MAXUS REALTY TRUST INC
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>19
<FILENAME>ex1018.txt
<TEXT>
WHEN RECORDED MAIL TO





       97 052920                        SPACE ABOVE THIS LINE FOR RECORDER'S USE
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                              MULTIFAMILY MORTGAGE,
                   ASSIGNMENT OF RENTS AND SECURITY AGREEMENT


     THIS MORTGAGE  (herein  "Instrument") is made as of the 15th day of August,
1997, between the Mortgagor/Grantor, WATERTON ROCK, LIMITED, an Arkansas limited
partnership,  whose address is 225 West Washington Street,  Suite 1650, Chicago,
Illinois  60606  (herein  "Borrower"),  and the  Mortgagee,  BERKSHIRE  MORTGAGE
FINANCE LIMITED PARTNERSHIP,  a limited partnership organized and existing under
the  laws  of  Massachusetts,  whose  address  is 470  Atlantic  Avenue,  Boston
Massachusetts 02210 (here "Lender").

     WHEREAS,  Borrower  is  indebted  to  Lender in the  principal  sum of Four
Million and 00/100  ($4,000,000.00)  Dollars, which indebtedness is evidenced by
Borrower's  note dated August 15, 1997 (herein  "Note"),  providing  for monthly
installments of principal and interest, with the balance of the indebtedness, if
not sooner paid, due and payable on September 1, 2007.

     TO SECURE TO LENDER (a) the repayment or the indebtedness  evidenced by the
Note,  with interest  thereon,  and all renewals,  extensions and  modifications
thereof; (b) the repayment of any future advances,  with interest thereon,  made
by  Lender  to  Borrower   pursuant  to  paragraph  30  hereof  (herein  "Future
Advances"); (c) [STRICKEN] (d) payment of all other sums, with interest thereon,
advanced in accordance herewith to protect the security of this Instrument;  and
(e)  the  performance  of  the  covenants  and  agreements  of  Borrower  herein
contained, Borrower does hereby mortgage, grant, convey and assign to Lender the
following  described property located in Little Rock,  Pulaski County,  State of
Arkansas:

SEE EXHIBIT A ANNEXED HERETO AND INCORPORATED BY REFERENCE HEREIN.
    ---------

<PAGE>

* any and all other  personal  property  owned by the Borrower and located on or
used in  connection  with the  above-described  real  property and  improvements
thereon, and together with the following items:  accounts,  general intangibles,
utility  deposits,  unearned  premiums,  accrued,  accruing  or to accrue  under
insurance  policies  covering the Project and all proceeds of any  conversion of
the "Property" (as hereinafter defined), or any part thereof including,  without
limitation,   proceeds  of  hazard  and  title  insurance  and  all  awards  and
compensation for the taking by eminent domain,  condemnation,  or otherwise,  of
all or any part of the Property or any easement therein

     TOGETHER with all buildings,  improvements,  and tenements now or hereafter
erected on the  Property,  and all  heretofore or hereafter  vacated  alleys and
streets abutting the property, and all easements, rights, appurtenances,  rents,
royalties,  mineral,  oil and gas rights and profits,  water,  water rights, and
water stock appurtenant to the property, and all fixtures, machinery, equipment,
engines,  boilers,  incinerators,  building  materials,  appliances and goods of
every nature whatsoever now or hereafter located in, or on, or used, or intended
to be used in connection with the property, including, but not limited to, those
for the purposes or supplying or  distributing  heating,  cooling,  electricity,
gas,  water,  air and  light;  and all  elevators,  and  related  machinery  and
equipment,  fire  prevention and  extinguishing  apparatus,  security and access
control apparatus,  plumbing,  bath tubs, water heaters,  water closets,  sinks,
ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers, awnings,
storm windows, storm doors, screens,  blinds, shades, curtains and curtain rods,
mirrors,  cabinets,   paneling,  rugs,  attached  floor  coverings,   furniture,
pictures,  antennas,  trees  and  plants,  and  *  ;  all  of  which,  including
replacements and additions  thereto,  shall be deemed to be and remain a part of
the real property covered by this Instrument; and all of the foregoing, together
with said property (or the leasehold estate in the event this Instrument is on a
leasehold) are herein referred to as the "Property".

     Borrower  covenants  that Borrower is lawfully  seized of the estate hereby
conveyed  and has the right to mortgage,  grant,  convey and assign the Property
(and,  if this  Instrument  is on a leasehold,  that the ground lease is in full
force and effect without  modification except as noted above and without default
on the part of  either  lessor  or  lessee  thereunder),  that the  Property  is
unencumbered,  and that Borrower will warrant and defend  generally the title to
the  Property  against  all claims and  demands,  subject to any  easements  and
restrictions  listed  in a  schedule  of  exceptions  to  coverage  in any title
insurance policy insuring Lender's interest in the Property.

Uniform Covenants.  Borrower and Lender covenant and agree as follows:

     1.   PAYMENT OF PRINCIPAL AND INTEREST.  Borrower  shall  promptly pay when
          due the principal of and interest on the indebtedness evidenced by the
          Note,  any  prepayment  and late charges  provided in the Note and all
          other sums secured by this Instrument.

     2.   FUNDS FOR TAXES,  INSURANCE AND OTHER  CHARGES.  Subject to applicable
          law or to a written waiver by Lender,  Borrower shall pay to Lender on
          the day

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<PAGE>
          monthly installments of principal or lowest are payable under the Note
          (or an another day designated in writing by Lender), until the Note is
          paid in full, a sum (herein  "Funds")  equal to one-twelfth of (a) the
          yearly  water and sewer rates and taxes and  assessments  which may be
          levied on the Property,  (b) the yearly ground rents,  if any, (c) the
          yearly premium  installment for fire and other hazard insurance,  rent
          loss  insurance  and such other  insurance  covering  the  Property as
          Lender may  require  pursuant to  paragraph 5 hereof,  (d ) the yearly
          premium  installments for mortgage insurance,  if any, and (e) if this
          Instrument is on a leasehold,  the yearly fixed rents,  if any,  under
          the ground lease, all as reasonably  estimated initially and from time
          to time by Lender on the basis of assessments and bills and reasonable
          estimates thereof. Any waiver by Lender of a requirement that Borrower
          pay such Funds may be revoked by Lender,  in Lender's sole discretion,
          at any time upon  notice in writing to  Borrower.  Lender may  require
          Borrower  to pay to Lender,  in  advance,  such other  Funds for other
          taxes,  charges,  premiums,  assessments and impositions in connection
          with  Borrower or the  Property  which Lender  shall  reasonably  deem
          necessary to protect Lender's interests (herein "Other  Impositions").
          Unless otherwise  provided by applicable law, Lender may require Funds
          for  Other  Impositions  to be paid by  Borrower  in a lump  sum or in
          periodic installments, at Lender's option.

     The Funds shall be held in an  Institution(s)  the  deposits or accounts of
which are insured or guaranteed by a Federal or state agency  (including  Lender
if  Lender is such an  institution).  Lender  shall  apply the Funds to pay said
rates,  rents, taxes,  assessments,  insurance premiums and Other Impositions so
long as Borrower is not in breach of any  covenant or  agreement  of Borrower in
this  Instrument.  Lender  shall make no charge for so holding and  applying the
Funds,  analyzing said account or for verifying and compiling  said  assessments
and bills,  unless  Lender pays  Borrower  interest,  earnings or profits on the
Funds and  applicable  law permits  Lender to make such a charge.  Borrower  and
Lender may agree in writing at the time of  execution  of this  Instrument  that
interest on the Funds shall be paid to  Borrower,  and unless such  agreement is
made or applicable law requires interest, earnings or profits to be paid, Lender
shall not be required to pay Borrower any  interest,  earnings or profits on the
Funds.  Lender shall give to Borrower,  without charge,  an annual accounting of
the Funds in Lender's  normal formal showing credits and debits to the Funds and
the purpose for which each debit to the Funds was made. The Funds are pledged as
additional security for the sums secured by this Instrument.

     If the  amount  of the  Funds  held by  Lender  at the  time of the  annual
accounting thereof shall exceed the amount deemed necessary by Lender to provide
for the  payment  of  water  and  sewer  rates,  taxes,  assessments,  insurance
premiums,  rents and Other  Impositions,  as they fall due, such excess shall be
credited to Borrower on the next monthly  installment or  installments  of Funds
due.  If at any time the amount of the Funds  held by Lender  shall be less than
the  amount  deemed  necessary  by Lender to pay water and sewer  rates,  taxes,
assessments,  insurance premiums, rents and Other Impositions, as they fall due,
Borrower  shall pay to Lender any  amount  necessary  to make up the  deficiency
within  thirty days after  notice from  Lender to  Borrower  requesting  payment
thereof.

                                       3
<PAGE>
     Upon  Borrower's  breach of any  covenant or  agreement of Borrower in this
Instrument,  Lender  may apply,  in any amount and in any order as Lender  shall
determine in Lender's sole  discretion,  any Funds held by Lender at the time of
application (i) to pay rates, rents, taxes, assessments,  insurance premiums and
Other  Impositions  which are now or will  hereafter  become  due,  or (ii) as a
credit against sums secured by this Instrument. Upon payment in full of all sums
secured by this  Instrument,  Lender shall promptly refund to Borrower any Funds
held by Lender.

     3. APPLICATION OF PAYMENTS.  Unless applicable law provides otherwise,  all
payments  received by Lender  from  Borrower  under the Note or this  Instrument
shall be applied  by Lender in the  following  order or  priority:  (i)  amounts
payable to Lender by Borrower under paragraph 2 hereof; (ii) interest payable on
the Note;  (iii) principal of the Note;  (iv) interest  payable on advances made
pursuant to  paragraph 8 hereof;  (v)  principal  of advances  made  pursuant to
paragraph 8 hereof;  (vi) interest payable on any Future Advance,  provided that
if more than one  Future  Advance  is  outstanding,  Lender  may apply  payments
received  among the amounts or interest  payable on the Future  Advances in such
order as Lender, in Lender's sole discretion,  may determine; (vii) principal of
any  Future  Advance,   provided  that  if  more  than  one  Future  Advance  is
outstanding,  Lender may apply payments received among the principal balances of
the Future Advances in such order as Lender,  in Lender's sole  discretion,  may
determine; and (viii) any other sums secured by this Instrument in such order as
Lender, at Lender's option, may determine;  provided,  however, that Lender may,
at Lender's option,  apply any sums payable pursuant to paragraph 8 hereof prior
to  interest  on and  principal  of the  Note,  but such  application  shall not
otherwise  affect  the  order  of  priority  of  application  specified  in this
paragraph 3.

     4. CHARGES;  LIENS.  Borrower  shall pay all water and sewer rates,  rents,
taxes, assessments, premiums, and Other Impositions attributable to the Property
at Lender's  option in the manner  provided under  paragraph 2 hereof or, if not
paid in such manner by Borrower making payment,  when due, directly to the payee
thereof,  or in such other manner as Lender may  designate in writing.  Borrower
shall promptly furnish to Lender all notices of amounts due under this paragraph
4, and in the  event  Borrower  shall  make  payment  directly,  Borrower  shall
promptly  furnish to Lender receipts  evidencing  such payments.  Borrower shall
promptly  discharge  any lien which has, or may have,  priority over or equality
with, the lien of this Instrument,  and Borrower shall pay, when due, the claims
of all  persons  supplying  labor  or  materials  to or in  connection  with the
Property.  Without Lender's prior written  permission,  Borrower shall not allow
any lien inferior to this Instrument to be perfected against the Property.

