Exhibit 10.1

 

SENIOR MEZZANINE LOAN AGREEMENT

This SENIOR MEZZANINE LOAN AGREEMENT (this “Agreement”) is made and entered into
as of this 22nd day of September, 2006, by and between GC 128 Voss SM LLC, a
Delaware limited liability company, whose address is 2001 Bryan Street, Suite
3700, Dallas, Texas, 75201 (“Borrower”), and Behringer Harvard Alexan Voss, LLC,
a Delaware limited liability company, whose address is 15601 Dallas Parkway,
Suite 600, Addison, Texas, 75001 (“Lender”).

R E C I T A L S:

This Agreement is made with reference to the following facts:

A.            Concurrently herewith, Bank of America, N.A., a national banking
association (“Senior Lender”) is making a mortgage loan in the amount of Thirty
Nine Million Six Hundred Eleven Thousand Sixty Six Dollars ($39,611,066.00) (the
“Senior Loan”) to GC 127 Voss Holdings LLC, a Delaware limited liability company
(“Mortgagor”) evidenced by a Promissory Note of even date herewith (the “Senior
Note”).

B.            Mortgagor, concurrently herewith, will be the owner of that
certain land located in Houston, Texas and more particularly described on
Exhibit “A-1” (the “La Scala Parcel”) attached hereto and at a later date,
Mortgagor will purchase that certain land located in Houston, Texas and more
particularly described on Exhibit “A-2”  (the “Hart Parcel”) (the La Scala
Parcel initially, and the Hart Parcel when acquired, together with all
improvements, fixtures and other appurtenances, shall be known as the
“Property”).  Mortgagor will construct on the Property a 376 unit apartment
project (the “Project”).  The Senior Note is secured by a deed of trust,
mortgage, or deed to secure debt, of even date herewith (together with any and
all extensions, renewals, substitutions, replacements, amendment, modifications
and/or restatements thereof (the “Security Instrument”) in favor of Senior
Lender encumbering the Project.

C.            Borrower is the legal and beneficial owner of 100% of the Equity
Interests in Mortgagor.

D.            Borrower has requested that Lender, as senior mezzanine lender,
make a loan to Borrower (the “Loan”) in the amount of Six Million Eight Hundred
Fifty Thousand Dollars ($6,850,000.00) (the “Loan Amount”) subject to the term
and provisions of this Agreement, which Loan is to be advanced as hereinafter
provided and is to be evidenced by the Note.  The Note is to be secured by the
Pledge and Security Agreement and the other collateral referred to in Section 5
below.

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E.             Borrower desires to borrow the Loan Amount from Lender, the
proceeds of which are to be used by Borrower to, among other things, pay the
costs and expenses, if any, referred to in Section 3(b) below.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
agreements hereinafter contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

1.           RECITALS.  The recitals set forth above are true and correct and
are incorporated herein by reference.

2.           DEFINITIONS.  The following terms, when used in this Agreement
(including when used in the above recitals), shall have the following meanings:

(a)                                  “Accounting Records”:  shall mean such
records used to prepare financial statements including but not limited to:  (i)
supporting documentation for cash disbursements (including check copies and
invoices); (ii) supporting documentation for cash receipts (including deposit
slips); (iii) contracts; (iv) check registers; (v) monthly bank account
reconciliations and (vi) such other documentation in the possession of Borrower
or its Affiliates or which Borrower will use its best efforts to acquire, as
Lender shall reasonably require for the preparation of financial statements for
the Project, Mortgagor or Borrower.

(b)                                 “Affiliate”:  of any specified person or
entity shall mean any other person or entity, directly or indirectly,
controlling or controlled by or under direct or indirect common control with
such specified person or entity.  For purposes of this definition, “control”
shall mean the ability, whether by the ownership of shares or other equity
interests, by contract or otherwise, to elect a majority of the directors of a
corporation, to make management decisions on behalf of, or independently to
select the managing partner of, a partnership, or otherwise to have the power
independently to remove and then select a majority of those individuals
exercising managerial authority over an entity.  Control of an entity shall be
conclusively presumed in the case of the ownership of more than 50% of the
equity interests in the entity.

(c)                                  “Annual Budget”:  shall mean, for any
period, the budget submitted to Lender and in effect for such period as provided
in Section 12 hereof.

(d)                                 “Bankruptcy Proceedings”:  is defined in
Section 17(j).

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(e)                                  “Borrower”:  means the entity identified as
“Borrower” in the first paragraph of this Agreement, together with its
successors and assigns.

