content: SECURITIES AND EXCHANGE COMMISSION
  
                                Washington, DC 20549
  
  
                                     Form 8-K
  
                                  CURRENT REPORT
  
  
  
                      Pursuant to Section 13 or 15(d) of the
                         Securities and Exchange Act of 1934
  
  
  
          Date of Report (Date of earliest event reported) July 18, 1997
  
  
                 Paine Webber Qualified Plan Property Fund Three, LP
                 ---------------------------------------------------
               (Exact name of registrant as specified in its charter)
  
  
  
       Delaware                       0-17147                    04-2798638
       --------                       -------                    ----------
  (State or other jurisdiction)    (Commission                 (IRS Employer
      of incorporation             File Number)               Identification No.)
  
  
  
  265 Franklin Street, Boston, Massachusetts                            02110
  ------------------------------------------                            -----
  (Address of principal executive offices)                            (Zip Code)
  
  
  Registrant's telephone number, including area code (617) 439-8118
                                                     --------------
  
  
              (Former name or address, if changed since last report)
  
  
  
  
  
  
  
  
  
  <PAGE>
  
  
                                     FORM 8-K
                                  CURRENT REPORT
  
                    PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
  
  ITEM 2 - Disposition of Assets
  
     Appletree Apartments, Omaha, Nebraska
  
     Disposition Date - July 18, 1997
  
        On July 18, 1997, the Partnership  received  $4,850,000 from the Appletree
  borrower,  which represented the full repayment of the first leasehold  mortgage
  loan secured by the Appletree  Apartments.  Simultaneously,  the Appletree owner
  purchased the Partnership's  interest in the underlying land at a price equal to
  $1,125,000,  which represented a premium of $475,000 over the Partnership's cost
  basis in the land of $650,000. In addition,  the Partnership received a mortgage
  loan prepayment penalty of 1.25% of the mortgage note balance, or $60,625, and a
  land  lease  termination  fee of  $16,000  in  accordance  with the terms of the
  agreements.  As previously  reported,  the owner of the Appletree Apartments had
  given notice of an intent to prepay its first leasehold  mortgage loan scheduled
  to  mature on June 1,  1999,  and to  repurchase  the  underlying  land from the
  Partnership.  The Partnership and the owner of the Appletree Apartments had been
  discussing  the terms of a  prepayment  transaction  for more  than a year,  and
  during the quarter  ended May 31, 1997 the parties  reached an  agreement on the
  terms of the prepayment transaction which closed on July 18, 1997.
  
        As a  result  of the  disposition  on July 18,  1997 of the  Partnership's
  investments  secured by the Appletree  Apartments,  the Partnership  will make a
  Special  Distribution of approximately  $6,264,000,  or $175 per original $1,000
  investment,  on October 15, 1997 to unit holders of record on July 18, 1997.  Of
  this amount,  approximately  $169 represents the net proceeds from the Appletree
  transactions  and  approximately  $6 represents a distribution  from Partnership
  reserves.  With the  disposition  of the Appletree  investments,  which were the
  Partnership's  only remaining real estate  assets,  a formal  liquidation of the
  Partnership  is underway.  The payment of a final  liquidating  distribution  of
  residual cash reserves after the payment of all liquidation-related expenses and
  the formal  liquidation  of the  Partnership  are  expected to be  completed  by
  November 30, 1997.
  
  ITEM 7 - Financial Statements and Exhibits
  
     (a)   Financial Statements: None
  
     (b)   Exhibits:
  
        (1)   Special  Warranty Deed by and between  Paine Webber  Qualified Plan
              Property Fund Three,  LP and Appletree  Apartments,  Inc.  dated
              July 18, 1997.
  
        (2)   Lease Termination  Agreement by and between Paine Webber  Qualified
              Plan Property Fund Three, LP and Appletree Apartments, Inc. dated 
              July 18, 1997.
  
        (3)   Assignment  and  Assumption  of  Lessor's  Rights and  Obligations
              Under Ground Lease between  Paine Webber Qualified Plan Property
              Fund Three, LP and Appletree Apartments, Inc. dated July 18, 1997.
  
        (4)   Assignment  and  Assumption  of  Leasee's  Rights and  Obligations
              Under Ground Lease and  Conveyance  of Personal  Property by Paine
              Webber  Qualified  Plan  Property  Fund Three,  LP and Appletree
              Apartments, Inc. dated July 18, 1997.
  
        (5)   Notice  Letter  and  Consent  to   Assignment  by  J.A.   Peterson
              Enterprises,  Inc. to  Paine Webber  Qualified  Plan  Property Fund
              Three, LP, dated July 10, 1997.
  
        (6)   Release of  Collateral  Assignment of Rents and Leases by Peterson
              Enterprises,  Inc. to  PaineWebber  Qualified  Plan  Property Fund
              Three, LP, dated July 18, 1997.
  
        (7)   Deed  of   Reconveyance   by  Peterson   Enterprises,   Inc.   and
              PaineWebber  Qualified Plan Property Fund Three,  LP, dated July
              18, 1997.
  
  
  <PAGE>
  
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
                 PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
  
  
  
  
                                    SIGNATURES
  
  
  
        Pursuant to the  requirements  of the Securities and Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
                                    (Registrant)
  
  
  
  
                              By: /s/ Walter V. Arnold
                                  --------------------
                                  Walter V. Arnold
                                  Senior Vice President and
                                  Chief Financial Officer
    
  
  
  
  
  
  
  Date:  August 4, 1997
  
  
  <PAGE>
  
  
                              SPECIAL WARRANTY DEED
  
  
        PAINE WEBBER  QUALIFIED PLAN PROPERTY FUND THREE,  LP, a Delaware  limited
  partnership,  having a  principal  place of  business  at 265  Franklin  Street,
  Boston,  Massachusetts  02110  ("Grantor"),  in  consideration of the sum of Ten
  Dollars ($10.00) and other good and valuable consideration to Grantor duly paid,
  the  receipt  of which is  hereby  acknowledged,  hereby  conveys  to  APPLETREE
  APARTMENTS,  INC.,  a Nebraska  corporation  having a place of business at 10000
  West 75th Street, Shawnee Mission, Kansas 66204 ("Grantee"),  the real estate at
  6224 South 99th Court in Omaha,  Douglas  County,  Nebraska,  more  particularly
  described on Exhibit A attached hereto.
  
        Grantor covenants  (jointly and severally,  if more than one) with Grantee
  that Grantor:
  
              (1) is lawfully  seised of such real estate and that the real estate
  is free from  encumbrances  except for all matters of record,  including but not
  limited to: all easements, covenants,  conditions,  restrictions,  reservations,
  declarations,  community  contracts,  mortgages  and other  matters  of  record;
  unrecorded  easements  and all other  matters  which  would be  disclosed  by an
  accurate  survey and  inspection  of the real estate;  zoning laws;  the lien of
  taxes and  assessments  for 1997 and all  subsequent  years;  and all  rights of
  tenants, as tenants only, to use or occupy the real estate;
  
              (2)   has legal power and lawful authority to convey the same;
  
              (3) warrants  and will defend  title to the real estate  against the
  lawful claims of all persons claiming the same or any part thereof  through,  by
  or under Grantor.
  
  
  <PAGE>
  
  
  
        Executed as a sealed instrument as of the 18th day of July, 1997.
  