     5. HAZARD  INSURANCE.  Borrower shall keep the improvements now existing or
hereafter erected on the Property insured by carriers at all times  satisfactory
to Lender  against  loss by fire,  hazards  included  within the term  "extended
coverage",  rent  loss and  such  other  hazards,  casualties,  liabilities  and
contingencies  as Lender (and, if this Instrument is on a leasehold,  the ground
lease)  shall  require and in such  amounts and for such periods as Lender shall
require.  All premiums on insurance  policies shall be paid, at Lender's option,
in the manner provided under paragraph 2 hereof,  or by Borrower

                                       4
<PAGE>
making payment,  when due,  directly to the carrier,  or in such other manner as
Lender may designate in writing.

     All insurance  policies and renewals  thereof shall be in a form acceptable
to Lender and shall include a standard  mortgage  clause in favor of and in form
acceptable  to Lender.  Lender  shall have the right to hold the  policies,  and
Borrower shall promptly  furnish to Lender all renewal  notices and all receipts
of paid premiums. At least thirty days prior to the expiration date of a policy,
Borrower  shall  deliver  to Lender a renewal  policy  in form  satisfactory  to
Lender.  If this  Instrument is on a leasehold.  Borrower shall furnish Lender a
duplicate of all policies,  renewal  notices,  renewal  policies and receipts of
paid premiums if, by virtue of the ground lease,  the originals  thereof may not
be supplied by Borrower to Lender.

     In the event or loss,  Borrower shall give immediate  written notice to she
insurance carrier and to Lender.  Borrower hereby authorizes and empowers Lender
as attorney-in-fact for Borrower to make proof of loss, to adjust and compromise
any claim  under  insurance  policies,  to appear in and  prosecute  any  action
arising from such insurance policies, to collect and receive insurance proceeds,
and to deduct  therefrom  Lender's  expenses  incurred in the collection of such
proceeds;  provided  however,  that nothing  contained in this paragraph 5 shall
require  Lender to incur any  expense  or take any  action  hereunder.  Borrower
further  authorizes  Lender, at Lender's option, (a) to hold the balance of such
proceeds to be used to  reimburse  Borrower  for the cost of  reconstruction  or
repair of the  Property  or (b) to apply the  balance  of such  proceeds  to the
payment of the sums secured by this Instrument,  whether or not then due, in the
order of application set forth in paragraph 3 hereof (subject,  however,  to the
rights  of the  lessor  under  the  ground  lease  if  this  Instrument  is on a
leasehold).

     If the insurance  proceeds are held by Lender to reimburse Borrower for the
cost or restoration  and repair of the property,  the Property shall be restored
to the  equivalent of its original  condition or such other  condition as Lender
may approve in writing.  Lender may, at Lender's option,  condition disbursement
of said  proceeds on Lender's  approval of such plans and  specifications  of an
architect  satisfactory  to Lender,  contractor's  cost  estimates,  architect's
certificates,  waivers of liens,  sworn  statements of mechanics and materialmen
and such  other  evidence  of  costs,  percentage  completion  of  construction,
application  of payments,  and  satisfaction  of liens as Lender may  reasonably
require.  If the  insurance  proceeds  are  applied  to the  payment of the sums
secured by this Instrument,  any such application of proceeds to principal shall
not extend or postpone the due dates of the monthly installments  referred to in
paragraphs  1 and 2 hereof or change the  amounts of such  installments.  If the
Property is sold pursuant to paragraph 27 hereof of if Lender  acquires title to
the Property, Lender shall have all of the right, title and interest of Borrower
in and to any insurance policies and unearned premiums thereon and in and to the
proceeds  resulting  from any  damage  to the  Property  prior  to such  sale or
acquisition.

     6.  PRESERVATION  AND MAINTENANCE OF PROPERTY;  LEASEHOLDERS.  Borrower (a)
shall not commit waste or permit  impairment or  deterioration  of the Property,
(b) shall not abandon the Property, (c) shall restore at repair

                                       5
<PAGE>
promptly and in a good and workmanlike manner all or any part of the Property to
the equivalent of its original condition,  or such other condition as Lender may
approve in writing, in the event of any damage, injury or loss thereto,  whether
or not  insurance  proceeds are available to cover in whole or in part the costs
of  such  restoration  or  repair,  (d)  shall  keep  the  Property,   including
improvements,  fixtures,  equipment,  machinery and  appliances  thereon in good
repair and shall replace  fixtures,  equipment,  machinery and appliances on the
Property when necessary to keep such items in good repair, (e) shall comply with
all laws,  ordinances,  regulations and  requirements of any  governmental  body
applicable tot the Property,  (f) shall provide for  professional  management of
the Property by a residential  rental  property  manager  satisfactory to Lender
pursuant to a contract  approved by Lender in writing,  unless such  requirement
shall be waived by Lender in writing,  (g) shall generally  operate and maintain
the Property in a manner to ensure maximum rentals, and (h) shall give notice in
writing to Lender of and,  unless  otherwise  directed  in writing by Lender by,
appear in and defend any action or proceeding purporting to affect the Property,
the  security  of this  Instrument  or the rights or powers of  Lender.  Neither
Borrower  nor any tenant or other  person  shall  remove,  demolish or alter any
improvement  now existing or  hereafter  erected on the Properly or any fixture,
equipment,  machinery or appliance in or on the Property except when incident to
the replacement of fixtures,  equipment,  machinery and appliances with items of
like kind.

     If this  Instrument  is on a leasehold,  Borrower (i) shall comply with the
provisions  of the ground lease,  (ii) shall give  immediate  written  notice to
Lender of any default by lessor under the ground lease or of any notice received
by Borrower  from such lessor of any default under the ground lease by Borrower,
(iii)  shall  exercise  any option to renew or extend the ground  lease and give
written  confirmation  thereof to Lender  within  thirty  days after such option
becomes  exercisable,  (iv) shall give immediate written notice to Lender of the
commencement  of any  remedial  proceedings  under the ground lease by any party
thereto  and,  if  required  by  Lender,   shall  permit  Lender  as  Borrower's
attorney-in-fact   to  control  and  act  for  Borrower  in  any  such  remedial
proceedings and (v) shall within thirty days after request by Lender obtain from
the lessor under the ground  lease and deliver to Lender the  lessor's  estoppel
certificate required thereunder, if any. Borrower hereby expressly transfers and
assigns to Lender the benefit of all  covenants  contained in the ground  lease,
whether  or not such  covenants  run with the land,  but  Lender  shall  have no
liability  with respect to such covenants nor any other  covenants  contained in
the ground lease.

     Borrower  shall not  surrender the  leasehold  estate and interests  herein
conveyed  nor  terminate  or cancel the ground  lease  creating  said estate and
interests,  and  Borrower  shall not,  without  the express  written  consent of
Lender,  alter or amend said ground  lease.  Borrower  covenants and agrees that
there  shall not be a merger of the ground  lease,  or of the  leasehold  estate
created  thereby,  with the fee estate  covered by the ground lease by reason of
said  leasehold  estate of said fee estate,  or any part or either,  coming into
common  ownership,  unless  Lender shall  consent in writing to such merger,  if
Borrower   shall   acquire  such  fee  estate,   then  this   Instrument   shall
simultaneously  and without  further  action be spread so as to became a lien on
such fee estate.

                                       7
<PAGE>
     7. USE OF PROPERTY.  Unless required by applicable law or unless Lender has
otherwise  agreed in writing,  Borrower  shall not allow  changes in the use for
which all or any part of the Property  was intended at the time this  Instrument
was executed. Borrower shall not initiate or acquiesce in a change in the zoning
classification of the Property without Lender's prior written consent.

     8.  PROTECTION  OF  LENDER'S  SECURITY.  If  Borrower  fails to perform the
covenants  and  agreements  contained  in this  Instrument,  or if any action or
proceeding  is  commenced  which  affects the  Property or title  thereto or the
interest of Lender  therein,  including,  but not limited  to,  eminent  domain,
insolvency,  code  enforcement,  or  arrangements  or  proceedings  involving  a
bankrupt or decedent,  then Lender at Lender's option may make such appearances,
disburse such sums and take such action as Lender deems  necessary,  in its sole
discretion,  to protect Lender's  interest,  including,  but not limited to, (i)
disbursement  of attorney's  fees, (ii) entry upon the Property to make repairs,
(iii)  procurement of satisfactory  insurance as provided in paragraph 5 hereof,
and (iv) if this  Instrument is on a leasehold,  exercise of any option to renew
or extend the ground  lease on behalf of Borrower  and the curing or any default
of Borrower in the terms and conditions or the ground lease.

     Any amounts disbursed by Lender pursuant to this paragraph 8, with interest
thereon,  shall  become  additional  indebtedness  of  Borrower  secured by this
Instrument.  Unless  Borrower and Lender  agree to other terms of payment,  such
amounts  shall be  immediately  due and payable and shall bear interest from the
date of  disbursement  at the rate  stated in the Note  unless  collection  from
Borrower of interest at such rate would be contrary to applicable  law, in which
event  such  amounts  shall  bear  interest  at the  highest  rate  which may be
collected from Borrower under  applicable  law.  Borrower  hereby  covenants and
agrees that Lender shall be subrogated to the lien of any mortgage or other lien
discharged,  in whole or in part, by the  indebtedness  secured hereby.  Nothing
contained in this  paragraph 8 shall require Lender to incur any expense or take
any action hereunder.

     9. INSPECTION.  Lender may make or cause to be made reasonable entries upon
and inspections or the Property.

     10. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT

     11.  CONDEMNATION.  Borrower shall promptly  notify Lender of any action or
proceeding  relating to any  condemnation  or other  taking,  whether  direct or
indirect,  of the Property,  or part thereof,  and Borrower  shall appear in and
prosecute any such action or proceeding  unless otherwise  directed by Lender in
writing. Borrower authorizes Lender, at Lender's option, as attorney-in-fact for
Borrower, to commence,  appear in and prosecute, in Lender's or Borrower's name,
any action or  proceeding  relating to any  condemnation  or other taking of the
Property,  whether direct or indirect,  and to settle or compromise any claim in
connection with such  condemnation  or other taking.  The proceeds of any award,
payment or claim for damages,  direct or  consequential,  in connection with any
condemnation or other taking,  whether direct or indirect,  of the Property,  or
part thereof, or for conveyances in lieu of condemnation, are hereby assigned

                                       7
<PAGE>
to and shall be paid to Lender subject, if this Instrument is on a leasehold, to
the rights of lessor under the ground lease.

