiture of the Property by reason of such nonpayment. Any such contest shall be prosecuted in accordance with the laws and rules pertaining to such contests and in all events with due diligence and Borrower shall promptly after final determination thereof pay the amount of any such Tax, Other Charge or Lien so determined, together with all interest and penalties, which may be payable in connection therewith. Notwithstanding the provisions of this Section, Borrower shall (and if Borrower shall fail so to do, Lender may but shall not be required to) pay any such Taxes, Other Charges or Liens notwithstanding such contest if in the reasonable opinion of Lender, the Property shall be in jeopardy or in danger of being forfeited or foreclosed.

3.4 RESERVES.

(a)       Borrower shall pay to Lender on each date that a regularly scheduled payment of principal or interest is due under the Note (a) one-twelfth of an amount which would be sufficient to pay the Taxes payable, or estimated by Lender to be payable, during the next ensuing twelve (12) months and (b) one-twelfth of an amount which would be sufficient to pay the Insurance Premiums due for the renewal of the coverage afforded by the Policies upon the expiration thereof (the amounts in (a) and (b) above shall be called the “Escrow Fund”). Borrower agrees to notify Lender immediately of any changes to the amounts, schedules and instructions for payment of any Taxes and Insurance Premiums of which it has obtained knowledge and authorizes Lender or its agent to obtain the bills for Taxes and Other Charges directly from the appropriate taxing authority. Borrower may, on its own behalf, also engage a third party tax service provider, so long as Lender continues to receive such bills for Taxes and Other Charges uninterrupted. The Escrow Fund and the payments of interest or principal or both, payable pursuant to the Note shall be added together and shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the Escrow Fund to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to Sections 3.2 and 3.3 hereof. If the amount of the Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 3.2 and 3.3 hereof, Lender shall, in its discretion, return any excess to Borrower or credit such excess against future payments to be made to the Escrow Fund. In allocating such excess, Lender may deal with the person shown on the records of Lender to be the owner of the Property. If the Escrow Fund is not sufficient to pay the items set forth in (a) and (b) above, Borrower shall promptly pay to Lender, upon demand, an amount which Lender shall estimate as sufficient to make up the deficiency. The Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by Lender. No earnings or interest on the Escrow Fund shall be payable to Borrower.

(b)       Borrower shall comply with the Replacement Reserve Requirements set forth on Exhibit “B” attached hereto and made a part hereof.

3.5        CONDEMNATION. Borrower shall promptly give Lender notice of the actual or threatened commencement of any condemnation or eminent domain proceeding and shall deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time deliver to Lender all instruments requested by it to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through eminent domain or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Security Instrument and the Debt shall not be reduced until any award or payment therefor shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the award by the condemning authority but shall be entitled to receive out of the award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 4.3 of this Security Instrument, except in instances where Lender has failed or elected not to disburse Net Proceeds to Borrower under such Section 4.3 (provided that such exception shall not apply if the failure to disburse is attributable to Borrower’s failure to comply with the conditions set forth in Clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or any other conditions set forth in Section 4.3 which Borrower has the practical ability to satisfy). If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the award or payment, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the award or payment, or a portion thereof sufficient to pay the Debt.

3.6 LEASES AND RENTS.

(a)       Except as otherwise consented to by Lender, all Leases shall be written on the standard form of lease which shall have been approved by Lender. Upon request, Borrower shall furnish Lender with executed copies of all Leases. No material changes may be made to the Lender-approved standard lease without the prior written consent of Lender. In addition, all renewals of Leases and all proposed leases shall provide for rental rates and terms comparable to existing local market rates and terms and shall be arms-length transactions with bona fide, independent third party tenants. All proposed commercial Leases and renewals of existing Leases for commercial space shall be subject to the prior approval of Lender and its counsel, at Borrower’s expense. All Leases shall provide that they are subordinate to this Security Instrument and that the lessee agrees to attorn to Lender.

(b)       Borrower (i) shall observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to impair the value of the Leases as security for the Obligations; (ii) shall enforce all of the terms, covenants and

conditions contained in the Leases upon the part of the lessee thereunder to be observed or performed, short of termination thereof; provided however, a residential Lease may be terminated in the event of a default by the tenant thereunder; (iii) shall not collect any of the Rents more than one ( I ) month in advance; (iv) shall not execute any other assignment of the lessor’s interest in the Leases or the Rents; and (v) shall not consent to any assignment of or subletting under the Leases not in accordance with their terms, without the prior written consent of Lender.

(c)       Notwithstanding the provisions of Subsection 3.6(a) above, renewals of existing commercial Leases and proposed leases for commercial space covering less than ten percent (10%) of the total rentable space for the Property and accounting for rental income which in the aggregate is less than ten percent (1 0%) of the total rental income for the Property shall not be subject to the prior approval of Lender provided that (i) the renewal Lease or proposed lease shall have a lease term not to exceed ten (10) years including options to renew, (ii) the renewal Lease or proposed lease shall provide for rental rates and terms comparable to existing local market rates and terms, and (iii) the renewal Lease or proposed lease shall be an arms-length transaction with a bona fide, independent third party tenant (leases meeting the foregoing requirements shall be referred to herein as “Minor Leases”). Borrower shall deliver to Lender copies of all Leases which are entered into pursuant to the preceding sentence together with Borrower’s certification that it has satisfied all of the conditions of the preceding sentence within thirty (30) days after the execution of the Lease.

(d)       All security deposits of tenants, whether held in cash or any other form, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower at such commercial or savings bank or banks as may be reasonably satisfactory to Lender. Borrower shall, upon request, provide Lender with evidence reasonably satisfactory to Lender of Borrower’s compliance with the foregoing. Following the occurrence and during the continuance of any Event of Default, Borrower shall, upon Lender’s request, if permitted by any applicable legal requirements, turn over to Lender the security deposits (and any interest theretofore earned thereon) with respect to all or any portion of the Property, to be held by Lender subject to the terms of the Leases.

3.7       MAINTENANCE OF PROPERTY. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements and the Personal Property shall not be removed, demolished or materially altered (except for normal replacement of the Personal Property and tenant improvements made in connection with a Lease which has been entered into by Borrower in accordance with the terms hereof) without the consent of Lender. Subject to the provisions of Subsection 3.2(g) and Section 3.5, Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated or which may be affected by any proceeding of the character referred to in Section 3.5 hereof and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Borrower shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof. If under applicable zoning provisions the use of all or any portion of the Property is or shall

become a nonconforming use, Borrower will not cause or permit the nonconforming use to be discontinued or abandoned without the express written consent of Lender.

3.8       WASTE. Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Security Instrument.

3.9        COMPLIANCE WITH LAWS. Borrower shall (i) promptly comply with all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting the Property, or the use thereof including, but not limited to, the Americans with Disabilities Act (“ADA”) (collectively, the “Applicable Laws”), (ii) from time to time, upon Lender’s request, provide Lender with evidence satisfactory to Lender that the Property complies with all Applicable Laws or is exempt from compliance with Applicable Laws, (iii) give prompt notice to Lender of the receipt by Borrower of any notice related to a violation of any Applicable Laws and of the commencement of any proceedings or investigations which relate to compliance with Applicable Laws, and (iv) take appropriate measures to prevent and will not engage in or knowingly permit any illegal activities at the Property.

3.10 BOOKS AND RECORDS.

(a)       Borrower shall keep adequate books and records of account in accordance with methods of accounting reasonably acceptable to Lender and furnish to Lender:

(i)        quarterly operating statements of the Property, prepared and certified by Borrower in the form required by Lender, detailing the revenues received, the expenses incurred and the net operating income before and after debt service (principal and interest) and major capital improvements for that quarter and containing appropriate year to date information within thirty (30) days after the end of each fiscal quarter;

(ii)        certified rent rolls for the last month of each fiscal quarter signed and dated by Borrower, detailing the names of all tenants of the Improvements, the portion of Improvements occupied by each tenant, the base rent and any other charges payable under each Lease and the term of each Lease, including the expiration date, and any other information as is reasonably required by Lender, within thirty (30) days after the end of each fiscal quarter;

(iii)       an annual operating statement of the Property detailing the total revenues received, total expenses incurred, total cost of all capital improvements, total debt service and total cash flow, to be prepared and certified by Borrower in the form required by Lender, within ninety (90) days after the close of each fiscal year of Borrower and if available, any operating statements prepared by an independent certified public accountant within thirty (30) days of the date the same are made available to Borrower;

(iv)       an annual balance sheet and profit and loss statement of Borrower in the form required by Lender, to be prepared and certified by Borrower within ninety (90) days after the close of each fiscal year of Borrower, and, if available, any financial statement prepared by an independent certified public accountant with respect to Borrower within thirty (30) days of the date the same are made available to any such persons; and

(v)        copies of Borrower’s federal income tax returns within fifteen (15) days of the date such returns are filed.

(b)        Upon Lender’s request, Borrower shall cause each Guarantor (as hereinafter defined) and each Indemnitor other than Borrower (an “Indemnitor”) under the Environmental Indemnity (as hereinafter defined) to furnish to Lender no later than ninety (90) days after the end of the fiscal year for the applicable Guarantor or Indemnitor a financial statement for said fiscal year certified to Lender and prepared on a form reasonably acceptable to Lender.

(c)        Borrower, its affiliates, any Guarantor and any Indemnitor shall furnish Lender with such other additional financial or management information as may, from time to time, be reasonably required by Lender in form and substance reasonably satisfactory to Lender. Lender may commission new or updated appraisals, phase I and phase I1 environmental reports, property condition surveys and (if the Property is located in an area with a high degree of seismic activity) seismic risk assessments of the Property to be prepared by third parties (each a “Third Party”) designated by Lender after the date hereof (each, a “Third Party Report”). Borrower shall cooperate with each Third Party and Lender in the preparation of the Third Party Reports and shall reimburse Lender within ten (10) days of Lender’s demand for all costs incurred by Lender in connection with such Third Party Reports, provided that Borrower shall not be obligated to reimburse Lender the cost of such Third Party Reports unless requested by Lender following the occurrence and during the continuance of any Event of Default.

3.11     PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with the Property and never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof, except for the Permitted Exceptions (defined below).

3.12 [INTENTIONALLY DELETED].

3.13      PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and perform each and every term to be observed or performed by Borrower pursuant to the terms of any agreement or recorded instrument affecting or pertaining to the Property, or given by Borrower to Lender for the purpose of further securing an obligation secured hereby and any amendments, modifications or changes thereto.

3.14    CHANGE OF NAME. IDENTITY OR STRUCTURE. Borrower will not change Borrower’s name, identity (including its trade name or names) or, if not an individual, Borrower’s corporate, limited liability company, partnership or other structure without notifying

Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s structure, without first obtaining the prior written consent of Lender. Borrower will execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein, and to the extent permitted by applicable law, hereby authorizes Lender to file any such financing statement on Borrower’s behalf. At the request of Lender, Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.

3.15     EXISTENCE. Borrower will continuously maintain its existence and its rights to do business in the state where the Property is located together with its franchises and trade names.

3.16     OFAC. At all times throughout the term of the Loan, Borrower and all of its respective Affiliates shall: (i) not be a Prohibited Person (defined below); and (ii) be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury.

The term “Prohibited Person” shall mean any person or entity:

(a)        listed in the Annex to, or otherwise subject to the provisions of, the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

(b)        that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed to the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(c)        with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order;

(d)       who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(e)       that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, www.ustreas.gov/offices/enforcement/ofac, or at any replacement website or other replacement official publication of such list; or

(f) who is an Affiliate of or affiliated with a person or entity listed above.

The term “Affiliate,” as used herein, shall mean as to any person or entity, any other person or entity that, directly or indirectly, is in control of, is controlled by or is under common control with such person or entity or is a director or officer of such person or entity or of an

Affiliate of such person or entity. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.

4. SPECIAL COVENANTS

Borrower covenants and agrees that:

4.1        PROPERTY USE. The Property shall be used only for an apartment complex, and for no other use without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion.

4.2        SINGLE PURPOSE ENTITY. It has not and shall not: (a) engage in any business or activity other than the ownership, operation and maintenance of the Property, and activities incidental thereto; (b) acquire or own any material assets other than (i) the Property, and (ii) such incidental Personal Property as may be necessary for the operation of the Property; (c) merge into or consolidate with any person or entity or dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure, without in each case Lender’s consent; (d) fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the laws of the jurisdiction of its organization or formation, or without the prior written consent of Lender, amend, modify, terminate or fail to comply with the provisions of Borrower’s partnership agreement, articles or certificate of incorporation , articles of organization, operating agreement, or similar organizational documents, as the case may be, as same may be further amended or supplemented, if such amendment, modification, termination or failure to comply would adversely affect the ability of Borrower to perform its obligations hereunder, under the Note or under the other Loan Documents; (e) own any subsidiary or make any investment in, any person or entity without the consent of Lender; (f) commingle its assets with the assets of any of its general partners, managing members, shareholders, affiliates, principals or of any other person or entity; (g) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than the Debt, except with respect to trade payables incurred in the ordinary course of its business of owning and operating the Property, provided that such debt is paid when due; (h) fail to maintain its records, books of account and bank accounts separate and apart from those of the general partners, managing members, shareholders, principals and affiliates of Borrower, the affiliates of a general partner or managing member of Borrower, and any other person or entity; (i) enter into any contract or agreement with any general partner, managing member, shareholder, principal or affiliate of Borrower, Guarantor or Indemnitor, or any general partner, managing member, shareholder, principal or affiliate thereof, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than any general partner, managing member, shareholder, principal or affiliate of Borrower, Guarantor or Indemnitor, or any general partner, managing member, shareholder, principal or affiliate thereof; (j) seek the dissolution or winding up in whole, or in part, of Borrower; (k) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any general partner, managing member, shareholder, principal or affiliate of Borrower, or any general

partner, managing member, shareholder, principal or affiliate thereof or any other person; (l) hold itself out to be responsible for the debts of another person; (m) make any loans to any third party; (n) fail either to hold itself out to the public as a legal entity separate and distinct from any other entity or person or to conduct its business solely in its own name in order not (i) to mislead others as to the identity with which such other party is transacting business, or (ii) to suggest that Borrower is responsible for the debts of any third party (including any general partner, managing member, shareholder, principal or affiliate of Borrower, or any general partner, managing member, shareholder, principal or affiliate thereof); (0) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; or (p) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors.

4.3       RESTORATION. The following provisions shall apply in connection with the Restoration of the Property:

(a)        If the Net Proceeds shall be less than One Hundred Thousand and 00/100 Dollars ($100,000.00) and the costs of completing the Restoration shall be less than One Hundred Thousand and 00/100 Dollars ($100,000.00), the Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that all of the conditions set forth in Subsection 4.3(b)(i) are met and Borrower delivers to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Security Instrument.

(b)       If the Net Proceeds are equal to or greater than One Hundred Thousand and 00/100 Dollars ($100,000.00) or the costs of completing the Restoration are equal to or greater than One Hundred Thousand and 00/100 Dollars ($100,000.00) Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Subsection 4.3(b). The term “Net Proceeds” for purposes of this Section 4.3 shall mean: (i) the net amount of all insurance proceeds received by Lender pursuant to Subsections 3.2(a)(i), (iv), (vi) and (viii) of this Security Instrument as a result of such damage or destruction (or any proceeds of self-insurance maintained in lieu of such insurance policies), after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of all awards and payments received by Lender with respect to a taking referenced in Section 3.5 of this Security Instrument, after deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be.

(i)         The Net Proceeds shall be made available to Borrower for the Restoration provided that each of the following conditions are met: (A) no Event of Default shall have occurred and be continuing under the Note, this Security Instrument or any of the other Loan Documents; (B) (1) in the event the Net Proceeds are Insurance Proceeds, less than fifty percent (50%) of the total floor area of the Improvements has been damaged, destroyed, or rendered unusable as a result of such fire or other casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or

periphery of the Property; (C) Leases demising in the aggregate a percentage amount equal to or greater than fifty percent (50%) (with respect to casualties) or ninety percent (90%) (with respect to condemnation) of the total net rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such fire or other casualty, as the case may be, shall remain in full force and effect during and after the completion of the Restoration; (D) Borrower shall have commenced the Restoration as soon as reasonably practicable (but in no event later than ninety (90) days after such damage or destruction or taking, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion; (E) Lender shall be satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note at the Applicable Interest Rate (as defined in the Note), which will be incurred with respect to the Property as a result of the occurrence of any such fire or other casualty or taking, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Subsection 3.2(a)(iii), if applicable, or (3) by other funds of Borrower; (F) Lender shall be satisfied that following the completion of the Restoration, the ratio of sustainable net cash flow for the Property (after deduction for underwritten reserves) to debt service payable under the Note shall be at least 1.40 to 1.0 (G) Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) twelve (12) months prior to the Maturity Date (as defined in the Note), (2) twelve (12) months after the occurrence of such fire or other casualty or taking, whichever the case may be, (3) the earliest date required for such completion under the terms of any Leases which are required in accordance with the provisions of this Subsection 4.3(b) to remain in effect subsequent to the occurrence of such fire or other casualty or taking, whichever the case may be, and the completion of the Restoration or (4) such time as may be required under any applicable zoning laws, ordinances, rules or regulations in order to repair and restore the Property to the condition it was in immediately prior to such fire or other casualty or to as nearly as possible the condition it was in immediately prior to such taking, as applicable; (H) the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable zoning laws, ordinances, rules and regulations; (I) the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion and in compliance with all applicable laws, rules and regulations; and (J) such fire or other casualty or taking, as applicable, does not result in the loss of access to the Property or the Improvements.

(ii)        The Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Subsection 4.3(b), shall constitute additional security for the Obligations. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not either been fully bonded to the

satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company insuring the lien of this Security Instrument.

(iii)       All plans and specifications required in connection with the Restoration shall be subject to prior review and approval in all respects by Lender and by an independent consulting engineer selected by Lender (the “Casualty Consultant”), which approval shall not be unreasonably withheld or delayed. Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to prior review and acceptance by Lender and the Casualty Consultant, which approval shall not be unreasonably withheld or delayed. All reasonable costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and the reasonable Casualty Consultant’s fees, shall be paid by Borrower.

(iv)      In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage” as used in this Subsection 4.3(b) shall mean an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Subsection 4.3(b), be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.3(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate governmental and quasi-governmental authorities, and Lender receives evidence reasonably satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage, provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, and the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company insuring the lien of this Security Instrument. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.

(v)       Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.

(vi)      If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Subsection 4.3(b) shall constitute additional security for the Obligations. With respect to Restorations following a casualty in which the Improvements are restored to substantially the same condition as they existed prior to the casualty, the excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Subsection 4.3(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and shall be continuing under the Note, this Security Instrument or any of the other Loan Documents.

(c)        All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Subsection 4.3(b)(vi) may be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its discretion shall deem proper or, at the discretion of Lender, the same may be paid, either in whole or in part, to Borrower for such purposes as Lender shall designate, in its discretion. Provided no Event of Default exists under the Note, this Security Instrument or the other Loan Documents, Borrower shall not be obligated to pay any prepayment premium or other prepayment consideration in connection with a prepayment resulting from the application of Net Proceeds to the Debt pursuant to the preceding sentence. Any such prepayment shall be applied to the principal last due under the Note and shall not release Borrower from the obligation to pay the Constant Monthly Payments (as defined in the Note) next becoming due under the Note and the Constant Monthly Payment shall not be adjusted or recalculated as a result of such partial prepayment. If Lender shall receive and retain Net Proceeds, the lien of this Security Instrument shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.

4.4 LOCK BOX ACCOUNT.

(a)       (i) Upon the occurrence of an Event of Default, provided a lock box procedure has not otherwise been instituted under any other provision of the Loan Documents, Lender shall have the right, upon written notice to Borrower to require that, from and after the next succeeding date of payment of an installment of principal and interest under the Note, all Rents with respect to the Property, at Lender’s discretion, be paid directly to the property manager for

the Property (the “Manager”) and deposited daily by the Manager in the name designated by Lender directly to a designated lock box account (the “Lock Box Account”), opened by Lender at a bank (the “Lock Box Bank”), which account shall be within the exclusive control of Lender.

(b)        Upon receipt of notice from Lender as set forth in Subsection (a) above, Borrower shall enter into and shall cause Manger to enter into a lock box agreement with Lender in a form reasonably satisfactory to Lender, which form shall substantially reflect the provisions of this Section (provided, however, that Borrower’s obligations under this Section 4.4 (including Borrower’s obligation to cause Manager to deposit Rents in the Lock-Box Account in accordance with Section 4.4 (a) above) shall not be dependent upon the execution of any such lock box agreement. If in Lender’s judgment, the Manager’s performance in collecting Rents shall decline, Borrower shall irrevocably instruct and otherwise cause each party paying such Rents (including each tenant under any Lease) to make all payments (A) if by wire transfer, to the Lock Box Account, and (B) if by check, money order or similar manner of payment, by mail to a designated lock box (the “Lock Box”) within the exclusive control of Lender. Amounts deposited into the Lock-Box shall be collected and deposited daily by the Lock-Box Bank into the Lock-Box Account. Borrower agrees that if any Rents required to be deposited in the Lock Box Account shall be received by it or any affiliate or any manager of all or any portion of the Property, Borrower shall deposit or cause such Rents to be deposited in the Lock Box Account within one (1) Business Day of the receipt of such Rents by Borrower, any affiliate or any manager.

(c)        Amounts on deposit in the Lock Box Account on any date of payment of an installment of principal and interest under the Note shall be applied in the following order of priority: (i) to pay any Taxes, Other Charges or Insurance Premiums then due and payable; (ii) to pay the Lock Box Bank’s fees; (iii) to pay interest and principal due on such date with respect to the Note; (iv) to replenish all reserves and escrow funds required to be paid by Borrower to Lender under the Note, this Security Instrument and the other Loan Documents; and (v) to pay normal and customary operating expenses of the Property which have been approved by Lender (which approval, if no Event of Default shall exist at the time, shall not be unreasonably withheld).

(d)        In the event that Lender shall have the right to institute lock box procedures pursuant to any other provision of the Loan Documents, the terms and provisions of such provision shall supersede the provisions of this Section 4.4.

5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

5.1       WARRANTY OF TITLE. Borrower has paid for and has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, set over, transfer and convey the same and that Borrower possesses an unencumbered fee simple absolute estate in the Land and the Improvements and that it owns the Property free and clear of all liens, encumbrances and charges whatsoever except for those exceptions shown in the title insurance policy insuring the lien of this Security Instrument (the “Permitted Exceptions”). Borrower shall

forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.

5.2        AUTHORITY. Borrower (and the undersigned representative of Borrower, if any) has full power, authority and legal right to execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant, set-over, transfer and convey the Property pursuant to the terms hereof and to keep and observe all of the terms of this Security Instrument on Borrower’s part to be performed.

5.3       LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized, validly existing and in good standing under the laws of its state of organization or incorporation; (b) is duly qualified to transact business and is in good standing in the State where the Property is located; and (c) has all necessary approvals, governmental and otherwise, and full power and authority to own the Property and carry on its business as now conducted and proposed to be conducted. Borrower now has and shall continue to have the full right, power and authority to operate and lease the Property, to encumber the Property as provided herein and to perform all of the other obligations to be performed by Borrower under the Note, this Security Instrument and the other Loan Documents

5.4        VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance of the Note, this Security Instrument and the other Loan Documents and the borrowing evidenced by the Note (i) are within the corporate, partnership, trust or limited liability company (as the case may be) power of Borrower; (ii) have been authorized by all requisite corporate, partnership, trust or limited liability company (as the case may be) action; (iii) have received all necessary approvals and consents, corporate, governmental or otherwise; (iv) will not violate, conflict with, result in a breach of or constitute (with notice or lapse of time, or both) a default under any provision of law, any order or judgment of any court or governmental authority, the articles of incorporation, by-laws, partnership, trust, operating agreement or other governing instrument of Borrower, or any indenture, agreement or other instrument to which Borrower is a party or by which it or any of its assets or the Property is or may be bound or affected; (v) will not result in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of its assets, except the lien and security interest created hereby; and (vi) will not require any authorization or license from, or any filing with, any governmental or other body (except for the recordation of this instrument in appropriate land records in the State where the Property is located and except for Uniform Commercial Code filings relating to the security interest created hereby); and (b) the Note, this Security Instrument and the other Loan Documents constitute the legal, valid and binding obligations of Borrower.

5.5       LITIGATION. There is no action, suit or proceeding, judicial, administrative or otherwise (including any condemnation or similar proceeding), pending or, to the best of Borrower’s knowledge, threatened or contemplated against, or affecting, Borrower, a Guarantor, if any, an Indemnitor, if any, or the Property that has not been disclosed to Lender or is not adequately covered by insurance, as determined by Lender in its sole and absolute discretion.

5.6       STATUS OF PROPERTY. (a) No portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended, or any successor law, or, if located within any such area, Borrower has obtained and will maintain the insurance prescribed in Section 3.2 hereof; (b) Borrower has obtained all necessary certificates, licenses and other approvals, governmental and otherwise, necessary for the operation of the Property and the conduct of its business and all required zoning, building code, land use, environmental and other similar permits or approvals, all of which are in full force and effect as of the date hereof and not subject to revocation, suspension, forfeiture or modification; (c) the Property and the present and contemplated use and occupancy thereof are in full compliance with all Applicable Laws, including, without limitation, zoning ordinances, building codes, land use and environmental laws, laws relating to the disabled (including, but not limited to, the ADA) and other similar laws; (d) the Property is served by all utilities (including, but not limited to, public water and sewer systems) required for the current or contemplated use thereof; (e) all utility service is provided by public utilities and the Property has accepted or is equipped to accept such utility service; (e) all public roads and streets necessary for service of and access to the Property for the current or contemplated use thereof have been completed, are serviceable and all-weather and are physically and legally open for use by the public; (g) the Property is, to the best of Borrower’s knowledge, free from damage caused by fire or other casualty; (h) all costs and expenses of any and all labor, materials, supplies and equipment used in the construction of the Improvements have been paid in full; (i) all liquid and solid waste disposal, septic and sewer systems located on the Property are in a good and safe condition and repair and in compliance with all Applicable Laws; and (j) all Improvements lie within the boundary of the Land.

5.7       NO FOREIGN PERSON. Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the related Treasury Department regulations, including temporary regulations.

5.8       SEPARATE TAX LOT. The Property is assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements are assessed and taxed together with the Property or any portion thereof.

5.9       ERISA COMPLIANCE. As of the date hereof and throughout the term of this Security Instrument, (i) Borrower is not and will not be an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA; (ii) the assets of Borrower do not and will not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA; (iii) Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA; and (iv) transactions by or with Borrower are not and will not be subject to state statutes applicable to Borrower regulating investments of and fiduciary obligations with respect to governmental plans. Borrower shall deliver to Lender such certifications or other evidence as requested by Lender from time to time of Borrower’s compliance with the foregoing representations and covenants.

5.10     LEASES. (a) Borrower is the sole owner of the entire lessor’s interest in the Leases except for the security interest in such Leases and Rents granted to Lender herein and under the Assignment of Leases and Rents in favor of Lender from Borrower and dated even date herewith (“Assignment of Leases”); (b) the Leases are valid and enforceable; (c) the terms of all alterations, modifications and amendments to the Leases are reflected in the certified occupancy statement delivered to and approved by Lender; (d) none of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated except for the security interest in such Leases and Rents granted to Lender herein and under the Assignment of Leases; (e) none of the Rents have been collected for more than one (1) month in advance; (f) the premises demised under the Leases have been completed and the tenants under the Leases have accepted the same and have taken possession of the same on a rent-paying basis; (g) there exist no offsets or defenses to the payment of any portion of the Rents; (h) no Lease contains an option to purchase, right of first refusal to purchase, or any other similar provision; and (i) no person or entity has any possessory interest in, or right to occupy, the Property except under and pursuant to a Lease.

5.11      FINANCIAL CONDITION. (a) Borrower is solvent, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to Borrower has been initiated, and (b) it has received reasonably equivalent value for the granting of this Security Instrument.

5.12      BUSINESS PURPOSES. The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.

5.13     TAXES. Borrower has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by them and have paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by them. Borrower knows of no basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

5.14    MAILING ADDRESS. Borrower’s mailing address, as set forth in the opening paragraph hereof or as changed in accordance with the provisions hereof, is true and correct.

5.15      NO CHANGE IN FACTS OR CIRCUMSTANCES. All information submitted in connection with Borrower’s application for the loan and Lender’s issuance of a commitment for the Loan (collectively, the “Loan Application”) and the satisfaction of the conditions thereof, including, but not limited to, all financial statements, rent rolls, reports, certificates and other documents, are accurate, complete and correct in all respects. There has been no adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading.

5.16     DISCLOSURE. To Borrower’s best knowledge, Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially misleading.

5.17     THIRD PARTY REPRESENTATIONS. Each of the representations and the warranties made by each Guarantor and Indemnitor herein or in any other Loan Document(s) is true and correct in all material respects.

5.18     ILLEGAL ACTIVITY. No portion of the Property has been or will be purchased with proceeds of any illegal activity.

5.19     OFAC Borrower represents and warrants that neither Borrower or any of its respective Affiliates is a Prohibited Person and Borrower and all of its respective Affiliates are in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.

Borrower acknowledges that in accepting the Note, this Security Instrument and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth above notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof; that the warranties and representations are a material inducement to Lender in making the Loan and that Lender would not make the Loan in the absence of such warranties.

6. OBLIGATIONS AND RELIANCES

6.1        RELATIONSHIP OF BORROWER AND LENDER. The relationship between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower and no term or condition of any of the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor. Borrower is not relying on Lender’s expertise business acumen or advice in connection with the Property.

6.2 NO LENDER OBLIGATIONS.

(a)       Notwithstanding the provisions of Subsections l.l(f) and (I) or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents.

(b)       By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Security Instrument, the Note or the other Loan Documents, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.

7. FURTHER ASSURANCES

7.1       RECORDING OF SECURITY INSTRUMENT. ETC. Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security

interest or evidencing the lien hereof upon the Property to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Except where prohibited by law, Borrower will pay all taxes, duties, imposts, assessments, filing, registration and recording fees, and any and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Loan Documents and any amendment or supplement thereto.

7.2       FURTHER ACTS. ETC. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignments, transfers, deeds to secure debt and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Applicable Laws. Borrower, on demand, will execute and deliver and hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, and to file in the appropriate filing or recording offices, one or more financing statements, chattel mortgages or other instruments, to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including without limitation such rights and remedies available to Lender pursuant to this Section 7.2.

7.3CHANGES IN TAX. DEBT, CREDIT AND DOCUMENTARY STAMP LAWS.

(a)       If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option by written notice of not less than ninety (90) days to declare the Debt immediately due and payable.

(b)       Borrower will not claim or demand or be entitled to any credit or credits against the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.

(c)        If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this Security Instrument, or any of the other Loan Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any.

7.4 ESTOPPEL CERTIFICATES.

(a)       After request by Lender, Borrower, within ten (10) days, shall furnish Lender or any proposed assignee an estoppel certificate in form and content as may be requested by Lender with respect to the status of the Loan and/or the Loan Documents.

(b)       Borrower shall use its best efforts to deliver to Lender, promptly upon request, duly executed estoppel certificates from any one or more lessees as required by Lender attesting to such facts regarding the Lease as Lender may reasonably require, provided that (i) Borrower shall not be required to honor more than two requests made by Lender in any twelve month period and (ii) in no event shall Borrower be required to obtain estoppel certificates from lessees containing more information than that required to be certified pursuant to the terms of the related Lease.

7.5      REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor.

8.DUE ON SALEIENCUMBRANCE

8.1       LENDER RELIANCE. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its general partners, managing members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for payment and performance of the Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the payment or the performance of the Obligations, Lender can recover the Debt by a sale of the Property.

8.2NO SALEIENCUMBRANCE. Borrower agrees that Borrower shall not, without the prior written consent of Lender, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred.

8.3       SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Article 8 shall be deemed to include, but not be limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) if Borrower, any Guarantor, any Indemnitor, or any general partner or managing member of Borrower, Guarantor or Indemnitor is a corporation, the voluntary or involuntary sale, conveyance, transfer or pledge of such corporation’s stock (or the stock of any corporation directly or indirectly controlling such corporation by operation of law or otherwise) or the creation or issuance of new stock by which an aggregate of more than forty-nine percent (49%) of such corporation’s stock shall become vested in another party; (d) if Borrower, any Guarantor or Indemnitor or any general partner or managing member of Borrower, any Guarantor or Indemnitor is a limited or general partnership or joint venture, the change, removal or resignation of a general partner or managing partner, or the transfer or pledge of the partnership interest of any general partner or managing partner of such partnership or any profits or proceeds relating to such partnership interest or the transfer or pledge of more than forty-nine percent (49%) in the aggregate of any limited partnership interests in such partnership or any profits or proceeds related to such interests whether in one transfer or pledge or a series of transfers or pledges; (e) if Borrower, any Guarantor or Indemnitor or any general partner or managing member of Borrower, any Guarantor or Indemnitor is a limited liability company, the change, removal or resignation of the managing member of such company, or the transfer or pledge of the membership interest of the managing member of such company or any profits or proceeds relating to such membership interest or the transfer or pledge of more than forty-nine percent (49%) in the aggregate of any membership interests in such company or any profits or proceeds related to such interests whether in one transfer or pledge or a series of transfers or pledges; and (f) without limitation to the foregoing, any voluntary or involuntary sale, transfer, conveyance or pledge by any person or entity which directly or indirectly controls Borrower (by operation of law or otherwise) (a “Principal”) of its direct or indirect controlling interest in Borrower. Notwithstanding the foregoing, the following transfers shall not be deemed to be a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment or transfer within the meaning of this Article 8: (A) transfer by devise or descent or by operation of law upon the death of a partner, member or stockholder of Borrower or any general partner thereof, and (B) a sale, transfer or hypothecation of a partnership, shareholder or membership interest in Borrower, whichever the case may be, by the current partner(s), shareholder(s) or member(s), as applicable, to an immediate family member (i.e., parents, spouses, siblings, children or grandchildren) of such partner, shareholder or member or to a Principal (or a trust for the benefit of any such persons). Notwithstanding the restrictions on transfer of ownership interests in Borrower contained in this Section 8.3 of Article 8 of the Security Instrument, transfers of direct or indirect ownership interests in Borrower or Secured Investment Resources Fund, LP 11, a Delaware limited partnership, the current guarantor of the Loan, (“SIR 11” and sometimes “Guarantor”) to “Permitted Transferees” will not be deemed to be a sale or transfer within the meaning of said Article 8 so long s (1) Millenium Oak Terrace, LLC, a California limited liability company, the current general partner of the Borrower, remains the general partner after such transfer and such company continues to be controlled by W. Robert Kohorst or an entity or entities which he

controls, (2) Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Oak Terrace, LLC, a California limited liability company and/or SIR II own, directly or indirectly, no less than % of the limited partnership interests in the Borrower and the Guarantor and (3) no transfer to an Existing Individual Limited Partner (defined below) shall result in any Existing Individual Limited Partner owning more than 20% of the Borrower or the Guarantor after such transfer.

For purposes hereof, “Permitted Transferees” means one or more of the following:

(a) W. Robert Kohorst, Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Oak Terrace, LLC, a California limited liability company and/or Secured Investment Resources Fund, LP II, a Delaware limited partnership (each an “Existing Everest Owners”).

(b) Any individual or entity limited partner of the Guarantor who currently owns a limited partnership interest and is neither an Existing Everest Owner nor an Owner-Controlled Entity (defined below), (“Existing Individual Limited Partner”), and

(c) Any partnership, limited liability company, corporation or other entity at least fifty-one percent (51%) of the equity ownership and voting control of which is collectively held by one or more Existing Everest Owners (each such entity, an “Owner-Controlled Entity”.

8.4       LENDER’S RIGHTS. Lender reserves the right to condition the consent required hereunder upon a modification of the terms hereof and on assumption of the Note, this Security Instrument and the other Loan Documents as so modified by the proposed transferee, payment of a processing fee of Two Thousand and 00/100 Dollars ($2,000.00) upon any request for transfer, payment of a transfer fee of one percent (1%) of the principal balance of the Note and all of Lender’s expenses incurred in connection with such transfer, the approval by Lender of the proposed transferee, the proposed transferee’s continued compliance with the representations, warranties and covenants set forth in Sections 4.2, 5.9 and 16.1 hereof, or such other conditions as Lender shall determine in its sole discretion to be in the interest of Lender. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property without Lender’s consent. This provision shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property regardless of whether voluntary or not, or whether or not Lender has consented to any previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property.

8.5       ONE-TIME TRANSFER. Notwithstanding anything to the contrary contained in this Article 8, and following the securitization of the Loan, Lender’s consent to a one-time sale, assignment, or other transfer of the Property shall not be withheld provided that Lender receives sixty (60) days prior written notice of such transfer hereunder and no Event of Default has occurred and is continuing, and further provided that, the following additional requirements are satisfied:

(a)        Borrower shall pay Lender a processing fee of Two Thousand and No/100 Dollars ($2,000.00) upon any request for transfer and a transfer fee equal to 1% of the outstanding principal balance of the Loan at the time of such transfer;

(b)        Borrower shall pay any and all out-of-pocket costs incurred in connection with the transfer of the Property (including, without limitation, Lender’s counsel fees and disbursements and all recording fees, title insurance premiums and mortgage and intangible taxes and the fees and expenses of the Rating Agencies pursuant to clause (i) below);

(c) The proposed transferee (the “Transferee”) or Transferee’s Principals (hereinafter defined) must have demonstrated expertise in owning and operating properties similar in location, size and operation to the Property, which expertise shall be reasonably determined by Lender. The term “Transferee’s Principals” shall include Transferee’s (A) managing members, general partners or principal shareholders and (B) such other members, partners or shareholders which directly or indirectly shall own a 15% or greater interest in Transferee;

(d)        Transferee and Transferee’s Principals shall, as of the date of such transfer, have an aggregate net worth and liquidity reasonably acceptable to Lender;

(e)       Transferee, Transferee’s Principals and all other entities which may be owned or controlled directly or indirectly by Transferee’s Principals (“Related Entities”) must not have been a party to any bankruptcy proceedings, voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed transfer of the Property;

(f)        Transferee shall assume all of the obligations of Borrower under the Loan Documents in a manner satisfactory to Lender in all respects, including, without limitation, by entering into an assumption agreement in form and substance satisfactory to Lender and one or more Transferee’s Principals having an aggregate net worth and liquidity reasonably acceptable to Lender shall execute in favor of Lender a Guaranty of Recourse Obligations and Environmental Indemnity Agreement in form acceptable to Lender;

(g)        There shall be no material litigation or regulatory action pending or threatened against Transferee, Transferee’s Principals or Related Entities which is not reasonably acceptable to Lender;

(h)        Transferee, Transferee’s Principals and Related Entities shall not have defaulted under its or their obligations with respect to any other indebtedness in a manner which is not reasonably acceptable to Lender;

(i)        Transferee and Transferee’s Principals must be able to satisfy all the covenants set forth in Sections 4.2 and 5.9 hereof, no Event of Default or event which, with the giving of notice, passage of time or both, shall constitute an Event of Default, shall otherwise occur as a result of such transfer, and Transferee and Transferee’s Principals shall deliver (A) all organization documentation reasonably requested by Lender, which shall be reasonably satisfactory to Lender, and (B) all certificates, agreements and covenants reasonably required by Lender;

(j) Transferee shall be approved by the Rating Agencies selected by Lender; and

(k)       Borrower shall deliver, at its sole cost and expense, an endorsement to the existing title policy insuring the Security Instrument, as modified by the assumption agreement, as a valid first lien on the Property and naming the Transferee as owner of the Property, which endorsement shall insure that, as of the date of the recording of the assumption agreement, the Property shall not be subject to any additional exceptions or liens other than those contained in the title policy issued on the date hereof.

(l) Immediately upon a transfer of the Property to a Transferee and the satisfaction of all of the above requirements, (i) Borrower shall be released from all liability under this Security Instrument, the Note and the other Loan Documents with respect to all actions taken or events first occurring after the date of such transfer, and (ii) Borrower’s Principals shall be released from all liability under the terms of the Guaranty of Recourse Obligations and the Environmental Indemnity Agreement with respect to all actions taken or events first occurring after the date of such transfer. The foregoing release shall be effective upon the date of such transfer, but Lender agrees to provide written evidence thereof reasonably requested by Borrower.

8.6        ONE-TIME TRANSFER OF MORE THAN 49% OF LIMITED PARTNERSHIPINTERESTS OF THE BORROWER. Notwithstanding anything to the contrary contained in this Article 8, and following the securitization of the Loan, Lender’s consent to a one-time sale, assignment, or other transfer of more than 49% of the limited partnership interests of the Borrower (“Restricted Interests”) to one or more third parties (“Transferee”) shall not be withheld provided that Lender receives sixty (60) days prior written notice of such transfer hereunder and no Event of Default has occurred and is continuing, and further provided that, the following additional requirements are satisfied:

(a)       Borrower shall pay Lender (i) Five Thousand and 00/100 Dollars ($5,000.00), and (ii) a transfer fee equal to zero percent (0%) of the outstanding principal balance of the Loan at the time of such transfer with respect to the transfer of the Restricted Interests to one or more third parties;

(b)        Borrower shall pay any and all out-of-pocket costs incurred in connection with the transfer of the Property (including, without limitation, Lender’s reasonable counsel fees and disbursements and all recording fees, title insurance premiums and mortgage and intangible taxes and the fees and expenses of any Rating Agencies, if any are required);

(c)        Millenium Oak Terrace, LLC., a California limited liability company, the general partner of the Borrower remains the general partner after such transfer and such general partner continues to be controlled by W. Robert Kohorst or an entity which he controls, and (B) W. Robert Kohorst, Everest Properties, II, LLC, a California limited liability company, Everest Properties, LLC, a California limited liability company, Millenium Management, LLC, a California limited liability company, Millenium Oak Terrace, LLC, a California limited liability company and/or Secured Investment Resources Fund, LP II, a Delaware limited partnership own, directly or indirectly, no less than _________ and one-hundreths percent (_____%) of the limited partnership interests of Borrower;

(d)       Transferee and Transferee’s Principals shall, as of the date of such transfer, have an aggregate net worth and liquidity reasonably acceptable to Lender. The term “Transferee’s Principals” shall include Transferee’s (A) managing members, general partners or principal shareholders and (B) such other members, partners or shareholders which directly or indirectly shall own a 15% or greater interest in Transferee;

(e)        Transferee, Transferee’s Principals and all other entities which may be owned or controlled directly or indirectly by Transferee’s Principals (“Related Entities”) must not have been a party to any bankruptcy proceedings, voluntary or involuntary, made an assignment for the benefit of creditors or taken advantage of any insolvency act, or any act for the benefit of debtors within seven (7) years prior to the date of the proposed transfer of the Property (as evidenced by a certification of the general partner);

(f) There shall be no material litigation or regulatory action pending or threatened against Transferee, Transferee’s Principals or Related Entities which is not reasonably acceptable to Lender; and,

(g)       Transferee and Transferee’s Principals shall deliver (A) all organization documentation reasonably requested by Lender, which shall be reasonably satisfactory to Lender, and (B) all certificates, agreements and covenants reasonably required by Lender. (h) Lender shall have received confirmation from any Rating Agencies assigning a rating to the securities issued in connection with the Loan that such transfer shall not result in a qualification, downgrade or withdrawal of any rating assigned by the Rating Agencies to such securities.

(i)        Lender shall receive a satisfactory credit check and background check on any partner of the Borrower that will increase their ownership interest to exceed 20% of the Borrower.

9. DEFAULT

9.1       EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”: (a) if any portion of the Debt is not paid on the date the same is due or if the entire Debt is not paid on or before the Maturity Date; (b) if any of the Taxes or Other Charges is not paid prior to the date the same becomes delinquent except to the extent sums sufficient to pay such Taxes and Other Charges have been deposited with Lender in accordance with the terms of this Security Instrument unless such Taxes, Other Charges or Liens

are being contested in accordance with Section 3.3; (c) if the Policies are not kept in full force and effect, or if the Policies are not delivered to Lender upon request or Borrower has not delivered evidence of the renewal of the Policies thirty (30) days prior to their expiration as provided in Section 3.2(e); (d) if Borrower violates or does not comply with any of the provisions of Sections 3.6 or 4.2 or Articles 8 or 11; (e) if any representation or warranty of Borrower, Indemnitor or any person guaranteeing payment or performance of the Obligations or any portion thereof (a “Guarantor”), or any general partner, principal or beneficial owner of any of the foregoing, made herein or in the Environmental Indemnity (defined below) or any guaranty, or in any certificate, report, financial statement or other instrument or document furnished to Lender shall have been false or misleading in any material respect when made; (f) if (i) Borrower or any general partner or managing member of Borrower shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, adjustment, liquidation, dissolution or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or Borrower or any general partner or managing member of Borrower shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against Borrower or any general partner or managing member of Borrower any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed or undischarged for a period of sixty (60) days; or (iii) there shall be commenced against Borrower or any general partner or managing member of Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of any order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower or any general partner or managing member of Borrower shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower or any general partner or managing member of Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; (g) if Borrower shall be in default beyond any applicable notice or cure period under any other mortgage, deed of trust, deed to secure debt or other security agreement covering any part of the Property whether it be superior or junior in lien to this Security Instrument; (h) if the Property becomes subject to any mechanic’s, materialman’s or other lien other than a lien for local real estate taxes and assessments not then delinquent and the lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of thirty (30) days after Borrower has first received notice thereof; (i) if any federal tax lien is filed against the Property and same is not discharged of record within thirty (30) days after Borrower has first received notice thereof; (j) within ten (10) days of Lender’s demand therefor Borrower fails to provide Lender with the written certification and evidence referred to in Section 5.9 hereof or Borrower fails to comply with its obligations under Section 16.1; (k) if Borrower or any other Indemnitor shall fail to perform any of its obligations under that certain environmental indemnity agreement of even date herewith (the “Environmental Indemnity”) after the expiration of applicable notice and grace periods, if any; (I) if any default beyond any applicable notice or cure period occurs under any guaranty or indemnity executed in connection herewith and such default continues after the expiration of

applicable grace periods, if any; or (m) if for more than ten (10) days after notice from Lender, Borrower shall continue to be in default under any other term, covenant or condition of the Note, this Security Instrument or the other Loan Documents in the case of any default which can be cured by the payment of a sum of money or for thirty (30) days after notice from Lender in the case of any other default, provided that if such default cannot reasonably be cured within such thirty (30) day period and Borrower shall have commenced to cure such default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for so long as it shall require Borrower in the exercise of due diligence to cure such default, it being agreed that no such extension shall be for a period in excess of sixty (60) days.

10. RIGHTS AND REMEDIES

10.1      REMEDIES. Upon the occurrence of any Event of Default, Borrower agrees that Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender: (a) declare the entire unpaid Debt to be immediately due and payable; (b) with or without entry, institute proceedings, judicial or otherwise, for the complete or partial foreclosure of this Security Instrument under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner, any partial foreclosure to be subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority; (c) sell for cash or upon credit the Property or any part thereof and all estate, claim , demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale, judicial decree or otherwise, at one or more sales, as an entirety or in one or more parcels; (d) institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note or in the other Loan Documents; (e) recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the other Loan Documents; (f) apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any Guarantor, Indemnitor or of any person, firm or other entity liable for the payment of the Debt; (g) enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may exercise all rights and powers of Borrower with respect to the Property including, without limitation, (I) the right to use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (2) the right to make or complete any construction, alterations, additions, renewals, replacements and improvements to or on the Property as Lender deems advisable; (3)the right to make, cancel, enforce or modify Leases, obtain and evict

tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (h) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (i) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; (i) apply the receipts from the Property, any Deposits and interest thereon and/or any unearned Insurance Premiums paid to Lender upon the surrender of any Policies maintained pursuant to Article 3 hereof (it being agreed that Lender shall have the right to surrender such Policies upon the occurrence of an Event of Default), to the payment of the Obligations, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion; (k) exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (I) the right to take possession of the Personal Property or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Personal Property, and (2) request Borrower at its expense to assemble the Personal Property and make it available to Lender at a convenient place acceptable to Lender, or (1) require a Lock Box Account pursuant to Section 4.4 and apply all sums in the Lock Box Account to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its discretion. Any notice of sale, disposition or other intended action by Lender with respect to the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower. Upon any foreclosure or other sale of the Property pursuant to the terms hereof, Lender may bid for and purchase the Property and shall be entitled to apply all or any part of the secured indebtedness as a credit against the purchase price.

In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. Notwithstanding the provisions of this Section 10.1 to the contrary, if any Event of Default as described in clause (i) or (ii) of Subsection 9.l(f) shall occur, the entire unpaid Debt shall be automatically due and payable, without any further notice, demand or other action by Lender.

10.2      APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant to the Note, this Security Instrument or the other Loan Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper

10.3     RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder or curing or being deemed to have cured any default hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with

interest as provided in this Section 10.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate (as defined in the Note), for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.

10.4      ACTIONS AND PROCEEDINGS. Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property.

10.5     RECOVERY OF SUMS REOUIRED TO BE PAID. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Borrower existing at the time such earlier action was commenced.

10.6      EXAMINATION OF BOOKS AND RECORDS. Lender, its agents, accountants and attorneys shall have the right to examine the records, books, management and other papers of Borrower and its affiliates or of any Guarantor or Indemnitor which reflect upon their financial condition, at the Property or at any office regularly maintained by Borrower, its affiliates or any Guarantor or Indemnitor where the books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower and its affiliates or of any Guarantor or Indemnitor pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower, its affiliates or any Guarantor or Indemnitor where the books and records are located. This Section 10.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing.

10.7 OTHER RIGHTS. ETC.

(a)       The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower, any Guarantor or any Indemnitor to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Security Instrument or the other Loan Documents.

(b)        It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession.

(c)        Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Security Instrument. The rights of Lender under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.

10.8     RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.

10.9     VIOLATION OF LAWS. If the Property is not in compliance with Applicable Laws, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents.

10.10   RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other provision of this Security Instrument, including, but not limited to, Article 13 hereof, Lender and other Indemnified Parties (defined in Section 11.1 below) are entitled to enforce the obligations of Borrower, Guarantor and Indemnitor contained in Sections 11.2 and 11.3 without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, Lender is entitled to pursue a deficiency judgment with respect to such obligations against Borrower, Guarantor and Indemnitor. The provisions of Sections 11.2 and 11.3 are exceptions to any non-recourse or exculpation provisions in the Note, this Security Instrument or the other Loan Documents, and Borrower, Guarantor and Indemnitor are fully and personally liable for the obligations pursuant to Sections 11.2 and 11.3. The liability of Borrower, Guarantor and Indemnitor are not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing pursuant to this

Security Instrument or exercising any other rights and remedies pursuant to the Note, this Security Instrument and the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower, whether or not action is brought against any other person or entity or whether or not any other person or entity is joined in the action or actions.

10.11   RIGHT OF ENTRY. Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.

10.12   DEFAULT INTEREST AND LATE CHARGES. Borrower acknowledges that, without limitation to any of Lender’s rights or remedies set forth in this Security Instrument, Lender has the right following an Event of Default to demand interest on the principal amount of the Note at the Default Rate and late payment charges in accordance with the terms of the Note.

11.INDEMNIFICATION

11.1     GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties for, from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities),actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including, but not limited to, attorneys’ fees and other costs of defense) (the “Losses”) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following, except to the extent the following relate solely to an Indemnified Party’s gross negligence or willful misconduct: (a) any Event of Default; (b) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Security Instrument or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any Guarantor or Indemnitor and/or any partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (c) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (d) any use, nonuse or condition in, on or about the Property or any part thereof; (e) any failure on the part of Borrower to perform or be in compliance with any of the terms of this Security Instrument; (f) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with the Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (g) any failure of the Property to be in compliance with any Applicable Laws; (h) the enforcement by any Indemnified Party of the provisions of this Article 11; (i) the payment of any commission, charge or brokerage fee to anyone which may be payable in connection with the funding of the Loan; (j) any misrepresentation made by Borrower in this Security Instrument or any other Loan Document; or (k) any other transaction arising out of or in any way connected with the Property or the Loan. Any amounts payable to

Lender by reason of the application of this Section 11.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid. For purposes of this Article 1 1 , the term “Indemnified Parties” means Lender and any person or entity who is or will have been involved in the origination of the Loan, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by this Security Instrument is or will have been recorded and persons and entities who may hold or acquire or will have held a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan.

11.2     MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Security Instrument, the Note or any of the other Loan Documents.

11.3     ERISA INDEMNIFICATION. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Section 5.9.

11.4 DUTY TO DEFEND: ATTORNEYS’ FEES AND OTHER FEES AND

EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them, and, at the option of Indemnified Parties, their attorneys shall control the resolution of claim or proceeding. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

12.WAIVERS

12.1     WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Note, any of the other Loan Documents, or the Obligations. Any assignee of Lender’s interest in this Security Instrument and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents, and any such rights to interpose

or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

12.2     MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law.

12.3     WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any nature whatsoever from Lender except with respect to matters for which this Security Instrument specifically and expressly provides for the giving of notice by Lender to Borrower and except with respect to matters for which Lender is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender to Borrower.

12.4     SOLE DISCRETION OF LENDER. Wherever pursuant to this Security Instrument (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

12.5     SURVIVAL. The indemnifications made pursuant to Section 11.3 shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender’s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender’s rights and remedies pursuant hereto including but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Note or the other Loan Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the obligations pursuant hereto.

12.6     WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THE NOTE, THIS SECURITY INSTRUMENT

OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER. ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

13.EXCULPATION

13.1     EXCULPATION. Except as otherwise provided herein, in the Note or in the other Loan Documents, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note or this Security Instrument by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may sell the Property under any power of sale or right of non-judicial foreclosure or bring a foreclosure action, confirmation action, action for specific performance or other appropriate action or proceeding to enable Lender to enforce and realize upon the Note, this Security Instrument, the other Loan Documents, and the interest in the Property, the Rents and any other collateral given to Lender created by the Note, this Security Instrument and the other Loan Documents; provided, however, that any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender. Lender, by accepting the Note and this Security Instrument, agrees that it shall not, except as otherwise provided in Section 10.10, sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding, under or by reason of or under or in connection with the Note, the other Loan Documents or this Security Instrument.

13.2     RESERVATION OF CERTAIN RIGHTS. The provisions of Section 13.1 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by the Note, the other Loan Documents or this Security Instrument; (b) [Intentionally Deleted;] (c) impair the right of Lender to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under this Security Instrument; (d) affect the validity or enforceability of any indemnity, guaranty, master lease or similar instrument made in connection with the Note, this Security Instrument, or the other Loan Documents; (e) impair the right of Lender to obtain the appointment of a receiver; (f) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith; (g) impair the right of Lender to obtain a deficiency judgment or judgment on the Note against Borrower if necessary to obtain any insurance proceeds or condemnation awards to which Lender would otherwise be entitled under this Security Instrument, provided, however, Lender shall only enforce such judgment against the insurance proceeds and/or condemnation awards; or (h) impair the right of Lender to enforce the provisions of Sections 10.10, 1 1.2 and 1 1.3 of this Security Instrument.

13.3     EXCEPTIONS TO EXCULPATION. Notwithstanding the provisions of this Article to the contrary, Borrower shall be personally liable to Lender for the Losses it incurs due to: (i) fraud or intentional misrepresentation by Borrower, its agents or principals; (ii)Borrower’s misapplication or misappropriation of (A) Rents received by Borrower after the occurrence of an Event of Default, (B) tenant security deposits or Rents collected in advance, or (C) insurance proceeds or condemnation awards; (iii) Borrower’s failure to pay Taxes, Insurance Premiums, Other Charges (except to the extent that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms of this Security Instrument), charges for

labor or materials or other charges that can create liens on the Property, provided that Borrower’s liability under this clause (iii) shall not exceed an amount equal to the net operating income of the Property for the twelve (12) month period preceding the related failure to pay, less the amount of all Constant Monthly Payments (as defined in the Note) and required reserve payments made by Borrower in accordance with the Note, this Security Instrument and the other Loan Documents during such twelve (12) month period; (iv) Borrower’s failure to comply with the provisions of Sections 3.10, 5.9 or 16.1 of this Security Instrument; or (v) Borrower’s or any other Indemnitor’s failure to comply with the provisions of the Environmental Indemnity.

13.4     RECOURSE. Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability as set forth in Section 13.1 above SHALL BECOME NULL AND VOID and shall be of no further force and effect in the event of Borrower’s default under Sections 4.2 or 8.2 of this Security Instrument or if the Property or any part thereof shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any party controlling, controlled by or under common control with Borrower (which shall include, but not be limited to any creditor or claimant acting in concert with Borrower or any the foregoing parties) (the “Borrowing Group”) or (B) in which any member of the Borrowing Group objects to a motion by Lender for relief from any stay or injunction from the foreclosure of this Security Instrument or any other remedial action permitted hereunder or under the Note or the other Loan Documents, or (iii) if a court of competent jurisdiction holds that the granting, execution or delivery of this Security Instrument or any other Loan Documents is or constitutes a fraudulent conveyance under any bankruptcy, insolvency or fraudulent conveyance law or is otherwise voidable under any such laws.

13.5     BANKRUPTCY CLAIMS. Nothing herein shall be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), I1 1 l(b) or any other provisions of the Bankruptcy Code to tile a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Note, this Security Instrument and the other Loan Documents.

14. NOTICES

14.1     NOTICES. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	EVEREST HICKORY GLEN, LP C/O Everest Properties 199 South Los Robles Avenue, Suite 200 Pasadena, California 91 101 Attention: W. Robert Kohorst
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 81h Floor New York, New York 10022 Attention: John Herman
With a copy to:	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
And	Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

15. APPLICABLE LAW

15.1     CHOICE OF LAW. This Security Instrument shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

15.2     USURY LAWS. This Security Instrument and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the Debt at a rate which could subject the holder of the Note to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Security Instrument or the Note, Borrower is at any time required or obligated to pay interest on the Debt at a rate in excess of such maximum rate, the rate of interest under the Security Instrument and the Note shall be deemed to be

immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of the Note. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

15.3     PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to he recorded, registered or filed under the provisions of any applicable law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the remainder of this Security Instrument and any other application of the term shall not be affected thereby.

16.SECONDARY MARKET

16.1     TRANSFER OF LOAN. Lender may, at any time, sell, transfer or assign the Note, this Security Instrument and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Lender may forward to each purchaser, transferee, assignee, servicer, participant, investor in such Securities or any rating agency (a “Rating Agency”) rating such Securities (all of the foregoing entities collectively referred to as the “Investor”) and each prospective Investor, all documents and information which Lender now has or may hereafter acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor and the Property, whether furnished by Borrower, any Guarantor, any Indemnitor or otherwise, as Lender determines necessary or desirable. Borrower, any Guarantor and any Indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section provided such cooperation does not require Borrower to incur any material cost or expense. Borrower shall also promptly furnish and Borrower, any Guarantor and any Indemnitor consent to Lender furnishing to such Investors or such prospective Investors or Rating Agency any and all available information concerning the Property, the Leases, the financial condition of Borrower, any Guarantor and any Indemnitor as may be requested by Lender, any Investor or any prospective Investor or Rating Agency (including, but not limited to, copies of information previously supplied to Lender) in connection with any sale, transfer or participation interest. In addition to any other obligations Borrower may have under this Section 16.1, Borrower shall execute such amendments to the Loan Documents and Borrower’s organizational documents as may be requested by the holder of the Note or any Investor to effect the assignment of the Note and the other Loan Documents an/or issuance of Securities including (i) bifurcating the Note into two or more notes, and/or splitting this Security Instrument into two or more mortgages, deeds of trust or deeds to secure debt (as the case may be) of the same or different priorities or otherwise as determined by and acceptable to Lender or (ii) dividing the Note into multiple components

corresponding to tranches of certificates to be issued in a Securitization each having a notional balance and an interest rate determined by Lender; provided, however, that Borrower shall not be required to modify or amend any Loan Document if the overall effect of such modification or amendment would (y) change the initial weighted average interest rate, the maturity or the amortization of principal set forth in the Note, or (z) modify or amend any other material economic term of the Note or the other Loan Documents.

17. COSTS

17.1     PERFORMANCE AT BORROWER’S EXPENSE. Borrower acknowledges and confirms that Lender shall be entitled to impose certain administrative processing and/or commitment fees in connection with: (a) extensions, renewals, modifications, amendments and terminations of the Loan Documents requested by Borrower, and (b) the release or substitution of collateral for the Loan requested by Borrower, and that Lender shall be entitled to reimbursement for its reasonable out-of-pocket costs and expenses associated with its provision of consents, waivers and approvals under the Loan Documents (the occurrence of any of the above shall be called an “Event”) subject to any limitation provided under Section 16.1 above. Borrower further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, which are required by law, regulation or any governmental or quasi-governmental authority. Borrower hereby acknowledges and agrees to pay, immediately, upon demand, all such fees, costs and expenses.

17.2     ATTORNEYS’ FEES FOR ENFORCEMENT. (a) Borrower shall pay all reasonable legal fees incurred by Lender in connection with the preparation of the Note, this Security Instrument and the other Loan Documents up to a maximum amount of $12,000.00, and (b) Borrower shall pay to Lender on demand any and all expenses, including legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Property or in collecting any amount payable hereunder or in enforcing its rights hereunder with respect to the Property, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any default or Event of Default shall have occurred and is continuing, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Borrower.

18. DEFINITIONS

18.1      GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Lender” shall mean “Lender, its servicer and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and

disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder. The terms “include(s)” and “including” shall mean “include(s), without limitation” and “including, without limitation,” respectively.

19. MISCELLANEOUS PROVISIONS

19.1     NO ORAL CHANGE. This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

19.2      LIABILITY. I f Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several. This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever.

19.3     INAPPLICABLE PROVISIONS. I f any term, covenant or condition of the Note or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Note and this Security Instrument shall be construed without such provision.

19.4     HEADINGS. ETC. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

19.5     DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Security Instrument may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Security Instrument. The failure of any party hereto to execute this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

19.6     NUMBER AND GENDER. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

19.7      SUBROGATION. I f any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the payment and performance of the Obligations.

19.8     ENTIRE AGREEMENT. The Note, this Security Instrument and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connectionwith the Debt and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, this Security Instrument and the other Loan Documents, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, this Security Instrument and the other Loan Documents.

19.9     BROKERS. Borrower agrees to pay and to indemnify and hold Lender harmless from any and all loss, cost or expense (including attorneys’ fees and expenses) arising from the claims of any brokers or anyone claiming a right to any fees in connection with the financing of the Property. Notwithstanding the foregoing, Borrower acknowledges that Lender or its affiliates may have a contractual relationship with the broker, if any, that arranged the Loan on Borrower’s behalf, and that such broker may be entitled to fees from Lender or its affiliates in connection with the origination, closing or servicing of the Loan, which fees shall be in addition to any brokerage fees owed by Borrower to such broker. Borrower shall not be responsible for any such additional fees. Borrower acknowledges and agrees that it has made and will make such inquiries of the broker, if any, that arranged the Loan with respect to the nature or existence of such arrangement. No agreement by Lender to pay any such fees or compensation to such broker (if any) shall be binding upon Lender unless it is set forth in separate written instrument that has been duly executed by Lender and such broker.

20. STATE SPECIFIC PROVISIONS

20.1     RIGHT TO PURCHASE. In the event of a judicial sale hereunder, Lender may become the purchaser of the Property, or any part thereof.

20.2 WAIVER OF RIGHT TO REDEEM FROM SALE: WAIVER OF

APPRAISEMENT AND VALUATION. (a) Borrower shall not and will not apply for or avail itself of any present or future homestead or exemption laws, or any so-called “Moratorium Laws”, now existing or hereafter enacted in order to prevent or hinder the enforcement or foreclosure of this Security Instrument, but hereby waives the benefit of such laws. Borrower for itself and all who may claim through or under it waives any and all right to have the property and estates comprising the Property marshalled upon any foreclosure of the lien hereof and agrees that any court having jurisdiction to foreclose such lien may order the Property sold as an entirety. In the event of any sale made under or by virtue of this instrument, the whole of the Property may be sold in one parcel as an entirety or in separate lots or parcels at the same or different times, all as Lender may determine. Lender shall have the right to become the purchaser at any sale made under or by virtue of this Security Instrument and Lender so purchasing at any such sale shall have the right to be credited upon the amount of the bid made therefor by Lender with the amount payable to Lender out of the net proceeds of such sale. In the event of any such sale, the Note and the other Obligations, if not previously due, shall be and become immediately due and payable without demand or notice of any kind. Borrower hereby waives any and all rights of redemption from sale under any order or decree of foreclosure pursuant to rights herein

granted, on behalf of Borrower, and each and every person acquiring any interest in, or title to the Property described herein subsequent to the date of this Security Instrument, and on behalf of all other persons to the extent permitted by applicable law. Without in any way limiting the foregoing, Borrower hereby specifically waives all rights of redemption from sale pursuant to any order or decree of foreclosure of this Security Instrument on its own behalf and on behalf of each Owner of Redemption, as defined in Section 5/15-1212 of the Illinois Code of Civil Procedure (735 ILCS 5/15-1212), and all other persons, to the full extent permitted by Section 5/15-1601 of the Illinois Code of Civil Procedure (735 ILCS 5/15-1601) and any successor provisions. The Borrower will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power or remedy herein or otherwise granted or delegated to the Lender, but will suffer and permit the execution of every other right, power and remedy as though no such law or laws had been made or enacted. (b) Borrower acknowledges that the transaction of which this Security Instrument is a part is a transaction that does not include either agricultural real estate (as defined in Section 201 of the Illinois Mortgage Foreclosure Act, 735 ILCS 5115-1 101 et seq.) (herein called the “Act”) or residential real estate (as defined in Section 5/15-1219 of the Act). Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument, on its own behalf and on behalf of each and every person, it being the intent hereof that any and all such rights of redemption of the Lender and all other persons are and shall be deemed to be voluntarily and knowingly waived to the full extent permitted by Section 5115-160l(b) of the Act and all other provisions of applicable law.”

20.3     COSTS AND EXPENSES OF FORECLOSURE. In any suit to foreclose the lien hereof there shall be allowed and included as additional Obligations in the decree for sale all expenditures and expenses which may be paid or incurred by or on behalf of Lender for reasonable attorney’s fees, appraiser’s fees, outlays for documentary and expert evidence, stenographic charges, publication costs and costs (which may be estimated as the items to be expended after the entry of the decree) of procuring all such abstracts of title, title searches and examination, guarantee policies, Torrens certificates and similar data and assurances with respect to title as Lender may deem to be reasonably necessary either to prosecute any foreclosure action or to evidence to the bidder at any sale pursuant thereto the true condition of the title to or the value of the Property, all of which expenditures shall become so much additional Obligations which the Borrower agrees to pay and all of such expenditures shall be immediately due and payable with interest thereon at the Default Rate from the date of expenditure until paid.

20.4      APPLICATION OF PROCEEDS. Subject to the provisions of Section 20.5 hereof, the proceeds of any foreclosure sale of the Property or of any sale of property pursuant to Section 10.1 hereof shall be distributed in the following order of priority: First, on account of all costs and expenses incident to the foreclosure or other proceedings including all such items as are mentioned in Sections 20.2 and 20.3 hereof; Second, to all other items which under the terms hereof constitute Obligations other than the Obligations evidenced by the Note with interest thereon as herein provided; and Third, to all principal of, late charges, and interest on the Note with any amounts remaining payable to whomsoever shall be lawfully entitled to same.

20.5     LENDER’S REMEDIES CUMULATIVE -NO WAIVER. No remedy or right of Lender shall be exclusive of but shall be cumulative and in addition to every other remedy or

right now or hereafter existing at law or in equity or by statute or otherwise. No delay in the exercise or omission to exercise any remedy or right accruing on any default shall impair any such remedy or right or be construed to be a waiver of any such default or acquiescence therein, nor shall it affect any subsequent default of the same or a different nature. Every such remedy or right may be exercised concurrently or independently, and when and as often as may be deemed expedient by Lender.

20.6     COMPLIANCE WITH ILLINOIS MORTGAGE FORECLOSURE LAW. In the event that any provision in this Security Instrument shall be inconsistent with any provision of the Act (as defined in Section 20.2 hereof), the provisions of the Act shall take precedence over the provisions of this Security Instrument, but shall not invalidate or render unenforceable any other provision of this Security Instrument that can be construed in a manner consistent with the Act; if any provision of this Security Instrument shall grant to Lender any rights or remedies upon default of Borrower which are more limited than the rights that would otherwise be vested in Lender under the Act in the absence of said provision, Lender shall be vested with the rights granted in the Act to the full extent permitted by law; Without limiting the generality of the foregoing, all expenses incurred by Lender to the extent reimbursable under Section 5/15-1510 and 5/15-1512 of the Act, whether incurred before or after any decree or judgment of foreclosure, and whether enumerated in Section 20.3 of this Security Instrument, shall be added to the Obligations or to the judgment of foreclosure.

20.7     BUSINESS EXCEPTION. The proceeds of the Note will be used for “business purposes” within the meaning of the Illinois Interest Act (81 5 ILCS 20511 et. seq.).

IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower as of the day and year first above written.