  
                                Paine Webber Qualified Plan Property
                                Fund Three, LP, a Delaware limited
                                partnership
  
                                By:Third Qualified Properties, Inc.,
                                General Partner
  
                                      By: /s/ Celia R. Deluga
                                          -------------------
  
                                      Name: Celia R. Deluga
  
                                      Title: Vice President
  
  
  
  STATE OF MASSACHUSETTS  )
                          )  SS.
  COUNTY OF SUFFOLK       )
  
       BE IT REMEMBERED,  that on this 9th day of July, 1997,  before me, a Notary
  Public in and for said County and State, personally appeared Celia R. Deluga, to
  me  personally  known to be the Vice  President of Third  Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Cynthia L. Proctor
                                          ------------------
                                          Notary Public
                                          Printed Name:  Cynthia L. Proctor
  My commission expires:
  3/11/99
  -------
  
  
  <PAGE>
  
  
                                    EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  
  
  
  
  
  
  <PAGE>
  
  
                             LEASE TERMINATION AGREEMENT
  
  
        THIS AGREEMENT  ("Agreement") is made as of the 18th day of July, 1997, by
  and between PAINE WEBBER  QUALIFIED  PLAN  PROPERTY  FUND THREE,  LP, a Delaware
  limited  partnership,  having a  principal  place of  business  at 265  Franklin
  Street, Boston,  Massachusetts 02110 ("Lessor"), and APPLETREE APARTMENTS, INC.,
  a Nebraska  corporation,  having a place of business at 10000 West 75th  Street,
  Shawnee Mission, Kansas 66204 ("Lessee").
  
                                      RECITALS:
  
        A. Lessor and J.A.  Peterson  Enterprises,  Inc.,  a Missouri  corporation
  ("Enterprises"),  entered into a certain Ground Lease dated as of the 8th day of
  May,  1984,  as amended  by a certain  Amendment  to Ground  Lease and Notice to
  Ground Lease dated October 30, 1985  (collectively,  the  "Lease"),  pursuant to
  which Lessor demised to Enterprises and  Enterprises  leased from Lessor certain
  real estate located at 6224 South 99th Court in Omaha, Douglas County, Nebraska,
  as more  particularly  described  in  Exhibit A  attached  hereto  (the  "Leased
  Premises").
  
        B. Lessor and  Enterprises  entered into a certain  Notice of Ground Lease
  relating to the Lease,  dated May 8, 1984 and  recorded May 8, 1984 in Book 710,
  Page  40  of  the  Miscellaneous  Records  of  Douglas  County,   Nebraska  (the
  "Recorder's  Office"),  as  amended by a certain  Amendment  to Notice to Ground
  Lease dated June 6, 1984 and recorded  July 5, 1984 in Book 713, Page 390 in the
  Recorder's  Office  and by a certain  Amendment  to Ground  Lease and  Notice to
  Ground Lease dated  October 30, 1985 and recorded  January 14, 1986 in Book 763,
  Page 10 in the Recorder's Office (as amended, the "Lease Memorandum").
  
        C. Pursuant to a certain  Assignment and Assumption of Lessee's Rights and
  Obligations  Under Ground Lease and  Conveyance of Personal  Property dated July
  18, 1997,  Enterprises  assigned  and  transferred  all of its right,  title and
  interest to and under the Lease and the Lease Memorandum to Lessee.
  
        D.    Contemporaneously  herewith,  Lessee is  purchasing  Lessor's  fee
  interest in the Leased Premises
  
        E. In connection  with the sale and conveyance of Lessor's fee interest in
  the Leased  Premises to Lessee,  Lessor and Lessee desire to terminate the Lease
  and release the Lease  Memorandum  of record in accordance  with the  provisions
  hereinafter set forth.
  
        NOW, THEREFORE, in consideration of the mutual covenants herein contained,
  the parties hereto agree as follows:
  
        1.    Termination  Date.  The term of the Lease shall  terminate and the
  Lease  Memorandum shall be released of record effective as of the date of this
  Agreement (the "Termination Date").
  
        2. Release by Lessee and Lessor.  Except as otherwise  specifically herein
  provided,  each party hereto hereby  releases and  discharges the other from all
  liability of any kind or nature  whatsoever which the other may now or hereafter
  have to the other  under the Lease and the Lease  Memorandum,  whether  known or
  unknown, and whether direct or indirect.
  
        3.    Successors.  The  provisions  of this  Agreement  shall be binding
  upon and inure to the  benefit of the parties  hereto,  their  successors  and
  assigns.
  
  
  
  <PAGE>
  
  
        IN WITNESS  WHEREOF,  the parties have executed  this  Agreement as of the
  date first above written.
  
                                       LESSOR:
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
  
                                            By:/s/ Celia R. Deluga
                                               -------------------
  
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  
  
  STATE OF MASSACHUSETTS  )
                          )SS
  COUNTY OF SUFFOLK       )
  
        BE IT REMEMBERED,  that on this 9th day of July, 1997, before me, a Notary
  Public in and for said County and State, personally appeared Celia R. Deluga, to
  me  personally  known to be the Vice  President of Third  Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Cynthia L. Proctor
                                          ------------------
                                          Notary Public
                                          Printed Name:  Cynthia L. Proctor
  My commission expires:
  3/11/99
  -------
  
  
  
  <PAGE>
  
  
                                       LESSEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
  
  
  STATE OF MISSOURI       )
                          )SS
  COUNTY OF JACKSON       )
  
        BE IT REMEMBERED,  that on this 9th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President  of APPLETREE  APARTMENTS,  INC.,  a Nebraska  corporation,  that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ----------
  Commissioned in Clay County
  
  
  <PAGE>
  
  
  EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  
  
  
  <PAGE>
  
  
                 ASSIGNMENT AND ASSUMPTION OF LESSOR'S RIGHTS AND
                          OBLIGATIONS UNDER GROUND LEASE
  
  
        THIS ASSIGNMENT AND ASSUMPTION OF LESSOR'S  RIGHTS AND  OBLIGATIONS  UNDER
  GROUND LEASE (this  "Assignment")  is made effective as of the 18th day of July,
  1997, by and between  PAINE WEBBER  QUALIFIED  PLAN  PROPERTY FUND THREE,  LP, a
  Delaware  limited  partnership,  having a  principal  place of  business  at 265
  Franklin  Street,  Boston,  Massachusetts  02110  ("Assignor"),   and  APPLETREE
  APARTMENTS,  INC., a Nebraska  corporation,  having a place of business at 10000
  West 75th Street, Shawnee Mission, Kansas 66204 ("Assignee").
  
  
                                     RECITALS
  
        WHEREAS,  Assignor  and  J.A.  Peterson  Enterprises,   Inc.,  a  Missouri
  corporation ("Enterprises"), are parties to a Ground Lease dated May 8, 1984, as
  amended by a certain  Amendment to Ground Lease and Notice to Ground Lease dated
  October 30, 1985 (as  amended,  the  "Lease"),  pursuant to which  Assignor,  as
  Lessor,  agreed to lease  certain  premises  located at 6224 South 99th Court in
  Omaha,  Douglas County,  Nebraska,  as more particularly  described on Exhibit A
  attached hereto (the "Property") to Enterprises, as Lessee; and
  
        WHEREAS,    Enterprises has assigned all of its right, title and
  interest in the Lease to Assignee; and
  
        WHEREAS, Assignee is contemporaneously  herewith exercising and closing on
  an option to purchase  Assignor's  fee  interest in the Property as set forth in
  Article 30 of the Lease; and
  
        WHEREAS, in consideration of Assignee's purchase of the Property, Assignor
  desires to assign,  transfer and set over to Assignee all of  Assignor's  right,
  title and interest in the Lease; and
  
        WHEREAS,  Assignee desires to accept such assignment and assume all of the
  obligations and liabilities of Assignor  arising on and after the date hereof as
  Lessor under the Lease as hereinafter provided.
  
                                      AGREEMENT
  
        NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00), in hand
  paid,  the  recitals,  premises,   covenants,  promises  and  conditions  herein
  contained,   and  other  good  and  valuable  consideration,   the  receipt  and
  sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
  follows:
  
        1.    Recitals.  All of the foregoing recitals are incorporated herein
  as though set forth again at length.
  
        2.  Assignment  of  the  Lease.  Effective  as of  the  date  hereof  (the
  "Assignment Date"), Assignor does hereby grant, bargain, sell, assign, transfer,
  set over and convey to Assignee all of Assignor's right title and interest under
  the Lease.
  
        3.  Assumption.  Assignee  hereby  assumes all of  Assignor's  obligations
  arising on or after the Assignment Date under the Lease as Lessor thereunder, in
  place and stead of Assignor;  provided,  that the parties hereby acknowledge and
  agree that (a) as a result of the  conveyance or  assignment  of Assignor's  fee
  interest in the Property and the Lease,  Assignee's  leasehold estate will merge
  into its fee  interest  and  terminate,  and (b) they will enter into and file a
  Lease Termination  Agreement of record that will evidence the termination of the
  Lease.
  