(f)                                    “Budget”:  shall mean that construction
budget attached hereto for the La Scala Parcel as Exhibit “B-1” and for the Hart
Parcel as Exhibit “B-2”.

(g)                                 “Business Day”:  shall mean all days other
than Saturday, Sunday or any other day on which national banks doing business in
Dallas, Texas are not open for business.

(h)                                 “Code”:  the Internal Revenue Code of 1986,
as amended from time to time, or the corresponding provisions of any successor
federal income tax law.  Any reference to a particular provision of the Code
shall include any amendment of such provision or the corresponding provision of
any successor federal income tax law.

(i)                                     “Collateral”:  is defined in the Pledge
Agreement.

(j)                                     “Completion Guaranty”: means that
certain Senior Mezzanine Completion Guaranty of even date herewith, executed by
the Guarantors, jointly and severally, in favor of Lender.

(k)                                  “Default Interest Rate”:  is defined in the
Note.

(l)                                     “Encumbrance”:  shall mean any pledge,
encumbrance, hypothecation or other grant of security interest, whether direct
or indirect, voluntary or involuntary or by operation of law, and whether or not
consented to by Lender, of or in (i) all or any portion of, or interest in, the
Project (other than any encumbrance by the Senior Loan Documents and the
Permitted Exceptions), or (ii) any Equity Interests in Mortgagor, or (iii) any
part of the Principal’s Equity Interests in Borrower.

(m)                               “Environmental Indemnity”:  shall mean the
Senior Mezzanine Environmental Indemnity Agreement of even date herewith,
executed by Borrower and containing representations, warranties, covenants and
indemnities in favor of Lender with respect to Hazardous Materials.

(n)                                 “Equity Interests”:  means, with respect to
any Person, shares of capital stock, partnership interests, membership interests
in a limited liability company, beneficial interests in a trust or other equity
ownership interests in such Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire from such Person any such
equity interest issued by such Person.

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(o)                                 “Event of Default”:  shall have the meaning
given in Section 17 hereof.

(p)                                 “Guarantors”:  shall mean CFP Residential,
L.P., Kenneth Valach, J. Ronald Terwilliger and Brian Austin.

(q)                                 “Hazardous Materials”:  shall have the
meaning given in the Environmental Indemnity.

(r)                                    “Indebtedness”:  shall mean the principal
of, interest on, and any other amounts due at any time under, this Agreement,
the Note, the Pledge Agreement or any other Loan Document, including prepayment
premiums, late charges, default interest, and advances to protect the security
of the Collateral.

(s)                                  “Junior Mezzanine Loan”: shall mean that
certain Junior Mezzanine Loan dated of even date herewith made to Principal, as
borrower, by Lender, as junior mezzanine lender.

(t)                                    “Leases”:  shall mean all present and
future leases, subleases, licenses, concessions or other possessory interests
now or hereafter in force, whether oral or written, covering or affecting the
Project, or any portion of the Project, and all modifications, extensions or
renewals.

(u)                                 “Lender”:  means the entity identified as
“Lender” in the first paragraph of this Agreement and its successors and
assigns.

(v)                                 “Loan Documents”:  shall mean the Note, this
Loan Agreement, the Pledge Agreement, the Completion Guaranty, the Environmental
Indemnity, the Subordination of Management Agreement and all other documents
executed by Borrower or Guarantors to evidence, secure or set out the terms of
the Loan, each as the same may hereafter be amended, modified and restated from
time to time.

(w)                               “Loan Commitment Fee”:  means the amount of
Two Hundred Five Thousand Five Hundred Dollars ($205,500.00), being 3% of the
Loan Amount, of which $115,500 is payable as of the date of this Agreement and
the remainder of which is payable on the date the Mortgagor purchases the Hart
Parcel.

(x)                                   “Management Agreement”:  shall mean that
certain Management Agreement dated September 22, 2006, entered into by and
between Mortgagor and Manager, pursuant to which Manager has agreed to manage
the operations of the Project, as the same may be amended from time to time,
that certain Management Agreement dated September 22, 2006, entered into by and
between Mortgagor and Manager, pursuant to which Manager has agreed to manage
the

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demolition of the existing improvements on the La Scala parcel as the same may
be amended from time to time, or any other management agreement approved by
Lender pursuant to Section 13(h) hereof.

(y)                                 “Manager”:  shall mean Riverstone
Residential SC, LP or any other property management company approved by Lender
pursuant to Section 13(h) hereof.