Everest Hickory Glen, LP, a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company, its general partner
By:	Millenium Management, LLC
	a California limited liability company, its manager
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis
Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On December 22, 2006, before, me, Lisa L. Longo, a Notary Pub-appeared Christopher K. Davis, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal

/S/ Lisa L Longo

Notary Public

Print Name: Lisa L. Longo

My Commission expires: 10/24/08

PREPARED BY AND UPON

RECORDING RETURN TO:

Best & Flanagan LLP

225 South Sixth Street, Suite 4000

Minneapolis, Minnesota 55402-4690

Attention: Daniel R Tyson

Telephone: (612) 339-7121

EXHIBIT “A”

DESCRIPTION OF LAND

ALL of that certain lot, piece or parcel of land, with the buildings and improvements thereon, situate, lying and being in Sangamon County, Illinois, and being more particularly described as follows:

EXHBIT A

Legal Description

PART OF THE EAST HALF OF THE NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 16 NORTH, RANGE 5 WEST OF THE THIRD PRINCIPAL MERIDIAN, SANGAMON COUNTY, ILLINOIS. SAID PART BEING FURTHER DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT AT THE INTERSECTION OF THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, SAID POINT BEING 40.00 FEET SOUTH OF AN AXLE AT THE NORTHEAST CORNER OF SAID NORTHWEST QUARTER OF SECTION 32; THENCE WESTERLY ALONG THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.32 FEET TO A DRILL HOLE; THENCE SOUTHERLY ALONG A LINE MAKING AN INTERIOR ANGLE OF 90 DEGREES 16 MINUTES 50 SECONDS WITH THE LAST DESCRIBED COURSE, A DISTANCEOF 370.00 FEET TO A DRILL HOLE; THENCE EASTERLY PARALLEL WITH THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.59 FEET TO THE EAST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 32; THENCE NORTHERLY ALONG SAID EAST LINE OF THE NORTHWEST QUARTER AND WEST LINE OF STANGE AVENUE, 370.00 FEET TO THE POINT OF BEGINNING, CONTAINING 1.80 ACRES, MORE OR LESS.

EXCEPT ALL COAL, MINERALS AND MINING RIGHTS HERETOFORE CONVEYED OR RESERVED OF RECORD.

SITUATED IN SANGAMON COUNTY, ILLINOIS.

EXHIBIT “B”

REPLACEMENT RESERVE REQUIREMENTS

1. Defined Terms.

All capitalized terms used herein and not defined in the Security Instrument shall have the meanings set forth in Section 7 of this Exhibit “B.” To the extent any Reserve Deposit is assigned the meaning “none” in the Reserve Letter, the provisions set forth in this Exhibit “B” specifically relating to the making or application of such Reserve Deposits shall be disregarded.

2. Reserve Deposits.

(a)       Concurrently with the execution of this Security Instrument, Borrower shall deposit with Lender the Deferred Maintenance Deposit. The Deferred Maintenance Deposit shall be applied as provided in Section 4 of this Exhibit “B.”

(b)       On the date hereof and on each date that a regularly scheduled payment of principal or interest is due under the Note, Borrower shall be required to make a Monthly Replacement Account Deposit which shall be deposited into an account (the “Replacement Account”) for the payment of Replacements.

(c) [Intentionally deleted.]

(d)       Lender shall maintain a record of all deposits into and withdrawals from the Replacement Account. Lender or a designated representative of Lender shall have the sole right to make withdrawals from the Replacement Account.

(e)       No interest shall be paid on the Deferred Maintenance Deposit. Provided Borrower pays the account fees set forth below, the Replacement Account shall be an interest bearing account. Lender shall have no responsibility or liability for the amount of interest earned on the Replacement Account. A11 interest earned on funds in the Replacement Account shall be added to and become part of the Replacement Account, and shall be for the benefit of Borrower, subject to Lender’s rights pursuant to the terms of this Security Instrument. In order for the Replacement Account to bear interest, Borrower shall be required to pay a one-time set-up fee on the date hereof of Three Hundred Fifty and 00/100 Dollars ($350.00) and an additional fee of Six Hundred and 00/100 Dollars ($600.00) on January 2 of each calendar year after the date hereof.

3. Disbursements.

(a)       Provided no Event of Default exists, Lender shall make disbursements of funds available in the Replacement Account to reimburse Borrower for Replacements.

(b) [Intentionally deleted.]

(c)       Lender shall, upon written request from Borrower and satisfaction of the requirements set forth in this Section 3, disburse to Borrower amounts from the Replacement Account necessary to reimburse Borrower for the actual costs of any work relating to Replacements (the “Work”).

(d)       Each request for disbursement from the Replacement Account shall be in a form specified or approved by Lender, and shall be accompanied by evidence of satisfactory completion of the Work and such bills, invoices and other evidence of the incurrence of the related costs and expenses as Lender may reasonably request.

(e)        Borrower shall not make a request for disbursement from the Replacement Account more frequently than once in any calendar quarter.

(f)        Borrower shall not make a request for disbursement from the Replacement Account in an amount less than the lesser of (i) Five Thousand and 00/100 Dollars ($5,000.00), and (ii) the total cost of the Replacement for which the disbursement is requested.

4. Performance of Replacements.

(a)       Deferred Maintenance. Notwithstanding anything contained herein to the contrary, Borrower agrees to perform all of the Scheduled Repairs within sixty (60) days after the date hereof or such other period of time, if any, set forth in the Reserve Letter. In the event that the Borrower shall not complete the Scheduled Repairs within such period of time the Borrower shall pay to the servicer      administering the Deferred Maintenance Deposit the sum of $150.00 per month until the Scheduled Repairs are completed and approved. The payment of such sums shall not be deemed to extend the period of time allowed herein for completion of the Scheduled Repairs. Such sum is intended to reimburse the servicer for the costs incurred in administering the deposit. The Deferred Maintenance Deposit shall be used solely for the payment of the actual costs of the Scheduled Repairs. Upon completion of the Scheduled Repairs in accordance with the requirements hereof, the portion of the Deferred Maintenance Deposit remaining undisbursed, if any, shall be disbursed to Borrower. All conditions, covenants and agreements set forth herein with respect to a disbursement from the Replacement Account shall apply to the disbursements from the Deferred Maintenance Deposit.

(b)       Entry Onto Property: Inspections. Lender may inspect the Property in connection with any Work prior to disbursing funds from the Replacement Account with respect thereto. In connection with any Work that is (i) a structural repair or improvement, (ii) a replacement or repair of a major component or element of any part of the Property or (iii) Scheduled Repairs, Lender may require, at Borrower’s expense, one or more inspections and/or certificates of completion by an appropriate independent, qualified professional (e.g., architect, engineer, consultant) approved by Lender. In addition to Lender’s costs and expenses, Borrower shall pay Lender a reasonable inspection fee, provided, however, such fees shall not exceed Five Hundred and 00/100 Dollars ($500.00), in the aggregate, in any calendar year.

5. Borrower’s Records.

Borrower shall furnish such financial statements, invoices, records, papers and documents relating to the Property as Lender may reasonably require from time to time to make the determinations permitted or required to be made by Lender with respect to disbursements of the Deferred Maintenance Deposit and/or the Replacement Account.

6. Insufficiency of Reserve Balances, Temporary Deferral of Monthly Deposits.

The insufficiency of any balance in the Replacement Account or the Deferred Maintenance Deposit shall not abrogate Borrower’s agreement to fulfill its obligations contained in this Security Instrument. In the event Lender determines that (i) the balance in the Replacement Account is less than the current estimated cost to complete the Work which Borrower, in the prudent operation of the Property can reasonably be anticipated to incur during the succeeding twenty-four (24) months, or (ii) the balance of the Deferred Maintenance Deposit is less than the amount necessary to complete the Scheduled Repairs, Borrower shall deposit the shortage within ten (10) days of request by Lender. In the event Lender determines from time to time based on Lender’s inspections that the amount of the Monthly Replacement Account Deposit is insufficient to fund the cost of likely Work and related contingencies that may arise during the remaining term of the Loan, Lender may require an increase in the amount of the Monthly Replacement Account Deposit upon thirty (30) days prior written notice to Borrower. Lender may approve a temporary deferral or a reduction in the amount of the Monthly Replacement Account Deposit; provided, however, that if Lender approves either a temporary deferral or reduction in the amount of the Monthly Replacement Account Deposit, such action by Lender shall not prevent Lender from requiring Borrower to resume payment of the Monthly Replacement Account Deposit on any date that Lender may deem appropriate.

7. Certain Defined Terns.

The following terms shall have the meanings assigned to them below:

(a)        “Deferred Maintenance Deposit” means the Deferred Maintenance Deposit set forth in the Reserve Letter, if any.

(b)       “Monthly Replacement Account Deposit” means the Monthly Replacement Account Deposit set forth in the Reserve Letter.

(c)        “Replacements” means the costs of any repairs, improvements, equipment, alterations, additions, changes, replacements and other items which, under generally accepted accounting principles, consistently applied, are properly classified as capital expenditures or capital improvements (and, in the case of multifamily projects only shall include the costs of window treatments and carpeting, blinds, equipment and appliances, and painting of the exterior of the Property), but excluding (i) costs of routine maintenance to the Property; (ii) the costs of salaries, benefits and administrative expenses related to the employment of (A) officers and executives of Borrower, and of employees of Borrower above the level of building manager, and (B) employees of Borrower at or below the level of building manager, except in

the case of those costs which Borrower can demonstrate to Lender’s satisfaction to be properly allocable to the work performed by such employees in connection with Replacements; (iii) the cost of any items for which Borrower is reimbursed by insurance or otherwise; (iv) the cost of any landscaping work to the Property; (v) the cost of any material additions or material alterations to the Property after the date hereof and (vi) (except in the case of multifamily projects) the cost of any alterations, additions, changes, replacements and improvements that are made primarily in order to prepare space for occupancy by a tenant.

(d)       “Reserve Deposits” shall mean the Deferred Maintenance Deposit and the Monthly Replacement Account Deposit.

(e)       “Reserve Letter” means a letter from Borrower to Lender of even date herewith confirming the amount of the Monthly Replacement Account Deposit and the Deferred Maintenance Deposit, if any, and the Scheduled Repairs, if any.

(f)        “Scheduled Repairs” means the Scheduled Repairs described in the Reserve Letter, if any.

EXHIBIT “C”

The term “Debt Service Coverage Ratio” shall mean the ratio of (a) the NOI (hereinafter defined) produced by the operation of the Property during the twelve (12) calendar month period immediately preceding the calculation to (b) the Annual Debt Service.

The Term “NOI” shall mean the Gross Income (as hereinafter defined) derived from the operation of the Property, less Expenses (hereinafter defined).

The term “Annual Debt Service” shall mean an amount equal to twelve (12) times the Constant Monthly Payment payable under the Note.

The term “Gross income” means (and includes only) Rents (as defined in the Security Instruments) and such other income, including any rent loss or business interruption insurance proceeds, laundry, parking, vending or concession income, which are actually received by the Borrower or its agents or representatives. Notwithstanding the foregoing, Gross Income shall not include (a) condemnation or insurance proceeds (excluding rent or business interruption insurance proceeds); (b) any proceeds from the sale, exchange, transfer, financing or refinancing of all or any portion of the Property; (c) amounts received from tenants as a security deposit; (d) any other type of income otherwise includable in NO1 but paid directly by any tenant to a person or entity other than Borrower or its agents or representatives; or (e) interest income.

The term “Expenses” shall mean the aggregate of the following items: (a) real estate taxes, general and special assessments or similar charges; (b) sales, use and personal property taxes; (c) management fees of not less than five percent (5%) of the gross income derived from the operation of the Property and disbursements for management services whether such services are performed at the Property or off-site; (d) wages, salaries, pension costs and all fringe and other employee-related benefits and expenses, up to and including (but not above) the level of the on-site manager, engaged in the repair, operation and maintenance of the Property and service to tenants and on-site personnel engaged in audit and accounting functions performed by Borrower; (e) insurance premiums including, but not limited to, casualty, liability, rent and fidelity insurance premiums; (f) cost of all electricity, oil, gas, water, steam, HVAC and any other energy, utility or similar item and overtime services, the cost of building and cleaning supplies, and all other administrative, management, ownership, operating, advertising, marketing and maintenance expenses incurred in connection with the operation of Property; (g) cost of necessary cleaning, repair, replacement, maintenance, decoration or painting of existing improvements on the Property (including, without limitation, parking lots and roadways), of like kind and quality or such kind or quality which is necessary to maintain the Property to the same standards as competitive properties of similar size and location of the Property, together with adequate reserves for the repair and replacement of capital improvements on the Property acceptable to Lender; (h) the cost of such other maintenance materials, HVAC repairs, parts and supplies, and all equipment to be used in the ordinary course of business, which is not capitalized in accordance with generally accepted accounting principles (“GAAP”); (i) cost of leasing commissions and tenants concessions payable by Borrower pursuant to Leases in effect for the Property; (j) legal, accounting and other professional expenses incurred in connection with the Property; (k) casualty losses to the extent not reimbursed by a third party; and (l) all amounts that

should be reserved, as reasonably determined by the Borrower with approval by the Lender in its reasonable discretion, for repair or maintenance of the Property and to maintain the value of the Property including replacement reserves in amounts not less than those required in Exhibit “B” of this Security Instrument. The Expenses shall be based on the above-described items actually incurred or payable on an accrual basis in accordance with GAAP by Borrower during the twelve (12) month period ending one month prior to the date on which the NO1 is to be calculated (except the capital expenses and reserves set forth in subsection (g) above), with customary adjustments for items such as taxes and insurance which accrue but are paid periodically, as adjusted by Lender to reflect projected adjustments for the subsequent twelve (12) month period beginning on the date on which the NO1 is to be calculated.

Notwithstanding the foregoing, the term “Expenses” shall not include (i) depreciation, amortization or any other non-cash item of expense unless approved by Lender; (ii) interest, principal, fees, costs and expense reimbursements of Lender in administrating the Loan or exercising remedies under the Loan Documents; or (iii) any expenditure (other than leasing commissions and tenant concessions) properly treated as a capital item under GAAP and such expenditure is treated by Borrower as a capital item in Borrower’s financial statements.

EX-99

ENVIRONMENTAL INDEMNITY AGREEMENT

ENVIRONMENTAL INDEMNITY AGREEMENT (the “Agreement”) made as of ___ ____, 2007, by EVEREST HICKORY GLEN, LP, a Kansas limited partnership, having an office at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Borrower”), and SECURED INVESTMENT RESOURCES FUND, LP II, a Delaware limited partnership, having an office at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Principal;” Borrower and Principal hereinafter collectively referred to as “Indemnitor”), in favor of LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having an office at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801, Attention: John Herman (“Indemnitee”) and other Indemnified Parties (defined below).

RECITALS:

A. Borrower is the fee owner of that certain real property located in the City of Springfield, County of Sangamon and State of Illinois, known as Hickory Glen and more particularly described in Exhibit “A”attached hereto (said real property, together with any real property hereafter encumbered by the lien of the Security Instrument (as defined in the Note), being herein collectively referred to as the “Land”; the Land, together with all structures, buildings and improvements now or hereafter located on the Land, being collectively referred to as the “Property”).

B.        Indemnitee is prepared to make a loan (the “Loan”) to Borrower in the principal amount of Nine Million and 00/100 Dollars ($9,000,000.00), to be evidenced by a certain promissory note of even date herewith in the principal amount of Nine Million and 00/100 Dollars ($9,000,000.00) made by Borrower to Indemnitee (the “Note”) and secured by, among other things the Security Instrument (as defined in the Note) which will encumber the Property.

C.         Indemnitee is unwilling to make the Loan unless Indemnitor agrees to provide the indemnification, representations, warranties, and covenants and other matters described in this Agreement for the benefit of Indemnified Parties.

D.        SECURED INVESTMENT RESOURCES FUND, LP II, a Delaware limited partnership is the general partner of Borrower and thus will derive substantial benefit from the Loan. Indemnitor enters into this Agreement to induce Indemnitee to make the Loan.

AGREEMENT

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby represents, warrants, covenants and agrees for the benefit of Indemnified Parties as follows:

1.          Environmental Representations and Warranties. To the best of Indemnitor’s knowledge, after due inquiry, (a) there are no Hazardous Substances (defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in

compliance with all Environmental Laws (defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in writing pursuant to the written report(s) resulting from the environmental assessment(s) of the Property delivered to Indemnitee (such report(s) are identified in Exhibit “B” attached hereto and are referred to below collectively as the “Environmental Report”); (b) there are no past, present or threatened Releases (defined below) of Hazardous Substances in, on, under or from the Property except as described in the Environmental Report; (c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property, except as described in the Environmental Report; (e) Indemnitor does not know of, and has not received, any written notice or other communication from any person or entity (including, but not limited to, a governmental entity) relating to Hazardous Substances or Remediation (defined below) thereof, of possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Indemnitor has truthfully and fully provided to Indemnitee, in writing, any and all information relating to conditions in, on, under or from the Property that is known to any Indemnitor and that is contained in files and records of any Indemnitor including, but not limited to, any reports relating to Hazardous Substances in, on, under or from the Property and/or to the environmental condition of the Property.

2. Environmental Covenants. Indemnitor covenants and agrees that: (a) all uses and operations on or of the Property, by Indemnitor or any other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on, under or from the Property by Indemnitor or anyone controlled by, controlling or under common control with Indemnitor; (c) Indemnitor shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of Indemnitor or any other person or entity (the “Environmental Liens”); (d) Indemnitor shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any written request of Indemnitee (provided that such request is made based upon Indemnitee’s reasonable belief that there are Hazardous Substances in, or under the Property which are not in compliance with Environmental Laws), and share with Indemnitee the reports and other results thereof, and Indemnitee and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (e) Indemnitor shall, at its sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) reasonably effectuate Remediation of any condition (including, but not limited to, a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (f) Indemnitor shall not do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (g) Indemnitor shall immediately notify Indemnitee in writing of (i) any presence or Releases

or threatened Releases of Hazardous Substances in, on, under. From or migrating towards the Property; (ii) any non-compliance with any Environmental Laws related in any way to the Property; (iii) any actual or potential Environmental Lien; (iv) any required or proposed Remediation of environmental conditions relating to the Property; and (v) any written or oral notice or other communication of which any Indemnitor becomes aware from any source whatsoever (including, but not limited to, a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Agreement.

3.         Indemnified Parties’ Rights/Cooperation and Access. Indemnified Parties and any other person or entity designated by Indemnified Parties (including, but not limited to, any receiver, any representative of a governmental entity and any environmental consultant), shall have the right but not the obligation to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use including, but not limited to, conducting any environmental assessment or audit (the scope of which shall be determined in Indemnitee’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air or building materials, and conducting other invasive testing. Indemnitor shall cooperate with and provide access to Indemnified Parties and any such person or entity designated by Indemnified Parties. All such investigations shall be performed at Indemnitor’s sole cost and expense.

4.         Indemnification. Indemnitor covenants and agrees at its sole cost and expense, to protect, defend, indemnify, release and hold Indemnified Parties harmless from and against any and all Losses (defined below) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following (except to the extent the same relate solely to Hazardous Substances first introduced to the Property by anyone other than Indemnitor or its respective agents or employees following the foreclosure of the Security Instrument (or the delivery and acceptance of a deed in lieu of such foreclosure), the expiration of any applicable right of redemption and the obtaining by the purchaser at such foreclosure sale or grantee under such deed of possession of the Property): (a) the past, present or future presence, Release or threatened Release of any Hazardous Substances in, on, above, or under the Property; (b) any past, present or threatened noncompliance or violations of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with the Property or operations thereon; (c) any legal or administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Agreement; (d) any personal injury, wrongful death, or property or other damage arising under any statutory or common law or tort law theory concerning Hazardous Substances; and (e) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations in this Agreement or any covenants or other obligations in the Security Instrument which are related to Hazardous Substances or Environmental Law.

5.         Duty to Defend and Attorneys and Other Fees and Expenses. Upon written request by any Indemnified Party, Indemnitor shall defend and provide legal representation for such Indemnified Party with respect to any of the matters referenced in Section 4 above

(if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys and other professionals to defend or assist them with respect to such matters: and, at the option of Indemnified Parties, their attorneys shall control the resolution of such matters. Upon demand, Indemnitor shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith.

6.         Definitions. As used in this Agreement, the following terms shall have the following meanings:

The term “Hazardous Substances” includes but is not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment including, but not limited to, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives.

The term “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. The term “Environmental Law” includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including, but not limited to, Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term “Environmental Law” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the Property.

The term ‘‘Release” with respect to any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances.

The term “Remediation” includes but is not limited to any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any Release of any Hazardous Substance; any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to herein.

The term “Legal Action” means any claim, suit or proceeding, whether administrative or judicial in nature.

The term “Indemnified Parties” includes Indemnitee, any person or entity who is or will have been involved in the origination of the Loan, any person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance created by the Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan for the benefit of third parties.

The term “Losses” includes any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including, but not limited to, strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of Remediation (whether or not performed voluntarily), amounts paid in settlement, foreseeable and unforeseeable consequential damages, litigation costs, attorneys’ fees, engineers’ fees, environmental consultants’ fees, and investigation costs (including, but not limited to, costs for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings, actions, claims, suits, judgments or awards.

7.         Unimpaired Liability. The liability of Indemnitor under this Agreement shall in no way be limited or impaired by, and Indemnitor hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Note, the Security Instrument or any of the other Loan Documents (as defined in the Security Instrument). In addition, the liability of Indemnitor under this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Note, the Security Instrument or any of the other Loan Documents, (ii) any sale or transfer of all or part of the Property, (iii) except as provided herein, any exculpatory provision in the Note, the Security Instrument, or any of the other Loan Documents limiting Indemnitee’s recourse to the Property or to any other security for the Note, or limiting Indemnitee’s rights to a deficiency judgment against Indemnitor, (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor under the Note, the Security Instrument or any of the other Loan Documents or herein, (v) the release of any Indemnitor or any other person from performance or observance of any of the agreements, covenants, terms or condition contained

in any of the other Loan Documents by operation of law, Indemnitee’s voluntary act, or otherwise, (vi) the release or substitution in whole or in part of any security for the Note, or (vii) Indemnitee’s failure to record the Security Instrument or file any UCC financing statements (or Indemnitee’s improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Note; and, in any such case, whether with or without notice to Indemnitor and with or without consideration.

8.         Enforcement. Indemnified Parties may enforce the obligations of Indemnitor without first resorting to or exhausting any security or collateral or without first having recourse to the Note, the Security Instrument, or any other Loan Documents or any of the Property, through foreclosure proceedings or otherwise, provided, however, that nothing herein shall inhibit or prevent Indemnitee from suing on the Note, foreclosing, or exercising any power of sale under, the Security Instrument, or exercising any other rights and remedies thereunder. This Agreement is not collateral or security for the debt of Indemnitor pursuant to the Loan, unless Indemnitee expressly elects in writing to make this Agreement additional collateral or security for the debt of Indemnitor pursuant to the Loan, which Indemnitee is entitled to do in its sole and absolute discretion. It is not necessary for an Event of Default (as defined in the Security Instrument) to have occurred for Indemnified Parties to exercise their rights pursuant to this Agreement. Notwithstanding any provision of the Security Instrument, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provision of the Security Instrument; Indemnitor is fully and personally liable for such obligations, and its liability is not limited to the original or amortized principal balance of the Loan or the value of the Property.

9. Survival. The obligations and liabilities of Indemnitor under this Indemnity shall fully survive indefinitely notwithstanding any termination, satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure of the Security Instrument.

10.       Interest. Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on demand and, if not paid within thirty (30) days of such demand therefor, shall bear interest at a per annum rate equal to the lesser of (a) 5% plus the Applicable Interest Rate (as such term is defined in the Note) or (b) the maximum interest rate which Indemnitor may by law pay or Indemnified Parties may charge and collect, from the date payment was due.

11. Waivers.

(a)       Indemnitor hereby waives (i) any right or claim of right to cause a marshalling of any Indemnitor’s assets or to cause Indemnitee or other Indemnified Parties to proceed against any of the security for the Loan before proceeding under this Agreement against any Indemnitor; (ii) and relinquishes all rights and remedies accorded by applicable law to Indemnitor, except any rights of subrogation which Indemnitor may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any claims or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including, without

limitation, any claim that such subrogation rights were abrogated by any acts of Indemnitee or other Indemnified Parties; (iii) the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose. Notwithstanding anything to the contrary contained herein, Indemnitor hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Loan until the Loan shall have been paid in full.

(b)       INDEMNITOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THE SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.

12.        Subrogation. Indemnitor shall take any and all reasonable actions, including institution of legal action against third-parties, necessary or appropriate to obtain reimbursement, payment or compensation from such persons responsible for the presence of any Hazardous Substances at, in, on, under or near the Property or otherwise obligated by law to bear the cost. Indemnified Parties shall be and hereby are subrogated to all of Indemnitor’s rights now or hereafter in such claims.

13.       Indemnitor’s Representations and Warranties. Indemnitor represents and warrants that:

(a)       If Indemnitor is a corporation, partnership or limited liability company, it has the full corporate/partnership/limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement by Indemnitor has been duly and validly authorized; and all requisite corporate/partnership/limited liability company action has been taken by Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;

(b)       If Indemnitor is an individual, he/she is acting in an individual capacity and has full power and authority to make this Agreement valid and binding upon Indemnitor, enforceable in accordance with its terms;

(c)       If Indemnitor is a corporation, partnership or limited liability company, its execution of, and compliance with, this Agreement is in the ordinary course of business of that Indemnitor and will not result in the breach of any term or provision of the charter, by-laws, partnership or trust agreement, articles of

organization, operating agreement or other governing instrument of that Indemnitor or result in the breach of any term or provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under any agreement, indenture or loan or credit agreement or other instrument to which the Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Indemnitor or the Property is subject;

(d)        If Indemnitor is an individual, his/her execution of, and compliance with, this Agreement will not result in the breach of any term or provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under any agreement, indenture or loan or credit agreement or other instrument to which Indemnitor or the Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Indemnitor or the Property is subject;

(e)       There is no action, suit, proceeding or investigation pending or threatened against it which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of Indemnitor, or in any material impairment of the right or ability of Indemnitor to carry on its business substantially as now conducted, or in any material liability on the part of Indemnitor, or which would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of Indemnitor contemplated herein, or which would be likely to impair materially the ability of Indemnitor to perform under the terms of this Agreement;

(f)        It does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement;

(g)       No approval, authorization, order, license or consent of, or registration or filing with, any governmental authority or other person, and no approval, authorization or consent of any other party is required in connection with this Agreement; and

(h)       This Agreement constitutes a valid, legal and binding obligation of Indemnitor, enforceable against it in accordance with the terms hereof.

14.No Waiver. No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such privilege, power or right.

15.        Notice of Legal Actions. Each party hereto shall, within five (5) business days of receipt thereof, give written notice to the other party hereto of (i) any notice, advice or other communication from any governmental entity or any source whatsoever with respect to Hazardous Substances on, from or affecting the Property, and (ii) any Legal Action brought against such party or related to the Property, with respect to which

any Indemnitor may have liability under this Agreement. Such notice shall comply with the provisions of Section 19 hereof.

16.       Examination of Books and Records. Indemnified Parties and their accountants shall have the right to examine the records, books, management and other papers of Indemnitor which reflect upon its financial condition, at the Property or at any office regularly maintained by Indemnitor where the books and records are located. Indemnified Parties and their accountants shall have the right to make copies and extracts from the foregoing records and other papers. In addition, Indemnified Parties and their accountants shall have the right to examine and audit the books and records of Indemnitor pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Indemnitor where the books and records are located.

17. Transfer of Loan.

(a)       Indemnitee may, at any time, sell, transfer or assign the Note, the Security Instrument, this Agreement and the other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the “Securities”). Indemnitee may forward to each purchaser, transferee, assignee, servicer, participant or investor in such Securities or any credit rating agency rating such Securities (the foregoing entities hereinafter collectively referred to as the “Investor”) and each prospective Investor, all documents and information (including, but not limited to, financial information), which Indemnitee now has or may hereafter acquire relating to Indemnitor and the Property, whether furnished by Indemnitor, any Guarantor (as defined in the Security Instrument), or otherwise, as Indemnitee determines necessary or desirable.

(b) Upon any transfer or proposed transfer contemplated above and by Section 16.1 of the Security Instrument, at Indemnitee’s request, Indemnitor shall provide an estoppel certificate to the Investor or any prospective Investor in such form, substance and detail as Indemnitee, such Investor or prospective Investor may require.

18.       Taxes. Indemnitor has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it. Indemnitor does not know of any basis for any additional assessment in respect of any such taxes and related liabilities for prior years.

19.       Notices. All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3)Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Indemnitor:	EVEREST HICKORY GLEN, LP c/o Everest Properties 199 S. Los Robles Ave., Suite 200 Pasadena, CA 91101 Attention: W. Robert Kohorst SECURED INVESTMENT RESOURCES FUND, LP II c/o Everest Properties 199 S. Los Robles Ave., Suite 200 Pasadena, CA 91101 Attention: W. Robert Kohorst
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler
If to Indemnitee:	Lehman Brothers Bank, FSB 399 Park Avenue, 8th Floor New York, New York 10022 Attention: John Herman
With a copy to:	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 55431-4435 Attention: Servicing Manager
And:	Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

For purposes of this Section, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

20.       Submission to Jurisdiction. With respect to any claim or action arising hereunder, Indemnitor (a) irrevocably submits to the nonexclusive jurisdiction of the courts of the State in which the Property is located and the United States District Court located in the county in which the Property is located, and appellate courts from any thereof, and (b)

irrevocably waives any objection which it may have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

21.       No Third-Pam Beneficiary. The terms of this Agreement are for the sole and exclusive protection and use of Indemnified Parties. No party shall be a third-party beneficiary hereunder, and no provision hereof shall operate or inure to the use and benefit of any such third party. It is agreed that those persons and entities included in the definition of Indemnified Parties are not such excluded third party beneficiaries.

22.       Duplicate Originals; Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

23.       No Oral Change. This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of any Indemnitor or any Indemnified Party, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

24.       Headings. Etc. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

25. Number and Gender/Successors and Assigns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person or persons referred to may require. Without limiting the effect of specific references in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and every person or entity comprising an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs, executors, administrators, legal representatives, successors and assigns of Indemnitor, all of whom shall be bound by the provisions of this Agreement, provided that no obligation of any Indemnitor may be assigned except with the written consent of Indemnitee. Each reference herein to Indemnitee shall be deemed to include its successors and assigns. This Agreement shall inure to the benefit of Indemnified Parties and their respective successors and assigns forever.

26.       Joint and Several Liability. If Indemnitor consists of more than one person or entity, the obligations and liabilities of each such person hereunder are joint and several.

27.       Release of Liability. Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability of any party not so released.

28.Rights Cumulative. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Security Instrument, or the other Loan Documents or would otherwise have at law or in equity.

29.       Inapplicable Provisions. If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

30.       Governing Law. This Agreement shall be deemed to be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

31.Miscellaneous. Wherever pursuant to this Agreement (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by

Indemnitor and is effective as of the day and year first above written.

INDEMNITOR: BORROWER
Everest Hickory Glen, LP, a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company, its general partner
By:	Millenium Management, LLC
	a California limited liability company, its manager
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis
Its:	Vice President and General Counsel

INDEMNITOR: PRINCIPAL Secured Investment Resources Fund, LP II a Delaware limited partnership
By:	Millenium Management, LLC, Its Manager
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis Vice President and General Counsel

EXHIBIT “A”

DESCRIPTION OF THE PROPERTY

EXHBIT A

Legal Description

PART OF THE EAST HALF OF THE NORTHWEST QUARTER OF SECTION 32, TOWNSHIP 16 NORTH, RANGE 5 WEST OF THE THIRD PRINCIPAL MERIDIAN, SANGAMON COUNTY, ILLINOIS. SAID PART BEING FURTHER DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT AT THE INTERSECTION OF THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, SAID POINT BEING 40.00 FEET SOUTH OF AN AXLE AT THE NORTHEAST CORNER OF SAID NORTHWEST QUARTER OF SECTION 32; THENCE WESTERLY ALONG THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.32 FEET TO A DRILL HOLE; THENCE SOUTHERLY ALONG A LINE MAKING AN INTERIOR ANGLE OF 90 DEGREES 16 MINUTES 50 SECONDS WITH THE LAST DESCRIBED COURSE, A DISTANCE OF 370.00 FEET TO A DRILL HOLE; THENCE EASTERLY PARALLEL WITH THE SOUTH RIGHT OF WAY LINE OF WASHINGTON STREET, 212.59 FEET TO THE EAST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 32; THENCE NORTHERLY ALONG SAID EAST LINE OF THE NORTHWEST QUARTER AND WEST LINE OF STANGE AVENUE, 370.00 FEET TO THE POINT OF BEGINNING, CONTAINING 1.80 ACRES, MORE OR LESS.

EXCEPT ALL COAL, MINERALS AND MINING RIGHTS HERETOFORE

CONVEYED OR RESERVED OF RECORD.

SITUATED IN SANGAMON COUNTY, ILLINOIS

EXHIBIT “B”

IDENTIFICATION OF ENVIRONMENTAL REPORT

Phase I Environmental Site Assessment prepared by Underground Environmental Services, Inc., dated December 5, 2006, Project No. 5673.06.3.

EX-99

GUARANTY OF RECOURSE OBLIGATIONS OF BORROWER

Springfield, Illinois

__________ ____, 20__

FOR VALUE RECEIVED, and to induce LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having its principal place of business at c/o Lehman Brothers, Inc., I000 West Street, Wilmington, Delaware 19801, Attention: John Herman (“Lender”), to lend to EVEREST HICKORY GLEN, LP, a Kansas limited partnership, having its principal place of business at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Borrower”), the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00) (the “Loan”), evidenced by that certain promissory note in the original principal amount of Nine Million and 00/100 Dollars ($9,000,000.00) (the “Note”) and secured by the Security Instrument (as defined in the Note) and by certain other Loan Documents (as defined in the Note), the undersigned, SECURED INVESTMENT RESOURCES FUND, LP II, a Delaware limited partnership having an address at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91 101 (hereinafter referred to as “Guarantor”) hereby absolutely and unconditionally guarantees to Lender the prompt and unconditional payment of the Guaranteed Recourse Obligations of Borrower (hereinafter defined). Capitalized terms used herein and not specifically defined herein shall have the respective meanings ascribed to those terms in the Security Instrument.

It is expressly understood and agreed that this is a continuing guaranty and that the obligations of Guarantor hereunder are and shall be absolute under any and all circumstances, without regard to the validity, regularity or enforceability of the Note, the Security Instrument, or the other Loan Documents, a true copy of each of said documents Guarantor hereby acknowledges having received and reviewed.

The term “Debt,” as used in this Guaranty, shall mean the principal sum evidenced by the Note and secured by the Security Instrument, or so much thereof as may be outstanding from time to time, together with interest thereon at the rate of interest specified in the Note and all other sums other than principal or interest which may or shall become due and payable pursuant to the provisions of the Note, the Security Instrument or the other Loan Documents.

The term “Guaranteed Recourse Obligations of Borrower,” as used in this Guaranty, shall mean all obligations and liabilities of Borrower set forth in subparagraphs (a) and (b) below for which Borrower shall be personally liable pursuant to the Note, the Security Instrument or the other Loan Documents:

(a)any and all Losses (as hereinafter defined) imposed upon or incurred by or asserted against Lender and directly or indirectly arising out of or in connection with any of the following: (i) fraud or intentional misrepresentation by Borrower, its agents or principals, (ii) Borrower’s misapplication or misappropriation of (A) Rents received by Borrower after the occurrence of an Event of Default, (B) tenant security deposits or Rents collected in advance, or (C) insurance proceeds or condemnation awards, (iii) Borrower’s failure to pay Taxes, Insurance Premiums, Other Charges (except to the extent that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms of the

Security Instrument), charges for labor or materials or other charges that can create liens on the Property, provided that Guarantor’s liability under this clause (iii) shall not exceed an amount equal to the net operating income of the Property for the twelve (12) month period preceding the related failure to pay, less the amount of all Constant Monthly Payments (as defined in the Note) and required reserve payments made by Borrower in accordance with the Note, the Security Instrument and the other Loan Documents during such twelve (12) month period, (iv) Borrower’s failure to comply with the provisions of Sections 3.10, 5.9 or 16.1 of the Security Instrument, or (v) Borrower’s or any other Indemnitor’s failure to comply with the provisions of the Environmental Indemnity.

(b)        the entire Debt outstanding (i) in the event of Borrower’s default under Sections 4.2 or 8.2 of the Security Instrument, (ii) if the Property or any part thereof shall become an asset in (I) a voluntary bankruptcy or insolvency proceeding, or (2) an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any member of the Borrowing Group or (B) in which any member of the Borrowing Group objects to a motion by Lender for relief from any stay or injunction from the foreclosure of the Security Instrument or any other remedial action permitted under the Note, the Security Instrument or the other Loan Documents, or (iii) if a court of competent jurisdiction holds that the granting, execution or delivery of the Security Instrument or any other Loan Documents is or constitutes a fraudulent conveyance under any bankruptcy, insolvency or fraudulent conveyance law or is otherwise voidable under any such laws.

The term “Losses” includes any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including but not limited to attorneys’ fees and other costs of defense).

Any indebtedness of Borrower to Guarantor now or hereafter existing (including, but not limited to, any rights to subrogation Guarantor may have as a result of any payment by Guarantor under this Guaranty), together with any interest thereon, shall be, and such indebtedness is, hereby deferred, postponed and subordinated to the prior payment in full of the Debt. Until payment in full of the Debt (and including interest accruing on the Note after the commencement of a proceeding by or against Borrower under the Bankruptcy Reform Act of 1978, as amended, 11 U.S.C. Sections 101 et seq., and the regulations adopted and promulgated pursuant thereto (collectively, the “Bankruptcy Code”) which interest the parties agree shall remain a claim that is prior and superior to any claim of Guarantor notwithstanding any contrary practice, custom or ruling in cases under the Bankruptcy Code generally), Guarantor agrees not to accept any payment or satisfaction of any kind of indebtedness of Borrower to Guarantor and hereby assigns such indebtedness to Lender, including the right to file proof of claim and to vote thereon in connection with any such proceeding under the Bankruptcy Code, including the right to vote on any plan of reorganization. Further, if Guarantor shall comprise more than one person, firm or corporation, Guarantor agrees that until such payment in full of the Debt, (a) no one of them shall accept payment from the others by way of contribution on account of any payment made hereunder by such party to Lender, (b) no one of them will take any action to exercise or enforce any rights to such contribution, and (c) if any of Guarantor should receive any

payment, satisfaction or security for any indebtedness of Borrower to any of Guarantor or for any contribution by the others of Guarantor for payment made hereunder by the recipient to Lender, the same shall be delivered to Lender in the form received, endorsed or assigned as may be appropriate for application on account of, or as security for, the Debt and until so delivered, shall be held in trust for Lender as security for the Debt.

Guarantor agrees that, with or without notice or demand, Guarantor will reimburse Lender, to the extent that such reimbursement is not made by Borrower, for all expenses (including reasonable counsel fees) incurred by Lender in connection with the collection of the Guaranteed Recourse Obligations of Borrower or any portion thereof or with the enforcement of this Guaranty.

All moneys available to Lender for application in payment or reduction of the Debt may be applied by Lender in such manner and in such amounts and at such time or times and in such order and priority as Lender may see fit to the payment or reduction of such portion of the Debt as Lender may elect.

Guarantor hereby waives notice of the acceptance hereof, presentment, demand for payment, protest, notice of protest, or any and all notice of non-payment, non-performance or non-observance, or other proof, or notice or demand, whereby to charge Guarantor therefor.

Guarantor further agrees that the validity of this Guaranty and the obligations of Guarantor hereunder shall in no way be terminated, affected or impaired (a) by reason of the assertion by Lender of any rights or remedies which it may have under or with respect to either the Note, the Security Instrument, or the other Loan Documents, against any person obligated thereunder or against the owner of the Property, or (b) by reason of any failure to file or record any of such instruments or to take or perfect any security intended to be provided thereby, or (c) by reason of the release or exchange of any property covered by the Security Instrument or other collateral for the Loan, or (d) by reason of Lender’s failure to exercise, or delay in exercising, any such right or remedy or any right or remedy Lender may have hereunder or in respect to this Guaranty, or (e) by reason of the commencement of a case under the Bankruptcy Code by or against any person obligated under the Note, the Security Instrument or the other Loan Documents, or the death of any Guarantor, or (f)by reason of any payment made on the Debt or any other indebtedness arising under the Note, the Security Instrument or the other Loan Documents, whether made by Borrower or Guarantor or any other person, which is required to be refunded pursuant to any bankruptcy or insolvency law; it being understood that no payment so refunded shall be considered as a payment of any portion of the Debt, nor shall it have the effect of reducing the liability of Guarantor hereunder. It is further understood, that if Borrower shall have taken advantage of, or be subject to the protection of, any provision in the Bankruptcy Code, the effect of which is to prevent or delay Lender from taking any remedial action against Borrower, including the exercise of any option Lender has to declare the Debt due and payable on the happening of any default or event by which under the terms of the Note, the Security Instrument or the other Loan Documents, the Debt shall become due and payable, Lender may, as against Guarantor, nevertheless, declare the Debt due and payable and enforce any or all of its

rights and remedies against Guarantor provided for herein.

Guarantor further covenants that this Guaranty shall remain and continue in full force and effect as to any modification, extension or renewal of the Note, the Security Instrument, or any of the other Loan Documents, that Lender shall not be under a duty to protect, secure or insure any security or lien provided by the Security Instrument or other such collateral, and that other indulgences or forbearance may be granted under any or all of such documents, all of which may be made, done or suffered without notice to, or further consent of, Guarantor.

With respect to any claim or action arising hereunder, Guarantor (a) irrevocably submits to the jurisdiction of the courts of the State in which the Property is located and the United States District Court located in the county in which the Property is located, and appellate courts from any thereof, (b) irrevocably waives any objection which it may have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Guaranty brought in any such court, and (c) irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

This is a guaranty of payment and not of collection and upon any default of Borrower under the Note, the Security Instrument or the other Loan Documents, Lender may, at its option, proceed directly and at once, without notice, against Guarantor to collect and recover the full amount of the liability hereunder or any portion thereof, without proceeding against Borrower or any other person, or foreclosing upon, selling, or otherwise disposing of or collecting or applying against any of the mortgaged property or other collateral for the Loan. Guarantor hereby waives the pleading of any statute of limitations as a defense to the obligation hereunder.

All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person with receipt acknowledged by the recipient thereof, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Guarantor	SECURED INVESTMENT RESOURCES FUND, LP II C/O Everest Properties 199 South Los Robles Avenue, Suite 200 Pasadena, California 91101
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63102 Attention: Jennifer A. Marler

If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8thFloor New York, New York 10022Attention: John Herman
With a copy to:	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 55431-4435 Attention: Servicing Manager
And	Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties. Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

Each reference herein to Lender shall be deemed to include its successors and assigns, to whose favor the provisions of this Guaranty shall also inure. Each reference herein to Guarantor shall be deemed to include the heirs, executors, administrators, legal representatives, successors and assigns of Guarantor, all of whom shall be bound by the provisions of this Guaranty.

If Guarantor is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term “Guarantor,” as used herein, shall include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Guarantor is a corporation or limited liability company, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders or members comprising, or the officers and directors or managers relating to, the corporation or limited liability company, and the term “Guarantor” as used herein, shall include any alternative or successor corporation or limited liability company, but any predecessor corporation or limited liability company shall not be relieved of liability hereunder.

Guarantor (and its representative, executing below, if any) has full power, authority and legal right to execute this Guaranty and to perform all its obligations under this Guaranty.

All understandings, representations and agreements heretofore had with respect to this Guaranty are merged into this Guaranty which alone fully and completely expresses the agreement of Guarantor and Lender.

This Guaranty may be executed in one or more counterparts by some or all of the parties hereto, each of which counterparts shall be an original and all of which together shall constitute a single agreement of Guaranty. The failure of any party hereto to execute this Guaranty, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

This Guaranty may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Lender or Borrower, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

This Guaranty shall be deemed to be a contract entered into pursuant to the laws of the State where the Property is located and shall in all respects be governed, construed, applied and enforced in accordance with applicable federal law and the laws of the State where the Property is located, without reference or giving effect to any choice of law doctrine.

GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS GUARANTY, THE NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

REMAINING PAGE LEFT INTENTIONALLY BLANK

IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the date first above set forth.

SECURED INVESTMENT RESOURCES FUND, LP II, a Delaware limited partnership
By:	Millenium Management, LLC, a California limited liability company its general partner
By:	/S/ CHRISTOPHER K. DAVIS
Its:	Christopher K. Davis Vice President and General Counsel

EX-99

Food Service Proposal

For

Oak Terrace

Retirement Community

presented by:

Arena Food Service

February 23, 1998

Oak Terrace

Active Retirement Community

Food Service Proposal

Arena Food Service would propose to operate your facility on a “profit or loss” basis under the following terms and conditions:

1. Arena will provide a professional staff and manager to run your foodservice operation. W e would be directly responsible for all food costs, all labor costs including payroll taxes and fringe benefits, all supplies needed in the operation, all insurance coverages (including workmen’s compensation, products liability , general liability) , taxes. foodhandler permits and uniform costs. Arena would not be responsible for any equipment investment, utility costs, pest control services, telephone cost or repairs and maintenance of equipment (except due to negligence on our part).

2. Arena would provide your foodservice at a flat monthly cost of $32,500.00. Oak Terrace will pay Arena once a month. (Payment due the 15th of the following month.) Price is guaranteed for one (1) year.

3. Arena will have an exclusive right to all vending.

4. Arena will offer one (1) meal per day to the staff at no charge.

5. All menus will be prepared at least one (1) week in advance and submitted for your approval. Menus will be reviewed and discussed with our registered dietician prior to submission. A minimum of one (1) “monotony” breaker will be offered each month (e.g. Seafood Buffet, Italian Night, Theme Days, Summer Cook-Outs).

6. Arena will operate your facility seven (7) days a week with the same hours of operation that you are currently accustomed to.

7. Arena agrees to keep data regarding daily meal counts.

8. The contract will be for a three (3) year term and be subject to renewal options of three (3) years each.

9. The contract shall contain a provision that either party, upon ninety (90) days written notice, can elect to terminate this agreement.

10. Arena will have an exclusive right to all special event meals and caterings. The price for such events to be mutually agreed upon in advance, depending on menu selections, number of people, etc. All such events to be paid for by resident at time of event. Special “activity department” costs will be billed to Oak Terrace separately.

11. Arena rill provide guest meals at the following rates: Breakfast - $2.75; Lunch - $5.00; Dinner - $6.00; Sunday and Special Buffet nights - $7.50.

12. Arena will maintain a separate and complete set of books on your operation. Arena will also be responsible for any sales tax returns, payroll tax returns, W-2’s. etc., with respect to the foodservice operation.

13. Arena would put in place a new foodservice crew, including a full-time dietary manager. Current employees would all be interviewed (including the current manager) and would be retained upon recommendation by the facility. Arena’s staff, including waiters and waitresses, would be attired in appropriate uniforms and would bring in a fresh, new enthusiastic attitude to your operation. Our on site manager would also be supported by a supervisory manager from our home office staff in Springfield.

14. The facility will assign at least one (1) individual to meet with Arena Food Service Management no less than quarterly to review operations.

15. Arena employees would be provided parking at no cost.

ARENA FOOD SERVICE	OAK TERRACE
President	Executive Director
Date	Date

EX-99

PROMISSORY NOTE

$9,000,000.00 Springfield, Illinois

____________ ____, 20__

FOR VALUE RECEIVED, EVEREST HICKORY GLEN, LP, a Kansas limited partnership, as maker, having its principal place of business at c/o Everest Properties, 199 South Los Robles Avenue, Suite 200, Pasadena, California 91101 (“Borrower”), hereby unconditionally promises to pay to the order of LEHMAN BROTHERS BANK, FSB, a federal stock savings bank, having its principal place of business at c/o Lehman Brothers, Inc., 1000 West Street, Wilmington, Delaware 19801, Attention: John Herman (“Lender”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00), in lawful money of the United States of America with interest thereon to be computed from the date of disbursement under this Note at the Applicable Interest Rate (defined below), and to be paid in installments as provided herein.

1 . CERTAIN DEFINED TERMS

As used herein, the following terms shall have the meanings set forth below:

(a)       “Accrual Period” shall mean the period commencing on the eleventh (11^th) day of a calendar month and ending on the tenth (10^th) day of the succeeding calendar month; provided that if this Note is dated as of any date other than the eleventh (11^th) day of a month, the first Accrual Period shall (i) consist of only the date hereof, if the date hereof is the tenth (10^th) day of a month, or (ii) commence on the date hereof and shall end on the next tenth (10^th) day of a calendar month to occur after the date hereof.

(b)       “Applicable Interest Rate” shall mean an interest rate equal to Five and Ninety-Four Hundredths Percent (5.94%) per annum.

(c) “Loan” shall mean the loan evidenced by this Note.

(d)       “Loan Documents’’ shall mean this Note, the Security Instrument, and any other documents or instruments which now or shall hereafter wholly or partially secure or guarantee payment of this Note or which have otherwise been executed by Borrower and/or any other person in connection with the Loan.

(e)       “Lockout Period Expiration Date” shall mean the earlier of (a) the fourth (4^th) anniversary of the date hereof, and (b) two years and one day from the “startup day” of any “real estate mortgage investment conduit” (as such terms are defined in Sections 860G and 860D, respectively, of the Internal Revenue Code of 1986, as amended or any successor statute thereto) which may acquire the Loan.

(f) “Maturity Date” shall mean January 11, 2012.

(g)        “Monthly Payment” shall mean, with respect to each Monthly Payment Date, an amount equal to the amount of all interest that has accrued on the outstanding principal balance of this Note during the immediately preceding Accrual Period.

(h)       “Monthly Payment Date” shall mean the eleventh (11^th) day of each calendar month prior to the Maturity Date commencing on (i) the eleventh (11^th) day of the next succeeding calendar month after the date hereof if this Note is dated on or prior to the eleventh (11^th) day of a month; or (ii) the eleventh (11^th) day of the second succeeding calendar month after the date hereof if this Note is dated after the eleventh (11^th) day of a month.

(i)        “Security Instrument” shall mean the Mortgage and Security Agreement dated the date hereof in the principal sum of Nine Million and 00/100 Dollars ($9,000,000.00) given by Borrower to (or for the benefit of) Lender covering the fee estate of Borrower in certain premises located in Sangamon County, State of Illinois, and other property, as more particularly described therein (collectively, the “Property”).

2. PAYMENT TERMS

(a)        If this Note is dated as of a date other than the eleventh (11th) day of a calendar month, a payment shall be due from Borrower to Lender on the date hereof on account of all interest scheduled to accrue on the principal sum from and after the date of disbursement hereunder through and including the last day of the current Accrual Period. The Monthly Payment shall be due from Borrower to Lender on each Monthly Payment Date, with each Monthly Payment to be applied to the payment of interest which has accrued during the preceding Accrual Period computed at the Applicable Interest Rate. The balance of the principal sum and all interest thereon shall be due and payable on the Maturity Date. Interest on the principal sum of this Note shall be calculated by multiplying the actual number of days elapsed in the period for which interest is being calculated by a daily rate based on a 360-day year.

(b)        Unless otherwise directed by Lender in writing, at all times during which the Debt (defined below) shall remain outstanding, Borrower shall maintain (i) an account (“Borrower Account”) with a commercial bank that shall be a member of the automated clearing house system (the “ACH System”) and (ii) such authorizations as may be necessary to enable Lender or its designated collecting agent to obtain payments due under the Loan Documents from the Borrower Account through the ACH System. Borrower shall not terminate the Borrower Account or such authorizations at any time during the term of this Loan without having provided sixty (60) days’ prior written notice thereof to Lender, which notice shall specify the institution at which a substitute Borrower Account has been established and the account number of such substitute Borrower Account, and certifying that all authorizations necessary to enable Lender or its collecting agent to obtain payments due under the Loan Documents from such substitute Borrower Account through the ACH System have been given and are then in effect. By not later than the opening of business on each day that any payments shall be due under the Loan Documents, Borrower shall cause an amount, in immediately available funds,

equal to such payment to be available for withdrawal from the Borrower Account by Lender or its collecting agent.

(c)       Unless payments are made in the required amount in immediately available funds at the place where this Note is payable, remittances in payment of all or any part of the Debt (defined below) shall not, regardless of any receipt or credit issued therefore, constitute payment until the required amount is actually received by Lender in funds immediately available at the place where this Note is payable (or any other place as Lender, in Lender’s sole discretion, may have established by delivery of written notice thereof to Borrower) and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks.

3. DEFAULT AND ACCELERATION

(a)       The whole of the principal sum of this Note, (b) interest, default interest, late charges and other sums, as provided in this Note, the Security Instrument or the other Loan Documents, (c) all other monies agreed or provided to be paid by Borrower in this Note, the Security Instrument or the other Loan Documents, (d) all sums advanced pursuant to the Security Instrument to protect and preserve the Property and the lien and the security interest created thereby, and (e) all sums advanced and costs and expenses incurred by Lender in connection with the Debt (defined below) or any part thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to in (a) through (e) above shall collectively be referred to as the “Debt”) shall without notice become immediately due and payable at the option of Lender if any payment required in this Note prior to the Maturity Date is not paid on the date when due or on the happening of any other default, after the expiration of any applicable notice and grace periods, herein or under the terms of the Security Instrument or any of the other Loan Documents (collectively, an “Event of Default”).

4. DEFAULT INTEREST

Borrower does hereby agree that upon the occurrence of an Event of Default, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal sum at a rate (the “Default Rate”) equal to (i) the greater of (a) the Applicable Interest Rate plus three percent (3%) and (b) the Prime Rate (as hereinafter defined) plus four percent (4%) or (ii) the maximum interest rate that Borrower may by law pay, whichever is lower. The Default Rate shall be computed from the occurrence of the Event of Default until the earlier of the date upon which the Event of Default is cured or the date upon which the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt, and shall be deemed secured by the Security Instrument. This provision, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default.

The “Prime Rate” shall mean the annual rate of interest publicly announced by Citibank, N.A. in New York, New York, as its base rate, as such rate shall change from time to time. If Citibank, N.A. ceases to announce a base rate, Prime Rate shall mean the rate of interest published in The Wall Street Journal from time to time as the Prime Rate. If more than one Prime Rate is published in The Wall Street Journal for a day, the average of the Prime Rates shall be used, and such average shall be rounded up to the nearest one quarter of one percent (25%). If The Wall Street Journal ceases to publish the “Prime Rate”, the Lender shall select an equivalent publication that publishes such “Prime Rate”, and if such prime rates are no longer generally published or are limited, regulated or administered by a governmental or quasigovernmental body, then Lender shall select a comparable interest rate index.

5. PREPAYMENT; DEFEASANCE

(a)       Borrower shall not have the right or privilege to prepay all or any portion of the unpaid principal balance of this Note until the Monthly Payment Date which is one (1) month prior to the Maturity Date. From and after such date, provided no Event of Default exists, the principal balance of this Note may be prepaid, in whole but not in part, upon: (i) not less than fifteen (15) days prior written notice (the “Prepayment Notice”) to Lender specifying the scheduled payment date on which prepayment is to be made (the “Prepayment Date”); (ii) payment of all accrued and unpaid interest on the outstanding principal balance of this Note to and including the Prepayment Date together with a payment of all interest which would have accrued on the principal balance of this Note to and including the last day of the Accrual Period in which the Prepayment Date occurs, if such prepayment occurs on a date which is not the eleventh (11^th) day of a calendar month (the “Shortfall Interest Payment”); and (iii) payment of all other sums then due under this Note, the Security Instrument and the other Loan Documents. Lender shall not be obligated to accept any prepayment of the principal balance of this Note unless it is accompanied by all sums due in connection therewith.

(b)

(i)        At any time from and after the Lockout Period Expiration Date and provided no Event of Default exists at the time, Borrower may obtain the release of the Property from the lien of the Security Instrument upon the satisfaction of the following conditions precedent:

(1) Borrower shall have provided Lender with not less than thirty (30) days and not more than sixty (60) days prior written notice specifying the date (the “Release Date”) on which the Defeasance Deposit (hereinafter defined) is to be made;

(2) Borrower shall have paid to Lender all interest accrued and unpaid on the principal balance of this Note to and including the Release Date;

(3) Borrower shall have paid to Lender all other sums due and payable under this Note, the Security Instrument and the other Loan Documents through and including the Release Date (including, but not limited to, any Monthly Payment which may be due and payable on the Release Date);

(4) Borrower shall have paid to Lender the Defeasance Deposit (hereinafter defined);

(5) The transactions contemplated by this Section 5(b) shall not cause the Loan to lose its status as a “qualified mortgage” within the meaning of Sections 860D and 860G(a)(3) of the Internal Revenue Code of 1986, as amended, or any successor statute thereto; and

(6) Borrower shall have delivered to Lender the following:

(A) a security agreement, in form and substance satisfactory to Lender, creating a first priority lien on the Defeasance Deposit and the Government Securities (hereinafter defined) purchased on behalf of Borrower with the Defeasance Deposit in accordance with the provisions of this Section 5(b) (the “Pledge Agreement”), which Pledge Agreement shall provide, among other things, that any excess payments of principal and interest received by Lender under the Government Securities over the amount needed to make payments of principal and interest and other sums due from Borrower hereunder shall be refunded to Borrower;

(B) a release of the Property from the lien of the Security Instrument (for execution by Lender) in a form appropriate for the jurisdiction in which the Property is located;

(C) an officer’s certificate of Borrower certifying that the requirements set forth in this Section 5(b) have been satisfied;

(D) a certificate by Borrower’s independent public accountant certifying that the cash flow from the Government Securities will be sufficient to timely meet all Scheduled Defeasance Payments;

(E) an opinion of counsel for Borrower in form satisfactory to Lender stating, among other things, that Lender will have a perfected first priority security interest in the Defeasance

Deposit and the Government Securities to be purchased on behalf of Borrower;

(F) evidence in writing from the applicable Rating Agencies (as defined in the Security Instrument) to the effect that such release will not result in a qualification, downgrade or withdrawal of any rating in effect immediately prior to such defeasance for any Securities (as defined in the Security Instrument) if the Defeasance Deposit is to be used to purchase Non-U.S. Treasury Obligations (as hereinafter defined)]; and

(G) such other certificates, documents or instruments as Lender may reasonably request.

The Defeasance Deposit shall be used to purchase Government Securities which provide payments which are (A) payable on or prior to, but as close as possible to, all successive Monthly Payment Dates after the Release Date and the Maturity Date and (B) in amounts necessary to meet the scheduled payments of principal and interest due under this Note on such dates (the “Scheduled Defeasance Payments”). Borrower, pursuant to the Pledge Agreement or other appropriate documents, shall authorize and direct that the payments received from the Government Securities be made directly to Lender and applied to satisfy the obligations of the Borrower under this Note.

(ii)       Upon compliance with the requirements of this Section 5(b), the Property shall be released from the lien of the Security Instrument and the pledged Defeasance Deposit and the Government Securities purchased therewith shall be the sole source of collateral securing this Note. In connection with such release, Lender, or its designee, shall establish or designate a successor entity (the “Successor Borrower”) and Borrower shall transfer and assign all obligations, rights and duties under and to this Note together with the Pledge Agreement and the pledged Defeasance Deposit and/or Government Securities to such Successor Borrower. At the time of such release, such Successor Borrower shall assume the obligations of Borrower under this Note and the Pledge Agreement, Borrower shall be relieved of its rights and obligations thereunder, and all references to Borrower herein or in the Pledge Agreement shall be deemed to refer to Successor Borrower. Borrower shall pay all costs and expenses incurred by Lender, including Lender’s attorneys’ fees and expenses and if paragraph 5(b)(i)(6)(F) above is applicable, Rating Agency fees, if any, incurred in connection with this Section 5(b).

(iii)      For purposes hereof, the following terms shall have the following meanings:

(1) The term “Defeasance Deposit” shall mean an amount equal to the sum of (1) the amount which will be sufficient to purchase Government Securities necessary to meet the Scheduled Defeasance Payments; and (2) any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of this Note or otherwise required to accomplish the agreements of this Section 5(b), all fees, costs and expenses incurred or to be incurred by Lender in the purchase of such Government Securities and the assumption payments referred to above;

(2) The term “Government Securities” shall mean (A) U.S. Treasury Obligations and (B) Non-U.S. Treasury Obligations;

(3) The term “U.S. Treasury Obligations” shall mean direct, non-callable, fixed rate obligations of the United States of America; and

(4) The term “Non-U.S. Treasury Obligations” shall mean non-callable, fixed rate obligations, other than U.S. Treasury Obligations, that are “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended.

(iv)       Following the delivery of the Defeasance Deposit to Lender, Borrower shall not have any right to prepay this Note.

(c)       Simultaneously with each Default Repayment (defined herein) occurring prior to the Maturity Date, Borrower shall pay to Lender an amount equal to the greater of: (A) three (3%) percent of the principal amount of this Note being prepaid; and (B) the present value of a series of payments each equal to the Payment Differential (hereinafter defined) and payable on each Monthly Payment Date over the remaining original term of this Note and on the Maturity Date discounted at the Reinvestment Yield (hereinafter defined) for the number of months remaining from the date of the Default Repayment (the “Repayment Date”) to each such Monthly Payment Date and the Maturity Date. The term “Reinvestment Yield” as used herein shall be equal to the lesser of (a) the (i) yield on the U.S. Treasury issue (primary issue) with the same maturity date as the Maturity Date; or (ii) if no such U.S. Treasury issue is available, then the interpolated yield on the two U.S. Treasury issues (primary issues) with maturity dates (one prior to and one following) that are closest to the Maturity Date; or (b) the (i) yield on the U.S. Treasury issue (primary issue) with a term equal to the remaining average life of the Debt, or (ii) if no such U.S. Treasury issue is available, then the interpolated yield on the two U.S. Treasury issues (primary issues) with terms (one prior to and one following) that are closest to the remaining average life of the Debt, with each such yield being based on the bid price for such issue as published in The Wall Street Journal on the date that is 14 days prior to the Repayment Date (or, if such bid price is not published on that date, the

next preceding date on which such bid price is so published) and converted to a monthly compounded nominal yield. The term “Payment Differential” as used herein shall be equal to (x) the Applicable Interest Rate minus the Reinvestment Yield, divided by (y) 12 and multiplied by (z) the principal sum being repaid on such Repayment Date after application of the Monthly Payment (if any) due on the date of the Default Repayment, provided that the Payment Differential shall in no event be less than zero. In no event, however, shall Lender be required to reinvest any repayment proceeds in U.S. Treasury obligations or otherwise.

For purposes of this Note, the term “Default Repayment” shall mean a repayment of all or any portion of the principal amount of this Note made during the continuance of any Event of Default or after an acceleration of the Maturity Date under any circumstances, including, without limitation, a repayment occurring in connection with reinstatement of the Security Instrument provided by statute under foreclosure proceedings or exercise of a power of sale, any statutory right of redemption exercised by Borrower or any other party having a statutory right to redeem or prevent foreclosure, any sale in foreclosure or under exercise of a power of sale or otherwise.

6. SECURITY

This Note is secured by the Security Instrument and the other Loan Documents. The Security Instrument is intended to be duly recorded in the public records of the county where the Property is located. All of the terms, covenants and conditions contained in the Security

Instrument and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein.

7. SAVINGS CLAUSE

This Note is subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance due hereunder at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Note, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

8. LATE CHARGE

If any sum payable under this Note is not paid on the date on which it is due, regardless of whether such failure shall constitute an Event of Default, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of the unpaid sum or the maximum amount permitted by applicable law to defray the expenses incurred by Lender in handling and processing the delinquent payment and to compensate Lender for the loss of the use of the delinquent payment and the amount shall be secured by the Security Instrument and the other Loan Documents.

9. NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

10. JOINT AND SEVERAL LIABILITY

If Borrower consists of more than one person or party, the obligations and liabilities of each person or party shall be joint and several.

11. WAIVERS, ETC.

All payments required hereunder shall be made irrespective of, and without any deduction for, any setoff, defense or counterclaim. Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other notices of any kind, other than notices specifically required by the terms of this Note, the Security Instrument and the other Loan Documents. Except as otherwise provided in Section 5(b) relating to the Defeasance Deposit, no release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Security Instrument or the other Loan Documents made by agreement between Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under this Note, the Security Instrument or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Security Instrument or the other Loan Documents. In addition, acceptance by Lender of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default. I f Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term “Borrower,” as used herein, shall

include any alternate or successor partnership, but any predecessor partnership and their partners shall not thereby be released from any liability. If Borrower is a corporation or limited liability company, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders or members comprising, or the officers and directors or managers relating to, the corporation or limited liability company, and the term “Borrower” as used herein, shall include any alternative or successor corporation or limited liability company, but any predecessor corporation or limited liability company shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in a partnership, corporation or limited liability company which may be set forth in the Security Instrument or any other Loan Document.).

12. TRANSFER

Upon the transfer of this Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Security Instrument and the other Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred.

13. WAIVER OF TRIAL BY JURY

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

14. EXCULPATION

(a)       Except as otherwise provided herein, in the Security Instrument or in the other Loan Documents, Lender shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in this Note or the Security Instrument by any action or proceeding wherein a money judgment shall be sought against Borrower, except that Lender may sell the Property under any power of sale or right of non-judicial foreclosure or bring a foreclosure action, confirmation action, action for specific performance or other appropriate action or proceeding to enable Lender to enforce and realize upon this Note, the Security Instrument, the other Loan Documents, and the interest in the Property, the Rents (as defined in the Security Instrument) and any other

collateral given to Lender created by this Note, the Security Instrument and the other Loan Documents; provided, however, that any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Lender. Lender, by accepting this Note and the Security instrument, agrees that it shall not, except as otherwise provided in Section 10.10 of the Security Instrument, sue for, seek or demand any deficiency judgment against Borrower in any such action or proceeding, under or by reason of or under or in connection with this Note, the other Loan Documents or the Security Instrument. The provisions of this Article shall not, however, (i) constitute a waiver, release or impairment of any obligation evidenced or secured by this Note, the other Loan Documents or the Security Instrument; (ii) [Intentionally Deleted]; (iii) impair the right of Lender to name Borrower as a party defendant in any action or suit for judicial foreclosure and sale under the Security Instrument; (iv) affect the validity or enforceability of any indemnity, guaranty, master lease or similar instrument made in connection with this Note, the Security Instrument, or the other Loan Documents; (v) impair the right of Lender to obtain the appointment of a receiver; (vi) impair the enforcement of the Assignment of Leases and Rents executed in connection herewith; (vii) impair the right of Lender to obtain a deficiency judgment or judgment on the Note against Borrower if necessary to obtain any insurance proceeds or condemnation awards to which Lender would otherwise be entitled under the Security Instrument; provided however, Lender shall only enforce such judgment against the insurance proceeds and/or condemnation awards; or (viii) impair the right of Lender to enforce the provisions of Sections 10.10, 11.2 and 11.3 of the Security Instrument.

(b)       Notwithstanding the provisions of this Article 14 to the contrary, Borrower shall be personally liable to Lender for the Losses (as defined in the Security Instrument) it incurs due to: (i) fraud or intentional misrepresentation by Borrower, its agents or principals, (ii) Borrower’s misapplication or misappropriation of (A) Rents received by Borrower after the occurrence of an Event of Default, (B) tenant security deposits or Rents collected in advance, or (C) insurance proceeds or condemnation awards, (iii) Borrower’s failure to pay Taxes (as defined in the Security Instrument), Insurance Premiums (as defined in the Security Instrument), Other Charges (as defined in the Security Instrument) (except to the extent that sums sufficient to pay such amounts have been deposited in escrow with Lender pursuant to the terms of the Security Instrument), charges for labor or materials or other charges that can create liens on the Property, provided that Borrower’s liability under this clause (iii) shall not exceed an amount equal to the net operating income of the Property for the twelve (12) month period preceding the related failure to pay, less the amount of all Monthly Payments and required reserve payments made by Borrower in accordance with this Note, the Security Instrument and the other Loan Documents during such twelve (12) month period, (iv) Borrower’s failure to comply with the provisions of Sections 3.10, 5.9 or 16.1 of the Security Instrument, or (v) Borrower’s or any other indemnitor’s failure to comply with the provisions of the Environmental Indemnity (as defined in the Security Instrument).

(c)       Notwithstanding the foregoing, the agreement of Lender not to pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL AND

VOID and shall be of no further force and effect (i) in the event of Borrower’s default under Sections 4.2 or 8.2 of the Security Instrument, or (ii) if the Property or any part thereof shall become an asset in (1) a voluntary bankruptcy or insolvency proceeding, or (2) an involuntary bankruptcy or insolvency proceeding (A) which is commenced by any party controlling, controlled by or under common control with Borrower (which shall include, but not be limited to, any creditor or claimant acting in concert with Borrower or any of the foregoing parties) (the “Borrowing Group”) or (B) in which any member of the Borrowing Group objects to a motion by Lender for relief from any stay or injunction from the foreclosure of the Security Instrument or any other remedial action permitted hereunder or under the Security Instrument or the other Loan Documents, or (iii) if a court of competent jurisdiction holds that the granting, execution or delivery of the Security Instrument or any other Loan Documents is or constitutes a fraudulent conveyance under any bankruptcy, insolvency or fraudulent conveyance law or is otherwise voidable under any such laws.

(d)       Nothing herein shall be deemed to be a waiver of any right which Lender may have under Sections 506(a), 506(b), 11 1 l(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with this Note, the Security Instrument and the other Loan Documents.

15. AUTHORITY

Borrower (and the undersigned representative of Borrower, if any) represents that Borrower has full power, authority and legal right to execute and deliver this Note, the Security Instrument and the other Loan Documents and that this Note, the Security Instrument and the other Loan Documents constitute valid and binding obligations of Borrower.

16. APPLICABLE LAW

This Note shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property is located and the applicable laws of the United States of America.

17. COUNSEL FEES

In the event that it should become necessary to employ counsel to collect the Debt or to protect or foreclose the security therefor, Borrower also agrees to pay all reasonable fees and expenses of Lender, including, without limitation, reasonable attorney’s fees for the services of such counsel whether or not suit be brought.