        4.  Representations  of Assignor.  Assignor  hereby  agrees to perform and
  indemnify and hold harmless Assignee from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions contained in the Lease to be performed by the Lessor thereunder prior
  to the Assignment Date.
  
        5. Modifications. This Assignment may not be changed, modified, discharged
  or  terminated  orally or in any other  manner  other  than by an  agreement  in
  writing signed by the parties hereto or their respective successors and assigns.
  The parties hereto hereby agree to execute and deliver any other  instruments or
  documents requested by any party hereto to carry out the provisions,  intent and
  purpose of this Assignment.
  
        6.    Binding.  This Assignment shall be binding upon and shall inure
  to the benefit of the parties hereto and their respective heirs, personal
  representatives, successors and assigns.
  
        7.    Counterpart Signatures.  This Assignment may be executed in any
  number of counterparts, each of which when so executed shall be deemed an
  original, but such counterparts together shall constitute but one and the
  same Assignment.
  
  
  <PAGE>
  
  
        IN WITNESS WHEREOF, the parties have executed this Assignment effective as
  of the date first written above.
  
  
                                      ASSIGNOR:
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
  
                                            By:/s/ Celia R. Deluga
                                               -------------------
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  
  
                                      ASSIGNEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
  
  
  <PAGE>
  
  
                                    EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  
  
  
  
  <PAGE>
  
  
                   ASSIGNMENT AND ASSUMPTION OF LESSEE'S RIGHTS
                        AND OBLIGATIONS UNDER GROUND LEASE
                         AND CONVEYANCE OF PERSONAL PROPERTY
  
  
        THIS AGREEMENT (this "Assignment") is made effective as of the 18th day of
  July,  1997,  by  and  between  J.A.  PETERSON  ENTERPRISES,  INC.,  a  Missouri
  corporation  having a place of  business  at 10000  West  75th  Street,  Shawnee
  Mission, Kansas 66204 (hereinafter "Assignor") and APPLETREE APARTMENTS, INC., a
  Nebraska  corporation  having a place of  business  at 10000  West 75th  Street,
  Shawnee Mission, Kansas 66204 (hereinafter "Assignee").
  
                                     RECITALS
  
        WHEREAS, Assignor and Paine Webber Qualified Plan Property Fund Three, LP,
  a Delaware limited partnership  ("Paine Webber"),  are parties to a Ground Lease
  dated May 8, 1984, as amended by a certain  Amendment to Ground Lease and Notice
  to Ground Lease dated October 30, 1985 (as amended,  the  "Lease"),  pursuant to
  which Paine Webber, as Lessor,  agreed to lease certain premises located at 6224
  South  99th  Court in Omaha,  Douglas  County,  Nebraska,  as more  particularly
  described on Exhibit A attached hereto (the "Property") to Assignor,  as Lessee;
  and
  
        WHEREAS,  Assignor  desires to assign,  convey,  transfer  and set over to
  Assignee all of Assignor's right, title and interest under the Lease,  including
  any rights or options  Assignor has under the Lease to purchase  Paine  Webber's
  fee interest in the Property; and
  
        WHEREAS, in connection with Assignor's  assignment of its rights under the
  Lease pursuant to this Assignment, Assignor also desires to assign and convey to
  Assignee all of Assignor's interest in all buildings,  improvements,  furniture,
  furnishings,  fixtures,  apparatus,  equipment, claims, guaranties,  warranties,
  plans, specifications,  blueprints, soil tests, engineering information, utility
  contracts,   construction   contracts,   architect's   contracts,   governmental
  approvals, occupancy permits and certificates,  licenses, permits, and all other
  agreements and rights, and all other items of personal  property,  both tangible
  and  intangible,  affixed or attached to, or placed or situated upon, or used or
  acquired in any way whatsoever in connection with the use, enjoyment,  occupancy
  and  operation  of the  Property,  except  those  owned by others,  (all of such
  properties  and assets being herein  collectively  referred to as the  "Assigned
  Properties"); and
  
        WHEREAS,  Assignee desires to accept such assignments and to assume all of
  the obligations and liabilities of Assignor arising on and after the date hereof
  as Lessee under the Lease.
  
                                      AGREEMENT
  
        NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00), in hand
  paid,  the  recitals,  premises,   covenants,  promises  and  conditions  herein
  contained,   and  other  good  and  valuable  consideration,   the  receipt  and
  sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
  follows:
  
        1.    Recitals.  All of the foregoing  recitals are incorporated  herein
  as though set forth again at length.
  
        2.  Assignment  of  the  Lease.  Effective  as of  the  date  hereof  (the
  "Assignment Date"), Assignor does hereby grant, bargain, sell, assign, transfer,
  set over and convey to Assignee all of Assignor's right title and interest under
  the Lease,  including  any and all options or rights to purchase the Property as
  set forth in the Lease.
  
        3. Conveyance of the Assigned  Properties.  Effective as of the Assignment
  Date, Assignor does also hereby grant, bargain, sell, assign, transfer,  confirm
  and deliver unto Assignee,  its successors and assigns, all of Assignor's right,
  title and  interest in and to the Assigned  Properties.  TO HAVE AND TO HOLD all
  and singular the Assigned Properties unto Assignee,  its successors and assigns,
  forever.
  
        4.  Assumption.  Assignee  hereby  assumes all of  Assignor's  obligations
  arising  on or after  the  Assignment  Date  pursuant  to the  Lease  as  Lessee
  thereunder, in place and stead of Assignor.  Assignee further agrees to perform,
  discharge and observe all of the covenants, obligations and conditions contained
  therein to be performed by Assignor on or after the  Assignment  Date.  Assignee
  also agrees to assume all valid and  enforceable  liabilities and obligations to
  which the Assigned Properties are subject,  including Assignor's loan with Paine
  Webber Qualified Plan Property Fund Three,  LP, a Delaware limited  partnership,
  in the original principal amount of $4,850,000.00.
  
        5.  Representations  of Assignor.  Assignor  hereby  agrees to perform and
  indemnify and hold harmless Assignee from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions contained in the Lease to be performed by the Lessee thereunder prior
  to the Assignment Date.
  
        6.  Representations  of Assignee.  Assignee  hereby  agrees to perform and
  indemnify and hold harmless Assignor from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions  contained in the Lease to be performed by the Lessee  thereunder  on
  and after the Assignment Date.
  
        7. Modifications. This Assignment may not be changed, modified, discharged
  or  terminated  orally or in any other  manner  other  than by an  agreement  in
  writing signed by the parties hereto or their respective successors and assigns.
  The parties hereto hereby agree to execute and deliver any other  instruments or
  documents requested by any party hereto to carry out the provisions,  intent and
  purpose of this Assignment.
  
        8.    Binding.  This  Assignment  shall be binding  upon and shall inure
  to the  benefit of the parties  hereto and their  respective  heirs,  personal
  representatives, successors and assigns.
  
        9.    Counterpart  Signatures.  This  Assignment  may be executed in any
  number of  counterparts,  each of which  when so  executed  shall be deemed an
  original,  but such  counterparts  together  shall  constitute but one and the
  same Assignment.
  
        IN WITNESS WHEREOF, the parties have executed this Assignment effective as
  of the date first written above.
  