(z)                                   “Maturity Date” shall have the meaning
given in the Note.

(aa)                            “Note”:  shall mean that certain Senior
Mezzanine Promissory Note, dated of even date herewith, in the Loan Amount, made
payable by Borrower to the order of Lender, evidencing all amounts outstanding
under the Loan from time to time, as the same may be amended from time to time.

(bb)                          “Option Agreement”:  shall mean that certain
Option Agreement dated of even date herewith, among Lender and Principal, giving
Lender the option to purchase the Equity Interests in Mortgagor and Borrower on
the terms and conditions set forth therein.

(cc)                            “Option Guaranty”:  shall mean that certain
Limited Guaranty dated of even date herewith, executed by Guarantors for the
benefit of Principal guaranteeing certain obligations in connection with the
Option Agreement.

(dd)                          “Permitted Exceptions”:  shall mean (1) the title
exceptions included in the Policy required to be delivered to Lender pursuant to
Section 7(a) hereof, as the same may be endorsed from time to time with the
consent of the Lender, (2) liens and security interests securing the Loan or the
Senior Loan, (3) liens for taxes, assessments or other governmental charges or
levies that are not then due or that are being contested in good faith and in
accordance with applicable statutory procedures, (4) mechanic’s liens against
the Project which are bonded off, released of record or otherwise remedied to
Lender’s reasonable satisfaction within 30 days of the date of creation, (5)
Leases entered into on terms allowed by this Agreement and (6) other matters
approved in writing by Lender.

(ee)                            “Person”:  shall mean any individual,
corporation, partnership, limited liability company, joint venture, estate,
trust, or unincorporated association, any other entity, any federal, state,
county or municipal government or any bureau, department or agency thereof and
any fiduciary acting in such capacity on behalf of the foregoing.

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(ff)                                “Pledge Agreement”:  shall mean that certain
Senior Mezzanine Pledge and Security Agreement, dated of even date herewith,
from the Borrower to Lender, as the same may be amended, modified and restated
from time to time, pursuant to which the Borrower has pledged all of the Equity
Interests in the Mortgagor.

(gg)                          “Principal”:  shall mean GC 129 Voss JM LLC, a
Delaware limited liability company, the sole member of Borrower and the holder
of all Equity Interests in Borrower, and any person or entity who becomes the
owner of any Equity Interest in Borrower after the date of this Agreement and is
identified as such in an amendment or supplement to this Agreement.

(hh)                          “Sale”:  shall mean any sale, assignment,
transfer, conveyance or other disposition, whether voluntary or involuntary, and
whether or not consented to by Lender of (i) all or any portion of, or interest
in, the Property or the Project, (ii) all or any portion of the Equity Interests
in Mortgagor, or (iii) all or any portion of the Principal’s Equity Interests in
Borrower.

(ii)                                  “Senior Loan Agreement:  shall mean that
certain Loan Agreement dated of even date herewith between Senior Lender and
Mortgagor.

(jj)                                  “Senior Loan Documents”:  shall mean the
Senior Note, the Security Instrument, the Senior Loan Agreement, the
Environmental Agreement (as defined in the Senior Loan Agreement), any guaranty
provided by the guarantors to the Senior Loan, financing statements filed in
connection with the Senior Loan, the Budget (as defined in the Senior Loan
Agreement), each Draw Request (as defined in the Senior Loan Agreement,
Assignment of Rents (as defined in the Senior Loan Agreement) and all other
documents and instruments to which Mortgagor or Guarantors are a party
evidencing, securing or pertaining to the loan evidenced by the Senior Note, as
they each may be amended, modified or restated with the consent of Senior
Lender.

(kk)                            “Senior Note”:  shall mean the Promissory Note
described in the Recitals to this Agreement, and all schedules, riders, allonges
and addenda, as such Promissory Note may be amended from time to time with the
consent of Senior Lender.

(ll)                                  “Title Insurer”:  shall mean Lawyer’s
Title Insurance Corporation.

(mm)                      “Third Party Agreement”:  shall mean any agreement
other than Leases and the Permitted Exceptions that will be binding on the
Project, Mortgagor or Borrower after the closing of the Loan.

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3.           THE LOAN; DISBURSEMENT OF LOAN.

(a)                                  Loan.  On the basis of the covenants,
agreements and representations of Borrower contained herein and subject to the
terms and conditions hereinafter set forth, Lender shall lend to Borrower and
Borrower shall borrow from Lender a sum not to exceed the Loan Amount, as it may
be reduced in accordance with Section 23 herein, the proceeds of which are to be
disbursed by Lender in accordance with the provisions of Section 3(b) hereof.