18. NOTICES

All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person, (ii) one (1) Business Day

(defined below) after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower	EVEREST HICKORY GLEN, LP C/O Everest Properties 199 South Los Robles Avenue, Suite 200 Pasadena, California 91101 Attention: W. Robert Kohorst
With a copy to:	Sonnenschein Nath & Rosenthal LLP One Metropolitan Square, Suite 3000 St. Louis, Missouri 63 102 Attention: Jennifer A. Marler
If to Lender:	Lehman Brothers Bank, FSB 399 Park Avenue, 8Ih Floor New York, New York 10022 Attention: John Herman
With a copy to:	NorthMarq Capital, Inc. 3500 American Boulevard West, Suite 500 Bloomington, Minnesota 5543 1-4435 Attention: Servicing Manager
And	Best & Flanagan LLP 225 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-4690 Attention: Daniel R. Tyson

or addressed as such party may from time to time designate by written notice to the other parties.

Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.

“Business Day” shall mean a day upon which commercial banks are not authorized or

required by law to close in New York, New York.

19. MISCELLANEOUS

(a)       Wherever pursuant to this Note (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

(b)       Whenever used, the singular shall include the plural, the plural shall include the singular, and the words “Lender” and “Borrower” shall include their respective successors, assigns, heirs, executors and administrators.

IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

Everest Hickory Glen, LP, a Kansas limited partnership
By:	Millenium Oak Terrace, LLC
	a California limited liability company, its general partner
By:	Millenium Management, LLC
	a California limited liability company, its manager
By:	/S/ CHRISTOPHER K. DAVIS
	Christopher K. Davis
Its:	Vice President and General Counsel

STATE OF CALIFORNIA	)
	)	ss.
COUNTY OF LOS ANGELES	)

On December 22, 2006, before, me, Lisa L. Longo, a Notary Public appeared Christopher K. Davis, personally h-own to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal

/S/ Lisa L Longo

Notary Public

Print Name: Lisa L. Longo

My Commission expires: 10/24/08

EX-99

TERMINATION AGREEMENT

(Oak Terrace Joint Venture, L.P. Project)

This Termination Agreement (the “Agreement”) is made this 29th day of December, 2006 by and among EVEREST HICKORY GLEN, LP (formerly known as OAK TERRACE JOINT VENTURE, L.P.) a Kansas limited partnership (the “Borrower”); SECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership and limited partner of the Borrower (the “Limited Partner”); CREDIT SUISSE (formerly Credit Suisse First Boston), acting by and through its New York branch (“Credit Suisse”); and CREDITRE MORTGAGE CAPITAL, L.L.C. a Delaware limited liability company (“Credit Re,” and together with Borrower, the Limited Partner and Credit Suisse, the “Parties,” and each a “Party”).

RECITALS

WHEREAS, the Borrower owns a multifamily active retirement apartment facility and related personal property and equipment located at 1700 West Washington, Springfield, Illinois, the development of which was financed with the proceeds of those certain bonds issued by the City of Springfield, Illinois and known as $9,000,000 Community Improvement Adjustable Demand Revenue Bonds, Series 1999 (Oak Terrace Joint Venture, L.P. Project), (the “Bonds”);

WHEREAS, Oak Terrace Venture, Inc., a Kansas corporation, was the general partner of Oak Terrace Joint Venture, L.P. and was replaced as general partner by Millenium Management, LLC, a California limited liability company;

WHEREAS, Millenium Management, LLC was replaced as the general partner of Oak Terrace Joint Venture, L.P. by one of its affiliates, Millenium Oak Terrace, LLC, a California limited liability company;

WHEREAS, James R. Hoyt and Secured Investment Resources II, Inc., a Kansas corporation, were the general partners of the Limited Partner and were replaced as such by Millenium Management, LLC, a California limited liability company;

WHEREAS, Oak Terrace Joint Venture, L.P. changed its name to Everest Hickory Glen, LP;

WHEREAS, Credit Re arranged for the delivery by Credit Suisse First Boston (predecessor-in-interest to Credit Suisse), in support of the Bonds, of its irrevocable Letter of Credit No TR-07001288 (the “Letter of Credit”);

WHEREAS, in connection with the issuance of the Letter of Credit, each Party has executed one or more of the agreements listed on Schedule 1 attached hereto and more fully defined thereon (each a “Loan Document” and collectively, the “Loan Documents”);

WHEREAS, it is expected that the Letter of Credit will be drawn twice on December 29, 2006 and, after such drawings, cannot be reinstated, and contemporaneously with the second of such drawings, all outstanding obligations of the Borrower to Credit Re and Credit Suisse will be refinanced and paid in full, at which time the Letter of Credit will be cancelled;

WHEREAS, in connection with the termination of the Letter of Credit and the payment in full of all obligations associated with such, each of the Parties wishes to terminate the Loan Documents to which it is a party, subject to the exceptions provided for herein;

NOW THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the Parties, intending to be legally bound hereby, covenant and agree as follows:

1.         Termination. Each Party hereby agrees and acknowledges that each of the Loan Documents to which it is a party is, and all of such Party’s rights and obligations thereunder are, hereby terminated, except for those indemnification obligations of the Borrower that, by the terms of any Loan Document, expressly survive the termination of such Loan Document and repayment of any obligations secured thereby (the “Surviving Indemnities”). In addition, if any amounts previously paid to Credit Re or Credit Suisse pursuant to any of the Loan Documents shall become subject to disgorgement by Credit Re or Credit Suisse as a result of any bankruptcy, fraudulent conveyance, or similar statute applicable to the Borrower as specifically set forth in the Loan Documents, such amounts shall once again become due and owing to Credit Re and/or Credit Suisse by the Borrower, and such payment obligation shall constitute one of the Surviving Indemnities. The obligations of the Borrower with respect to the Surviving Indemnities shall be limited pursuant to and in accordance with the provision of Section 9.17 of the Reimbursement Agreement, as incorporated in the Loan Documents, and such provision shall survive the termination of the Loan Documents, but only to the extent specifically set forth therein.

2.         Conditions Precedent. The effectiveness of the termination and release set forth herein is conditioned upon the following:

(a)        reimbursement in full of all amounts due and owing under the Reimbursement Agreement (subject to adjustment or proration as set forth therein) and as adjusted by the Letter dated October 31, 2006, from Credit Re to Borrower; and

(b)       termination of the Letter of Credit and delivery of such Letter of Credit to Credit Suisse.

3.         Further Assurances. The Parties agree to execute and deliver such further instruments and to take such further actions as may be reasonable and as may be required to carry out the purposes hereof, including, without limitation, the execution and recordation or filing of such other instruments as may be necessary to remove of record

all documents or instruments evidencing or securing the obligations of the Borrower to Credit Suisse and to Credit Re. Without limiting the foregoing, Credit Suisse and Credit Re hereby authorize the Borrower (or its designee) to prepare and file UCC termination statements, terminating of record any and all financing statements filed by Credit Suisse or Credit Re as secured parties in respect of the Borrower, as debtor.

4.          Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its principles of conflicts of law.

5.         Releases. Except as otherwise provided herein, each of the Parties hereby releases, remises and forever discharges each of the other Parties from and against any and all liabilities, obligations, losses, demands or claims that any of them has or ever had, of every kind and nature, at law or in equity, whether known or unknown, relating to or arising out of any of the Loan Documents.

6.         Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original as to any Party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall be binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all the Parties. Facsimile execution or execution by electronic mail imaging of this Agreement shall constitute an original for all purposes.

[REMAINDER OF PAGE LEFT BLANK]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

CREDITRE MORTGAGE CAPITAL, L.L.C., a Delaware limited liability company
By:	/S/ STEPHEN F. YOUNG
Name: Title:	Stephen F. Young Senior Vice President

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

CREDIT SUISSE (formerly Credit Suisse First Boston), acting by and through its New York Branch
By:	/S/ SHARON M. MEADOWS
Name: Title:	Sharon M. Medows Managing Director
By:	/S/ Michael A. Criscito
Name: Title:	Michael A. Criscito Managing Director

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written.

EVEREST HICKORY GLEN, LP (formerly OAK TERRACE JOINT VENTURE, L.P.) a Kansas limited partnership
By:	Millenium Oak Terrace, LLC, a California limited liability company, its general partner
	By:	Millenium Management, LLC, a California limited liability company, its manager
		By: /S/ W. ROBERT KOHORST
		Name: W. Robert Kohorst Title: President

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the

day and year first above written.

SECURED INVESTMENT RESOURCES FUND, L.P. II, a Delaware limited partnership
By: Millenium Management, LLC, a California limited liability company, its general partner
By:	/S/ W. ROBERT KOHORST
Name: Title:	W. Robert Kohorst President

Schedule 1

LOAN DOCUMENTS

The Loan Documents are listed with reference to the parties who originally executed them. Such parties include all successors or assigns, if any, to their rights and obligations under the documents, and the documents include all supplements or amendments, if any, made to date.

1.         Letter of Credit and Reimbursement and Security Agreement dated as of November 1, 1999 by and between Credit Suisse, the Limited Partner, Credit Re and the Borrower.

2.         Mortgage, Assignment of Rents and Security Agreement dated as of November 12, 1999 made by the Borrower for the benefit of Credit Re and Credit Suisse.

3.         Assignment of Rents and Leases dated as of November 12, 1999 made by Borrower for the benefit of Credit Re and Credit Suisse.

4.         Assignment of Service Contracts, Warranties and Guaranties dated as of November 12, 1999 made by the Borrower for the benefit of Credit Re and Credit Suisse.

5.         Collateral Assignment of Management Agreement dated as of November 12, 1999 made by the Borrower for the benefit of Credit Re and Credit Suisse.

6.         Assignment of Interest Rate Cap Agreement dated November 12, 1999 made by the Borrower for the benefit of Credit Re and Credit Suisse.

7.         Environmental Indemnity dated as of November 12, 1999 made by the Borrower in favor of Credit Re and Credit Suisse.

8.         Escrow and Security Agreement dated as of November 12, 1999 by and between Credit Suisse, Credit Re, Republic National Bank of New York as collateral agent, and the Borrower.

9.         Bond Pledge and Security Agreement dated as of November 12, 1999 by and among the Borrower, National Bank of Michigan/Illinois as trustee, Credit Suisse and Credit Re.

10.        UCC Financing and Termination Statements relating to the collateral covered by the Security Agreement.

EX-99

CHANGE INTERMS AGREEMENT

Principal $2,628,691.32	Loan Date 11-21-1996	Maturity 03-10-2006	Loan No 1050113246	Call/Coll	Account	Officer	Initials
References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations

Borrower: Secured Investment Resources Fund, L.P. II 4520 Main Ste 1000 Kansas City, MO 64111 Lender: BANK OF THE WEST Kansas City BBC #21383 740 NW Blue Park Way Lee’s Summit, MO 64086 (888) 457-2692

Principal Amount: $2,628,691.32 Date of Agreement: December 10, 2005

DESCRIPTION OF EXISTING INDEBTEDNESS.

Promissory Note dated November 21, 1996 in the original principal amount of $2,628,691.32.

DESCRIPTION OF COLLATERAL.

Future Advance Deed of Trust and Security Agreement (including Assignment of Leases and Rents) dated November 21. 1996.

DESCRIPTION OF CHANGE IN TERMS.

1. Extension of Maturity Date. The Maturity Date of the Promissory Note shall be extended to March 10, 2006.

PAYMENT. Borrower will pay this loan in 2 regular payments of $18,954.29 each and one irregular last payment estimated at $2,394,218.07. Borrower’s first payment is due January 10, 2006, and all subsequent payments are due on the same day of each month after that. Borrower’s final Payment will be due on March 10, 2006, and will be for all principal and all accrued interest not yet paid. Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal: then to any unpaid collection costs; and then to any late charges. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lander’s address shown above or at such other place as

Lender may designate in writing.

2. Conditions Precedent. As a condition precedent to the effectiveness of this Change In Terms Agreement. Borrower agrees to pay Lender a fee of $2.500.00 in cash

3. Conditions Precedent. As a condition precedent to the effectiveness of this Change in Terms Agreement, Borrower agrees to pay Lender accrued interest of 812,963.83 in cash.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in lull force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker orendorser. including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

CONTINUED ON NEXT PAGE

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding. or counterclaim brought by either Lender or Borrower against the other.

PRIOR TO SIGNING THlS AGREEMENT. BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THlS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

CHANGE IN TERMS SIGNERS:

SECURED INVESTMENT RESOURCES FUND, L.P. II

MILLENIUM MANAGEMENT, LLC, General Partner of Secured Investment Resources Fund, L.P. II

By:	/S/ JOHN ANDERSON	/S/ W. ROBERT KOHORST
	John Anderson, Designated Agent of Millenium Management, LLC	W. Robert Kohorst, Designated Agent of Millenium Management, LLC

	BANK OF THE WEST
By:
	Mike Yancy, Loan Officer of BANK OF THE WEST

RESOLUTION OF LIMITED LIABILITY COMPANY PARTNER

Principal $2,628,691.32	Loan Date 11-21-1996	Maturity 03-10-2006	Loan No 1050113246	Call/Coll	Account	Officer	Initials
References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations

Borrower:	Secured Investment Resources Fund, L.P. II 4520 Main Ste 1000 Kansas City, MO 64111	Lender:	BANK OF THE WEST Kansas City BBC #21383 740 NW Blue Park Way Lee’s Summit, MO 64086 (888) 457-2692
Company:	Millenium Management, LLC 199 S. Los Robles Ave., #200 Pasadena, CA 91101

WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

THE COMPANY’S EXISTENCE. The complete and correct name of the Company is Millenium Management, LLC (”Company”). The Company is a limited liability company which is,and at all times shell be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of California. The Company is duly authorized to transact business in the State of Missouri and all other states in which the Company is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which the Company is doing business. Specifically, the Company is, and at all times shall be, duly qualified as a foreign limited liability company in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. The Company has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. The Company maintains an office at 199 S Los Robles Ave Suite 200, Pasadena, CA 91101. Unless the Company has designated otherwise in writing. The principal office is the office at which the Company keeps its books and records including its records concerning the Collateral. The Company will notify Lender prior to any change in the location of The Company’s state of organization or any change in The Company’s name. The Company shall do all things necessary to preserve and to keep in full force and effect its existence. rights and privileges, and shall comply with all regulations, rules, ordinances. statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to the Company and The Company’s business activities.

RELATIONSHIP. The Company is a Partner in Secured Investments Resources Fund, L.P. II. Secured investment Resources Fund. L.P. II has, including those which may be described on any exhibit or schedule attached to this Resolution. The Company has considered the value to itself of Secured Investment Resources Fund. L.P. II.

AUTHORIZATION TO BE A PARTNER. The Company is authorized to be and become a Partner in the Partnership named Secured lnvestment Resources Fund. L.P. II, whose office is at 4620 Main Ste 1000, Kansas City, MO 64111

RESOLUTIONS ADOPTED. At a meeting of the members of the Company, duly called and held on and held on _______. At which a quorum was present and voting, or (SES) By other duly authorized action in lieu of a meeting, the resolutions set forth in this Resolution were adopted.

MEMBERS. The following named persons are members of Millenium Management, LLC:

NAMES	TITLES	AUTHORIZED	ACTUAL SIGNATURES
John Anderson	Agent	y	/S/ John Anderson
W Robert Kohorst	Agent	Y	/S/ W. Robert Kohorst

ACTIONS AUTHORIZED. Any two (2) of the authorized persons listed above may enter into any agreements of any nature with Lender, and those agreements will bind the Company. Specifically, but without limitation, any two (21 of such authorized persons areauthorized, empowered, and directed to do the following for and on behalf of the Company:

Execute Documents. To execute and deliver to Lender the form of and other loan documents submitted by Lender, confirming the nature and existence of Secured Investment Resources Fund, L.P. II, including the Company’s participation in secured Investment Resources Fund, L.P. II as a Partner.

Authorize Members. To authorize other members or employees of the Company, from time to time, to act in their stead or as their successors on behalf of the Company as the Partner in Secured Investment Resources Fund, L.P. II.

Further Acts. To do and perform such other acts and things and to execute and deliver such other documents and agreements, including agreements waiving the right to a trial by jury, as the members may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of this Resolution.

NOTICES TO LENDER. The Company will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any (A) change in the Company’s name; (B) change in the Company’s assumed business name(s); (C) change in the management orin the Members of the Company; (D) change in the authorized signor(s); (E) change in the Company’s principal office address; (F) change in the Company’s state of organization; (G) conversion of the Company to a new or different type of business entity; or (H) change in any other aspect of the Company that directly or indirectly relates to any agreements between the Company and Lender. No change inthe Company’s name or state of organization will take effect until after Lender has received notice.

PARTICIPATION AUTHORIZED. The Company’s participation in Secured Investment Resources Fund, L.P. II as a Partner and the execution, delivery, and performance of the documents described herein have been duly authorized by all necessary action by the Company and do not conflict with, result in a violation of, or constitute a default under (A) any provision of its articles of organization, or any agreement or other instrument binding upon the Company or (El any law. governmental regulation, court decree, or order applicable to the Company.

CERTIFICATION CONCERNING MEMBERS AND RESOLUTIONS. The members named above are duly elected, appointed. or employed by orfor the Company, as the case may be, and occupy the positions set opposite their respective names. This Resolution now stands of record on the books of the Company. is in full force and effect, and has not been modified or revoked in any manner whatsoever.

CONTINUING VALIDITY. Any and all acts authorized pursuant to this Resolution and performed prior to the passage of this Resolution are hereby ratified and approved approved. This Resolution shall be continuing, shall remain in full force and effect and Lender may rely onit until written notice of its revocation shall have been delivered to and received by Lender at Lender’s address shown above (or such addresses as Lender may designate from time to time. Any such notice shall not affect any of the Company’s agreements or commitments ineffect at the time notice is given.

RESOLUTION OF LIMITED LIABILITY COMPANY PARTNER

Loan No: 10501 13246 (Continued) Page 2

IN TESTIMONY WHEREOF. we have hereunto set ourhand.

We each have read all the provisions of this Resolution, and we each personally and on behalf of the Company certify that all statements and representations made in this Resolution are true and correct This Resolution of Limited Liability Company Partner is dated 12/9/05.

	CERTIFIED AND ATTESTED BY:
By:	/S/ JOHN ANDERSON
	Authorized Signor for Millenium Management, LLC
By:	/S/ W. ROBERT KOHORST
	Authorized Signer for Millenium Management, LLC

EX-99

AMENDMENT TO PROMISSORY NOTE

>

This Amendment To Promissory Note (the “Amendment”), is entered into as of the ___ day of September, 2001, by and SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Maker”), having its principal place of business c/o SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133, and FIRST UNION NATIONAL BANK, a national banking association (“Lender”), having its principal office at 201 South Tryon Street, Suite 130, PMB Box #4, Charlotte, North Carolina

28202.

WHEREAS, Maker executed and delivered to Lender that certain Promissory Note (the “Original Note”) payable to the order of Lender in the original principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) dated as of August 1,2001, which Original Note evidences a loan in such amount made by Lender to Maker;

WHEREAS, the Original Note is secured by that certain Deed of Trust and Security Agreement (the “Deed of Trust”) dated as of August 1, 2001, from Maker, as grantor, to the trustee named in the Deed of Trust for benefit of Lender, as beneficiary, encumbering that certain real property situated in the County of Clark, State of Nevada, as more particularly described in Exhibit A to the Deed of Trust;

WHEREAS, Maker and Lender desire to amend the amount of the monthly interest and principal payments under the Original Note.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker and Lender hereby agree as follows:

1. All capitalized terms not otherwise defined herein shall have the

respective meanings ascribed to them in the Original Note.

2.        The second sentence of Section 1.02 is hereby deleted and the following is inserted in lieu thereof:

“Such principal and interest shall be payable in equal consecutive monthly installments of $67,910.83 each, beginning on the first day of the second full calendar month following the date of this Note (or on the first day of the first full calendar month following the date hereof, in the event the advance of the principal amount evidenced by this Note is the first day of a calendar month)(the “First Payment Date”), and continuing on the first day of each and every month thereafter (each, a “Payment Date”) through and including August 1,

2006 (the “Maturity Date”), at which time the entire outstanding principal balance hereof, together with all accrued but unpaid interest thereon, shall be due and payable in full.”

3.        Except as otherwise provided in this Amendment above, all of the terms, covenants and conditions of the Original Note shall remain in full force and effect.

4.         All references to the term “Note” and “Loan Documents” in the Note and the other Loan Documents shall be deemed to refer to the Original Note, as modified by this Amendment.

5.This Amendment shall be governed by and construed in accordance with the laws of the State of Nevada.

6. The terms, agreements, covenants and conditions contained in this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

7. This Amendment may not be changed orally.

8.This Amendment may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, and all of which shall together constitute one and the same document, and shall be binding on the signatories; and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Maker and Lender have duly executed this Amendment as of the day and year first above written.

MAKER: SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited Partnership
By:	Sunwood Village, Inc., a Nevada corporation, its general partner
	By:	/S/ JAMES R. HOYT
		Name: James R. Hoyt
		Title President
LENDER: FIRST UNION NATIONAL BANK, a national banking association
By:
	Name:
	Title:

STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 4^th day of December, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation, the general partner of Sunwood Village Joint Venture,

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

STATE OF NORTH CAROLINA)

COUNTY OF MECKLENBURG)

The foregoing instrument was acknowledged before me on this - day of September, 2001, by ____________, as _____________ of First Union National Bank, a national banking association.

Notary Public

My Commission Expires:

EX-99

APN NO. 162-18-801-003,

20010802

01493

01125503-029-TDS

ASSIGNMENT OF LEASES ANDRENTS

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP

AS ASSIGNOR

AND

FIRST UNION NATIONAL BANK,

AS ASSIGNEE

County: Clark

State: Nevada

Record and Return to:

Winston & Strawn

200 Park Avenue

New York, New York 10166

Attention: Colette Bonnard

FUNB Loan No.: 502694601

Sunwood Apartments

MAIL TAX STATEMENTS TO:

SUNWOOD VILLAGE JOINT VENTURE

C/O SPECS, INC.

4200 BLUE RIDGE KLVD STE LH-06

KANSAS CITY, MO 64133

ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (this “Assignment”) made as of the 1^st day of August, 2001, is by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Assignor”), whose address is c/o SPECS, inc., Suite LH-06-, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133 in favor of FIRST UNION NAITONAL BANK, a national banking association (“Assignee”), whose address is 201 South Tryon Street, Suite 130, PMG Box #4, Charlotte, North Carolina 28202.

WINESSETH:

THAT, WHEREAS, Assignor has executed that certain Promissory Note dated of even date herewith (the “Note”), payable to the order of Assignee in the state principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00); and

WHEREAS, the Note is secured by that certain Deed of Trust and Security Agreement dated of even date herewith (the “Deed of Trust”), from Assignor, as grantor, to Assignee, as beneficiary, encumbering that certain real property situated in the city of Las Vegas, County of Clark, State of Nevada as is more particularly described on Exhibit A attached hereto and incorporated herein by this reference and all buildings and other improvements now or hereafter located thereon (collectively, the “Improvements”) (said real property and the Improvements are hereinafter sometimes collectively referred to as the “Property”); and

WHEREAS, Assignor is desirous of further securing to Assignee the performance of the terms, covenants and agreements hereof and of the Note, the Deed of Trust and each other document evidencing, securing, guaranteeing or otherwise relating to the indebtedness evidenced by the Note (the Note, the Deed of Trust and such other documents, as each of the foregoing may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the “Loan Documents”).

NOW, THEREFORE, in consideration of the making of the loan evidenced by the Note by Assignee to Assignor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby irrevocable, absolutely and unconditionally transfer, sell, assign, pledge and convey to Assignee, its successors an designs, all of the right, title and interest of Assignor in and to:

(a)      Any and all leases, licenses, rental agreements and occupancy agreements of whatever form now or hereafter affecting all or any part of the Property and any and all guarantees, extensions, renewals, replacements and modifications thereof (collectively, the “Leases”); and

(b)      all deposits (whether for security or otherwise), rents, issues, profits, revenues, royalties, accounts, rights, benefits and income of every nature of and from the Property, including, without limitation, minimum rents, additional rents, termination payments, forfeited security deposits, liquidated damages following default and all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability due to destruction or damage to the Property, together with the immediate and continuing right to collect and receive the same, whether now due or hereafter becoming due, and together with all rights and claims of any kind that Assignor may have against any tenant, lessee or licensee under the Leases or against any other occupant of the Property (collectively, the “Rents”).

TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns.

IT IS AGREED that, notwithstanding that this instrument is a present, absolute and executed assignment of the Rents and of the Leases and a present, absolute and executed grant of the powers herein granted to Assignee, Assignor is hereby permitted, at the sufferance of Assignee and at its discretion, and is hereby granted a license by Assignee, to retain possession of the Leases and to collect and retain the Rents unless and until there shall be an Event of Default under the terms of any of the Loan Documents. Upon the occurrence of such Event of Default the aforementioned license granted to Assignor shall automatically terminate without notice to Assignor, and Assignee may thereafter, without taking possession of the Property, take possession of the Leases and collect the Rents. Further, from and after such termination, Assignor shall be the agent of Assignee in collection of the Rents, and any Rents so collected by Assignor shall be held in trust by Assignor for the sole and exclusive benefit of Assignee and Assignor shall, within one (1) business day after receipt of any Rents, pay the same to Assignee to be applied by Assignee as hereinafter set forth. Furthermore, from and after such Event of Default and termination of the aforementioned license, Assignee shall have the right and authority, without any notice whatsoever to Assignor and without regard to the adequacy of the security therefor, to: (a) make application to a court of competent jurisdiction for appointment of a receiver for all or any part of the Property, as particularly set forth in the Deed of Trust, (b) manage and operate the Property, with full power to employ agents to manage the same; (c) demand, collect, receive and sue for the Rents, including those past due an unpaid; and (d) do all acts relating to such management of the Property, including, but not limited to, negotiation of new Leases, making adjustments of existing Leases, contracting and paying for repairs and replacements to the Improvements and to the fixtures, equipment and personal property located in the improvements or used in any way in the operation, use and occupancy of the Property as in the soles subjective judgment and discretion of Assignee may be necessary to maintain the same in a tenantable condition, purchasing and paying for such additional furniture and equipment as in the sole subjective

judgment of Assignee may be necessary to maintain a proper rental income from the Property, employing necessary managers and other employees, purchasing fuel, providing utilities and paying for all other expenses incurred in the operation of the Property, maintaining adequate insurance coverage over hazards customarily insured against and paying the premiums therefor. Assignee may apply the Rents received by Assignor from the Property, after deducting the costs of collection thereof, including, without limitation, attorneys’ fees and management fee for any management agent so employed, against amounts expended for repairs, upkeep, maintenance, service, fuel, utilities, taxes, assessments, insurance premiums and such other expenses as Assignee incurs in connection with the operation of the Property and against interest, principal, required escrow deposits and other sums which have or which may become due, from time to time, under the terms of the Loan Documents, in such order or priority as to any of the items so mentioned as Assignee, in its sole subjective discretion, may determine. The exercise by Assignee of the rights granted Assignee in this paragraph, and the collection of, the Rents and the application thereof as herein provided, shall not be considered a waiver by Assignee of any Event of Default under the Loan Documents or prevent foreclosure of any liens on the Property nor shall such exercise make Assignee liable under any of the Leases, Assignee hereby expressly reserving all of its rights and privileges under the Deed of Trust and other Loan Documents as fully as though this Assignment had not been entered into.

Without limiting the rights granted hereinabove, in the event Assignor shall fail to make any payment or to perform any act required under the terms hereof and such failure shall not be cured within any applicable grace or cure period, then Assignee may, but shall not be obligated to, without prior notice to or demand on Assignor, and without releasing Assignor from any obligation hereof, make or perform the same in such manner and to such extent as Assignee may deem necessary to protect the security hereof, including specifically, without limitation, appearing and defending any action or proceeding purporting to affect the security hereof or the rights or powers of Assignee, performing or discharging any obligation, covenant or agreement of Assignor under any of the Leases, and, in exercising any of such powers, paying all necessary costs and expenses, employing counsel and incurring and paying attorneys’ fees. Any sum advanced or paid by Assignee for any such purpose, including, without limitation, attorneys’ fees, together with interest thereon at the Default Interest Rate (as defined in the Note) from the date paid or advanced by Assignee until repaid by Assignor, shall immediately be due and payable to Assignee by Assignor on demand and shall be secured by the Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

IT IS FURTHER AGREED that this Assignment is made upon the following terms, covenants and conditions:

1.        This Assignment shall not operate to place responsibility for the control, care, management or repair of the Property upon Assignee, nor for the

performance of any of the terms and conditions of any of the Leases, nor shall it operate to make Assignee responsible or liable for any waste committed on the Property by the tenants or any other party or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property. Assignee shall not be liable for any loss sustained by Assignor resulting from Assignee’s failure to let the Property or from any other act or omission of Assignee in managing the Property. Assignor shall and does hereby indemnify and hold Assignee harmless from and against any and all liability, loss, claim, demand or damage which may or might be incurred by reason of this Assignment, including, without limitation, claims or demands for security deposits from tenants of space in the Improvements deposited with Assignor, and from and against any and all claims and demands whatsoever which may be asserted against Assignee by reasons of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any of the Leases. Should Assignee incur any liability by reason of this Assignment or in defense of any claim or demand for loss or damage as provided above, the amount thereof, including, without limitation, costs, expenses and attorneys’ fees, together with interest thereof at the Default Interest Rate form the date paid or incurred by Assignee until repaid by Assignor, shall be immediately due and payable to Assignee by Assignor upon demand and shall be secured by the Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidence by the Note.

2.        This Assignment shall not be construed as making Assignee a mortgagee in possession.

3.        Assignee is obligated to account to Assignor only for such Rents as are actually connected or received by Assignee.

4.        Assignor hereby further presently and absolutely assigns to Assignee subject to the terms and provisions of this Assignment; (a) any award or other payment which Assignor may hereafter become entitled to receive with respect to any of the Leases as a result of or pursuant to any bankruptcy, insolvency or reorganization or similar proceedings involving the tenants under such Leases; and (b) any and all payments made by or on behalf of any tenant of any part of the Property in lieu of Rent. Assignor hereby irrevocably appoints Assignee as its attorney-in-fact to, from and after the occurrence of an Event of Default by Assignor hereunder under any of the other Loan Documents which has not been cured within any applicable grace or cure period, appear in any such proceeding and to collect any such award or payment, which power of attorney is coupled with an interest by virtue of this Assignment and is irrevocable so long as any sums are outstanding under the loan evidence by the Note.

5.        Assignor represents, warrants and covenants to and for the benefit of Assignee; (a) that Assignor now is (or with respect to any Leases not yet in existence, will be immediately upon the execution thereof) the absolute owner of the landlord’s

interest in the Leases, with full right and title to Assignee the same and the Rents due or to become due thereunder; (b) that, other than this Assignment and those assignments, if any, specifically permitted in the Deed of Trust, there are no outstanding assignments of the Leases or Rents; (c) that no Rents have been anticipated, discounted, released, waived, compromised or otherwise discharged except for prepayment of rent of not more than one (1) month prior to the accrual thereof; (d) that there are no a material defaults now existing under any of the Leases by the landlord or tenant, and there exists no state of facts which, with the giving of notice or lapse for time or both, would constitute a default under any of the Leases by the landlord or tenant, except as disclosed in writing to Assignee; (e) that Assignor has and shall duly and punctually observe and perform all covenants, conditions and agreements in the Leases on the part of the landlord to be observed and performed thereunder and (f) the Leases are in full force and effect and are the valid and binding obligations of Assignor, and, to the knowledge of Assignor, are the valid and binding obligations of the tenants thereto.

6.       Assignor covenants and agrees that Assignor shall not, without the prior written consent of Assignee; (a) exclusive of security deposits, accept any payment of Rent or installments of Rent for more than one month in advance; (b) enter into any Lease having a term of less than six (6) months or in excess of one (1) year; (c) cancel or terminate any Lease (other than for non-payment of Rent or amend or modify any Lease; (d) take or omit to take any action right or option which would permit the tenant under any Lease to cancel or terminate said Lease; (e) anticipate, discount, release, waive, compromise or otherwise discharge any Rents payable or other obligations under the Leases; (f) further pledge, transfer, mortgage or otherwise encumber or assign the Leases or future payments of Rents except as otherwise expressly permitted by the terms of the Deed of Trust or incur any material indebtedness, liability or other obligation to any tenant, lessee or licensee under the Leases; or (g) permit any Lease to become subordinate to any lien other than the lien of the Deed of Trust; provided, however, that Assignor may take any of the actions described in subsection (c) or (e) above so long as such actions are taken by Assignor in the ordinary course of business and are consistent with sound customary leasing and management practices of similar properties.

7.       Assignor covenants and agrees that Assignor shall, at its sole cost and expense, appear in and defend any action or proceeding arising under, growing out of, or in any manner connected with the Leases or the obligations, duties or liabilities of the landlord or tenant thereunder, and shall pay on demand all costs and expenses, including, without limitation, attorneys’ fees, which Assignee nay incur in connection with Assignee’s appearance, voluntary or otherwise, in any such action or proceeding, together with interest thereon at the Default Interest Rate from the date incurred by Assignee until repaid by Assignor.

8.       At any time, Assignee may, at its option, notify any tenants or other parties of the existence of this Assignment. Assignor does hereby specifically

authorize, instruct and direct each and every present and future tenant, lessee and licensee of the whole or any part of the Property to pay all unpaid and future Rents to Assignee upon receipt of demand from Assignee to so pay all the same and Assignor hereby agrees that each such present and future tenant, lessee and licensee may rely upon such written demand form Assignee to so pay said Rents without any inquiry into whether there exists an Event of Default hereunder or under the other Loan Documents or whether Assignee is otherwise entitled to said Rents. Assignor hereby waives any right, claim or demand which Assignor may now or hereafter have against any present or future tenant, lessee or licensee by reason of such payment of Rents to Assignee, and any such payment shall discharge such tenant’s, lessee’s or licensee’s obligation to make such payment to Assignor.

9.        Assignee may take or release any security for the indebtedness evidenced by the Note, may release any party primarily or secondarily liable for the indebtedness evidenced by the Note, may grant extensions, renewals or indulgences with respect to the indebtedness evidenced by the Note and may apply any other security thereof held by it to the satisfaction of any indebtedness evidenced by the Note without prejudice to any of its right hereunder.

10.      The acceptance of this Assignment and the collection of the Rents in the event Assignor’s license is terminated, as referred to above, shall be without prejudice to Assignee. The rights of Assignee hereunder are cumulative and concurrent, may be pursued separately, successively or together and may be exercised as often as occasion therefor shall arise, it being agreed by Assignor that the exercise of any one of more of the rights provided for herein shall not be construed as a waiver of any of the other rights or remedies of Assignee, at law or in equity or otherwise, so long as any obligation under the loan Documents remains unsatisfied.

11.      All rights of Assignee hereunder shall inure to the benefit of its successors and assigns; and all obligations of Assignor shall bind its successors and assigns and any subsequent owner of the Property. All rights of Assignee in, to and under this Assignment shall pass to and may be exercised by any assignee of such rights of Assignee. Assignor hereby agrees that if Assignee gives notice to Assignor of an assignment of said rights, upon such notice the liability of Assignor to the assignee of the Assignee shall be immediate and absolute. Assignor will not set up any claim against Assignee or any intervening assignee for any amounts due hereunder or for possession of or the exercise of rights with respect to the Leases or the Rents.

12.      It shall be an Event of Default hereunder (a) if any representation or warranty made herein by Assignor is determined by Assignee to have been false or misleading in any material respect at the time made, or (b) upon any failure by Assignor to comply with the provisions of Paragraph 6 above or (c) upon any failure by Assignor in the performance or observance of any other covenant or condition hereof and, to the extent such failure described in this subsection (c) is susceptible of

being cured, the continuance of such failure for thirty (30) days after written notice thereof form Assignee to Assignor; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with reasonable diligence within said period of time, and if Assignor commences to cure such default promptly after receipt of notice thereof from Assignee, and thereafter prosecutes the curing of such default with reasonable diligence, such period of time shall be extended for such period of time as may be necessary to cure such default with reasonable diligence, but not to exceed an additional sixty (60) days. Any such default not so cured shall be a default or an Event of Default, as applicable, under each of the other Loan Documents, entitling Assignee to exercise any or all rights and remedies available to Assignee under the terms hereof or of any or all of the other Loan Documents, and any Event of Default or default under any other Loan Document which is not cured within any applicable grace or cure period shall be deemed and Event of Default hereunder subject to no grace or cure period, entitling Assignee to exercise any or all rights prided for herein.

13.      Failure by Assignee to exercise any right which it may have hereunder shall not be deemed a waiver thereof unless so agreed in writing by Assignee, and the waiver by Assignee of any default hereunder shall not constitute a continuing waiver or a waiver of any other default or of the same default on any future occasion. No collection by Assignee of any Rents pursuant to this Agreement shall constitute or result in a waiver of any default then existing hereunder or under any of the other loan Documents.

14.       If any provision under this Assignment or the application thereof to any entity, person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Assignment and the application of the provisions hereof to other entities, persons or circumstances shall not be affected thereby and shall be enforced to the fullest extent permitted by law.

15. This Assignment may not be amended, modified or otherwise changed except by a written instrument duly executed by Assignor and Assignee.

16.      This Assignment shall be in full force and effect continuously form the date hereof to and until the Deed of Trust shall be released or record, and the release of the Deed of trust shall, for all purposes, automatically terminate this Assignment and render this Assignment null and void an of no effect whatsoever.

17.      In case of a conflict between any Provision of this Assignment and any provision of the other Loan Documents, the provision selected by Assignee in its sole subjective discretion shall prevail and be controlling.

18.      All notices, demands, request or other communications to be sent by one party to the other hereunder or required by law shall be given and become effective as provided in the Deed of Trust.

19.      This Assignment shall be governed by and construed in accordance with the laws of the State in which the Property is located, except to the extent that any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law shall so govern and be controlling; and provided further that the laws of the state in which the real property on Exhibit “A” attached hereto is located shall govern as to the creation, priority and enforcement of liens and security interests property located in such state.

20.      This Assignment may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Assignment may be detached form any counterpart of this Assignment without impairing the legal effect of any signature thereon and may be attached to another counterpart of this Assignment identical in form hereto but having attached to it one or more additional signature pages.

21.      In addition to, but not in lieu of, any other rights hereunder, Assignee shall have the right to institute suit and obtain a protective or mandatory injunction against Assignor to prevent a breach or default, or to reinforce the observance, of the agreements, covenants, terms and conditions contained herein, as well as the right to damages occasioned by any breach or default by Assignor.

22.      This Assignment shall continue and remain in full force and effect during any period of foreclosure with respect to the Property.

23.      Assignor hereby covenants and agrees that Assignee shall be entitled to all of the rights, remedies and benefits available by statute, at law, in equity or as a matter of practice for the enforcement and perfection of the intents and purposes hereof. Assignee shall, as a matter of absolute right, be entitled, upon application to a court of applicable jurisdiction, and without notice to Assignor, to the appointment of a receiver to obtain and secure the rights of Assignee hereunder and the benefits intended to be provided to Assignee hereunder.

24.      Notwithstanding anything to the contrary contained in this Assignment, the liability of Assignor and its officers, directors, general partners, managers, members and principals for the indebtedness secured hereby and for the performance of the other agreements, covenants and obligations contained herein and in the other Loan Documents shall be limited a set forth in Section 2.04 of the Note.

                        IN WITNESS WHWEROF, Assignor has executed this Assignment as of the day and year first above written.

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited Partnership
By:	Sunwood Village, Inc., a Nevada corporation, its general partner
	By:	/S/ JAMES R. HOYT
		Name: James R. Hoyt
		Title President

STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 20, day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation, the general partner of Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership.

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

Exhibit A

The North Half (N ½) of the South Half (S ½) of the Southwest Quarter (SW ¼) of the Southeast Quarter (SE ¼) of Section 18, Township 21 South, Range 61 East, M.D.M., more particularly described as follows:

Commencing at the Southwest corner of the Southeast Quarter (SE ¼ ) of said Section 18; Thence North 01°01’02” East, along the West line thereof, a distance of 655.14 feet; Thence North 89°35’15” East, a distance of 40.01 feet to a point on the Easterly right-of-way line of Arville Street (80.00 feet wide), said point being the True Point of Beginning; Thence continuing North 89° 35’15” East, a distance of 1299.07 feet to a point on the Westerly right-of-way line of Wynn Road (60.00 feet wide); Thence South 00°14’52” West, along said Westerly right-of-way line of Wynn Road, a distance of 328.89 feet; Thence South 89°38’49” West, a distance of 1,303.46 feet to a point on the aforementioned Easterly right-of-way line of Arville Street; Thence North 01°01’02” East, along said Easterly right-of-way line of Arville Street a distance of 327.61 feet to the True Point of Beginning.

EX-99

APN NO. 162-18-801-003

DEED OF TRUST AND SECURITY AGREEMENT

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP,

GRANTOR,

TO

UNITED TITLE OF NEVADA,

AS TRUSTEE,

FOR THE BENEFIT OF

FIRST UNION NATIONAL BANK,

BENEFICIARY

DATED: AS OF AUGUST 1, 2001

County: Clark

State: Nevada

MAIL TAX STATEMENTS TO:
SUNWOOD VILLAGE JOINT VENTURE C/O SPECS, INC.
4200 BLUE RIDGE BLVD
SUITE LH-06
KANSAS CITY, MO 64133 Record and Return to:
Winston & Strawn
200 Park Avenue
New York, New York 10166
Attention: Colette Bonnard FUNB Loan No.: 502694601
Sunwood Apartments

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DEED OF TRUST AND SECURITY AGREEMENT

THIS DEED OF TRUST AND SECURITY AGREEMENT (this “Deed ofTrust”) is entered into by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership, as Grantor (“Grantor”), whose address is SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133 to UNITED TITLE OF NEVADA, as Trustee (“Trustee”), whose address is 3980 Howard Hughes Parkway #100, Las Vegas, Nevada 89109, for the benefit of FIRST UNION NATIONAL BANK, a national banking association, as Beneficiary (“Beneficiary”), whose address is at the office of Beneficiary at 201 South Tryon Street, Suite 130, PMB Box #4, Charlotte, North Carolina 28202.

WITNESSETH:

Grantor has GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does GRANT, BARGAIN, SELL and CONVEY, unto Trustee, in trust, with power of sale, all of the following described property, whether now owned or hereafter acquired (collectively, the “Property”):

(A)      All that certain real property situated at 4020 S. Arville in the County of Clark, State of Nevada, more particularly described on Exhibit A attached hereto and incorporated herein by this reference (the “Land), together with all of the easements, rights, privileges, franchises, tenements, hereditaments and appurtenances now or hereafter thereunto belonging or in any way appertaining thereto, and all of the estate, right, title, interest, claim and demand whatsoever of Grantor therein or thereto, either at law or in equity, in possession or in expectancy, now or hereafter acquired;

(B)      All structures, buildings and improvements of every kind and description now or at any time hereafter located or placed on the Land (the “Improvements”):

(C)      All furniture, furnishings, fixtures, goods, equipment, inventory or personal property owned by Grantor and now or hereafter located on, attached to or used in and about the Improvements, including, but not limited to, all machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets, draperies, lawn mowers, and all appliances, plumbing, heating, air conditioning, lighting, ventilating, refrigerating, disposal and incinerating equipment, and all fixtures and appurtenances thereto, and such other goods and chattels and personal property owned by Grantor as are now or hereafter used or furnished in operating the Improvements, or the activities conducted therein, and all building materials and equipment hereafter situated on or about the Land or Improvements, and all warranties and guaranties relating thereto, and all additions thereto and substitutions and replacements therefor (exclusive of any of the foregoing owned or leased by tenants of space in the Improvements);

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(D)      All easements, rights-of-way, strips and gores of land, vaults, streets, ways, alleys, passages, sewer rights, air rights and other development rights now or hereafter located on the Land or under or above the same or any part or parcel thereof, and all estates, rights, titles, interests, tenements, hereditaments and appurtenances, reversions and remainders whatsoever, in any way belonging, relating or appertaining to the Land and/or Improvements or any part thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Grantor;

(E)      All water, ditches, wells, reservoirs and drains and all water, ditch, well, reservoir and drainage rights which are appurtenant to, located on, under or above or used in connection with the Land or the Improvements, or any part thereof, whether now existing or hereafter created or acquired;

(F)       All minerals, crops, timber, trees, shrubs, flowers and landscaping features now or hereafter located on, under or above the Land;

(G)      All cash funds, deposit accounts and other rights and evidence of rights to cash, now or hereafter created or held by Beneficiary pursuant to this Deed of Trust or any other of the Loan Documents (as hereinafter defined), including, without limitation, all funds now or hereafter on deposit in the Impound Account, _the Repair and Remediation Reserve, the Replacement Reserve and the Payment Reserve (each as hereafter defined);

(H)      All leases (including, without limitation, oil, gas and mineral leases), licenses, concessions and occupancy agreements of all or any part the Land or the Improvements (each, a “Lease” and collectively, “Leases”), whether written or oral, now or hereafter entered into and all rents, royalties, issues, profits, bonus money, revenue, income, rights and other benefits (collectively, the “Rents and Profits”) of the Land or the Improvements, now or hereafter arising from the use or enjoyment of all or any portion thereof or from any present or future Lease or other agreement pertaining thereto or arising from any of the Contracts (as hereinafter defined) or any of the General Intangibles (as hereinafter defined) and all cash or securities deposited to secure performance by the tenants, lessees or licensees (each, a “Tenant” and collectively, “Tenants”), as applicable, of their obligations under any such Leases, whether said cash or securities are to be held until the expiration of the terms of said Leases or applied to one or more of the installments of rent coming due prior to the expiration of said terms, subject, however, to the provisions contained in Section 1.11 hereinbelow;

(I)       All contracts and agreements now or hereafter entered into covering any part of the Land or the Improvements (collectively, the “Contracts”) and all revenue, income and other benefits thereof, including, without limitation, management agreements, service contracts, maintenance contracts, equipment leases, personal property leases and any contracts or documents relating to construction on

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any part of the Land or the Improvements (including plans, drawings, surveys, tests, reports, bonds and governmental approvals) or to the management or operation of any part of the Land or the Improvements;

(J)       All present and future monetary deposits given to any public or private utility with respect to utility services furnished to any part of the Land or the Improvements;

(K)      All present and future funds, accounts, instruments, accounts receivable, documents, causes of action, claims, general intangibles (including, without limitation, trademarks, trade names, service marks and symbols now or hereafter used in connection with any part of the Land or the Improvements, all names by which the Land or the Improvements may be operated or known, all rights to carry on business under such names, and all rights, interest and privileges which Grantor has or may have as developer or declarant under any covenants, restrictions or declarations now or hereafter relating to the Land or the Improvements) and all notes or chattel paper now or hereafter arising from or by virtue of any transactions related to the Land or the Improvements (collectively, the “General Intangibles”);

(L)       All water taps, sewer taps, certificates of occupancy, permits, licenses, franchises, certificates, consents, approvals and other rights and privileges now or hereafter obtained in connection with the Land or the Improvements and all present and future warranties and guaranties relating to the Improvements or to any equipment, fixtures, furniture, furnishings, personal property or components of any of the foregoing now or hereafter located or installed on the Land or the Improvements;

(M)     All building materials, supplies and equipment now or hereafter placed on the Land or in the Improvements and all architectural renderings, models, drawings, plans, specifications, studies and data now or hereafter relating to the Land or the Improvements;

(N)      All right, title and interest of Grantor in any insurance policies or binders now or hereafter relating to the Property, including any unearned premiums thereon;

(O)      All proceeds, products, substitutions and accessions (including claims and demands therefor) of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation awards; and

(P)       All other or greater rights and interests of every nature in the Land or the Improvements and in the possession or use thereof and income therefrom, whether now owned or hereafter acquired by Grantor.

FOR THE PURPOSE OF SECURING:

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(1)       The debt evidenced by that certain promissory note (such promissory note, together with any and all renewals, modifications, consolidations and extensions thereof, is hereinafter referred to as the “Note”) of even date with this Deed of Trust, made by Grantor to the order of Beneficiary in the principal face amount of TEN MILLION EIGHTY THOUSAND AND 001100 DOLLARS ($10,080,000.00), together with interest as therein provided;

(2)The full and prompt payment and performance of all of the provisions, agreements, covenants and obligations herein contained and contained in any other agreements, documents or instruments now or hereafter evidencing, securing, guarantying or otherwise relating to the indebtedness evidenced by the Note, including, but not limited to, the Hazardous Indemnity Agreement (as hereinafter defined) (the Note, this Deed of Trust, and such other agreements, documents and instruments, together with any and all renewals, amendments, extensions and modifications thereof, are hereinafter collectively referred to as the “Loan Documents”) and the payment of all other sums therein covenanted to be paid;

(3)       Any and all additional advances made by Beneficiary to protect or preserve the Property or the lien or security interest created hereby on the Property, or for taxes, assessments or insurance premiums as hereinafter provided or for performance of any of Grantor’s obligations hereunder or under the other Loan Documents or for any other purpose provided herein or in the other Loan Documents (whether or not the original Grantor remains the owner of the Property at the time of such advances); and

(4)       Any and all other indebtedness now owing or which may hereafter be owing by Grantor to Beneficiary, including, without limitation, all prepayment fees, however and whenever incurred or evidenced, whether express or implied, direct or indirect, absolute or contingent, or due or to become due, and all renewals, modifications, consolidations, replacements and extensions thereof, it being contemplated by Grantor and Beneficiary that Grantor may hereafter become so indebted to Beneficiary.

(All of the sums referred to in Paragraphs (1) through (4) above are herein sometimes referred to as the “secured indebtedness” or the “indebtedness secured hereby”).

TO HAVE AND TO HOLD the Property unto Trustee, its successors and assigns forever, and Grantor does hereby bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND the title to the Property unto Trustee against every person whomsoever lawfully claiming or to claim the same or any part thereof;

PROVIDED, HOWEVER, that if the principal and interest and all other sums due or to become due under the Note or under the other Loan Documents, including, without limitation, any prepayment fees required pursuant to the terms of the Note,

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shall have been paid at the time and in the manner stipulated therein and all other sums payable hereunder and all other indebtedness secured hereby shall have been paid and all other covenants contained in the Loan Documents shall have been performed, then, in such case, the liens, security interests, estates and rights granted by this Deed of Trust shall be satisfied and the estate, right, title and interest of Beneficiary in the Property shall cease, and upon payment to Beneficiary of all costs and expenses incurred for the preparation of the release hereinafter referenced and all recording costs if allowed by law, Beneficiary shall satisfy and release this Deed of Trust and the lien hereof by proper instrument.

ARTICLE I

COVENANTS OF GRANTOR

For the purpose of further securing the indebtedness secured hereby and for the protection of the security of this Deed of Trust, for so long as the indebtedness secured hereby or any part thereof remains unpaid, Grantor covenants and agrees as follows:

1.1       Warranties of Grantor. Grantor, for itself and its successors and assigns, does hereby represent, warrant and covenant to and with Beneficiary, its successors and assigns, that:

(a)       Grantor has good and indefeasible fee simple title to the Property, subject only to those matters expressly set forth as exceptions to or subordinate matters in the title insurance policy insuring the lien of this Deed of Trust which Beneficiary has agreed to accept, excepting therefrom all preprinted and/or standard exceptions (the “Permitted Exceptions”), and has full power and lawful authority to grant, bargain, sell, convey, assign, transfer and encumber its interest in the property in the manner and form hereby done or intended. Grantor will preserve its interest in and title to the Property and will forever warrant and defend the same to Beneficiary against any and all claims whatsoever and will forever warrant and defend the validity and priority of the lien and security interest created herein against the claims of all persons and parties whomsoever, subject to the Permitted Exceptions. The foregoing warranty of title shall survive the foreclosure of this Deed of Trust and shall inure to the benefit of and be enforceable by Beneficiary in the event Beneficiary acquires title to the Property pursuant to any foreclosure;

(b)       No bankruptcy or insolvency proceedings are pending or contemplated by Grantor or, to the best knowledge of Grantor, against Grantor or by or against any endorser or cosigner of the Note, or any guarantor or indemnitor under any guaranty or indemnity agreement executed in connection with the Note of the loan evidenced thereby and secured hereby;

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(c) All reports, certificates, affidavits, statements and other data furnished by or on behalf of Grantor to Beneficiary in connection with the loan evidenced by the Note are true and correct in all material respects and do not omit to state any fact or circumstance necessary to make the statements contained therein not misleading;

(d)       The execution, delivery and performance of this Deed of Trust, the Note and all of the other Loan Documents have been duly authorized by all necessary action to be, and are, binding and enforceable against Grantor in accordance with the respective terms thereof and do not contravene, result in a breach of or constitute (upon the giving of notice or the passage of time or both) a default under the partnership agreement, articles of incorporation or other organizational documents of Grantor or any contract or agreement of any nature to which Grantor is a party or by which Grantor or any of its property may be bound and do not violate or contravene any law, order, decree, rule or regulation to which Grantor is subject;

(e)        To the best of Grantor’s knowledge, information and belief, the Land and the Improvements and the intended use thereof by Grantor comply in all material respects with all applicable restrictive covenants, zoning ordinances, subdivision and building codes, flood disaster laws, applicable health and environmental laws and regulations and all other ordinances, orders or requirements issued by any state, federal or municipal authorities having or claiming jurisdiction over the Property. The Land and Improvements constitute one or more separate tax parcels for purposes of ad valorem taxation. The Land and Improvements do not require any rights over, or restrictions against, other property in order to comply with any of the aforesaid governmental ordinances, orders or requirements;

(f)        All utility services necessary and sufficient for the full use, occupancy, operation and disposition of the Land and the Improvements for their intended purposes are available to the Property, including water, storm sewer, sanitary sewer, gas, electric, cable and telephone facilities, through public rights-of-way or perpetual private easements approved by Beneficiary;

(g)       To the best of Grantor’s knowledge, information and belief, all streets, roads, highways, bridges and waterways necessary for access to and full use, occupancy, operation and disposition of the Land and the Improvements have been completed, have been dedicated to and accepted by the appropriate municipal authority and are open and available to the Land and the Improvements without further condition or cost to Grantor;

(h)       All curb cuts, driveways and traffic signals shown on the survey delivered to Beneficiary prior to the execution and delivery of this Deed of Trust are existing and have been fully approved by the appropriate governmental authority;

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(i)         There are no judicial, administrative, mediation or arbitration actions, suits or proceedings pending or threatened against or affecting Grantor, (and, if Grantor is a partnership, any of its general partners) or the Property which, if adversely determined, would materially impair either the Property or Grantor’s ability to perform the covenants or obligations required to be performed under the Loan Documents;

(j)        The Property is free from delinquent water charges, sewer rents, taxes and assessments;

(k)        Except as otherwise disclosed in that certain environmental report prepared by Dominion Environmental Group and dated May 7, 2001, as of the date of this Deed of Trust, the Property is free from unrepaired damage caused by fire, flood, accident or other casualty;

(l) As of the date of this Deed of Trust, no part of the Land or the

Improvements has been taken in condemnation, eminent domain or like proceeding or is any such proceeding pending or to Grantor’s knowledge and belief, threatened or contemplated;

(m)      Grantor possesses all franchises, patents, copyrights, trademarks, trade names, licenses and permits adequate for the conduct of its business substantially as now conducted;

(n)       The Improvements are structurally sound, in good repair and free of defects in materials and workmanship and have been constructed and installed in substantial compliance with the plans and specifications relating thereto. All major building systems located within the Improvements, including, without limitation, the heating and air conditioning systems and the electrical and plumbing systems, are in good working order and condition;

(o)       Grantor has delivered to Beneficiary true, correct and complete copies of all Contracts and all amendments thereto or modifications thereof;

(p)Each Contract constitutes the legal, valid and binding obligation of Grantor and, to the best of Grantor’s knowledge and belief, is enforceable against any other party thereto. No default exists, or with the passing of time or the giving of notice or both would exist, under any Contract which would, in the aggregate, have a material adverse effect on Grantor or the Property;

(q)       No Contract provides any party with the right to obtain a lien or encumbrance upon the Property superior to the lien of this Deed of Trust;

(r)        Grantor and the Property are free from any past due obligations for sales and payroll taxes;

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(s)        There are no security agreements or financing statements affecting any of the Property other than (i) as disclosed in writing by Grantor to Beneficiary prior to the date hereof and (ii) the security agreements and financing statements created in favor of Beneficiary;

(t)         The Property forms no part of any property owned, used or claimed by Grantor as a residence or business homestead and is not exempt from forced sale under the laws of the State of Nevada. Grantor hereby disclaims and renounces each and every claim to all or any portion of the Property as a homestead; and

(u)       The Permitted Exceptions do not and will not materially and adversely affect (1) the ability of Grantor to pay in full the principal and interest on the Note in a timely manner or (2) the use of the Property for the use currently being made thereof, the operation of the Property as currently being operated or the value of the Property.

1.2      Defense of Title. If, while this Deed of Trust is in force, the title to the Property or the interest of Beneficiary therein shall be the subject, directly or indirectly, of any action at law or in equity, or be attached directly or indirectly, or endangered, clouded or adversely affected in any manner, Grantor, at Grantor’s expense, shall take all necessary and proper steps for the defense of said title or interest, including the employment of counsel approved by Beneficiary, the prosecution or defense of litigation, and the compromise or discharge of claims made against said title or interest. Notwithstanding the foregoing, in the event that Beneficiary determines that Grantor is not adequately performing its obligations under this Section, Beneficiary may, without limiting or waiving any other rights or remedies of Beneficiary hereunder, take such steps with respect thereto as Beneficiary shall deem necessary or proper and any and all costs and expenses incurred by Beneficiary in connection therewith, together with interest thereon at the Default Interest Rate (as defined in the Note) from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

1.3      Performance of Obligations. Grantor shall pay when due the principal of and the interest on the indebtedness evidenced by the Note. Grantor shall also pay all charges, fees and other sums required to be paid by Grantor as provided in the Loan Documents, and shall observe, perform and discharge all obligations, covenants and agreements to be observed, performed or discharged by Grantor set forth in the Loan Documents in accordance with their terms. Further, Grantor shall promptly and strictly perform and comply with all covenants, conditions, obligations and prohibitions required of Grantor in connection with any other document or instrument affecting title to the Property, or any part thereof, regardless of whether such

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document or instrument is superior or subordinate to this Deed of Trust.

1.4Insurance. Grantor shall, at Grantor’s expense, maintain in force and effect on the Property at all times while this Deed of Trust continues in effect the following insurance:

(a)       Insurance against loss or damage to the Property by fire, windstorm, tornado and hail and against loss and damage by such other, further and additional risks as may be now or hereafter embraced by an “all-risk” or “special form” type of insurance policy. The amount of such insurance shall be not less than one hundred percent (100%) of the full replacement cost (insurable value) of the Improvements (as established by an MAI appraisal), without reduction for depreciation. The determination of the replacement cost amount shall be adjusted annually to comply with the requirements of the insurer issuing such coverage or, at Beneficiary’s election, by reference to such indices, appraisals or information as Beneficiary determines in its reasonable discretion in order to reflect increased value due to inflation. Absent such annual adjustment, each policy shall contain inflation guard coverage insuring that the policy limit will be increased over time to reflect the effect of inflation. Full replacement cost, as used herein, means, with respect to the Improvements, the cost of replacing the Improvements without regard to deduction for depreciation, exclusive of the cost of excavations, foundations and footings below the lowest basement floor. Grantor shall also maintain insurance against loss or damage to furniture, furnishing, fixtures, equipment and other items (whether personalty or fixtures) included in the Property and owned by Grantor from time to time to the extent applicable. Each policy shall contain a replacement cost endorsement and either an agreed amount endorsement (to avoid the operation of any co-insurance provisions) or a waiver of any co-insurance provisions, all subject to Beneficiary’s approval. The maximum deductible shall be $10,000.00.

(b)       Commercial General Liability Insurance against claims for personal injury, bodily injury, death and property damage occurring on, in or about the Real Estate or the Improvements in amounts not less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella coverage in an amount not less than $2,000,000. Beneficiary hereby retains the right to periodically review the amount of said liability insurance being maintained by Grantor and to require an increase in the amount of said liability insurance should Beneficiary deem an increase to be reasonably prudent under then existing circumstances.

(c)        Boiler and machinery insurance is required if steam boilers or other pressure-fired vessels are in operation at the Property. Minimum liability coverage per accident must equal the greater of the replacement cost (insurable value) of the Improvements housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more large (i.e., greater than twenty (20) tons) HVAC units is in operation at the Property, “Systems Breakdowns” coverage shall be required, as

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determined by Beneficiary. Minimum liability coverage per accident must equal the value of such unit(s).

(d)        If the Improvements or any part thereof is situated in an area designated by the Federal Emergency Management Agency (“FEMA”) as a special flood hazard area (Zone A or Zone V), flood insurance in an amount equal to the lesser of: (a) the minimum amount required, under the terms of coverage, to compensate for any damage or loss on a replacement basis (or the unpaid balance of the indebtedness secured hereby if replacement cost coverage is not available for the type of building insured); or (b) the maximum insurance available under the appropriate National Flood Insurance Administration program. The maximum deductible shall be $3,000.00 per building or a higher minimum amount as required by FEMA or other applicable law.

(e)       During the period of any construction, renovation or alteration of the existing Improvements which exceeds the lesser of 10% of the principal amount of the Note or $500,000, at Beneficiary’s request, a completed value, “All Risk” Builder’s Risk form or “Course of Construction” insurance policy in nonreporting form, in an amount approved by Beneficiary, may be required. During the period of any construction of any addition to the existing Improvements, a completed value, “All Risk” Builder’s Risk form or “Course of Construction” insurance policy in non-reporting form, in an amount approved by Beneficiary, shall be required.

(f)        When required by applicable law, ordinance or other regulation, Worker’s Compensation and Employer’s Liability Insurance covering all persons subject to the worker’s compensation laws of the state in which the Property is located.

(g)       Business income (loss of rents) insurance in amounts sufficient to compensate Grantor for all Rents and Profits or income during a period of not less than eighteen (18) months. The amount of coverage shall be adjusted annually to reflect the Rents and Profits or income payable during the succeeding eighteen (18) month period.

(h)        Such other insurance on the Property or on any replacements or substitutions thereof or additions thereto as may from time to time be required by Beneficiary against other insurable hazards or casualties which at the time are commonly insured against in the case of property similarly situated including, without limitation, Sinkhole, Mine Subsidence, Earthquake and Environmental insurance, due regard being given to the height and type of buildings, their construction, location, use and occupancy.

All such insurance shall (i) be with insurers fully licensed and authorized to do business in the state within which the Premises is located and who

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have and maintain a rating of at least from AA from Standard & Poor’s, (ii) contain the complete address of the Premises (or a complete legal description), (iii) be for terms of at least one year, with premium prepaid, and (vi) be subject to the approval of Beneficiary as to insurance companies, amounts, content, forms of policies, method by which premiums are paid and expiration dates, and (v) include a standard, non-contributory, mortgagee clause naming EXACTLY:

First Union National Bank,

its successors and assigns ATIMA

c/o First Union Mortgage Corporation

P.O. Box 20068

Charlotte, North Carolina 28202

(a)       as an additional insured under all liability insurance policies, (b) as the first mortgagee on all property insurance policies and (c) as the loss payee on all loss of rents or loss of business income insurance policies.

Grantor shall, as of the date hereof, deliver to Beneficiary evidence that said insurance policies have been prepaid as required above and certified copies of such insurance policies and original certificates of insurance signed by an authorized agent of the applicable insurance companies evidencing such insurance satisfactory to Beneficiary. Grantor shall renew all such insurance and deliver to Beneficiary certificates and policies evidencing such renewals at least thirty (30) days before any such insurance shall expire. Grantor further agrees that each such insurance policy: (i) shall provide for at least thirty (30) days’ prior written notice to Beneficiary prior to any policy reduction or cancellation for any reason other than non-payment of premium and at least ten (10) days’ prior written notice to Beneficiary prior to any cancellation due to non-payment of premium; (ii) shall contain an endorsement or agreement by the insurer that any loss shall be payable to Beneficiary in accordance with the terms of such policy notwithstanding any act or negligence of Grantor which might otherwise result in forfeiture of such insurance; (iii) shall waive all rights of subrogation against Beneficiary; (iv) in the event that the Real Estate or the Improvements constitutes a legal non-conforming use under applicable building, zoning or land use laws or ordinances, shall include an ordinance or law coverage endorsement which will contain Coverage A: “Loss Due to Operation of Law” (with a minimum liability limit equal to Replacement Cost With Agreed Value Endorsement), Coverage B: “Demolition Cost” and Coverage C: “Increased Cost of Construction” coverages; and (v) may be in the form of a blanket policy provided that, in the event that any such coverage is provided in the form of a blanket policy, Grantor hereby acknowledges and agrees that failure to pay any portion of the premium therefor which is not allocable to the Property or by any other action not relating to the Property which would otherwise permit the issuer thereof to cancel the coverage thereof, would require the Property to be insured by a separate, single-property policy. The blanket policy must properly identify and fully protect the Property as if a separate policy were issued for 100% of Replacement Cost at the time

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of loss and otherwise meet all of Beneficiary’s applicable insurance requirements set forth in this Section 1.4. The delivery to Beneficiary of the insurance policies or the certificates of insurance as provided above shall constitute an assignment of all proceeds payable under such insurance policies relating to the Property by Grantor to Beneficiary as further security for the indebtedness secured hereby. In the event of foreclosure of this Deed of Trust, or other transfer of title to the Property in extinguishment in whole or in part of the indebtedness secured hereby, all right, title and interest of Grantor in and to all proceeds payable under such policies then in force concerning the Property shall thereupon vest in the purchaser at such foreclosure, or in Beneficiary or other transferee in the event of such other transfer of title. Approval of any insurance by Beneficiary shall not be a representation of the solvency of any insurer or the sufficiency of any amount of insurance. In the event Grantor fails to provide, maintain, keep in force or deliver and furnish to Beneficiary the policies of insurance required by this Deed of Trust or evidence of their renewal as required herein, Beneficiary may, but shall not be obligated to, procure such insurance and Grantor shall pay all amounts advanced by Beneficiary therefor, together with interest thereon at the Default Interest Rate from and after the date advanced by Beneficiary until actually repaid by Grantor, promptly upon demand by Beneficiary. Any amounts so advanced by Beneficiary, together with interest thereon, shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness secured hereby. Beneficiary shall not be responsible for nor incur any liability for the insolvency of the insurer or other failure of the insurer to perform, even though Beneficiary has caused the insurance to be placed with the insurer after failure of Grantor to furnish such insurance. Grantor shall not obtain insurance for the Property in addition to that required by Beneficiary without the prior written consent of Beneficiary, which consent will not be unreasonably withheld provided that (i) Beneficiary is a named insured on such insurance, (ii) Beneficiary receives complete copies of all policies evidencing such insurance, and (iii) such insurance complies with all of the applicable requirements set forth herein.

1.5      Payment of Taxes. Grantor shall pay or cause to be paid, except to the extent provision is actually made therefor pursuant to Section 1.6 of this Deed of Trust, all taxes and assessments which are or may become a lien on the Property or which are assessed against or imposed upon the Property. Grantor shall furnish Beneficiary with receipts (or if receipts are not immediately available, with copies of canceled checks evidencing payment with receipts to follow promptly after they become available) showing payment of such taxes and assessments at least fifteen (15) days prior to the applicable delinquency date therefor. Notwithstanding the foregoing, Grantor may in good faith, by appropriate proceedings and upon notice to Beneficiary, contest the validity, applicability or amount of any asserted tax or assessment so long as (a) such contest is diligently pursued, (b) Beneficiary determines, in its subjective opinion, that such contest suspends the obligation to pay the tax and that nonpayment of such tax or assessment will not result in the sale, loss, forfeiture or diminution of the Property or any part thereof or any interest of Beneficiary therein, and (c) prior to the earlier of the commencement of such contest

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or the delinquency date of the asserted tax or assessment, Grantor deposits in the Impound Account (as hereinafter defined) an amount determined by Beneficiary to be adequate to cover the payment of such tax or assessment and a reasonable additional sum to cover possible interest, costs and penalties; provided, however, that Grantor shall promptly cause to be paid any amount adjudged by a court of competent jurisdiction to be due, with all interest, costs and penalties thereon, promptly after such judgment becomes final; and provided further that in any event each such contest shall be concluded and the taxes, assessments, interest, costs and penalties shall be paid prior to the date any writ or order is issued under which the Property may be sold, lost or forfeited.