  
                                      ASSIGNOR:
  
                                      J.A. PETERSON ENTERPRISES,
                                      INC., a Missouri corporation
  
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
  
                                      ASSIGNEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
  
  
  
  
  <PAGE>
  
  
  STATE OF MISSOURI )
                    )  SS.
  COUNTY OF JACKSON)
  
       BE IT REMEMBERED,  that on this 10th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President of J.A. PETERSON ENTERPRISES,  INC., a Missouri corporation, that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ---------
  Commissioned in Clay County
  
  
  STATE OF MISSOURI )
                    )SS
  COUNTY OF JACKSON )
  
        BE IT REMEMBERED, that on this 10th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President  of APPLETREE  APARTMENTS,  INC.,  a Nebraska  corporation,  that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ---------
  Commissioned in Clay County
  
  
  
  <PAGE>
  
  
                                    EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  
  
  
  <PAGE>
  
  
                           J.A. Peterson Enterprises, Inc.
                              10000 West 75th Street
                            Shawnee Mission, Kansas 66204
  
                                    July 10, 1997
  
  
  Paine Webber Qualified Plan
   Property Fund Three, LP
  265 Franklin Street
  Boston, Massachusetts 02110
  Attn:  Rock M. D'Errico
  
        RE:   Assignment of "Ground  Lease" dated May 8, 1984 by and between Paine
              Webber  Qualified  Plan Property Fund Three,  LP, as lessor  ("Paine
              Webber"),   and  J.A.   Peterson   Enterprises,   Inc.,   as  lessee
              ("Enterprises"),  as amended by a certain  Amendment to Ground Lease
              and Notice to Ground Lease dated  October 30, 1985 (as amended,  the
              "Lease").
  
  Dear Mr. D'Errico:
  
        As you know,  Enterprises  is the  lessee of  record of  certain  premises
  located  at 6224  South  99th  Court in Omaha,  Douglas  County,  Nebraska  (the
  "Premises")  under  the  Lease.  This is to  notify  you that  contemporaneously
  herewith and in accordance with the provisions of Section 30.01(l) of the Lease,
  the  undersigned  is  assigning  and  transferring  all of its right,  title and
  interest in the Lease (the "Lease Assignment"),  including,  without limitation,
  the Option to  Purchase  the  Premises  set forth in  Article  30  thereof  (the
  "Purchase  Option"),  to  Appletree  Apartments,  Inc.,  a Nebraska  corporation
  ("Appletree").
  
        This will also confirm that  Appletree is exercising  the Purchase  Option
  and will be  acquiring  the fee  interest in the  Premises  from Paine Webber in
  accordance with the provisions of the Lease.
  
        Please  evidence your agreement with the foregoing and your consent to the
  Lease  Assignment  by signing this letter and  returning it to the  attention of
  Eric Theroff at the office of the undersigned's counsel, Lewis, Rice & Fingersh,
  L.C., 1010 Walnut Street, Suite 500, Kansas City, Missouri 64106.
  Please call if you have any questions.
  
                                  Very truly yours,
  
                                      J.A. PETERSON ENTERPRISES,
                                      INC., a Missouri corporation
  
  
                                      By:/s/ Kenneth L.Riedemann
                                         -----------------------
                                         Kenneth L. Riedemann,
                                         President
  
  
  <PAGE>
  
  
                      Acknowledgement and Consent to Assignment
  
  
        The  undersigned,  Paine Webber  Qualified Plan Property Fund Three, LP, a
  Delaware limited partnership, acknowledges receipt of the foregoing letter as of
  this 10th day of July, 1997 and hereby consents to the Lease Assignment.
  
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
  
                                            By:  /s/ Celia R. Deluga
                                                 -------------------
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  
  
  <PAGE>
  
  
                         RELEASE OF COLLATERAL ASSIGNMENT
                                 OF RENTS AND LEASES
  
        KNOW ALL MEN BY THESE PRESENTS:
  
        THAT  whereas,  all of the  indebtedness  secured by a certain  Collateral
  Assignment  of Rents  and  Leases  (the  "Lease  Assignment")  executed  by J.A.
  PETERSON ENTERPRISES,  INC., a Missouri corporation ("JA Peterson"), in favor of
  PAINE  WEBBER  QUALIFIED  PLAN  PROPERTY  FUND  THREE,  LP, a  Delaware  limited
  partnership   ("Paine  Webber"),   dated  May  8,  1984,  and  recorded  in  the
  Miscellaneous  Records of Douglas County,  Nebraska, in Book 710 at Page 54, has
  been  paid,  and JA  Peterson  has  requested  in writing  that this  Release be
  executed and delivered;
  
        NOW THEREFORE, in consideration of such payment and in accordance with the
  request of JA Peterson,  the undersigned,  Paine Webber,  does by these presents
  grant, remise, release and reconvey to the person,  persons,  entity or entities
  entitled  thereto,  all the interest and estate derived to the undersigned by or
  through the Lease Assignment in and to the following described property:
  
  
                          SEE EXHIBIT A ATTACHED HERETO.
  
  
  
        Dated July 18, 1997.
  
  
                                Paine Webber Qualified Plan Property
                                Fund Three, LP, a Delaware limited
                                partnership
  
                                By:   Third Qualified Properties, Inc.,
                                      General Partner
  
                                      By:/s/ Rock M. D'Errico
                                         --------------------
  
                                      Name: Rock M. D'Errico
  
                                      Title: Vice President
  
  
  
  <PAGE>
  
  
  
  COMMONWEALTH OF MASSACHUSETTS )
                                      )  SS.
  COUNTY OF SUFFOLK                   )
  
       BE IT REMEMBERED,  that on this 2nd day of July, 1997,  before me, a Notary
  Public in and for said County and State,  personally  appeared Rock M. D'Errico,
  to me personally  known to be the Vice President of Third Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Andrew C. Sucoff
                                          ----------------
                                          Notary Public
                                          Printed Name:Andrew C. Sucoff
  My commission expires:
  2/26/2004
  ---------
  
  
  <PAGE>
  
  
                                    EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  
  
  
  
  
  
  <PAGE>
  
  
  
  
  
                               DEED OF RECONVEYANCE
  
        KNOW ALL MEN BY THESE PRESENTS:
  
        THAT  whereas,  all of the  indebtedness  secured  by the  Deed of  Trust,
  Security   Agreement  and  Financing   Statement   executed  by  J.A.   PETERSON
  ENTERPRISES,  INC., a Missouri corporation,  in favor of MICHAEL CURRY, Esq., as
  Trustee,  and PAINE WEBBER  QUALIFIED  PLAN PROPERTY FUND THREE,  LP, a Delaware
  limited  partnership,  the  Beneficiary  named  therein,  dated May 8, 1984, and
  recorded in the Office of the Register of Deeds of Douglas County,  Nebraska, in
  Book 2676 at Page 40, has been  paid,  and said  Beneficiary  has  requested  in
  writing that this deed of reconveyance be executed and delivered;
  
        NOW THEREFORE, in consideration of such payment and in accordance with the
  request of the Beneficiary  named therein,  the undersigned as Trustee,  does by
  these  presents  grant,  remise,  release and  reconvey to the person,  persons,
  entity or entities entitled thereto, all the interest and estate derived to said
  Trustee  by or  through  said  Deed of Trust in and to the  following  described
  property:
  
  
                          SEE EXHIBIT A ATTACHED HERETO.
  
  
        Dated  July 18, 1997
  
  
  /s/ Michael Curry, Esq., as Trustee
      -------------------------------
  
  STATE OF NEBRASKA       )
                          )ss.
  COUNTY OF DOUGLAS       )
  
        The foregoing Deed of Reconveyance was acknowledged before me this 3rd day
  of July, 1997, by Michael L. Curry, Trustee as aforesaid.
  
  
                                            /s/ Betty M. Cronican
                                                -----------------
                                                Notary Public
  
  My Commission Expires: 8/24/1999
                         ---------
  
  
  <PAGE>
  
  
                                    EXHIBIT A
                                Legal Description
  
  
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "SALE OF APPLETREE APARTMENTS", "secsgml_size_bytes": 40915}]
metadata_filer: {"company-data": {"conformed-name": "PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE LP", "cik": "0000724136", "assigned-sic": "6798", "irs-number": "042798638", "state-of-incorporation": "DE", "fiscal-year-end": "0831"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-17147", "film-number": "97650920"}, "business-address": {"street1": "265 FRANKLIN ST 15TH FLR", "city": "BOSTON", "state": "MA", "zip": "02110", "phone": "6174398118"}, "mail-address": {"street1": "265 FRANKLIN ST", "city": "BOSTON", "state": "MA", "zip": "02110"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                                Washington, DC 20549
  
                                     Form 8-K
  
                                  CURRENT REPORT
  
                      Pursuant to Section 13 or 15(d) of the
                         Securities and Exchange Act of 1934
  
          Date of Report (Date of earliest event reported) July 18, 1997
  
                 Paine Webber Qualified Plan Property Fund Three, LP
                 ---------------------------------------------------
               (Exact name of registrant as specified in its charter)
  
       Delaware                       0-17147                    04-2798638
       --------                       -------                    ----------
  (State or other jurisdiction)    (Commission                 (IRS Employer
      of incorporation             File Number)               Identification No.)
  