     Borrower  authorizes  Lender to apply such  awards,  payments,  proceeds or
damages,  after the deduction of Lender's expenses incurred in the collection of
such amounts, at Lender's option, to restoration or repair of the Property or to
payment of the sums secured by this Instrument,  whether or not then due, in the
order of application set forth in paragraph 3 hereof,  with the balance, if any,
to  Borrower.  Unless  Borrower  and  Lender  otherwise  agree in  writing,  any
application  of proceeds to principal  shall not extend or postpone the due date
of the monthly  installments  referred to in paragraphs 1 and 2 hereof or change
the  amount of such  installments.  Borrower  agrees  to  execute  such  further
evidence of assignment  of any awards,  proceeds,  damages or claims  arising in
connection with such condemnation or taking as Lender may require.

     12.  BORROWER  AND LIEN NOT  RELEASED.  From time to time,  Lender  may, at
Lender's option,  without giving notice to or obtaining the consent of Borrower,
Borrower's  successors  or assigns or of any junior  lienholder  or  guarantors,
without liability on Lender's part and notwithstanding  Borrower's breach of any
covenant  or  agreement  of  Borrower  in this  Instrument,  extend the time for
payment of said  indebtedness or any part thereof,  reduce the payments thereon,
release  anyone  liable on any of said  indebtedness,  accept a renewal  note or
notes  therefor,  modify  the terms and time of  payment  of said  indebtedness,
release  from the lien of this  Instrument  any  part of the  Property,  take or
release other or additional security, reconvey any part of the Property, consent
to any map or plan of the  Property,  consent to the  granting of any  easement,
join in any  extension  or  subordination  agreement,  and agree in writing with
Borrower to modify the rate of interest or period of amortization of the Note or
change the amount of the monthly  installments  payable thereunder.  Any actions
taken by Lender  pursuant to the terms of this paragraph 12 shall not affect the
obligation  of  Borrower  or  Borrower's  successors  or assigns to pay the sums
secured by this  Instrument  and to observe the covenants of Borrower  contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other  entity for  payment of the  indebtedness  secured  hereby,  and shall not
affect the lien or priority of lien hereof on the Property.  Borrower  shall pay
Lender a reasonable service charge,  together with such title insurance premiums
and attorney's fees as may be incurred at Lender's  option,  for any such action
if taken at Borrower's request.

     13.  FORBEARANCE  BY LENDER  NOT A  WAIVER.  Any  forbearance  by Lender in
exercising any right or remedy  hereunder,  or otherwise  afforded by applicable
law,  shall not be a waiver of or preclude  the exercise of any right or remedy.
The acceptance by Lender of payment of any sum secured by this Instrument  after
the due date of such payment  shall not be a waiver of Lender's  right to either
require  prompt  payment  when due of all other  sums so secured or to declare a
default for failure to make prompt payment.  The procurement of insurance or the
payment of taxes or other  liens or  charges by Lender  shall not be a waiver of
Lender's right to accelerator the maturity of the  indebtedness  secured by this
Instrument,  nor shall Lender's receipt of any awards, proceeds or damages under
paragraphs  5 and 11  hereof  operate  to cure or waive  Borrower's  default  in
payment of sums secured by this Instrument.

                                       8
<PAGE>
     14.  ESTOPPEL  CERTIFICATE.  Borrower  shall  within  ten days of a written
request from Lender furnish Lender with a written statement,  duly acknowledged,
setting  forth the sums  secured by this  Instrument  and any right of  set-off,
counterclaim or other defense which exists against such sums and the obligations
of this Instrument.

     15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended
to be a security  agreement  pursuant to the Uniform  Commercial Code for any of
the items specified above as part of the Property which,  under  applicable law,
may be subject to a security interest  pursuant to the Uniform  Commercial Code,
and Borrower  hereby grants Lender a security  interest in said items.  Borrower
agrees that Lender may file this Instrument,  or a reproduction  thereof, in the
real estate records or other appropriate index, as a financing statement for any
of the items specified above as part of the Property.  Any  reproduction of this
Instrument or of any other security  agreement or financing  statement  shall be
sufficient as a financing statement. In addition, Borrower agrees to execute and
deliver to Lender, upon Lender's request, any financing  statements,  as well as
extensions,   renewals  and  amendments  thereof,   and  reproductions  of  this
Instrument  in such form as Lender may  require  to perfect a security  interest
with  respect  to said  items.  Borrower  shall  pay all  costs of  filing  such
financing  statements  and any  extensions,  renewals,  amendments  and releases
thereof,  and shall pay all reasonable costs and expenses of any record searches
for  financing  statements  Lender may  reasonably  require.  Without  the prior
written  consent  of Lender,  Borrower  shall not create or suffer to be created
pursuant  to the Uniform  Commercial  Code any other  security  interest in said
items,  including  replacements and additions thereto. Upon Borrower's breach of
any covenant or agreement of Borrower  contained in this  Instrument,  including
the covenants to pay when due all sums secured by this Instrument,  Lender shall
have the remedies of a secured party under the Uniform  Commercial  Code and, at
Lender's option,  may also invoke the remedies  provided in paragraph 27 of this
Instrument as to such items.  In  exercising  any of said  remedies,  Lender may
proceed  against the Items of real  property and any items of personal  property
specified above as part of the Property  separately or together and in any order
whatsoever,  without in any way affecting the availability of Lender's  remedies
under the Uniform  Commercial  Code or the remedies  provided in paragraph 27 of
this Instrument.

     16. LEASES OF THE PROPERTY.  As used in this paragraph 16, the word "lease"
shall mean  "sublease"  if this  Instrument  is on a leasehold.  Borrower  shall
comply with and observe  Borrower's  obligations as landlord under all leases of
the  Property or any part  thereof.  Borrower  will not lease any portion of the
Property  for  non-residential  use except  with the prior  written  approval of
Lender. Borrower, at Lender's request, shall furnish Lender with executed copies
of all leases now existing or hereafter made or all or any part of the Property,
and all  leases  now or  hereafter  entered  into will be in form and  substance
subject to the approval of Lender. All leases of the Property shall specifically
provide that such leases are  subordinate  to this  Instrument;  that the tenant
attorns to Lender, such attornment to be effective upon Lender's  acquisition of
title to the Property;  that the tenant agrees to execute such further evidences
of attornment as Lender may from time to time  request;  that the  attornment of
the tenant  shall not be  terminated  by  foreclosure;  and that  Lender may, at
Lender's option, accept or reject such attornments.  Borrower shall not, without
Lender's written consent, execute, modify,

                                       9
<PAGE>
surrender or terminate,  either orally or in writing,  any lease now existing or
hereafter made of all or any part of the Property  providing for a term of three
years or more, permit an assignment of sublease of such a lease without Lender's
written consent,  or request or consent to the subordination of any lease of all
or any part of the  Property  to any lien  subordinate  to this  Instrument.  If
Borrower  becomes aware that any tenant proposes to do, or is doing,  any act or
thing which may give rise to any right of set-off  against rent,  Borrower shall
(1) take such steps as shall be reasonably  calculated to prevent the accrual of
any right of set-off  against rent, (ii) notify Lender thereof and of the amount
of said  set-offs,  and (iii) within ten days after such accrual,  reimburse the
tenant who shall have acquired such right to set-off or take such other steps as
shall  effectively  discharge  such  set-off  and as  shall  assure  that  rents
thereafter due shall continue to be payable without set-off or deduction.

     Upon  Lender's  request,  Borrower  shall  assign  to  Lender,  by  written
Instrument  satisfactory to Lender, all leases now existing or hereafter made of
all or any part of the  Property and all  security  deposits  made by tenants in
connection  with such leases of the  Property.  Upon  assignment  by Borrower to
Lender of any leases of the  Property,  Lender  shall have all of the rights and
powers  possessed by Borrower prior to such assignment and Lender shall have the
right to modify,  extend or terminate  such  existing  leases and to execute new
leases, in Lender's sole discretion.

     17.  REMEDIES  CUMULATIVE.  Each  remedy  provided  in this  Instrument  is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently,  independently, or
successively, in any order whatsoever.

     18.  ACCELERATION  IN CASE OF  BORROWER'S  INSOLVENCY.  If  Borrower  shall
voluntarily  file a petition under the Federal  Bankruptcy  Act, as such Act may
from time to time be amended,  or under any similar or successor Federal statute
relating to bankruptcy,  insolvency,  arrangements or reorganizations,  or under
any state  bankruptcy  or  insolvency  act, or file an answer in an  involuntary
proceeding  admitting insolvency or inability to pay debts, or if Borrower shall
fail to obtain a vacation  or stay of  involuntary  proceedings  brought for the
reorganization,  dissolution or liquidation of Borrower, or if Borrower shall be
adjudged a bankrupt, or if a trustee or receiver shall be appointed for Borrower
or  Borrower's  property,  or if  the  Property  shall  become  subject  to  the
jurisdiction  of a  Federal  bankruptcy  court or  similar  state  court,  or if
Borrower shall make an assignment for the benefit of Borrower's creditors, or if
there is an attachment,  execution or other  judicial  seizure of any portion of
Borrower's  assets and such  seizure  is not  discharged  within ten days,  then
Lender  may,  at  Lender's  option,  declare  all of the  sums  secured  by this
Instrument to be immediately  due and payable  without prior notice to Borrower,
and Lender may invoke any remedies permitted by paragraph 27 of this Instrument.
Any  attorney's  fees and other expenses  incurred by Lender in connection  with
Borrower's  bankruptcy or any of the other aforesaid  events shall be additional
indebtedness  of Borrower  secured by this  Instrument  pursuant to  paragraph 8
hereof.

     19. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT

                                       10
<PAGE>
     20. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT

     21.  SUCCESSORS AND ASSIGNS  BOUND;  JOINT AND SEVERAL  LIABILITY;  AGENTS;
CAPTIONS.  The covenants and  agreements  herein  contained  shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of Lender
and Borrower,  subject to the  provisions of paragraph 19 hereof.  All covenants
and agreements of Borrower shall be joint and several.  In exercising any rights
hereunder or taking any actions provided for herein,  Lender may act through its
employees,  agents or  independent  contractors  as  authorized  by Lender.  The
captions and headings of the paragraphs of this  Instrument are for  convenience
only and are not to be used to interpret or define the provisions hereof.

     22. UNIFORM MULTIFAMILY INSTRUMENT;  GOVERNING LAW; SEVERABILITY. This form
or  multifamily  Instrument  combines  uniform  covenants  for  national use and
non-uniform  covenants with limited  variations by  jurisdiction to constitute a
uniform  security  Instrument  covering real  property and related  fixtures and
personal  property.  This  Instrument  shall  be  governed  by  the  law  of the
jurisdiction  in which the Property is located.  In the event that any provision
of this  Instrument or the Note  conflicts  with  applicable  law, such conflict
shall not affect other  provisions  of this  Instrument or the Note which can be
given effect without the conflicting provisions,  and to this end the provisions
of this Instrument and the Note are declared to be severable.  In the event that
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
this Instrument or in the Note, whether  considered  separately or together with
other charges levied in connection with this  Instrument and the Note,  violates
such law,  and  Borrower is entitled to the benefit of such law,  such charge is
hereby reduced to the extent necessary to eliminate such violation. The amounts,
if any,  previously  paid to Lender in excess of the  amounts  payable to Lender
pursuant  to such  charges as  reduced  shall be applied by Lender to reduce the
principal  of the  indebtedness  evidenced  by the  Note.  For  the  purpose  of
determining whether any applicable law limiting the amount of interests or other
charges  permitted  to  be  collected  from  Borrower  has  been  violated,  all
indebtedness  which is secured by this  Instrument  or  evidence by the Note and
which  constitutes  interest,  as well as all other charges levied in connection
with  such  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  computed  thereby is uniform  throughout  the
stated term of the Note.