(b)                                 Loan Disbursements.  Upon satisfaction of
all the conditions set forth in Section 6 hereof (with respect to the La Scala
Parcel, as applicable), Borrower hereby directs and authorizes Lender to
disburse an initial draw in the amount of $2,360,053.98 to Borrower to be used,
as applicable, to acquire the La Scala Parcel and/or to pay for or reimburse
Borrower for payment of costs as described in Exhibit “B-1”.  Upon the purchase
by Mortgagor of the Hart Parcel, Lender shall, upon the satisfaction of all the
conditions set forth in Section 6 hereof (with respect to the Hart Parcel, as
applicable), disburse a second draw to Borrower in the amount of 30% of the
acquisition costs of the Hart Parcel to be used, as applicable, to acquire the
Hart Parcel and /or to pay for or reimburse Borrower for payment of costs as
described in the Budget.  At anytime thereafter but no more than twice monthly,
Borrower may submit a Draw Request in the form of Exhibit “C” and provided
Borrower meets the conditions set forth in Section 6 and Borrower is in
compliance with the covenants set forth herein and there are no Events of
Default, then Lender shall disburse the requested amount to be used for the
payment of costs as described in the Budget, not to exceed the Loan Amount as it
may be reduced in accordance with Section 23 herein.  The Loan is not
revolving.  In no event shall the aggregate amount disbursed hereunder exceed
the original principal amount of the Loan.

4.           INTEREST PAYMENTS; NO USURY, LOAN COMMITMENT FEE; PREPAYMENT;
MATURITY; REPAYMENT.

(a)                                  Interest.  Interest on the principal
balance of the Loan shall accrue and shall be payable in the amounts and at the
times set forth in the Note.  Borrower agrees to pay, on the Maturity Date, the
unpaid principal balance of the Loan, together with all accrued but unpaid
interest thereon.

(b)                                 No Usury.  The provisions of this Agreement,
the Note, the Option Agreement and of all other agreements between Borrower and
Lender, whether now existing or hereafter arising and whether written or oral,
including, but not limited to, the Loan Documents, are hereby expressly limited
so that in no contingency or event whatsoever, whether by reason of demand or
acceleration of the

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maturity of this Note or otherwise, shall the amount contracted for, charged,
taken, reserved, paid, or agreed to be paid to Lender for the use, forbearance,
retention or detention of the money loaned under this Note and related
indebtedness exceed the maximum amount permissible under applicable law.  If,
from any circumstance whatsoever, performance or fulfillment of any provision
hereof or of any agreement between Borrower and Lender shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit; and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the payment
of interest.  All interest (including any amounts or payments judicially or
otherwise under the law deemed to be interest) contracted for, charged, taken,
reserved, paid or agreed to be paid to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Note, including any extensions or renewals thereof, until payment in
full of the Indebtedness so that the interest thereof for such full period will
not exceed at any time the maximum amount permitted by applicable law.  In this
regard, Borrower acknowledges with Lender, as a material inducement to Lender to
enter into this Agreement and advance the Loan, that the Option Agreement is “an
option or right to purchase capital stock or other equity securities of an
obligor or of an affiliate of an obligor” as such phrase is used in Section
306.101(b)(3) of the Texas Finance Code, and, accordingly, that the neither
execution of the Option Agreement nor exercise by Lender of such option shall
constitute or result in a charge of interest under Texas law.  To the extent
that Lender is relying on Chapter 303, as amended, of the Texas Finance Code to
determine the maximum amount of interest permitted by applicable law on the
principal of the Loan, Lender will utilize the weekly rate ceiling from time to
time in effect as provided in such Chapter 303, as amended.  To the extent
United States federal law permits a greater amount of interest than is permitted
under Texas law, Lender will rely on United States federal law instead of such
Chapter 303, as amended, for the purpose of determining the maximum amount
permitted by applicable law.  Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lender may, at its option and from
time to time, implement any other method of computing the maximum lawful rate
under such Chapter 303, as amended, or

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under other applicable law by giving notice, if required, to Borrower as
provided by applicable law now or hereafter in effect.  This paragraph 4(b) will
control all agreements (including the Option Agreement) between Borrower and
Lender.