  265 Franklin Street, Boston, Massachusetts                            02110
  ------------------------------------------                            -----
  (Address of principal executive offices)                            (Zip Code)
  
  Registrant's telephone number, including area code (617) 439-8118
                                                     --------------
  
              (Former name or address, if changed since last report)
  FORM 8-K
                                  CURRENT REPORT
  
                    PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
  
  ITEM 2 - Disposition of Assets
  
     Appletree Apartments, Omaha, Nebraska
  
     Disposition Date - July 18, 1997
  
        On July 18, 1997, the Partnership  received  $4,850,000 from the Appletree
  borrower,  which represented the full repayment of the first leasehold  mortgage
  loan secured by the Appletree  Apartments.  Simultaneously,  the Appletree owner
  purchased the Partnership's  interest in the underlying land at a price equal to
  $1,125,000,  which represented a premium of $475,000 over the Partnership's cost
  basis in the land of $650,000. In addition,  the Partnership received a mortgage
  loan prepayment penalty of 1.25% of the mortgage note balance, or $60,625, and a
  land  lease  termination  fee of  $16,000  in  accordance  with the terms of the
  agreements.  As previously  reported,  the owner of the Appletree Apartments had
  given notice of an intent to prepay its first leasehold  mortgage loan scheduled
  to  mature on June 1,  1999,  and to  repurchase  the  underlying  land from the
  Partnership.  The Partnership and the owner of the Appletree Apartments had been
  discussing  the terms of a  prepayment  transaction  for more  than a year,  and
  during the quarter  ended May 31, 1997 the parties  reached an  agreement on the
  terms of the prepayment transaction which closed on July 18, 1997.
  
        As a  result  of the  disposition  on July 18,  1997 of the  Partnership's
  investments  secured by the Appletree  Apartments,  the Partnership  will make a
  Special  Distribution of approximately  $6,264,000,  or $175 per original $1,000
  investment,  on October 15, 1997 to unit holders of record on July 18, 1997.  Of
  this amount,  approximately  $169 represents the net proceeds from the Appletree
  transactions  and  approximately  $6 represents a distribution  from Partnership
  reserves.  With the  disposition  of the Appletree  investments,  which were the
  Partnership's  only remaining real estate  assets,  a formal  liquidation of the
  Partnership  is underway.  The payment of a final  liquidating  distribution  of
  residual cash reserves after the payment of all liquidation-related expenses and
  the formal  liquidation  of the  Partnership  are  expected to be  completed  by
  November 30, 1997.
  
  ITEM 7 - Financial Statements and Exhibits
  
     (a)   Financial Statements: None
  
     (b)   Exhibits:
  
        (1)   Special  Warranty Deed by and between  Paine Webber  Qualified Plan
              Property Fund Three,  LP and Appletree  Apartments,  Inc.  dated
              July 18, 1997.
  
        (2)   Lease Termination  Agreement by and between Paine Webber  Qualified
              Plan Property Fund Three, LP and Appletree Apartments, Inc. dated 
              July 18, 1997.
  
        (3)   Assignment  and  Assumption  of  Lessor's  Rights and  Obligations
              Under Ground Lease between  Paine Webber Qualified Plan Property
              Fund Three, LP and Appletree Apartments, Inc. dated July 18, 1997.
  
        (4)   Assignment  and  Assumption  of  Leasee's  Rights and  Obligations
              Under Ground Lease and  Conveyance  of Personal  Property by Paine
              Webber  Qualified  Plan  Property  Fund Three,  LP and Appletree
              Apartments, Inc. dated July 18, 1997.
  
        (5)   Notice  Letter  and  Consent  to   Assignment  by  J.A.   Peterson
              Enterprises,  Inc. to  Paine Webber  Qualified  Plan  Property Fund
              Three, LP, dated July 10, 1997.
  
        (6)   Release of  Collateral  Assignment of Rents and Leases by Peterson
              Enterprises,  Inc. to  PaineWebber  Qualified  Plan  Property Fund
              Three, LP, dated July 18, 1997.
  
        (7)   Deed  of   Reconveyance   by  Peterson   Enterprises,   Inc.   and
              PaineWebber  Qualified Plan Property Fund Three,  LP, dated July
              18, 1997.
  FORM 8-K
  
                                   CURRENT REPORT
  
                 PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
  
                                    SIGNATURES
  
        Pursuant to the  requirements  of the Securities and Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned thereunto duly authorized.
  
                PAINE WEBBER QUALIFIED PLAN PROPERTY FUND THREE, LP
                                    (Registrant)
  
                              By: /s/ Walter V. Arnold
                                  --------------------
                                  Walter V. Arnold
                                  Senior Vice President and
                                  Chief Financial Officer
    
  
  Date:  August 4, 1997
  SPECIAL WARRANTY DEED
  
        PAINE WEBBER  QUALIFIED PLAN PROPERTY FUND THREE,  LP, a Delaware  limited
  partnership,  having a  principal  place of  business  at 265  Franklin  Street,
  Boston,  Massachusetts  02110  ("Grantor"),  in  consideration of the sum of Ten
  Dollars ($10.00) and other good and valuable consideration to Grantor duly paid,
  the  receipt  of which is  hereby  acknowledged,  hereby  conveys  to  APPLETREE
  APARTMENTS,  INC.,  a Nebraska  corporation  having a place of business at 10000
  West 75th Street, Shawnee Mission, Kansas 66204 ("Grantee"),  the real estate at
  6224 South 99th Court in Omaha,  Douglas  County,  Nebraska,  more  particularly
  described on Exhibit A attached hereto.
  
        Grantor covenants  (jointly and severally,  if more than one) with Grantee
  that Grantor:
  
              (1) is lawfully  seised of such real estate and that the real estate
  is free from  encumbrances  except for all matters of record,  including but not
  limited to: all easements, covenants,  conditions,  restrictions,  reservations,
  declarations,  community  contracts,  mortgages  and other  matters  of  record;
  unrecorded  easements  and all other  matters  which  would be  disclosed  by an
  accurate  survey and  inspection  of the real estate;  zoning laws;  the lien of
  taxes and  assessments  for 1997 and all  subsequent  years;  and all  rights of
  tenants, as tenants only, to use or occupy the real estate;
  
              (2)   has legal power and lawful authority to convey the same;
  
              (3) warrants  and will defend  title to the real estate  against the
  lawful claims of all persons claiming the same or any part thereof  through,  by
  or under Grantor.
  Executed as a sealed instrument as of the 18th day of July, 1997.
  
                                Paine Webber Qualified Plan Property
                                Fund Three, LP, a Delaware limited
                                partnership
  
                                By:Third Qualified Properties, Inc.,
                                General Partner
  
                                      By: /s/ Celia R. Deluga
                                          -------------------
  
                                      Name: Celia R. Deluga
  
                                      Title: Vice President
  
  STATE OF MASSACHUSETTS  )
                          )  SS.
  COUNTY OF SUFFOLK       )
  
       BE IT REMEMBERED,  that on this 9th day of July, 1997,  before me, a Notary
  Public in and for said County and State, personally appeared Celia R. Deluga, to
  me  personally  known to be the Vice  President of Third  Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Cynthia L. Proctor
                                          ------------------
                                          Notary Public
                                          Printed Name:  Cynthia L. Proctor
  My commission expires:
  3/11/99
  -------
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  LEASE TERMINATION AGREEMENT
  
        THIS AGREEMENT  ("Agreement") is made as of the 18th day of July, 1997, by
  and between PAINE WEBBER  QUALIFIED  PLAN  PROPERTY  FUND THREE,  LP, a Delaware
  limited  partnership,  having a  principal  place of  business  at 265  Franklin
  Street, Boston,  Massachusetts 02110 ("Lessor"), and APPLETREE APARTMENTS, INC.,
  a Nebraska  corporation,  having a place of business at 10000 West 75th  Street,
  Shawnee Mission, Kansas 66204 ("Lessee").
  