     23. 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  the Note or any other
obligation secured by this Instrument.

     24.  WAIVER OF  MARSHALLING.  Notwithstanding  the  existence  of any other
security interests in the Property held by Lender or by any other party,  Lender
shall have the right to determine  the order in which

                                       11
<PAGE>
any or all of the Property shall be subjected to the remedies  provided  herein.
Lender shall have the right to determine  the order in which any or all portions
or the indebtedness secured hereby arc satisfied from the proceeds realized upon
the exercise of the remedies provided herein.  Borrower,  any party who consents
to this  Instrument  and any  party who now or  hereafter  acquires  a  security
interest  in the  Property,  and who has actual or  constructive  notice  hereof
hereby  waives  any and all  right to  require  the  marshalling  of  assets  in
connection with the exercise or any of the remedies  permitted by applicable law
or provided herein.

     25. [STRICKEN]

     26. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER;  LENDER IN POSSESSION. As
part of the consideration for the indebtedness  evidenced by the Note,  Borrower
hereby  absolutely and  unconditionally  assigns and transfers to Lender all the
rents and revenues of the  Property,  including  those now due,  past due, or to
become due by virtue of any lease or other agreement for the occupancy or use of
all or any part of the Property, regardless of to whom the rents and revenues of
the Property are payable.  Borrower hereby  authorizes Lender or Lender's agents
to collect the  aforesaid  rents and revenues and hereby  directs each tenant of
the Property to pay such rents to Lender or Lender's agents; provided,  however,
that  prior to  written  notice  given by Lender to  Borrower  of the  breach by
Borrower of any covenant or agreement of Borrower in this  Instrument,  Borrower
shall  collect and receive all rents and revenues of the Property as trustee for
the benefit of Lender and Borrower, to apply the rents and revenues so collected
to the sums  secured by this  Instrument  in the order  provided in  paragraph 3
hereof with the balance, so long as no such breach has occurred,  to the account
of Borrower,  it being  intended by Borrower and Lender that this  assignment of
rents  constitutes  an absolute  assignment and not an assignment for additional
security  only.  Upon  delivery  of written  notice by Lender to Borrower of the
breach by Borrower of any covenant or agreement of Borrower in this  Instrument,
and without the  necessity of Lender  entering  upon and taking and  maintaining
full  control  of the  Property  in  person,  by agent  or by a  court-appointed
receiver,  Lender shall  immediately  be entitled to possession of all rents and
revenues of the Property as  specified  in this  paragraph 26 as the same become
due and payable, including but not limited to rents then due and unpaid, and all
such rents shall immediately upon delivery or such notice be held by Borrower as
trustee  for the benefit of Lender  only;  provided,  however,  that the written
notice by Lender to Borrower of the breach by Borrower shall contain a statement
that Lender exercises its rights to such rents.  Borrower agrees that commencing
upon delivery of such written notice of Borrower's breach by Lender to Borrower,
each tenant of the Property  shall make such rents payable to and pay such rents
to Lender or Lender's agents on Lender's written demand to each tenant therefor,
delivered to each tenant  personally,  by mail or by  delivering  such demand to
each rental  unit,  without any  liability on the part of said tenant to inquire
further as to the existence of a default by Borrower.

     Borrower  hereby  covenants  that  Borrower  has  not  executed  any  prior
assignment of said rents, that Borrower has not performed, and will not perform,
any acts or has not executed,  and will not execute,  any Instrument which would
prevent  Lender from  exercising its rights under this paragraph 26, and that at
the time of  execution  of this  Instrument  there has been no  anticipation  or
prepayment of any of the rents of the Property for more than two months prior to
the due dates of such rents. Borrower

                                       12
<PAGE>
covenants  that  Borrower will not  hereafter  collect or accept  payment of any
rents of the Property more than two months prior to the due dates of such rents.
Borrower further covenants that Borrower will execute and deliver to Lender such
further  assignments  of rents and  revenues of the  Property as Lender may from
time to time request.

     Upon  Borrower's  breach of any  covenant or  agreement of Borrower in this
Instrument,  Lender may in person,  by agent or by a  court-appointed  receiver,
regardless  of thc  adequacy  of  Lender's  security,  enter  upon  and take and
maintain full control of the Property in order to perform all acts necessary and
appropriate for the operation and maintenance thereof including, but not limited
to, the execution, cancellation or modification of leases, the collection of all
rents and  revenues of the  Property,  the making of repairs to the Property and
the  execution or  termination  of contracts  providing  for the  management  or
maintenance of the Property, all on such terms as are deemed best to protect the
security of this Instrument.  In the event Lender elects to seek the appointment
of a  receiver  for the  Property  upon  Borrower's  breach of any  covenant  or
agreement of Borrower in this Instrument,  Borrower hereby expressly consents to
the  appointment of such  receiver.  Lender or the receiver shall be entitled to
receive a reasonable fee for so managing the Property.

     All rents and revenues  collected  subsequent to delivery of written notice
by Lender to Borrower of the breach by Borrower of any  covenant or agreement of
Borrower  in this  Instrument  shall be applied  first to the costs,  if any, of
taking control of and managing the Property and collecting the rents, including,
but not limited to,  attorney's fees,  receiver's  fees,  premiums on receiver's
bonds, costs of repairs to the Property,  premiums on insurance policies, taxes,
assessments and other charges on the Property,  and the costs of discharging any
obligation  or  liability  of Borrower as lessor or landlord of the Property and
then to the sums secured by this  Instrument.  Lender or the receiver shall have
Access to the books and records used in the  operation  and  maintenance  of the
Property and shall be liable to account only for those rents actually  received.
Lender  shall  not be liable  to  Borrower,  anyone  claiming  under or  through
Borrower or anyone having an interest in the Property by reason of anything done
or left undone by Lender under this paragraph 26.

     If the rents of the Property are not sufficient to meet the costs,  if any,
of taking  control of and managing the Property and  collecting  the rents,  any
funds expended by Lender for such purposes shall become indebtedness of Borrower
to Lender  secured by this  Instrument  pursuant to  paragraph 8 hereof.  Unless
Lender and  Borrower  agree in writing to other terms of payment,  such  amounts
shall be payable upon notice from Lender to Borrower  requesting payment thereof
and shall bear interest from the date of  disbursement at the rate stated in the
Note unless  payment of  interest  at such rate would be contrary to  applicable
law, in which event such amounts  shall bear  interest at the highest rate which
may be collected from Borrower under applicable law.

     Any entering upon and taking and  maintaining or control of the Property by
Lender or the receiver and any application of rents as provided herein shall not
cure or waive any default  hereunder or invalidate  any other right or remedy of
Lender under

                                       13
<PAGE>
applicable  law or provided  herein.  This  assignment  of rents of the Property
shall  terminate at such time as this Instrument  ceases to secure  indebtedness
held by Lender.

     27.  ACCELERATION;  REMEDIES.  Upon  Borrower's  breach of any  covenant or
agreement  of Borrower  in this  Instrument,  including  but not limited to, the
covenants  to pay  when due any  sums  secured  by this  Instrument.  Lender  at
Lender's  option may declare all of the sums  secured by this  Instrument  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 herein. Lender shall be entitled to collect all costs
and expenses incurred in pursuing such remedies,  including, but not limited to,
attorney's fees, costs of documentary evidence, abstracts and title reports.

     28. RELEASE.  Upon payment of all sums secured by this  Instrument,  Lender
shall release this  Instrument.  Borrower  shall pay Lender's  reasonable  costs
incurred in releasing this Instrument.

     29. WAIVER OF  HOMESTEAD,  DOWER,  REDEMPTION  AND  APPRAISEMENT.  Borrower
hereby waives all right of homestead  exemption in and  statutory  redemption of
the Property and all right of appraisement of the Property and  relinquishes all
right of dower in the Property.

     30. FUTURE ADVANCES.  Upon request of Borrower,  Lender, at Lender's option
so long as this Instrument secures  indebtedness held by Lender, may make Future
Advances to Borrower.  Such Future  Advances,  with interest  thereon,  shall be
secured by this Instrument, when evidenced by promissory notes stating that said
notes  are  secured  hereby.  At no  time  shall  the  principal  amount  of the
indebtedness  secured  by  this  Instrument,  not  including  sums  advanced  in
accordance  herewith to protect  the  security  of this  Instrument,  exceed the
original amount of the Note (U.S. $4,000,000.00) plus the additional sum of U.S.
$0.00.  SEE RIDER TO MULTIFAMILY  INSTRUMENT  ANNEXED HERETO AND INCORPORATED BY
REFERENCE HEREIN.

     IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused the
same to be executed by its representatives thereunto duly authorized.

                                        WATERTON ROCK, LIMITED,  an Arkansas
                                        limited partnership

                                        By: Waterton Rock, Investors,
                                            an Arkansas limited
                                            partnership, its General

                                        Partner

                                        By: SV, L.L.C. d/b/a Waterton SV, L.L.C.
                                           an Illinois limited liability company

                                            By: /s/ Peter M. Vilim
                                                    Peter M. Vilim
                                                    Managing Member

                                       14
<PAGE>
                                          Borrower's Address:
                                          225 West Washington Street, Suite 1650
                                          Chicago, Illinois 60606

                                       15
<PAGE>





                            CORPORATE ACKNOWLEDGMENT

STATE OF ARKANSAS,_________________County ss:


     On this___day of___ , 19__ , before me, the undersigned officer, personally
appeared________________________, who acknowledged himself to be the____________
of__________,a corporation,  and that he as such ____________,  being authorized
to do so, executed the foregoing  Instrument for the purposes therein  contained
by   signing   name   of   the    corporation   by   himself   as   ___________.


         IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.

                                                        ________________________
                                                        ________________________
                                                         Title of Officer


                            INDIVIDUAL ACKNOWLEDGMENT

STATE OF ARKANSAS, ____________ County ss:

     On this  ______ day  of__________,  19_______,  before me, the  undersigned
officer.   personally   appeared   ______________________   known   to  me   (or
satisfactorily  proven) to be the person(s)  whose name(s)  ___________________,
subscribed to the within  Instrument  and  acknowledged  that_________he________
executed the same for the purposes therein contained.


         IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.

                                                       ________________________
                                                        ________________________
                                                         Title of Officer



                  INDIVIDUAL LIMITED PARTNERSHIP ACKNOWLEDGMENT

STATE OF ARKANSAS,_________________County ss:

     On this ________day of_________,  19__, before me, the undersigned officer.
personally  appeared  ________________  the individual(s) named in the foregoing
Instrument  as the general  partner(s) of  _________________________,  a Limited
Partnership,  and, on behalf of such Limited  Partnership,  did  acknowledge the
foregoing Instrument to the act and deed of said Limited Partnership.

IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.