1.6      Tax and Insurance Impound Account. Grantor shall establish and maintain at all times while this Deed of Trust continues in effect an impound account (the “Impound Account”) with Beneficiary for payment of real estate taxes and assessments and insurance on the Property and as additional security for the indebtedness secured hereby. Simultaneously with the execution hereof, Grantor shall deposit in the Impound Account an amount determined by Beneficiary to be necessary to ensure that there will be on deposit with Beneficiary an amount which, when added to the monthly payments subsequently required to be deposited with Beneficiary hereunder on account of real estate taxes, assessments and insurance premiums, will result in there being on deposit with Beneficiary in the Impound Account an amount sufficient to pay the next due installment of real estate taxes and assessment on the Property at least one (1) month prior to the due date thereof and the next due annual insurance premiums with respect to the Property at least one (1) month prior to the due date thereof (if paid in one installment). Commencing on the first monthly payment date under the Note and continuing thereafter on each monthly payment date under the Note, Grantor shall pay to Beneficiary, concurrently with and in addition to the monthly payment due under the Note and until the Note and all other indebtedness secured hereby is fully paid and performed, deposits in an amount equal to one-twelfth (1/12) of the amount of the annual real estate taxes and assessments that will next become due and payable on the Property, plus one-twelfth (1/12) of the amount of the annual premiums that will next become due and payable on insurance policies which Grantor is required to maintain hereunder, each as estimated and determined by Beneficiary. So long as no Event of Default (as hereinafter defined), or event which with the passage of time, the giving of notice, or both, would constitute an Event of Default (a “Default”) hereunder or under the other Loan Documents has occurred and is continuing, all sums in the Impound Account shall be held by Beneficiary in the Impound Account to pay said taxes, assessments and insurance premiums before the same become delinquent. Grantor shall be responsible for ensuring the receipt by Beneficiary, at least thirty (30) days prior to the respective due date for payment thereof, of all bills, invoices and statements for all taxes, assessments and insurance premiums to be paid from the Impound Account, and so long as no Default or Event of Default hereunder or under the other Loan Documents has occurred and is continuing, Beneficiary shall pay the governmental authority or other party entitled thereto directly to the extent funds are available for

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such purpose in the Impound Account. In making any payment from the Impound Account, Beneficiary shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax,assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. The Impound Account shall not, unless otherwise explicitly required by applicable law, be or be deemed to be escrow or trust funds, but, at Beneficiary’s option and in Beneficiary’s discretion, may either be held in a separate account or be commingled by Beneficiary with the general funds of Beneficiary. No interest on the funds contained in the Impound Account shall be paid by Beneficiary to Grantor. The Impound Account is solely for the protection of Beneficiary and entails no responsibility on Beneficiary’s part beyond the payment of taxes, assessments and insurance premiums following receipt of bills, invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due credit for the sums actually received. Upon assignment of this Deed of Trust by Beneficiary, any funds in the Impound Account shall be turned over to the assignee and any responsibility of Beneficiary, as assignor, with respect thereto shall terminate. If the total funds in the Impound Account shall exceed the amount of payments actually applied by Beneficiary for the purposes of the Impound Account, such excess may be credited by Beneficiary on subsequent payments to be made hereunder or, at the option of Beneficiary, refunded to Grantor. If, however, the Impound Account shall not contain sufficient funds to pay the sums required when the same shall become due and payable, Grantor shall, within ten (10) days after receipt of written notice thereof, deposit with Beneficiary the full amount of any such deficiency. If Grantor shall fail to deposit with Beneficiary the full amount of such deficiency as provided above, Beneficiary shall have the option, but not the obligation, to make such deposit, and all amounts so deposited by Beneficiary, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. If there is an Event of Default under this Deed of Trust, Beneficiary may, but shall not be obligated to, apply at any time the balance then remaining in the Impound Account against the indebtedness secured hereby in whatever order Beneficiary shall subjectively determine. No such application of the Impound Account shall be deemed to cure any Default or Event of Default hereunder. Upon full payment of the indebtedness secured hereby in accordance with its terms or at such earlier time as Beneficiary may elect, the balance of the Impound Account then in Beneficiary’s possession shall be paid over to Grantor and no other party shall have any right or claim thereto.

1.7 Payment Reserve.

(a)       Contemporaneously with the execution hereof, Grantor has established with Beneficiary a reserve in the amount equal to one (1) regular monthly

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installments of principal, interest and all required deposits or impounds as calculated by Beneficiary (the “Payment Reserve”). Grantor understands and agrees that, notwithstanding the establishment of the Payment Reserve as herein required, all of the proceeds of the Note have been, and shall be considered, fully disbursed and shall bear interest and be payable on the terms provided therein. No interest on funds contained in the Payment Reserve shall be paid by Beneficiary to Grantor.

(b)        For so long as no Event of Default has occurred hereunder or under any of the other Loan Documents, Beneficiary shall on the first one (1) monthly Payment Dates (as defined in the Note) under the Note, advance from the Payment Reserve to itself the amount of the monthly installment due and payable by Grantor under the Note on such monthly Payment Date and shall also advance from the Payment Reserve into the Impound Account the amount of any deposit for taxes and insurance premiums and into the Replacement Reserve (as hereinafter defined) the amount of any deposit for Repairs (as hereinafter defined) and into any other reserve account the amount of any deposit in accordance with the terms of any other Loan Document required to be paid by Grantor concurrently with each such monthly installment pursuant to the terms hereof. Provided no Default or Event of Default has occurred after the final disbursement from the Payment Reserve, any amounts then remaining in the Payment Reserve shall be paid to Grantor. Nothing contained herein, including, without limitation, the existence of the Payment Reserve, shall release Grantor of any obligation to make payments under the Note, this Deed of Trust or the other Loan Documents strictly in accordance with the terms hereof or thereof and, in this regard, without limiting the generality of the foregoing, should the amounts contained in the Payment Reserve not be sufficient to pay in full the monthly installments and the Impound Account, Replacement Reserve and any other applicable reserve account deposits referenced above in this subparagraph, Grantor shall be responsible for paying such deficiency on the Payment Date of any such monthly installment.

1.8 Replacement Reserve: Security Interest Reserves.

(a)       As additional security for the indebtedness secured hereby, Grantor shall establish and maintain at all times while this Deed of Trust continues in effect a repair reserve (the “Replacement Reserve”) with Beneficiary for payment of certain non-recurring types of costs and expenses incurred by Grantor for interior and exterior work to the Property, including without limitation, performance of work to the roofs, chimneys, gutters, downspouts, paving, curbs, ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways, windows, elevators and mechanical and HVAC equipment, (collectively, the “Repairs”) provided such costs and expenses are incurred for repairs (i) not incurred for ordinary wear and tear at the Property and (ii) categorized under generally accepted accounting principles as a capital expense and not as an operating expense. Commencing on the first monthly Payment Date under the Note and continuing thereafter on each monthly Payment Date under the Note, Grantor shall pay to Beneficiary, concurrently with and in

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addition to the monthly payment due under the Note and until the Note and all other indebtedness secured hereby is fully paid and performed, a deposit to the Replacement Reserve in an amount equal to $5,250.00 per month. So long as no Default or Event of Default hereunder or under the other Loan Documents has occurred and is continuing, all sums in the Replacement Reserve shall be held by Beneficiary in the Replacement Reserve to pay the costs and expenses of Repairs. So long as no Default or Event of Default hereunder or under the other Loan Documents has occurred and is continuing, Beneficiary shall, to the extent funds are available for such purpose in the Replacement Reserve, disburse to Grantor the amount incurred and paid by Grantor in performing such Repairs within ten (10) days following: (a) the receipt by Beneficiary of a written request from Grantor for disbursement from the Replacement Reserve and a certification in the form attached hereto as Exhibit B that the applicable item of Repair has been completed; (b) the delivery to Beneficiary of paid invoices, receipts or other evidence satisfactory to Beneficiary, verifying the cost and payment of performing the Repairs; (c) for disbursement requests in excess of $10,000.00, the delivery to Beneficiary of affidavits, lien waivers or other evidence reasonably satisfactory to Beneficiary showing that all materialmen, laborers, subcontractors and any other parties who might or could claim statutory or common law liens and are furnishing or have furnished material or labor to the Property have been paid all amounts due for labor and materials furnished to the Property; (d) for disbursement requests in excess of $10,000.00, delivery to Beneficiary of a certification from an inspecting architect or other third party acceptable to Beneficiary describing the completed Repairs and verifying the completion of the Repairs; (e) for disbursement requests in excess of $10,000.00, delivery to Beneficiary of a new certificate of occupancy for the portion of the Improvements covered by such Repairs, if said new certificate of occupancy is required by law, or a certification by Grantor that no new certificate of occupancy is required; and (f) the receipt by Beneficiary of an administrative fee in the amount of $150.00. Beneficiary shall not be required to make advances from the Replacement Reserve more frequently than once in any ninety (90) day period. In making any payment from the Replacement Reserve, Beneficiary shall be entitled to rely on such request from Grantor without any inquiry into the accuracy, validity or contestability of any such amount. Beneficiary may, at Grantor’s expense, make or cause to be made during the term of this Deed of Trust an annual inspection of the Property to determine the need, as determined by Beneficiary in its reasonable judgment, for further Repairs of the Property. In the event that such inspection reveals that further Repairs of the Property are required, Beneficiary shall provide Grantor with a written description of the required Repairs and Grantor shall complete such Repairs to the reasonable satisfaction of Beneficiary within ninety (90) days after the receipt of such description from Beneficiary, or such later date as may be approved by Beneficiary in its sole discretion. The Replacement Reserve shall not, unless otherwise explicitly required by applicable law, be or be deemed to be escrow or trust funds, but, at Beneficiary’s option and in Beneficiary’s discretion, may either be held in a separate account or be commingled by Beneficiary with the general funds of Beneficiary. Interest on the funds contained in the Replacement Reserve shall be credited to Grantor as provided in Section 5.31 hereof. The Replacement Reserve is

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solely for the protection of Beneficiary and entails no responsibility on Beneficiary’s part beyond the payment of the costs and expenses described in this Section in accordance with the terms hereof and beyond the allowing of due credit for the sums actually received. In the event that the amounts on deposit or available in the Replacement Reserve are inadequate to pay the cost of the Repairs, Grantor shall pay the amount of such deficiency. Upon assignment of this Deed of Trust by Beneficiary, any funds in the Replacement Reserve shall be turned over to the assignee and any responsibility of Beneficiary, as assignor, with respect thereto shall terminate. If there is an Event of Default under this Deed of Trust, Beneficiary may, but shall not be obligated to, apply at any time the balance then remaining in the Replacement Reserve against the indebtedness secured hereby in whatever order Beneficiary shall subjectively determine. No such application of the Replacement Reserve shall be deemed to cure any Default or Event of Default hereunder. Upon full payment of the indebtedness secured hereby in accordance with its terms or at such earlier time as Beneficiary may elect, the balance of the Replacement Reserve then in Beneficiary’s possession shall be paid over to Grantor and no other party shall have any right or claim thereto.

(b)       As additional security for the payment and performance by Grantor of all duties, responsibilities and obligations under the Note and the other Loan Documents, Grantor hereby unconditionally and irrevocably assigns, conveys, pledges, mortgages, transfers, delivers, deposits, sets over and confirms unto Beneficiary, and hereby grants to Beneficiary a security interest in, (i) the Impound Account, the Payment Reserve, the Repair and Remediation Reserve, the Replacement Reserve and any other reserve or escrow account established pursuant to the terms hereof or of any other Loan Document (collectively, the “Reserves”), (ii) the accounts into which the Reserves have been deposited, (iii) all insurance on said accounts, (iv) all accounts, contract rights and general intangibles or other rights and interests pertaining thereto, (v) all sums now or hereafter therein or represented thereby, (vi) all replacements, substitutions or proceeds thereof, (vii) all instruments and documents now or hereafter evidencing the Reserves or such accounts, (viii) all powers, options, rights, privileges and immunities pertaining to the Reserves (including the right to make withdrawals therefrom), and (ix) all proceeds of the foregoing. Grantor hereby authorizes and consents to the account into which the Reserves have been deposited being held in Beneficiary’s name or the name of any entity servicing the Note for Beneficiary and hereby acknowledges and agrees that Beneficiary, or at Beneficiary’s election, such servicing agent, shall have exclusive control over said account. Notice of the assignment and security interest granted to Beneficiary herein may be delivered by Beneficiary at any time to the financial institution wherein the Reserves have been established, and Beneficiary, or such servicing entity, shall have possession of all passbooks or other evidences of such accounts. Grantor hereby assumes all risk of loss with respect to amounts on deposit in the Reserves. Grantor hereby knowingly, voluntarily and intentionally stipulates, acknowledges and agrees that the advancement of the funds from the Reserves as set forth herein is at Grantor’s direction and is not the exercise by Beneficiary of any

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right of set-off or other remedy upon a Default or an Event of Default. Grantor hereby waives all right to withdraw funds from the Reserves. If an Event of Default shall occur hereunder or under any other of the Loan Documents which is not cured within any applicable grace or cure period, then Beneficiary may, without notice or demand on Grantor, at its option: (A) withdraw any or all of the funds (including, without limitation, interest) then remaining in the Reserves and apply the same, after deducting all costs and expenses of safekeeping, collection and delivery (including, but not limited to, attorneys’ fees, costs and expenses) to the indebtedness evidenced by the Note or any other obligations of Grantor under the other Loan Documents in such manner or as Beneficiary shall deem appropriate in its sole discretion, and the excess, if any, shall be paid to Grantor, (B) exercise any and all rights and remedies of a secured party under any applicable Uniform Commercial Code, and/or (C) exercise any other remedies available at law or in equity. No such use or application of the funds contained in the Reserves shall be deemed to cure any Default or Event of Default hereunder or under the other Loan Documents.

1.9      Casualty and Condemnation. Grantor shall give Beneficiary prompt written notice of the occurrence of any casualty affecting, or the institution of any proceedings for eminent domain or for the condemnation of, the Property or any portion thereof. All insurance proceeds on the Property, and all causes of action, claims, compensation, awards and recoveries for any damage, condemnation or taking of all or any part of the Property or for any damage or injury to it for any loss or diminution in value of the Property, are hereby assigned to and shall be paid to Beneficiary. Beneficiary may participate in any suits or proceedings relating to any such proceeds, causes of action, claims, compensation, awards or recoveries, and Beneficiary is hereby authorized, in its own name or in Grantor’s name, to adjust any loss covered by insurance or any condemnation claim or cause of action, and to settle or compromise any claim or cause of action in connection therewith, and Grantor shall from time to time deliver to Beneficiary any instruments required to permit such participation; provided, however, that so long as no Default or Event of Default shall have occurred and be continuing Beneficiary shall not have the right to participate in the adjustment of any loss which is not in excess of the lesser of (i) ten percent (10%) of the then outstanding principal balance of the Note, and (ii) $250,000.00. Beneficiary shall apply any sums received by it under this Section first to the payment of all of its costs and expenses (including, but not limited to, legal fees and disbursements) incurred in obtaining those sums, and then, as follows:

(a)       In the event that less than forty percent (40%) of the Improvements located on the Land have been taken or destroyed, then if:

(1)        no Default or Event of Default is then continuing hereunder or under any of the other Loan Documents, and

(2)        the Property can, in Beneficiary’s judgment, with diligent restoration or repair, be returned to a condition at least equal to the

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condition thereof that existed prior to the casualty or partial taking causing the loss or damage within the earlier to occur of (i) six (6) months after the receipt of insurance proceeds or condemnation awards by either Grantor or Beneficiary, and (ii) six (6) months prior to the stated maturity date of the Note, and

(3)        all necessary governmental approvals can be obtained to allow the rebuilding and reoccupancy of the Property as described in Section 1.9(a)(2) above, and

(4) there are sufficient sums available (through insurance proceeds or condemnation awards and contributions by Grantor, the full amount of which shall at Beneficiary’s option have been deposited with Beneficiary) for such restoration or repair (including, without limitation, for any costs and expenses of Beneficiary to be incurred in administering said restoration or repair) and for payment of principal and interest to become due and payable under the Note during such restoration or repair, and

(5)        the economic feasibility of the Improvements after such restoration or repair will be such that income from their operation is reasonably anticipated to be sufficient to pay operating expenses of the Property and debt service on the indebtedness secured hereby in full with the same coverage ratio considered by Beneficiary in its determination to make the loan secured hereby including an assessment of the impact of the termination of any Leases due to such casualty or condemnation, and

(6)       in the event that the insurance proceeds or condemnation awards received as a result of such casualty or partial taking exceed the lesser of (i) five percent (5%) of the then outstanding principal balance of the Note and (ii) $150,000, Grantor shall have delivered to Beneficiary, at Grantor’s sole cost and expense, an appraisal reporting form and substance satisfactory to Beneficiary appraising the value of the Property as proposed to be restored or repaired to be not less than the appraised value of the Property considered by Beneficiary in its determination to make the loan secured hereby, and

(7)       Grantor so elects by written notice delivered to Beneficiary within five (5) days after settlement of the aforesaid insurance or condemnation claim then, Beneficiary shall, solely for the purposes of such restoration or repair, advance so much of the remainder of such sums as may be required for such restoration or repair, and any funds deposited by Grantor therefor, to Grantor in the manner and upon such terms and conditions as would be required by a prudent interim construction lender, including, but not limited to, the prior approval by Beneficiary of plans and specifications, contractors and form of construction contracts and the furnishing to Beneficiary of permits, bonds, lien waivers, invoices, receipts and affidavits

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from contractors and subcontractors, in form and substance satisfactory to Beneficiary in its discretion, with any remainder being applied by Beneficiary for payment of the indebtedness secured hereby in whatever order Beneficiary directs in its absolute discretion.

(b)        In all other cases, namely, in the event that forty percent (40%) or more of the Improvements located on the Land have been taken or destroyed or Grantor does not elect to restore or repair the Property pursuant to clause (a) above, or otherwise fails to meet the requirements of clause (a) above, then, in any of such events, Beneficiary shall elect, in Beneficiary’s absolute discretion and without regard to the adequacy of Beneficiary’s security, to do either of the following: (1) accelerate the maturity date of the Note and declare any and all indebtedness secured hereby to be immediately due and payable and apply the remainder of such sums received pursuant to this Section to the payment of the indebtedness secured hereby in whatever order Beneficiary directs in its absolute discretion, with any remainder being paid to Grantor, or (2) notwithstanding that Grantor may have elected not to restore or repair the Property pursuant to the provisions of Section 1.9(a)(7) above, require Grantor to restore or repair the Property in the manner and upon such terms and conditions as would be required by a prudent interim construction lender, including, but not limited to, the deposit by Grantor with Beneficiary, within thirty (30) days after demand therefor, of any deficiency necessary in order to assure the availability of sufficient funds to pay for such restoration or repair, including Beneficiary’s costs and expenses to be incurred in connection therewith, the prior approval by Beneficiary of plans and specifications, contractors and form of construction contracts and the furnishing to Beneficiary of permits, bonds, lien waivers, invoices, receipts and affidavits from contractors and subcontractors, in form and substance satisfactory to Beneficiary in its discretion, and apply the remainder of such sums toward such restoration and repair, with any balance thereafter remaining being applied by Beneficiary for payment of the indebtedness secured hereby in whatever order Beneficiary directs in its absolute discretion.

Any reduction in the indebtedness secured hereby resulting from Beneficiary’s application of any sums received by it hereunder shall take effect only when Beneficiary actually receives such sums and elects to apply such sums to the indebtedness secured hereby and, in any event, yet unpaid portion of the indebtedness secured hereby shall remain in full force and effect and Grantor shall not be excused in the payment thereof. Partial payments received by Beneficiary, as described in the preceding sentence, shall be applied first to the final payment due under the Note and thereafter to installments due under the Note in the inverse order of their due date. If Grantor elects or Beneficiary directs Grantor to restore or repair the Property after the occurrence of a casualty or partial taking of the Property as provided above, Grantor shall promptly and diligently, at Grantor’s sole cost and expense and regardless of whether the insurance proceeds or condemnation award, as appropriate, shall be sufficient for the purpose, restore, repair, replace and rebuild the Property as nearly as possible to its value, condition and character immediately prior to such casualty or

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partial taking in accordance with the foregoing provisions and Grantor shall pay to Beneficiary all costs and expenses of Beneficiary incurred in administering said rebuilding, restoration or repair, provided that Beneficiary makes such proceeds or award available for such purpose. Grantor agrees to execute and deliver from time to time such further instruments as may be requested by Beneficiary to confirm the foregoing assignment to Beneficiary of any award, damage, insurance proceeds, payment or other compensation. Beneficiary is hereby irrevocably constituted and appointed the attorney-in-fact of Grantor (which power of attorney shall be irrevocable so long as any indebtedness secured hereby is outstanding, shall be deemed coupled with an interest, shall survive the voluntary or involuntary dissolution of Grantor and shall not be affected by any disability or incapacity suffered by Grantor subsequent to the date hereof), with full power of substitution, subject to the terms of this Section, to settle for, collect and receive any such awards, damages, insurance proceeds, payments or other compensation from the parties or authorities making the same, to appear in and prosecute any proceedings therefor and to give receipts and acquittances therefor.

1.10     Construction Liens. Grantor shall pay when due all claims and demands of mechanics, materialmen, laborers and others for any work performed or materials delivered for the Land or the Improvements; provided, however, that, Grantor shall have the right to contest in good faith any such claim or demand, so long as it does so diligently, by appropriate proceedings and without prejudice to Beneficiary and provided that neither the Property nor any interest therein would be in any danger of sale, loss or forfeiture as a result of such proceeding or contest. In the event Grantor shall contest any such claim or demand, Grantor shall promptly notify Beneficiary of such contest and thereafter shall, upon Beneficiary’s request, promptly provide a bond, cash deposit or other security satisfactory to Beneficiary to protect Beneficiary’s interest and security should the contest be unsuccessful. If Grantor shall fail to immediately discharge or provide security against any such claim or demand as aforesaid, Beneficiary may do so and any and all expenses incurred by Beneficiary, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

1.11    Rents and Profits. As additional and collateral security for the payment of the Indebtedness secured hereby and cumulative of any and all rights and remedies herein provided for, Grantor hereby absolutely and presently assigns to Beneficiary all existing and future Rents and Profits. Grantor hereby grants to Beneficiary the sole, exclusive and immediate right, without taking possession of the Property, to demand, collect (by suit or otherwise), receive and give valid and sufficient receipts for any and all of said Rents and Profits, for which purpose Grantor does hereby irrevocably make, constitute and appoint Beneficiary its attorney-in-fact with full power to appoint substitutes or a trustee to accomplish such purpose (which power of attorney shall be irrevocable so long as any indebtedness secured hereby is

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outstanding, shall be deemed to be coupled with an interest, shall survive the voluntary or involuntary dissolution of Grantor and shall not be affected by any disability or incapacity suffered by Grantor subsequent to the date hereof). Beneficiary shall be without liability for any loss which may arise from a failure or inability to collect Rents and Profits, proceeds or other payments. However, until the occurrence of an Event of Default under this Deed of Trust, Grantor shall have a license to collect and receive the Rents and Profits when due and prepayments thereof for not more than one (1) month prior to due date thereof. Upon the occurrence of an Event of Default hereunder, Grantor’s license shall automatically terminate without notice to Grantor and Beneficiary may thereafter, without taking possession of the Property, collect the Rents and Profits itself or by an agent or receiver. From and after the termination of such license, Grantor shall be the agent of Beneficiary in collection of the Rents and Profits, and all of the Rents and Profits so collected by Grantor shall be held in trust by Grantor for the sole and exclusive benefit of Beneficiary, and Grantor shall, within one (1) business day after receipt of any Rents and Profits, pay the same to Beneficiary to be applied by Beneficiary as hereinafter set forth. Neither the demand for or collection of Rents and Profits by Beneficiary shall constitute any assumption by Beneficiary of any obligations under any agreement relating thereto. Beneficiary is obligated to account only for such Rents and Profits as are actually collected or received by Beneficiary. Grantor irrevocably agrees and consents that the respective payors of the Rents and Profits shall, upon demand and notice from Beneficiary of an Event of Default hereunder, pay said Rents and Profits to Beneficiary without liability to determine the actual existence of any Event of Default claimed by Beneficiary. Grantor hereby waives any right, claim or demand which Grantor may now or hereafter have against any such payor by reason of such payment of Rents and Profits to Beneficiary, and any such payment shall discharge such payor’s obligation to make such payment to Grantor. All Rents and Profits collected or received by Beneficiary may be applied against all expenses of collection, including, without limitation, attorneys’ fees, against costs of operation and management of the Property and against the indebtedness secured hereby, in whatever order or priority as to any of the items so mentioned as Beneficiary directs in its sole subjective discretion and without regard to the adequacy of its security. Neither the exercise by Beneficiary of any rights under this Section nor the application of any Rents and Profits to the secured indebtedness shall cure or be deemed a waiver of any Event of Default hereunder. The assignment of Rents and Profits hereinabove granted shall continue in full force and effect during any period of foreclosure or redemption with respect to the Property. Grantor has executed an Assignment of Leases and Rents dated of even date herewith (the “Assignment”)in favor of Beneficiary covering all of the right, title and interest of Grantor, as landlord, lessor or licensor, in and to any Leases. All rights and remedies granted to Beneficiary under the Assignment shall be in addition to and cumulative of all rights and remedies granted to Beneficiary hereunder.

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1.12 Leases and Licenses.

(a)       Prior to execution of any Leases of space in the Improvements after the date hereof, Grantor shall submit to Beneficiary, for Beneficiary’s prior approval, which approval shall not be unreasonably withheld, a copy of the form Lease Grantor plans to use in leasing space in the Improvements. All Leases of space in the Improvements shall be on terms consistent with the terms for similar leases in the market area of the Land, shall provide for free rent only if the same is consistent with prevailing market conditions and shall provide for market rents then prevailing in the market area of the Land. Such Leases shall also provide for security deposits in reasonable amounts. Grantor shall also submit to Beneficiary for Beneficiary’s approval, which approval shall not be unreasonably withheld, prior to the execution thereof, any proposed Lease of the Improvements or any portion thereof that differs materially and adversely from the aforementioned form Lease. Grantor shall not execute any Lease for all or a substantial portion of the Property, except for an actual occupancy by the Tenant thereunder, and shall at all times promptly and faithfully perform, or cause to be performed, all of the covenants, conditions and agreements contained in all Leases with respect to the Property, now or hereafter existing, on the part of the landlord, lessor or licensor thereunder to be kept and performed. Grantor shall furnish to Beneficiary, within ten (10) days after a request by Beneficiary to do so, but in any event by January 1 of each year, a current Rent Roll certified by Grantor as being true and correct, containing the names of all Tenants with respect to the Property, the terms of their respective Leases, the spaces occupied and the rentals or fees payable thereunder and the amount of each tenant’s security deposit. Upon the request of Beneficiary, Grantor shall deliver to Beneficiary a copy of each such Lease. Grantor shall not do or suffer to be done any act that might result in a default by the landlord, lessor or licensor under any such Lease or allow the Tenant, lessee or licensee thereunder to withhold payment or rent and, except as otherwise expressly permitted by the terms of Section 1.12 hereof, shall not further assign any such Lease or any such rents. Grantor, at no cost or expense to Beneficiary, shall enforce, short of termination, the performance and observance of each and every condition and covenant of each of the parties under such Leases. Grantor shall not, without the prior written consent of Beneficiary, modify any of the Leases, terminate or accept the surrender of any Leases, waive or release any other party from the performance or observance of any obligation or condition under such Leases except in the normal course of business in a manner which is consistent with sound and customary leasing and management practices for similar properties in the community in which the Property is located. Grantor shall not permit the prepayment of any rents under any of the Leases for more than one (1) month prior to the due date thereof (except with respect to newly executed Leases, Rents and Profits for the first and last months (i.e., two (2) months) may be collected in advance).

(b)        Each Lease executed after the date hereof affecting any of the Land or the Improvements must provide, in a manner approved by Beneficiary, that

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the Tenant will recognize as its landlord, lessor or licensor, as applicable, and attom to any person succeeding to the interest of Grantor upon any foreclosure of this Deed of Trust or deed in lieu of foreclosure. Each such Lease shall also provide that, upon request of said successor in interest, the Tenant shall execute and deliver an instrument or instruments confirming its attornment as provided for in this Section; provided. however, that neither Beneficiary nor any successor-in-interest shall be bound by any payment of rental for more than one (1) month in advance, or any amendment or modification of said Lease made without the express written consent of Beneficiary or said successor-in-interest.

(c)        Upon the occurrence of an Event of Default under this Deed of Trust, whether before or after the whole principal sum secured hereby is declared to be immediately due or whether before or after the institution of legal proceedings to foreclose this Deed of Trust, forthwith, upon demand of Beneficiary, Grantor shall surrender to Beneficiary, and Beneficiary shall be entitled to take actual possession of, the Property or any part thereof personally, or by its agent or attorneys. In such event, Beneficiary shall have, and Grantor hereby gives and grants to Beneficiary, the right, power and authority to make and enter into Leases with respect to the Property or portions thereof for such rents and for such periods of occupancy and upon conditions and provisions as Beneficiary may deem desirable in its sole discretion, and Grantor expressly acknowledges and agrees that the term of any such Lease may extend beyond the date of any foreclosure sale of the Property; it being the intention of Grantor that in such event Beneficiary shall be deemed to be and shall be the attorney-in-fact of Grantor for the purpose of making and entering into Leases of parts or portions of the Property for the rents and upon the terms, conditions and provisions deemed desirable to Beneficiary in its sole discretion and with like effect as if such Leases had been made by Grantor as the owner in fee simple of the Property free and clear of any conditions or limitations established by this Deed of Trust. The power and authority hereby given and granted by Grantor to Beneficiary shall be deemed to be coupled with an interest, shall not be revocable by Grantor so long as any indebtedness secured hereby is outstanding, shall survive the voluntary or involuntary dissolution of Grantor and shall not be affected by any disability or incapacity suffered by Grantor subsequent to the date hereof. In connection with any action taken by Beneficiary pursuant to this Section, Beneficiary shall not be liable for any loss sustained by Grantor resulting from any failure to let the Property, or any part thereof, or from any other act or omission of Beneficiary in managing the Property, nor shall Beneficiary be obligated to perform or discharge any obligation, duty or liability under any Lease covering the Property or any part thereof or under or by reason of this instrument or the exercise of rights or remedies hereunder. Grantor shall, and does hereby, indemnify Beneficiary for, and hold Beneficiary harmless from, any and all claims, actions, demands, liabilities, loss or damage which may or might be incurred by Beneficiary under any such Lease or under this Deed of Trust or by the exercise of rights or remedies hereunder and from any and all claims and demands whatsoever which may be asserted against Beneficiary by reason of any alleged obligations or undertakings on its part to perform or discharge any of the

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terms, covenants or agreements contained in any such Lease other than those finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of Beneficiary. Should Beneficiary incur any such liability, the amount thereof, including, without limitation, costs, expenses and attorneys’ fees, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately due and payable to Beneficiary by Grantor on demand and shall be secured hereby and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. Nothing in this Section shall impose on Beneficiary any duty, obligation or responsibility for the control, care, management or repair of the Property, or for the carrying out of any of the terms and conditions of any such Lease nor shall it operate to make Beneficiary responsible or liable for any waste committed on the Property by the Tenants or by any other parties or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property. Grantor hereby assents to, ratifies and confirms any and all actions of Beneficiary with respect to the Property taken under this Section.

1.13 Alienation and Further Encumbrances.

(a)        Grantor acknowledges that Beneficiary has relied upon the principals of Grantor and their experience in owning and operating the Property and properties similar to the Property in connection with the closing of the loan evidenced by the Note. Accordingly, except as specifically allowed hereinbelow in this Section and notwithstanding anything to the contrary contained in Section 5.6hereof, in the event that the Property or any part thereof or interest therein shall be sold, conveyed, disposed of, alienated, hypothecated, leased (except to Tenants of space in the Improvements in accordance with the provisions of Section 1.12 hereof), assigned, pledged, mortgaged, further encumbered or otherwise transferred or Grantor shall be divested of its title tothe Property or any interest therein, in any manner or way, whether voluntarily or involuntarily, without the prior written consent of Beneficiary being first obtained, which consent may be withheld in Beneficiary’s sole discretion, then the same shall constitute an Event of Default hereunder and Beneficiary shall have the right, at its option, to declare any or all of the indebtedness secured hereby, irrespective of the maturity date specified in the Note, immediately due and payable and to otherwise exercise any of its other rights and remedies contained in Article III hereof. If such acceleration is during any period when a prepayment fee is payable pursuant to the provisions set forth in the Note, then, in addition to all of the foregoing, such prepayment fee shall also then be immediately due and payable to the same end as though Grantor were prepaying the entire indebtedness secured hereby on the date of such acceleration. For the purposes of this Section: (i) in the event either Grantor or any of its general partners or managing members is a corporation or trust, the sale, conveyance, transfer or disposition of more than 10% of the issued and outstanding capital stock of Grantor or any of its general partners or of the beneficial interest of such trust (or the issuance of new shares of capital stock in Grantor or any of its general partners or managing members so that immediately after such issuance

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the total capital stock then issued and outstanding is more than 110% of the total immediately prior to such issuance) shall be deemed to be a transfer of an interest in the Property; and (ii) in the event Grantor or any general partner or managing member of Grantor is a limited or general partnership, a joint venture or a limited liability company, a change in the ownership interests in any general partner, any joint venturer or any managing member, either voluntarily, involuntarily or otherwise, or the sale, conveyance, transfer, disposition, alienation, hypothecation or encumbering of all or any portion of the interest of any such general partner, joint venturer or managing member in Grantor or such general partner (whether in the form of a beneficial or partnership interest or in the form of a power of direction, control or management, or otherwise), shall be deemed to be a transfer of an interest in the Property. Notwithstanding the foregoing, however, (i) limited partnership or non-managing member interests in Grantor or in any general partner or managing member of Grantor shall be freely transferable without the consent of Beneficiary, (ii) any involuntary transfer caused by the death of Grantor or any general partner, shareholder, joint venturer, or beneficial owner of a trust shall not be an Event of Default under this Deed of Trust so long as Grantor is reconstituted, if required, following such death and so long as those persons responsible for the management of the Property remain unchanged as a result of such death or any replacement management is approved by Beneficiary and (iii) gifts for estate planning purposes of any individual’s interests in Grantor or in any of Grantor’s general partners, managing members or joint venturers to the spouse or any lineal descendant of such individual, or to a trust for the benefit of any one or more of such individual, spouse or lineal descendant, shall not be an Event of Default under this Deed of Trust so long as Grantor is reconstituted, if required, following such gift and so long as those persons responsible for the management of the Property and Grantor remain unchanged following such gift or any replacement management is approved by Beneficiary. Notwithstanding any provision of this Deed of Trust to the contrary, no person or entity may, after the date hereof, become an owner of a direct or indirect interest in Grantor, which interest exceeds forty-nine percent (49%), without Beneficiary’s written consent in each instance and receipt by Beneficiary of confirmation that there will be no Adverse Rating Impact (as hereafter defined).

(b)       Notwithstanding the foregoing provisions of this Section, Beneficiary shall consent to one or more sales, conveyances or transfers of the Property in its entirety (hereinafter, “Sale”) to any person or entity provided that each of the following terms and conditions are satisfied for each such Sale:

(1)        No Default or Event of Default is then continuing hereunder or under any of the other Loan Documents;

(2)        Grantor gives Beneficiary written notice of the terms of such prospective Sale not less than sixty (60) days before the date on which such Sale is scheduled to close and, concurrently therewith, gives Beneficiary all such information concerning the proposed transferee of the Property

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(hereinafter, “Buyer”) as Beneficiary would require in evaluating an initial extension of credit to a borrower and pays to Beneficiary a non-refundable application fee in the amount of $2,500.00. Beneficiary shall have the right to approve or disapprove the proposed Buyer. In determining whether to give or withhold its approval of the proposed Buyer, Beneficiary shall consider the Buyer’s experience and track record in owning and operating facilities similar to the Property, the Buyer’s financial strength, the Buyer’s general business standing and the Buyer’s relationships and experience with contractors, vendors, tenants, lenders and other business entities; provided, however, that, notwithstanding Beneficiary’s agreement to consider the foregoing factors in determining whether to give or withhold such approval, such approval shall be given or withheld based on what Beneficiary determines to be commercially reasonable in Beneficiary’s sole discretion and, if given, may be given subject to such conditions as Beneficiary may deem appropriate;

(3)       Grantor pays Beneficiary, concurrently with the closing of such Sale, a non-refundable assumption fee in an amount equal to all out-of-pocket costs and expenses, including, without limitation, attorneys’ fees, incurred by Beneficiary in connection with the Sale, plus an amount equal to one percent (1.0%) of the then outstanding principal balance of the Note (provided, however, that such one (1%) percent fee shall not be due in connection with the first Sale hereunder);

(4) The Buyer assumes and agrees to pay the indebtedness secured hereby subject to the provisions of Section 5.27 hereof and, prior to or concurrently with the closing of such Sale, the Buyer executes, without any cost or expense to Beneficiary, such documents and agreements as Beneficiary shall reasonably require to evidence and effectuate said assumption and delivers such legal opinions, including a non-consolidation opinion, as Beneficiary may require;

(5)       Aparty associated with the Buyer approved by Beneficiary in its sole discretion assumes the obligations of the current indemnitor under its guaranty or indemnity agreement and such party associated with the Buyer executes, without any cost or expense to Beneficiary, a new guaranty or indemnity agreement in form and substance satisfactory to Beneficiary and delivers such legal opinions as Beneficiary may require;

(6)      Grantor and the Buyer execute, without any cost or expense to Beneficiary, new financing statements or financing statement amendments and any additional documents reasonably requested by Beneficiary;

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(7)       Grantor delivers to Beneficiary, without any cost or expense to Beneficiary, such endorsements to Beneficiary’s title insurance policy, hazard insurance endorsements or certificates and other similar materials as Beneficiary may deem necessary at the time of the Sale, all in form and substance satisfactory to Beneficiary, including, without limitation, an endorsement or endorsements to Beneficiary’s title insurance policy insuring the lien of this Deed of Trust, extending the effective date of such policy to the date of execution and delivery (or, if later, of recording) of the assumption agreement referenced above in subparagraph (4) of this Section, with no additional exceptions added to such policy, and insuring that fee simple title to the Property is vested in the Buyer;

(8)Grantor executes and delivers to Beneficiary, without any cost or expense to Beneficiary, a release of Beneficiary, its officers, directors, employees and agents, from all claims and liability relating to the transactions evidenced by the Loan Documents, through and including the date of the closing of the Sale, which agreement shall be in form and substance satisfactory to Beneficiary and shall be binding upon the Buyer;

(9)      Subject to the provisions of Section 5.27 hereof, such Sale is not construed so as to relieve Grantor of any personal liability under the Note or any of the other Loan Documents for any acts or events occurring or obligations arising prior to or simultaneously with the closing of such Sale, and Grantor executes, without any cost or expense to Beneficiary, such documents and agreements as Beneficiary shall reasonably require to evidence and effectuate the ratification of said personal liability. Grantor shall be released from and relieved of any personal liability under the Note or any of the other Loan Documents for any acts or events occurring or obligations arising after the closing of such Sale which are not caused by or arising out of any acts or events occurring or obligations arising prior to or simultaneously with the closing of such Sale;

(10)     Such Sale is not construed so as to relieve any current indemnitor of its obligations under any guaranty or indemnity agreement for any acts or events occurring or obligations arising prior to or simultaneously with the closing of such Sale, and each such current indemnitor executes, without any cost or expense to Beneficiary, such documents and agreements as Beneficiary shall reasonably require to evidence and effectuate the ratification of each such guaranty and indemnity agreement. Each such current indemnitor shall be released from and relieved of any of its obligations under any guaranty or indemnity agreement executed in connection with the loan secured hereby for any acts or events occurring or obligations arising after the closing of such Sale which are not caused by or arising out of any acts or events occurring or obligations arising prior to or simultaneously with the closing of such Sale;

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(11)    The Buyer shall furnish, if the Buyer is a corporation, partnership or other entity, all appropriate papers evidencing the Buyer’s capacity and good standing, and the qualification of the signers to execute the assumption of the indebtedness secured hereby, which papers shall include certified copies of all documents relating to the-organization and formation of the Buyer and of the entities, if any, which are partners of the Buyer. The Buyer and such constituent partners, members or shareholders of Buyer (as the case may be), as Beneficiary shall require, shall be single purpose, “bankruptcy remote” entities, whose formation documents shall be approved by counsel to Beneficiary. The individual recommended by the Grantor and approved by Beneficiary shall serve as an independent director of the Buyer (if the Buyer is a corporation) or the Buyer’s corporate general partner or as an independent member or, in Beneficiary’s discretion, as a manager, of Buyer if the Buyer a limited liability company. The consent of such independent party shall be required for, among other things, any merger, consolidation, dissolution, bankruptcy or insolvency of such independent party or of the Buyer; and

(12)Grantor delivers to Beneficiary a written statement from the applicable rating agency to the effect that the Sale will not result in a downgrading, withdrawal or qualification of the respective ratings (collectively, an “Adverse Rating Impact”) in effect immediately prior to such Sale for any securities issues in connection with a Secondary Market Transaction (as hereinafter defined).

1.14    Payment of Utilities, Assessments, Charges, Etc. Grantor shall pay when due all utility charges which are incurred by Grantor w which may become a charge or lien against any portion of the Property for gas, electricity, water and sewer services furnished to the Land and/or the Improvements and all other assessments or charges of a similar nature, or assessments payable pursuant to any restrictive covenants, whether public or private, affecting the Land and/or the Improvements or any portion thereof, whether or not such assessments or charges are or may become liens thereon.

1.15    Access Privileges and Inspections. Beneficiary and the agents, representatives and employees of Beneficiary shall, subject to the rights of tenants, have full and free access to the Land and the Improvements and any other location where books and records concerning the Property are kept at all reasonable times for the purposes of inspecting the Property and of examining, copying and making extracts from the books and records of Grantor relating to the Property. Grantor shall lend assistance to all such agents, representatives and employees of Beneficiary.

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1.16    Waste: Alteration of Improvements. Grantor shall not commit, suffer or permit any waste on the Property nor take any actions that might invalidate any insurance carried on the Property. Grantor shall maintain the Property in good condition and repair. No part of the Improvements may be removed, demolished or materially altered, without the prior written consent of Beneficiary. Without the prior written consent of Beneficiary, Grantor shall not commence construction of any improvements on the Land other than improvements required for the maintenance or repair of the Property.

1.17      Zoning. Without the prior written consent of Beneficiary, Grantor shall not seek, make, suffer, consent to or acquiesce in any change in the zoning or conditions of use of the Land or the Improvements. Grantor shall comply with and make all payments required under the provisions of any covenants, conditions or restrictions affecting the Land or the Improvements. Grantor shall comply with all existing and future requirements of all governmental authorities having jurisdiction over the Property. Grantor shall keep all licenses, permits, franchises and other approvals necessary for the operation of the Property in full force and effect. Grantor shall operate the Property as an apartment complex for so long as the indebtedness secured hereby is outstanding. If, under applicable zoning provisions, the use of all or any part of the Land or the Improvements is or becomes a nonconforming use, Grantor shall not cause or permit such use to be discontinued or abandoned without the prior written consent of Beneficiary. Further, without Beneficiary’s prior written consent, Grantor shall not file or subject any part of the Land or the Improvements to any declaration of condominium or co-operative or convert any part of the Land or the Improvements to a condominium, co-operative or other form of multiple ownership and governance.

1.18    Financial Statements and Books and Records. Grantor shall keep accurate books and records of account of the Property and its own financial affairs sufficient to permit the preparation of financial statements therefrom in accordance with generally accepted accounting principles. Beneficiary and its duly authorized representatives shall have the right to examine, copy and audit Grantor’s records and books of account at all reasonable times. So long as this Deed of Trust continues in effect, Grantor shall provide to Beneficiary, in addition to any other financial statements required hereunder or under any of the other Loan Documents, the following financial statements and information, all of which must be certified to Beneficiary as being true and correct by Grantor or the person or entity to which they pertain, as applicable, be prepared in accordance with generally accepted accounting principles consistently applied and be in form and substance acceptable to Beneficiary:

(a)       copies of all tax returns filed by Grantor, within thirty (30) days after the date of filing;

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(b)       monthly operating statements for the Property within ten (10) days after the end of each month during the first twelve months of the term of the loan secured hereby;

(c)       quarterly operating statements for the Property, within thirty (30) days after the end of each calendar quarter;

(d)       annual balance sheets for the Property and annual financial statements for Grantor, each principal or general partner in Grantor, and each indemnitor and guarantor under any indemnity or guaranty executed in connection with the loan secured hereby, within ninety (90) days after the end of each calendar year; and

(e)       such other information with respect to the Property, Grantor, the principals or general partners in Grantor, and each indemnitor and guarantor under any indemnity or guaranty executed in connection with the loan secured hereby, which may be requested from time to time by Beneficiary, within a reasonable time after the applicable request.

If any of the aforementioned materials are not furnished to Beneficiary within the applicable time periods or Beneficiary is dissatisfied with the contents of any of the foregoing, in addition to any other rights and remedies of Beneficiary contained herein, Beneficiary shall have the right, but not the obligation, to obtain the same by means of an audit by an independent certified public accountant selected by Beneficiary, in which event Grantor agrees to pay, or to reimburse Beneficiary for, any expense of such audit and further agrees to provide all necessary information-to said accountant and to otherwise cooperate in the making of such audit.

1.19     Further Documentation. (a) Grantor shall, on the request of Beneficiary and at the expense of Grantor: (a) promptly correct any defect, error or omission which may be discovered in the contents of this Deed of Trust or in the contents of any of the other Loan Documents; (b) promptly execute, acknowledge, deliver and record or file such further instruments (including, without limitation, further mortgages, deeds of trust, security deeds, security agreements, financing statements, continuation statements and assignments of rents or leases) and promptly do such further acts as may be necessary, desirable or proper to carry out more effectively the purposes of this Deed of Trust and the other Loan Documents and to subject to the liens and security interests hereof and thereof any property intended by the terms hereof and thereof to be covered hereby and thereby, including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Property; (c) promptly execute, acknowledge, deliver, procure and record or file any document or instrument (including specifically any financing statement) deemed advisable by Beneficiary to protect, continue or perfect the liens or the security interests hereunder against the rights or interests of third persons; and (d) promptly furnish to Beneficiary, upon Beneficiary’s request, a duly acknowledged

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written statement and estoppel certificate addressed to such party or parties as directed by Beneficiary and in form and substance supplied by Beneficiary, setting forth all amounts due under the Note, stating whether any Default or Event of Default has occurred hereunder, stating whether any offsets or defenses exist against the indebtedness secured hereby and containing such other matters as Beneficiary may reasonably require.

(b)       Grantor acknowledges that Beneficiary and its successors and assigns may effectuate a Secondary Market Transaction. Grantor shall cooperate in good faith with Beneficiary in effecting any such Secondary Market Transaction and shall cooperate in good faith to implement all requirements imposed by any rating agency involved in any Secondary Market Transaction including, without limitation, all structural or other changes to the indebtedness secured hereby, modifications to any documents evidencing or securing the loan; provided, however, that the Grantor shall not be required to modify any documents evidencing or securing the indebtedness secured hereby which would modify (A) the interest rate payable under the Note, (B) the stated maturity of the Note, (C) the amortization of principal of the Note, or (D) any other material economic term of the indebtedness secured hereby. Grantor shall provide such information, and documents relating to Grantor, any guarantor or indemnitor, the Property and any tenants of the Improvements as Beneficiary may reasonably request in connection with such Secondary Market Transaction. Grantor shall make available to Beneficiary all information concerning its business and operations that Beneficiary may reasonably request. Beneficiary shall be permitted to share all such information with the investment banking firms, rating agencies, accounting firms, law firms and other third-party advisory firms involved with the Loan Documents or the applicable Secondary Market Transaction. It is understood that the information provided by Grantor to Beneficiary may ultimately be incorporated into the offering documents for the Secondary Market Transaction and thus various investors may also see some or all of the information. Beneficiary and all of the aforesaid third-party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of, Grantor and Grantor indemnifies Beneficiary as to any losses, claims, damages or liabilities that arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in such information or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated in such information or necessary in order to make the statements in such information, or in light of the circumstances under which they were made, not misleading. Beneficiary may publicize the existence of the indebtedness secured hereby in connection with its marketing for a Secondary Market Transaction or otherwise as part of its business development. For purposes hereof, a “Secondary Market Transaction” shall be (a) any sale of the Deed of Trust, Note and other Loan Documents to one or more investors as a whole loan; (b) a participation of the indebtedness secured hereby to one or more investors, (c) any deposit of the Deed of Trust, Note and other Loan Documents with a trust or other entity which may sell certificates or other instruments to investors evidencing an ownership interest in the assets of such trust or other entity, or (d) any

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other sale or transfer of the indebtedness secured hereby or any interest therein to one or more investors.

1.20    Payment of Costs: Reimbursement to Beneficiary. Grantor shall pay all costs and expenses of every character incurred in connection with the closing of the loan evidenced by the Note and secured hereby or otherwise attributable or chargeable to Grantor as the owner of the Property, including, without limitation, appraisal fees, recording fees, documentary, stamp, mortgage or intangible taxes, brokerage fees and commissions, title policy premiums and title search fees, uniform commercial code/tax lien/litigation search fees, escrow fees and attorneys’ fees. If Grantor defaults in any such payment, which default is not cured within any applicable grace or cure period, Beneficiary may pay the same and Grantor shall reimburse Beneficiary on demand for all such costs and expenses incurred or paid by Beneficiary, together with such interest thereon at the Default Interest Rate from and after the date of Beneficiary’s making such payment until reimbursement thereof by Grantor. Any such sums disbursed by Beneficiary, together with such interest thereon, shall be additional indebtedness of Grantor secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. Further, Grantor shall promptly notify Beneficiary in writing of any litigation or threatened litigation affecting the Property, or any other demand or claim which, if enforced, could impair or threaten to impair Beneficiary’s security hereunder. Without limiting or waiving any other rights and remedies of Beneficiary hereunder, if Grantor fails to perform any of its covenants or agreements contained in this Deed of Trust or in any of the other Loan Documents and such failure is not cured within any applicable grace or cure period, or if any action or proceeding of any kind (including, but not limited to, any bankruptcy, insolvency, arrangement, reorganization or other debtor relief proceeding) is commenced which might affect Beneficiary’s interest in the Property or Beneficiary’s right to enforce its security, then Beneficiary may, at its option, with or without notice to Grantor, make any appearances, disburse any sums and take any actions as may be necessary or desirable to protect or enforce the security of this Deed of Trust or to remedy the failure of Grantor to perform its covenants and agreements (without, however, waiving any default of Grantor). Grantor agrees to pay on demand all expenses of Beneficiary incurred with respect to the foregoing (including, but not limited to, reasonable fees and disbursements of counsel), together with interest thereon at the Default Interest Rate from and after the date on which Beneficiary incurs such expenses until reimbursement thereof by Grantor. Any such expenses so incurred by Beneficiary, together with interest thereon as provided above, shall be additional indebtedness of Grantor secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. The necessity for any such actions and of the amounts to be paid shall be determined by Beneficiary in its discretion. Beneficiary is hereby empowered to enter and to authorize others to enter upon the Property or any part thereof for the purpose of performing or observing any such defaulted term, covenant or condition without thereby becoming liable to Grantor or any person in possession holding under Grantor. Grantor hereby

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acknowledges and agrees that the remedies set forth in this Section 1.20 shall be exercisable by Beneficiary, and any and all payments made or costs or expenses incurred by Beneficiary in connection therewith shall be secured hereby and shall be, without demand, immediately repaid by Grantor with interest thereon at the Default Interest Rate, notwithstanding the fact that such remedies were exercised and such payments made and costs incurred by Beneficiary after the filing by Grantor of a voluntary case or the filing against Grantor of an involuntary case pursuant to or within the meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any similar action pursuant to any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable to Grantor, Beneficiary, any guarantor or indemnitor, the secured indebtedness or any of the Loan Documents. Grantor hereby indemnifies and holds Beneficiary harmless from and against all loss, cost and expenses with respect to any Event of Default hereof, any liens (i.e., judgments, mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances filed against the Property, and from any claims and demands for damages or injury, including claims for property damage, personal injury or wrongful death, arising out of or in connection with any accident or fire or other casualty on the Land or the Improvements or any nuisance made or suffered thereon, including, in any case, attorneys’ fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate level, and such indemnity shall survive payment in full of the indebtedness secured hereby. This Section shall not be construed to require Beneficiary to incur any expenses, make any appearances or take any actions.

1.21    Security Interest. This Deed of Trust is also intended to encumber and create a security interest in, and Grantor hereby grants to Beneficiary a security interest in all sums on deposit with Beneficiary pursuant to the provisions of Section 1.6, Section 1.7, Section 1.8 and Section 1.35 hereof or any other Section hereof and all fixtures, chattels, accounts, equipment, inventory, contract rights, general intangibles and other personal property included within the Property, all renewals, replacements of any of the aforementioned items, or articles in substitution therefor or in addition thereto or the proceeds thereof (said property is hereinafter referred to collectively as the “Collateral”), whether or not the same shall be attached to the Land or the Improvements in any manner. It is hereby agreed that to the extent permitted by law, all of the foregoing property is to be deemed and held to be a part of and affixed to the Land and the Improvements. The foregoing security interest shall also cover Grantor’s leasehold interest in any of the foregoing property which is leased by Grantor. Notwithstanding the foregoing, all of the foregoing property shall be owned by Grantor and no leasing or installment sales or other financing or title retention agreement in connection therewith shall be permitted without the prior written approval of Beneficiary. Grantor shall, from time to time upon the request of Beneficiary, supply Beneficiary with a current inventory of all of the property in which Beneficiary is granted a security interest hereunder, in such detail as Beneficiary may require. Grantor shall promptly replace all of the Collateral subject to the lien or security interest of this Deed of Trust when worn or obsolete with

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Collateral comparable to the worn out or obsolete Collateral when new and will not, without the prior written consent of Beneficiary, remove from the Land or the Improvements any of the Collateral subject to the lien or security interest of this Deed of Trust except such as is replaced by an article of equal suitability and value as above provided, owned by Grantor free and clear of any lien or security interest except that created by this Deed of Trust and the other Loan Documents and except as otherwise expressly permitted by the terms of Section 1.13 of this Deed of Trust. All of the Collateral shall be kept at the location of the Land except as otherwise required by the terms of the Loan Documents. Grantor shall not use any of the Collateral in violation of any applicable statute, ordinance or insurance policy.

1.22Security Agreement. This Deed of Trust constitutes a security agreement between Grantor and Beneficiary with respect to the Collateral in which Beneficiary is granted a security interest hereunder, and, cumulative of all other rights and remedies of Beneficiary hereunder, Beneficiary shall have all of the rights and remedies of a secured party under any applicable Uniform Commercial Code. Grantor hereby agrees to execute and deliver on demand and hereby irrevocably constitutes and appoints Beneficiary the attorney-in-fact of Grantor to execute and deliver and, if appropriate, to file with the appropriate filing officer or office such security agreements, financing statements, continuation statements or other instruments as Beneficiary may request or require in order to impose, perfect or continue the perfection of the lien or security interest created hereby. Except with respect to Rents and Profits to the extent specifically provided herein to the contrary, Beneficiary shall have the right of possession of all cash, securities, instruments, negotiable instruments, documents, certificates and any other evidences of cash or other property or evidences of rights to cash rather than property, which are now or hereafter a part of the Property, and Grantor shall promptly deliver the same to Beneficiary, endorsed to Beneficiary, without further notice from Beneficiary. Grantor agrees to furnish Beneficiary with notice of any change in the name, identity, organizational structure, residence, or principal place of business or mailing address of Grantor within ten (10) days of the effective date of any such change. Upon the occurrence of any Event of Default, Beneficiary shall have the rights and remedies as prescribed in this Deed of Trust, or as prescribed by general law, or as prescribed by any applicable Uniform Commercial Code, all at Beneficiary’s election. Any disposition of the Collateral may be conducted by an employee or agent of Beneficiary. Any person, including both Grantor and Beneficiary, shall be eligible to purchase any part or all of the Collateral at any such disposition. Expenses of retaking, holding, preparing for sale, selling or the like (including, without limitation, Beneficiary’s attorneys’ fees and legal expenses), together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. Beneficiary shall have the right to enter upon the Land and the Improvements or any real property where any of the property which is the subject of the security interest granted herein is located to take possession of, assemble and collect the same or to

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render it unusable, or Grantor, upon demand of Beneficiary, shall assemble such property and make it available to Beneficiary at the Land, or at a place which is hereby deemed to be reasonably convenient to Beneficiary and Grantor. If notice is required by law, Beneficiary shall give Grantor at least ten (10) days’ prior written notice of the time and place of any public sale of such property or of the time of or after which any private sale or any other intended disposition thereof is to be made, and if such notice is sent to Grantor, as the same is provided for the mailing of notices herein, it is hereby deemed that such notice shall be and is reasonable notice to Grantor. No such notice is necessary for any such property which is perishable, threatens to decline speedily in value or is of a type customarily sold on a recognized market. Any sale made pursuant to the provisions of this Section shall be deemed to have been a public sale conducted in a commercially reasonable manner if held contemporaneously with the foreclosure sale as provided in Section 3.l(e) hereof upon giving the same notice with respect to the sale of the Property hereunder as is required under said Section 3.l(e). Furthermore, to the extent permitted by law, in conjunction with, in addition to or in substitution for the rights and remedies available to Beneficiary pursuant to any applicable Uniform Commercial Code:

(a)        In the event of a foreclosure sale, the Property may, at the option of Beneficiary, be sold as a whole; and

(b)       It shall not be necessary that Beneficiary take possession of the aforementioned Collateral, or any part thereof, prior to the time that any sale pursuant to the provisions of this Section is conducted and it shall not be necessary that said Collateral, or any part thereof, be present at the location of such sale; and

(c)       Beneficiary may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Beneficiary, including the sending of notices and the conduct of the sale, but in the name and on behalf of Beneficiary.

The name and address of Grantor (as Debtor under any applicable Uniform Commercial Code) are:

Sunwood Village Joint Venture

C/O SPECS, Inc.

Suite LH-06,4200 Blue Ridge Boulevard

Kansas City, Missouri 64133

The name and address of Beneficiary (as Secured Party under any applicable Uniform Commercial Code) are:

First Union National Bank

One First Union Center,

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301 South College Street, NC 0166

Charlotte, North Carolina 28288-0166

1.23    Easements and Rights-of-Way. Grantor shall not grant any easement or right-of-way with respect to all or any portion of the Land or the Improvements without the prior written consent of Beneficiary. The purchaser at any foreclosure sale hereunder may, at its discretion, disaffirm any easement or right-of-way granted in violation of any of the provisions of this Deed of Trust and may take immediate possession of the Property free from, and despite the terms of, such grant of easement or right-of-way. If Beneficiary consents to the grant of an easement or right-of-way, Beneficiary agrees to grant such consent provided that Beneficiary is paid a standard review fee together with all other expenses, including, without limitation, attorneys’ fees, incurred by Beneficiary in the review of Grantor’s request and in the preparation of documents effecting the subordination.

1.24     Compliance with Laws. Grantor shall at all times comply with all statutes, ordinances, orders, regulations and other governmental or quasi-governmental requirements and private covenants now or hereafter relating to the ownership, construction, use or operation of the Property, including, but not limited to, those concerning employment and compensation of persons engaged in operation and maintenance of the Property and any environmental or ecological requirements, even if such compliance shall require structural changes to the Property; provided, however. that, Grantor may, upon providing Beneficiary with security satisfactory to Beneficiary, proceed diligently and in good faith to contest the validity or applicability of any such statute, ordinance, regulation or requirement so long as during such contest the Property shall not be subject to any lien, charge, fine or other liability and shall not be in danger of being forfeited, lost or closed. Grantor shall not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any Lease of or any other agreement applicable to the Property or any applicable law, rule, regulation or order or which constitutes a public or private nuisance or which makes void, voidable or cancelable, or increases the premium of, any insurance then in force with respect thereto.

1.25     Additional Taxes. In the event of the enactment after this date of any law of the state where the Property is located or of any other governmental entity deducting from the value of the Property for the purpose of taxing any lien or security interest thereon, or imposing upon Beneficiary the payment of the whole or any part of the taxes or assessments or charges or liens herein required to be paid by Grantor, or changing in any way the laws relating to the taxation of deeds of trust, mortgages or security agreements or debts secured by deeds of trust, mortgages or security agreements or the interest of the beneficiary, mortgagee or secured party in the property covered thereby, or the manner of collection of such taxes, so as to adversely affect this Deed of Trust or the indebtedness secured hereby or Beneficiary, then, and in any such event, Grantor, upon demand by Beneficiary, shall pay such taxes, assessments, charges or liens, or reimburse Beneficiary therefor; provided. however.

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that if in the opinion of counsel for Beneficiary (a) it might be unlawful to require Grantor to make such payment, or (b) the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law, then and in either such event, Beneficiary may elect, by notice in writing given to Grantor, to declare all of the indebtedness secured hereby to be and become due and payable in full thirty (30) days from the giving of such notice.

1.26    Secured Indebtedness. It is understood and agreed that this Deed of Trust shall secure payment of not only the indebtedness evidenced by the Note but also any and all substitutions, replacements, renewals and extensions of the Note, any and all indebtedness and obligations arising pursuant to the terms hereof and any and all indebtedness and obligations arising pursuant to the terms of any of the other Loan Documents, all of which indebtedness is equally secured with and has the same priority as any amounts advanced as of the date hereof. It is agreed that any future advances made by Beneficiary to or for the benefit of Grantor from time to time under this Deed of Trust or the other Loan Documents and whether or not such advances are obligatory or are made at the option of Beneficiary, or otherwise, made for any purpose, within twenty (20) years from the date hereof, and all interest accruing thereon, shall be equally secured by this Deed of Trust and shall have the same priority as all amounts, if any, advanced as of the date hereof and shall be subject to all of the terms and provisions of this Deed of Trust.

1.27    Grantor’s Waivers. To the full extent permitted by law, Grantor agrees that Grantor shall not at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any appraisement, valuation, stay, moratorium or extension, or any law now or hereafter in force providing for the reinstatement of the indebtedness secured hereby prior to any sale of the Property to be made pursuant to any provisions contained herein or prior to the entering of any decree, judgment or order of any court of competent jurisdiction, or any right under any statute to redeem all or any part of the Property so sold. Grantor, for Grantor and Grantor’s successors and assigns, and for any and all persons ever claiming any interest in the Property, to the full extent permitted by law, hereby knowingly, intentionally and voluntarily with and upon the advice of competent counsel: (a) waives, releases, relinquishes and forever forgoes all rights of valuation, appraisement, stay of execution, reinstatement and notice of election or intention to mature or declare due the secured indebtedness (except such notices as are specifically provided for herein); (b) waives, releases, relinquishes and forever forgoes all right to a marshalling of the assets of Grantor, including the Property, to a sale in the inverse order of alienation, or to direct the order in which any of the Property shall be sold in the event of foreclosure of the liens and security interests hereby created and agrees that any court having jurisdiction to foreclose such liens and security interests may order the Property sold as an entirety; and (c) waives, releases, relinquishes and forever forgoes all rights and periods of redemption provided under applicable law. To the full extent permitted by law, Grantor shall not have or assert any right under any statute or rule of law pertaining to the exemption of

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homestead or other exemption under any federal, state or local law now or hereafter in effect, the administration of estates of decedents or other matters whatever to defeat, reduce or affect the right of Beneficiary under the terms of this Deed of Trust to a sale of the Property, for the collection of the secured indebtedness without any prior or different resort for collection, or the right of Beneficiary under the terms of this Deed of Trust to the payment of the indebtedness secured hereby out of the proceeds of sale of the Property in preference to every other claimant whatever. Further, Grantor hereby knowingly, intentionally and voluntarily, with and upon the advice of competent counsel, waives, releases, relinquishes and forever forgoes all

present and future statutes of limitations as a defense to any action to enforce the provisions of this Deed of Trust or to collect any of the indebtedness secured hereby to the fullest extent permitted by law. Grantor covenants and agrees that upon the commencement of a voluntary or involuntary bankruptcy proceeding by or against Grantor, Grantor shall not seek a supplemental stay or otherwise shall not seek pursuant to 11 U.S.C. $105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Beneficiary to enforce any rights of Beneficiary against any guarantor or indemnitor of the secured obligations or any other party liable with respect thereto by virtue of any indemnity, guaranty or otherwise.

1.28 SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL.

(a)GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING OR RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS, (ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION OVER THE COUNTY IN WHICH THE PROPERTY IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). GRANTOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO GRANTOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 5.5 HEREOF, AND

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CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

(b)GRANTOR AND BENEFICIARY, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THE INDEBTEDNESS SECURED HEREBY OR ANY CONDUCT, ACT OR OMISSION OF BENEFICIARY OR GRANTOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MANAGING MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH BENEFICIARY OR GRANTOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

1.29     Contractual Statute of Limitations. Grantor hereby agrees that any claim or cause of action by Grantor against Beneficiary, or any of Beneficiary’s directors, officers, employees, agents, accountants or attorneys, based upon, arising from or relating to the indebtedness secured hereby, or any other matter, cause or thing whatsoever, whether or not relating thereto, occurred, done, omitted or suffered to be done by Beneficiary or by Beneficiary’s directors, officers, employees, agents, accountants or attorneys, whether sounding in contract or in tort or otherwise, shall be barred unless asserted by Grantor by the commencement of an action or proceeding in a court of competent jurisdiction by the filing of a complaint within one (1) year after Grantor first acquires or reasonably should have acquired knowledge of the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based and service of a summons and complaint on an officer of Beneficiary or any other person authorized to accept service of process on behalf of Beneficiary, within thirty (30) days thereafter. Grantor agrees that such one (1) year period of time is reasonable and sufficient time for a borrower to investigate and act upon any such claim or cause of action. The one (1) year period provided herein shall not be waived, tolled or extended except by the specific written agreement of Beneficiary. This provision shall survive any termination of this Deed of Trust or any of the other Loan Documents.

1.30     Management. The management of the Property shall be by either: (a) Grantor or an entity affiliated with Grantor approved by Beneficiary for so long as Grantor or said affiliated entity is managing the Property in a first class manner; or (b) a professional property management company approved by Beneficiary. Such management by an affiliated entity or a professional property management company shall be pursuant to a written agreement approved by Beneficiary. In no event shall

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any manager be removed or replaced or the terms of any management agreement modified or amended without the prior written consent of Beneficiary. After an Event of Default or a default under any management contract then in effect, which default is not cured within any applicable grace or cure period, Beneficiary shall have the right to terminate, or to direct Grantor to terminate, such management contract upon thirty (30) days’ notice and to retain, or to direct Grantor to retain, a new management agent approved by Beneficiary. All Rents and Profits generated by or derived from the Property shall first be utilized solely for current expenses directly attributable to the ownership and operation of the Property, including, without limitation, current expenses relating to Grantor’s liabilities and obligations with respect to this Deed of Trust and the other Loan Documents, and none of the Rents and Profits generated by or derived from the Property shall be diverted by Grantor and utilized for any other purposes unless all such current expenses attributable to the ownership and operation of the Property have been fully paid and satisfied.

1.31 Hazardous Waste and Other Substances.

(a)       Grantor hereby represents and warrants to Beneficiary that, as of the date hereof: (i) to the best of Grantor’s knowledge, information and belief, the Property is not in direct or indirect violation of any local, state or federal law, rule or regulation pertaining to environmental regulation, contamination or clean-up (collectively, “Environmental Laws”), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq. and 40 CFR §302.1 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §1251 et seq. and 40 CFR §116.1 et seq.), those relating to lead based paint, and the Hazardous Materials Transportation Act (49 U.S.C. $1801 et seq.), and the regulations promulgated pursuant to said laws, all as amended; (ii) no hazardous, toxic or harmful substances, wastes, materials, pollutants or contaminants (including, without limitation, asbestos, lead based paint, polychlorinated biphenyls, petroleum products, flammable explosives, radioactive materials, infectious substances or raw materials which include hazardous constituents) or any other substances or materials which are included under or regulated by Environmental Laws (collectively, “Hazardous Substances”) are located on or have been handled, generated, stored, processed or disposed of on or released or discharged from the Property (including underground contamination), except for those substances used by Grantor in the ordinary course of its business and in compliance with all Environmental Laws; (iii) the Property is not subject to any private or governmental lien or judicial or administrative notice or action relating to Hazardous Substances; (iv) there are no existing or closed underground storage tanks or other underground storage receptacles for Hazardous Substances on the Property; (v) Grantor has received no notice of, and to the best of Grantor’s knowledge and belief, there exists no investigation, action, proceeding or claim by any agency, authority or unit of government or by any third party which could result in any liability, penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or operation of the Property,

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nor does Grantor know of any basis for such a claim; and (vi) Grantor has received no notice of and, to the best of Grantor’s knowledge and belief, there has been no claim by any party that any use, operation or condition of the Property has caused any nuisance or any other liability or adverse condition on any other property, nor does Grantor know of any basis for such a claim.

(b)        Grantor shall keep or cause the Property to be kept free from Hazardous Substances-(except those substances used by Grantor in the ordinary course of-its business and in compliance with all Environmental Laws) and in compliance with all Environmental Laws, shall not install or use any underground storage tanks, shall expressly prohibit the use, generation handling, storage, production, processing and disposal of Hazardous Substances by all tenants of space in the Improvements, and, without limiting the generality of the foregoing, during the term of this Deed of Trust, shall not install in the Improvements or permit to be installed in the Improvements asbestos or any substance containing asbestos.