                                      RECITALS:
  
        A. Lessor and J.A.  Peterson  Enterprises,  Inc.,  a Missouri  corporation
  ("Enterprises"),  entered into a certain Ground Lease dated as of the 8th day of
  May,  1984,  as amended  by a certain  Amendment  to Ground  Lease and Notice to
  Ground Lease dated October 30, 1985  (collectively,  the  "Lease"),  pursuant to
  which Lessor demised to Enterprises and  Enterprises  leased from Lessor certain
  real estate located at 6224 South 99th Court in Omaha, Douglas County, Nebraska,
  as more  particularly  described  in  Exhibit A  attached  hereto  (the  "Leased
  Premises").
  
        B. Lessor and  Enterprises  entered into a certain  Notice of Ground Lease
  relating to the Lease,  dated May 8, 1984 and  recorded May 8, 1984 in Book 710,
  Page  40  of  the  Miscellaneous  Records  of  Douglas  County,   Nebraska  (the
  "Recorder's  Office"),  as  amended by a certain  Amendment  to Notice to Ground
  Lease dated June 6, 1984 and recorded  July 5, 1984 in Book 713, Page 390 in the
  Recorder's  Office  and by a certain  Amendment  to Ground  Lease and  Notice to
  Ground Lease dated  October 30, 1985 and recorded  January 14, 1986 in Book 763,
  Page 10 in the Recorder's Office (as amended, the "Lease Memorandum").
  
        C. Pursuant to a certain  Assignment and Assumption of Lessee's Rights and
  Obligations  Under Ground Lease and  Conveyance of Personal  Property dated July
  18, 1997,  Enterprises  assigned  and  transferred  all of its right,  title and
  interest to and under the Lease and the Lease Memorandum to Lessee.
  
        D.    Contemporaneously  herewith,  Lessee is  purchasing  Lessor's  fee
  interest in the Leased Premises
  
        E. In connection  with the sale and conveyance of Lessor's fee interest in
  the Leased  Premises to Lessee,  Lessor and Lessee desire to terminate the Lease
  and release the Lease  Memorandum  of record in accordance  with the  provisions
  hereinafter set forth.
  
        NOW, THEREFORE, in consideration of the mutual covenants herein contained,
  the parties hereto agree as follows:
  
        1.    Termination  Date.  The term of the Lease shall  terminate and the
  Lease  Memorandum shall be released of record effective as of the date of this
  Agreement (the "Termination Date").
  
        2. Release by Lessee and Lessor.  Except as otherwise  specifically herein
  provided,  each party hereto hereby  releases and  discharges the other from all
  liability of any kind or nature  whatsoever which the other may now or hereafter
  have to the other  under the Lease and the Lease  Memorandum,  whether  known or
  unknown, and whether direct or indirect.
  
        3.    Successors.  The  provisions  of this  Agreement  shall be binding
  upon and inure to the  benefit of the parties  hereto,  their  successors  and
  assigns.
  IN WITNESS  WHEREOF,  the parties have executed  this  Agreement as of the
  date first above written.
  
                                       LESSOR:
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
                                            By:/s/ Celia R. Deluga
                                               -------------------
  
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  
  STATE OF MASSACHUSETTS  )
                          )SS
  COUNTY OF SUFFOLK       )
  
        BE IT REMEMBERED,  that on this 9th day of July, 1997, before me, a Notary
  Public in and for said County and State, personally appeared Celia R. Deluga, to
  me  personally  known to be the Vice  President of Third  Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Cynthia L. Proctor
                                          ------------------
                                          Notary Public
                                          Printed Name:  Cynthia L. Proctor
  My commission expires:
  3/11/99
  -------
  LESSEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
  STATE OF MISSOURI       )
                          )SS
  COUNTY OF JACKSON       )
  
        BE IT REMEMBERED,  that on this 9th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President  of APPLETREE  APARTMENTS,  INC.,  a Nebraska  corporation,  that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ----------
  Commissioned in Clay County
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  ASSIGNMENT AND ASSUMPTION OF LESSOR'S RIGHTS AND
                          OBLIGATIONS UNDER GROUND LEASE
  
        THIS ASSIGNMENT AND ASSUMPTION OF LESSOR'S  RIGHTS AND  OBLIGATIONS  UNDER
  GROUND LEASE (this  "Assignment")  is made effective as of the 18th day of July,
  1997, by and between  PAINE WEBBER  QUALIFIED  PLAN  PROPERTY FUND THREE,  LP, a
  Delaware  limited  partnership,  having a  principal  place of  business  at 265
  Franklin  Street,  Boston,  Massachusetts  02110  ("Assignor"),   and  APPLETREE
  APARTMENTS,  INC., a Nebraska  corporation,  having a place of business at 10000
  West 75th Street, Shawnee Mission, Kansas 66204 ("Assignee").
  
                                     RECITALS
  
        WHEREAS,  Assignor  and  J.A.  Peterson  Enterprises,   Inc.,  a  Missouri
  corporation ("Enterprises"), are parties to a Ground Lease dated May 8, 1984, as
  amended by a certain  Amendment to Ground Lease and Notice to Ground Lease dated
  October 30, 1985 (as  amended,  the  "Lease"),  pursuant to which  Assignor,  as
  Lessor,  agreed to lease  certain  premises  located at 6224 South 99th Court in
  Omaha,  Douglas County,  Nebraska,  as more particularly  described on Exhibit A
  attached hereto (the "Property") to Enterprises, as Lessee; and
  
        WHEREAS,    Enterprises has assigned all of its right, title and
  interest in the Lease to Assignee; and
  
        WHEREAS, Assignee is contemporaneously  herewith exercising and closing on
  an option to purchase  Assignor's  fee  interest in the Property as set forth in
  Article 30 of the Lease; and
  
        WHEREAS, in consideration of Assignee's purchase of the Property, Assignor
  desires to assign,  transfer and set over to Assignee all of  Assignor's  right,
  title and interest in the Lease; and
  
        WHEREAS,  Assignee desires to accept such assignment and assume all of the
  obligations and liabilities of Assignor  arising on and after the date hereof as
  Lessor under the Lease as hereinafter provided.
  
                                      AGREEMENT
  
        NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00), in hand
  paid,  the  recitals,  premises,   covenants,  promises  and  conditions  herein
  contained,   and  other  good  and  valuable  consideration,   the  receipt  and
  sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
  follows:
  
        1.    Recitals.  All of the foregoing recitals are incorporated herein
  as though set forth again at length.
  
        2.  Assignment  of  the  Lease.  Effective  as of  the  date  hereof  (the
  "Assignment Date"), Assignor does hereby grant, bargain, sell, assign, transfer,
  set over and convey to Assignee all of Assignor's right title and interest under
  the Lease.
  
        3.  Assumption.  Assignee  hereby  assumes all of  Assignor's  obligations
  arising on or after the Assignment Date under the Lease as Lessor thereunder, in
  place and stead of Assignor;  provided,  that the parties hereby acknowledge and
  agree that (a) as a result of the  conveyance or  assignment  of Assignor's  fee
  interest in the Property and the Lease,  Assignee's  leasehold estate will merge
  into its fee  interest  and  terminate,  and (b) they will enter into and file a
  Lease Termination  Agreement of record that will evidence the termination of the
  Lease.
  
        4.  Representations  of Assignor.  Assignor  hereby  agrees to perform and
  indemnify and hold harmless Assignee from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions contained in the Lease to be performed by the Lessor thereunder prior
  to the Assignment Date.
  