                                                        ________________________
                                                        ________________________
                                                         Title of Officer


                                       16
<PAGE>
                  CORPORATE LIMITED PARTNERSHIP ACKNOWLEDGMENT

STATE OF ARKANSAS,______________________County ss:


     On this__ day of___, 19___, before me, the undersigned officer,  personally
appeared   ____________,   who  acknowledged   himself  to  be  the  ___________
of__________,  the corporation named in the foregoing  instrument as the General
Partner  of  _________________,  a  Limited  Partnership,  and  that  he as such
____________  of the General  Partner,  being  authorized to do so, executed the
foregoing  Instrument  for the  purposes  therein  contained in the name of such
Limited Partnership by himself as _______________ the General Partner, on behalf
of said Limited Partnership.

IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.


                                                        ________________________
                                                        ________________________
                                                         Title of Officer
                                       17
<PAGE>



STATE OF ARKANSAS, Pulaski County ss:

     On this  14 day of  August,  1997,  before  me,  the  undersigned  officer,
personally appeared Peter M. Vilim , who acknowledged himself to be the Managing
Member of SV, L.L.C.  (d/b/a Waterton SV, L.L.C.) the limited  liability company
named in the  foregoing  Instrument  as the  General  Partner of  Waterton  Rock
Investors,  Limited,  a limited  partnership and the General Partner of WATERTON
ROCK, LIMITED, a limited partnership, and that he as such Managing Member of SV,
L.L.C.,  the General  Partner of Waterton Rock Investors,  Limited,  the General
Partner of WATERTON  ROCK,  LIMITED,  being  authorized  to do so,  executed the
foregoing  Instrument  for the  purposes  therein  contained in the name of such
Limited  Partnership by himself as Managing  Member of SV,  L.L.C.,  the General
Partner of Waterton Rock  Investors,  Limited,  the General  Partner of WATERTON
ROCK, LIMITED, on behalf of WATERTON ROCK, LIMITED.

         IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.

                                                /s/ Sharon A. Miller
                                                Title of Officer: Notary Public
                                                My Commission expires: 4/23/2003

                                                              [NOTARIAL SEAL]
                                       18
<PAGE>
                                    EXHIBIT A


The land located in the County of Pulaski,  State of Arkansas,  and described as
follows:

Part Of Tracts 3, 6, and 7,  Hillvale  Addition,  Little Rock,  Pulaski  County,
Arkansas, more particularly described as follows:

Beginning at the Northwest corner of Tract 7, Hillvale Addition; thence South 67
degrees  35  minutes 20 seconds  East  35.00  feet;  thence  South 48 degrees 59
minutes  16  seconds  East  80.00  fact;  thence  South 77 degrees 17 minutes 24
seconds  East 72.00  feet;  thence  South 30 degrees 18 minutes 29 seconds  East
78.00 feet;  thence South 68 degrees 07 minutes 04 seconds East 124.00 feet to a
point on the East line of the West 1/2 of said Tract 7; thence  South 00 degrees
45 minutes 54 seconds  West along said East line  374.98  feet to a point on the
North line of a 50 foot wide Little Rock Water Works  Easement;  thence North 87
degrees 25 minutes 51 seconds  West along said North line  219.11  feet;  thence
North 78 degrees 18 minutes  19 seconds  West  continuing  along said North line
290.87 feet; thence North 81 degrees 37 minutes 00 seconds West continuing along
said North line 298.70 feet;  thence North 33 degrees 50 minutes 55 seconds East
350.00  feet;  thence  North 8 degrees 54 minutes  57 seconds  East 60.00  feet;
thence North 53 degrees 57 minutes 51 seconds  East 80.00 feet;  thence North 42
degrees  42  minutes 56 seconds  East  99.00  feet;  thence  North 67 degrees 48
minutes  07  seconds  East  98.00  feet;  thence  South 66 degrees 15 minutes 55
seconds  East 50.00  feet;  thence  South 46 degrees 21 minutes 58 seconds  East
20.00  feet to a point on the East line of Tract 3,  Hillvale  Addition;  thence
South 00 degrees  54 minutes 05 seconds  West along said East line 15.00 feet to
the Point of Beginning.

                                       19
<PAGE>

                          RIDER MULTIFAMILY INSTRUMENT

THIS RIDER TO MULTIFAMILY INSTRUMENT (the "Rider") is made as of the 15th day of
August , 1997,  and is  incorporated  into and  shall  be  deemed  to amend  and
supplement the Multifamily Mortgage, Deed of Trust or Deed to Secure Debt of the
same date (the "Instrument"),  given by the undersigned  WATERTON ROCK, LIMITED,
an  Arkansas  limited   partnership  (the  "Borrower"),   to  secure  Borrower's
Multifamily Note of the same date (the "Note") with Addendum to Multifamily Note
of the same date (The  "AddendumBERKSHIRE  MORTGAGE FINANCE LIMITED PARTNERSHIP,
470 Atlantic Avenue,  Boston,  Massachusetts 02210 , [Insert address of Lender],
and its  successors,  assigns  and  transferees  (the  "Lender"),  covering  the
property  described in the  Instrument  and defined  therein as the  "Property,"
located at:

           13200 Chenal Parkway, Little Rock, Pulaski County, Arkansas
                               [Property Address]

The Property is located  entirely  within the State of Arkansas  [insert name of
state in which the Property is located] (the "Property Jurisdiction").

     The term "Loan Documents" when used in this Rider shall mean, collectively,
the following  documents:  (i) the  Instrument as modified by this Rider and any
other  riders to the  Instrument  given by Borrower to Lender and  covering  the
Property;  (ii) the Note, as modified by the Addendum and any other  addendum to
the Note; and (iii) all other documents or agreements,  including any Collateral
Agreements  (as defined  below) or O&M agreement (as defined below) arising from
time to time.  Any conflict  between the  provisions of the  Instrument  and the
Rider shall be resolved in favor of the Rider.

     The  covenants  and  agreements  of  this  Rider,  and  the  covenants  and
agreements of any other riders to the Instrument given by Borrower to Lender and
covering the Property, shall be incorporated into and shall amend and supplement
the  covenants and  agreements of the  Instrument as if this Rider and the other
riders were a part of the Instrument and all references to the Instrument in the
Loan Documents shall mean the Instrument as so amended and supplemented.

     ADDITIONALL COVENANTS.  In addition to the covenants and agreements made in
the Instrument, Borrower and Lender further covenant and agree as follows:


A.   Funds for Tues, Insurance and Other Charges

     Uniform Covenant 2 of the Instrument ("Funds for Taxes, Insurance and Other
Charges")  is amended to change  the title to "Funds  for Taxes,  Insurance  and
Other Charges; Collateral Agreements." Existing Uniform Covenant 2 is amended to
become  Uniform  Covenant 2A. The following new Uniform  Covenant 2B is added at
the end of Uniform Covenant 2A:

2B   Replacement  Reserve Agreement,  Completion/Repair  Agreement,  Achievement
     Agreement and Other Collateral Agreements


                                       20
<PAGE>




         (a) Replacement Reserve Agreement

     Borrower shall deposit with Lender the amounts  required by the Replacement
Reserve and Security  Agreement (the "Replacement  Reserve  Agreement")  between
Borrower and Lender,  dated the date of the Note,  at the times  required by the
Replacement  Reserve  Agreement,  and shall perform all other obligations as and
when required pursuant to the Replacement Reserve Agreement.

         (b)  Completion/Repair Agreement

     Borrower   shall   deposit   with   Lender  the  amount   required  by  the
Completion/Repair  and Security  Agreement (the  "Completion/Repair  Agreement")
between  Borrower  and Under (if any),  dated the date of the Note,  at the time
required  by the  Completion/Repair  Agreement,  and  shall  perform  all  other
obligations as and when required pursuant to the Completion/Repair Agreement.

         (c) Achievement Agreement

     Borrower shall perform all of its obligations as and when required pursuant
to the Achievement Agreement between Borrower and Under (if any), dated the date
of the Note.

         (d)  Collateral Agreements

     As used  herein,  the term  "Collateral  Agreement"  shall  mean any of the
Replacement Reserve Agreement, the Completion/Repair  Agreement, the Achievement
Agreement and any similar agreement which has been entered into between Borrower
and Lender in connection with the loan evidenced by the Note.


B.       Application of Payments

     Uniform Covenant 3 of the Instrument ("Application of Payments") is amended
to add the following sentence at the end thereof:

     Notwithstanding  the preceding  sentence,  (i) Lender shall be permitted to
apply any partial  payment  received from  Borrower in any manner  determined by
Lender and in any order of priority of application  as determined by Lender,  in
Lender's sole discretion,  and (ii) upon any breach of any covenant or agreement
of Borrower in the Instrument, the Note or any other Loan Document, Lender shall
be permitted to apply any funds held pursuant to any Collateral Agreement in any
manner which is permitted pursuant to such Collateral Agreement and in any order
of priority of application as determined by Lender, in Lender's sole discretion.


C.       Hazard Insurance; Restoration of Property


                                       21
<PAGE>



     Uniform Covenant 5 of the Instrument ("Hazard Insurance") is amended to add
the following sentence at the end thereof:

     Lender shall not exercise  Lender's option to apply  Insurance  proceeds to
the  payment  of the sums  secured  by the  Instrument  if all of the  following
conditions are met: (i) Borrower is not in breach or default of any provision of
the Instrument, the Note or any other Loan Document; (ii) Lender determines that
there will be sufficient funds to restore and repair the Property to a condition
approved  by Lender;  (iii)  Lender  determines  that the  rental  income of the
Property,  after restoration and repair of the Property to a condition  approved
by Lender,  will be sufficient to meet all operating  costs and other  expenses,
payments for reserves and loan repayment  obligations  relating to thc Property;
and (iv) Lender  determines  that  restoration  and repair of the  Property to a
condition  approved by Lender will be  completed  prior to the earlier of either
(1) the maturity date of the Note or (2) within one year of the date or the loss
or casualty to the Property.


D.   Environmental Hazards Provision

     In addition to Borrower's covenants and agreements under uniform Covenant 6
of the Instrument  ("Preservation  and  Maintenance  of Property;  Leaseholds"),
Borrower further covenants and agrees that Borrower shall not:

     (a)  cause  or  permit  the   presence,   use,   generation,   manufacture,
          production,  processing,  installation,  release,  discharge,  storage
          (including  aboveground and underground storage tanks for petroleum or
          petroleum products), treatment, handling, or disposal of any Hazardous
          Materials (as defined  below)  (excluding  the safe and lawful use and
          storage of quantities of Hazardous  Materials  customarily used in the
          operation and maintenance of comparable  multifamily properties or for
          normal  household  purposes) on or under the  Property,  or in any way
          affecting  the Property or its value.  or which may form the basis for
          any  present  or  future  demand,   claim  or  liability  relating  to
          contamination,  exposure, cleanup or other remediation of the Property
          or;

     (b)  cause or permit the  transportation to, from or across the Property of
          any Hazardous Material  (excluding the safe and lawful use and storage
          of quantities of Hazardous Materials customarily used in the operation
          and  maintenance  of comparable  multifamily  properties or for normal
          household purposes); or

     (c)  cause or exacerbate  any  occurrence or condition on the Property that
          is or may be in  violation  of  Hazardous  Materials  Law (as detailed
          below).

(The matters  described  in (a), (b) and (c) above are referred to  collectively
below as "Prohibited Activities or Conditions.")