(c)       Grantor shall promptly notify Beneficiary if Grantor shall become aware of the possible existence of any Hazardous Substances on the Property or if Grantor shall become aware that the Property is or may be in direct or indirect violation of any Environmental Laws. Further, immediately upon receipt of the same, Grantor shall deliver to Beneficiary copies of any and all orders, notices, permits, applications, reports, and other communications, documents and instruments pertaining to the actual, alleged or potential presence or existence of any Hazardous Substances at, on, about, under, within, near or in connection with the Property. Grantor shall, promptly and when and as required by Beneficiary, at Grantor’s sole cost and expense, take all actions as shall be necessary or advisable, in Beneficiary’s discretion, for the clean-up of any and all portions of the Property or other affected property, including, without limitation, all investigative, monitoring, removal, containment and remedial actions in accordance with all applicable Environmental Laws (and in all events in a manner satisfactory to Beneficiary) and shall further pay or cause to be paid, at no expense to Beneficiary, all clean-up, administrative and enforcement costs of applicable governmental agencies which may be asserted against the Property. In the event Grantor fails to do so, Beneficiary may, but shall not be obligated to, cause the Property or other affected property to be freed from any Hazardous Substances or otherwise brought into conformance with Environmental Laws and any and all costs and expenses incurred by Beneficiary in connection therewith, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. Grantor hereby grants to Beneficiary and its agents and employees access to the Property and a license to remove any items deemed by Beneficiary to be Hazardous Substances and to do all things Beneficiary shall deem necessary to bring the Property in conformance with Environmental Laws. Grantor covenants and agrees, at Grantor’s sole cost and expense, to indemnify, defend (at trial and appellate levels, and with

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attorneys, consultants and experts acceptable to Beneficiary), and hold Beneficiary harmless from and against any and all liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding) which may at any time be imposed upon, incurred by or asserted or awarded against Beneficiary or the Property, and arising directly or indirectly from or out of: (i) the presence, release or threat of release of any Hazardous Substances on, in, under or affecting all or any portion of the Property or any surrounding areas, regardless of whether or not caused by or within the control of Grantor; (ii) the violation of any Environmental Laws relating to or affecting the Property, whether or not caused by or within the control of Grantor; (iii) the failure by Grantor to comply fully with the terms and conditions of this Section 1.3 1; (iv) the breach of any representation or warranty contained in this Section 1.31; or (v) the enforcement of this Section 1.31, including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Substances from all or any portion of the Property or any surrounding areas, the cost of any actions taken in response to the presence, release or threat of release of any Hazardous Substances on, in, under or affecting any portion of the Property or any surrounding areas to prevent or minimize such release or threat of release so that it does not migrate or otherwise cause or threaten danger to present or future public health, safety, welfare or the environment, and costs incurred to comply with the Environmental Laws in connection with all or any portion of the Property or any surrounding areas. The indemnity set forth in this Section 1.3 l(c) shall also include any diminution in the value of the security afforded by the Property or any future reduction in the sales price of the Property by reason of any matter set forth in this Section 1.31(c).. Beneficiary’s rights under this Section shall survive payment in full of the indebtedness secured hereby and shall be in addition to all other rights of Beneficiary under this Deed of Trust, the Note and the other Loan Documents.

(d)        Upon Beneficiary’s request, at any time after the occurrence of an Event of Default hereunder or at such other time as Beneficiary has reasonable grounds to believe that Hazardous Substances are or have been released, stored or disposed of on or around the Property or that the Property may be in violation of the Environmental Laws, Grantor shall provide, at Grantor’s sole cost and expense, an inspection or audit of the Property prepared by a hydrogeologist or environmental engineer or other appropriate consultant approved by Beneficiary indicating the presence or absence of Hazardous Substances on the Property or an inspection or audit of the Improvements prepared by an engineering or consulting firm approved by Beneficiary indicating the presence or absence of friable asbestos or substances containing asbestos on the Property. If Grantor fails to provide such inspection or audit within thirty (30) days after such request, Beneficiary may order the same, and Grantor hereby grants to Beneficiary and its employees and agents access to the Property and a license to undertake such inspection or audit. The cost of such

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inspection or audit, together with interest thereon at the Default Interest Rate from the date incurred by Beneficiary until actually paid by Grantor, shall be immediately paid by Grantor on demand and shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

(e)        Reference is made to that certain Hazardous Substances Indemnity Agreement of even date herewith by and among Grantor, Sunwood Village, Inc. and Beneficiary (the “Hazardous Indemnity Agreement”). The provisions of this Deed of Trust and the Hazardous Indemnity Agreement shall be read together to maximize the coverage with respect to the subject matter thereof, as determined by Beneficiary.

(f)If, prior to the date hereof, it was determined that the Property contains Lead Based Paint, Grantor had prepared an assessment report describing the location and condition of the Lead Based Paint (a “Lead Based Paint Report”). If, at any time hereafter, Lead Based Paint is suspected of being present on the Property, Grantor agrees, at its sole cost and expense and within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by an expert, and in form, scope and substance, acceptable to Beneficiary.

(g)        Grantor agrees that if it has been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint, on or before thirty (30) days following (i) the date hereof, if such determination was made prior to the date hereof or (ii) such determination, if such-determination is hereafter made, as applicable, Grantor shall, at its sole cost and expenses, develop and implement, and thereafter diligently and continuously carryout (or cause to be developed and implemented and thereafter diligently and continually to be carried out), an operations, abatement and maintenance plan for the Lead Based Paint on the Property, which plan shall be prepared by an expert, and be in form, scope and substance, acceptable to Beneficiary (together with any Lead Based Paint Report, the “O&M Plan”). (If an O&M Plan has been prepared prior to the date hereof, Grantor agrees to diligently and continually carry out (or cause to be carried out) the provisions thereof). Compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and maintenance of all records, papers and forms required under the Environmental Laws.

1.32 Indemnification: Subrogation.

(a)       Grantor shall indemnify, defend and hold Beneficiary harmless against: (i) any and all claims for brokerage, leasing, finders or similar fees which may be made relating to the Property or the secured indebtedness, and (ii) any and all liability, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses (including Beneficiary’s reasonable attorneys’ fees, together with reasonable appellate counsel fees, if any) of whatever kind or nature which may be

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asserted against, imposed on or incurred by Beneficiary in connection with the secured indebtedness, this Deed of Trust, the Property, or any part thereof, or the exercise by Beneficiary of any rights or remedies granted to it under this Deed of Trust; provided, however, that nothing herein shall be construed to obligate Grantor to indemnify, defend and hold harmless Beneficiary from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses enacted against, imposed on or incurred by Beneficiary by reason of Beneficiary’s willful misconduct or gross negligence.

(b)        If Beneficiary is made a party defendant to any litigation or any claim is threatened or brought against Beneficiary concerning the secured indebtedness, this Deed of Trust, the Property, or any part thereof, or any interest therein, or the construction, maintenance, operation or occupancy or use thereof, then Grantor shall indemnify, defend and hold Beneficiary harmless from and against all liability by reason of said litigation or claims, including reasonable attorneys’ fees (together with reasonable appellate counsel fees, if any) and expenses incurred by Beneficiary in any such litigation or claim, whether or not any such litigation or claim is prosecuted to judgment. If Beneficiary commences an action against Grantor to enforce any of the terms hereof or to prosecute any breach by Grantor of any of the terms hereof or to recover any sum secured hereby, Grantor shall pay to Beneficiary its reasonable attorneys’ fees (together with reasonable appellate counsel, fees, if any) and expenses. The right to such attorneys’ fees (together with reasonable appellate counsel fees, if any) and expenses shall be deemed to have accrued on the commencement of such action, and shall be enforceable whether or not such action is prosecuted to judgment. If Grantor breaches any term of this Deed of Trust, Beneficiary may engage the services of an attorney or attorneys to protect its rights hereunder, and in the event of such engagement following any breach by Grantor, Grantor shall pay Beneficiary its reasonable attorneys’ fees (together with reasonable appellate counsel fees, if any) and expenses incurred by Beneficiary, whether or not an action is actually commenced against Grantor by reason of such breach. All references to “attorneys” in this Subsection and elsewhere in this Deed of Trust shall include, without limitation, any attorney or law firm engaged by Beneficiary, and all references to “fees and expenses” in this Subsection and elsewhere in this Deed of Trust shall include, without limitation, any fees of such attorney or law firm.

(c)        A waiver of subrogation shall be obtained by Grantor from its insurance carrier and, consequently, Grantor waives any and all right to claim or recover against Beneficiary, its officers, employees, agents and representatives, for loss of or damage to Grantor, the Property, Grantor’s property or the property of others under Grantor’s control from any cause insured against or required to be insured against by the provisions of this Deed of Trust.

1.33Covenants with Respect to Indebtedness. Operations and Fundamental Changes to Grantor. Grantor represents, warrants and covenants as of the date hereof and until such time as the indebtedness secured hereby is paid in full, that Grantor:

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(a)       will not, nor will any partner, limited or general, member or shareholder thereof, as applicable, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization, or other formation agreement or document, as applicable, in any material term or manner, or in a manner which adversely affects Grantor’s existence as a single purpose entity;

(b)        will not enter into any transaction of merger or consolidation, or liquidate or dissolve itself (or suffer any liquidation or dissolution), or acquire by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of, any entity;

(c)       has not and will not guarantee, pledge its assets for the benefit of, or otherwise become liable on or in connection with any other person or entity;

(d)        does not own and will not own any encumbered asset other than (i) the Property, and (ii) incidental personal property necessary for the operation of the Property;

(e)        is not engaged and will not engage in any business other than the ownership, management and operation of the Property;

(f)        will not enter into any contract or agreement with any general partner, member, principal or Affiliate (as hereinafter defined) of Grantor or any Affiliate of the general partner, principal or member of Grantor, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties other than an Affiliate;

(g)        has not incurred and will not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) the secured indebtedness, and (ii) trade payables or accrued expenses incurred in the ordinary course of business of operating the Property for more than 60 days with trade creditors and in amounts as are normal and reasonable under the circumstances, but in no event to exceed $302,400.00 and no other debt may be secured (senior, subordinate or pari passu) by the Property;

(h)        has not made and will not make any loans or advances to any third party (including any Affiliate);

(i)         is and will be solvent and pay its debt from its assets as the same shall become due;

(j)        has done or caused to be done and will do all things necessary to preserve its existence, and will not, nor will any partner, limited or general, or

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shareholder thereof, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation or by-laws in a manner which adversely affects Grantor’s existence as a single purpose entity;

(k)        will conduct and operate its business as presently conducted and operated;

(1)       will maintain financial statements, books and records and bank accounts separate from those of its Affiliates, including its general partners and managing members;

(m)      will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate thereof, including any general Partner or member or any Affiliate of the general partner or member of the Grantor);

(n) will file its own tax returns;

(0)       will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

(p)       will not seek the dissolution or winding up, in whole or in part, of Grantor;

(q)       will not commingle the funds and other assets of Grantor with those of any general partner, member, any Affiliate or any other person;

(r)        has and will maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other person;

(s) does not and will not hold itself out to be responsible for the debts or obligations of any other person;

(t)         will not do any act which would make it impossible to cany on the ordinary business of Grantor;

(u)       will not possess or assign the Property or incidental personal property necessary for the operation of the Property for other than a business or company purpose;

(v)       will not sell, encumber or otherwise dispose of all or substantially all of the Property or incidental personal property necessary for the operation of the Property;

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(w)      will not hold title to Grantor’s assets other than in Grantor’s name; and

(x)       will not institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable federal or state law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Grantor or a substantial part of Grantor’s property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due; or take any action in furtherance of any such action.

1.34    Covenants Regarding. Sunwood Village. Inc. By execution hereof, Sunwood Village, Inc. (Sunwood Village, Inc. and any successor or assignee are hereinafter the “General Partner”) agrees that it:

(a)        shall at all times act as the general partner of Grantor with all of the rights, powers, obligations and liabilities of general partner under the limited partnership agreement of Grantor and shall take any and all actions and do any and all things necessary or appropriate to the accomplishment of same and will engage in no other business.

(b)        shall not, institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable federal or state law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the General Partner or a substantial part of its property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due; or take any corporate action in furtherance of any such action.

(c)        shall not, (a) liquidate or dissolve the General Partner in whole or in part and (b) consolidate, merge or enter into any form of consolidation with or into any other entity, nor convey, transfer or lease its assets substantially as an entirety to any person or entity nor permit any entity to consolidate, merge or enter into any form of consolidation with or into the General Partner, nor convey, transfer or lease its assets substantially as an entirety to any person or entity.

(d)        shall maintain its principal executive office and telephone and facsimile numbers separate from that of any Affiliate and shall conspicuously identify such office and numbers as its own and shall use its own stationary, invoices and checks which reflect its address, telephone number and facsimile number, as appropriate;

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(e)        shall maintain its corporate records and books and accounts separate from those of any Affiliate or any other entity and shall prepare unaudited quarterly and annual financial statements, and said financial statements shall be in compliance with generally accepted accounting principles and shall be in form reasonably acceptable to Beneficiary and its successors and/or assigns;

(f)         shall maintain its own separate bank accounts and correct, complete and separate books of account;

(g)       shall hold itself out to the public (including any Affiliate’s creditors) under the General Partner’s own name and as a separate and distinct corporate entity and not as a department, division or otherwise of any Affiliate;

(h)        shall observe all customary formalities regarding the corporate existence of the General Partner, including holding meetings of or obtaining the consent of its board of directors, as appropriate, and its stockholders and maintaining current accurate minute books separate from those of any Affiliate;

(i)        shall act solely in its own corporate name and through its own duly authorized officers and agents and no Affiliate shall be appointed or act as agent of the General Partner in its capacity as general partner of Grantor;

(j)         shall make investments in the name of the General Partner directly by the General Partner or on its behalf by brokers engaged and paid by the General Partner or its agents;

(k)except as required by Beneficiary or any successor to Beneficiary in connection with any extension of credit by Beneficiary or any successor to Beneficiary to Grantor (or any refinancing, increase, modification, consolidation or extension of any such extension of credit), shall not guaranty or assume or hold itself out or permit itself to be held out as having guaranteed or assumed any liabilities of any partner of Grantor or any Affiliate other than Grantor, nor shall the General Partner make any loan, except as permitted in the applicable Agreement of Limited Partnership of Grantor;

(l)         represents and warrants that the General Partner is and expects to remain solvent and shall pay its own liabilities, indebtedness and obligations of any kind, including all administrative expenses, from its own separate assets;

(m)      represents and warrants that assets of the General Partner shall be separately identified, maintained and segregated and the General Partner’s assets shall at all times be held by or on behalf of the General Partner and if held on behalf of the General Partner by another entity, shall at all times be kept identifiable (in accordance with customary usages) as assets owned by the General Partner (this restriction requires, among other things, that corporate funds shall not be commingled

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with those of any Affiliate and it shall maintain all accounts in its own name and with its own tax identification number, separate from those of any Affiliates);

(n)        shall not intentionally take any action if, as a result of such action, the General Partner would be required to register as an investment company under the Investment Company Act of 1940, as amended;

(o)       shall at all times be adequately capitalized to engage in the transactions contemplated at its formation;

(p)      represents and warrants that all data and records (including computer records) used by the General Partner or any Affiliate in the collection and administration of any loan shall reflect the General Partner’s ownership interest therein; and

(q)        represents and warrants that none of the General Partner’s funds shall be invested in securities issued by any Affiliate.

(r) shall maintain one (1) Independent Director.

“Independent Director” means a natural person who has not been, and during the continuation of his or her services as Independent Director (i) except in the capacity as an Independent Director of the General Partner, is not and has never been an employee, officer, director, shareholder, partner, member, counsel or agent of the General Partner or any other partner to Mortgagor (individually, a “Partner,” collectively, the “Partners”) or any Affiliate of either of same, (ii) is not a present or former customer or supplier of any Partner, Grantor or any Affiliate of either of same, or other person or entity who derives or is entitled to derive any of its profits or revenues or any payments (other than any fee paid to such director as compensation for such director to serve as an Independent Director) from any Partner, Grantor or any Affiliate of either of same, (iii) is not (and is not affiliated with an entity that is) a present or former advisor or consultant to any Partner, Grantor or any Affiliate of either of same, (iv) is not a spouse, parent, child, grandchild or sibling of, or otherwise related to (by blood or by law), any of (i), (ii) or (iii) above, and (v) is not affiliated with a person or entity of which any Partner, Grantor or any Affiliate of either of same is a present or former customer or supplier, provided, however, that an entity that provides independent directors as a service for a fee is not prohibited under this paragraph 8(a) from providing one or more independent directors to the General Partner. In the event of the death, incapacity, resignation or removal of an Independent Director, the Board of Directors of the General Partner shall promptly appoint a replacement Independent Director and no action requiring the consent of the Independent Director shall be taken until a replacement Independent Director has been appointed.

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“Affiliate” means any person or entity which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a specified person or entity. For purposes hereof, the terms “control”, “controlled”, or “controlling” with respect to a specified person or entity shall include, without limitation, (i) the ownership, control or power to vote ten (10%) percent or more of (x) the outstanding shares of any class of voting securities or (y) beneficial interests, of any such person or entity, as the case may be, directly or indirectly, or acting through one or more persons or entities, (ii) the control in any manner over the General Partner(s) or the election of more than one director or trustee (or persons exercising similar functions) of such person or entity, or (iii) the power to exercise, directly or indirectly, control over the management or policies of such person or entity.

1.35     Repair and Remediation Reserve. Prior to the execution of this Deed of Trust, Beneficiary has caused the Property to be inspected and such inspection has revealed that the Property is in need of certain maintenance, repairs and/or remedial or corrective work. Contemporaneously with the execution hereof, Grantor has established with the Beneficiary a reserve in the amount of $2,187.50 (the “Repair and Remediation Reserve”) by depositing such amount with Beneficiary. Grantor shall cause each of the items described in Exhibit C attached hereto and made a part hereof and as more particularly described in that certain Engineering Report entitled Property Condition Report, dated May 7, 2001 and prepared Dominian Environmental Group, Inc. (the “Deferred Maintenance”) to be completed, performed, remediated and corrected to the satisfaction of Beneficiary and as necessary to bring the Property into compliance with all applicable laws, ordinances, rules and regulations on or before the expiration of 90 days after the effective date hereof, as such time period may be extended by Beneficiary in its sole discretion. So long as no Default or Event of Default hereunder or under the other Loan Documents has occurred and is continuing, all sums in the Repair and Remediation Reserve shall be held by Beneficiary in the Repair and Remediation Reserve to pay the costs and expenses of completing the Deferred Maintenance. So long as no Default or Event of Default hereunder or under the other Loan Documents has occurred and is continuing, Beneficiary shall, to the extent funds are available for such purpose in the Repair and Remediation Reserve, disburse to Grantor the amount paid or incurred by Grantor in completing, performing, remediating or correcting the Deferred Maintenance upon (a) the receipt by Beneficiary of a written request from Grantor for disbursement from the Repair and Remediation Reserve and a certification by Grantor in the form annexed hereto as Exhibit B that the applicable item of Deferred Maintenance has been paid for and completed in accordance with the terms of this Deed of Trust, (b) delivery to Beneficiary of paid invoices, receipts or other evidence satisfactory to Beneficiary verifying the costs of the Deferred Maintenance to be reimbursed, (c) delivery to Beneficiary of a certification from

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an inspecting architect, engineer or other consultant reasonably acceptable to Beneficiary describing the completed work, verifying the completion of the work and the value of the completed work and, if applicable, certifying that the Property is, as a result of such work, in compliance with all applicable laws, ordinances rules and regulations relating to the Deferred Maintenance so performed, (d) delivery to Beneficiary of affidavits, lien waivers or other evidence reasonably satisfactory to Beneficiary showing that all materialmen, laborers, subcontractors and any other parties who might or could claim statutory or common law liens and are furnishing or have furnished materials or labor to the Property have been paid all amounts due for such labor and materials furnished to the Property, and (e) the receipt by Beneficiary of an administrative fee in the amount of $150.00. Beneficiary shall not be required to make advances from the Repair and Remediation Reserve more frequently than once in any ninety (90) day period. In making any payment from the Repair and Remediation Reserve, Beneficiary shall be entitled to rely on such request from Grantor without any inquiry into the accuracy, validity or contestability of any such amount. Grantor hereby grants to Beneficiary, as additional security for payment of the indebtedness secured hereby, a security interest in the Repair and Remediation Reserve. In no event may Grantor be entitled to reimbursement of any costs with respect to each item of Deferred Maintenance in excess of the applicable amount set forth in Exhibit C attached hereto and made part hereof. The Repair and Remediation Reserve shall not, unless otherwise explicitly required by applicable law, be or be deemed to be escrow or trust funds, but at Beneficiary’s option and in Beneficiary’s discretion, may either be held in a separate account or be commingled by Beneficiary with the general funds of Beneficiary. No interest on the funds contained in the Repair and Remediation Reserve shall be paid by Beneficiary to Grantor. The Repair and Remediation Reserve is solely for the protection of Beneficiary and entails no responsibility on Beneficiary’s part beyond the payment of the costs and expenses described in this paragraph in accordance with the terms hereof and beyond the allowing of due credit for the sums actually received. In the event that the amounts on deposit or available in the Repair and Remediation Reserve are inadequate to pay the costs of the Deferred Maintenance, Grantor shall pay the amount of such deficiency. Upon assignment of this Deed of Trust by Beneficiary, any funds in the Repair and Remediation Reserve shall be turned over to the assignee and any responsibility of Beneficiary, as assignor, with respect thereto shall terminate. If there is a default under this Deed of Trust which is not cured within any applicable grace or cure period, Beneficiary may, but shall not be obligated to, apply at any time the balance then remaining in the Repair-and Remediation Reserve against the indebtedness secured hereby in whatever order Beneficiary shall subjectively determine. No such application of the Repair and Remediation Reserve shall be deemed to cure any default hereunder. Grantor hereby grants to Beneficiary a power-of-attorney, coupled with an interest, to cause the Deferred Maintenance to be completed, performed, remediated and corrected to the satisfaction of Beneficiary upon Grantor’s failure to do so in accordance with the terms and conditions of this Deed of Trust, and to apply the amounts on deposit in the

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Repair and Remediation Reserve to the costs associated therewith, all as Beneficiary may determine in its sole and absolute discretion but without obligation to do so. Upon the earlier to occur of full payment of the indebtedness secured hereby in accordance with its terms, the completion of the Deferred Maintenance to the satisfaction of the Beneficiary or at such earlier time as Beneficiary may elect, the balance of the Repair and Remediation Reserve then in Beneficiary’s possession shall be paid over to Grantor and no other party shall have any right or claim thereto.

ARTICLE II

EVENTS OF DEFAULT

2.1      Events of Default. The occurrence of any of the following events (each, an “Event of Default”) shall be an Event of Default hereunder:

(a)       Grantor fails to punctually perform any covenant, agreement, obligation, term or condition under the Note, this Deed of Trust or any other Loan Document which requires payment of any money to Beneficiary at the time or within any applicable grace period set forth therein or herein, or if no time or grace period is set forth, then within seven (7) days of the date such payment is due or following demand if there is no due date.

(b)        Grantor fails to provide insurance as required by Section 1.4 hereof or fails to perform any covenant, agreement, obligation, term or condition set forth in Sections 1.5, 1.15. 1.31. 1.33 or 1.35 hereof.

(c)        Grantor fails to perform any other covenant, agreement, obligation, term or condition set forth herein other than those otherwise described in this Section 2.1and, to the extent such failure or default is susceptible of being cured, the continuance of such failure or default for thirty (30) days after written notice thereof from Beneficiary to Grantor; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with reasonable diligence within said period of time, and if Grantor commences to cure such default promptly after receipt of notice thereof from Beneficiary, and thereafter prosecutes the curing of such default with reasonable diligence, such period of time shall be extended for such period of time as may be necessary to cure such default with reasonable diligence, but not to exceed an additional sixty (60) days.

(d)       Any representation or warranty made herein, in or in connection with any application or commitment relating to the loan evidenced by the Note, or in any of the other Loan Documents to Beneficiary by Grantor, by any principal, general partner, manager or member in Grantor or by any indemnitor or guarantor under any indemnity or guaranty executed in connection with the loan secured hereby is determined by Beneficiary to have been false or misleading in any material respect at the time made.

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(e)       There shall be a sale, conveyance, disposition, alienation, hypothecation, leasing, assignment, pledge, mortgage, granting of a security interest in or other transfer or further encumbrancing of the Property, Grantor or its general partners or members, or any portion thereof or any interest therein, in violation of Section 1.13 hereof.

(f)       An Event of Default or default occurs under any of the other Loan Documents which has not been cured within any applicable grace or cure period therein provided.

(g)       Grantor, any principal, managing member or general partner in Grantor or any indemnitor or guarantor under any indemnity or guaranty executed in connection with the loan secured hereby becomes insolvent, or shall make a transfer in fraud of creditors, or shall make an assignment for the benefit of creditors, shall file a petition in bankruptcy, shall voluntarily be adjudicated insolvent or bankrupt or shall admit in writing the inability to pay debts as they mature, shall petition or apply to any tribunal for or shall consent to or shall not contest the appointment of a receiver, trustee, custodian or similar officer for Grantor, for any such principal, managing member or general partner of Grantor or for any such indemnitor or guarantor or for a substantial part of the assets of Grantor, of any such principal, managing member or general partner of Grantor or of any such indemnitor or guarantor, or shall commence any case, proceeding or other action under any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect.

(h)       A petition is filed or any case, proceeding or other action is commenced against Grantor, against any principal, managing member or general partner of Grantor or against any indemnitor or guarantor under any indemnity or guaranty executed in connection with the loan secured hereby seeking to have an order for relief entered against it as debtor or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or other relief under any law relating to bankruptcy, insolvency, arrangement, reorganization, receivership or other debtor relief under any law or statute of any jurisdiction, whether now or hereafter in effect, or a court of competent jurisdiction enters an order for relief against Grantor, against any principal, managing member or general partner of Grantor or against any indemnitor or guarantor under any indemnity or guaranty executed in connection with the loan secured hereby, as debtor, or an order, judgment or decree is entered appointing, with or without the consent of Grantor, of any such principal, managing member or general partner of Grantor or of any such indemnitor or guarantor, a receiver, trustee, custodian or similar officer for Grantor, for any such principal, managing member or general partner of Grantor or for any such indemnitor or guarantor, or for any substantial part of any of the properties of Grantor, of any such principal, managing member or general partner of Grantor or of any such

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indemnitor or guarantor, and if any such event shall occur, such petition, case, proceeding, action, order, judgment or decree shall not be dismissed within sixty (60) days after being commenced.

(i)        The Property or any part thereof shall be taken on execution or other process of law in any action against Grantor.

(j) Grantor-abandons-a11 or a portion of the Property.

(k)        The holder of any lien or security interest on the Property (without implying the consent of Beneficiary to the existence or creation of any such lien or security interest), whether superior or subordinate to this Deed of Trust or any of the other Loan Documents, declares a default and such default is not cured within any applicable grace or cure period set forth in the applicable document or such holder institutes foreclosure or other proceedings for the enforcement of its remedies thereunder.

(l)         The Property, or any part thereof, is subjected to actual or threatened waste or to removal, demolition or material alteration so that the value of the Property is materially diminished thereby and Beneficiary determines (in its subjective determination) that it is not adequately protected from any loss, damage or risk associated therewith.

(m)       Any dissolution, termination, partial or complete liquidation, merger or consolidation of Grantor, any of its principals or any general partner or any managing member.

(n)        General Partner fails to perform any covenant, agreement obligation, terms or condition of Section 1.34hereof.

ARTICLE III

REMEDIES

3.1Remedies Available. If there shall occur an Event of Default under this Deed of Trust, then this Deed of Trust is subject to foreclosure as provided by law and Beneficiary may, at its option and by or through a trustee, nominee, assignee or otherwise, to the fullest extent permitted by law, exercise any or all of the following rights, remedies and recourses, either successively or concurrently:

(a)       Acceleration. Accelerate the maturity date of the Note and declare any or all of the indebtedness secured hereby to be immediately due and payable without any presentment, demand, protest, notice or action of any kind whatever (each of which is hereby expressly waived by Grantor), whereupon the same shall become immediately due and payable. Upon any such acceleration,

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payment of such accelerated amount shall constitute a prepayment of the principal balance of the Note and any applicable prepayment fee provided for in the Note shall then be immediately due and payable.

(b)        Entry on the Property. Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of its security, enter upon and take possession of the Property, or any part thereof, without force or with such force as is permitted by law and without notice or process or with such notice or process as is required by law, unless such notice and process is waivable, in which case Grantor hereby waives such notice and process, and do any and all acts and perform any and all work which may be desirable or necessary in Beneficiary’s judgment to complete any unfinished construction on the Land, to preserve the value, marketability or rentability of the Property, to increase the income therefrom, to manage and operate the Property or to protect the security hereof, and all sums expended by Beneficiary therefor, together with interest thereon at the Default Interest-Rate, shall be immediately due and payable to Beneficiary by Grantor on demand and shall be secured hereby and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

(c)        Collect Rents and Profits. With or without taking possession of the Property, sue or otherwise collect the Rents and Profits, including those past due and unpaid.

(d)       Appointment of Receiver. Upon, or at any time prior or after, initiating the exercise of any power of sale, instituting any judicial foreclosure or instituting any other foreclosure of the liens and security interests provided for herein or any other legal proceedings hereunder, make application to a court of competent jurisdiction for appointment of a receiver for all or any part of the Property, as a matter of strict right and without notice to Grantor and without regard to the adequacy of the Property for the repayment of the indebtedness secured hereby or the solvency of Grantor or any person or persons liable for the payment of the indebtedness secured hereby, and Grantor does hereby irrevocably consent to such appointment, waive any and all notices of and defenses to such appointment and agree not to oppose any application therefor by Beneficiary, but nothing herein is to be construed to deprive Beneficiary of any other right, remedy or privilege Beneficiary may now have under the law to have a receiver appointed, provided, however, that the appointment of such receiver, trustee or other appointee by virtue of any court order, statute or regulation shall not impair or in any manner prejudice the rights of Beneficiary to receive payment of the Rents and Profits pursuant to other terms and provisions hereof. Any such receiver shall have all of the usual powers and duties of receivers in similar cases, including, without limitation, the full power to hold, develop, rent, lease, manage, maintain, operate and otherwise use or permit the use of the Property upon such terms and conditions as said receiver may deem to be prudent and reasonable under the circumstances as more fully set forth in Section 3.3 below.

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Such receivership shall, at the option of Beneficiary, continue until full payment of all of the indebtedness secured hereby or until title to the Property shall have passed by foreclosure sale under this Deed of Trust or deed in lieu of foreclosure.

(e)       Foreclosure. Immediately commence an action or proceeding to foreclose this Deed of Trust or to specifically enforce its provisions with respect to the indebtedness secured hereby, pursuant to the statutes in such case made and provided, and sell the Property or cause the Property to be sold in accordance with the requirements and procedures provided by said statutes in a single parcel or in several parcels at the option of Beneficiary.

(1)       Should Beneficiary have elected to accelerate the indebtedness secured hereby, Beneficiary may initiate foreclosure of the Property by requesting the Trustee to effectuate a non-judicial foreclosure sale. The Trustee of this Deed of Trust shall then sell, or offer for sale, the Property at public sale to the highest bidder for cash during a three hour period between the hours of ten o’clock a.m. and four o’clock p.m. whose earliest point in time is specified, on the first Tuesday of any month, at the area officially designated for holding such sales at the courthouse of any county in the State of Nevada in which any part of the Property is situated, after having given notice of the date, the time period, place and terms of said sale in accordance with the laws of the State of Nevada then in force and governing said sales of real property and improvements under powers conferred by deeds of trust. The Property shall be sold by posting, or causing to be posted, at least twenty-one (21) consecutive days prior to the date of said sale, written or printed notice thereof at the courthouse door in each of the counties in which the Property is situated, designating the county where the Property will be sold and designating the date, the time period, the place and the terms of sale. A copy of such notice shall also be filed in the office of the County Clerk in each county of the State of Nevada in which any part of the Property is situated at least twenty-one (21) consecutive days before the date of said sale of the Property. Beneficiary shall have the right to become the purchaser at any sale held by any Trustee or substitute or successor Trustee, or by any receiver or public officer. Any Beneficiary purchasing at any such sale shall have the right to credit the secured indebtedness owing to such Beneficiary upon the amount of its bid entered at such sale to the extent necessary to satisfy such bid. Said Trustee may appoint an attorney-in-fact to act in its stead as Trustee to conduct sale as hereinbefore provided. Grantor authorizes and empowers the Trustee to sell the Property, in lots or parcels or as a whole, and to execute and deliver to the purchaser or purchasers thereof good and sufficient deeds of conveyance thereto of the estate of title then existing on the Property and bills of sale with covenants of general warranty. Grantor binds himself to warrant and forever defend the title of such purchaser or purchasers when so made by the Trustee, and agrees to accept proceeds of said sale, if any, which are payable to Grantor as provided herein. In addition to the posting and filing of notices hereinabove

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provided, and for so long as required by law, no foreclosure under the power of sale herein contained shall be held unless Beneficiary, at least twenty-one (21) days preceding the date of sale and in the manner prescribed by law, shall have served written notice of the proposed sale which designates the county where the Property will be sold and designates the date, time period, the place and the terms of sale by certified mail on Grantor. Service of such a notice by certified mail shall be completed upon deposit of such notice, postage prepaid and properly addressed to each such person or entity at the address for Grantor indicated on the first page of this Deed of Trust, in a Post Office of the United States Postal Service or in an official depository under the care and custody of the United States Postal Service. The affidavit of a person knowledgeable of the facts to the effect that such service was completed shall be prima facie evidence of the fact of service.

(2)Should Beneficiary have not elected to accelerate the indebtedness secured hereby, Beneficiary may nonetheless proceed with foreclosure in satisfaction of such default, either through the courts or by directing the Trustee to proceed as if under a full foreclosure, conducting sale as hereinbefore provided, but without declaring the entire indebtedness secured by this Deed of Trust due, and provided that if said sale is made because of such default, such sale may be made subject to the unmatured part of the secured indebtedness. Such sale, if so made, shall not in any manner affect the unmatured part of the debt secured by this Deed of Trust, but as to such unmatured part, this Deed of Trust shall remain in full force as though no sale had been made. Several sales may be made without exhausting the right of sale with respect to any unmatured part of the secured indebtedness, it being the purpose and intent hereof to provide for a foreclosure and the sale of the Properly for any matured portion of said secured indebtedness without exhausting the power of foreclosure.

(3)        In the event foreclosure proceedings are instituted by Beneficiary, all expenses incident to such proceedings, including, but not limited to, attorneys’ and trustee’s fees and costs, shall be paid by Grantor and secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note. The secured indebtedness and all other obligations secured by this Deed of Trust, including, without limitation, interest at the Default Interest Rate (as defined in the Note), any prepayment charge, fee or premium required to be paid under the Note in order to prepay principal (to the extent permitted by applicable law), attorneys’ and trustee’s fees and any other amounts due and unpaid to Beneficiary under the Loan Documents, may be bid by Beneficiary in the event of a foreclosure sale hereunder.

(f)Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted by Beneficiary, or Trustee, upon written request of Beneficiary, to enforce

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the payment of the indebtedness secured hereby or the other obligations of Grantor hereunder or pursuant to the Loan Documents, to foreclose the liens and security interests of this Deed of Trust as against all or any part of the Property, and to have all or any part of the Property sold under the judgment or decree of a court of competent jurisdiction. This remedy shall be cumulative of any other nonjudicial remedies available to the Beneficiary with respect to the Loan Documents. Proceeding with the request or receiving a judgment for legal relief shall not be or be deemed to be an election of remedies or bar any available non-judicial remedy of the Beneficiary.

(g)        Other.Exercise any other right or remedy available hereunder, under any of the other Loan Documents or at law or in equity.

3.2Application of Proceeds. To the fullest extent permitted by law, the proceeds of any sale under this Deed of Trust shall be applied, to the extent funds are so available, to the following items in such order as Beneficiary in its discretion may determine:

(a)        To payment of the costs, expenses and fees of taking possession of the Property, and of holding, operating, maintaining, using, leasing, repairing, improving, marketing and selling the same and of otherwise enforcing Beneficiary’s right and remedies hereunder and under the other Loan Documents, including, but not limited to, a reasonable fee to the Trustee, receivers’ fees, court costs, attorneys’, accountants’, appraisers’, managers’ and other professional fees, title charges and transfer taxes.

(b)        To payment of all sums expended by Beneficiary under the terms of any of the Loan Documents and not yet repaid, together with interest on such sums at the Default Interest Rate.

(c)        payment of the secured indebtedness and all other obligations secured by this Deed of Trust, including, without limitation, interest at the Default Interest Rate and, to the extent permitted by applicable law, any prepayment fee, charge or premium required to be paid under the Note in order to prepay principal, in any order that Beneficiary chooses in its sole discretion.

(d)       The remainder, if any, of such funds shall be disbursed to Grantor or to the person or persons legally entitled thereto.

3.3       Right and Authority of Receiver or Beneficiary in the Event of Default; Power of Attorney. Upon the occurrence of an Event of Default hereunder, which default is not cured within any applicable grace or cure period, and entry upon the Property pursuant to Section hereof or appointment of a receiver pursuant to Section 3.l(d) hereof, and under such terms and conditions as may be prudent and reasonable under the circumstances in Beneficiary’s or the receiver’s sole discretion, all at Grantor’s expense, Beneficiary or said receiver, or such other persons or entities

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as they shall hire, direct or engage, as the case may be, may do or permit one or more of the following, successively or concurrently: (a) enter upon and take possession and control of any and all of the Property; (b) take and maintain possession of all documents, books, records, papers and accounts relating to the Property; (c) exclude Grantor and its agents, servants and employees wholly from the Property; (d) manage and operate the Property; (e) preserve and maintain the Property; (f) make repairs and alterations to the Property; (g) complete any construction or repair of the Improvements, with such changes, additions or modifications of the plans and specifications or intended disposition and use of the Improvements as Beneficiary may in its sole discretion deem appropriate or desirable to place the Property in such condition as will, in Beneficiary’s sole discretion, make it or any part thereof readily marketable or rentable; (h) conduct a marketing or leasing program with respect to the Property, or employ a marketing or leasing agent or agents to do so, directed to the leasing or sale of the Property under such terms and conditions as Beneficiary may in its sole discretion deem appropriate or desirable; (i) employ such contractors, subcontractors, materialmen, architects, engineers, consultants, managers, brokers, marketing agents, or other employees, agents, independent contractors or professionals, as Beneficiary may in its sole discretion deem appropriate or desirable to implement and effectuate the rights and powers herein granted; (i) execute and deliver, in the name of Beneficiary as attorney-in-fact and agent of Grantor or in its own name as Beneficiary, such documents and instruments as are necessary or appropriate to consummate authorized transactions; (k) enter such leases, whether of real or personal property, or tenancy agreements, under such terms and conditions as Beneficiary may in its sole discretion deem appropriate or desirable; (1) collect and receive the Rents and Profits from the Property; (m) eject Tenants or repossess personal property, as provided by law, for breaches of the conditions of their Leases; (n) sue for unpaid Rents and Profits, payments, income or proceeds in the name of Grantor or Beneficiary; (0) maintain actions in forcible entry and detainer, ejectment for possession and actions in distress for rent; (p) compromise or give acquittance for Rents and Profits, payments, income or proceeds that may become due; (q) delegate or assign any and all rights and powers given to Beneficiary by this Deed of Trust; and (r) do any acts which Beneficiary in its sole discretion deems appropriate or desirable to protect the security hereof and use such measures, legal or equitable, as Beneficiary may in its sole discretion deem appropriate or desirable to implement and effectuate the provisions of this Deed of Trust. This Deed of Trust shall constitute a direction to and full authority to any lessee, or other third party who has heretofore dealt or contracted or may hereafter deal or contract with Grantor or Beneficiary, at the request of Beneficiary, to pay all amounts owing under any Lease, contract, concession, license or other agreement to Beneficiary without proof of the Event of Default relied upon. Any such lessee or third party is hereby irrevocably authorized to rely upon and comply with (and shall be fully protected by Grantor in so doing) any request, notice or demand by Beneficiary for the payment to Beneficiary of any Rents and Profits or other sums which may be or thereafter become due under its Lease, contract, concession, license or other agreement, or for the performance of any

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undertakings under any such Lease, contract, concession, license or other agreement, and shall have no right or duty to inquire whether any Event of Default under this Deed of Trust or under any of the other Loan Documents has actually occurred or is then existing. Grantor hereby constitutes and appoints Beneficiary, its assignees, successors, transferees and nominees, as Grantor’s true and lawful attorney-in-fact and agent, with full power of substitution in the Property, in Grantor’s name, place and stead, to do or permit any one or more of the foregoing described rights, remedies, powers and authorities, successively or concurrently, and said power of attorney shall be deemed a power coupled with an interest and irrevocable so long as any indebtedness secured hereby is outstanding. Any money advanced by Beneficiary in connection with any action taken under this Section 3.3, together with interest thereon at the Default Interest Rate from the date of making such advancement by Beneficiary until actually paid by Grantor, shall be a demand obligation owing by Grantor to Beneficiary and shall be secured by this Deed of Trust and by every other instrument securing the secured indebtedness.

3.4 Occupancy After Foreclosure. In the event there is a foreclosure sale hereunder and at the time of such sale, Grantor or Grantor’s representatives, successors or assigns, or any other persons claiming any interest in the Property by, through or under Grantor (except tenants of space in the Improvements subject to Leases entered into prior to the date hereof), are occupying or using the Property, or any part thereof, then, to the extent not prohibited by applicable law, each and all shall, at the option of Beneficiary or the purchaser at such sale, as the case may be, immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at a reasonable rental per day based upon the value of the Property occupied or used, such rental to be due daily to the purchaser. Further, to the extent permitted by applicable law, in the event the tenant fails to surrender possession of the Property upon the termination of such tenancy, the purchaser shall be entitled to institute and maintain an action for unlawful detainer of the Property in the appropriate court of the county in which the Land is located.

3.5      Notice to Account Debtors. Beneficiary may, at any time after an Event of Default notify the account debtors and obligors of any accounts, chattel paper, negotiable instruments or other evidences of indebtedness to Grantor included in the Property to pay Beneficiary directly. Grantor shall at any time or from time to time upon the request of Beneficiary provide to Beneficiary a current list of all such account debtors and obligors and their addresses.

3.6Cumulative Remedies. All remedies contained in this Deed of Trust are cumulative and Beneficiary shall also have all other remedies provided at law and in equity or in any other Loan Documents. Such remedies may be pursued separately, successively or concurrently at the sole subjective direction of Beneficiary and may be exercised in any order and as often as occasion therefor shall arise. No act of Beneficiary shall be construed as an election to proceed under any particular

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provisions of this Deed of Trust to the exclusion of any other provision of this Deed of Trust or as an election of remedies to the exclusion of any other remedy which may then or thereafter be available to Beneficiary. No delay or failure by Beneficiary to exercise any right or remedy under this Deed of Trust shall be construed to be a waiver of that right or remedy or of any Event of Default hereunder. Beneficiary may exercise any one or more of its rights and remedies at its option without regard to the adequacy of its security.

3.7      Payment of Expenses. Grantor shall pay on demand all of Beneficiary’s expenses incurred in any efforts to enforce any terms of this Deed of Trust, whether or not any lawsuit is filed and whether or not foreclosure is commenced but not completed, including, but not limited to, legal fees and disbursements, foreclosure costs and title charges, together with interest thereon from and after the date incurred by Beneficiary until actually paid by Grantor at the Default Interest Rate, and the same shall be secured by this Deed of Trust and by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the Note.

3.8Fair Market Value. The “fair market value” of the Property shall be determined as of the foreclosure date in order to enforce a deficiency against Grantor or any other party liable for the repayment of the indebtedness secured hereby, the term “fair market value” shall include those matters required by law and shall also include the additional factors as follows:

(a)        The Property is to be valued “AS IS, WHERE IS” and “WITH ALL FAULTS” and there shall be no assumption of restoration of or refurbishment of the Property after the date of foreclosure;

(b)        There shall be an assumption of a prompt resale of the Property for an all cash sales price by the purchaser at the foreclosure so that no extensive holding period should be factored into the determination of “fair market value” of the Property;

(c)       Anoffset to the fair market value of the Property, as determined hereunder, shall be made by deducting from such value the reasonable estimated closing costs relating to the sale of the Property, including, but not limited to, brokerage commissions, title policy expenses, tax prorations, escrow fees, and other common charges which are incurred by a seller of real property similar to the Property; and

(d)       After consideration of the factors required by law and those required above, an additional discount factor shall be calculated based upon the estimated time it will take to effectuate a sale of the Property so that the “fair market value” as so determined is discounted to be as of the date of the foreclosure of the Property.

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ARTICLE IV

CONCERNING THE TRUSTEE

4.1No Required Action. Trustee shall not be required to take any action toward the execution and enforcement of the trust hereby created or to institute, appear in, or defend any action, suit, or other proceeding in connection therewith where, in his opinion, such action would be likely to involve him in expense or liability, unless requested so to do by a written instrument signed by Beneficiary and, if Trustee so requests, unless Trustee is tendered security and indemnity satisfactory to Trustee against any and all cost, expense, and liability arising therefrom. Trustee shall not be responsible for the execution, acknowledgment, or validity of the Loan Documents, or for the proper authorization thereof, or for the sufficiency of the lien and security interest purported to be created hereby, and Trustee makes no representation in respect thereof or in respect of the rights, remedies, and recourse of Beneficiary.

4.2Certain Rights. With the approval of Beneficiary, Trustee shall have the right to take any and all of the following actions: (i) to select, employ, and consult with counsel (who may be, but need not be, counsel for Beneficiary) upon any matters arising hereunder, including the preparation, execution, and interpretation of the Loan Documents, and shall be fully protected in relying as to legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and employ, in and about the execution of his duties hereunder, suitable accountants, engineers and other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of Trustee (and Trustee shall not be answerable for any act, default, negligence, or misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee’s gross negligence or bad faith), and (iv) any and all other lawful action that Beneficiary may instruct Trustee to take to protect or enforce Beneficiary’s rights hereunder. Trustee shall not be personally liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property for debts contracted for or liability or damages incurred in the management or operation of the Property. Trustee shall have the right to rely on any instrument, document, or signature authorizing or supporting any action taken or proposed to be taken by Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to reimbursement for expenses incurred by Trustee in the performance of Trustee’s duties hereunder and to reasonable compensation for such of Trustee’s services hereunder as shall be rendered. Grantor

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will, from time to time, pay the compensation due to Trustee hereunder and reimburse Trustee for, and save Trustee harmless against, any and all liability and expenses which may be incurred by Trustee in the performance of Trustee’s duties.

4.3Retention of Money. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by applicable law), and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder.

4.4Successor Trustees. Trustee may resign by the giving of notice of such resignation in writing or verbally to Beneficiary. If Trustee shall die, resign, or become disqualified from acting in the execution of this trust, or if, for any reason, Beneficiary shall prefer to appoint a substitute trustee or multiple substitute trustees, or successive substitute trustees or successive multiple substitute trustees, to act instead of the aforenamed Trustee, Beneficiary shall have full power to appoint a substitute trustee (or, if preferred, multiple substitute trustees) in succession who shall succeed (and if multiple substitute trustees are appointed, each of such multiple substitute trustees shall succeed) to all the estates, rights, powers, and duties of the aforenamed Trustee. Such appointment may be executed by any authorized agent of Beneficiary, and if such Beneficiary be a corporation and such appointment be executed in its behalf by any officer of such corporation, such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of the corporation. Grantor hereby ratifies and confirms any and all acts which the aforenamed Trustee, or his successor or successors in this trust, shall do lawfully by virtue hereof. If multiple substitute Trustees are appointed, each of such multiple substitute Trustees shall be empowered and authorized to act alone without the necessity of the joinder of the other multiple substitute trustees, whenever any

action or undertaking of such substitute trustees is requested or required under or pursuant to this Deed of Trust or applicable law.

4.5       Perfection of Appointment. Should any deed, conveyance, or instrument of any nature be required from Grantor by any Trustee or substitute Trustee to more fully and certainly vest in and confirm to the Trustee or substitute Trustee such estates, rights, powers, and duties, then, upon request by the Trustee or substitute Trustee, any and all such deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded and/or filed by Grantor.

4.6Succession Instruments. Any substitute Trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance, become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of Beneficiary or of the substitute

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Trustee, the Trustee ceasing to act shall execute and deliver any instrument transferring to such substitute Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee to the substitute Trustee so appointed in the Trustee’s place.

4.7      No Representation by Trustee or Beneficiary. By accepting or approving anything required to be observed, performed, or fulfilled or to be given to Trustee or Beneficiary pursuant to the Loan Documents, including, without limitation, any officer’s certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy, neither Trustee nor Beneficiary shall be deemed to have warranted, consented to, or affirmed the sufficiency, legality, effectiveness, or legal effect of the same, or of any term, provision, or condition thereof, and such acceptance or approval thereof shall not be or constitute any warranty or affirmation with respect thereto by Trustee or Beneficiary.

ARTICLE V

MISCELLANEOUS TERMS AND CONDITIONS

5.1      Time of Essence. Time is of the essence with respect to all provisions of this Deed of Trust.

5.2      Release of Deed of Trust. If all of the secured indebtedness be paid, then and in that event only, all rights under this Deed of Trust, except for those provisions hereof which by their terms survive, shall terminate and the Property shall become wholly clear of the liens, security interests, conveyances and assignments evidenced hereby, which shall be released by Beneficiary in due form at Grantor’s cost. No release of this Deed of Trust or the lien hereof shall be valid unless executed by Beneficiary.

5.3      Certain Rights of Beneficiary. Without affecting Grantor’s liability for the payment of any of the indebtedness secured hereby, Beneficiary may from time to time and without notice to Grantor: (a) release any person liable for the payment of the indebtedness secured hereby; (b) extend or modify the terms of payment of the indebtedness secured hereby; (c) accept additional real or personal property of any kind as security or alter, substitute or release any property securing the indebtedness secured hereby; (d) recover any part of the Property; (e) consent in writing to the making of any subdivision map or plat thereof, (f) join in granting any easement therein; or (g) join in any extension agreement of this Deed of Trust or any agreement subordinating the lien hereof.

5.4      Waiver of Certain Defenses. No action for the enforcement of the lien hereof or of any provision hereof shall be subject to any defense which would not be

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good and available to the party interposing the same in an action at law upon the Note or any of the other Loan Documents.

5.5      Notices. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by law shall be in writing and shall be deemed to have been validly given or served by delivery of the same in person to the intended addressee, or by depositing the same with Federal Express or another reputable private courier service for next business day delivery, or by depositing the same in the United States mail, postage prepaid, registered or certified mail, return receipt requested, in any event addressed to the intended addressee at its address set forth on the first page of this Deed of Trust or at such other address as may be designated by such party as herein provided. All notices, demands and requests to be sent to Beneficiary shall be addressed to the attention of the Capital Markets Group. All notices, demands and requests shall be effective upon such personal delivery, or one (1) business day after being deposited with the private courier service, or two (2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’ prior written notice thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

5.6      Successors and Assigns. The terms, provisions, indemnities, covenants and conditions hereof shall be binding upon Grantor and the successors and assigns of Grantor, including all successors in interest of Grantor in and to all or any part of the Property, and shall inure to the benefit of Beneficiary, its directors, officers, shareholders, employees and agents and their respective successors and assigns and shall constitute covenants running with the land. All references in this Deed of Trust to Grantor or Beneficiary shall be deemed to include all such parties’ successors and assigns, and the term “Beneficiary” as used herein shall also mean and refer to any lawful holder or owner, including pledgees and participants, of any of the indebtedness secured hereby. If Grantor consists of more than one person or entity, each will be jointly and severally liable to perform the obligations of Grantor.

5.7      Severability. A determination that any provision of this Deed of Trust is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Deed of Trust to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

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5.8      Gender. Within this Deed of Trust, words of any gender shall be held and construed to include any other gender, and words in the singular shall be held and construed to include the plural, and vice versa, unless the context otherwise requires.

5.9      Waiver: Discontinuance of Proceedings. Beneficiary may waive any single Event of Default by Grantor hereunder without waiving any other prior or subsequent Event of Default. Beneficiary may remedy any Event of Default by Grantor hereunder without waiving the Event of Default remedied. Neither the failure by Beneficiary to exercise, nor the delay by Beneficiary in exercising, any right, power or remedy upon any Event of Default by Grantor hereunder shall be construed as a waiver of such Event of Default or as a waiver of the right to exercise any such right, power or remedy at a later date. No single or partial exercise by Beneficiary of any right, power or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy hereunder may be exercised at any time and from time to time. No modification or waiver of any provision hereof nor consent to any departure by Grantor therefrom shall in any event be effective unless the same shall be in writing and signed by Beneficiary, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose given. No notice to nor demand on Grantor in any case shall of itself entitle Grantor to any other or further notice or demand in similar or other circumstances. Acceptance by Beneficiary of any payment in an amount less than the amount then due on any of the secured indebtedness shall be deemed an acceptance on account only and shall not in any way affect the existence of an Event of Default hereunder. In case Beneficiary shall have proceeded to invoke any right, remedy or recourse permitted hereunder or under the other Loan Documents and shall thereafter elect to discontinue or abandon the same for any reason, Beneficiary shall have the unqualified right to do so and, in such an event, Grantor and Beneficiary shall be restored to their former positions with respect to the indebtedness secured hereby, the Loan Documents, the Property and otherwise, and the rights, remedies, recourses and powers of Beneficiary shall continue as if the same had never been invoked.

5.10Section Headings. The headings of the sections and paragraphs of this Deed of Trust are for convenience of reference only, are not to be considered a part hereof and shall not limit or otherwise affect any of the terms hereof.

5.11GOVERNING LAW. THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE REAL ESTATE IS LOCATED PROVIDED THAT TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING; AND PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE LAND IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT

OF LIENS AND SECURITY INTERESTS IN PROPERTY LOCATED IN SUCH STATE.

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5.12Counting of Days. The term “days” when used herein shall mean calendar days. If any time period ends on a Saturday, Sunday or holiday officially recognized by the state within which the Land is located, the period shall be deemed to end on the next succeeding business day. The term “business day” when used herein shall mean a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Nevada are authorized by law to be closed.

5.13Relationship of the Parties. The relationship between Grantor and Beneficiary is that of a borrower and a lender only and neither of those parties is, nor shall it hold itself out to be, the agent, employee, joint venturer or partner of the other party.

5.14Application of the Proceeds of the Note. To the extent that proceeds of the Note are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior encumbrance against the Property, such proceeds have been advanced by Beneficiary at Grantor’s request and Beneficiary shall be subrogated to any and all rights, security interests and liens owned by any owner or holder of such outstanding liens, security interests, charges or encumbrances, irrespective of whether said liens, security interests, charges or encumbrances are released.

5.15       Unsecured Portion of Indebtedness. If any part of the secured indebtedness cannot be lawfully secured by this Deed of Trust or if any part of the Property cannot be lawfully subject to the lien and security interest hereof to the full extent of such indebtedness, then all payments made shall be applied on said indebtedness first in discharge of that portion thereof which is unsecured by this Deed of Trust.

5.16Cross Default. AnEvent of Default hereunder shall be a default under each of the other Loan Documents.

5.17Interest After Sale. In the event the Property or any part thereof shall be sold upon foreclosure as provided hereunder, to the extent permitted by law, the sum for which the same shall have been sold shall, for purposes of redemption (pursuant to the laws of the state in which the Property is located), bear interest at the Default Interest Rate.

5.18    Inconsistency with Other Loan Documents. In the event of any inconsistency between the provisions hereof and the provisions in any of the other Loan Documents, it is intended that the provisions selected to control by Beneficiary in its sole subjective discretion shall be controlling.

5.19    Construction of this Document. This document may be construed as a mortgage, security deed, deed of trust, chattel mortgage, conveyance, assignment,

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security agreement, pledge, financing statement, hypothecation or contract, or any one or more of the foregoing, in order to fully effectuate the liens and security interests created hereby and the purposes and agreements herein set forth.

5.20    No Merger. It is the desire and intention of the parties hereto that this Deed of Trust and the lien hereof do not merge in fee simple title to the Property. It is hereby understood and agreed that should Beneficiary acquire any additional or other interests in or to the Property or the ownership thereof, then, unless a contrary intent is manifested by Beneficiary as evidenced by an appropriate document duly recorded, this Deed of Trust and the lien hereof shall not merge in such other or additional interests in or to the Property, toward the end that this Deed of Trust may be foreclosed as if owned by a stranger to said other or additional interests.

5.21    Rights With Respect to Junior Encumbrances. Any person or entity purporting to have or to take a junior mortgage or other lien upon the Property or any interest therein shall be subject to the rights of Beneficiary to amend, modify, increase, vary, alter or supplement this Deed of Trust, the Note or any of the other Loan Documents, to extend the maturity date of the indebtedness secured hereby, to increase the amount of the indebtedness secured hereby, to waive or forebear the exercise of any of its rights and remedies hereunder or under any of the other Loan Documents and to release any collateral or security for the indebtedness secured hereby, in each and every case without obtaining the consent of the holder of such junior lien and without the lien or security interest of this Deed of Trust losing its priority over the rights of any such junior lien.

5.22    Beneficiary May File Proofs of Claim. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting Grantor or the principals or general partners in Grantor, or their respective creditors or property, Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of Beneficiary allowed in such proceedings for the entire secured indebtedness at the date of the institution of such proceedings and for any additional amount which may become due and payable by Grantor hereunder after such date.

5.23    Fixture Filing. This Deed of Trust shall be effective from the date of its recording as a financing statement filed as a fixture filing with respect to all goods constituting part of the Property which are or are to become fixtures. This Deed of Trust shall also be effective as a financing statement covering minerals or the like (including oil and gas) and is to be filed for record in the Real Estate Records of the county where the Property is situated. The mailing address of Grantor and the address of Beneficiary from which information concerning the security interests may be obtained are set forth in Section 1.22 above.

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5.24    After-Acquired Program. All property acquired by Grantor after the date of this Deed of Trust which by the terms of this Deed of Trust shall be subject to the lien and the security interest created hereby, shall immediately upon the acquisition thereof by Grantor and without further mortgage, conveyance or assignment become subject to the lien and security interest created by this Deed of Trust. Nevertheless, Grantor shall execute, acknowledge, deliver and record or file, as appropriate, all and every such further mortgages, security agreements, financing statements, assignments and assurances as Beneficiary shall require for accomplishing the purposes of this Deed of Trust.

5.25    No Representation. By accepting delivery of any item required to be observed, performed or fulfilled or to be given to Beneficiary pursuant to the Loan Documents, including, but not limited to, any officer’s certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal or insurance policy, Beneficiary shall not be deemed to have warranted, consented to, or affirmed the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance of delivery thereof shall not be or constitute any warranty, consent or affirmation with respect thereto by Beneficiary.

5.26    Counterparts. This Deed of Trust may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Deed of Trust may be detached from any counterpart of this Deed of Trust without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Deed of Trust identical in form hereto but having attached to it one or more additional signature pages.

5.27Personal Liability. Notwithstanding anything to the contrary contained in this Deed of Trust, the liability of Grantor and its officer, directors, general partners, managers, managing members and principals for the indebtedness secured hereby and for the performance of the other agreements, covenants and obligations contained herein and in the other Loan Documents shall be limited as set forth in Section 2.04 of the Note.

5.28    Recording and Filing. Grantor will cause the Loan Documents and all amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and re-filed in such manner and in such places as Beneficiary shall reasonably request, and will pay on demand all such recording, filing, re-recording and re-filing taxes, fees and other charges. Grantor shall reimburse Beneficiary, or its servicing agent, for the costs incurred in obtaining a tax service company to verify the status of payment of taxes and assessments on the Property.

5.29    Entire Agreement and Modifications. This Deed of Trust and the other Loan Documents contain the entire agreements between the parties relating to the

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subject matter hereof and thereof and dl prior agreements relative hereto and thereto which are not contained herein or therein are terminated. This Deed of Trust and the other Loan Documents may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments executed by the party against which enforcement of the amendment, revision, waiver, discharge, release or termination is asserted. Any alleged amendment, revision, waiver, discharge, release or termination which is not so documented shall not be effective as to any Party.

5.30    Maximum Interest. The provisions of this Deed of Trust and of all agreements between Grantor and Beneficiary, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand or acceleration of the maturity of the Note or otherwise, shall the amount paid, or agreed to be paid (“Interest”), to Beneficiary for the use, forbearance or retention of the money loaned under the Note exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, performance or fulfillment of any provision hereof or of any agreement between Grantor and Beneficiary shall, at the time performance or fulfillment of such provision shall be due, exceed the limit for Interest prescribed by law or otherwise transcend the limit of validity prescribed by applicable law, then ips0 facto the obligation to be performed or fulfilled shall be reduced to such limit, and if, from any circumstance whatsoever, Beneficiary shall ever receive anything of value deemed Interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive Interest shall be applied to the reduction of the principal balance owing under the Note in the inverse order of its maturity (whether or not then due) or at the option of Beneficiary be paid over to Grantor, and not to the payment of Interest. All Interest (including any amounts or payments deemed to be Interest) paid or agreed to be paid to Beneficiary shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal balance of the Note so that the Interest thereon for such full period will not exceed the maximum amount permitted by applicable law. This paragraph will control all agreements between Grantor and Beneficiary.

5.31    Interest Payable by Beneficiary. Beneficiary shall cause funds in the Replacement Reserve to be deposited into an interest bearing account of the type customarily maintained by Beneficiary or its servicing agent for the investment of similar reserves, which account may not yield the highest interest rate then available. Interest payable on such amounts shall be computed based on the daily outstanding balance in the Replacement Reserve. Such interest shall be calculated on a simple, non-compounded interest basis based solely on contributions made to the Replacement Reserve by Grantor. All interest earned on amounts contributed to the Replacement Reserve shall be retained by Beneficiary and accumulated for the benefit of Grantor and added to the balance in the Replacement Reserve and shall be

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disbursed for payment of the items for which other funds in the Replacement Reserve are to be disbursed.

5.32    Secondary Market. Beneficiary may sell, transfer and deliver the Loan Documents to one or more Investors in the secondary mortgage market. In connection with such sale, may retain or assign responsibility for servicing the loan or may delegate some or all of such responsibility and/or obligations to a servicer, including, but not limited to, any subservicer or master servicer, on behalf of the investors. All references to Beneficiary herein shall refer to and include, without limitation, any such servicer, to the extent applicable.

5.33    State Specific Provisions. The additional covenants, agreements and provisions set forth in Exhibit B and Exhibit C attached hereto, if any, shall be a part of this Deed of Trust and shall, in the event of any conflict between such further stipulations and any of the other provisions of this Deed of Trust, be deemed to control.

(a)       This Deed of Trust secures future advances, as defined in Nevada Revised Statutes (“NRS”) Section 106.320, and is to be governed by NRS 106.300 to 106.400, inclusive. The maximum principal amount to be secured hereby is $10,080,000.

(b)       The granting clause of this Deed of Trust shall be deemed amended to provide that the Property is conveyed unto Trustee, in trust for the benefit of Beneficiary, with power of sale and with right of entry and possession.

(c)       Without limiting the generality of Section 1.15 of this Deed of Trust, Grantor agrees that Beneficiary shall have the same right, power and authority to enter and inspect the Property as is granted to a secured lender under NRS Section 40.507, and that Beneficiary will have the right to appoint a receiver to enforce the right to enter and inspect the Property to the extent such authority is provided under Nevada law, including, without limitation, the authority granted to a secured lender under NRS Section 32.01 5.

(d)        As used in this Deed of Trust, “Environmental Laws” shall also include the applicable provisions of NRS Chapters 444,445A, 445B, 445C, 459 and 590, NRS Sections 618.750 through 618.850, inclusive, and NRS 477.045, and the present and future rules, regulations and guidance documents promulgated under any or all of the foregoing.

(e)       Beneficiary’s rights and remedies under this Deed of Trust shall be subject to NRS 107.080.

(f)       Paragraph 3.l(e)(l) is hereby deleted in its entirety, and the following is substituted therefor:

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Should Beneficiary have elected to accelerate the indebtedness secured hereby, Beneficiary may initiate foreclosure of the Property by requesting the Trustee to effectuate a non-judicial foreclosure sale. Trustee shall give and record such notice as the law then requires as a condition precedent to a trustee’s sale. When the minimum period of time required by law after such notice has elapsed, Trustee, without notice to or demand upon Grantor except as required by law, shall sell the Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at time of sale. Neither Grantor nor any other person or entity other than Beneficiary shall have the right to direct the order in which the Property is sold. Subject to requirements and limits imposed by law, Trustee may, from time to time, postpone the sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time may postpone the sale by public announcement at the time and place fixed by the preceding postponement. A sale of less than the whole of the Property on any defective or irregular sale made hereunder shall not exhaust the power of sale provided for herein. Trustee shall deliver to the purchaser at such sale a deed conveying the Property or portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Beneficiary shall have the right to become the purchaser at any sale held by any Trustee or substitute or successor Trustee, or by any receiver of public officer. Any Beneficiary purchasing at any such sale shall have the right to credit the secured indebtedness owing to such Beneficiary upon the amount of its bid entered at such sale to the extent necessary to satisfy such bid. Said Trustee may appoint an attorney-in-fact to act in its stead as Trustee to conduct sale as hereinbefore provided. Grantor binds himself to warrant and forever defend the title of such purchaser or purchasers when so made by the Trustee, and agrees to accept proceeds of said sale, if any, which are payable to Trustee as provided herein.

(g)       Where not inconsistent with the provisions of Sections 3.1 through 3.7, inclusive, of this Deed of Trust, covenants 1, 2 (full replacement value), 3, 4 (Default Interest Rate), 5, 6,7 (a reasonable percentage), 8 and 9 of NRS 107.030 are hereby adopted and made a part of this Deed of Trust.

(h)       Supplementing Section 5.23 of this Deed of Trust, this Deed of Trust shall constitute a fixture filing pursuant to NRS 104.9402, as amended and recodified from time to time. Some or all of the Collateral may be or become a fixture in which Beneficiary has a security interest under the security agreement set forth in Section 1.22 above (the “Security Agreement”). However, nothing herein shall, or shall be deemed to, create any lien or interest in favor of the Trustee in any Collateral

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which is not a fixture. The rights, remedies and interests of Beneficiary under this Deed of Trust and the Security Agreement are independent and cumulative, and there shall be no merger of any lien hereunder with any security interest created by the Security Agreement. Beneficiary may elect to exercise or enforce any of its rights, remedies or interests under either or both this Deed of Trust or the Security Agreement as Beneficiary may from time to time deem appropriate.

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IN WITNESS WHEREOF, Grantor has executed this Deed of Trust as of the date hereof.

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited Partnership
By:	Sunwood Village, Inc., a Nevada corporation, its general partner
	By:	/S/ JAMES R. HOYT
		Name: James R. Hoyt
		Title President

Consented and Agreed to

As to the provisions of

Section 1.34

SUNWOOD VILLAGE, INC., a Nevada corporation

By: /S/ JAMES R. HOYT

Name: James R. Hoyt

Title: President

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STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 20, day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation, the general partner of Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership.

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

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Exhibit A

The North Half (N ½) of the South Half (S ½) of the Southwest Quarter (SW ¼) of the Southeast Quarter (SE ¼) of Section 18, Township 21 South, Range 61 East, M.D.M., more particularly described as follows:

Commencing at the Southwest corner of the Southeast Quarter (SE ¼ ) of said Section 18; Thence North 01°01’02” East, along the West line thereof, a distance of 655.14 feet; Thence North 89°35’15” East, a distance of 40.01 feet to a point on the Easterly right-of-way line of Arville Street (80.00 feet wide), said point being the True Point of Beginning; Thence continuing North 89° 35’15” East, a distance of 1299.07 feet to a point on the Westerly right-of-way line of Wynn Road (60.00 feet wide); Thence South 00°14’52” West, along said Westerly right-of-way line of Wynn Road, a distance of 328.89 feet; Thence South 89°38’49” West, a distance of 1,303.46 feet to a point on the aforementioned Easterly right-of-way line of Arville Street; Thence North 01°01’02” East, along said Easterly right-of-way line of Arville Street a distance of 327.61 feet to the True Point of Beginning.

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EXHIBIT B

GRANTOR’S CERTIFICATE

The undersigned is the ________________ the ___________________of (the “Grantor”) and has made due investigation as to the matters hereinafter set forth and does hereby certify the following to induce FIRST UNION NATIONAL BANK, (the “Beneficiary”) to advance the aggregate sum of $________ (the “Disbursement”) [from the Replacement Reserve or Repair and Remediation Reserve or Environmental Reserve] to the Grantor pursuant to the terms of that certain Deed of Trust and Security Agreement, dated as of ______ ___,200_, between the Beneficiary and the Grantor (together with any amendments, modifications, supplements and replacements thereof or therefor, .the “Deed of Trust”), dated ____. ____200_, pursuant to that certain Disbursement request which is being submitted to the Beneficiary. (Capitalized terms used and not otherwise define shall have the respective meanings given to them in the Deed of Trust.)

1. No default beyond any applicable notice and/or grace period exists under the Deed of Trust or under any of the other Loan Documents.

2. The [Repairs, Deferred Maintenance or Environmental Work] relative to the Disbursement have been delivered or provided to Grantor and are property, completely and permanently installed on or about the Property or otherwise properly completed, as applicable.

3. All of the statements, invoices, receipts and information delivered in connection with the Disbursement request being submitted to the Beneficiary in connection herewith are true and correct as of the date hereof, and the amount requested in said Disbursement request accurately reflects the precise amounts due and payable during the period covered by such Disbursement request. All of the funds to be received pursuant to such Disbursement request shall be used solely for the purpose of reimbursing the Grantor for items previously paid.

4. Nothing has occurred subsequent to the date of the Deed of Trust which has or may result in the creation of any lien, charge or encumbrance upon the Land or the Improvements or any part thereof, or anything affixed thereto or used in connection therewith, or which has or may substantially and adversely impair the ability of the Grantor to make any payments of principal and interest on the Note or the ability of the Grantor to meet its obligations under the Deed of Trust.

5. None of the labor, materials, overhead or other items of expense specified in the Disbursement request submitted herewith has previously been the basis of

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any Disbursement request by the Grantor or any payment by the Beneficiary and, when added to all sums previously disbursed by Beneficiary on account of the [Deferred Maintenance, Repairs or Environmental Work], do not exceed the costs of all [Deferred Maintenance, Repairs or Environmental Work] services completed, installed and/or delivered, as applicable, to the date of that certificate.

6. The amount remaining in the [Account] allocated to the payment of items on the [Deferred Maintenance, Repairs or Environmental Work] will be sufficient to pay in full the entire remaining cost of [Deferred Maintenance, Repairs or Environmental Work] required to be completed in accordance with the Deed of Trust.

7. All work required permits and approvals required to complete the work which work is now in process or was previously completed have been obtained.

8. All conditions to the Disbursement to be made in accordance with the Disbursement request submitted herewith have been met in accordance with the terms of the Deed of Trust.