        5. Modifications. This Assignment may not be changed, modified, discharged
  or  terminated  orally or in any other  manner  other  than by an  agreement  in
  writing signed by the parties hereto or their respective successors and assigns.
  The parties hereto hereby agree to execute and deliver any other  instruments or
  documents requested by any party hereto to carry out the provisions,  intent and
  purpose of this Assignment.
  
        6.    Binding.  This Assignment shall be binding upon and shall inure
  to the benefit of the parties hereto and their respective heirs, personal
  representatives, successors and assigns.
  
        7.    Counterpart Signatures.  This Assignment may be executed in any
  number of counterparts, each of which when so executed shall be deemed an
  original, but such counterparts together shall constitute but one and the
  same Assignment.
  IN WITNESS WHEREOF, the parties have executed this Assignment effective as
  of the date first written above.
  
                                      ASSIGNOR:
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
                                            By:/s/ Celia R. Deluga
                                               -------------------
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  
                                      ASSIGNEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  ASSIGNMENT AND ASSUMPTION OF LESSEE'S RIGHTS
                        AND OBLIGATIONS UNDER GROUND LEASE
                         AND CONVEYANCE OF PERSONAL PROPERTY
  
        THIS AGREEMENT (this "Assignment") is made effective as of the 18th day of
  July,  1997,  by  and  between  J.A.  PETERSON  ENTERPRISES,  INC.,  a  Missouri
  corporation  having a place of  business  at 10000  West  75th  Street,  Shawnee
  Mission, Kansas 66204 (hereinafter "Assignor") and APPLETREE APARTMENTS, INC., a
  Nebraska  corporation  having a place of  business  at 10000  West 75th  Street,
  Shawnee Mission, Kansas 66204 (hereinafter "Assignee").
  
                                     RECITALS
  
        WHEREAS, Assignor and Paine Webber Qualified Plan Property Fund Three, LP,
  a Delaware limited partnership  ("Paine Webber"),  are parties to a Ground Lease
  dated May 8, 1984, as amended by a certain  Amendment to Ground Lease and Notice
  to Ground Lease dated October 30, 1985 (as amended,  the  "Lease"),  pursuant to
  which Paine Webber, as Lessor,  agreed to lease certain premises located at 6224
  South  99th  Court in Omaha,  Douglas  County,  Nebraska,  as more  particularly
  described on Exhibit A attached hereto (the "Property") to Assignor,  as Lessee;
  and
  
        WHEREAS,  Assignor  desires to assign,  convey,  transfer  and set over to
  Assignee all of Assignor's right, title and interest under the Lease,  including
  any rights or options  Assignor has under the Lease to purchase  Paine  Webber's
  fee interest in the Property; and
  
        WHEREAS, in connection with Assignor's  assignment of its rights under the
  Lease pursuant to this Assignment, Assignor also desires to assign and convey to
  Assignee all of Assignor's interest in all buildings,  improvements,  furniture,
  furnishings,  fixtures,  apparatus,  equipment, claims, guaranties,  warranties,
  plans, specifications,  blueprints, soil tests, engineering information, utility
  contracts,   construction   contracts,   architect's   contracts,   governmental
  approvals, occupancy permits and certificates,  licenses, permits, and all other
  agreements and rights, and all other items of personal  property,  both tangible
  and  intangible,  affixed or attached to, or placed or situated upon, or used or
  acquired in any way whatsoever in connection with the use, enjoyment,  occupancy
  and  operation  of the  Property,  except  those  owned by others,  (all of such
  properties  and assets being herein  collectively  referred to as the  "Assigned
  Properties"); and
  
        WHEREAS,  Assignee desires to accept such assignments and to assume all of
  the obligations and liabilities of Assignor arising on and after the date hereof
  as Lessee under the Lease.
  
                                      AGREEMENT
  
        NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00), in hand
  paid,  the  recitals,  premises,   covenants,  promises  and  conditions  herein
  contained,   and  other  good  and  valuable  consideration,   the  receipt  and
  sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
  follows:
  
        1.    Recitals.  All of the foregoing  recitals are incorporated  herein
  as though set forth again at length.
  
        2.  Assignment  of  the  Lease.  Effective  as of  the  date  hereof  (the
  "Assignment Date"), Assignor does hereby grant, bargain, sell, assign, transfer,
  set over and convey to Assignee all of Assignor's right title and interest under
  the Lease,  including  any and all options or rights to purchase the Property as
  set forth in the Lease.
  
        3. Conveyance of the Assigned  Properties.  Effective as of the Assignment
  Date, Assignor does also hereby grant, bargain, sell, assign, transfer,  confirm
  and deliver unto Assignee,  its successors and assigns, all of Assignor's right,
  title and  interest in and to the Assigned  Properties.  TO HAVE AND TO HOLD all
  and singular the Assigned Properties unto Assignee,  its successors and assigns,
  forever.
  
        4.  Assumption.  Assignee  hereby  assumes all of  Assignor's  obligations
  arising  on or after  the  Assignment  Date  pursuant  to the  Lease  as  Lessee
  thereunder, in place and stead of Assignor.  Assignee further agrees to perform,
  discharge and observe all of the covenants, obligations and conditions contained
  therein to be performed by Assignor on or after the  Assignment  Date.  Assignee
  also agrees to assume all valid and  enforceable  liabilities and obligations to
  which the Assigned Properties are subject,  including Assignor's loan with Paine
  Webber Qualified Plan Property Fund Three,  LP, a Delaware limited  partnership,
  in the original principal amount of $4,850,000.00.
  
        5.  Representations  of Assignor.  Assignor  hereby  agrees to perform and
  indemnify and hold harmless Assignee from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions contained in the Lease to be performed by the Lessee thereunder prior
  to the Assignment Date.
  
        6.  Representations  of Assignee.  Assignee  hereby  agrees to perform and
  indemnify and hold harmless Assignor from any damages, losses, costs or expenses
  related  to  the  nonperformance  of  all  of  the  covenants,  obligations  and
  conditions  contained in the Lease to be performed by the Lessee  thereunder  on
  and after the Assignment Date.
  
        7. Modifications. This Assignment may not be changed, modified, discharged
  or  terminated  orally or in any other  manner  other  than by an  agreement  in
  writing signed by the parties hereto or their respective successors and assigns.
  The parties hereto hereby agree to execute and deliver any other  instruments or
  documents requested by any party hereto to carry out the provisions,  intent and
  purpose of this Assignment.
  
        8.    Binding.  This  Assignment  shall be binding  upon and shall inure
  to the  benefit of the parties  hereto and their  respective  heirs,  personal
  representatives, successors and assigns.
  
        9.    Counterpart  Signatures.  This  Assignment  may be executed in any
  number of  counterparts,  each of which  when so  executed  shall be deemed an
  original,  but such  counterparts  together  shall  constitute but one and the
  same Assignment.
  
        IN WITNESS WHEREOF, the parties have executed this Assignment effective as
  of the date first written above.
  
                                      ASSIGNOR:
  
                                      J.A. PETERSON ENTERPRISES,
                                      INC., a Missouri corporation
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  
                                      ASSIGNEE:
  
                                      APPLETREE APARTMENTS, INC., a
                                      Nebraska corporation
  
                                      By:/s/ Kenneth L. Riedemann
                                         ------------------------
                                         Kenneth L. Riedemann,
                                         President
  STATE OF MISSOURI )
                    )  SS.
  COUNTY OF JACKSON)
  
       BE IT REMEMBERED,  that on this 10th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President of J.A. PETERSON ENTERPRISES,  INC., a Missouri corporation, that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ---------
  Commissioned in Clay County
  
  STATE OF MISSOURI )
                    )SS
  COUNTY OF JACKSON )
  
        BE IT REMEMBERED, that on this 10th day of July, 1997, before me, a Notary
  Public  in and for  said  County  and  State,  personally  appeared  Kenneth  L.
  Riedemann, to me personally known to be the person described in and who executed
  the foregoing  instrument,  who, being by me duly sworn,  did say that he is the
  President  of APPLETREE  APARTMENTS,  INC.,  a Nebraska  corporation,  that said
  instrument was signed in behalf of said corporation by authority of its board of
  directors,  and said person  acknowledged said instrument to be the free act and
  deed of said corporation.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                  /s/ Sandra Zintz
                                      ------------
                                      Notary Public
                                      Printed Name:Sandra Zintz
  My Commission expires:
  8/19/2000
  ---------
  Commissioned in Clay County
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  J.A. Peterson Enterprises, Inc.
                              10000 West 75th Street
                            Shawnee Mission, Kansas 66204
  
                                    July 10, 1997
  
  Paine Webber Qualified Plan
   Property Fund Three, LP
  265 Franklin Street
  Boston, Massachusetts 02110
  Attn:  Rock M. D'Errico
  
        RE:   Assignment of "Ground  Lease" dated May 8, 1984 by and between Paine
              Webber  Qualified  Plan Property Fund Three,  LP, as lessor  ("Paine
              Webber"),   and  J.A.   Peterson   Enterprises,   Inc.,   as  lessee
              ("Enterprises"),  as amended by a certain  Amendment to Ground Lease
              and Notice to Ground Lease dated  October 30, 1985 (as amended,  the
              "Lease").
  