                                       22
<PAGE>
     Except with respect to many matters  which have beach  disclosed in writing
by Borrower to Lender prior to the date of the Instrument, or matters which have
been  disclosed in an  environmental  hazard  assessment  report of the Property
received by Lender prior to the date of the Instrument,  Borrower represents and
warrants  that  it has  not at any  time  caused  or  permitted  any  Prohibited
Activities  or  Conditions  and to the  best  of its  knowledge,  no  Prohibited
Activities  or  Conditions  exist  or have  existed  on or under  the  Property.
Borrower  shall  take  all  appropriate  steps  (including  but not  limited  to
appropriate lease provisions) to prevent its employees, agents, and contractors,
and all tenants and other occupants on the Property, from causing, permitting or
exacerbating any Prohibited  Activities or Conditions.  Borrower shall not lease
or allow the sublease of all or any portion of the Property for  non-residential
use to any tenant or subtenant  that,  in the ordinary  course of its  business,
would cause, permit or exacerbate any Prohibited  Activities or Conditions,  and
all  nonresidential   leases  and  subleases  shall  provide  that  tenants  and
subtenants  shall not cause,  permit or exacerbate any Prohibited  Activities or
Conditions.

     If Borrower has disclosed that Prohibited Activities or Conditions exist on
the  Property,  Borrower  shall comply in a timely  manner  with,  and cause all
employees,  agents, and contractors of Borrower and any other persons present on
the Properly to so comply with,  (1) any program of operations  and  maintenance
("O&M  Program")  relating to the  Property  that is  acceptable  to Lender with
respect to one or more Hazardous  Materials  (which O&M Program may be set forth
in an agreement of Borrower (an "O&M  Agreement")) and all other obligations set
forth  in any O&M  Agreement,  and (2) all  Hazardous  Materials  Laws.  Any O&M
Program shall be performed by qualified personnel. All costs and expenses of the
O&M Program shall be paid by Borrower,  including  without  limitation  Lender's
fees and costs incurred in connection  with the monitoring and review of the O&M
Program and  Borrower's  performance  thereunder.  If  Borrower  fails to timely
commence or diligently continue and complete the O&M Program and comply with any
O&M  Agreement,  then Lender may,  at Lender's  option,  declare all of the sums
secured by the  Instrument  to be  immediately  due and payable,  and Lender may
invoke any remedies permitted by paragraph 27 of the Instrument.

     Borrower represents that Borrower has not received, and has no knowledge of
the  issuance  of, any claim,  citation or notice of any  pending or  threatened
suits, proceedings,  orders, or governmental inquiries or opinions involving the
Property that allege the violation of any Hazardous Materials Law ("Governmental
Actions").

     Borrower shall promptly  notify Lender in writing of: (i) the occurrence of
any Prohibited  Activity or Condition on the Property;  (ii)  Borrower's  actual
knowledge of the presence on or under any  adjoining  property of any  Hazardous
Materials which can reasonably be expected to have a material  adverse impact on
the  Property  or the value of the  Property,  discovery  of any  occurrence  or
condition on the Property or any  adjoining  real  property that could cause any
restrictions on the ownership, occupancy. transferability or use of the Property
under Hazardous  Materials Law.  Borrower shall cooperate with any  governmental
inquiry,  and shall comply with any  governmental or judicial order which arises
from any alleged  Prohibited  Activities or Conditions;  (iii) any  Governmental
Action,  and (iv) any  claim  made or  threatened  by any  third  party  against

                                       23
<PAGE>
Borrower,  bender, or the Property relating to loss or injury resulting from any
Hazardous Materials,  Any such notice by Borrower shall not relieve Borrower of,
or result in a waiver of any obligation of Borrower under this paragraph D.

     Borrower shall pay promptly the costs of any environmental audits,  studies
or investigations (including but not limited to advice of legal counsel) and the
removal of any  Hazardous  Materials  from the Property  required by Lender as a
condition  of its  consent to any sale or  transfer  under  paragraph  19 of the
Instrument or all or any part of the Property or any transfer  occurring  upon a
foreclosure  or a deed  in lieu  of  foreclosure  or any  interest  therein,  or
required by Lender Following a reasonable determination by Lender that there May
be  Prohibited  Activities  or  Conditions  on or under the  Property.  Borrower
authorizes  Lender and its employees,  agents and  contractors to enter onto the
Property for the purpose of conducting such  environmental  audits,  studies and
investigations.  Any such costs and expenses  incurred by Lender  (including but
not limited to fees and expenses of attorneys and consultants,  whether incurred
in connection with any judicial or  administrative  process or otherwise)  which
Borrower  fails to pay  promptly  shall become  immediately  due and payable and
shall  became  additional  indebtedness  secured by the  Instrument  pursuant to
Uniform Covenant 8 of the Instrument.

Borrower  shall hold  harmless,  defend and  indemnify  Lender and its officers,
directors,  trustees,  employees,  and agents from and  against all  proceedings
(including but not limited to Government Actions),  claims, damages,  penalties,
costs and expenses  (including without limitation fees and expenses of attorneys
and expert witnesses,  investigatory fees, and cleanup and remediation expenses.
whether or not  incurred  within the context of the judicial  process),  arising
directly or indirectly from (i) any breach of any representation,  warranty,  or
obligation  of Borrower  contained  in this  paragraph D or (ii) the presence or
alleged presence of Hazardous Materials on or under the Property.  Lender agrees
that the liability  created under this  paragraph  shall be limited to assets of
Borrower  and Lender shall not seek to recover any  deficiency  from any natural
persons who arc general partners of Borrower (if Borrower is a partnership).

     The term "Hazardous  Materials," for purposes of this paragraph D, includes
petroleum and petroleum products,  flammable  explosives,  radioactive materials
(excluding radioactive materials in smoke detectors), polychlorinated biphenyls,
lead,  asbestos in any form that is or could become  friable,  hazardous  waste,
toxic or hazardous  substances or other related materials whether in the form of
a chemical, element, compound, solution, mixture or otherwise including, but not
limited  to,  those  materials  defined as  "hazardous  substances,"  "extremely
hazardous  substances,"  "hazardous  chemicals,"  "hazardous  materials," "toxic
substances,"   "solid  waste,"  "toxic  chemicals,"  "air  pollutants,"   "toxic
pollutants,"  hazardous  wastes,"  "extremely  hazardous  waste," or "restricted
hazardous waste" by Hazardous  Materials Law or regulated by Hazardous Materials
Law in any manner whatsoever.


The term "Hazardous  Materials Law," for the purposes of this paragraph D, means
all federal,  state,  and local laws,  ordinances and regulations and standards,
rules,  policies


                                       24
<PAGE>
and other binding  governmental  requirements and any court judgments applicable
to  Borrower  or  to  the  Property   relating  to  industrial   hygiene  or  to
environmental or unsafe conditions or to human health including, but not limited
to,  those  relating  to  the  generation,   manufacture,   storage,   handling,
transportation, disposal, release, emission or discharge of Hazardous Materials,
these in connection with the  construction,  fuel supply,  power  generation and
transmission,  waste disposal or any other  operations or processes  relating to
the Property,  and those relating to the  atmosphere,  soil,  surface and ground
water,  wetlands,  stream  sediments and vegetation  on, under,  in or about the
Property.

     The representations,  warranties,  covenants,  agreements,  indemnities and
undertakings  of Borrower  contained in this paragraph D shall be in addition to
any and all other  obligations and liabilities  that Borrower may have to Lender
under applicable law.

     The representations,  warranties,  covenants,  agreements,  indemnities and
undertakings  of  Borrower  contained  in this  paragraph D shall  continue  and
survive  notwithstanding  the  satisfaction,   discharge,  release,  assignment,
termination,  subordination  or cancellation of the Instrument or the payment in
full of the  principal  of and  interest on the Note and all other sums  payable
under Loan  Documents  or the  foreclosure  of the  Instrument  or the tender or
delivery of a deed in lieu of  foreclosure  or the release of any portion of the
Property from the lien of the Instrument,  except with respect to any Prohibited
Activities or Conditions  or violation of any or the  Hazardous  Materials  Laws
which first  commences and occurs after the  satisfaction,  discharge,  release,
assignment,  termination or cancellation of the Instrument following the payment
in full of the  principal of and interest on the Note and all other sums payable
under the Loan  Documents  or which first  commences  or occurs after the actual
dispossession  from the entire  Property of the Borrower and all entities  which
control,  are controlled by. or are under common control with the Borrower (each
of  the  foregoing  persons  or  entities  is  hereinafter   referred  to  as  a
"Responsible  Party") following  foreclosure of the Instrument or acquisition of
the Property by a deed in lieu of foreclosure. Nothing in the foregoing sentence
shall  relieve the Borrower from any  liability  with respect to any  Prohibited
Activities  or Conditions  or violation of Hazardous  Materials  Laws where such
Prohibited  Activities or Conditions  or violation of Hazardous  Materials  Laws
commences  or occurs,  or is present as a result of, any act or  omission by any
Responsible  Patty or by any person or entity  acting on behalf of a Responsible
Party.

     E. Books, Records and Financial Information

     Uniform  Covenant 10 of the Instrument  ("Books and Records") is amended to
read as follows:

     Borrower  shall keep and maintain at all times and upon  Lender's  request,
Borrower  shall make  available at the Property  Address,  complete and accurate
books of accounts  and records in  sufficient  detail to  correctly  reflect the
results of the  operation of the  Property and copies of all written  contracts,
leases and other  Instruments  which  affect  the  Property  (including  but not
limited to all bills invoices and contracts for electrical

                                       25
<PAGE>
service,  gas  service,  water  and sewer  service,  waste  management  service,
telephone service and management  services).  These books,  records,  contracts,
leases and other  Instruments  shall be subject to examination and inspection at
any reasonable  time by Lender.  Borrower shall furnish to Lender the following:
(i) within 120 days after the end of each fiscal year of  Borrower,  a statement
of Income and  expenses of the  Property and a statement of changes in financial
position,  and when  requested by Lender,  a balance  sheet,  each in reasonable
detail and  certified by Borrower  and, if Lender shall  require,  the foregoing
financial  statements  shall  be  audited  by an  independent  certified  public
accountant;  (ii) together with the foregoing  financial  statements  and at any
other time upon Lender's request, a rent schedule for the Property,  in the form
required by Lender and  certified by Borrower,  showing the name of each tenant,
and for each tenant,  the space occupied,  the lease  expiration  date, the rent
payable, the rent paid and any other information requested by Lender; (iii) upon
Lender's request. an accounting of all security deposits held in connection with
any lease of any part of the  Property,  including  the name and  identification
number of the accounts in which such  security  deposits are held,  the name and
address of the financial  institutions 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  (iv)  promptly  upon  Borrower's  receipt,  copies  of any
complaint  filed  against the Borrower or the Property  management  alleging any
violation  of  fair  housing  law,   handicap   access  or  the  Americans  with
Disabilities Act and any final  administrative or judicial  dispositions of such
complaints.  If Borrower shall fail to timely  provide the financial  statements
required by clause (i) above, Lender shall have the right to have the Borrower's
books and records audited in order to obtain such financial statements,  and any
such costs and expenses  incurred by Lender which Borrower fails to pay promptly
shall  become   immediately   due  and  payable  and  shall  become   additional
indebtedness  secured  by  the  Instrument  pursuant  to  paragraph  8  or  tile
Instrument.