(c)                                  Loan Commitment Fee.  Concurrently with the
closing of the Loan, and as a condition precedent thereto, Lender shall receive
$115,500 of the Loan Commitment Fee, which shall be deemed to have been earned
in full by Lender, and is non-refundable, upon the disbursement of all or any
portion of the Loan.  Upon the acquisition of the Hart Parcel by Mortgagor,
Lender shall receive the remainder of the Loan Commitment Fee which shall be
deemed to have been earned in full by Lender, and is non-refundable, upon the
disbursement of all or any portion of the Loan.

(d)                                 Prepayment.  All amounts due and owing under
the Note from time to time may only be prepaid in accordance with the terms of
the Note.

(e)                                  Maturity Date .  The outstanding principal
balance of the Note and all accrued and unpaid interest thereon shall become due
and payable on the Maturity Date unless the same is otherwise accelerated in
accordance with the provisions hereof or the other Loan Documents.  Subject to
the provisions of Section 13(d) hereof, in the event that the Senior Note is
paid in full at any time prior to the Maturity Date of the Loan, the
Indebtedness shall then be immediately due and payable regardless of the then
stated maturity date of the Loan.

5.           SECURITY FOR LOAN; GUARANTY.

(a)                                  Pledge Agreement.  The Loan shall be
secured by, among other things, the Pledge Agreement.

(b)                                 Other Loan Documents.  The Loan shall be
further secured and supported by the Environmental Indemnity and the other Loan
Documents.

(c)                                  Completion Guaranty.  As additional
security for the Loan, the Guarantors shall execute and deliver to Lender the
Completion Guaranty.

6.           CONDITIONS PRECEDENT TO CLOSING OF THE LOAN.  Prior to the funding
of the Loan (unless otherwise provided), all of the following conditions shall
have been satisfied and/or Borrower, Guarantors or Mortgagor, as applicable,
shall have furnished to Lender the following, all in form and substance
satisfactory to Lender in its sole and absolute discretion:

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(a)                                  Loan Documents.  Borrower, Guarantors or
Mortgagor, as applicable, shall have provided to Lender duly executed and, where
appropriate, notarized originals of the Loan Documents, each satisfactory to
Lender in its sole and absolute discretion, including the following:

(i)                                     this Agreement

(ii)                                  the Note;

(iii)                               the Pledge Agreement;

(iv)                              the Completion Guaranty;

(v)                                 the Environmental Indemnity;

(vi)                              the Subordination of Management Agreement;

(vii)                           UCC Financing Statements, both state and local,
as appropriate, with respect to items which are, or may be, personal property or
other collateral including the Collateral as described in the Pledge Agreement;

(viii)                        Certification of Organizational Documents;

(ix)                                the Option Agreement;

(x)                                   the Option Guaranty; and

(xi)                                such other agreements by Borrower or
Mortgagor as may be required by other provisions of this Agreement or as Lender
may reasonably require in order to evidence or secure the Loan.

(b)                                 Third Party Agreements.

(i)                                     Copies.  Borrower shall have provided to
Lender executed copies, certified by the Borrower and Mortgagor as being true,
correct and complete, of the Senior Loan Documents, the Management Agreement and
the other Third Party Agreements then in effect, if any.

(ii)                                  Termination of Hart Lease.  Borrower shall
have provided to Lender, with respect to the Hart Parcel, the termination of the
Hart Lease (as defined in the Senior Loan Documents).

(iii)                               Purchase Agreement.  Borrower shall have
provided to Lender a copy of the fully-executed purchase agreements for the La
Scala Parcel and the Hart Parcel, together will all documents relating

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thereto, as the same may be assigned, amended or modified, which agreement and
documents shall be satisfactory to Lender in form and substance.

(iv)                              Intercreditor Agreement.  Senior Lender shall
have provided to Lender an executed copy of that certain Intercreditor Agreement
by and between Senior Lender and Lender dated of even date herewith, which shall
be satisfactory to Lender in form and substance.

(v)                                 Manager’s Subordination Agreement.  The
Borrower shall cause the Manager to enter into an agreement with the Lender
whereby the Manager:

1)     consents to the termination of the Management Agreement without fee or
penalty upon foreclosure against the Collateral,

2)     consents to the removal and replacement of Manager upon foreclosure
against the Collateral, and

3)     if Manager is an Affiliate of Borrower or Mortgagor, subordinates its
right to receive its management fee to the payment of amounts due Lender under
the Loan Documents, subject to the prior rights of Senior Lender.