  Dear Mr. D'Errico:
  
        As you know,  Enterprises  is the  lessee of  record of  certain  premises
  located  at 6224  South  99th  Court in Omaha,  Douglas  County,  Nebraska  (the
  "Premises")  under  the  Lease.  This is to  notify  you that  contemporaneously
  herewith and in accordance with the provisions of Section 30.01(l) of the Lease,
  the  undersigned  is  assigning  and  transferring  all of its right,  title and
  interest in the Lease (the "Lease Assignment"),  including,  without limitation,
  the Option to  Purchase  the  Premises  set forth in  Article  30  thereof  (the
  "Purchase  Option"),  to  Appletree  Apartments,  Inc.,  a Nebraska  corporation
  ("Appletree").
  
        This will also confirm that  Appletree is exercising  the Purchase  Option
  and will be  acquiring  the fee  interest in the  Premises  from Paine Webber in
  accordance with the provisions of the Lease.
  
        Please  evidence your agreement with the foregoing and your consent to the
  Lease  Assignment  by signing this letter and  returning it to the  attention of
  Eric Theroff at the office of the undersigned's counsel, Lewis, Rice & Fingersh,
  L.C., 1010 Walnut Street, Suite 500, Kansas City, Missouri 64106.
  Please call if you have any questions.
  
                                  Very truly yours,
  
                                      J.A. PETERSON ENTERPRISES,
                                      INC., a Missouri corporation
  
                                      By:/s/ Kenneth L.Riedemann
                                         -----------------------
                                         Kenneth L. Riedemann,
                                         President
  Acknowledgement and Consent to Assignment
  
        The  undersigned,  Paine Webber  Qualified Plan Property Fund Three, LP, a
  Delaware limited partnership, acknowledges receipt of the foregoing letter as of
  this 10th day of July, 1997 and hereby consents to the Lease Assignment.
  
                                      PAINE WEBBER QUALIFIED PLAN
                                      PROPERTY FUND THREE, LP, a
                                      a Delaware limited partnership
  
                                      By:   THIRD QUALIFIED PROPERTIES,
                                            INC., General Partner
  
                                            By:  /s/ Celia R. Deluga
                                                 -------------------
                                            Name:  Celia R. Deluga
                                            Title: Vice President
  RELEASE OF COLLATERAL ASSIGNMENT
                                 OF RENTS AND LEASES
  
        KNOW ALL MEN BY THESE PRESENTS:
  
        THAT  whereas,  all of the  indebtedness  secured by a certain  Collateral
  Assignment  of Rents  and  Leases  (the  "Lease  Assignment")  executed  by J.A.
  PETERSON ENTERPRISES,  INC., a Missouri corporation ("JA Peterson"), in favor of
  PAINE  WEBBER  QUALIFIED  PLAN  PROPERTY  FUND  THREE,  LP, a  Delaware  limited
  partnership   ("Paine  Webber"),   dated  May  8,  1984,  and  recorded  in  the
  Miscellaneous  Records of Douglas County,  Nebraska, in Book 710 at Page 54, has
  been  paid,  and JA  Peterson  has  requested  in writing  that this  Release be
  executed and delivered;
  
        NOW THEREFORE, in consideration of such payment and in accordance with the
  request of JA Peterson,  the undersigned,  Paine Webber,  does by these presents
  grant, remise, release and reconvey to the person,  persons,  entity or entities
  entitled  thereto,  all the interest and estate derived to the undersigned by or
  through the Lease Assignment in and to the following described property:
  
                          SEE EXHIBIT A ATTACHED HERETO.
  
        Dated July 18, 1997.
  
                                Paine Webber Qualified Plan Property
                                Fund Three, LP, a Delaware limited
                                partnership
  
                                By:   Third Qualified Properties, Inc.,
                                      General Partner
  
                                      By:/s/ Rock M. D'Errico
                                         --------------------
  
                                      Name: Rock M. D'Errico
  
                                      Title: Vice President
  COMMONWEALTH OF MASSACHUSETTS )
                                      )  SS.
  COUNTY OF SUFFOLK                   )
  
       BE IT REMEMBERED,  that on this 2nd day of July, 1997,  before me, a Notary
  Public in and for said County and State,  personally  appeared Rock M. D'Errico,
  to me personally  known to be the Vice President of Third Qualified  Properties,
  Inc.,  Managing  General  Partner of Paine Webber  Qualified  Plan Property Fund
  Three,  LP, a Delaware  limited  partnership,  and who  executed  the  foregoing
  instrument  as such  officer  on behalf  of said  corporation  and said  limited
  partnership,  and such person duly  acknowledged the execution of the same to be
  the free act and deed of said corporation and said limited partnership.
  
       IN WITNESS  WHEREOF,  I have  hereunto  set my hand and affixed my official
  seal the day and year last above written.
  
                                      /s/ Andrew C. Sucoff
                                          ----------------
                                          Notary Public
                                          Printed Name:Andrew C. Sucoff
  My commission expires:
  2/26/2004
  ---------
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.
  DEED OF RECONVEYANCE
  
        KNOW ALL MEN BY THESE PRESENTS:
  
        THAT  whereas,  all of the  indebtedness  secured  by the  Deed of  Trust,
  Security   Agreement  and  Financing   Statement   executed  by  J.A.   PETERSON
  ENTERPRISES,  INC., a Missouri corporation,  in favor of MICHAEL CURRY, Esq., as
  Trustee,  and PAINE WEBBER  QUALIFIED  PLAN PROPERTY FUND THREE,  LP, a Delaware
  limited  partnership,  the  Beneficiary  named  therein,  dated May 8, 1984, and
  recorded in the Office of the Register of Deeds of Douglas County,  Nebraska, in
  Book 2676 at Page 40, has been  paid,  and said  Beneficiary  has  requested  in
  writing that this deed of reconveyance be executed and delivered;
  
        NOW THEREFORE, in consideration of such payment and in accordance with the
  request of the Beneficiary  named therein,  the undersigned as Trustee,  does by
  these  presents  grant,  remise,  release and  reconvey to the person,  persons,
  entity or entities entitled thereto, all the interest and estate derived to said
  Trustee  by or  through  said  Deed of Trust in and to the  following  described
  property:
  
                          SEE EXHIBIT A ATTACHED HERETO.
  
        Dated  July 18, 1997
  
  /s/ Michael Curry, Esq., as Trustee
      -------------------------------
  
  STATE OF NEBRASKA       )
                          )ss.
  COUNTY OF DOUGLAS       )
  
        The foregoing Deed of Reconveyance was acknowledged before me this 3rd day
  of July, 1997, by Michael L. Curry, Trustee as aforesaid.
  
                                            /s/ Betty M. Cronican
                                                -----------------
                                                Notary Public
  
  My Commission Expires: 8/24/1999
                         ---------
  EXHIBIT A
                                Legal Description
  
  Lots 17, 18 and 19, in APPLEWOOD, an Addition to the City of Omaha, as surveyed,
  platted and recorded, in Douglas County, Nebraska.