     F.   Transfers  of the  Property  or  Significant  Interests  in  Borrower;
          Transfer Fees

          Uniform  Covenant 19 of the Instrument  ("Transfers of the Property or
     Beneficial  Interests in Borrower,  Assumption")  is amended to read as set
     forth below:


     Transfers or the Property or  Significant  Interests in Borrower;  Transfer
Fees

         (a) Definitions

     For purposes of the Instrument  (and the Rider),  (the following terms have
the respective meanings set forth below:

     (1)  The term "Key  Principal"  means the natural  person(s)  identified as
          such, at the foot or thc Rider,  and any natural  person who becomes

                                       26
<PAGE>
          a Key Principal  after the date of the Note and are identified as such
          in an amendment or supplement to the Loan Documents.

     (2)  The  term  "Transfer"  means a sale,  assignment,  transfer  or  other
          disposition  (whether  voluntary  or by  operation  of law) of, or the
          granting or creating of a lien,  encumbrance or security  interest in,
          the  Property or in  ownership  interests,  and the  issuance or other
          creation of ownership interests in an entity and the reconstitution of
          one type of entity to another type of entity.

     (3)  A "Significant Interest" in any entity shall mean the following:

          (i)  if the entity is a general  partnership or a joint  venture,  (A)
               any partnership interest in the general  partnership,  or (B) any
               interest of a joint venture in a joint venture;

          (ii) if  the  entity  is  a  limited  partnership,   (A)  any  limited
               partnership interest in the entity which, together with all other
               limited  partnership  interests in the entity, or (B) any general
               partnership interest in the entity;

          (iii)if the  entity is a limited  liability  company,  any  membership
               interest which,  together with all other membership  interests is
               the limited liability  company  Transferred since the date of the
               Note,  exceeds  49% of all of  the  membership  interests  in the
               limited liability company;

          (iv) if  the  entity  is  a  corporation,  any  voting  stock  in  the
               corporation  which,  together  with all other voting stock or the
               corporation  Transferred since the date of the Note,  exceeds 49%
               of all of the voting stock of the corporation; or

          (v)  if the entity is a trust,  any beneficial  interest in such trust
               which,  together with all other beneficial interests in the trust
               Transferred  since the date of the Note,  exceeds  49% of all the
               beneficial interests in the trust.

(b)  Acceleration  of the Loan Upon  Transfers  of the  Property or  Significant
     Interests

     Lender may, at Lender's option,  declare all sums secured by the Instrument
immediately  due and payable  and Lender may invoke any  remedies  permitted  by
paragraph 27 of the Instrument  if, without the Lender's prior written  consent,
any of the following shall occur:

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

                                     27
<PAGE>
     (2)  a Transfer of any Significant Interest in Borrower;

     (3)  a Transfer of any Significant Interest in a corporation,  partnership,
          limited  liability  company,  joint  venture,  or trust  which  owns a
          Significant Interest in the Borrower;

     (4)  if the  Borrower  is a  trust,  or if  any  trust  owns a  Significant
          Interest in the Borrower, the addition,  deletion or substitution of a
          trustee of such trust,  which addition,  deletion or substitution  has
          not been approved by Lender; or

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

(c)  Transfers Permitted with Lender's Prior Consent

Lender shall consent to a Transfer which would otherwise  violate this paragraph
19 if, prior to the Transfer:

     (1)  Borrower causes to be submitted to Lender all information  required by
          Lender to evaluate  the  transferee  and the Property as if a new loan
          were being made to the transferee and secured by the Properly.  In the
          cast or a Transfer  of all or any part of the  Property or an interest
          therein,  or to the  Borrower  (as  reconstituted  after the  proposed
          Transfer), in the case of a Transfer of Significant Interests;

     (2)  The  transferee,  in the case of a Transfer  of all or any part of the
          Property or an interest  therein,  or the Borrower  (as  reconstituted
          after the proposed Transfer), in the case of a Transfer of Significant
          Interests,   meet  the  eligibility,   credit,  management  and  other
          standards,  and  the  Property  meets  the  physical  maintenance  and
          replacement  reserve  requirements  customarily  applied by Lender for
          approval of new borrowers and properties for loans secured by liens on
          multifamily properties;

     (3)  In the  case of a  Transfer  of all or any part of the  Property,  the
          proposed  transferee  (i) executes as agreement  acceptable  to Lender
          pursuant to which the proposed transferee agrees, upon consummation of
          the Transfer,  to assume and to pay and perform all obligations of the
          Borrower under the Note, the Instrument and the other Loan  Documents,
          (ii) causes one or more  individuals  acceptable to Lender to execute.
          and deliver to Lender an amendment or supplement to the Loan Documents
          as "Key  Principal"  and (iii)  executes such  documents and otherwise

                                       28
<PAGE>
          provides  such  documents  and  information  as  required by Lender in
          connection with the Transfer;

     (4)  In the case of a  Transfer  of a Key  Principal's  ownership  interest
          pursuant to paragraph  19(b)(5),  (i) the  Borrower (as  reconstituted
          after the proposed Transfer executes an agreement acceptable to Lender
          that ratifies and confirms the obligations of Borrower under the Note,
          the  Instrument  and  the  other  Loan  Documents,  (ii)  one or  more
          individuals  acceptable  to Lender  execute  and  deliver to Lender an
          amendment or supplement to the Loan Documents as "Key  Principal," and
          (iii) the Borrower executes such documents and otherwise provides such
          documents and information as required by Lender in connection with the
          Transfer; and

     (5)  Borrower pays to Lender a $3000  non-refundable  application fee and a
          transfer  fee equal to one  percent  (1%) of the sums  secured  by the
          Instrument.  In  addition,  Borrower  shall be required  to  reimburse
          Lender  for  all  of  Lender's  out of  pocket  expenses  incurred  in
          connection  with the  assumption,  to the extent such expenses  exceed
          $3000.

(d)  No Acceleration of the Loan For Transfers Caused By Certain Events

Notwithstanding the foregoing  provisions of this covenant,  Lender shall not be
entitled to declare sums secured by the Instrument  immediately  due and payable
or to invoke any remedy permitted by paragraph 27 or the Instrument  solely upon
the occurrence. of any of the followings:

(1)  A Transfer that occurs by inheritance,  devise, or bequest or. by operation
     of law upon the death of a natural  person who is an owner of the  Property
     or the owner of a direct or indirect ownership interest in the Borrower.

(2)  The grant of a leasehold  interest in individual  dwelling units for a term
     of two years or less and leases for  commercial  uses as long as commercial
     leases do not  exceed 20  percent  of the  rentable  space of the  Property
     (measured  as  required  by Lender) and  provided  that all such  leasehold
     interests do not contain an option to purchase the Property.

(3)  A sale or other disposition of obsolete or worn out personal property which
     is  contemporaneously  replaced by comparable personal property of equal or
     greater value which is free and clear of liens,  encumbrances  and security
     interests other than those created by the Loan Documents.

(4)  The creation of a mechanic's or materialmen's lien or judgment lien against
     the Property which is released of record or

                                       29
<PAGE>
     otherwise remedied to Lender's satisfaction,  within 30 days of the date of
     creation.

(5)  The grant of an  easement,  if prior to the  granting of the  easement  the
     Borrower  causes to be  submitted  to Lender all  information  required  by
     Lender to evaluate the easement, and if Lender determines that the easement
     will not  materially  affect the  operation  of the  Property  or  Lender's
     interest in the Property and Borrower pays to Lender,  on demand,  all cost
     and expenses  incurred by Lender in connection  with  reviewing  Borrower's
     request.


     G. Notice
     Uniform  Covenant  20 of the  Instrument  ("Notice")  is amended to read as
follows:

     Each notice, demand,  consent, or other approval  (collectively,  "notices"
and singly,  "notice") given under the Note, the Instrument,  and any other Loan
Document,  shall be in writing to the other party,  and if to  Borrower,  at its
address set forth below Borrower's signature on the Instrument, and if to Lender
at its address set forth at the beginning of the Rider, or at such other address
as such  party may  designate  by notice to the other  party and shall be deemed
given (a) three (3) Business Days after mailing, by certified or registered U.S.
mail, return receipt requested,  postage prepaid, (b) one (1) Business Day after
delivery,  fee prepaid,  to a national overnight  delivery service,  or (c) when
delivered, if personally delivered with proof of delivery thereof.

     Borrower and Lender each agrees that it will not refuse or reject  delivery
of any notice given hereunder, that it will acknowledge, in writing, the receipt
of the same upon  request  by the other  party and that any notice  rejected  or
refused by it shall be deemed for all  purposes of this  Agreement  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.  As used in the Instrument,  the term "Business Day" means any
day other than a Saturday, a Sunday or any other day on which Lender is not open
for business.

     Lender shall not be required to deliver to Key Principal in connection with
any notice given to Borrower.  However,  if Lender shall  deliver  notice to Key
Principal,  such notice  shall be given in the manner  provided in this  Uniform
Covenant 20, at Key Principal's address set forth at the foot of the Rider.


H.   Governing Law

     In addition to the governing  law  provision of Uniform  Covenant 22 of the
Instrument ("Uniform Multifamily  Instrument;  Governing Law; Severability") the
Borrower and Lender covenant and agree as follows:

     (a)  Choice of Law


                                       30
<PAGE>

     The validity of the Instrument and the other Loan Documents,  each of their
terms and  provisions,  and the rights and  obligations  of  Borrower  under the
Instrument  and the other Loan  Documents,  shall be governed  by,  interpreted,
construed,  and  enforced  pursuant  to and in  accordance  with the laws of the
Property Jurisdiction.

     (b)  Consent to Jurisdiction

     Borrower  consents to the exclusive  jurisdiction  of any and all state and
federal courts with jurisdiction in the Property  Jurisdiction over Borrower and
the Borrower's  assets.  Borrower agrees that such assets shall be used first to
satisfy all claims of creditors  organized or domiciled in the United  States of
America  ("USA")  and  that  no  assets  of the  Borrower  in the USA  shall  be
considered part of any foreign bankruptcy estate.

     Borrower  agrees that any  controversy  arising under or in relation to the
Note,  the  Instrument  or any of the other Loan  Documents  shall be  litigated
exclusively  In the  Property  Jurisdiction.  The state and  federal  courts and
authorities with jurisdiction in the Property  Jurisdiction shall have exclusive
jurisdiction over all controversies  which may arise under or in relation to the
Note,  and any security for the debt  evidenced by the Note,  including  without
limitation  those  controversies  relating  to  the  execution,  interpretation,
breach,  enforcement,  or compliance with the Note, the Instrument, or any other
issue  arising  under,  related  to,  or in  connection  with  any of  the  Loan
Documents. Borrower irrevocably consents to service,  jurisdiction, and venue of
such courts for any  litigation  arising from the Note, the Instrument or any of
the other  Loan  Documents,  and  waives  any  other  venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise.