/S/ JAMES R. HOYT

President, Sunwood Village, Inc., General Partner

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EXHIBIT C

ITEM OF WORK	COST
Repair damaged, heaved and uneven concrete walkway surfaces	$1,500.00
Construct 4.5 foot high vertical sign displaying the universal handicapped symbol at appropriate spaces	250.00
TOTAL	$1,750.00

CLARK COUNTY, NEVADA

JUDITH A. VANDEVER. RECORDER

RECORDED AT REQUEST OF:

UNITED TITLE OF NEVRDR

08-02-200114:10 JBR 70

Official records

BOOK: 20010802 INST: 0912

FEE: 76.08 RPTT: . 00

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EX-99

ALLONGE

This Allonge is attached to the Promissory Note dated August 1, 2001 (the “Note”), in the principal amount of $10,080,000, made by Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership, and payable to First Union National Bank, a national banking association.

Pay to the order of East West Bank, a California banking corporation.

Dated: April 23 2007

EVEREST PROPERTIES II, LLC, a California limited liability company
By:	EVEREST PROPERTIES, LLC, a California limited liability company, its Manager
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst, President and Manager

W:\Working\05904\88\W0057889.DOC v1

EX-99

RECORDING REQUESTED BY:

AND WHEN RECORDED RETURN TO:

East West Bank

135 N. Los Robles, 2nd Floor

Pasadena, California 91101

Attention: Kathleen Kwan

COLLATERAL ASSIGNMENT OF DEED OF TRUST

The undersigned, EVEREST PROPERTIES II, LLC, a California limited liability company (“Assignor”), hereby assigns, transfers and sets over to EAST WEST BANK, a California banking corporation (“Assignee”), as collateral security for obligations owing from Assignor to Assignee, all of Assignor’s interest in the Deed of Trust and Security Agreement dated as of August 1,2001 executed by Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership, for the benefit of First Union National Bank, a national banking association, which was recorded on August 2, 2001 in Book No. 20020802, Document No 01912 in the real property records of Clark County, Nevada.

Dated: As of April 23, 2007

EVEREST PROPERTIES II, LLC, a California limited liability company
By:	EVEREST PROPERTIES, LLC, a California limited liability company, its Manager
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst President

ACKNOWLEDGMENT

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

On April 23^rd, 2007, before me, Lisa L. Longo, a Notary Public, personally

appeared W. Robert Kohorst, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal.

/S/ LISA L. LONGO

Notary Public

EX-99

GUARANTY

THIS GUARANTY is entered into as of April 23, 2007, by W. ROBERT KOHORST (“Guarantor”), in favor of EAST WEST BANK, a California banking corporation (“Lender”).

RECITALS

A. Lender is the payee under the Promissory Note of this date in the principal amount of $9,000,000 (the “Note”) made by Everest Properties II, LLC (“Borrower”). The Note evidences a loan from Lender to Borrower in the maximum principal amount of the Note (the “Loan”). Borrower’s performance under the Note is secured by the Security Agreement of this date executed by Borrower for the benefit of Lender (the “Security Agreement”). The Note, Security Agreement and all other documents, agreements and instruments evidencing, securing or otherwise delivered in connection with the Loan are referred to as the “Loan Documents.”

B.        Guarantor’s execution and delivery of this Guaranty is a condition precedent to Lender’s making the Loan. Guarantor has in interest in Borrower and will directly benefit from Lender’s making the Loan to Borrower. Guarantor is therefore willing to enter into this Guaranty to induce Lender to make the Loan to Borrower.

AGREEMENT

1. Guaranty.

(a)       Guarantor unconditionally and irrevocably guarantees the full and prompt payment of all principal, interest, fees, costs and other sums owed under the Loan Documents at the times and according to the terms expressed in the Loan Documents, including any interest, late charges, default interest, fees and costs (including reasonable attorneys’ fees) that would have accrued under the Loan Documents but for the commencement of a case under Title 11 of the United States Code or any successor statute (the “Bankruptcy Code”).

(b)       Guarantor’s liability under this Guaranty is a guaranty of payment and performance of the Note and not of collectibility only.

2.Chances Do Not Affect Liability. Guarantor agrees that Lender may without notice to Guarantor and without limiting Guarantor’s liability under, or affecting the enforceability of, this Guaranty:

(a)       grant extensions of time, renewals or other indulgences and modifications to Borrower or any other party under the Loan Documents;

(b) change the rate of interest under the Note;

(c) change, amend or modify the Loan Documents;

(d)       authorize the sale, exchange, release or subordination of any security or collateral in which Lender has an interest or fail to create, perfect or maintain the priority of any security interest in any such collateral;

(e)       take additional security for any obligation in connection with the Loan;

(f)discharge or release any party or parties liable under the Loan Documents;

(g)       waive rights of, make arrangements with respect to, or file or refrain from filing a claim in any bankruptcy proceeding of Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan;

(h)       make other or additional loans to Borrower in such amounts and at such times as Lender may determine;

(i)        credit payments in such manner and order of priority to principal, interest or other obligations as Lender may determine; and

(j)        otherwise deal with Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan as Lender may determine in its discretion.

3. Additional Waivers.

(a)       Guarantor waives all benefits and defenses it may have under California Civil Code Section 2809 and agrees that Guarantor’s liability may he larger in amount and more burdensome than that of Borrower. Guarantor’s liability under this Guaranty shall continue until all sums due under the Loan Documents have been paid in full and shall not be limited or affected in any way by any impairment or any diminution or loss of value of any security or collateral for the Loan, from whatever cause, including, without limitation, Lender’s failure to perfect a security interest in any such security or collateral or any disability or other defense of Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan.

(b)       Guarantor agrees that its liability under, and the enforceability of, this Guaranty are absolute and are not contingent upon the genuineness, validity or enforceability of any of the Loan Documents or the availability of any defense to Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan. Guarantor waives all benefits and defenses it may have under California Civil Code Section 2810 and agrees that Guarantor shall be liable even if Borrower, any other guarantor of the Loan, any

pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan had no liability at the time of execution of the Note or later ceases to be liable.

(c)        Guarantor waives its rights under California Civil Code Section 2815 and agrees that by doing so Guarantor has no right to revoke this Guaranty until all obligations under the Loan Documents have been fully satisfied.

(d)       Guarantor waives its rights under California Civil Code Section 2819 and agrees that by doing so Guarantor’s liability and the enforceability of this Guaranty shall continue even if Lender alters any obligations under the Note or any of the other Loan Documents in any respect.

(e)       Guarantor waives its rights under California Civil Code Section 2839 and agrees that by doing so (i) its obligations under this Guaranty shall not be deemed satisfied by a mere offer of payment by Borrower or any other person of the principal obligations under the Loan Documents and (ii) Guarantor’s liability under and the enforceability of this Guaranty shall continue until all obligations under the Loan Documents have been fully satisfied.

(f)       Guarantor waives all benefits and defenses it may have under California Civil Code Sections 2845, 2849 and 2850, including, without limitation, the right to require Lender to (i) proceed against Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan, (ii) proceed against or exhaust any other security or collateral Lender may hold, or (iii) pursue any other right or remedy for any Guarantor’s benefit, and agrees that Lender may foreclose against all or a part of the Property or any other security Lender may hold without taking any action against Borrower, any other guarantor of the Loan, any pledgor of collateral for any person’s obligations to Lender or any other person related to the Loan, and without proceeding against or exhausting any security or collateral Lender holds.

(g)       Guarantor waives its rights under California Civil Code Sections 2899 and 3433 and agrees that by doing so Lender has no obligation regarding the order in which it exercises its remedies against the Property or any other collateral security encumbered pursuant to any of the Loan Documents.

(h)       Guarantor waives diligence and all demands, protests, presentments and notices of every kind or nature, including notices of protest, dishonor, nonpayment, acceptance of this Guaranty and creation, renewal, extension, modification or accrual of any of the obligations under the Note or the other Loan Documents. Guarantor also waives the right to plead all statutes of limitation as a defense to Guarantor’s liability under, or the enforceability of, this Guaranty.

4.         Guarantor Informed of Borrower’s Condition. Guarantor acknowledges that it has had an opportunity to review the Loan Documents, the value of the security for the Loan and Borrower’s financial condition and ability to repay the

Loan. Guarantor agrees to keep itself fully informed of all aspects of Borrower’s financial condition and the performance of Borrower’s obligations to Lender and that Lender has no duty to disclose to Guarantor any information pertaining to Borrower or any security for the Loan.

5.Subrogation. Reimbursement and Contribution Rights. Guarantor agrees that its rights of subrogation and reimbursement against Borrower, its right of subrogation against any other collateral or security for the Loan or the pledgor of such collateral or security and its right of contribution from any guarantor of the Loan shall be subordinate to Lender’s rights against Borrower, in such collateral or security, against any such pledgor and against any such guarantor. Guarantor shall have no such rights of subrogation, reimbursement or contribution until all amounts due under the Loan Documents have been paid in full and Lender has released, transferred or disposed of all of its rights in any collateral or security. Guarantor waives its rights under California Civil Code Sections 2847, 2848 and 2849 to the extent inconsistent with the foregoing.

6.Guaranty Continues if Payments Are Avoided or Recovered from Lender. If all or any portion of the obligations guaranteed under this Guaranty are paid or performed, Guarantor’s obligations under this Guaranty shall continue and remain in full force and effect if all or any part of such payment or performance is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise, irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery, and (b) payment in full of the Loan.

7.        Subordination. Any rights of Guarantor, whether now existing or later arising, to receive payment on account of any indebtedness (including interest) owed to it by Borrower or any subsequent owner of the Property, or to withdraw capital invested by it in Borrower, or to receive distributions from Borrower, shall at all times be subordinate as to lien and time of payment and in all other respects to the full and prior repayment to Lender of the Loan. Guarantor shall not be entitled to enforce or receive payment of any sums hereby subordinated until the Loan has been paid and performed in full and any such sums received in violation of this Guaranty shall be received by Guarantor in trust for Lender.

8.         Representations and Warranties. Guarantor makes the following representations and warranties to Lender:

(a) This Guaranty has been duly executed and delivered and is the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms.

(b)       Guarantor’s execution and delivery of, and its performance of its obligations under, this Guaranty do not and will not conflict with any (i) contractual or legal restriction or obligation, or (ii) court or regulatory order, binding on or affecting Guarantor.

(c)       There is no pending or, to the actual knowledge of Guarantor, threatened action, proceeding or investigation before any court, governmental agency or arbitrator against or affecting Guarantor or any of Guarantor’s assets which, if decided adversely to Guarantor, would materially and adversely affect the financial condition of Guarantor or of any of Guarantor’s assets or would materially and adversely affect the present or future ability of Guarantor to perform its obligations under the Guaranty.

(d)       Guarantor is not insolvent nor will Guarantor be rendered insolvent by the transactions contemplated by the Loan Documents. After giving effect to the transactions contemplated by the Loan Documents, Guarantor will not be left with an unreasonably small amount of capital with which to engage in its business or undertakings, nor will Guarantor have intended to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature.

(e)       Except as disclosed to Lender in writing, the financial statements and all financial data delivered to Lender relating to Guarantor are true, correct and complete in all material respects. Such financial statements fairly present the financial position of Guarantor as of the dates indicated. No material adverse change has occurred in Guarantor’s financial position since the date of such financial statements, and Guarantor has not incurred any indebtedness since the date of any such statements.

(f)Guarantor has filed all required federal, state and local tax returns. Guarantor has paid all federal, state and local taxes prior to delinquency (including any interest and penalties) other than taxes being promptly and actively contested in good faith and by appropriate proceedings.

(g)       Guarantor is in material compliance with all laws, regulations and court orders applicable to it and its business.

(h)       None of Guarantor’s representations or warranties contained in this Guaranty or any other document, certificate or written statement furnished to Lender on behalf of Guarantor contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in this Agreement or in such other document, certificate or written statement (when taken in their entirety) not misleading. There is no fact known to Guarantor which materially or adversely affects the business, operations, assets or condition (financial or otherwise) of Guarantor which has not been disclosed in this Agreement or in another written statement delivered to Lender by Borrower or Guarantor.

9.Financial Reporting. Guarantor shall deliver the following information to Lender in form and substance reasonably satisfactory to Lender:

(a)       as soon as filed, but in no event later than October 3 1 of each year, copies of Guarantor’s federal income tax return, together with all schedules; and

(b)       not later than March 3 1 of each year, a balance sheet of Guarantor as of the end of the previous calendar year;

(c)       all other information, reports and notices relating to Guarantor that Lender shall reasonably request.

10.       Borrower. As used in this Guaranty, “Borrower” shall include any successor to Borrower with respect to the Loan and any estate created by the commencement of a case under the Bankruptcy Code or any other insolvency, bankruptcy, reorganization or liquidation proceeding, or by any trustee under the Bankruptcy Code, liquidator, sequestrator or receiver of Borrower or Borrower’s property or similar person duly appointed pursuant to any law generally governing any insolvency, bankruptcy, reorganization, liquidation, receivership or like proceeding.

11.        Opportunity to Review. Guarantor acknowledges that it has had the opportunity to review the matters discussed and contemplated by the Loan Documents, including the remedies Lender may pursue against Borrower in the event of a default under the Loan Documents, the value of the security or collateral for the Loan and Borrower’s financial condition and ability to perform under the Loan. Guarantor further has had the opportunity to review this Guaranty with its counsel.

12. Miscellaneous.

(a)       Notices. Any notice, demand or request required under this Guaranty shall be given in writing at the addresses set forth below by personal service; telecopy; overnight courier; or registered or certified, first class mail, return receipt requested

If to Guarantor:	W. Robert Kohorst C/O Everest Properties 199 S. Los Robles Avenue, Suite 200 Pasadena, California 91101 Fax No.: (626) 585-5929
If to Lender:	East West Bank 135 N. Los Robles, 2nd Floor Pasadena, California 91101 Attention: Kathleen Kwan Fax No.: (626) 8 17-8869

Such addresses may be changed by notice to the other parties given in the same manner as required above. Any notice, demand or request shall be deemed received as follows: (i) if sent by personal service, at the time such personal service is effected; (ii) if sent by

telecopy, upon the sender’s receipt of a confirmation report indicating receipt by the recipient’s telecopier; (iii) if sent by overnight courier, on the business day immediately following deposit with the overnight courier; and (iv) if sent by mail, three business days following deposit in the mail.

(b)       Governing Law. All questions with respect to the construction of this Guaranty and the rights and liabilities of the parties to this Guaranty shall be governed by the laws of the State of California.

(c)       Binding on Successors. This Guaranty shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Guaranty. Lender may assign his Guaranty with one or more of the Loan Documents. without in any way affecting Guarantor’s liability under it or them.

(d) Attorneys’ Fees

(i)        Guarantor shall reimburse Lender for all reasonable attorneys’ fees, costs and expenses, incurred by Lender in connection with the enforcement of Lender’s rights under this Guaranty and each of the other Loan Documents, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state of federal statute, including, without limitation, reasonable attorneys’ fees, costs and expenses incurred to protect Lender’s security and attorneys’ fees, costs and expenses incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Lender in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted by Lender in connection with any such proceeding.

(ii)       Lender shall also be entitled to its attorneys’ fees, costs and expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Guaranty into any judgment on this Guaranty.

(iii)       The foregoing attorneys’ fees provisions are mutual as provided in Section 1717 of the California Civil Code.

(e)       Counterparts. This Guaranty may be executed in any number of original counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one instrument. The original signature page of any counterpart may be detached from such counterpart and attached to any other counterpart identical to such counterpart (except having additional signature pages executed by other parties to this Guaranty) without impairing the legal effect of any such signature(s).

(f)        Entire Agreement. This Guaranty constitutes the entire agreement and understanding between the parties in respect of the subject matter of this Guaranty and supersedes all prior agreements and understandings with respect to such subject matter, whether oral or written.

(g)       Waivers. Waiver by Lender of any term, covenant or condition under this Guaranty or the Loan Documents, or of any default by Guarantor under this Guaranty or the Loan Documents, or any failure by Lender to insist upon strict performance by Guarantor of any term, covenant or condition contained in this Guaranty or the Loan Documents, shall be effective or binding on Lender only if made in writing by Lender; no such waiver shall be implied from any omission by Lender to take action with respect to any such term, covenant, condition or default. No express written waiver by Lender of any term, covenant, condition or default shall affect any other term, covenant, condition or default or cover any other time period than the application of any such term, covenant or condition to the matter as to which a waiver has been given or the default or time period specified in such express waiver. This Guaranty may be amended only by an instrument in writing signed by the parties to this Guaranty.

(h)        Severability. If any part of this Guaranty is declared invalid for any reason, such shall not affect the validity of the rest of the Guaranty. The other parts of this Guaranty shall remain in effect as if this Guaranty had been executed without the invalid part. The parties declare that they intend and desire that the remaining parts of this Guaranty continue to be effective without any part or parts that have been declared invalid.

13.Waiver of Trial by Jury. EACH OF LENDER AND GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND GUARANTOR. BOTH LENDER AND GUARANTOR HAVE OBTAINED THE ADVICE OF THEIR RESPECTIVE LEGAL COUNSEL BEFORE SIGNING THIS GUARANTY AND ACKNOWLEDGE THAT THEY VOLUNTARILY AGREED TO THIS WAIVER OF THEIR RIGHT TO TRIAL BY JURY WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND LEGAL CONSEQUENCE.

(Signatures on next page)

/S/ W. ROBERT KOHORST

W. Robert Kohorst

EX-99

PROMISSORY NOTE

April 23, 2007

Pasadena, California

$9,000,000

FOR VALUE RECEIVED, the undersigned, EVEREST PROPERTIES II, LLC, a California limited liability company (“Maker”), having its principal place of business at 199 South Los Robles Avenue, Suite 200, Pasadena, California 91 101, promises to pay to the order of EAST WEST BANK, a California banking corporation (“Payee”), at 135 N. Los Robles, 2^nd Floor, Pasadena, California 91 101, or at such other place as the holder of this Note from time to time may designate in writing, the principal sum of Nine Million Dollars ($9,000,000), or so much of such amount as may from time to time be disbursed and unpaid, together with interest on the unpaid principal amount of this Note from time to time outstanding at the “Interest Rate” (as defined below) in lawful money of the United States of America.

1. Payments of Principal and Interest.

(a) Interest. On May 1, 2007 and on the first day of each month after such date (each a “Payment Date”), Maker shall pay to Payee the amount of interest which shall have accrued at the Interest Rate during the calendar month (or portion of such calendar month, as applicable) immediately preceding such Payment Date.

“Interest Rate” means the “Prime Rate” (as defined below) less .125% per annum. “Prime Rate” means the variable rate of interest published in the Money Rates Section of The Wall Street Journal under the caption “prime rate.” Each change in the Prime Rate shall be effective as of the opening of business on the date announced as the effective date on which the changed Prime Rate is published. If more than one “prime rate” is published, the highest rate published shall be the Prime Rate for purposes of this Note.

(b) Payment on Maturity Date. The entire unpaid principal amount of this Note, together with any accrued and unpaid interest and any other amounts then due under the “Loan Documents” (as defined below), shall be due and payable on April 30, 2009 (the “Maturity Date”), unless such amounts become due and payable sooner because of acceleration, in which case they shall be due and payable in full on the date of such acceleration.

2. Payment Provisions. All payments received by Payee later than 1:00 p.m. (Los Angeles time) shall be considered received on the following business day. Interest payable under this Note shall be calculated on the basis of a 360-day year and the actual number of days elapsed. Payee may apply any payments made pursuant to the terms of this Note and the other Loan Documents in such order as it shall determine in its sole and absolute discretion.

3. Loan Documents. Repayment of this Note is secured by a Security Agreement of this date executed by Maker for the benefit of Payee (the “Security Agreement”) and by other security evidenced by agreements, financing statements, instruments and documents executed concurrently with this Note or from time to time after this date executed and delivered by or on behalf of Maker to Payee. This Note, the Security Agreement and all other documents, agreements and instruments evidencing, securing or delivered in connection with the loan made pursuant to this Note are collectively referred to in this Note as the “Loan Documents.”

4. Prepayment. Upon not less than two business days’ notice to Payee, Maker shall have the right to prepay amounts owing under this Note in an amount in each case of not less than $25,000.

5. Late Charges. If any installment of principal or interest due under this Note shall become overdue for a period longer than ten days, Maker shall pay to Payee a late charge of six cents for each dollar so overdue. Maker acknowledges that late payment to Payee will cause Payee to incur costs it would not have to incur had payment been timely made, the exact amount of such costs being difficult and impracticable to assess. Such costs include, without limitation, processing and accounting charges and the potential costs to be incurred as a result of Payee’s frustration and inability to meet its other commitments. The parties agree that the late charges represent a reasonable sum considering all of the circumstances existing as of the date of this Note and represent a fair and reasonable estimate of the costs that Payee will incur by reason of late payment. The parties further agree that proof of actual damages would be costly and inconvenient. Acceptance of any late charge shall not constitute a waiver of the default with respect to the overdue amount to the extent that such overdue amount remains outstanding, and shall not prevent Payee from exercising any of the other rights and remedies available to Payee. The late charges shall be due and payable immediately without demand and shall be secured by any Loan Document which grants a security interest.

6.Events of Default and Remedies. Upon the occurrence and during the continuance of any default under any term of any Loan Document (an “Event of Default”), Payee, at its option, may:

(a) collect interest on the entire unpaid principal amount of this Note from time to time outstanding at a rate of interest (the “Default Rate”) equal to the sum of the Interest Rate plus five percent per annum from the date of the occurrence of such Event of Default;

(b) declare all of Maker’s obligations under this Note and any other Loan Documents to be immediately due and payable, without notice, notice being expressly waived; and

(c) pursue each other right remedy and power available to it under this Note or any of the other Loan Documents or available to it at law or equity.

The rights, remedies and powers of Payee, as provided in this Note and the other Loan Documents, are cumulative and concurrent, and may be pursued singly, successively or together against Maker, the property described in any of the Loan Documents, any guarantor of Maker’s obligations and any other security given at any time to secure the payment of Maker’s obligations, all at the sole discretion of Payee. Payee may resort to every other right or remedy available at law or in equity without first exhausting all rights and remedies contained in this Note, the Security Agreement or the other Loan Documents, all in Payee’s sole discretion. Failure of Payee, for any period of time or on more than one occasion, to exercise its option to accelerate the Maturity Date shall not constitute a waiver of the right to exercise such right at any time during the continued existence of any Event of Default under any of the Loan Documents or in the event of any subsequent Event of Default under this Note or any of the other Loan Documents. Payee shall not by any other omission or act be deemed to waive any of its rights or remedies under this Note or the other Loan Documents unless such waiver is contained in a writing signed by Payee, and then only to the extent specifically set forth in such writing. A waiver in connection with one event shall not be construed as continuing or as a bar to or waiver of any right or remedy in connection with a subsequent event.

7. Waivers and Consents. Maker and each endorser, guarantor, surety or accommodation party of this Note and each other person liable or to become liable for any part of the indebtedness evidenced by this Note, waives presentment for payment, demand, notice of nonpayment, notice of dishonor, protest of any dishonor, notice of protest and protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, and agree that their liability shall be unconditional and without regard to the liability of any other party and shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee. Maker and each such endorser, guarantor, surety, accommodation party and person liable or to become liable further consent to every extension of time, renewal, waiver or modification that may be granted by Payee with respect to the payment or other provisions of this Note, and to the release of any collateral given to secure the payment of amounts owing under this Note, with or without substitution, and agree that additional makers or guarantors or endorsers may become parties to this Note without notice to Maker or any other parties and without affecting the liability of Maker or any other parties under this Note.

8. Miscellaneous.

(a) Governing Law. All questions with respect to the construction of this Note and the rights and liabilities of the parties to this Note shall be governed by the laws of the State of California.

(b) Binding on Successors. This Note shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Note.

(c) Attorneys’ Fees.

(i) Maker shall reimburse Payee for all reasonable attorneys’ fees, costs and expenses (including those of in-house counsel), incurred by Payee in connection with the enforcement of Payee’s rights under this Note and each of the other Loan Documents, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state or federal statute, including, without limitation, reasonable attorneys’ fees, costs and expenses incurred to protect Payee’s security and attorneys’ fees, costs and expenses incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Payee in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted by Payee in connection with any such proceeding.

(ii) Payee shall also be entitled to its attorneys’ fees, costs and expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Note into any judgment on this Note.

(iii) The foregoing attorneys’ fees provisions are mutual as provided in Section 1717 of the California Civil Code.

(d) Entire Agreement. This Note and the other Loan Documents constitute the entire agreement and understanding between and among the parties in respect of the subject matter of such agreements and supersedes all prior agreements and understandings with respect to such subject matter, whether oral or written.

(e) Waivers. Waiver by Payee of any term, covenant or condition under this Note or the other Loan Documents, or of any default by Maker under this Note or the other Loan Documents, or any failure by Payee to insist upon strict performance by Maker of any term, covenant or condition contained in this Note or the other Loan Documents, shall be effective or binding on Payee only if made in writing by Payee; no such waiver shall be implied from any omission by Payee to take action with respect to any such term, covenant, condition or default. No express written waiver by Payee of any term, covenant, condition or default shall affect any other term, covenant, condition or default or cover any other time period than the application of any such term, covenant or condition to the matter as to which a waiver has been given or the default or time period specified in such express waiver. This Note may be amended only by an instrument in writing signed by Maker and Payee.

(f)Severability. If any part of this Note is declared invalid for any reason, such shall not affect the validity of the rest of the Note. The other parts of this Note shall remain in effect as if this Note had been executed without the invalid part. The

parties declare that they intend and desire that the remaining parts of this Note continue to be effective without any part or parts that have been declared invalid.

9.Loan Fee and Payee’s Costs. In consideration of Payee’s making the loan evidenced by this Note, Maker agrees to pay to Payee a loan fee in the amount of $11,250 and to reimburse Payee for all of its costs incurred in making such loan, including, without limitation, legal, title, recording, investigation and appraisal fees. Such loan fee shall be fully earned on the date on which the first advance under this Note is made and shall be nonrefundable. Maker consents to Payee’s withholding the amount of the loan fee and all costs incurred by Payee from the first advance under this Note.

10. Waiver of Trial by Jury. EACH OF MAKER AND PAYEE WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARTSING OUT OF THIS NOTE OR THE OTHER LOAN DOCUMENTS OR THE CONDUCT OF THE RELATIONSHIP BETWEEN PAYEE AND MAKER. BOTH MAKER AND PAYEE HAVE OBTAINED THE ADVICEOF THEIR RESPECTIVE LEGAL COUNSEL BEFORE SIGNING THIS NOTE AND ACKNOWLEDGE THAT THEY VOLUNTARILY AGREED TO THIS WAIVER OF THEIR RIGHT TO A TRIAL BY JURY WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND LEGAL CONSEQUENCE.

(Signatures on next page)

EVEREST PROPERTIES II, LLC, a California limited liability company
By:	EVEREST PROPERTIES, LLC, a California limited liability company, its Manager
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst, its President and Manager

EX-99

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is entered into as of April 23, 2007, by EVEREST PROPERTIES II, LLC, a California limited liability company (“Debtor”), for the benefit of EAST WEST BANK, a California banking corporation (“Secured Party”).

RECITALS

A. Secured Party is the payee of the Promissory Note of this date, executed by Debtor in the original principal amount of $9,000,000 (the “Note”). The Note, this Agreement and all other agreements evidencing or securing the loan evidenced by the Note are referred to as the “Loan Documents.”

B.        Debtor is executing this Agreement to grant to Secured Party a security interest in a promissory note held by Debtor. Secured Party would not make the loan evidenced by the Note without the security interest provided for in this Agreement. Debtor is therefore willing to deliver this Agreement to satisfy the conditions precedent to the funding of such loan.

AGREEMENT

1.         Security Interest. Debtor grants to Secured Party a security interest in all of Debtor’s rights to and interest in the following (collectively, the “Collateral”):

(a)       The promissory note (the “Assigned Note”) and the deed of trust (the “Assigned Deed of Trust”) described on Schedule 1 attached to this Agreement, together with any extensions, modifications, renewals and substitutions of or for the Assigned Note and Assigned Deed of Trust, and all other documents, instruments and agreements evidencing, securing or otherwise delivered in connection with the loans evidenced by the Assigned Note (collectively, the “Assigned Loan Documents”);

(b)        All amounts owing to Debtor pursuant to the Assigned Note, the Assigned Deed of Trust or the Assigned Loan Documents, whether under guaranties, indemnity agreements, insurance policies, other collateral or general intangibles arising or available in connection with the Assigned Note, Assigned Deed of Trust or Assigned Loan Documents;

(c)       Any loan policies of title insurance issued in connection with the Assigned Deed of Trust;

(d)        All books, records, files, appraisals, reports; certificates, computer files and records and all other information in whatever form relating to the Assigned Note; and

(e)       All replacements, substitutions, renewals or proceeds of any of the property described above.

2. Delivery of Collateral.

(a)       Concurrently with the execution and delivery of this Agreement Debtor shall deliver to Secured Party the following:

(i)        the executed original of the Assigned Note, attached to which shall be an allonge in form satisfactory to Secured Party duly executed by Debtor;

(ii)        a copy of the Assigned Deed of Trust, together with an assignment of deed of trust in form satisfactory to Secured Party, duly executed by Debtor and acknowledged and otherwise in recordable form, assigning to Secured Party all of Debtor’s interest in the Assigned Deed of Trust;

(iii)      the original loan policy of title insurance issued with respect to the Assigned Deed of Trust, with an assignment endorsement in form satisfactory to Secured Party;

(iv)      a UCC-I Financing Statement for the purpose of perfecting the security interest granted by this Agreement;

(v)       a UCC assignment giving notice of the assignment to Secured Party of Debtor’s rights under any UCC-1 Financing Statement filed with respect to the Assigned Deed of Trust in which Debtor is secured party; and

(vi)      To the extent not included in the foregoing, all other instruments, agreements, or contracts representing or evidencing the Collateral in suitable form for transfer by delivery, which shall be accompanied by, as applicable, Debtor’s endorsement or other instruments of transfer or assignment in blank, all in form and substance satisfactory to Secured Party.

(b)       After the execution and delivery of this Agreement, from time to time during the term of this Agreement, Debtor shall promptly upon receipt deliver to Secured Party, or cause the prompt delivery to Secured Party of, any of the items set forth in Section 2(a) above relating to the Collateral which is not then in Secured Party’s possession.

(c)       Any part of the Collateral which Debtor is required to deliver to Secured Party by the terms of this Agreement shall be deemed to have been received in trust by Debtor for the benefit of Secured Party and shall be segregated from Debtor’s other funds and property pending delivery by Debtor as provided in Section 2(b) above.

3.Security for Obligations. This Agreement is given to secure performance of each obligation contained in the Loan Documents and this Agreement, and any other obligation in the future evidenced by a writing reciting that the performance of such

obligation is secured by this Agreement (the “Obligations”). Upon the full performance of all of the Obligations, all Collateral shall be promptly returned to Debtor and Secured Party shall execute and deliver such instruments and documents as are reasonably necessary to release Secured Party’s interests in the Collateral.

4.         Representations and Warranties. Debtor represents and warrants to Secured Party as follows:

(a)       Debtor is the sole legal owner of the Collateral, free and clear of any claim, lien or other encumbrance except for the security interest granted in this Agreement, with full rights to grant a security interest in the Collateral to Secured Party.

(b)       Secured Party has a valid, perfected first-priority security interest in the Collateral, securing performance of the Obligations.

(c)        Debtor’s execution and delivery of this Agreement do not contravene or conflict with any contractual restriction contained in the Assigned Note, Assigned Deed of Trust or Assigned Loan Documents.

(d)       Except as shown on Schedule 1, (i) neither the Assigned Note nor the Assigned Deed of Trust have been released, discharged, satisfied or cancelled; (ii) no part of the security described in the Assigned Deed of Trust or any other Assigned Loan Document or any UCC-1 Financing Statement filed in connection with the Assigned Deed of Trust or other Assigned Loan Document has been released from the lien thereof or subordinated to any other lien; and (iii) the Assigned Note and Assigned Deed of Trust have not been amended, modified, extended or renewed.

(e)       Debtor is not aware of any facts indicating or tending to indicate that a party which purports to be bound or obligated under the Assigned Note, Assigned Deed of Trust or any other part of the Collateral is not so bound.

(f)Debtor is not aware of any respect in which the Collateral does not comply with applicable laws concerning form, content and manner of preparation or execution.

(g)       The description of the Collateral on Schedule 1 is accurate and complete.

5. Covenants.

(a)       Debtor shall act as a prudent lender and exercise such care, undertake such acts and assert such rights as are necessary to protect and realize the optimal value of the Collateral. Debtor shall punctually and properly perform all of its obligations under the Collateral.

(b)       Debtor shall give notice to Secured Party of each material default under and each material decision to be made with respect to the Collateral after the date

hereof. Debtor shall not, without the prior written consent of Secured Party, enter into or consent to any material modification of the Assigned Note, Assigned Deed of Trust or other Assigned Loan Documents or waive any material rights or grant any material consents under any of the Assigned Note, Assigned Deed of Trust or Assigned Loan Documents. Secured Party hereby acknowledges that the maker of the Assigned Note has defaulted on the payment of such Assigned Note and has previously defaulted under the Assigned Deed of Trust and other Assigned Loan Documents. Secured Party hereby acknowledges that the maker of the Assigned Note filed a voluntary petition for relief under the provisions of Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada, Case No. BK-S-06-12463, and is making payments on the Assigned Note in accordance with the Stipulation and Order for Use of Cash Collateral dated October 2, 2006, as extended by a Stipulation for Continued Use of Cash Collateral filed January 24, 2007 (collectively, the “Stipulation”). Secured Party consents to one or more extensions of the Stipulation on terms requiring a monthly loan payment to Debtor of no less than Seventy Thousand Dollars ($70,000.00).

(c)       Debtor shall not commingle proceeds of the Collateral with any other property.

(d)       Debtor shall keep, in accordance with sound business practices, complete and accurate records regarding the Collateral.

(e)       Debtor shall not sell, transfer or otherwise dispose of any of the Collateral or create or permit to exist any lien, security interest, or other charge or encumbrance upon or with respect to any of the Collateral, except for the security interest under this Agreement.

(f)        Debtor shall keep the Collateral free and clear of all defenses, rights of offset and counterclaims.

(g)Debtor shall deliver to Secured Party, from time to time upon Secured Party’s request, in form and substance satisfactory to Secured Party, a report of collections in connection with the Collateral.

(h)       Debtor shall permit Secured Party during normal business hours to review Debtor’s books and records pertaining to the Collateral.

(i)        Debtor shall promptly notify Secured Party of any change in any fact or circumstances warranted or represented by Debtor in this Agreement or in any other writing furnished by Debtor to Secured Party in connection with the Collateral and of any claim, action or proceeding affecting title to the Collateral or any part thereof or the security interest granted hereby and, at the request of Secured Party, appear in and defend at Debtor’s expense any such action or proceeding.

(i)        Debtor shall not relocate its chief executive office or the place where Debtor maintains its records concerning the Collateral without first giving Secured Party written notice of the time and place of such relocation.

(k)       Debtor shall not change its name without first giving Secured Party written notice of the changed name and the effective date of the change.

(l)        Debtor shall furnish the following information, reports and notices to Secured Party in form and substance reasonably satisfactory to Secured Party:

(i)        as soon as available but in no event later than 120 days after the end of each calendar year, the balance sheet and income statement of Debtor, comparing the figures in such statements to those for the previous year, all in reasonable detail, accompanied by the certificate of a representative of Debtor reasonably satisfactory to Secured Party, stating that such financial statements have been prepared in accordance with generally accepted accounting principles (or, if acceptable to Secured Party, other accounting principles, which such certificate shall describe), consistently applied, and that such financial statements fairly present the financial condition of Debtor for such year;

(ii)       as soon as filed, but in no event later than October 31 of each year, copies of Debtor’s state and federal income tax returns, together with all schedules; and

(iii)      all other information, reports and notices relating to the Property and Debtor that Secured Party shall reasonably request.

6. Collection and Enforcement of Collateral.

(a)       Upon Secured Party’s request, irrespective of the occurrence or not of an “Event of Default” (as defined below) or a default under any part of the Collateral, Debtor shall notify the maker of the Assigned Note that all of such maker’s payments under the Assigned Note are to be made to Secured Party or such person as Secured Party shall designate.

(b)       Secured Party may require that all proceeds or property realized upon any enforcement or foreclosure under the Assigned Loan Documents (including, without limitation, any property acquired by Debtor for cash and/or credit bid at any foreclosure sale) be pledged to Secured Party as additional security for the Obligations (and this Agreement shall be deemed to be continue to cover and grant a security interest in all such proceeds and property), or, at Secured Party’s option, Secured Party may require that all such proceeds and property be applied to the Obligations in such order and manner as Secured Party may determine. In addition, if Secured Party determines that Debtor has failed to instigate or diligently pursue any foreclosure upon the occurrence of any default of any obligor on the Collateral and Secured Party determines that such failure may result in the material impairment of Secured Party’s Collateral, and if Secured Party does so in accordance with applicable law, then Secured Party may, at its option, enforce or conduct any foreclosure under the Collateral in its own name, and Debtor consents to any nonjudicial foreclosure under the Assigned Note and Assigned

Deed of Trust, or any other action taken by Secured Party which may release any person from personal liability under any of the Collateral; and in connection therewith, Secured Party is authorized to credit bid all or any part of the indebtedness owing to Debtor at any foreclosure sale. All proceeds or property realized by Secured Party upon any such enforcement or foreclosure shall be held by Secured Party as additional security for the Obligations or, at Secured Party’s option, shall be applied to Obligations in such order and manner as Secured Party may determine.

(c)       In the event that, prior to the complete satisfaction of the Obligations, Debtor or Secured Party becomes vested with fee or leasehold title to any of the real property encumbered by the Assigned Deed of Trust, concurrently with such vesting, Secured Party shall grant such real property to Debtor if necessary, and Debtor shall execute and deliver to Secured Party a deed of trust, assignment of rents, security agreement, UCC-I financing statement and such other documents and agreements as Secured Party shall require in connection with such real property, in form and substance satisfactory to Secured Party. Debtor further agrees in such event to provide Secured Party, at Debtor’s sole cost and expense, with an ALTA loan policy of title insurance in an amount required by Secured Party in its sole discretion, issued by a title insurance company satisfactory to Secured Party, subject only to such exceptions as shall exist when Debtor acquires such title.

7. Further Assurances. Debtor shall, at any time and from time to time, at the expense of Debtor, execute and deliver promptly all.further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may reasonably request, in order to perfect and protect any security interest granted or purported to be granted by this Agreement or to enable Secured Party to exercise and enforce its rights and remedies under this Agreement with respect to any Collateral.

8. Attorney-in-Fact: Secured Party May Perform.

(a)       Debtor appoints Secured Party Debtor’s attorney-in-fact, with full authority in Debtor’s place and in the name of Debtor or otherwise, from time to time in Secured Party’s discretion to take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, indorse and collect all instruments made payable to Debtor representing any dividend, interest payment or other distribution in respect of the Collateral and to give full discharge for the same. This appointment is coupled with an interest and is irrevocable.

(b)       Secured Party, either in its own name or in the name of its nominee, may, but shall not be obligated to, (i) perform such acts as it may deem proper to preserve, protect and defend the Collateral and the validity, perfection, enforceability and priority of Secured Party’s security interest in the Collateral and (ii) cause the performance of Debtor’s obligations under this Agreement in the absence of Debtor’s performance of such obligations. Debtor may exercise such rights, powers and remedies with respect to the Collateral as an owner would possess.

(c)       The expenses of Secured Party incurred in connection with Secured Party’s actions pursuant to this Section 8 shall be payable by Debtor under Section 13.

9.Secured Party’s Obligation for Collateral. Secured Party shall not have any responsibility for (a) ascertaining or taking action with respect to maturities, defaults, claims or other matters relative to the Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve the rights against any parties with respect to any Collateral.

10.       Default. An “Event of Default” shall occur under this Agreement upon the occurrence of any of the following events and the lapse of any applicable period in which Debtor is permitted to cure such events under any Loan Document:

(a)       Debtor’s failure to pay when due any amount under the Note or any other sum required to be paid or deposit of funds required to be made by the terms of any Loan Document;

(b)       any default under this Agreement or any of the other Loan Documents;

(c)       any written representation, warranty or financial statement given by Debtor or any guarantor of Debtor’s obligations (a “Guarantor”) shall have been untrue in any material respect when given;

(d)       Debtor or any Guarantor shall be unable or shall admit in writing its inability to pay its debts when due, or shall make an assignment for the benefit of creditors; or any of them shall apply for or consent to the appointment of any receiver, trustee or similar officer for such person or for all or any substantial part of such person’s property; or any of them shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debts, dissolution, liquidation, or similar proceedings relating to such person under the laws of any jurisdiction;

(e)       if a receiver, trustee or similar officer shall be appointed for Debtor or any Guarantor, or for all or any substantial part of any such person’s property without the application or consent of such person, and such appointment shall continue undischarged for a period of 60 days (whether or not consecutive); or any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceedings shall be instituted (by petition, application or otherwise) against any such person and shall remain undismissed for a period of 60 days (whether or not consecutive);

(f)       all or any material part of the assets of Debtor or any Guarantor shall become subject to attachment, execution or judicial seizure (whether by

enforcement of money judgment, by writ or warrant of attachment, or by any other process);

(g)       Debtor or any other person obligated shall be in default in the payment of any indebtedness and such default is declared and is not cured within the time, if any, specified for such a cure in any applicable agreement;

(h)       any of the Loan Documents shall cease to be a valid, binding and enforceable obligation of the person purported to be bound; or the lien of any Loan Document securing any of Debtor’s obligations shall cease to be a valid, enforceable, perfected and first priority lien on the property it purports to encumber; or Debtor shall assert such cessation or failure in writing; or

(i)        the death or a material adverse change in the financial condition of any Guarantor.

11. Remedies. If any Event of Default shall have occurred and be continuing:

(a)       Secured Party shall have, in addition to all other rights and remedies that Secured Party may have under this Agreement and the California Uniform Commercial Code, the following rights and remedies, all of which may be exercised with or without further notice to Debtor:

(i)        to notify or notify any and all obligors on the Collateral that the same has been pledged to Secured Party and that all payments thereon are to be made directly and exclusively to Secured Party; to renew, extend, modify, amend, accelerate, accept partial payments on, make allowances and adjustments and issue creditors with respect to, release, settle, compromise, compound, collect or otherwise liquidate, on terms acceptable to Secured Party, in whole or in part, the Collateral and any amounts owing thereon or any guaranty or security therefor; to enter into any other agreement relating to or affecting the Collateral; and to give all consents, waivers and ratifications in respect of the Collateral and exercise all other rights, powers and remedies and otherwise act with respect thereto as if it were the owner thereof;

(ii)        to enforce payment and prosecute any action or proceeding with respect to any and all of the Collateral and take or bring, in Secured Party’s name or in the name of Debtor, all steps, actions, suits or proceedings deemed by Secured Party necessary or desirable to effect collection of or to realize upon the Collateral;

(iii)      to take possession of the Collateral with or without judicial process; and to enter any premises where any Collateral may be located for the purpose of taking possession of the Collateral or removing the same;

(iv)      to endorse, in the name of Debtor, all checks, notes, drafts, money orders, instruments and other evidences of payment relating to the Collateral; to transfer any or all of the Collateral into the name of Secured Party or its nominee or nominees; and to receive, open and dispose of all mail addressed to Debtor and notify the

postal authorities to change the address for delivery thereof to such address as Secured Party may designate; and (v) to foreclose the liens and security interests created under this Agreement or under any other agreement relating to the Collateral by any available judicial procedure or without judicial process; and to sell, assign, lease or otherwise dispose of the Collateral or any part thereof, either at public or private sale or at any broker’s board or securities exchange, in lots or in bulk, for cash, on credit or for future delivery, or otherwise, with or without representations or warranties, and upon such terms as shall be acceptable to Secured Party; all at Secured Party’s sole option and as Secured Party in its sole discretion may deem advisable.

(b) Debtor shall, at Secured Party’s request, assemble all Collateral and make it available to Secured Party at places which Secured Party may select which are reasonably convenient for both parties, whether at the premises of Debtor or elsewhere.

(c) All demands of performance, advertisements, notices of sale or retention, as well as the presence of the Collateral at any sale and the constructive possession of the Collateral by the person conducting any sale.

(d)       Upon consummation of any sale of the Collateral, Secured Party shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the Collateral sold absolutely free from claim or right on the part of Debtor, and Debtor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

(e) Any cash held by Secured Party as Collateral and all cash proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Secured Party, be held by Secured Party as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to Secured Party) in whole or in part by Secured Party against, all or any part of the Obligations in such order as Secured Party shall elect. Any surplus of such cash or cash proceeds held by Secured Party and remaining after payment in full of all the Obligations shall be paid over to Debtor or to whomsoever may be lawfully entitled to receive such surplus.

12.       Indemnity and Expenses. Debtor shall indemnify Secured Party from all demands, claims, losses and liabilities arising out of or resulting from this Agreement. Debtor shall upon demand pay to Secured Party the amount of all reasonable expenses, including those specified in Section 13(d) below, which Secured Party may incur in connection with (a) the administration of this Agreement; (b) the custody, preservation, use, sale of, collection from or other realization upon, any of the Collateral; (c) the exercise of any remedies or enforcement of any rights of Secured Party under this Agreement or relating to the Collateral; or (d) Debtor’s failure to perform or observe any of the provisions of this Agreement.

13. Miscellaneous.

(a)       Notices. Any notice, demand or request required under this Agreement shall be given in writing at the addresses set forth below by personal service; telecopy; overnight courier; or registered or certified, first class mail, return receipt requested.

If to Debtor:
	Everest Properties II, LLC 199 South Los Robles Avenue, Suite 200 Pasadena, California 91 101 Attention: W. Robert Kohorst Fax No.: (626) 585-5920
If to Secured Party:
	East West Bank 135 N. Los Robles, 2nd Floor Pasadena, California 9 1 10 1 Attention: Kathleen Kwan Fax No.: (626) 817-8869

Such addresses may be changed by notice to the other parties given in the same manner as required above. Any notice, demand or request shall be deemed received as follows: (i) if sent by personal service, at the time such personal service is effected; (ii) if sent by telecopy, upon the sender’s receipt of a confirmation report generated by the sender’s telecopier indicating receipt by the recipient’s telecopier; (iii) if sent by overnight courier, on the business day immediately following deposit with the overnight courier; and (iv) if sent by mail, 48 hours following deposit in the mail.

(b)        Governing Law. All questions with respect to the construction of this Agreement and the rights and liabilities of the parties to this Agreement shall be governed by the laws of the State of California.

(c)       Binding on Successors. This Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of each of the parties to this Agreement.

(d) Attorneys’ Fees.

(i)        Debtor shall reimburse Secured Party for all reasonable attorneys’ fees, costs and expenses, incurred by Secured Party in connection with the

enforcement of Secured Party’s rights under this Agreement and each of the other Loan Documents, including, without limitation, reasonable attorneys’ fees, costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state or federal statute, including, without limitation, reasonable attorneys’ fees, costs and expenses incurred to protect Secured Party’s security and attorneys’ fees, costs and expenses incurred in bankruptcy and insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. The term “expenses” means any expenses incurred by Secured Party in connection with any of the out-of-court, or state, federal or bankruptcy proceedings referred to above, including, without limitation, the fees and expenses of any appraisers, consultants and expert witnesses retained or consulted by Secured Party in connection with any such proceeding.

(ii)        Secured Party shall also be entitled to its attorneys’ fees, costs and expenses incurred in any post-judgment proceedings to collect and enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement.

(iii)       The foregoing attorneys’ fees provisions are mutual as provided in Section 1717 of the California Civil Code.

(e)       Counterparts. This Agreement may be executed in any number of original counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one instrument. The original signature page of any counterpart may be detached from such counterpart and attached to any other counterpart identical to such counterpart (except having additional signature pages executed by other parties to this Agreement) without impairing the legal effect of any such signature(s).

(f)        Entire Agreement. This Agreement and the other Loan Documents constitute the entire agreement and understanding between the parties in respect of the subject matter of this Agreement and supersede all prior agreements and understandings with respect to such subject matter, whether oral or written.

(g)       Waivers. Waiver by Secured Party of any term, covenant or condition under this Agreement or the Loan Documents, or of any default by Debtor under this Agreement or the Loan Documents, or any failure by Secured Party to insist upon strict performance by Debtor of any term, covenant or condition contained in this Agreement or the Loan Documents, shall be effective or binding on Secured Party only if made in writing by Secured Party; no such wavier shall be implied from any omission by Secured Party to take action with respect to any such term, covenant, condition or default. No express written waiver by Secured Party of any term, covenant, condition or default shall affect any other term, covenant, condition or default or cover any other time period than the application of any such term, covenant or condition to the matter as to which a waiver has been given or the default or time period specified in such express waiver. This Agreement may be amended only by an instrument in writing signed by the parties to this Agreement.

(h)       Severability. If any part of this Agreement is declared invalid for any reason, such shall not affect the validity of the rest of the Agreement. The other parts of this Agreement shall remain in effect as if this Agreement had been executed without the invalid part. The parties declare that they intend and desire that the remaining parts of this Agreement continue to be effective without any part or parts that have been declared invalid.

[Signature on following page]

EVEREST PROPERTIES II, LLC, a California limited liability company
By:	EVEREST PROPERTIES, LLC, a California limited liability company, its Manager
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst, its President and Manager

SCHEDULE 1

Assigned Loan Documents

Promissory Note dated August 1, 2001 in the amount of $10,080,000 made by Sunwood Village Joint Venture, Limited Partnership (“Borrower”) and payable to the order of First Union National Bank

Deed of Trust and Security Agreement dated as of August 1, 2001 executed by Sunwood Village Joint Venture, Limited Partnership for the benefit of First Union National Bank, which was recorded on August 2, 2001 in Book No. 20020802, Document No. 01912 in the real property records of Clark County, Nevada, as subsequently assigned by First Union National Bank to Assignor hereunder by Assignment of Deed of Trust and Security Agreement and Assignment of Assignment of Leases and Rents dated as of November 28, 2001, and recorded on May 3, 2002, as Instrument No. 00257, in Book 20020503, in the Clark County Clerk’s Office (the “First Assignment”)

Assignment of Leases and Rents dated as of August 1,2001 by Borrower, as assignor and First Union National Bank, as assignee (the “Assignment of Leases”) recorded on August 2, 2001, as Instrument No. 01913, in Book 20010802, in the Clark County Clerk’s Office, as subsequently assigned by First Union National Bank to Assignor hereunder by the First Assignment

The UCC1Financing Statement filed as Book 200201 17, Instrument No. 02364, in Clark County, NV, which may be considered to have lapsed.

EX-99

ALLONGE

(FUNB 2001-C4; Loan No. 502694601)

THIS ALLONGE IS TO BE ATTACHED to that certain Promissory Note dated August 1, 2001, payable by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership, to the order of FIRST UNION NATIONAL BANK, a national banking association, in the original principal amount of Ten Million Eighty Thousand and No/100 U.S. Dollars (U.S. $10,080,000.00) (the “Note”).

PAY TO THE ORDER OF EVEREST PROPERTIES II, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, WITHOUT RECOURSE AND WITHOUT REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR BY OPERATION OF LAW, OF ANY KIND AND/OR NATURE WHATSOEVER, EXCEPT THAT THE UNDERSIGNED (A) IS THE PAYEE OF THE NOTE; (B) HAS NOT SOLD, TRANSFERRED, ASSIGNED, CONVEYED, PLEDGED OR ENDORSED ANY RIGHT, TITLE OR INTEREST THE NOTE TO ANY PERSON OR ENTITY OTHER THAN EVEREST PROPERTIES II, LLC; AND (C) HAS FULL RIGHT AND POWER TO SELL AND ASSIGN THE SAME, SUBJECT TO NO INTEREST OR PARTICIPATION OF, OR AGREEMENT WITH, ANY PARTY OTHER THAN EVEREST PROPERTIES II, LLC.

Dated: April 23, 2007.

WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FAHGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4
By:	LNR Partners, Inc., a Florida corporation, its attorney-in-fact under Limited Power of Attorney dated May 31, 2005
	By:	/S/ RANDOLPH J. WOLPERT
		Randolph J. Wolpert, Vice President

EX-99

APN:

WHEN RECORDED, MAIL TO:

Christopher K. Davis

Vice President and General Counsel

Everest Properties

199 S. Los Robles Ave., Suite 200

Pasadena, CA 91101

ASSIGNMENT OF DEED OF TRUST AND SECURITY AGREEMENT AND ASSIGNMENT OF ASSIGNMENT OF LEASES AND RENTS

WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF

FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST,

COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,

SERIES 2001-C4

And

EVEREST PROPERTIES II, LLC,

A CALIFORNIA LIMITED LIABILITY COMPANY

Date: As of April 23, 2007

County: Clark

State: Nevada

ASSIGNMENT OF DEED OF TRUST AND SECURITY AGREEMENT

AND ASSIGNMENT OF ASSIGNMENT OF LEASES AND RENTS

(FUNB 2001-C4; Loan No. 502694601)

THIS ASSIGNMENT OF DEED OF TRUST AND SECURITY AGREEMENT AND ASSIGNMENT OF ASSIGNMENT OF LEASES AND RENTS (this “Assignment”) is made and entered into as of the 23rd day of April, 2007, by WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4 (“Assignor”), having an office at 7080 Samuel Morse Drive, Columbia, Maryland 21046, Attn.: Corporate Trust Services CMBS, Re: FUNB 2001-C4, Loan No. 502694601, in favor of EVEREST PROPERTIES II, LLC, a California limited liability company (“Assignee”) having an office at 199 S. Los Robles Ave., Suite 200, Pasadena, California 91101.

W I T N E S S E T H

WHEREAS, Assignor is the present legal and equitable owner and holder of that certain Promissory Note dated August 1, 2001, executed by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Borrower”), and made payable to the order of Assignor in the stated principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) (the “Note”) in connection with the refinancing of certain real property situated in the County of Clark and State of Nevada as more particularly described on Exhibit A annexed hereto and made a part hereof (the “Premises”); and

WHEREAS, the Note is secured by the Deed of Trust and Security Agreement and Assignment of Leases and Rents, as both are hereafter defined; and

WHEREAS, Assignee desires that Assignor assign to Assignee, and its successors and assigns, all of Assignor’s right, title and interest in and to the Deed of Trust and Security Agreement and Assignment of Leases and Rents, and Assignor agrees to such assignment.

NOW, THEREFORE, in consideration of the premises above set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Assignor and Assignee hereby covenant and agree as follows:

1.         Assignment. Assignor does hereby transfer, assign, grant and convey to Assignee, and its successors and assigns, all of the right, title and interest of Assignor in and to the following documents and does hereby grant and delegate to Assignee, and its successors and assigns, any and all of the duties and obligations of Assignor under the following documents from and after the date hereof:

(a)        That certain Deed of Trust and Security Agreement dated as of August 1, 2001, from Borrower, as Grantor, to United Title of Nevada, as Trustee, for the benefit of First Union National Bank, as Beneficiary (the “Security Instrument”) and recorded on August 2,2001, as Instrument No. 01912, in Book 20010802, in the Clark County Clerk’s Office, encumbering the Premises, together with the notes and bonds secured thereby; as subsequently assigned by First Union National Bank to Assignor hereunder by Assignment of Deed of Trust and Security Agreement and Assignment of Assignment of

Leases and Rents dated as of November 28, 2001, and recorded on May 3, 2002, as Instrument No. 00257, in Book 20020503, in the Clark County Clerk’s Office (the “First Assignment”) and

(b)       That certain Assignment of Leases and Rents dated as of August 1, 2001 by Borrower, as assignor and First Union National Bank, as assignee (the “Assignment ofLeases”) recorded on August 2, 2001, as Instrument No. 01913, in Book 20010802, in the Clark County Clerk’s Office, as subsequently assigned by First Union National Bank to Assignor hereunder by the First Assignment.

TOGETHER WITH all sums and other obligations described therein and in the promissory note(s) referred to therein.

TO HAVE AND TO HOLD the same unto the Assignee and to the successors and assigns of the Assignee forever.

2.         Assumption. From and after the date hereof, Assignee, by its acceptance hereof, hereby accepts the Assignment and assumes and agrees to observe, perform and be bound by all of the terms, covenants, agreements, conditions and obligations of the Security Instrument and the Assignment of Leases required to be observed or performed by Assignor thereunder.

3.         Representations and Warranties of Assignor. This Assignment is an absolute assignment. THIS ASSIGN\IENT IS WITHOUT RECOURSE, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, UPON ASSIGNOR, EXCEPT THAT ASSIGNOR HEREBY WARRANTS AND REPRESENTS TO ASSIGNEE THAT:

(a)        Assignor is the sole beneficiary of the Security Instrument and Assignment of Leases;

(b)       Assignor has not sold, transferred, assigned, conveyed, pledged or endorsed any right, title or interest in the Security Instrument or the Assignment of Leases to any person or entity other than Assignee;

(c)        Assignor has full right and power to sell and assign the same to Assignee subject to no interest or participation of, or agreement with, any party other than Assignee;

(d)       The current principal balance of the Loan, funds in suspense, escrow balances for insurance and reserves, interest payment due, default rate interest due, legal fees, inspection fees, Trustee expense, appraisal fee, miscellaneous fees, interest on advances, administrative fees, and master servicer fees/charges shown on the Statement of Mortgage Debt dated April , 2007, provided by Assignor to Assignee are true and correct in all material respects;

(e) None of the Note, the Security Instrument and the Assignment of Leases have been released, discharged, satisfied or cancelled by Assignor;

(f)No part of the collateral described in the Security Instrument or any UCC Financing Statement filed in connection therewith, or any other collateral securing the Note, has been released by Assignor from the lien thereon or subordinated by Assignor to any other lien, except that the UCC Financing Statement filed in Book 20020117, Instrument No. 02364, in Clark County, Nevada, may be considered to have lapsed; and

(g) None of the Note, the Security Instrument and the Assignment of Leases have been amended, modified, extended or renewed by Assignor, except by the First Assignment.

4.Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State of Nevada.

5.Successors and Assigns. This Assignment shall he binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6.          Headings. The headings of the paragraphs of this Assignment have been included only for convenience, and shall not be deemed in any manner to modify or limit any of the provisions of this Assignment or be used in any manner in the interpretation of this Assignment.

7.         Interpretation. Whenever the context so requires in this Assignment, all words used in the singular shall be construed to have been used in the plural (and vice versa), each gender shall be construed to include any other genders, and the word “person” shall be construed to include a natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other entity.

8.         Partial Invalidity. Each provision of this Assignment shall be valid and enforceable to the fullest extent permitted by law. If any provision of this Assignment or the application of such provision to any person or circumstance shall, to any extent, be invalid or unenforceable, then the remainder of this Assignment, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected by such invalidity or unenforceability.

IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date above first written.

[END OF TEXT - SIGNATURE AND ACKNOWLEDGMENT PAGE FOLLOWS]

	WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FAHGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4
	By:	LNR Partners, Inc., a Florida corporation, its attorney-in-fact under Limited Power of Attorney dated May 31, 2005
Witnesses:		By:	/S/ RANDOLPH J. WOLPERT
/S/ JOSH TYLER			Randolph J. Wolpert, Vice President
Print Name: Josh Tyler

[CORPORATE SEAL]

STATE OF FLORIDA

COUNTY OF MIAMI-DADE 1

The foregoing instrument was acknowledged before me this 24^th day of April, 2007, by Randolph J. Wolpert, as Vice President of LNR Partners, Inc., a Florida corporation, on behalf of said corporation, as attorney-in-fact for WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4, on behalf of the said trust. He is personally known to me or -h as produced a driver’s license as identification.

/S/ Maria E. Ruiz

Notary Public, State of Florida

Print Name: Maria E. Ruiz

My Commission Expires:
May 21, 2010

EXHIBIT A

The North Half (N ½ ) of the South Half (S ½ )of the Southwest Quarter (SW ¼ ) of the Southeast Quarter (SE ¼) of Section 18, Township 21 South, Range 61 East, M.D.M., more particularly described as follows:

Commencing at the Southwest comer of the Southeast Quarter (SE ¼) of said Section 18; Thence North 01°01’02” East, along the West line thereof, a distance of 655.14 feet; Thence North 89°35’15” East, a distance of 40.01 feet to a point on the Easterly right-of-way line of Arville Street (80.00 feet wide), said point being the True Point of Beginning; Thence continuing North 89°35’15” East, a distance of 1299.07 feet to a point on the Westerly right-of-way line of Wynn Road (60.00 feet wide); Thence South 00°14’52” West, along said Westerly right-of-way line of Wynn Road, a distance 328.89 feet; Thence South 89°38’49” West, a distance of 1,303.46 feet to a point on the aforementioned Easterly right-of-way line of Arville Street; Thence North 01°01’02” East, along said Easterly right-of-way line of Arville Street a distance of 327.61 feet to the True Point of Beginning.

EX-99

OMNIBUS ASSIGNMENT

(FUNB 2001-C4; Loan No. 502694601)

WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASSTHROUGH CERTIFICATES, SERIES 2001-C4 (“Assignor”), for good and valuable consideration. the receipt and sufficiency of which are acknowledged, hereby sells, transfers, assigns, deli&, sets over, and conveys-to EVEREST PROPERTIES II, LLC, a California limited liability company (“Assignee”) and its successors and assigns, WITHOUT RECOURSE TO ASSIGNOR AND WITHOUT REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, BY ASSIGNOR, EXCEPT THOSE REPRESENTATIONS ANDWARRANTIES MADE IN THE ASSIGNMENT OF DEED OF TRUST AND SECURITY AGREEMENT AND ASSIGNMENT OF ASSIGNMENT OF LEASES AND RENTS OF THE SAME DATE AS THIS OMNIBUS ASSIGNMENT all right, title and interest of Assignor in and to that certain loan from First Union National ~ a n k , a national banking association, to Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership, in the original principal amount of Ten Million Eighty Thousand and No/00 U.S. Dollars (U.S. $10,080,000.00), for certain real property situated at 4020 South Arville, in Clark County, Nevada (the “Loan”), including, without limitation, all of Assignor’s right, title and interest in and to:

1.         that certain Stipulation and Order for Use of Cash Collateral dated October 2, 2006, filed in the United States Bankruptcy Court, District of Nevada, Case No. BKS-06-12463-BAM (Chapter 11), In re: Sunwood Village Joint Venture. Limited Partnership, Debtor;

2.         that certain Secured Proof of Claim filed by Assignor on January 11, 2007, in the United States Bankruptcy Court, District of Nevada, Case No. BK-S-06-12463-BAM (Chapter 11), in re: Sunwood Village Joint Venture. Limited Partnership, Debtor; and,

3.         any claims, collateral, insurance policies, certificates of deposit, letters of credit, escrow accounts, performance bonds, demands, causes of action and any other collateral arising out of and/or executed and/or delivered in or to or with respect to the Loan, together with any other documents or instruments executed and/or delivered in connection with or otherwise related to the Loan.

To the fullest extent permitted by law, Assignee shall indemnify, defend and hold harmless Assignor and Assignor’s predecessors in interest, and any subsidiary or affiliate of Assignor and all of the past, present and future officers, directors, shareholders, controlling persons, partners, managers, members, contractors, employees, agents, representatives, consultants, servicers (including, but not limited to, Wachovia Bank, N.A., a national banking association, and LNR Partners, Inc., a Florida corporation),

attorneys, participants, successors and assigns of Assignor (collectively, the “Indemnitees”) from and against any and all losses, claims, demands, damages, penalties, settlements, judgments, awards, expenses (including reasonable attorney’s fees and costs at trial and on appeal), costs, liabilities, actions, proceedings, investigations and/or causes of action (collectively, “Damages”) arising from, out of, or in any way related to, connected with, or resulting from (a) that certain pending litigation styled Mega Ventures. LLC v. Sunwood Village Joint Venture, L.P., James Hoyt and Secured Investments Resources Fund. L.P., IInow pending in the Eighth Judicial District Court, Clark County, Nevada, under Case No. 5000656, and that certain pending bankruptcy action styled Sunwood Village Joint Venture, Limited partners hi^ now pending in the United Stated Bankruptcy Court, District of Nevada, under Case No. BK-S-06-12463-BAM (Chapter 11) together with any adversary proceeding filed thereunder (collectively, the “Litigation”), or (b) any appeal of said Litigation, or (c) any subsequent litigation between or among the parties to the Litigation and any appeal thereof; provided, however, notwithstanding anything to the contrary contained in the foregoing, Assignee does not indemnify Assignor for Damages arising from, out of, in connection with, or resulting from the Litigation that may be incurred by Assignor as a result of Assignor’s actions taken on or before April 15, 2005 (the date on which Millenium Sunwood, LLC, a California limited liability company, became the General Partner of Sunwood Village Joint Venture, Limited Partnership), and Assignee does not indemnify Assignor for Damages arising from, out of, in connection with, or resulting from actions taken at any time by Assignor of which Assignee is not aware; provided, however, notwithstanding anything to the contrary contained in the foregoing, Assignee shall be deemed to have actual knowledge of the contents of any pleading, deposition testimony, answers to interrogatories, document production, and other discovery given to date by Assignor, and any of Assignor’s directors, officers, employees, contractors, agents, attorneys, representatives, and servicers (including, but not limited to, Wachovia Bank, N.A., a national banking association, and LNR Partners, Inc., a Florida corporation, and their respective directors, officers, employees, contractors, agents, attorneys, and representatives), in the Litigation.

Anyindemnified party shall promptly advise Assignee in writing of any action or legal proceeding to which this indemnification may apply and Assignee, at Assignee’s expense, shall assume on behalf of such indemnified party, and conduct with due diligence and in good faith, the defense of such action or legal proceeding with counsel reasonably satisfactory to such indemnified party, provided that such indemnified party shall have the right to be represented by advisory counsel of its own selection and at its own expense. In the event of the failure of the Assignee to obtain counsel to defend any such claim against any such indemnified party, or to pay any final judgment entered against any such indemnified party as a result of such indemnity claim, in accordance with this indemnification, the indemnified party at its option and without relieving Assignee of its obligations hereunder, may perform such obligations, but all costs and expenses so incurred by the indemnified party in that event shall be reimbursed by Assignee together with interest at the maximum legal rate under the applicable Nevada Statutes from the date any such expense was pad. The Indemnitees may retain counsel on

their own behalf in connection with such claim and/or judgment in the event of default by the Indemnitor hereunder.

In Witness Whereof, Assignor and Assignee have executed this instrument as of April 23,

2007.

[END OF TEXT - SIGNATURE AND ACKNOWLEDGE PAGES FOLLOW]

	WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FAHGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4
	By:	LNR Partners, Inc., a Florida corporation, its attorney-in-fact under Limited Power of Attorney dated May 31, 2005
Witnesses:		By:	/S/ RANDOLPH J. WOLPERT
/S/ JOSH TYLER			Randolph J. Wolpert, Vice President
Print Name: Josh Tyler
/S/ N SANTANA
Print Name: N Santana

[CORPORATE SEAL]

STATE OF FLORIDA

COUNTY OF MIAMI-DADE

The foregoing instrument was acknowledged before me this 24^th day of April, 2007, by Randolph J. Wolpert, as Vice President of LNR Partners, Inc., a Florida corporation, on behalf of said corporation, as attorney-in-fact for WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4, on behalf of the said trust. He is personally known to me or -h as produced a driver’s license as identification.

/S/ Maria E. Ruiz

Notary Public, State of Florida

Print Name: Maria E. Ruiz

My Commission Expires:
May 21, 2010

Witnesses:	ASSIGNEE: EVEREST PROPERTIES II, LLC, a California limited liability company
/S/ Christopher K. Davis	By:	/S/ W. ROBERT KOHORST
Print Name: Christopher K. Davis		W. Robert Kohorst President
/S/ SANDRA RANCOUR
Print Name: Sandra Rancour

STATE OF CALIFORNA

COUNTY OF LOS ANGELES

The foregoing instrument was acknowledged before me this 23^rd day of April, 2007, by W. Robert Kohorst, as President of EVEREST PROERTIES II, LLC, a California limited liability company, on behalf of said limited liability company, on behalf of the said trust. He is personally known to me or -has produced a driver’s license as identification.

/S/ Lisa L Longo

Notary Public, State of California

Print Name: Lisa L. Longo

My Commission Expires:
October 24, 2008

EX-99

MANAGEMENT AGREEMENT

THIS AGREEMENT is entered into this lst day of July, 1996, by and between Sunwood Village Joint Venture, L.P. a Nevada Limited Partnership acting herein by and through James R. Hoyt, authorized general partner, (“OWNER”) and SPECS, Inc., a Kansas Corporation (“MANAGER) with reference to the following facts:

A. Owner is the owner of the real property commonly known as Sunwood Village Apartments legally described in Schedule A attached hereto and made a part hereof and the improvements located thereon (the “Property”).

B. The Owner desires uniform and continuous management of such property by a single qualified organization.

C. Manager has the experience and staff necessary for the management and operation of real estate properties in Nevada, and desires to undertake the management and operation of such property of Owner.

D. Manager is an “independent contractor”, as that term is defined in the Regulations issued under Part 11, Subchapter M, Chapter 1, of the Internal Revenue Code of 1954, as amended, and is qualified to render the management service required.

THEREFORE, in consideration of mutual promises and covenants set forth herein, the parties hereto agree as follows:

1. Employment of Manager. Owner hereby designates Manager, and Manager hereby accepts the same, to manage and operate the Property for the purpose of the advancement, protection and preservation of the interests of the Owner in and to such Property.

2. Duties of Manager. Subject to the conditions or limitations set forth herein, to such written instructions as may from time to time be imposed or given by Owner, and to the requirements of any law or administrative enactment applicable to the Property, Manager shall perform the following:

a. Use its best efforts to lease and keep leased to desirable tenants, at best possible rentals and terms, all space held for lease. Manager shall abide by the provisions of any deed of trust, lease, or other agreements, now, or hereafter affecting such property (copies of all such documents shall be provided Manager).

b. At the expense of Owner, promote such leasing by such use of advertising, floor plans, circulars, promotional aids and economic survey as it deems appropriate.

c. Deal appropriately with all inquiries relating to leases and lease renewals referred to it by the Owner, and all negotiations connected therewith sh211 be conducted by the Manager or under its direction.

d. Use its best efforts to collect rent and other income from the Property. The Manager may, with the approval of Owner, compromise claims for such rent and other income and, at the expense of and with the approval of the Owner, institute legal proceedings in its own name or in the name of the Owner (subject to real party in interest limitations) to collect the same, to oust or dispossess tenants or others occupying such real estate interest and otherwise to enforce the rights of the Owner with respect thereto.

e. At the expense of the Owner, cause to be made such ordinary repairs, alterations, and improvements to the real estate interests of the Owner and purchase such supplies and equipment for the maintenance and operation of such real estate interests as may be advisable or necessary (including, without limitation, such charges and expenses necessary to maintain the Property in at least as good condition, in all respects, as of the date hereof) and further to provide such additional services to tenants as may be required by their leases.

f. At the expense of Owner, control and arrange for the payment of the cost, maintenance, and repairs but not incur

extraordinary expenditures for any one invoice in excess of $2,500 without the approval of the Owner, except in those cases when, in its opinion as emergency necessitates so doing before the approval of the Owner can reasonably be obtained, or provided, however, that all such cases shall be reported to the Owner, with all reasonable promptness.

g. Contract on behalf of the Owner and at the expense of the Owner and pay for gas, electricity, steam, telephone, common area maintenance, vermin exterminations, and other services as may be advisable or appropriate in the operation and maintenance of the Property. It is understood that Manager is not assuming any obligation to pay said charges or expense out of its own funds.

h. Engage and discharge such employees as it deems necessary for the operation and maintenance of the real estate interests of the Owner. Such employees shall be in the employ of the Manager, or such local agent or agents as may be retained by the Manager, and not in the employ of the Owner, however, Owner shall reimburse Manager for all salary, benefits, FICA and other direct employee expenses incurred by Agent for onsite personnel exclusive to this Property. The Owner further agree that for one year following termination of the Management .4greement: said Owner or Asset Manager will not attempt to hire or employ any employee of the Manager without receiving prior approval from the Manager.

i. On behalf of the Owner and at the expense of the Owner, pay mortgage interest and amortization, real estate taxes, water and sewer charges, and other charges or assessments of every nature with respect to the real estate interests of the Owner. The Manager may, in its discretion reasonably exercise, defend against and seek revision of, or appeal from, any assessment or charge which it deems improper and all such actions may be taken in its name or in the name of the Owner subject to real party in interest limitations. All monies so paid shall be from Owner funds.

j. Purchase on behalf of, with the approval or and at the expense of the Owner such insurance of every nature advisable to protect the real estate interests of the Owner, including but not limited to fire insurance, with extended coverage, boiler, elevator, public liability and Workmen’s Compensation Insurance. The Owner and the Manager shall be named as parties in interest in such policies of insurance and the policies or certificates of insurance shall be delivered to Owner.

k. Use its best efforts to comply with all building codes, zoning and licensing requirements, and other requirements of the duly constituted federal. state: and local governmental authorities with respect to the real estate interests.

1. Maintain one local separate b a d account for the deposit of funds received pursuant to this Agreement and to make disbursements therefrom pursuant to this Agreement.

m. Maintain authorized representatives available at all reasonable times, upon or in close proximity to such Property, for the purpose of maintaining good tenant relations and otherwise performing its duties herein.

n. Maintain complete and accurate records of all transactions relating to the Property interests of the Owner and make such records available for inspection by the Owner or its representatives at reasonable times.

o. Render to the Owner a monthly statement of receipts and disbursements and of its compensation hereunder with respect to the subject real estate, which shall also contain such additional material information which may be requested by Owner, including without limitation (i) such information and reports as may be required by the Deeds of Trust affecting such Property, and (ii) descriptions of any repair, alteration, or improvement which is deemed by Manager to be necessary, desirable, or appropriate to preserve or improve the appearance - and tenantability of such Property. Manager shall in such statements fully itemize all such disbursements and provide Owner with copies of all statements invoices, bills, or other evidence of amounts which have been so discharged, together with a description of the nature and purpose of such expenditures.

p. Remit to the Owner, together with such monthly statements, the net balance due to the Owner as reflected on a summary of such statements after deducting the compensation provided for in Paragraph 4 hereof.

3. Liability of Manager. The Manager will give the Owner the benefit of its best judgment and efforts in rendering the foregoing services to the Owner. The Manager shall not be liable for good faith errors in judgment, but shall be liable for its breach of this Agreement by bad faith, or gross negligence, or that of its employees, agents, and representatives in the conduct of its duties. The Owner agrees to indemnity Manager against any claims, demands, or legal proceedings (including the costs, expenses and reasonable attorney’s fees incurred in connection with the defense of any such matter) which may be brought against the Manager arising out of the operation of the Property, except with respect to claims or demands arising out of matters outside of the scope of the Manager’s authority hereunder, or due to the Manger’s breach of this Agreement by bad faith or gross negligence, or that of its employees, agents and representatives in the conduct of its duties,

provided however, that this indemnity is on the condition as to any particular event, that (i) Manager notifies Owner of its insurers in writing as soon as possible after notice of any injury or claims is received, and (ii) takes no steps (such as admissions of liability) which will operate to bar Owner from obtaining any protection afforded by any policies of insurance it may hold or which operate to prejudice the defense in ay such legal proceeding or otherwise prevent Owner from protecting itself against such claim, demand, or legal proceedings. Manager agrees to indemnity Owner from and against any claims, demands, or legal proceedings (including the costs, expenses and reasonable attorneys fees incurred in connection with the defense of any such matter) due to a breach by Manager of this Agreement, Manager’s bad faith or gross negligence, or that of its employees, agents, and representatives in the conduct of its duties, or for any action knowingly taken by Manager outside the scope of this Agreement.

4. Compensation of Manager. Manager shall be entitled to compensation from Owner for its services hereunder the sum of 5% of gross revenues collected per month.

5. Term of this Agreement. This Agreement shall become effective on the date of this Agreement and shall thereafter continue in full force and effect for a period of one (1) year, after which the Agreement will continue to automatically renew, from year-to year, unless thirty (30) days written notice is given, by either party, prior to the annual renewal date of said Agreement.

6. Limitation on Assignment. This Agreement shall not be transferred, assigned, sold, or in any manner hypothecated or pledged by Manager, and shall terminate automatically upon any such transfer, assignment, sale, hypothecation, or pledge, except that this Agreement shall not terminate upon any sale or merger of Manager if the presently controlling interests of Manager continue in control of the purchaser of the resulting company after such sale or merger.

7. Dealing with Manager. No interest in the real property shall be conveyed directly or indirectly by owner to Manager by this Agreement. Further, the provisions of this Agreement shall not be construed as constituting a partnership or joint venture between Manager and Owner.

8. Binding Effect. Except as herein otherwise provided, this Agreement shall inure to the benefit of and be binding upon the parties, their successors or assigns.

9. Notice.Any notice to be given hereunder shall be in writing and shall be given by delivering same in person to the address set forth hereinafter for the party to whom the notice is given, or placed in the United States mail, return receipt requested, addressed to the party at the address hereinafter specified. The address of Manager shall be SPECS, Inc., Attention: Director of Property Management, 5453 W. 61’’ Place, Mission, KS 66205. The address of Owner shall be James R. Hoyt, General Partner, 5453 W. 61^st Place, Mission, KS 66205. From time to time, either party may designate another address within the United States of America for all purposes of this Agreement by giving the other party not less than ten (10) days advance written notice of such change of address in accordance with the provision hereof.

10. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Missouri.

By:	/S/ JAMES R. HOYT
	James R. Hoyt, General Partner

By:	/S/ JAMES R. HOYT
	James R. Hoyt, President SPECS, Inc.

EX-99

ESCROW AGREEMENT

This Escrow Agreement (the “Agreement”) is made this 23rd day of April, 2007 by and among EVEREST PROPERTIES II, LLC, a California limited liability company (“Everest”), EAST WEST BANK, a California banking corporation (“EWB”), and WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FARGO BANK MINNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001 -C4 (“Assignor”).

Recitals

WHEREAS, that certain Promissory Note dated August 1, 2001, executed by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Borrower”), and made payable to the order of First Union National Bank, a national banking association (“Original Lender”) in the stated principal amount of TEN MILLION EIGHTY THOUSAND AND 001100 DOLLARS ($10,080,000.00) (the “Assigned Note”) was endorsed by Original Lender to the order of Assignor;

WHEREAS, the Assigned Note is secured by that certain Deed of Trust and Security Agreement dated as of August 1, 2001, from Borrower, as Grantor, to United Title of Nevada, as Trustee, for the benefit of First Union National Bank, as Beneficiary, and recorded on August 2, 2001, as Instrument No. 01912, in Book 20010802, in the Clark County Clerk’s Office (the “Assigned Deed of Trust”); as subsequently assigned by First Union National Bank to Assignor hereunder by Assignment of Deed of Trust and Security Agreement and Assignment of Assignment of Leases and Rents dated as of November 28, 2001, and recorded on May 3, 2002, as Instrument No. 00257, in Book 20020503, in the Clark County Clerk’s Office (the “First Assignment”);

WHEREAS, the Assigned Note is also secured by that certain Assignment of Leases and Rents dated as of August 1, 2001 by Borrower, as assignor and First Union National Bank, as assignee (the “Assignment of Leases”) recorded on August 2, 2001, as Instrument No. 01913, in Book 20010802, in the Clark County Clerk’s Office, as subsequently assigned by First Union National Bank to Assignor hereunder by the First Assignment;

WHEREAS, Everest and Assignor have agreed that Assignor will endorse the Assigned Note to the order of Everest, Assignor will assign the Assigned Deed of Trust to Everest, Assignor will assign the Assignment of Leases to Everest, and Assignor will assign the other loan documents evidencing and securing the Assigned Note to Everest;

WHEREAS, Everest and EWB have agreed to enter into a loan for the purpose of financing Everest’s transactions with Assignor;

WHEREAS, an escrow for the foregoing transactions has been opened with STEWART TITLE GUARANTY COMPANY, a Texas corporation (“Escrow Agent”): Escrow No. 07200308 / 207149840; and Everest, EWB and LNR (collectively, the “Parties”) desire to create an escrow agreement in preparation of the closing of such transactions:

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for good and valuable consideration, the receipt of which is hereby acknowledged, it is hereby agreed as follows:

1.         Everest, EWB and Assignor (or LNR Partners, Inc., a Florida corporation (“LNR”), as the Special Servicer for Assignor) will deposit with the Escrow Agent the following items:

(a)         Statement of Mortgage Debt Payoff Closing Statement dated the closing date, from LNR (“Payoff Statement”);

(b)        Good funds from EWB in the amount of Nine Million Dollars ($9,000,000.00), less fees and charges in accordance with a closing statement approved by Everest and EWB;

(c)         Good funds in the amount that, together with the other funds deposited into escrow, will suffice to close the transactions as set forth below, from Everest;

(d) [omitted]

(e) [omitted]

(f) [omitted]

(g)        the executed original of the Assigned Note, from Assignor; .dh) an allonge for attachment to the Assigned Note, by Assignor in

favor of Everest (one original);

(i)         an allonge for attachment to the Assigned Note, by Everest in favor of EWB for security purposes (one original);

(j)         the executed original of the Assigned Deed of Trust, from Assignor;

(k) the executed original of the Assignment of Leases, from Assignor;

(l) the executed original of the First Assignment, from Assignor;

(m)      Assignment of Deed of Trust and Security Agreement and Assignment of Assignment of Leases and Rents by Assignor in favor of Everest, assigning to Everest the Assigned Deed of Trust and the Assignment of Leases, in recordable form (three originals) (“Everest’s Assignment of Deed of Trust”);

(n)       Collateral Assignment of Deed of Trust and Security Agreement and Assignment of Assignment of Leases and Rents by Everest in favor of EWB, assigning to EWB for security purposes the Assigned Deed of Trust and the Assignment of Leases, recordable form (three originals) (“EWB’s Assignment of Deed of Trust”);

(o)       Omnibus Assignment between Assignor and Everest assigning the loan documented by the Assigned Note, the Assigned Deed of Trust and the other related documents and instruments (two originals);

(p) [omitted]

(q)       the original loan policy of title insurance issued with respect to the Assigned Deed of Trust, Chicago Title Insurance Company Policy No. 01125503L, from Assignor;

(r)        a UCC-I Financing Statement for the purpose of perfecting EWB’s security interest in the collateral granted by the EWB Security Agreement, for filing with the California Secretary of State (one original);

(s)        a UCC-1 Financing Statement for the purpose of perfecting Everest’s security interest in the same collateral described in the Financing Statement filed as BOOK 20020117, INSTRUMENT NO. 02364, in Clark County, NV (one original);

(t)         a UCC-3 Financing Statement Amendment giving notice of the assignment to EWB of Everest’s rights under the Financing Statement described in Item l(s) above, for security purposes (one original);

(u)       a UCC-3 Financing Statement Amendment giving notice of the assignment to Everest of Assignor’s rights under the Financing Statement filed as INSTRUMENT NO. 2003008775-7, with the Nevada Secretary of State (one original);

(v)       a UCC-3 Financing Statement Amendment giving notice of the assignment to EWB of Everest’s rights under the Financing Statement filed as INSTRUMENT NO. 2003008775-7, with the Nevada Secretary of State, for security purposes;

(w)        the binding commitment of the Chicago Title Insurance Company to deliver endorsement 104.13 to the loan policy of title insurance issued with respect to the Assigned Deed of Trust, Policy No. 01125503L, in favor of Everest as assignee of the Assigned Deed of Trust; and,

(x)       the binding commitment of the Chicago Title Insurance Company to deliver endorsements 104.4 and 104.10 to the loan policy of title insurance issued with respect to the Assigned Deed of Trust, Policy No. 01125503L, in favor of EWB as assignee for security purposes of the Assigned Deed of Trust.

2.         Upon receipt of all of the items set forth in Section 1 above, Escrow Agent shall close the transactions and escrow by taking the following actions:

(a)        record in Clark County, Nevada: first Everest’s Assignment of Deed of Trust (Item l(m)), then EWB’s Assignment of Deed of Trust (Item l(n)), and file the UCC statements described in Items l(r) - 1(v) in their respective jurisdictions;

(b) deliver to Assignor c/o LNR:

(1)       good funds in the amount reflected on the Payoff Statement, as adjusted in accordance with a closing statement approved by Everest and Assignor; and,

(2)       one original Omnibus Assignment (Item l(o)); (c) deliver to Everest:

(1) any funds remaining in escrow;

(2) the original of the Assigned Deed of Trust (Item l(o));

(3) the original of the Assignment of Leases (Item 1 (k));

(4) the original of the First Assignment (Item l(1));

(5) one original of Everest’s Assignment of Deed (Item l(m));

(6) one original of EWB’s Assignment of Deed (Item i(n));

(7) one original Omnibus Assignment (Item l(o));

(8) copy of loan policy of title insurance (Item l(q));

(9)       endorsement 104.13 to title insurance policy (Item l (w)), and;

(10) a copy of every other document delivered in accordance with Section 1;

(d) deliver to EWB:

(1) [omitted]

(2) [omitted]

(3) [omitted]

(4) the original Assigned Note (Item l(g));

(5) allonge for the Assigned Note, to Everest (Item 1 (h));

(6) allonge for the Assigned Note, to EWB (Item l(i));

(7) one original of Everest’s Assignment of Deed (Item l(m));

(8) one original of EWB’s Assignment of Deed (Item l(n));

(9) original loan policy of title insurance (Item l(q));

(10) copy of UCC-I Financing Statement (Item l(r));

(11) copy of UCC-1 Financing Statement (Item l(s));

(12)      copy of UCC-3 Financing Statement Amendment (Item l(t));

(13)      copy of UCC-3 Financing Statement Amendment (Item l(u));

(14)      copy of of UCC-3 Financing Statement Amendment (Item 1 (v)); and,

(15)      endorsements 104.4 and 104.10 to title insurance policy (Item 1 (x)).

3. Everest shall deliver directly to EWB, prior to the closing, the following

items:

(a)        Promissory Note executed by Everest as Maker, in favor of EWB, in the amount of Nine Million Dollars ($9,000,000.00) (one original) (the “EWB Note”);

(b)       Security Agreement executed by Everest in favor of EWB, securing the EWB Note (one original) (the “EWB Security Agreement”);

(c)Guaranty executed by W. Robert Kohorst in favor of EWB, guarantying the EWB Note (one original);

4.         Assignor shall deliver to Everest in accordance with Everest’s instructions, within four (4) weeks of closing, all escrow and reserve balances held by Assignor for the benefit of Borrower.

5.       If a closing has not been declared by all parties hereto by Thursday, April 26, 2007 so that the actions enumerated in Section 2 can be completed immediately after the closing, then unless otherwise agreed by the Parties, all monies and documents previously deposited with the Escrow Agent by the Parties will be returned to the parties that deposited such monies or documents.

(The remainder of this page is left blank intentionally)

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

EVEREST: EVEREST PROPERTIES II, LLC a California limited liability company
By:	/S/ W. ROBERT KOHORST
Name: Title:	W. Robert Kohorst President

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

EAST WEST BANK, a California banking corporation
By:	/S/ KATHLEEN KWAN
Name: Title:	Kathleen Kwan Senior Vice President

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

LNR: WELLS FARGO BANK, N.A., A NATIONAL BANKING ASSOCIATION, SUCCESSOR BY MERGER TO WELLS FARGO BANK MlNNESOTA, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2001-C4 By: LNR Partners, Inc., a Florida corporation, its attorney-in-fact under Limited Power of Attorney dated May 31, 2005
By:
	Randolph J. Wolpert, Vice President [CORPORATE SEAL]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first written above.

ESCROW AGENT: STEWART TITLE GUARANTY COMPANY, a Texas corporation
By:	/S/ VICKI DORFMAN
	Vicki Dorfman National Closing Specialist

EX-99

HAZARDOUS SUBSTANCES

INDEMNITY AGREEMENT

THIS HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT (this “Agreement”), made as of the 1st day of August, 2001, is by SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Borrower”), whose address is c/o SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133 and by SUNWOOD VILLAGE, INC., a Nevada corporation (“Principal”), whose address is C/O SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133, jointly and severally (Borrower and Principal being referred to herein collectively as “Indemnitors” and individually as “Indemnitor”), in favor of FIRST UNION NATIONAL BANK, a national banking association, (“Lender”), whose address is at the office of Lender at 201 South Tryon Street, Suite 130, PMB Box #4, Charlotte, North Carolina 28202.

WITNESSETH:

WHEREAS, Lender has extended to Borrower a loan in the principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) (the “Loan”); and

WHEREAS, the Loan is evidenced by a Promissory Note dated of even date herewith (the “Note”), executed by Borrower and payable to the order of Lender in the stated principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) and is secured by a Deed of Trust and Security Agreement dated of even date herewith (the “Deed of Trust”), from Borrower, as grantor, to Lender, as beneficiary, encumbering that certain real property situated in the City of Las Vegas, County of Clark, State of Nevada, as is more particularly described on Exhibit A attached hereto and incorporated herein by this reference, together with the buildings, structures and other improvements now or hereafter located thereon (said real property, buildings, structures and other improvements being hereinafter collectively referred to as the “Property”) and by other documents and instruments (the Note, the Deed of Trust and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the “Loan Documents”); and

WHEREAS, as a condition to making the Loan, Lender has required that Indemnitors indemnify Lender with respect to hazardous wastes on, in, under or affecting the Property as herein set forth.

NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby covenant and agree for the benefit of Lender, as follows:

1.         Indemnity. Indemnitors hereby, jointly and severally assume liability for, and hereby agree to pay, protect, defend (at trial and appellate levels) and with attorneys, consultants and experts acceptable to Lender, and save Lender harmless from and against, and hereby indemnify Lender from and against any and all present or future liens, damages, losses, liabilities, obligations, settlement payments, penalties, assessments, citations, directives, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements and expenses of any kind or of any nature whatsoever (including, without limitation, reasonable attorneys’, consultants’ and experts’ fees and disbursements actually incurred in investigating, defending, settling or prosecuting any claim, litigation or proceeding) (collectively “Costs”) which may at any time be imposed upon, incurred by or asserted or awarded against Lender or the Property, and arising directly or indirectly from or out of: (i) the violation of any present or future local, state or federal law, rule or regulation pertaining to environmental regulation, contamination or clean-up (collectively, “Environmental Laws”), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et seq. and 40 CFR §302.1 et seq.) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901 et seq.),the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.) and 40 CFR § 116.1 et seq.) and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), and those relating to Lead Based Paint (as hereinafter defined), all as same have been or may be amended, relating to or affecting the Property, whether or not caused by or within the control of Indemnitors; (ii) the actual or alleged presence, release or threat of release of any hazardous, toxic or harmful substances, wastes, materials, pollutants or contaminants (including, without limitation, asbestos, polychlorinated biphenyls, petroleum products, flammable explosives, radioactive materials, paint containing more than 0.5% lead by dry weight (“Lead Based Paint”), infectious substances or raw materials which include hazardous constituents) or any other substances or materials which are included under or regulated by Environmental Laws (collectively, “Hazardous Substances”), now or hereafter on, in, under or affecting all or any portion of the Property or any surrounding areas, regardless of whether or not caused by or within the control of Indemnitors; (iii) the failure by Indemnitors to comply fully with the terms and conditions of this Agreement; (iv) the breach of any representation or warranty contained in this Agreement; or (v) the enforcement of this Agreement, including, without limitation, the cost of assessment, containment and/or removal of any and all Hazardous Substances from all or any portion of the Property or any surrounding areas, the cost of any actions taken in response to the presence, release or threat of release of any Hazardous Substances on, in, under or affecting any portion of the Property or any surrounding areas to prevent or minimize such release or threat of release so that it does not migrate or otherwise cause or threaten danger to present or future public health, safety, welfare or the environment, and costs incurred to comply with the Environmental Laws in connection with all or any portion of the Property or any surrounding areas. “Costs” as used in this Agreement shall also include any diminution in the value of the security afforded by the Property or any future reduction of the sales price of the Property by reason of any matter set forth in this Paragraph 1.

2.         Representations Regarding Hazardous Substances. Indemnitors hereby represent and warrant to and covenant and agree with Lender as follows:

(a)       To the best of Indemnitors’ knowledge, information and belief, the Property is not in direct or indirect violation of any Environmental Law;

(b)       No Hazardous Substances are located on or have been handled, generated, stored, processed or disposed of on or released or discharged from the Property (including underground contamination) except for those substances used by Borrower in the ordinary course of its business and in compliance with all Environmental Laws;

(c)       The Property is not subject to any private or governmental lien or judicial or administrative notice or action relating to Hazardous Substances;

(d)       There are no existing or closed underground storage tanks or other underground storage receptacles for Hazardous Substances on the Property;

(e)       Indemnitors have received no notice of, and to the best of Indemnitors’ knowledge and belief, there exists no investigation, action, proceeding or claim by any agency, authority or unit of government or by any third party which could result in any liability, penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or operation of the Property nor do Indemnitors know of any basis for such a claim; and

(f) Indemnitors have received no notice that, and to the best of Indemnitors’ knowledge and belief, there has been no claim by any party that, any use, operation or condition of the Property has caused any nuisance or any other liability or adverse condition on any other property nor do Indemnitors know of any basis for such a claim.

3. Covenants of Indemnitors.

(a)      Indemnitors shall keep or cause the Property to be kept free from Hazardous Substances (except those substances used by Borrower in the ordinary course of its business and in compliance with all Environmental Laws) and in compliance with all Environmental Laws, shall not install or use any underground storage tanks, shall expressly prohibit the use, generation, handling, storage, production, processing and disposal of Hazardous Substances by all tenants of space in the improvements, and, without limiting the generality of the foregoing, during the term of this Agreement, shall not install in the improvements or permit to be installed in the improvements asbestos or any substance containing asbestos. Indernnitors acknowledge their responsibility to be aware of, and fully versed in, all Environmental Laws in effect during the term of the Loan. Indemnitors further acknowledge and agree that Lender has no duty to provide Indemnitors with any information regarding the Environmental Laws or any interpretation thereof.

(b)        Indemnitors shall immediately notify Lender should Indemnitors, or either of them, become aware of (i) any Hazardous Substances, or other potential environmental problem or liability, with respect to the Property, (ii) any lien, action or notice affecting the Property or Borrower resulting from any violation or alleged violation of the Environmental Laws, (iii) the institution of any investigation, inquiry or proceeding concerning Borrower or the Property pursuant to any Environmental Law or otherwise relating to Hazardous Substances, or (iv) the discovery of any occurrence, condition or state of facts which would render any representation or warranty contained in this Agreement incorrect in any respect if made at the time of such discovery. Indemnitors shall, promptly and when and as required and regardless of the source of the contamination, at their own expense, take all actions as shall be necessary or advisable for the clean-up of any and all portions of the Property or other affected property, including, without limitation, all investigative, monitoring, removal, containment and remedial actions in accordance with all applicable Environmental Laws (and in all events in a manner satisfactory to Lender), and shall further pay or cause to be paid, at no expense to Lender, all clean-up, administrative and enforcement costs of applicable governmental agencies which may be asserted against the Property. In the event Indemnitors fail to do so, Lender may cause the Property or other affected property to be freed from any Hazardous Substances or otherwise brought into conformance with Environmental Laws and any cost incurred in connection therewith shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Paragraph 4(c) hereof. In furtherance of the foregoing, Indemnitors hereby grant to Lender access to the Property and an irrevocable license to remove any items deemed by Lender to be Hazardous Substances and to do all things Lender shall deem necessary to bring the Property into conformance with Environmental Laws.

(c)        Upon the request of Lender, at any time and from time to time after the occurrence of a default under this Agreement or the Loan Documents or at such other time as Lender has reasonable grounds to believe that Hazardous Substances are or have been released, stored or disposed of on or around the Property or that the Property may be in violation of the Environmental Laws, Indemnitors shall provide, at Indemnitors’ sole expense, an inspection or audit of the Property prepared by a hydrogeologist or environmental engineer or other appropriate consultant approved by Lender indicating the presence or absence of Hazardous Substances on the Property or an inspection or audit of the improvements located on the Property prepared by an engineering or consulting firm approved by Lender indicating the presence or absence of friable asbestos or substances containing asbestos on the Property. If Indemnitors fail to provide such inspection or audit within thirty (30) days after such request, Lender may order the same, and Indemnitors hereby grant to Lender access to the Property and an irrevocable license to undertake such inspection or audit. The cost of such inspection or audit shall be included in Costs and shall be paid by Indemnitors in accordance with the terms of Paragraph 4(c) hereof.

(d)       If prior to the date hereof, it was determined that the Property contains Lead Based Paint, Borrower had prepared an assessment report describing the

location and condition of the Lead Based Paint (a “Lead Based Paint Report”). If at any time hereafter Lead Based Paint is suspected of being present on the Property, Indemnitors agree, at their sole cost and expense and within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by an expert, and in form, scope and substance, acceptable to Lender.

(e)       Indemnitors agree that if it has been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint, on or before thirty (30) days following (i) the date hereof, if such determination was made prior to the date hereof or (ii) such determination, if such determination is hereafter made, as applicable, Indemnitors shall, at their sole cost and expense, develop and implement, and thereafter diligently and continuously carry out (or cause to be developed and implemented and thereafter diligently and continually to be carried out), an operations, abatement and maintenance plan for the Lead Based Paint on the Property, which plan shall be prepared by an expert, and be in form, scope and substance, acceptable to Lender (together with any Lead Based Paint Report, the “O&M Plan”). (If an O&M Plan has been prepared prior to the date hereof, Indemnitors agree to diligently and continually carry out (or cause to be carried out) the provisions thereof.) Compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper preparation and maintenance of all records, papers and forms required under the Environmental Laws.

4. Indemnification Procedures.

(a)       If any action shall be brought against Lender based upon any of the matters for which Lender is indemnified hereunder, Lender shall notify Indemnitors in writing thereof and Indemnitors shall promptly assume the defense thereof, including, without limitation, the employment of counsel acceptable to Lender and the negotiation of any settlement; provided, however, that any failure of Lender to notify Indemnitors of such matter shall not impair or reduce the obligations of Indemnitors hereunder. Lender shall have the right, at the expense of Indemnitors (which expense shall be included in Costs), to employ separate counsel in any such action and to participate in the defense thereof. In the event Indemnitors shall fail to discharge or undertake to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder, Lender may, at its sole option and election, defend or settle such claim, loss or liability. The liability of Indemnitors to Lender hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation attorneys’ fees and disbursements, incurred by Lender in effecting such settlement. In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitors shall pay the same as hereinafter provided. Lender’s good faith in any such settlement shall be conclusively established if the settlement is made on the advice of independent legal counsel for Lender.

(b)       Indemnitors shall not, without the prior written consent of Lender: (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the

claimant or plaintiff to Lender of a full and complete written release of Lender (in form, scope and substance satisfactory to Lender in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit, proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay any sum or perform any obligation as determined by Lender in its sole discretion.

(c)       All Costs shall be immediately reimbursable to Lender when and as incurred and, in the event of any litigation, claim or other proceedings without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceedings and Indemnitors shall pay to Lender any and all Costs within ten (10) days after written notice from Lender itemizing the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of Indemnitors to periodically pay such Costs, such Costs, if not paid within said ten-day period, shall bear interest at the Default Interest Rate (as defined in the Note) and such costs and interest shall be additional indebtedness of Borrower secured by the Deed of Trust and by the other Loan Documents securing all or part of the Loan.

5.          Reinstatement of Obligations. If at any time all or any part of any payment made by Indemnitors or received by Lender from Indemnitors under or with respect to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of either Indemnitor), then the obligations of Indemnitors hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitors, or receipt of payment by Lender, and the obligations of Indemnitors hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitors had never been made,

6.Waivers by Indemnitors. To the extent permitted by law, Indemnitors hereby waive and agree not to assert or take advantage of:

(a)       Any right to require Lender to proceed against any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power or under any other agreement before proceeding against Indemnitors hereunder;

(b)       The defense of the statute of limitations in any action hereunder;

(c)       Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceedings) of any other person or persons;

(d)       Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including,

without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Lender, any endorser or creditor of either Indemnitor or any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender;

(e) Any defense based upon an election of remedies by Lender;

(f)        Any right or claim of right to cause a marshalling of the assets of either Indemnitor.

(g)       Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Agreement;

(h)       Any duty on the part of Lender to disclose to Indemnitors any facts Lender may now or hereafter know about the Property, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Indemnitors intend to assume or has reason to believe that such facts are unknown to Indemnitors or has a reasonable opportunity to communicate such facts to Indemnitors, it being understood and agreed that Indemnitors are fully responsible for being and keeping informed of the condition of the Property and of any and all circumstances bearing on the risk that liability may be incurred by Indemnitors hereunder;

(i)         Any lack of notice of disposition or of manner of disposition of any collateral for the Loan;

(j)        Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

(k)       Any lack of commercial reasonableness in dealing with the collateral for the Loan;

(l)         Any deficiencies in the collateral for the Loan or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed;

(m)      An assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Principal or the collateral for the Loan;

(n)        Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise;

(o)        Any action, occurrence, event or matter consented to by Indemnitors under Paragraph 7(h) hereof, under any other provision hereof, or otherwise; and

(p)       Indemnitor hereby waives the benefits of the “one action rule” under NRS 40-430, to the extent permitted in NRS paragraph 40.495(4).

7. General Provisions.

(a)       Fully Recourse. All of the terms and provisions of this Agreement are recourse obligations of Indemnitors and not restricted by any limitation on personal liability.

(b)       Unsecured Obligations. Indemnitors hereby acknowledge that Lender’s appraisal of the Property is such that Lender is not willing to accept the consequences of the inclusion of Indemnitors’ indemnity set forth herein among the obligations secured by the Deed of Trust and the other Loan Documents and that Lender would not make the Loan but for the unsecured personal liability undertaken by Indemnitors herein. Indemnitors further hereby acknowledge that even though the representations, warranties, covenants or agreements of Indemnitors contained herein may be identical or substantially similar to representations, warranties, covenants or agreements of Borrower set forth in the Deed of Trust and secured thereby, the obligations of Indemnitors under this Agreement are not secured by the lien of the Deed of Trust or the security interests or other collateral described in the Deed of Trust or the other Loan Documents, it being the intent of Lender to create separate obligations of Indemnitors hereunder which can be enforced against Indemnitors without regard to the existence of the Deed of Trust or other Loan Documents or the liens or security interests created therein.

(c)       Survival. This Agreement shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the payment of the indebtedness evidenced and secured by the Loan Documents and the exercise of any remedy by Lender under the Deed of Trust or any of the other Loan Documents, including, without limitation, any foreclosure or deed in lieu thereof, even if, as a part of such remedy, the Loan is paid or satisfied in full.

(d) No Subrogation; No Recourse Against Lender.

Notwithstanding the satisfaction by Principal of any liability hereunder, Principal shall not have any right of subrogation, contribution, reimbursement or indemnity whatsoever

or any right of recourse to or with respect to the assets or property of Borrower or to any collateral for the Loan. In connection with the foregoing, Principal expressly waives any and all rights of subrogation to Lender against Borrower,-and Principal hereby waives any rights to enforce any remedy which Lender may have against Borrower and any right to participate in any collateral for the Loan. In addition to and without in any way limiting the foregoing, Principal hereby subordinates any and all indebtedness of Borrower now or hereafter owed to Principal to all indebtedness of Borrower to Lender, and agrees with Lender that Principal shall not demand or accept any payment of principal or interest from Borrower, shall not claim any offset or other reduction of Principal’s obligations hereunder because of any such indebtedness and shall not take any action to obtain any of the collateral from the Loan. Further, neither Indemnitor shall have any right of recourse against Lender by reason of any action Lender may take or omit to take under the provisions of this Agreement or under the provisions of any of the Loan Documents.

(e)       Reservation of Rights. Nothing contained in this Agreement shall prevent or in any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which Lender may have against either Indemnitor or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980(codified at Title 42 U.S.C. §9601et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved.

(f)        Financial Statements. Each Indemnitor hereby agrees, as a material inducement to Lender to make the Loan to Borrower, to furnish to Lender promptly upon demand by Lender current and dated financial statements certified by or on behalf of each Indemnitor detailing the assets and liabilities of said Indemnitor, in form and substance acceptable to Lender. Each Indemnitor hereby warrants and represents unto Lender that any and all balance sheets, net worth statements and other financial data which have heretofore been given or may hereafter be given to Lender with respect to said Indemnitor did or will at the time of such delivery fairly and accurately present the financial condition of said Indemnitor.

(g)       Rights Cumulative; Payments. Lender’s rights under this Agreement shall be in addition to all rights of Lender under the Note, the Deed of Trust and the other Loan Documents. Further, payments made by Indemnitors under this Agreement shall not reduce in any respect Borrower’s obligations and liabilities under the Note, the Deed of Trust and the Other Loan Documents.

(h)       No Limitation on Liability. Indemnitors hereby consent and agree that Lender may at any time and from time to time without further consent from Indemnitors do any of the following events, and the liability of Indemnitors under this Agreement shall be unconditional and absolute and shall in no way be impaired or limited by any of the following events, whether occurring with or without notice to Indemnitors or with or without consideration: (i) any extensions of time for performance required by any of the Loan Documents or extension or renewal of the Note; (ii) any sale, assignment

or foreclosure of the Note, the Deed of Trust or any of the other Loan Documents or any sale or transfer of the Property; (iii) any change in the composition of Borrower, including, without limitation, the withdrawal or removal of Indemnitors from any current or future position of ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitors herein or by Borrower in any of the Loan Documents; (v) the release of Borrower or of any other person or entity from performance or observance of any of the agreements, covenants, terms or-conditions contained in any of the Loan Documents by operation of law, Lender’s voluntary act or otherwise; (vi) the release or substitution in whole or in part of any security for the Loan; (vii) Lender’s failure to record the Deed of Trust or to file any financing statement (or Lender’s improper recording or filing thereof) or to otherwise perfect, protect, secure or insure any lien or security interest given as security for the Loan; (viii) the modification of the terms of any one or more of the Loan Documents; or (ix) the taking or failure to take any action of any type whatsoever. No such action which Lender shall take or fail to take in connection with the Loan Documents or any collateral for the Loan, nor any course of dealing with Borrower or any other person, shall limit, impair or release Indemnitors’ obligations hereunder, affect this Agreement in any way or afford Indemnitors any recourse against Lender. Nothing contained in this Paragraph shall be construed to require Lender to take or refrain from taking any action referred to herein.

(i)        Entire Agreement: Amendment: Severability. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes (except as to the Deed of Trust) all prior agreements, whether written or oral, between the parties respecting such matters. Any amendments or modifications hereto, in order to be effective, shall be in writing and executed by the parties hereto. A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

(j)        Governing Law; Binding Effect: Waiver of Acceptance. This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located, except to the extent that the applicability of any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law shall so govern and be controlling. This Agreement shall bind each Indemnitor and the heirs, personal representatives, successors and assigns of each Indemnitor and shall inure to the benefit of Lender and the officers, directors, shareholders, agents and employees of Lender and their respective heirs, successors and assigns. Notwithstanding the foregoing, Indemnitors shall not assign any of their respective rights or obligations under this Agreement without the prior written consent of Lender, which consent may be withheld by Lender in its sole discretion. Each Indemnitor hereby waives any acceptance of this Agreement by Lender, and this Agreement shall immediately be binding upon Indemnitors.

(k)Notice. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by law shall be in writing and shall be deemed to have been validly given or served by delivery of the same in person to the intended addressee, or by depositing the same with Federal Express or another reputable private courier service for next business day delivery to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided, or by depositing the same in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided. All notices, demands and requests to be sent to Lender shall be addressed to the attention of the Capital Markets Group. All notices, demands and requests shall be effective upon such personal delivery, or one-(1) business day after being deposited with the private courier service, or two (2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’ prior written notice thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

(l)        No Waiver: Time of Essence: Business Days. The failure of any party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such right or remedy must be in writing and signed by the party to be bound. This Agreement is subject to enforcement at law or in equity, including actions for damages or specific performance. Time is of the essence hereof. The term “business day” as used herein shall mean a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Nevada are authorized by law to be closed.

(m)      Captions for Convenience. The captions and headings of the sections and paragraphs of this Agreement are for convenience of reference only and shall not be construed in interpreting the provisions hereof.

(n)       Attorneys’ Fees. In the event it is necessary for Lender to retain the services of an attorney or any other consultants in order to enforce this Agreement, or any portion thereof, Indemnitors agree to pay to Lender any and all costs and expenses, including, without limitation, attorneys’ fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be included in Costs.

(o)       Successive Actions. A separate right of action hereunder shall arise each time Lender acquires knowledge of any matter indemnified by Indemnitors under this Agreement. Separate and successive actions may be brought hereunder to enforce

any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action, and Indemnitors hereby waive and covenant not to assert any defense in the nature of splitting of causes of action or merger of judgments.

(p)       Joint and Several Liability. Notwithstanding anything to the contrary contained herein, the representations, warranties, covenants and agreements made by Indemnitors herein, and the liability of Indemnitors hereunder, are joint and several.

(q)       Reliance. Lender would not make the Loan to Borrower without this Agreement. Accordingly, Indemnitors intentionally and unconditionally enter into the covenants and agreements as set forth above and understand that, in reliance upon and in consideration of such covenants and agreements, the Loan shall be made and, as part and parcel thereof, specific monetary and other obligations have been, are being and shall be entered into which would not be made or entered into but for such reliance.

(r)        Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument, for the same effect as if all parties hereto had signed the same signature page. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more additional signature pages.

(s)       SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

(1)      INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMIT TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, (B) AGREE THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION OVER THE COUNTY IN WHICH THE PROPERTY IS LOCATED, (C) SUBMIT TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREE THAT NEITHER OF THEM WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). INDEMNITORS FURTHER CONSENT AND AGREE TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO THE INDEMNITORS AT THE ADDRESS FOR NOTICES DESCRIBED IN PARAGRAPH 7(k) HEREOF, AND CONSENT AND AGREE THAT SUCH SERVICE

SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

(2)       LENDER AND INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITORS, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITORS, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

(t)        Waiver by Indemnitors. Borrower and Principal covenant and agree that upon the commencement of a voluntary or involuntary bankruptcy proceeding by or against Borrower, neither Borrower nor Principal shall seek a supplemental stay or otherwise pursuant to 11 U.S.C. § 105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law, or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against Principal by virtue of this Agreement or otherwise.

(u)       Indemnitor hereby waives the benefits of the “one action rule” under NRS 40-430, to the extent permitted in NRS paragraph 40.495(4).

(v)       Decisions. Wherever pursuant to this Agreement (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory or acceptable to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove or to accept or not accept, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

(w)      Costs. Wherever pursuant to this Agreement it is provided that Indemnitors shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Lender, whether retained firms or otherwise.

IN WITNESS WHEREOF, Indemnitors have executed this Hazardous Substances Indemnity Agreement as of the day and year first above written.

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited Partnership
By:	Sunwood Village, Inc., a Nevada corporation, its general partner
	By:	/S/ JAMES R. HOYT
		Name: James R. Hoyt
		Title President

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership
By:	/S/ JAMES R. HOYT
Name: Title:	James R. Hoyt President

STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 20, day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation, the general partner of Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership.

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 20, day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation.

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

EXHIBIT A

LEGAL DESCRIPTION

EX-99

INDEMNITY AND GUARANTY AGREEMENT

THIS INDEMNITY AND GUARANTY AGREEMENT (this “Agreement”), made as of the 1^st day of August, 2001, by SUNWOOD VILLAGE, INC., a Nevada corporation (“Indemnitor”), whose address is c/o SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133, in favor of FIRST UNION NATIONAL BANK, a national banking association, whose address is 201 South Tryon Street, Suite 130, PMB Box #4, Charlotte, North Carolina 28202 (“Lender”).

W I T N E S S E T H:

WHEREAS, SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Borrower”), has obtained a loan in the principal amount of TEN MILLION EIGHTY THOUSAND AND 001100 DOLLARS ($10,080,000.00) (the “Loan”) from Lender; and

WHEREAS, the Loan is evidenced by a Promissory Note dated of even date herewith (the “Note”), executed by Borrower and payable to the order of Lender in the stated principal amount of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) and is secured by a Deed of Trust and Security Agreement dated of even date herewith (the “Deed of Trust”) from Borrower, as grantor, to Lender, as beneficiary, encumbering that certain real property situated in the City of Las Vegas, County of Clark, State of Nevada, as more particularly described on Exhibit A attached hereto and incorporated herein by this reference, together with the buildings, structures and other improvements now or hereafter located thereon (said real property, buildings, structures and other improvements being hereinafter collectively referred to as the “Property”) and by other documents and instruments (the Note, the Deed of Trust and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the “Loan Documents”) and

WHEREAS, as a condition to making the Loan to Borrower, Lender has required that Indemnitor indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Deed of Trust; and

WHEREAS, the extension of the Loan to Borrower is of substantial benefit to Indemnitor and, therefore, Indemnitor desires to indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Deed of Trust.

NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in consideration of the foregoing premises and for other good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:

1. Indemnity and Guaranty. Indemnitor hereby assumes liability for, hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against any and all liabilities, obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees), causes of action, suits, claims, demands and judgments of any nature or description whatsoever (collectively, “Costs”) which may at any time be imposed upon, incurred by or awarded against Lender as a result of:

(a)        Proceeds paid under any insurance policies (or paid as a result of any other claim or cause of action against any person or entity) by reason of damage, loss or destruction to all or any portion of the Property, to the full extent of such proceeds not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender;

(b)       Proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of all or any portion of the Property, to the full extent of such proceeds or awards not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender;

(c)       All tenant security deposits or other refundable deposits paid to or held by Borrower or any other person or entity in connection with leases of all or any portion of the Security Property which are not applied in accordance with the terms of the applicable lease or other agreement;

(d)       Rent and other payments received from tenants under leases of all or any portion of the Property paid more than one month in advance;

(e)       Rents, issues, profits and revenues of all or any portion of the Security Property received or applicable to a period after the occurrence of any Event of Default (as defined in the Deed of Trust) or any event which with notice or the passage of time, or both, would constitute an Event of Default, which are not either applied to the ordinary and necessary expenses of owning and operating the Property or paid to Lender;

(f)       Waste committed on the Property by, or damage to the Property as a result of the intentional misconduct or gross negligence of, Borrower or any of its principals, officers, general partners or members or any agent or employee of such persons, or any removal of the Property in violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred by Lender on account of such occurrence;

(g)       Failure by Borrower to pay any valid taxes, assessments, mechanic’s liens, materialmen’s liens or other liens which could create liens on any portion of the Property which would be superior to the lien or security title of the Deed of Trust or the other Loan Documents, except, with respect to any such taxes or assessments, to the extent that funds have been deposited with Lender pursuant to the terms of the Deed of Trust specifically for the applicable taxes or assessments and not applied by Lender to pay such taxes;

(h)       All obligations and indemnities of Borrower under the Loan Documents relating to hazardous or toxic substances or compliance with environmental laws and regulations to the full extent of any losses or damages (including those resulting from diminution in value of any Property) incurred by Lender as a result of the existence of such hazardous or toxic substances or failure to comply with environmental laws or regulations; and

(i)        Fraud or material misrepresentation or failure to disclose a material fact by Borrower or any of its principals, officers, general partners or members, any guarantor, any indemnitor or any agent, employee or other person authorized or apparently authorized to make statements, representations or disclosures on behalf of Borrower, any principal, officer, partner or members, of Borrower, or any guarantor or any indemnitor, to the full extent of any losses, damages and expenses of Lender on account thereof.

This is a guaranty of payment and performance and not of collection. The liability of Indemnitor under this Agreement shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower or any other person (including, without limitation, other guarantors, if any), nor against the collateral for the Loan. Indemnitor waives any right to require that an action be brought against Borrower or any other person or to require that resort be had to any collateral for the Loan or to any balance of any deposit account or credit on the books of Lender in favor of Borrower or any other person. In the event, on account of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, Borrower shall be relieved of or fail to incur any debt, obligation or liability as provided in the Loan Documents, Indemnitor shall nevertheless be fully liable therefor. In the event of a default under the Loan Documents which is not cured within any applicable grace or cure period, Lender shall have the right to enforce its rights, powers and remedies (including, without limitation, foreclosure of all or any portion of the collateral for the Loan) thereunder or hereunder, in any order, and all rights, powers and remedies available to Lender in such event shall be non-exclusive and cumulative of all other rights, powers and remedies provided thereunder or hereunder or by law or in equity. If the indebtedness and obligations guaranteed hereby are partially paid or discharged by reason of the exercise of any of the remedies available to Lender, this Agreement shall nevertheless remain in full force and effect, and Indemnitor shall remain liable

for all remaining indebtedness and obligations guaranteed hereby, even though any rights which Indemnitor may have against Borrower may be destroyed or diminished by the exercise of any such remedy.

2. Indemnification Procedures.

(a)       If any action shall be brought against Lender based upon any of the matters for which Lender is indemnified hereunder, Lender shall notify Indemnitor in writing thereof and Indemnitor shall promptly assume the defense thereof, including, without limitation, the employment of counsel acceptable to Lender and the negotiation of any settlement; provided, however, that any failure of Lender to notify Indemnitor of such matter shall not impair or reduce the obligations of Indemnitor hereunder. Lender shall have the right, at the expense of Indemnitor (which expense shall be included in Costs), to employ separate counsel in any such action and to participate in the defense thereof. In the event Indemnitor shall fail to discharge or undertake to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder, Lender may, at its sole option and election, defend or settle such claim, loss or liability. The liability of Indemnitor to Lender hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation, attorneys’ fees and disbursements, incurred by Lender in effecting such settlement. In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitor shall pay the same as hereinafter provided. Lender’s good faith in any such settlement shall be conclusively established if the settlement is made on the advice of independent legal counsel for Lender.

(b)       Indemnitor shall not, without the prior written consent of Lender: (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to Lender of a full and complete written release of Lender (in form, scope and substance satisfactory to Lender in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit, proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay any sum or perform any obligation as determined by Lender in its sole discretion.

(c)       All Costs shall be immediately reimbursable to Lender when and as incurred and, in the event of any litigation, claim or other proceeding, without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceeding, and Indemnitor shall pay to Lender any and all Costs within ten (10) days after written notice from Lender itemizing the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of Indemnitor to

periodically pay such Costs, such Costs, if not paid within said ten-day period, shall bear interest at the Default Interest Rate (as defined in the Note).

3.Reinstatement of Obligations. If at any time all or any part of any payment made by Indemnitor or received by Lender from Indemnitor under or with respect to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of Indemnitor or Borrower), then the obligations of Indemnitor hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitor, or receipt of payment by Lender, and the obligations of Indemnitor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitor had never been made.

4.Waivers by Indemnitor. To the extent permitted by law, Indemnitor hereby waives and agrees not to assert or take advantage of:

(a)       Any right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power or under any other agreement before proceeding against Indemnitor hereunder;

(b)       The defense of the statute of limitations in any action hereunder;

(c)       Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons;

(d)       Demand, presentment for payment, notice of nonpayment, intent to accelerate, acceleration, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or nonaction on the part of Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender;

(e)       Any defense based upon an election of remedies by Lender;

(f)       Any right or claim or right to cause a marshalling of the assets of Indemnitor;

(g)       Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Agreement;

(h)       Any duty on the part of Lender to disclose to Indemnitor any facts Lender may now or hereafter know about Borrower or the Property, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Indemnitor intends to assume or has reason to believe that such facts are unknown to Indemnitor or has a reasonable opportunity to communicate such facts to Indemnitor, it being understood and agreed that Indemnitor is fully responsible for being and keeping informed of the financial condition of Borrower, of the condition of the Property and of any and all circumstances bearing on the risk that liability may be incurred by Indemnitor hereunder;

(i)         Any lack of notice of disposition or of manner of disposition of any collateral for the Loan;

(j)        Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

(k)      Any lack of commercial reasonableness in dealing with the collateral for the Loan;

(l)        Any deficiencies in the collateral for the Loan or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed;

(m)      Any assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Indemnitor or the collateral for the Loan;

(n)       Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise;

(o)       Any action, occurrence, event or matter consented to by Indemnitor under Section 5(h) hereof, under any other provision hereof, or otherwise; and

(p) Indemnitor hereby waives the benefits of the “one action rule” under NRS 40-430, to the extent permitted in NRS paragraph 40.495(4).

5. General Provisions.

(a)       Fully Recourse. All of the terms and provisions of this Agreement are recourse obligations of Indemnitor and not restricted by any limitation on personal liability.

(b)       Unsecured Obligations. Indemnitor hereby acknowledges that Lender’s appraisal of the Property is such that Lender is not willing to accept the consequences of the inclusion of Indemnitor’s indemnity set forth herein among the obligations secured by the Deed of Trust and the other Loan Documents and that Lender would not make the Loan but for the unsecured personal liability undertaken by Indemnitor herein.

(c)       Survival. This Agreement shall be deemed to be continuing in nature and shall remain in full force and effect and shall survive the exercise of any remedy by Lender under the Deed of Trust or any of the other Loan Documents, including, without limitation, any foreclosure or deed in lieu thereof, even if, as a part of such remedy, the Loan is paid or satisfied in full.

(d)       No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction by Indemnitor of any liability hereunder, Indemnitor shall not have any right of subrogation, contribution, reimbursement or indemnity whatsoever or any right of recourse to or with respect to the assets or property of Borrower or to any collateral for the Loan. In connection with the foregoing, Indemnitor expressly waives any and all rights of subrogation to Lender against Borrower, and Indemnitor hereby waives any rights to enforce any remedy which Lender may have against Borrower and any right to participate in any collateral for the Loan. In addition to and without in any way limiting the foregoing, Indemnitor hereby subordinates any and all indebtedness of Borrower now or hereafter owed to Indemnitor to all indebtedness of Borrower to Lender, and agrees with Lender that Indemnitor shall not demand or accept any payment of principal or interest from Borrower, shall not claim any offset or other reduction of Indemnitor’s obligations hereunder because of any such indebtedness and shall not take any action to obtain any of the collateral from the Loan. Further, Indemnitor shall not have any right of recourse against Lender by reason of any action Lender may take or omit to take under the provisions of this Agreement or under the provisions of any of the Loan Documents.

(e)       Reservation of Rights. Nothing contained in this Agreement shall prevent or in any way diminish or interfere with any rights or remedies, including, without limitation, the right to contribution, which Lender may have against Borrower, Indemnitor or any other party under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title

42 U.S.C. §9601 et seq.), as it may be amended from time to time, or any other applicable federal, state or local laws, all such rights being hereby expressly reserved.

(f)        Financial Statements; Net Worth. Indemnitor hereby agrees, as a material inducement to Lender to make the Loan to Borrower, to furnish to Lender promptly upon demand by Lender current and dated financial statements detailing the assets and liabilities of Indemnitor certified by Indemnitor, in form and substance acceptable to Lender. Indemnitor hereby agrees that at all times during the term of the Loan it shall maintain a minimum net worth of no less than that which is set forth in the financials delivered to Lender prior to the date hereof. The failure by Indemnitor to maintain such net worth shall be deemed an “Event of Default” under the Loan Documents entitling Lender to exercise any and all of its remedies thereunder. Indemnitor hereby warrants and represents unto Lender that any and all balance sheets, net worth statements and other financial data which have heretofore been given or may hereafter be given to Lender with respect to Indemnitor did or will at the time of such delivery fairly and accurately present the financial condition of Indemnitor.

(g)       Rights Cumulative; Payments. Lender’s rights under this Agreement shall be in addition to all rights of Lender under the Note, the Deed of Trust and the other Loan Documents. Further, payments made by Indemnitor, under this Agreement shall not reduce in any respect Borrower’s obligations and liabilities under the Note, the Deed of Trust and the Other Loan Documents.

(h)       No Limitation on Liability. Indemnitor hereby consents and agrees that Lender may at any time and from time to time without further consent from Indemnitor do any of the following events, and the liability of Indemnitor under this Agreement shall be unconditional and absolute and shall in no way be impaired or limited by any of the following events, whether occurring with or without notice to Indemnitor or with or without consideration: (i) any extensions of time for performance required by any of the Loan Documents or extension or renewal of the Note; (ii) any sale, assignment or foreclosure of the Note, the Deed of Trust or any of the other Loan Documents or any sale or transfer of the Property; (iii) any change in the composition of Borrower, including, without limitation, the withdrawal or removal of Indemnitor from any current or future position of ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor herein or by Borrower in any of the Loan Documents; (v) the release of Borrower or of any other person or entity from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Lender’s voluntary act or otherwise; (vi) the release or substitution in whole or in part of any security for the Loan; (vii) Lender’s failure to record the Deed of Trust or to file any financing statement (or Lender’s improper recording or filing thereof) or to otherwise perfect, protect, secure or insure any lien or security interest given as security for the Loan; (viii) the modification of the terms of any one or more of the Loan Documents; or (ix) the

taking or failure to take any action of any type whatsoever. No such action which Lender shall take or fail to take in connection with the Loan Documents or any collateral for the Loan, nor any course of dealing with Borrower or any other person, shall limit, impair or release Indemnitor’s obligations hereunder, affect this Agreement in any way or afford Indemnitor any recourse against Lender. Nothing contained in this Section shall be construed to require Lender to take or refrain from taking any action referred to herein.

(i)        Entire Agreement; Amendment: Severability. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements, whether written or oral, between the parties respecting such matters. Any amendments or modifications hereto, in order to be effective, shall be in writing and executed by the parties hereto. A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

(j)        Governing Law; Binding Effect: Waiver of Acceptance. This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located, except to the extent that the applicability of any of such laws may now or hereafter be preempted by Federal law, in which case such Federal law shall so govern and be controlling. This Agreement shall bind Indemnitor and the heirs, personal representatives, successors and assigns of Indemnitor and shall inure to the benefit of Lender and the officers, directors, shareholders, agents and employees of Lender and their respective heirs, successors and assigns. Notwithstanding the foregoing, Indemnitor shall not assign any of its rights or obligations under this Agreement without the prior written consent of Lender, which consent may be withheld by Lender in its sole discretion. Indemnitor hereby waives any acceptance of this Agreement by Lender, and this Agreement shall immediately be binding upon Indemnitor.

(k)        Notices. All notices, demands, requests or other communications to be sent by one party to the other hereunder or required by law shall be in writing and shall be deemed to have been validly given or served by delivery of the same in person to the intended addressee, or by depositing the same with Federal Express or another reputable private courier service for next business day delivery to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided, or by depositing the same in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the intended addressee at its address set forth on the first page of this Agreement or at such other address as may be designated by such party as herein provided. All notices, demands and requests to be sent to Lender shall be addressed to the attention of the Capital

Markets Group. All notices, demands and requests shall be effective upon such personal delivery, or one (1) business day after being deposited with the private courier service, or two (2) business days after being deposited in the United States mail as required above. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given as herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to the other party hereto at least fifteen (15) days’ prior written notice thereof in accordance with the provisions hereof, the parties hereto shall have the right from time to time to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

(1)        No Waiver: Time of Essence: Business Day. The failure of any party hereto to enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the parties hereto from their respective obligations hereunder. Any waiver of such right or remedy must be in writing and signed by the party to be bound. This Agreement is subject to enforcement at law or in equity, including actions for damages or specific performance. Time is of the essence hereof. The term “business day” as used herein shall mean a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Nevada are authorized by law to be closed.

(m)Cautions for Convenience. The captions and headings of the sections and paragraphs of this Agreement are for convenience of reference only and shall not be construed in interpreting the provisions hereof.

(n)       Attorneys’ Fees. In the event it is necessary for Lender to retain the services of an attorney or any other consultants in order to enforce this Agreement, or any portion thereof, Indemnitor agrees to pay to Lender any and all costs and expenses, including, without limitation, attorneys’ fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be included in Costs.

(o)       Successive Actions. A separate right of action hereunder shall arise each time Lender acquires knowledge of any matter indemnified or guaranteed by Indemnitor under this Agreement. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action, and Indemnitor hereby waives and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments.

(p)        Reliance. Lender would not make the Loan to Borrower without this Agreement. Accordingly, Indemnitor intentionally and unconditionally enters into the covenants and agreements as set forth above and understands that, in reliance upon and in consideration of such covenants and agreements, the Loan shall be made and, as part and parcel thereof, specific monetary and other obligations have

been, are being and shall be entered into which would not be made or entered into but for such reliance.

(q)      SUBMISSION TO JURISDICTION: WAIVER OF JURY TRIAL.

(1)       INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION OVER THE COUNTY, IN WHICH THE PROPERTY IS LOCATED, (C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) TO THE FULLEST EXTENT PERMITTED BY LAW, INDEMNITOR AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). INDEMNITOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESSIN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.MAIL, POSTAGE PREPAID, TO THE INDEMNITOR AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 5(k) HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

(2) LENDER AND INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING-TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

(r)       Waiver by Indemnitor. Indemnitor covenants and agrees that, upon the commencement of a voluntary or involuntary bankruptcy proceeding by or

against Borrower, Indemnitor shall not seek or cause Borrower or any other person or entity to seek a supplemental stay or other relief, whether injunctive or otherwise, pursuant to 11 U.S.C. § 105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law, (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against Indemnitor or the collateral for the Loan by virtue of this Agreement or otherwise.

(s)       Indemnitor hereby waives the benefits of the “one action rule” under NRS 40-430, to the extent permitted in NRS paragraph 40.495(4).

(t)         No Petition. Indemnitor hereby covenants and agrees that it will not at any time institute against Borrower, or join in any institution against Borrower of, any bankruptcy proceedings under any United States Federal or state bankruptcy or similar law.

IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement as of the day and year first above written.

SUNWOOD VILLAGE, INC. a Nevada corporation
By:	/S/ JAMES R. HOYT
Name: Title:	James R. Hoyt President

STATE OF KANSAS

COUNTY OF JOHNSON

The foregoing instrument was acknowledged before me on this 20, day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation.

/S/ CANDICE S. DENNIS

Notary Public

My Commission Expires: 5-1-04

Exhibit A

The North Half (N ½) of the South Half (S ½) of the Southwest Quarter (SW ¼) of the Southeast Quarter (SE ¼) of Section 18, Township 21 South, Range 61 East, M.D.M., more particularly described as follows:

Commencing at the Southwest corner of the Southeast Quarter (SE ¼ ) of said Section 18; Thence North 01°01’02” East, along the West line thereof, a distance of 655.14 feet; Thence North 89°35’15” East, a distance of 40.01 feet to a point on the Easterly right-of-way line of Arville Street (80.00 feet wide), said point being the True Point of Beginning; Thence continuing North 89° 35’15” East, a distance of 1299.07 feet to a point on the Westerly right-of-way line of Wynn Road (60.00 feet wide); Thence South 00°14’52” West, along said Westerly right-of-way line of Wynn Road, a distance of 328.89 feet; Thence South 89°38’49” West, a distance of 1,303.46 feet to a point on the aforementioned Easterly right-of-way line of Arville Street; Thence North 01°01’02” East, along said Easterly right-of-way line of Arville Street a distance of 327.61 feet to the True Point of Beginning.

EX-99

PROMISSORY NOTE

$10,080,000.00 August 1, 2001

FOR VALUE RECEIVED, the undersigned, SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHJP, a Nevada limited partnership (“Borrower”), whose address is c/o SPECS, Inc., Suite LH-06, 4200 Blue Ridge Boulevard, Kansas City, Missouri 64133, promises to pay to the order of FIRST UNION NATIONAL BANK, a national banking association (“Lender”), at the office of Lender at 201 South Tryon Street, Suite 130, PMB Box #4, Charlotte, North Carolina 28202, or at such other place as Lender may designate to Borrower in writing from time to time, the principal sum of TEN MILLION EIGHTY THOUSAND AND 00/100 DOLLARS ($10,080,000.00) together with interest on so much thereof as is from time to time outstanding and unpaid, from the date of the advance of the principal evidenced hereby, at the rate of seven and one hundred twenty-five thousandths (7.125%) percent per annum (the “Note Rate”), in la* money of the United Stares of America, which shall at the time of payment be legal tender in payment of all debts and dues, public and private.

ARTICLE 1 TERMS AND CONDITIONS

1.0      Computation of Interest. Interest shall be computed hereunder based on a 360-day year and paid for on the actual number of days elapsed for any whole or partial month in which interest is being calculated. Interest shall accrue from the date on which funds are advanced (regardless of the time of day) through and including the day on which funds are credited pursuant to Section 1.02 hereof.

1.02    Payment of Principal and Interest. Payments in federal funds immediately available in the place designated for payment received by Lender prior to 2:00 p.m. local time on a day on which Lender is open for business at said place of payment shall be credited prior to close of business, while other payments may, at the option of Lender, not be credited until immediately available to Lender in federal h d s at the place designated for payment prior to 2:00 p.m. local time at said place of payment on a day on which Lender is open for business. Such principal and interest shall be payable in equal consecutive monthly installments of $69,620.06 each, beginning on the first day of the second full calendar month following the date of this Note (or on the first day of the first full calendar month following the date hereof, in the event the advance of the principle amount evidenced by this Note is the first day of a calendar month) (the “First Payment Date”), and continuing on the first day of each and every month thereafter (each, a “Payment Date”) through and including August 3,2006 (the “Maturity Date”), at

which time the entire outstanding principal balance hereof, together with all accrued but unpaid interest thereon, shall be due and payable in full.

1.03    Application of Payments. So long as no Event of Default (as hereinafter defined) exists hereunder or under any other Loan Document, each such monthly installment shall be applied first, to any amounts hereafter advanced by Lender hereunder or under any other Loan Document, second, to any late fees and other amounts payable to Lender, third, to the payment of accrued interest and last to reduction of principal.

1.04    Payment of Short Interest. If the advance of the principal amount evidenced by this Note is made on a date other than the first day, of a calendar month, then Borrower shall pay to Lender contemporaneously with Le execution hereof interest at the vote Rate for a periodfrom the date hereof through and including the last day of this calendar month:

1.05 Prepayment; Defeasance

(a) This Note may not be prepaid, in whole or in part (except as otherwise specifically provided herein), at any time. In the event that Borrower wishes to have the Security Property (as hereinafter defined) released from the lien of the Security Instrument (as hereinafter defined), Borrower’s sole option shall be a Defeasance (as hereinafter defined) upon satisfaction of the terms and conditions set forth in Section 1.05(d) hereof. This Note may be prepaid in whole but not in part without premium or penalty on either of the last two (2) Payment Dates occurring immediately prior to the Maturity Date provided (i) written notice of such prepayment is received by Payee not more than ninety (90) days and not less than thirty (30) days prior to the date of such prepayment, and (ii) such prepayment is accompanied by all interest accrued hereunder through and including the date of such prepayment and all other sums due hereunder or under the other Loan Documents. If, upon any such permitted prepayment on either of the last two (2) Payment Dates immediately prior to the Maturity Date, the aforesaid prior written notice has not been timely received by Lender, there shall be due a prepayment fee equal to, an amount equal to the lesser of (i) thirty (30) days’ interest computed at the Note Rate on the outstanding principal balance of this Note so prepaid and (ii) interest computed at the Note Rate on the outstanding principal balance of this Note so prepaid that would have been payable for the period from, and including, the date of prepayment through the Maturity Date of this Note as though such prepayment had not occurred .

(b) Partial prepayments of this Note shall not be permitted, except for partial prepayments resulting from Lender’s election to apply insurance or condemnation proceeds to reduce the outstanding principal balance of this Note as provided in the Security Instrument, in which event no prepayment fee or premium shall be due unless, at the time of either Lender’s receipt of such proceeds or the application of

such proceeds to the outstanding principal balance of this Note, an Event of Default, or an event which, with notice or the passage of time, or both, would constitute an Event of Default, shall have occurred, which default or Event of Default is unrelated to the applicable casualty or condemnation, in which event the applicable prepayment fee or premium shall be due and payable based upon the amount of the prepayment. No notice of prepayment shall be required under the circumstances specified in the preceding sentence. No principal amount repaid may be reborrowed. Any such partial prepayments- of principal shall be applied to the unpaid principal balance evidenced hereby but such application shall not reduce the amount of the fixed monthly installments required to be paid pursuant to Section 1.02 above Except as otherwise expressly provided in this Section 1 .05(b), the prepayment fees provided in the immediate following paragraph shall be due, to the extent permitted by applicable law, under any and all circumstances where all or any portion of this Note is paid prior to the Maturity Date, whether such prepayment is voluntary or involuntary, including, without limitation, if such prepayment results from Lender’s exercise of its rights upon Borrower’s default and acceleration of the Maturity Date of this Note respective of (irrespective of whether foreclosure proceedings have been commenced), and shall be in. addition to any other sums due hereunder or under any of the other’ Loan Documents. No tender of a prepayment of this Note with respect to which a prepayment fee is due shall be effective unless such prepayment is accompanied by the applicable prepayment fee.

(c)       If, prior to the Lockout Expiration Date (as hereinafter defined), the indebtedness evidenced by this Note shall have been declared due and payable by Lender pursuant to Article II hereof or the provisions of any other Loan Document due to a default by Borrower, then, in addition to the indebtedness evidenced by this Note being immediately due and payable, there shall also then be immediately due and payable a sum equal to the interest which would have accrued on the principal balance of this Note at the Note Rate from the date of such acceleration to the Lock-out Expiration Date, together with a prepayment fee in an amount equal to the Yield Maintenance Premium (as hereinafter defined) based on the entire indebtedness on the date of such acceleration. If such acceleration is on or following the Lockout Expiration-Date;-the-Yield -Maintenance-Premium -shall .also then-be -immediately due and payable as though Borrower were prepaying the entire indebtedness on the date of such acceleration. In addition to the amounts described in the two preceding sentences, in the event any such acceleration or tender of payment of such indebtedness occurs or is made on or prior to the Lockout Expiration Date, there shall also then be immediately due and payable an additional prepayment fee of three percent (3%) of the principal balance of this Note. The term “Yield Maintenance Premium shall mean an amount equal to the greater of (A) two percent (2.0%) of the principal amount being prepaid, and (B) the present value of a series of payments each equal to the Payment Differential (as hereinafter defined) and payable on each Payment Date over the remaining original term of this Note and on the Maturity Date, discounted at the Reinvestment Yield (ashereinafter defined) for the number of

months remaining as of the date of such prepayment to each such Payment Date and the Maturity Date. The term “Payment Differential” shall mean an amount equal to (i) the Note Rate less the Reinvestment Yield, divided by (ii) twelve (12) and multiplied by (iii) the principal sum outstanding under this Note after application of the constant monthly payment due under this Note on the date of such prepayment, provided that the Payment Differential shall in no event be less than zero. The term “Reinvestment Yield shall mean an amount equal to the lesser of (i) the yield on the U.S. Treasury issue (primary issue) with a maturity date closest to the Maturity Date, or (ii) the yield on the U.S. Treasury issue (primary issue) with a term equal to the remaining average life of the indebtedness evidenced by this Note, with each such yield being based on the bid price for such issue as published in the Wall Street Journal on the date that is fourteen (14) days prior to the date of such prepayment set forth in the notice of prepayment (or, if such bid price is not published on that date, the next preceding date on which such bid price is so published) and converted to a monthly compounded nominal yield. In the event that any prepayment fee is due hereunder, Lender shall deliver to Borrower a statement setting forth the amount and determination of the prepayment fee, and, provided that Lender shall have in good faith applied the formula described above, Borrower shall not have the right to challenge the calculation or the method of calculation set forth in any such statement in the absence of manifest error, which calculation may be made by Lender on any day during the fifteen (15) day period preceding the date of such prepayment. Lender shall not be obligated or required to have actually reinvested the principal balance at the Reinvestment Yield or otherwise as a condition to receiving the prepayment fee.