I.   Acceleration; Remedies

     Covenant 27 of the Instrument ("Acceleration;  Remedies") is amended to add
the following at the end of the first paragraph:

     Upon the breach of any covenant or agreement by Borrower in the Instrument,
(including,  but not limited to, the  covenants  to pay when due sums secured by
the Instrument) or any other Loan Document,  Lender,  at Lender's option may, in
addition to any remedies  provided in this  covenant,  invoke any other remedies
provided in any Collateral Agreement.

     If Borrower is in default under any  promissory  note (other than the Note)
evidencing  a loan (the  "Subordinate  Loan")  secured by a security  Instrument
(other than the  Instrument)  covering all or any portion of the  Property  (the
"Subordinate  Instrument")  or under any  Subordinate  Instrument  or other loan
document executed in connection,  with the Subordinate Loan, (and whether or not
the Borrower has obtained the prior  approval of Lender to the placement of such
Subordinate  Instrument on the Property) which default remains uncured after any
applicable cure period, Borrower also then will be in default under the Note and
the Instrument.  In that event, the entire unpaid principal

                                       31
<PAGE>
balance of the Note,  accrued  interest and any other sums due Lender secured by
the Instrument then will become due and payable,  at Lender's option.  If Lender
exercises  this option to accelerate,  Lender will do so in accordance  with the
provisions of the Note and the Instrument, and the Lender may invoke any and all
remedies  permitted by applicable law, the Note, the  Instrument,  or any of the
other Loan Documents.


J.   Single Asset Borrower

     Until the debt  evidenced by the Note is paid in full,  Borrower  shall not
(1) acquire any real or personal  property  other than the  Property  and assets
(such as accounts) related to the operation and maintenance of the Property, (2)
operate any business other than the management and operation of the Property.


K.   Non-Recourse Liability

     Subject to the  provisions  or  paragraph L and  notwithstanding  any other
provision in the Note or  Instrument,  the personal  liability of Borrower,  any
general  partner  of  Borrower  (if  Borrower  is a  partnership),  and  any Key
Principal to pay the principal of and interest on the debt evidenced by the Note
and any other agreement evidencing Borrower's obligations under the Note and the
Instrument shall be limited to (1) the real and personal  property  described as
the "Property" in the  Instrument,  (2) the personal  property  described in and
pledged under any  Collateral  Agreement  executed in  connection  with the loan
evidenced by the Note, (3) the rents,  profits,  issues,  products and income of
the Property  received or collected by or on behalf of Borrower  (the "Rents and
Profits") to the extent such receipts are necessary, first to pay the reasonable
expenses of operating,  managing and  repairing the Property,  including but not
limited  to real  estate  taxes,  utilities,  assessments,  insurance  premiums,
repairs,  replacements and ground rents, if any (the "Operating  Expenses") then
due and payable as of the time of receipt of such Rents and  Profits,  and then,
to pay the  principal  and interest  due under the Note,  and any other sums due
under the  Instrument or any other Loan Document  (including  but not limited to
deposits or reserves due under any Collateral  Agreement),  except to the extent
that  Borrower  did  not  have  the  legal  right,   because  of  a  bankruptcy,
receivership or similar judicial proceeding,  to direct the disbursement of such
sums.

     Except as provided in  paragraph  L, Lender shall not seek (a) any judgment
for a deficiency against Borrower,  any general partner of Borrower (if Borrower
is a  partnership)  or any Key  Principal,  or  Borrower's  or any such  general
partner's  or  Key  Principal's  heirs,  legal  representatives,  successors  or
assigns,  in any action to enforce any right or remedy under the Instrument,  or
(b) Any judgment on the Note except as may be  necessary  in any action  brought
under the Instrument to enforce the lien against the Property or to exercise any
remedies under any Collateral Agreement.


L.   Exceptions to Non-Recourse Liability

     If, without obtaining Lender's prior written consent,  (i) a Transfer shall
occur which, pursuant to Uniform Covenant 19 of the Instrument, gives Lender the
right, at its option, to declare all sums secured by the Instrument  immediately
due and payable,  (ii)

                                       32
<PAGE>
Borrower shall encumber the Property with the lien of any Subordinate Instrument
in connection  with any financing by Borrower,  or (iii)  Borrower shall violate
the single asset covenant in paragraph J of the Rider,  any of such events shall
constitute a default by Borrower  under the Note,  the  Instrument and the other
Loan Documents and if such event shall  continue for 30 days,  paragraph K shall
not apply from and after the date which is 30 days  after  such  event.  and the
Borrower, any general partner or Borrower (if Borrower is a partnership) and Key
Principal  (each  individually  on a joint and  several  basis if more than one)
shall be  personally  liable on a joint  and  several  basis  for full  recourse
liability under the Note and the other Loan Documents.

     Notwithstanding  paragraph K, Borrower, any general partner of Borrower (if
Borrower is a partnership)  and Key Principal (each  individually on a joint and
several  basis if more  than  one),  shall be  personally  liable on a joint and
several  basis,  in the amount of any loss,  damage or cost  (including  but not
limited  to  attorneys'   fees)   resulting   from  (A)  fraud  or   intentional
misrepresentation  by  Borrower or  Borrower's  agents or  employees  or any Key
Principal or general  partner of Borrower in connection  with obtaining the loan
evidenced by the Note, or in complying with any of Borrower's  obligations under
the Loan  Documents,  (B)  insurance  proceeds,  condemnation  awards,  security
deposits  from  tenants and other sums or  payments  received by or on behalf of
Borrower in its capacity as owner of the Property and not applied in  accordance
with the  provisions of the  Instrument  (except to the extent that Borrower did
not have the legal  right,  because  of a  bankruptcy,  receivership  or similar
judicial proceeding,  to direct the disbursement of such sums or payments),  (C)
all Rents and Profits (except to the extent that Borrower did not have the legal
right, because of a bankruptcy,  receivership or similar judicial proceeding, to
direct the disbursement of such sums), and not applied, first, to the payment of
the  reasonable  Operating  Expenses as such Operating  Expenses  become due and
payable, and then, to the payment of principal and interest then due and payable
under the Note and all other  sums due under the  Instrument  and all other Loan
Documents  (including but not limited to deposits or reserves  payable under any
Collateral  Agreement),  (D) Borrower's failure to pay transfer fees and charges
due under paragraph 19(c) of the Instrument, or (E) Borrower's failure following
a default  under any of the Loan  Documents  to  deliver to Lender on demand all
Rents and Profits, and security deposits (except to the extent that Borrower did
not have the legal  right  because  of a  bankruptcy,  receivership  or  similar
judicial  proceeding  to direct  disbursement  of such sums),  books and records
relating to the Property.

     No provision of  paragraphs K or L shall (i) affect any guaranty or similar
agreement  executed in  connection  with the debt  evidenced  by the Note,  (ii)
release  or reduce the debt  evidenced  by the Note,  (iii)  impair the right to
Lender to enforce the  provisions  of paragraph D of the Rider,  (iv) impair the
lien of the  Instrument  or (V)  impair  the  right of  Lender  to  enforce  the
provisions of any Collateral Agreement.


M.   Waiver of Jury Trial

     Borrower and Key Principal (each for himself if more than one) (i) covenant
and agree not to elect a trial by jury with respect to any issue  arising  under
any of the Loan Documents triable by a jury and (ii) waive any right to trial by
jury to the extent that any

                                       33
<PAGE>
such right shall now or hereafter  exist.  This waiver of right to trial by jury
is separately  given,  knowingly and  voluntarily  with the benefit of competent
legal counsel by the Borrower and Key Principal,  and this waiver is intended to
encompass  individually  each instance and each issue as to which the right to a
jury trial would otherwise  accrue.  Further,  Borrower and Key Principal hereby
certify  that no  representative  or agent  of the  Lender  (including,  but not
limited to, the Lender's  counsel) has represented,  expressly or otherwise,  to
Borrower or Key Principal that Lender will not leek to enforce the provisions of
this paragraph M.


                                       34
<PAGE>




     BY  SIGNING  BELOW,  Borrower  accepts  and  agrees  to the  covenants  and
agreements contained in this Rider

                                              Borrower:  WATERTON ROCK, LIMITED,
                                              an Arkansas limited partnership*

By:      Waterton Rock Investors, Limited,
         an Arkansas limited partnership,
         its General Partner                  By:      /s/ Peter M. Vilim (Seal)

                                              Name:    Peter M. Vilim
By:      SV, L.L.C. d/b/a Waterton
         SV, L.L.C., an Illinois              Title:   Managing Member
         limited liability company,
         its General Partner



     Acknowledgment and Agreement of Key Principal to Personal Liability for the
Exceptions to Non-Recourse

     Key  Principal  (each for  himself if more than one) hereby  represents  to
Lender that he has a direct or indirect  ownership  interest in the Borrower and
that he participates in the management of the Borrower.

     BY SIGNING BELOW,  the  undersigned Key Principal (each for himself if more
than one) understands,  accepts and agrees to the provisions of paragraphs F, G,
L and M above. No transfer of Key Principal's  ownership interest in Borrower or
in any entity which directly or indirectly has an ownership interest in Borrower
shall release Key Principal  from liability  hereunder,  unless the Borrower and
Key Principal  shall have complied with the  provisions of paragraph F above and
Lender shall have approved the transfer and the substituted  Key Principal.  Key
Principal shall have no right of subrogation against the Borrower or any general
partner of  Borrower  by reason of any  payment  by Key  Principal  pursuant  to
paragraph L.


                                            Key Principal:

                                                  /s/ David R. Schwartz   (Seal)

                                            Name:     David R. Schwartz

                                            Address:225 West Washington  Street,
                                                    Suite 1650
                                                    Chicago, Illinois 60606
                                       35
<PAGE>

                                                   /s/ Peter M. Vilim     (Seal)

                                            Name:      Peter M. Vilim

                                            Address: 225 West Washington Street,
                                                     Suite 1650
                                                     Chicago, Illinois 60606

                                             _____________________________(Seal)


                                            Name:_______________________________

                                            Address:____________________________

     Attach  notarial  acknowledgment(s)  for Key  Principal.  [Attach  notarial
acknowledgment(s) for Borrower signatories, if applicable]


                                       36
<PAGE>




STATE OF Illinois, Cook County ss:


     On  this 7 day  of  August,  1997,  before  me,  the  undersigned  officer,
personally appeared DAVID R. SCHWARTZ, known to me (or satisfactorily proven) to
be  the  person  whose  name  is  subscribed  to  the  within  Instrument,   and
acknowledged that he executed the same for the purposes therein contained.

     IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.



                                                  /s/ Elizabeth Harmon
                                                  Title of Officer:
                                                  My commission expires:  5/4/99

                                                                 [NOTARIAL SEAL]


                                       37
<PAGE>






<PAGE>



STATE OFIllinois, Cook County ss:

     On  this 7 day  of  August,  1997,  before  me,  the  undersigned  officer,
personally appeared PETER M. VILIM, known to me (or satisfactorily proven) to be
the person whose name is subscribed to the within  Instrument,  and acknowledged
that he executed the same for the purposes therein contained.

     IN TESTIMONY WHEREOF, I hereunto set my hand and official seal.



                                                  /s/ Elizabeth Harmon
                                                  Title of Officer:
                                                  My commission expires:  5/4/99

                                                                 [NOTARIAL SEAL]

                                       38




</TEXT>
</DOCUMENT>