(d)      (i) At any time after the the date which is two (2) years after the “startup day,” within the meaning of Section.860G(a) (9) of the Internal Revenue Code of 1986, as amended h r n time to time or any successor statute (the “Code”), of the “real estate mortgage investment conduit,” within the meaning of Section 860D of the Code, that holds this Note (the “Lockout Expiration Date”) provided no Event of Default has occurred hereunder or under any of the other Loan Documents, Lender shall cause the release of the Security Property from the lien of the Security Instrument and the other Loan Documents (a “Defeasance”) upon the satisfaction of the following conditions:

(A)      Borrower shall give not, more than ninety (90) days or less than sixty (60) days prior written- notice to Lender specifying .the date Borrower intends for the Defeasance to be consummated (the “Release Date”), which date.

(B)      All accrued and unpaid interest and all other sums due under this Note and under the other Loan Documents up to and including the Release Date shall be paid in full on or prior to the Release Date.

(C) .     Borrower shall deliver to Lender on or prior to the Release Date:

(1)       a sum of money in immediately available funds (the “Defeasance Deposit”) equal to the outstanding principal balance of this Note plus an amount, if any, which together with the outstanding principal balance of this Note, shall be sufficient to enable Lender to purchase, through means and sources customarily employed and available to Lender, for the account of Borrower, direct, non-callable obligations of the United States of America that provide for payments prior, but as close as possible, to all successive monthly Payment Dates occurring after the Release Date and to the Maturity Date, with each such payment being equal to or greater than the amount of the corresponding installment of principal and/or interest required to be paid under this Note (including, but not limited to, all amounts due on the Maturity Date) for the balance of the term hereof (“the “Defeasance Collateral”), each of which shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a written instrument of transfer in form and substance satisfactory to Lender in its sole discretion (including, without limitation, such instruments as may be required by the depository institution holding such securities or the issuer thereof, as the case may be, to effectuate book-entry transfers and pledges through the book-entry facilities of such institution) in order to perfect upon the delivery of the Defeasance Security Agreement (as hereinafter defined) the first priority security interest in the Defeasance Collateral in favor of Lender in conformity with all applicable state and federal laws governing granting of such security interests.

(2) A pledge and security agreement, in form and substance satisfactory to Lender in its sole discretion, creating a first priority security interest in favor of Lender in the Defeasance Collateral (the “Defeasance: Security Agreement”), which shall provide, among other things, that any excess received by Lender from the Defeasance Collateral over the amounts payable by Borrower; hereunder shall be refunded to Borrower .promptly after each monthly Payment Date.

(3) A Certificate of Borrower certifying that all of the requirements set forth in this subsection 1.05(d)(i) .have been satisfied

(4) An opinion of counsel for Borrower in form and substance and delivered by counsel satisfactory to Lender in its sole discretion

stating, among other things, that (x) Lender has a perfected first priority security interest in the. Defeasance Collateral and that the Defeasance Security Agreement is enforceable against Borrower in accordance .with its terms, (y) that any REMIC Trust formed pursuant to a securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code as a result of such defeasance.

(5) Borrower shall deliver evidence in writing from the applicable rating agencies to the effect that the collateral substitution will not result in a downgrading, withdrawal or qualification of the respective ratings in effect immediately prior to such defeasance event for any securities issued in connection with the securitization which are then outstanding.

(6) A certificate from a firm of independent public accountants, acceptable to Lender certifying that the Defeasance Collateral is sufficient to satisfy the provisions of subparagraph (1 ) above.

(7) Such other certificates, documents or instruments as Lender may reasonably require. . . . .

(8) Payment of all fees, costs, expenses and charges incurred by Lender in connection with the Defeasance of the Security Property and the purchase of the Defeasance Collateral, including, without limitation, legal fees-and all costs and expenses incurred by Lender or its agents in connection with release of the Security Property, review of the proposed Defeasance Collateral and preparation -of the Defeasance Security Agreement and related documentation, any revenue, documentary, stamp, intangible or other taxes, charges or fees due in connection with transfer of the Note, assumption of the Note, or substitution of collateral for the Security Property.- Without limiting Borrower’s obligations with respect thereto, Lender shall be entitled to deduct all such fees, costs, expenses and charges from the Defeasance Deposit to the extent of any excess of :the Defeasance Deposit.

(D)      In connection with the Defeasance Deposit, Borrower hereby authorizes and directs Lender using the means and sources customarily employed and available to Lender to use the Defeasance Deposit to purchase for the account. of Borrower the Defeasance Collateral. Furthermore, the

Defeasance Collated shall be arranged such that -payments received from such Defeasance Collateral shall be paid directly to Lender to be applied on account of the indebtedness of this Note. Any part of the Defeasance Deposit in excess of the amount necessary to purchase the Defeasance Collateral and to pay the other and related costs Borrower is obligated to pay under this Section 1.05 shall be refunded to .Borrower.

(ii)      Upon compliance with the requirements of subsection 1.05(d)(i), the Security Property shall be released from the lien of the Security Instrument and the other Loan Documents, and the Defeasance Collateral shall constitute collateral which shall secure this Note and all other obligations under the Loan Documents. Lender will, at Borrower expense, execute and deliver any agreements reasonably requested by Borrower to release the lien of the Security Instrument from the Security Property.

(iii)     Upon the release of the Security Property in accordance with this Section l.05(d), Borrower shall assign all its obligations and rights under this Note, together with the pledged Defeasance Collateral, to a newly created entity which complies with the terms of Section 1.33 of the Security Instrument designated by: Borrower and approved by Lender in its sole discretion. . Such successor entity shall execute an assumption agreement in form and substance satisfactory to Lender in its sole discretion pursuant to which it shall assume Borrower’s obligations under this Note and the Defeasance Security Agreement. As conditions to such assignment and assumption, Borrower shall (x) deliver to Lender an opinion of counsel in form and substance and delivered by counsel satisfactory to Lender in its sole discretion stating, among other things, that such assumption agreement is enforceable against Borrower and such successor entity in accordance with its terms and that this Note and the Defeasance Security Agreement as so assumed, are enforceable against such successor entity in accordance with their respective terms, and (y) pay all costs and expenses (including, but not limited to, legal fees) incurred by Lender or its agents in connection with such assignment and assumption (including, without limitation, the review of the proposed transferee and the preparation of the assumption agreement and related documentation). Upon such assumption, Borrower shall be relieved of its obligations hereunder, under the other Loan Documents other than the Hazardous Substances Indemnity Agreement (as hereinafter defined) and under the Defeasance Security Agreement,

1.06    Security. The indebtedness evidenced by this Note and the obligations created hereby are secured by, among other things, that certain Deed of Trust and Security Agreement (the “Security Instrument”) from Borrower to Lender, dated as of the date hereof, concerning property located in Las Vegas, Nevada. The Security Instrument together with this Note and all other documents to or of which Lender is a party or beneficiary now or hereafter evidencing, securing, guarantying, modifying or otherwise relating to the indebtedness evidenced hereby, are herein referred to

collectively as the “Loan Documents”. All of the terms and provisions of the Loan Documents are incorporated herein by reference.

ARTICLE-2DEFAULT

2.01    Event of Default. It is hereby expressly agreed that should any default the payment. of principal or interest as .stipulated above and such payment is not made within seven (7) days of the date such payment is due (except that no grace or notice period is provided for the payment of principal and interest due on the Maturity Date), or should any other “Event of Default” or any default not cured within any applicable grace or notice period occur under my .other Loan Document, then an event of default (an “Event of Default”) shall exist hereunder, and in such event the indebtedness evidenced hereby, including all sums advanced or accrued hereunder or under any other Loan Document, and all unpaid interest accrued thereon, shall, at the option of Lender and without notice to Borrower, at once become due and payable and may be collected forthwith whether or not there has been a prior demand for payment and regardless of the stipulated date of maturity.

2.02    Late Charges and Default Interest Rate. In the event that any payment is not received by Lender on the date when due (subject to the applicable grace period), then addition to any default interest payments due hereunder, Borrower shall also pay to Lender a late charge in an amount equal to five percent (5.0%) of the amount of such overdue payment. So long as any Event of Default exists, regardless of whether or not there has been an acceleration of the indebtedness evidenced hereby, and at all times after maturity of the indebtedness evidenced hereby (whether by acceleration or otherwise), interest shall accrue on the outstanding principal balance of this Note from the date of default at a rate per annum equal to the lesser of (a) four percent (4.0%) in excess of the Note Rate, or (b) the maximum rate of interest, if any, which may be charged or collected from Borrower under applicable law (the “Default Interest Rate”), and such default interest shall be immediately due and payable. Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender’s actual damages.resulting from any late payment or default, and such late charges and default interest are reasonable estimates of those damages and do not constitute a penalty.

2.03    Cumulative Remedies. The remedies of Lender in this Note or in the Loan Documents, or at law or in equity, shall be cumulative and concurrent, and may be pursued singly, successively or together in Lender’s discretion. In the event this Note, or any part hereof, is collected by or through an attorney-at-law, Borrower agrees to pay all costs of collection including, but not limited to, reasonable attorneys’ fees.

2.04    Exculpation. Notwithstanding anything in the Loan Documents to the contrary, but subject to the qualifications hereinbelow setforth, Lender agrees that:

a.         Borrower shall be liable upon the indebtedness evidenced hereby and for the other obligations arising under the Loan Documents to the full extent (but only to the extent) of the security therefor, the same being all properties (whether real or personal), rights, estates and interest now or at any time hereafter securing the payment of this Note and/or the other obligations of Borrower under the Loan Documents (collectively, the “Security Property”);

b.        if an Event of Default occurs, any judicial or other proceeding brought by Lender against Borrower shall be limited ‘to the preservation, enforcement -and foreclosure, or any thereof, of the liens, security titles, estates, assignments, rights and security interests now, or at any time hereafter securing the payment of this Note and/or the other obligations of Borrower under the Loan Documents, and no attachment, execution or other writ of process shall be -sought, issued or levied upon -any assets, properties or funds of Borrower other than the Security Property, except with respect to the liability described below in this section; and

c.         in the event of a foreclosure of such liens, security titles, estates, assignments, rights or security interests securing the payment of this Note and/or the other obligations of Borrower under the Loan. Documents, no judgment for any deficiency upon the indebtedness evidenced hereby shall be sought or obtained by Lender against Borrower, except with respect to the .liability described below in this section; provided, however, that, notwithstanding the foregoing provisions of this section, Borrower shall be fully and personally liable and subject to legal action (i) for proceeds paid under any insurance policies (or paid as a result of any other claim or cause of action against any person or entity) by reason of damage, loss or destruction to all or any portion of the Security Property, to the fill extent of such proceeds not previously delivered to, Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender, (ii) for proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of all or any portion of the Security Property, or any of them, to the full extent of such proceeds or awards not previously

delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender, (iii) for all tenant security deposits or other refundable deposits paid to or held by Borrower or any other person or entity in connection with leases of all or any portion of the Security Property which are not applied in accordance with the tens of the applicable lease or other agreement, (iv) for rent and other payments received from tenants under leases of all or any portion of the Security Property paid more than one month in advance, (v) for rents, issues, profits and revenues of all or any portion of the - Security Property received or applicable to a period after the occurrence of any Event of Default or any event which, with notice or the passage of time, or both, would constitute an Event of Default hereunder or under the Loan Documents which are not either applied to the ordinary and necessary expenses of owning and operating the Security Property or paid to Lender, (vi) for waste committed on the Security Property by, or damage to the Security Property as a result of the intentional misconduct or gross negligence of, Borrower or any of its principals, officers, general partners or members, any guarantor, any indemnitor, or any agent or employee of any such persons, or any removal of the Security Property in violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred by Lender on account of such occurrence, (vii) for failure to pay any valid taxes, assessments, mechanic’s liens, materialmen’s liens or other liens which could create liens on any portion of the Security Property which would be superior to the lien or security title of he Security Instrument or the other Loan Documents, to the full extent of the amount claimed by any such lien claimant except, with respect to any such taxes or assessments, to the extent that funds have been deposited with Lender pursuant to the terms of the Security Instrument specifically for the applicable taxes or assessments and not applied by Lender to pay such taxes and assessments, (viii) for all obligations and indemnities of Borrower under the Loan Documents relating to hazardous or toxic substances or radon or radon or compliance with environmental laws and regulations to the full extent of any losses or damages (including, but not limited to, those resulting from diminution in value of any Security Property) incurred

by Lender as a result of the existence of such hazardous or toxic substances or failure to comply with environmental laws or regulations, and (ix) for fraud or material misrepresentation or failure to disclose a material fact by Borrower or any of its principals, officers, general partners or members, any guarantor, any indemnitor or any agent, ,employee or other person authorized or apparently authorized to make statements, representations or disclosures on behalf of Borrower, any principal, officer, general partner ,or member of Borrower, any guarantor or any indemnitor, to the full extent of any losses, damages, and expenses of Lender on account thereof. Nothing contained in this section shall (A) be deemed to be a release or impairment of the indebtedness evidenced by this Note or the other obligations of Borrower under the Loan Documents or the lien of the Loan Documents upon the Security Property, or (B) preclude Lender from foreclosing the Loan Documents in case of any default or from enforcing any of the other rights of Lender except as stated in, this section, or (C) release, relieve, reduce, .waive, limit or impair in any way whatsoever, any obligation of any party to the Indemnity and Guaranty Agreement and Hazardous Substances Indemnity Agreement each of even date executed and delivered in connection with the indebtedness evidenced by this Note.

Notwithstanding anything to the contrary in this Note, the Security Instrument or any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111 ( b) or any other provisions of the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness evidenced hereby or secured by the Security Instrument or any of the other Loan Documents or to require that all collateral shall continue to secure all of the indebtedness owing to Lender in accordance with this Note, the Security Instrument and the other Loan Documents.

ARTICLE 3 GENERAL CONDITIONS

3.01    No Waiver: Amendment. No failure to accelerate the debt evidenced hereby by reason of default hereunder, acceptance of a partial or past due payment, or indulgences granted from time to time shall be construed (a) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terns of this Note, or (b) to prevent the exercise of such right of acceleration or any other right granted hereunder or by any applicable laws;

and Borrower hereby expressly waives the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. No extension of the time for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note. either in whole or in part unless Lender agrees otherwise in writing. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought

3.02    Waivers. Presentment for payment; demand, protest and notice of demand, intent, to accelerate, acceleration, protest and nonpayment and all other notices .are hereby waived by Borrower. Borrower hereby further waives and renounces, ‘to the fullest extent permitted by law, all rights to the benefits of any moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension, redemption, appraisement, exemption and homestead now or hereafter provided by the Constitution and laws of the United States of America and of each state thereof, both as to itself and in and to all of its property, real and personal, against the endorsement and collection of the obligations evidenced by this Note or the other Loan Documents.

3.03 Limited of Validity. The provisions of this Note and all agreements between Borrower and Lender, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so .that in no contingency or event whatsoever, whether by reason of demand or acceleration of the maturity of this Note or otherwise, shall the amount paid, or agreed to be paid (“Interest”), to Lender for the use, forbearance or detention of the money loaned under this Note exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever, performance or fulfillment of any provision hereof or of any agreement between Borrower and Lender, shall at the time performance or fulfillment of such provision shall be due, exceed the limit for Interest prescribed by law or otherwise transcend the limit of validity prescribed by applicable law, then ipso facto the obligation to be performed or fulfilled shall be reduced to such limit and if from any circumstance whatsoever, Lender shall ever receive anything of value deemed Interest by applicable law in excess-of the maximum lawful amount, an amount equal to any excessive Interest shall be applied to the reduction, of the principal balance owing under this Note in the inverse order of its maturity (whether or not then due or at the option of Lender be paid over to Borrower, and not to the payment of Interest. All Interest (including, but not limited to, any amounts or payments deemed to be Interest) paid or agreed to be paid to Lender shall, to the extent permitted .by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal balance of this Note so that the Interest thereof for such full period will not exceed the maximum amount permitted by applicable law. This Section 3.03 will control all agreements between Borrower and Lender.

3.04    Use of Funds. Except as set forth in Section 2.04 hereof Borrower hereby warrants, represents and covenants that no funds disbursed hereunder shall be used for personal, family or household purposes.

3.05    Unconditional Payment. Except as set forth in Section 2.04 hereof, Borrower is and shall be obligated to pay principal, interest and any and all other amounts which become payable hereunder or under the other Loan Documents absolutely and unconditionally and without any abatement, postponement, diminution or deduction and without any reduction for counterclaim or setoff. In the event that at any time any payment received by Lender hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.

3.06    Secondary Market: Lender may sell, transfer and deliver the Loan Documents to one ore more investors in the secondary mortgage market. In connection with such sale, Lender may retain or assign responsibility for servicing the loan evidenced by this Note or may delegate some or all of such responsibility and/or obligations to a-servicer, including, but not limited to, any subservicer or master servicer, on behalf of the investors. All references to Lender herein shall refer to and include, without limitation, any such servicer, to the extent applicable.

3.07    Miscellaneous. This Note shall be interpreted, construed and enforced according to the laws of the State of Nevada. The terms and provisions hereof shall be binding upon and inure to the benefit of Borrower and Lender and their respective heirs, executors, legal representatives, successors, successors-in-title and assigns, whether by voluntary action of the parties or by operation of law. As used herein, the terms “Borrower” and “Lender” shall be deemed to include their respective heirs, executors, legal representatives, successors, successors-in-title and assigns, whether by voluntary action of the parties or by operation of law. If Borrower consists of more than one person or entity, each shall be jointly and severally liable to perform the obligations of Borrower under this Note. All personal pronouns used herein, whether used in the masculine; feminine-or neuter gender, shall include all other genders; the singular shall include the plural and vice versa. Titles of articles and sections are for convenience only and in no way define, limit, amplify, or describe the scope or intent of any provisions hereof. Time is of the essence with respect to all provisions of this Note. This Note and the other Loan Documents contain the entire agreements between the parties hereto relating to the subject matter hereof and thereof and all prior agreements relative hereto and thereto which are not contained herein or therein are terminated.

3.08    State Specific Provisions. The seven (7) day grace period for payment referenced in Section 1.06 of-this Note shall run concurrently with the 35 day statutory cure period under NRS 107.080(2)(a)(2).

Borrower’s Tax Identification No:

48-1183328

FUNB Loan No,: 502694601

            IN WITENSS WHEREOF, Borrower has executed this Noe under seal as of the date first above written.

SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERHIP, a Nevada limited partnership
By:	Sunwood Village, Inc., a Nevada corporation, its general partner
	By:	/S/ JAMES R. HOYT
		Name: James R. Hoyt Title: President

STATE OF KANSAS

COUNTY OF JACKSON

The foregoing instrument was acknowledged before me on this 20th day of July, 2001, by James R. Hoyt, as President of Sunwood Village, Inc., a Nevada corporation, the general partner of Sunwood Village Joint Venture, Limited Partnership, a Nevada limited partnership.

/S/ CANDICE DENNIS

Notary Public

My Commission Expires:

5-1-04

EX-99

PROPERTY MANAGEMENT AGREEMENT

Sunwood Village

This PROPERTY MANAGEMENT AGREEMENT (the “Agreement”) is dated as of March 11, 2005 between SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership (“Owner”), and CONAM MANAGEMENT CORPORATION, a California corporation (“Manager”). Owner owns the apartment building commonly known as Sunwood Village, located at 4020 S. Arville, Las Vegas, Nevada (the “Property”). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Manager’s duties and responsibilities under this Agreement shall begin on the date hereof (the “Start Date”) and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER’S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner’s request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2       Employees; Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker’s compensation, liability insurance, Social Security, unemployment

insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner’s insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager’s employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager’s employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that it has no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i) notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cooperate with Owner, at Owner’s expense, to cure any such existing violations.

(c) Except as otherwise provided in Section 14.9 hereof, Manager shall have responsibility, at Owner’s expense, for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cooperate with Owner (at Owner’s expense) to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4       Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Anystaff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner’s prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A)Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager’s reasonable judgment, required for the operation of the Property.

(c)       During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5      Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. Manager shall not give fre rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)       Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6      Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7      Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning, painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager’s normal authority without prior approval of Owner, if Manager believes in good faith that

such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, hut no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8       Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall he subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all hid responses accompanied by Manager’s recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b)       Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c)       Manager shall obtain proof from the vendor that, as required, each entity providing services to the Property holds a valid license in the state, county, and/or municipality where the work is to be performed.

2.9      Service Contracts, Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner’s option, to Owner’s designee, (c) be for a term not to exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days’ written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by

memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner’s option, shall assign to Owner or its designee all of Manager’s interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only In connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner’s approval prior to Manager’s payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.11Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12     Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager’s employees or agents on or from the Property, including the on-site management offices.

2.13     Miscellaneous Duties. Manager shall (a) maintain at Manager’s office at Manager’s address as set forth in Section 13.1 and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof (b) provide reports for Owner’s accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager’s employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f) check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager’s receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1       Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager

obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)        Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager’s furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner’s request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2Employees, Contractor’s. Subcontractor’s Insurance. For all of Manager’s employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor’s or subcontractor’s expense, in the following minimum amounts: (a) Worker’s Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer’s liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and subcontractors. Manager shall obtain Owner’s permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall

obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3      Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carriers thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager’s office at Manager’s address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner’s assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2       Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner an income statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accruals basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3        Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager’s office at Manager’s address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f) summaries of adjusting journal entries as part of the annual audit process; (g)

supporting documentation for payroll, payroll taxes and employee benefits for Manager’s employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (j) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (j), on a quarterly basis.

ARTICLE 5. OWNER’S RIGHT TO AUDIT

5.1       Owner’s Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager’s activities either at the Property or at any office of Manager if such audit or investigation relates to Manager’s activities for Owner. (b) Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1       Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the “Deposit Account”) for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the “Operating Account”) for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2       Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Sunwood Security Deposit Account. The Security Deposit Account shall be maintained in accordance with applicable state or local laws, if any, and shall be maintained in an institution in which the Security Deposit Account is insured by the FDIC and which Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3       Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4       Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager’s loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7.PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager’s employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker’s compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each month, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. ANAGER’S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to this Agreement shall be at the sole cost and expense of Manager and shall not be reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager’s responsibility to Owner; (b) cost of forms, papers,

ledgers, and other supplies and equipment used for the Management of the Property in the Manager’s office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager’s office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager’s employees to and from the Property; (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner has not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker’s compensation insurance and unemployment insurance, for Manager’s Employees; (j) all overhead and indirect expenses of Manager’s office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner’s expense under Article 3),fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager’s employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other expenses relating to disputes with Manager’s employees, including without limitation claims for worker’s compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1        Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the “Management Fee”) equal to three and one-half percent (3.5%) of Gross Revenues (defined below). “Gross Revenues” shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the mouth in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f)condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If Owner is required to refund to a tenant any amount paid by the tenant, Manager shall promptly pay to Owner, or subtract from the next month’s Management Fee, all Management Fees originally paid to Manager on the amount of the refund. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERMINATION

10.1    Termination Upon Default. Each of the following occurrences shall constitute a “Default” by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager’s real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager’s failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this Agreement.

In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager. In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager’s Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that

it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to fulfill such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1     Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1     Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner’s prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER: ConAm Management Corporation
3990 Ruffin Road
Suite 100
San Diego, CA 92123
Tel.: (858) 614-7200
Fax: (858) 614-1644
Attention: Daniel J. Epstein

OWNER : Sunwood Village Joint Venture, Limited Partnership
199 S. Los Robles Avenue
Suite 200
Pasadena, CA 91101
Tel.: (626) 585-5920
Fax: (626) 585-5929
Attention: John Anderson

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1) business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party’s sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2     Consent and Approvals. Each party may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates J. Bradley Forrester, Frazier Crawford and Scott Dupree.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The term “affiliate” means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. “Control” includes the ownership of ten percent (10%) or more of the beneficial interest or the voting power of the appropriate entity.

14.4      Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing.

14.5     Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution

proceeding, all costs and expenses, including reasonable attorney’s fees, incurred by the other party in connection with such other party’s enforcement of this Agreement.

14.6     Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8      Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Owner arising: (i) out of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager’s authority under this Agreement; and/or (iii) out of Manager’s acts or omissions relating to Manager’s employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. It is the intent of the parties that an indemnification obligation shall arise (if at all) only to the extent that insurance is unavailable or inadequate to satisfy a Claim. Manager shall have no obligation under this Section 14.9 to the extent a Claim: (a) is covered under Section 14.10 or other indemnification of Manager by Owner under this Agreement; or (b) arises on account of mold at the Property, unless such mold arises, or the condition of mold is exacerbated, as a result of the gross negligence or willful misconduct of the Manager. If any person or entity makes a Claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then: (1) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (2) Manager may defend such Claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (3)neither Owner nor Manager shall settle any Claim without the other’s written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10   Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney’s fees and court costs (collectively, “Claims”), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager’s obligations under this Agreement, but: (i) only to the extent of Owner’s interest in the Property; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel. It is the intent of the parties that an indemnification obligation shall arise (if at all) only to the extent that insurance is unavailable or inadequate to satisfy a Claim. Owner shall have no obligation under this Section 14.10 to the extent: (a) a Claim is covered under Section 14.9 or other indemnification of Owner by Manager under this Agreement; and/or (b) a Claim arises on account of mold at the Property resulting from Manager’s gross negligence or willful misconduct. If any person or entity makes a Claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (1) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (2) Owner may defend such Claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (3) neither Manager nor Owner shall settle any Claim without the other’s written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.11   Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided in Sections 2.12 and 12.1 herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement

or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or be construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16   Enforcement of Manager’s Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner’s or any such affiliate’s interest therein.

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

“OWNER” SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership
By:	Millenium Management, LLC a California limited liability company, its general partner
	By:	/S/ W. ROBERT KOHORST
		W. Robert Kohorst President

“MANAGER” ConAm Management Corporation a California corporation
	By:	/S/ J. BRADLEY FORRESTER
		J. Bradley Forrester President

EX-99

PROPERTY MANAGEMENT AGREEMENT

Sunwood Village

Chapter 11 Debtor in Possession

This PROPERTY MANAGEMENT AGREEMENT (the "Agreement") is dated as of September 12, 2006 between SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership, in its capacity as Debtor and Debtor in Possession in Case No. BK-S-06-12643 ("Owner"), and CONAM MANAGEMENT CORPORATION, a California corporation ("Manager").

Owner owns the apartment building commonly known as Sunwood Village, located at 4020 S. Arville, Las Vegas, Nevada (the "Property"). Owner desires to engage Manager, and Manager desires to accept such engagement, to manage, lease, operate, and maintain the Property on the terms and subject to the conditions set forth herein.

THEREFORE, the parties agree as follows:

ARTICLE 1. COMMENCEMENT AND TERM

1.1       Commencement and Term. Subject to Bankruptcy Court approval in Case No. BK-S-06-12643, Manager's duties and responsibilities under this Agreement shall begin on the date hereof (the "Start Date") and shall terminate on the earlier of (i) the conveyance of the Property or any portion thereof, as to such conveyed portion thereof only, or (ii) termination as provided in Article 10.

ARTICLE 2. MANAGER'S RESPONSIBILITIES

2.1       Management. Manager shall manage, operate and maintain the Property in an efficient and economic manner and shall arrange the performance of everything reasonably necessary to accomplish the foregoing, subject to the budgets, policies and limitations provided to Manager in writing by Owner from time to time. Manager shall keep the Property clean and in good repair, shall promptly order and supervise the completion of such repairs as may be required and shall generally do and perform, or cause to be done or performed, all things necessary or desirable to ensure the proper and efficient management, operation, and maintenance of the Property. Manager shall perform all services in a diligent and professional manner. Additionally, Manager shall upon Owner's request cooperate with any proposed purchaser of the Property, any proposed lender evaluating the Property as collateral or any broker named by Owner in connection with a sale or financing of the Property. Manager is hereby authorized to take any action with respect to the Property which Manager believes in good faith is necessary for Manager to comply with all laws, rules and regulations applicable to Manager, as a licensed real estate broker or otherwise, and, when possible, Manager agrees to provide advance notice to and consult with Owner about any such action that has not been previously authorized. Manager shall exercise reasonable efforts to comply with all directions or instructions from Owner pertaining to the Property.

2.2 Employees: Independent Contractor. All arrangements and agreements with employees or independent contractors working at the Property shall confirm that Owner has no obligation or relationship with respect to such employees or independent contractors. Manager shall comply with all applicable governmental requirements relating to worker's compensation, liability insurance, Social Security, unemployment insurance, hours of labor, wages, working conditions, employment discrimination, and other employer-employee related matters and shall prepare and file all forms required in connection therewith. Manager shall obtain coverage of all employees who handle funds of Owner by fidelity bond or under a comprehensive crime insurance policy, each in amounts required by Owner and indemnifying Owner against loss, theft, embezzlement, or other fraudulent acts of Manager or its employees. Manager shall employ, directly or through third party contractors (e.g., an employee leasing company) all labor and employees required for the operation and maintenance of the property, it being agreed that all employees shall be deemed employees of Manager and not Owner. Owner's insurance policies required hereunder shall not cover and the Owner shall not be liable for any wrong doing by Manager's employees, any claims, costs, damages and liabilities, including but not limited to the defense of any claim or lawsuit arising out of the employment of any of the Manager's employees. All approved costs and expenses associated with such employees (including, without limitation, wages and benefits) shall be costs of, billed to, and reimbursed by the Property.

2.3      Compliance with Laws. Manager shall comply with all governmental requirements relative to the performance of its duties hereunder and shall use diligent efforts to cause the Property to comply with all applicable governmental requirements.

(a)       Owner represents that ithas no knowledge of any violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it.

(b)       Manager shall not have any responsibility or liability for violations existing at or prior to the Start Date of any ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any public authority or official thereof, or of any court, having jurisdiction over it, except to: (i)notify Owner promptly of any existing violations actually discovered by Manager: (ii) forward to Owner promptly any complaints, warning, notices or summonses received by it relating to such matters; and (iii) use diligent efforts to cooperate with Owner, at Owner's expense, to cure any such existing violations.

(c)        Except as otherwise provided in Section 14.9 hereof, Manager shall have responsibility, at Owner's expense, for compliance of the Property and any of its equipment with the requirements of any and all ordinances, laws, rules, regulations or orders (including, but not limited to, those relating to the disposal of solid, liquid and gaseous wastes or materials) of any city, county, state or federal government, or any

public authority or official thereof, or of any court, having jurisdiction over it on a going forward basis. Manager shall notify Owner promptly, and forward to Owner promptly, any complaints, warnings, notices or summonses received by it relating to such matters, and shall use diligent efforts to cooperate with Owner (at Owner's expense) to cure any violation relating to such complaints, warnings, notices or summonses.

(d)       Owner: (i) represents that the Property has not received any notice regarding non-compliance with all applicable legal requirements; (ii) authorizes Manager to disclose the ownership of the Property to any such officials; and (iii) agrees to indemnify, defend and save Manager, its affiliates and their respective officers, directors, representatives and employees harmless from any and all losses, costs, damages, claims, fines, penalties, expenses and liabilities which may be imposed upon or threatened against any of them by reason of any current or future violation or alleged violation of such laws, ordinances, rules, regulations, or orders, or in connection with any bills or charges unpaid by Owner except for any violations resulting from the acts or omissions of any such indemnified party.

(e)       Manager shall furnish to Owner no later than the end of the third (3rd) business day after receipt by Manager each notice or order affecting the Property, including, without limitation, any notice from any taxing or other governmental authority, any notice of violation of any governmental requirement by the Property or Owner, any notice of default or otherwise from the holder of any mortgage or deed of trust, or any notice of renewal, termination or cancellation of or default under any insurance policy. Manager shall not take any action regarding such notice, order or requirement, however, as long as Owner is contesting or has notified Manager of its intention to contest such notice, order or requirement.

2.4      Approved Budget. (a) An initial annual capital and operating budget on a monthly basis for the projected revenue and the promotion, operation, staffing, repair, maintenance and improvement of the Property is attached hereto as Exhibit A. Such budget as amended by Owner from time to time and each subsequent annual budget as approved and amended from time to time by Owner is referred to herein as the Approved Budget. Owner may amend prospectively such Approved Budget at any time in its good faith discretion upon thirty (30) days prior notice to Manager. Manager shall promptly provide Owner with such information and explanation as may be, from time to time, requested by Owner in order to monitor compliance with or evaluate changes to such Approved Budget. Any staff changes, including salary, hourly compensation levels, and bonus plans must be approved in writing by Owner.

(b)       Manager shall charge all expenses to the proper account as specified in a list of accounts theretofore approved by Owner. Subject to the provisions of Section 2.7, Manager shall obtain Owner's prior approval for any expenditure that exceeds the applicable amount in the Approved Budget unless: (i) the amount over budget does not exceed: (A) Two Hundred Fifty Dollars ($250), and (B) Five percent (5%) of the annual applicable amount in the Approved Budget, and (ii) is, in the Manager's reasonable judgment, required for the operation of the Property.

(c)        During each calendar year, Manager shall inform Owner of any increases or decreases in costs and expenses not included in the Approved Budget as soon as Manager becomes aware of such changes.

2.5       Leasing. (a) Manager shall have the exclusive authority to negotiate and execute all leases and lease renewals for the Property and to advertise the availability for rental of the Property or any part thereof, and to display signs thereon, using a standard lease form approved by Owner. Manager shall not give free rental or discounts or rent concessions except in accordance with specific discretion or promotions approved in writing by Owner or with the prior written approval of Owner.

(b)       Manager shall not, without the prior written approval of Owner, give or continue any free rent or discounts or rental concessions to any employees, representatives or affiliates of Manager or anyone related to such employees, representatives or affiliates. Manager shall not lease any space in the Property to itself or to any of its employees, representatives or affiliates, without the prior written consent of Owner.

(c)       Manager shall investigate all prospective tenants in accordance with credit standards approved by Owner, and shall not rent to persons not meeting such standards. If requested by Owner, Manager shall obtain a credit check for all prospective tenants from a credit investigation service approved by Owner, and shall reasonably investigate and document references with respect to income verification and prior rental history. Manager shall retain such information for the duration of the tenancy, and shall make it available to Owner upon reasonable notice. Manager does not guarantee the accuracy of any such information or the financial condition of any tenant.

(d)       Manager and Owner agree that there shall be no discrimination against or segregation of any person or group of persons on account of age, race, color, religion, creed, handicap, sex or national origin in the leasing or occupancy of the Property, nor shall Owner or Manager permit any such practice or practices of discrimination or segregation with respect to the selection, location, number or occupancy of tenants. In addition, Manager shall comply with all applicable local, state, and Federal regulations regarding non-discrimination.

2.6       Collection of Rents and Other Income. Manager shall regularly bill all tenants and use its best efforts to collect all rent and other charges due and payable from all tenants or from others for services provided in connection with the Property. Manager is authorized on behalf of Owner to initiate legal action for the collection of all amounts due Owner under tenant leases and enforcements of the terms of said leases. Manager shall deposit promptly all monies so collected in the Operating Account.

2.7       Repairs and Maintenance. (a) Manager shall maintain the buildings, appurtenances and grounds of the Property, other than areas which are the responsibility of tenants, including, without limitation, all ordinary and extraordinary repairs, cleaning,

painting, decorations and alterations including electrical, plumbing, carpentry, masonry, elevators and such other routine repairs as are necessary or reasonably appropriate in the course of maintenance of the Property (subject to the limitations of this Agreement). In cases of emergency, Manager may make expenditures for repairs in excess of Manager's normal authority without prior approval of Owner, if Manager believes in good faith that such expenditures are immediately necessary to prevent damage or injury, to comply with a governmental requirement, or to avoid the suspension of any necessary service to the Property. Manager shall inform Owner of any such emergency as soon as reasonably practical, but no later than before the end of the next business day.

(b)       Manager shall take all reasonable precautions against fire, vandalism, burglary and trespass to the Property. Manager shall use reasonable diligence to require each tenant to comply with its obligations to maintain its respective leased premises pursuant to its lease.

2.8       Capital Expenditures. (a) The Approved Budget shall constitute authorization for Manager to make any budgeted capital expenditures; provided that the Manager follows the bid procedures prescribed below unless Owner specifically waives such bid procedures or approves a particular contract. All other capital expenditures shall be subject to written approval of Owner. Unless Owner specifically waives such requirements or approves a particular contract, Manager shall solicit competitive bids for capital expenditures or new or replacement equipment as follows: (a) Manager shall obtain a minimum of two (2) written bids for each purchase; (b) Manager shall solicit each bid according to a specification approved by Owner so that uniformity will exist in the bid quotes; (c) for capital expenditures where all bids exceed $5,000, Manager shall provide Owner with all bid responses accompanied by Manager's recommendations as to the most acceptable bid (such recommendations shall be in writing if Manager advises acceptance of other than the lowest bidder); and (d) for capital expenditures where all bids exceed $5,000, Owner may accept or reject any bid. Owner will promptly communicate to Manager its acceptance or rejection of bids.

(b)        Manager shall assist and cooperate with Owner in management of capital improvement construction projects; and shall provide access to the Property and other reasonable accommodations for any such projects.

(c)       Manager shall obtain proof from the vendor that, as required, each entity providing services to the Property holds a valid license in the state, county, and/or municipality where the work is to be performed.

2.9       Service Contracts, Supplies and Equipment. In its capacity as agent for Owner, Manager is authorized to contract on behalf of Owner for electricity, gas, fuel, water, telephone, rubbish hauling and other services or such of them as Manager shall deem advisable. It is agreed that Manager shall execute such contracts expressly as agent for Owner, and Owner shall ratify and approve all such service contracts if requested by the Manager or service provider. Each such service contract shall (a) be in the name of Owner, (b) be assignable, at Owner's option, to Owner's designee, (c) be for a term not to

exceed one (1) year, (d) be cancelable by Owner or Manager upon no more than 30 days' written notice, for any reason or no reason at all, without fee or penalty, and (e) require that all contractors provide evidence of insurance as set forth in Section 3.3. Unless Owner specifically waives such requirements or approves a particular contract, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under the procedure as specified in Section 2.8.

(b)       If this Agreement terminates for any reason, Manager, at Owner's option, shall assign to Owner or its designee all of Manager's interest in all service agreements pertaining to the Property.

(c)       Manager shall procure all janitorial and maintenance supplies, tools and equipment, restroom and toilet supplies, light bulbs, paints, and similar supplies necessary for the efficient and economical operation and maintenance of the Property. Such supplies and equipment shall be the property of Owner. All such supplies, tools, and equipment shall be delivered to and stored in the Property and shall be used only in connection with the management, operation, and maintenance of the Property.

(d)       Manager shall use its best efforts to procure all goods, supplies or services at the lowest cost available from reputable sources in the metropolitan area where the Property is located. In making any contract or purchase hereunder, Manager shall use its best efforts to obtain favorable discounts for Owner and all discounts, rebates or commissions under any contract or purchase order made hereunder shall inure to the benefit of Owner. Manager shall make payments under any such contract or purchase order to enable Owner to take advantage of any such discount. Manager shall not request or accept any compensation in any form for selecting or continuing to use a supplier of goods or services for the Property.

2.10     Taxes, Mortgages. Manager, unless otherwise requested, shall pay bills for real estate and personal property taxes, general and special real property assessments and other like charges which are or may become liens against the Property. Manager shall report such taxes or assessments to Owner in a timely fashion and obtain Owner's approval prior to Manager's payment thereof. Manager, if requested by Owner, will cooperate to prepare an application for correction of the assessed valuation (in cooperation with representatives of Owner) to be filed with the appropriate governmental agency. Manager shall pay, within the time required to obtain discounts, from funds provided by Owner or from the Operating Account, all utilities, real estate and personal property taxes, general and special real property assessments and other like charges and any lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.

2.11Tenant Relations. Manager will use its best efforts to develop and maintain good tenant relations in the Property. At all times during the term hereof, Manager shall use its best efforts to retain existing tenants in the Property and, after completion of the initial leasing activity, to retain the new tenants. Manager shall use its

best efforts to secure compliance by the tenants with the terms and conditions of their respective Leases.

2.12Conduct of Other Business. Without the prior written approval of Owner, Manager will allow no business other than the management and operation of the Property to be conducted by Manager's employees or agents on or from the Property, including the on-site management offices.

2.13Miscellaneous Duties. Manager shall (a) maintain at Manager's office at Manager's address as set forth in Section 13.1and make readily accessible to Owner, orderly files containing rent records, insurance policies, leases and subleases, correspondence, receipted bills and vouchers, bank statements, canceled checks, deposit slips, debit and credit memos, and other documents and papers considered material by Manager or expressly requested by Owner pertaining to the Property or the operation thereof; (b) provide reports for Owner's accountants in the preparation and filing by Owner of each income or other tax return required by any governmental authority as well as reports required by any lender or a lienholder on the property; (c) prepare and file timely all necessary forms for unemployment insurance, withholding and social security taxes and all other tax and other forms relating to employment of Manager's employees; (d) consider and record tenant service requests in systematic fashion showing the action taken with respect to each, and investigate and report to Owner in a timely fashion with appropriate recommendations all complaints of a nature which might have a material adverse effect on the Property or the Approved Budget; (e) render an inspection report, an assessment for damages and a recommendation on the disposition of any deposit held as security for the performance by the tenant under its lease with respect to each premises vacated; (f)check all bills received for the services, work and supplies ordered in connection with maintaining and operating the Property and, except as otherwise provided in this Agreement, pay such bills when due and payable and, in no event, later than thirty (30) days after Manager's receipt of such bills; and (g) not knowingly permit the use of the Property for any purpose that might void any policy of insurance held by Owner or which might render any loss thereunder uncollectible, or which might violate any applicable law, rule or ordinance. All such records are the property of Owner and will be delivered to Owner upon request.

ARTICLE 3. INSURANCE

3.1Insurance. (a) Subject to Section 2.2, Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (such as fire) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. The aggregate coverage for commercial general liability insurance maintained hereunder shall not be for less than Five. Million Dollars ($5,000,000). Owner shall include Manager as an additional insured in all liability insurance maintained with respect to the Property. Owner shall furnish to the Manager certificates evidencing the existence of such insurance.

(b)       In lieu of complying with Section 3.l(a) above, Owner may request that Manager maintain the insurance required under Section 3.l(a). If such a request is made by Owner, Manager shall use its best effort to comply with such request. If Manager obtains and maintains the requested insurance under Section 3.l(a), Owner shall reimburse Manager for actual cost of such insurance.

(c)       Manager shall advise Owner in writing and make recommendations with respect to the proper insurance coverage for the Property, taking into account the insurance requirements set forth in any mortgage on the Property, shall furnish such information as Owner may reasonably request to obtain insurance coverage and shall aid and cooperate in every reasonable way with respect to such insurance and any loss thereunder. Owner shall include in its hazard policy covering the Property all personal property, fixtures and equipment located thereon which are owned by Owner. Owner acknowledges that Manager is not a licensed insurance agent or insurance expert and will seek its own advice on the proper insurance for the Property. Owner shall not be required to cover Manager's furniture, furnishings or fixtures situated at the Property, and each of Manager and Owner shall to the extent available, include in their respective policies appropriate clauses pursuant to which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable under such policies.

(d)       Manager shall promptly investigate and promptly submit a written report to the insurance carrier and Owner as to all accidents and claims for damage relating to the ownership, operation and maintenance of the Property, any damage to or destruction of the Property and the estimated costs of repair thereof, and at Owner's request prepare and file with the insurance company in a timely manner and otherwise as the insurance company requires all reports in connection therewith. Manager shall take no action (such as admission of liability) which might preclude Owner from obtaining any protections provided by any policy held by Owner or which might prejudice Owner in its defense to a claim based on the applicable loss. Manager shall settle all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing and collection of receipts and collection of money, except that Manager shall not settle claims in excess of $1,000 without the prior written approval of Owner.

3.2Employees, Contractor's. Subcontractor's Insurance. For all of Manager's employees and all contracts or work orders procured by Manager, Manager shall maintain and require all contractors and subcontractors entering upon the Property to perform services to maintain insurance coverage at the contractor's or subcontractor's expense, in the following minimum amounts: (a) Worker's Compensation insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (b) employer's liability insurance for the statutory amount or Five Hundred Thousand Dollars ($500,000), whichever is higher; (c) comprehensive auto liability insurance covering the use of all owned, non-owned and hired automobiles with bodily injury and property damage limits of One Million Dollars ($1,000,000) per occurrence; and (d) commercial general liability with a combined single limit of at least Five Million Dollars ($5,000,000) as to Manager and One Million Dollars ($1,000,000) as to contractors and

subcontractors. Manager shall obtain Owner's permission before altering or waiving any of the above requirements or limits. For any contract or series of related contracts with the same party which total in excess of Five Thousand Dollars ($5,000), Manager shall obtain and keep on file a certificate of insurance which shows that each contractor and subcontractor is so insured and which names Owner, Property Manager and Property as additional insureds.

3.3Waiver of Subrogation. To the extent available, all insurance policies obtained relating to the Property shall contain language whereby the insurance carrier thereunder waives all rights of subrogation with respect to losses payable under such policies.

ARTICLE 4. FINANCIAL REPORTING AND RECORDKEEPING

4.1       Books of Accounts. Manager shall maintain adequate and separate books and records for the Property with the entries supported by sufficient documentation to ascertain their accuracy with respect to the Property. Manager shall maintain such books and records at Manager's office at Manager's address as set forth in Section 13.1. Manager shall ensure such control over accounting and financial transactions as is reasonably necessary to protect Owner's assets from theft, error or fraudulent activity. To the extent not reimbursed by insurance proceeds, Manager shall bear losses arising from such instances, including, without limitation, the following: (a) theft of assets by Manager or its employees or affiliates; (b) overpayment or duplicate payment of invoices arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (c) overpayment of labor costs arising from either fraud or gross negligence, unless reimbursement or credit is subsequently received; (d) overpayment resulting from kickbacks from suppliers to Manager or its employees or affiliates arising from the purchase of goods or services for the Property; and (e) unauthorized use of facilities by Manager or its employees or affiliates.

4.2Financial Reports. No later than the fifteenth (15th) day of each month, Manager shall furnish to Owner an income statement, balance sheet and general ledger for the prior month. These reports shall show all collections, delinquencies, uncollectible items, expenses, vacancies and other matters requested by Owner pertaining to the management, operation, and maintenance of the Property during the month. Manager also shall deliver to Owner within 15 days after the termination of this Agreement, a balance sheet for the Property. The statement of income and expenses, the balance sheet, and all other financial statements and reports shall be prepared on an accruals basis as directed by Owner. Manager shall also provide Owner or any third party (as directed by Owner) any financial reports as the Owner may require from time to time.

4.3      Supporting Documentation. As additional support to the monthly financial statement, unless otherwise directed by Owner, Manager shall maintain and make available at Manager's office at Manager's address as set forth in Section 13.1 copies of the following: (a) all bank statements, bank deposit slips, bank debit and credit memos, canceled checks, and bank reconciliations; (b) detailed cash receipts and disbursement

records; (c) detailed trial balance for receivables and payables and billed and unbilled revenue items; (d) rent roll of tenants; (e) paid invoices (or copies thereof); (f) summaries of adjusting journal entries as part of the annual audit process; (g) supporting documentation for payroll, payroll taxes and employee benefits for Manager's employees; (h) appropriate details of accrued expenses and property records; (i) any other information requested by Owner regarding the operation of the Property necessary for preparation of tax returns for Owner; and (i) rent and occupancy surveys of competition (quarterly only).

In addition, Manager shall deliver to Owner with the monthly financial statement copies of the documents described above in (a) (statements and reconciliations only), (b), (c), (d), and (h), on a monthly basis, and (i), on a quarterly basis.

ARTICLE 5. OWNER'S RIGHT TO AUDIT

5.1Owner's Right to Audit. (a) Owner, or persons appointed by Owner, may examine all books, records and files maintained for Owner by Manager. Owner may perform any audit or investigations relating to Manager's activities either at the Property or at any office of Manager if such audit or investigation relates to Manager's activities for Owner. (b) Should Owner or its appointees discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies within a reasonable period of time. Manager shall inform Owner in writing of the action taken to correct any audit discrepancies.

ARTICLE 6. BANK ACCOUNTS

6.1      Operating Account. Unless Owner specifies otherwise, Manager shall deposit on a daily basis, all rents and other funds collected from the operation of the Property in a bank designated by Owner in a special deposit account (the "Deposit Account") for the Property to be maintained by Owner. Manager shall also maintain in a bank designated by Owner a disbursement trust account such trust account and withdrawals therefrom (such trust account together with and any interest earned thereon, shall hereinafter be referred to as the "Operating Account") for the benefit of the Owner. Manager shall maintain books and records of the funds deposited in the Deposit Account and withdrawals from the Operating Account. Owner shall deposit in the Operating Account an amount equal to the expenses set forth in the Approved Budget as requested in writing by Manager, less expenses directly paid by Owner. Unless Owner specifies otherwise, Manager shall pay from the Operating Account the operating expenses of the Property and any other payments relative to the Property as required by this Agreement. If more accounts are necessary to operate the Property, each account shall have a unique name.

6.2Security Deposit Account. Manager shall, if required by law, maintain one or more separate interest-bearing accounts for tenant security deposits known collectively as the Sunwood Security Deposit Account. The Security Deposit Account shall he maintained in accordance with applicable state or local laws, if any, and shall be

maintained in an institution in which the Security Deposit Account is insured by the FDIC and which Security Deposit Account balances shall not exceed levels which are fully insured by FDIC.

6.3       Change of Banks. Owner may direct Manager to change a depository bank or the depository arrangements.

6.4Access to Account. Owner shall not be responsible for, and Manager shall defend, indemnify and hold Owner harmless for, from and against, any loss, liability, cost or expense, or other consequences of any kind, resulting from Manager's loss of Operating Account funds (or funds that should have been deposited in the Operating Account by Manager) or use of Operating Account funds other than for the benefit of Owner or the Property, except for losses due to bank failure or any action of Owner.

ARTICLE 7. PAYMENTS OF EXPENSES

7.1       Costs Eligible for Payment from Operating Account. Unless otherwise expressly provided in this Agreement, all costs and expenses paid or incurred by Manager in carrying out any of its duties or performing any of its obligations pursuant to and in accordance with this Agreement shall be paid out of the Operating Account or otherwise reimbursed by Owner. Unless Owner specifies otherwise, Manager shall pay first, all management fees due to Manager; second, all payroll expenses; and then all expenses of the operation, maintenance and repair of the Property included in the Approved Budget directly from the Operating Account, subject to any applicable conditions set forth in this Agreement. Without limiting the generality of any other provision of this Agreement, it is hereby expressly acknowledged and agreed that, except as expressly provided in Article 8, all salaries, wages and other compensation included in the Approved Budget to be paid to Manager's employees, and all other routine expenses related to such employees, including without limitation social security taxes, worker's compensation insurance premiums and unemployment insurance, shall be reimbursed to Manager. All other amounts payable with respect to the Property shall be payable from the Operating Account only to the extent approved by Owner, as provided in this Agreement. If there are not sufficient funds in the account to make any such payment, Manager shall notify Owner, if possible, at least ten (10) business days prior to any delinquency so that Owner has an opportunity to deposit sufficient funds in the Operating Account to allow for such payment prior to the imposition of any penalty or late charge. No later than the twentieth (20th) day of each mouth, Manager shall advise Owner of the amount of unexpended funds that are no longer required to remain in the Operating Account for expenses included in the Approved Budget, other expenses approved by Owner, or funds reserved for contingencies approved by Owner, in order to allow Owner to calculate the amount of funds to be left or deposited in the Operating Account pursuant to Section 6.1.

ARTICLE 8. MANAGER'S COST NOT TO BE REIMBURSED

8.1       Non-reimbursable Costs. The following expenses or costs incurred by or on behalf of Manager in connection with the performance of any obligation pursuant to

this Agreement shall be at the sole cost and expense of Manager and shall not be reimbursed by Owner: (a) general accounting and reporting services within the reasonable scope of the Manager's responsibility to Owner; (b) cost of forms, papers, ledgers, and other supplies and equipment used for the Management of the Property in the Manager's office at any location other than the Property; (c) cost of electronic data processing equipment, including personal computers located at Manager's office off the Property for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (d) cost of electronic data processing provided by computer service companies for preparation of reports, information and returns to be prepared by Manager under the terms of this Agreement; (e) cost of routine travel by Manager's employees to and from the Property; (f) cost attributable to losses arising from gross negligence or fraud on the part of Manager or its employees or affiliates; (g) cost of insurance purchased by Manager for its own furniture, furnishings and fixtures, excess liability coverages or other coverages that Owner bas not agreed to provide under this Agreement or by subsequent approval; (h) cost attributable to physical damage to the Property arising from the acts or omissions of Manager or its employees or affiliates not paid for by insurance; (i) to the extent not reimbursable to Manager under Section 7.1, the salaries, wages, and other compensation and expenses, including social security, taxes, worker's compensation insurance and unemployment insurance, for Manager's employees; (j)all overhead and indirect expenses of Manager's office(s) off the Property, including, but not limited to, communication costs (telephone, postage, etc.), computer rentals or time, supplies (paper, envelopes, business forms, checks, payroll forms and record cards, forms for governmental reports, etc.), printing, equipment, insurance (other than insurance provided at Owner's expense under Article 3), fidelity bonds, taxes and license fees, and general office expenses; (k) any expenses of Manager related to the management or operation of any other site; and (1) any costs of recruiting or terminating any employee of Manager in excess of Five Hundred Dollars ($500) for advertising for recruitment of each available position incurred without prior written approval from Owner of such cost.

8.2        Payroll Taxes. Manager shall have full and exclusive responsibility and liability for payment of all Federal, State, and local payroll taxes and for contributions for unemployment insurance, Social Security (F.I.C.A.), and other benefits imposed or assessed under any provision of law or by regulation, and which are measured by salaries, wages or other remuneration paid or payable by Manager to Manager's employees or other persons engaged by Manager to perform any work in connection with the Property or this Agreement or indicated herein. Manager shall have full and exclusive responsibility and liability for the withholding and payment of any income taxes required to be withheld from the wages or salaries of said employees under any provision of law or regulation. Manager agrees to indemnify, defend, and save Owner harmless from all claims for penalties, interests or costs which may be assessed under any law or any rules or regulations thereunder with respect to its failure or inability to perform the aforesaid responsibilities.

8.3       Litigation. Manager will be responsible for and shall indemnify, defend and hold Owner harmless for, from and against, all liabilities, costs, legal fees and other

expenses relating to disputes with Manager's employees, including without limitation claims for worker's compensation, discrimination, harassment or wrongful termination.

ARTICLE 9. COMPENSATION

9.1       Management Compensation. Manager shall receive, for its services in managing the Property in accordance with the terms of this Agreement, a monthly management fee (the "Management Fee") equal to three and one-half percent (3.5%) of Gross Revenues (defined below). "Gross Revenues" shall mean all gross rental receipts from the operations of the Property, including without limitation proceeds from rent insurance, security deposits when and to the extent credited to rent, vending machine revenue and any net proceeds from the sale of tenant property to the extent credited to rent, and excluding only (a) security deposits received from tenants and interest accrued thereon for the benefit of the tenant until such deposits or interest are applied to rent, (b) advance rents until the month in which payments are to apply as rental income, (c) reimbursements by tenants for work done for that particular tenant, (d) proceeds from the sale or other disposition of all or any part of the Property, (e) insurance proceeds received by the Owner as a result of any insured loss (except proceeds from rent insurance), (f) condemnation proceeds, (g) proceeds from capital and financing transactions, (h) income derived from interest on investments or otherwise, (i) tax refunds or abatement of taxes, (j) discounts and dividends on insurance policies, and (k) the value of rental or promotional concessions, even if revenue is recorded for the value thereof in the accounting records for the Property. If Owner is required to refund to a tenant any amount paid by the tenant, Manager shall promptly pay to Owner, or subtract from the next month's Management Fee, all Management Fees originally paid to Manager on the amount of the refund. If a new source of revenue attributable to the Property arises after the date hereof, Manager and Owner will determine to what extent such revenue shall be included in Gross Revenues. The Management Fee shall be payable monthly following calculation thereof upon submission of a monthly statement from the Operating Account or from other funds timely provided by Owner. Upon termination of this Agreement, the parties will prorate the Management Fee on a daily basis to the effective date of such cancellation or termination.

ARTICLE 10. TERMINATION

10.1     Termination Upon Default. Each of the following occurrences shall constitute a "Default" by Manager: (a) Manager ceases to do business; (b) loss or forfeiture of Manager's real estate brokerage license, if such license is legally required as a condition to manage or lease the Property, and Manager's failure to recover said license (or to obtain temporary permission to manage the Property pending disposition of any reinstatement) within ten (10) business days after delivery of written notice to Manager of such loss or forfeiture; (c) any embezzlement or misappropriation of funds by or with the knowledge of any officer, director or member of Manager or any affiliate of Manager; (d) any bankruptcy, insolvency or assignment for the benefit of the creditors of Manager initiated (1) by Manager or (2) by creditors of Manager and not stayed or dismissed within thirty (30) days; and (e) any breach by Manager of any of its obligations under this Agreement.

In the event of a Default described in clauses (a), (b), (c) and (d), Owner may terminate this Agreement immediately upon notice to Manager. In the event of a Default described in clause (d), this Agreement shall terminate automatically upon the first to occur of the filing of a voluntary or involuntary petition in bankruptcy, the date of insolvency of Manager or the date of any assignment for the benefit of creditors of Manager. In the event of a Default described in clause (e), Owner shall notify Manager that this Agreement shall terminate if such Default is not cured within fifteen (15) days of such notice and shall describe the Default in such notice sufficiently for Manager to identify and cure the Default. If cure of such Default requires more than fifteen (15) days and Manager has commenced and thereafter diligently continues its efforts to cure such breach, then such fifteen-day period shall be extended for the reasonable amount of time needed to complete such efforts. If Manager fails to cure such breach within the required period, this Agreement shall terminate at the end of such period. Failure of Owner to give notice to Manager for Manager's Default hereunder shall not constitute a waiver by Owner of its rights and remedies against Manager.

10.2     Termination Without Default. Owner shall also have the right to terminate this Agreement in the absence of Default at any time upon not less than thirty (30) days written notice to Manager.

10.3     Termination by Manager. Manager shall have the right to terminate this Agreement at any time, with or without cause, upon sixty (60) days written notice to Owner. Manager shall also have the right to terminate this Agreement upon thirty (30) days written notice to Owner for non-payment of fees and expenses due Manager under the terms of this Agreement

10.4     Final Accounting. Upon termination of this Agreement for any reason, Owner shall pay Manager an amount equal to the Management Fee due Manager, prorated to the date of termination, less any amounts which may be due Owner from Manager; and Manager shall deliver to Owner the following: (a) a final accounting, setting forth the balance of income and expenses on the Property as of the date of termination, delivered within thirty (30) days after termination; (b) any balance or monies of Owner or tenant security deposits held by Manager with respect to the Property, delivered immediately upon termination; and (c) all materials and supplies, keys, books and records, contracts, leases, receipts for deposits, unpaid bills and other papers or documents which pertain to the Property, delivered within fifteen (15) days after termination.

For a period of sixty (60) days after such expiration or cancellation, Manager shall be available, through its senior executives familiar with the Property, to consult with and advise Owner or any person or entity succeeding to Owner as owner of the Property or such other person or persons selected by Owner regarding the operation and maintenance of the Property. In addition, Manager shall cooperate with Owner in notifying all tenants of the Property of the expiration and termination of this Agreement, and shall use reasonable efforts to cooperate with Owner to accomplish an orderly transfer of the

operation and management of the Property to a party designated by Owner. Manager shall, at its cost and expense, promptly remove all signs wherever located indicating that it is the manager and replace and repair any damage resulting therefrom. Termination of this Agreement shall not release either party from liability for failure to perform any of the duties or obligations as expressed herein and required to be performed by such party for the period prior to the termination.

Provisions of this Agreement that by their nature require a party to perform an obligation after termination in order to fulfil such obligation with respect to the period prior to termination shall survive the termination of this Agreement until fully performed.

ARTICLE 11. LENDER APPROVAL

11.1      Lender Approval. This Agreement maybe subject to approval by lender(s) or lienholder(s) on the Property. If such an approval is required, this Agreement shall not go into effect until such approval is obtained. Manager agrees to use its best effects to assist and cooperate with the Owner in obtaining such approval.

ARTICLE 12. CONFLICTS

12.1     Conflicts. Manager shall not deal with or engage, or purchase goods or services from any affiliate or any company in which Manager or an affiliate has a financial interest, in connection with the management of the Property, without Owner's prior written approval. Manager shall not give preference to the operations or leasing of any other property in which Manager or any affiliate of Manager directly or indirectly has an interest, including, but not limited to, other properties that Manager manages.

ARTICLE 13. NOTICES

13.1     Notices. All notices, demands, consents, approvals, requests, directions, instructions, requirements, procedures, policies, reports, information and other communications provided for in this Agreement shall be in writing and shall be given to Owner or Manager at the address set forth below or at such other address as they may specify hereafter in writing:

MANAGER: ConAm Management Corporation
3990 Ruffin Road
Suite 100
San Diego, CA 92123
Tel.: (858) 614-7200
Fax: (858) 614-1644
Attention: Daniel J. Epstein

OWNER Sunwood Village Joint Venture, Limited Partnership
199 S. Los Robles Avenue
Suite 200
Pasadena, CA 91101
Tel.: (626) 585-5920
Fax: (626) 585-5929
Attention: John Anderson

Such notice or other communication shall be delivered by a recognized overnight delivery service providing a receipt, facsimile transmission, or mailed by United States registered or certified mail, return receipt requested, postage prepaid if deposited in a United States Post Office or depository for the receipt of mail regularly maintained by the post office. Notices sent by overnight courier shall be deemed given one (1) business day after delivery to such courier prior to its deadline for overnight service; notices sent by registered or certified mail shall be deemed given three (3) business days after deposit in a United State mailbox; and notices sent by facsimile transmission shall be deemed given as of the date sent (if sent prior to 5:00 p.m. Pacific Time and if receipt has been acknowledged by electronic transmission confirmation).

ARTICLE 14. MISCELLANEOUS

14.1     Assignment. Neither party may assign this Agreement or its rights or obligations hereunder without the prior written consent of the other party, which consent may be withheld in the party's sole and absolute discretion, except that Owner may assign the Agreement without such consent to an affiliate, while retaining liability for the performance of the Agreement.

14.2      Consent and Approvals. Each party may give notices or other communications only by representatives from time to time designated in writing by such party. Owner hereby initially designates W. Robert Kohorst, David I. Lesser, John D. Anderson and Peter J. Wilkinson. Manager hereby initially designates J. Bradley Forrester, Frazier Crawford and Scott Dupree.

14.3     Gender; Definition of Affiliates. Each gender shall include each other gender. The singular shall include the plural and vice-versa. The tern "affiliate" means, as to one party, an employee, officer, director, partner, member, shareholder or other representative of the party, or any person or entity (or a group of persons) which directly, or indirectly controls, is controlled by or is under common control with the party. "Control" includes the ownership of ten percent (10%) or more of the beneficial interest or the voting power of the appropriate entity.

14.4     Amendments. Each amendment, addition or deletion to this Agreement shall not be effective unless approved by the parties in writing.

14.5     Attorneys’ Fees. Each party agrees to pay the other party, if such party prevails by final judgment in a judicial, administrative or alternative dispute resolution proceeding, all costs and expenses, including reasonable attorney's fees, incurred by the other party in connection with such other party's enforcement of this Agreement.

14.6     Governing Law. This Agreement shall be governed by the laws of the state where the Property is located, without regard to the conflicts of law provisions thereof. The parties to this Agreement, and each of them, hereby consent and submit to the personam jurisdiction of the courts of that state for purposes of litigating any action arising under this Agreement. The parties hereto further agree that all disputes or controversies arising out of this Agreement, and any claim for relief or other legal proceeding filed to interpret or enforce the respective rights of the parties hereunder, shall be filed either in the state court or the United States District Court for the District where the Property is located.

14.7     Headings. All headings are only for convenience and ease of reference and are irrelevant to the construction or interpretation of any provision of this Agreement.

14.8     Representations. Manager represents and warrants that it is fully qualified and licensed, to the extent required by law, to manage and lease real estate and perform all obligations assumed by Manager hereunder. Manager shall comply with all such laws now or hereafter in effect.

14.9     Indemnification by Manager. Manager shall indemnify, defend and hold harmless Owner and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney's fees and court costs (collectively, "Claims"), sustained or incurred by or asserted against Owner arising: (i) out of acts or omissions of Manager, its agents or employees; (ii) out of acts beyond the scope of Manager's authority under this Agreement; andlor (iii) out of Manager's acts or omissions relating to Manager's employees or other personnel of Manager, to the extent such Claims are not covered by insurance maintained by Owner or Manager. It is the intent of the parties that an indemnification obligation shall arise (if at all) only to the extent that insurance is unavailable or inadequate to satisfy a Claim. Manager shall have no obligation under this Section 14.9 to the extent a Claim: (a) is covered under Section 14.10 or other indemnification of Manager by Owner under this Agreement; or (b) arises on account of mold at the Property, unless such mold arises, or the condition of mold is exacerbated, as a result of the gross negligence or willful misconduct of the Manager. If any person or entity makes a Claim or institutes a suit against Owner on a matter for which Owner claims the benefit of the foregoing indemnification, then: (1) Owner shall give Manager notice thereof in writing promptly and if possible in sufficient time for Manager to meet any applicable deadlines for responding; (2) Manager may defend such Claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Owner; and (3) neither Owner nor Manager shall settle any Claim without the other's written consent. This Section shall not be construed to release Owner from or indemnify Owner for a breach by Owner of any of the terms of this Agreement.

14.10   Indemnification by Owner. Owner shall indemnify, defend and hold harmless Manager and its members, officers, employees and representatives for, from and against any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including reasonable attorney's fees and court costs (collectively, "Claims"), sustained or incurred by or asserted against Manager by reason of the operation, management, and maintenance of the Property and the performance by Manager of Manager's obligations under this Agreement, but: (i) only to the extent of Owner's interest in the Property; and (ii) except for the intentional or negligent acts and omissions of Manager or its personnel. It is the intent of the parties that an indemnification obligation shall arise (if at all) only to the extent that insurance is unavailable or inadequate to satisfy a Claim. Owner shall have no obligation under this Section 14.10 to the extent: (a) a Claim is covered under Section 14.9 or other indemnification of Owner by Manager under this Agreement; and/or (b) a Claim arises on account of mold at the Property resulting from Manager's gross negligence or willful misconduct. If any person or entity makes a Claim or institutes a suit against Manager on a matter for which Manager claims the benefit of the foregoing indemnification, then (1) Manager shall give Owner notice thereof in writing promptly and if possible in sufficient time for Owner to meet any applicable deadlines for responding; (2) Owner may defend such Claim or action by counsel of its own choosing provided such counsel is reasonably satisfactory to Manager; and (3) neither Manager nor Owner shall settle any Claim without the other's written consent. This Section shall not be construed so as to release Manager from or indemnify Manager for any liability for a breach by Manager of any of the terms of this Agreement.

14.1 1 Complete Agreement. This Agreement shall supersede and take the place of any and all previous agreements entered into between the parties with respect to the management of the Property.

14.12   Status of Manager. Nothing in this Agreement shall cause Manager and Owner to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except that Manager shall be the agent of and have authority to bind Owner for actions taken within the scope of and in accordance with the terms of this Agreement. Except as otherwise provided in Sections 2.12 and 12.1 herein, nothing in this Agreement shall deprive or otherwise affect the right of either party or its affiliates to own, invest in, manage, or operate, or to conduct business activities which compete with the business of the Property.

14.13   Severability. If any provisions of this Agreement, or application to any party or circumstances, shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement, or the application of such provision to other parties or circumstances, shall not be affected thereby, and each provision hereof shall be valid and shall be enforced to the fullest extent permitted by law.

14.14   No Waiver. The failure by either party to insist upon the strict performance of or to seek remedy of any one of the terms or conditions of this Agreement or to exercise any right, remedy, or election set forth herein or permitted by law shall not constitute or be construed as a waiver or relinquishment of such term, condition, right, remedy or election, but such item shall continue and remain in full force and effect. All rights or remedies of either party specified in this Agreement and all other rights or remedies that either party may have at law, in equity or otherwise shall be distinct, separate and cumulative rights or remedies, and no one of them, whether exercised or not, shall be deemed to be in exclusion of any other right or remedy. Any consent, waiver or approval by either party of any act or matter must be in writing and shall apply only to the particular act or matter to which such consent or approval is given.

14.15   Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

14.16   Enforcement of Manager's Rights. In the enforcement of its rights under this Agreement, Manager shall not seek or obtain a money judgment or any other right or remedy against any party other than Owner and any affiliate to which Owner may have assigned this Agreement. Manager shall enforce its rights and remedies solely against the interest of Owner and any such affiliate in the Property or the proceeds of the operation or any sale or refinancing of all or any portion of the Property or of Owner's or any such affiliate's interest therein.

[SIGNATURES ON THE FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

“OWNER” SUNWOOD VILLAGE JOINT VENTURE, LIMITED PARTNERSHIP, a Nevada limited partnership
By:	Millenium Management, LLC a California limited liability company, its general partner
By:	Millenium Management, LLC, a California limited liability company, its general partner
	By:	/S/ CHRISTOPHER K. DAVIS
		Christopher K. Davis Vice President and General Counsel

“MANAGER” ConAm Management Corporation a California corporation
	By:	/S/ BRIAN J. DAPPER
		Name:Brian J. Dapper Title: SR. Regional VP