(c)                                  Certification  Borrower shall have provided
to Lender a certification by Borrower as of the date of this Agreement (which is
the date that the commitment of Lender to make the Loan to Borrower becomes
binding on Lender) of the Budget attached hereto as Exhibit “B-1” and
Exhibit “B-2”, including certification of the purchase price of the Property,
and the reasonably estimated costs of the improvements that would be capitalized
by Mortgagor as real property for federal income tax purposes consistent with
past practices of the affiliates of Mortgagor.

(d)                                 Financial Statements.  Borrower shall have
provided to Lender (i) with respect to the Borrower, the Project and the
Mortgagor, financial statements and other financial information, certified by
the Borrower and Mortgagor as being true, correct and complete in all material
respects, and in the form and containing the detail and supporting information
as required by Lender for the underwriting for the Loan and (ii) with respect to
Guarantors, the Estimated Collateral Value Statement, dated as of June 20, 2005
of each Guarantor.

(e)                                  Insurance Policies.  The Borrower shall
have provided to Lender the original insurance policies, certified copies
thereof or certificates thereof, together with evidence of premium payments, for
the insurance as more fully provided in Section 8 hereof, which should

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include Builder’s Risk, Hazard and Public Liability and Worker’s Compensation
Insurance in the event such insurance is not required by Senior Lender.

(f)                                    Contracts.  Borrower shall have provided
to Lender copies of any contracts regarding the Project entered into by
Mortgagor with any contractors or engineers and, if requested by Lender, copies
of contracts with any subcontractors for the construction or installation of the
improvements made in connection with the Project.

(g)                                 Plans.  Borrower shall have provided to
Lender copies of all available plans prepared by any engineers or architects in
connection with the Project.

(h)                                 Budget and Cost Review.  Lender shall have
received a report of its inspecting engineer with respect to Mortgagor’s
construction budget and the available plans for the Project, which shall be
satisfactory to Lender.

(i)                                     Leases.  Borrower shall have provided to
Lender (i) the form lease for residential units within the Project and (ii)
copies of any non-residential Leases affecting the Project.

(j)                                     Title Insurance Policy.  Lender shall
have received, reviewed and approved the commitment for title insurance with
respect to the Property and copies of all exceptions to such title insurance
that have been delivered to Senior Lender in connection with its review and
approval of the mortgage loan.

(k)                                  UCC Policy.  Lender shall have received the
UCC Policy referred to in Section 7(b) hereof.

(l)                                     ALTA Survey.  Lender shall have received
a current ALTA survey of the Property (the “Survey”) completed in accordance
with Senior Lender’s requirements, satisfactory to Lender and to the Title
Insurer and certified to Senior Lender, Lender (and its successors and assigns)
and the Title Insurer.

(m)                               Conditional Use Permits and Government
Approvals.  Lender shall have received any conditional use permit(s) affecting
the Property and such evidence as Lender may require (including the written
certification of Borrower’s engineer or any other person satisfactory to Lender)
that the Project will be developed in accordance with all applicable
governmental requirements and upon completion will satisfy all applicable
governmental requirements.  Any such certifications shall also be certified to
Lender and its successors and assigns.

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(n)                                 Flood Plain Certification.  To the extent
not provided on the Survey, Lender shall have received evidence that the
Property is not located within any flood plain or, if the Property is located
within a flood plain, Borrower has obtained and is maintaining in full force and
effect a policy or policies of flood insurance pursuant to Section 8 hereof. 
Any such certifications shall also be certified to Lender and its successors and
assigns.

(o)                                 Appraisal.  Lender shall have received an
appraisal of the Property prepared by a licensed appraiser acceptable to Lender,
in form and substance required by Senior Lender, but also addressed to Lender
and its successors and assigns, in the amount of $69,000,000.

(p)                                 Environmental Report.  Lender shall have
received an environmental report covering the Property, prepared by a
professional acceptable to Lender, in form and substance as required by Senior
Lender, and also certified to Lender and its successors and assigns.

(q)                                 Certification of Organizational Documents. 
Lender shall have received a written certification attaching the required
documents with respect to both Mortgagor and Borrower, confirming (i) that true,
complete and correct copies of the organizational documents have been attached
to the certification, (ii) that no modifications of such documents exist which
have not been provided to Lender, and (iii) that the provisions of Section 22
hereof have been incorporated into the organizational documents.

(r)                                    Legal Opinion.  Lender shall have
received a written legal opinion or legal opinions from Borrower’s counsel
(which counsel must be acceptable to Lender) in form acceptable to Lender and
its counsel, opining as to such matters as Lender may reasonably require,
including an opinion regarding:  (1) due organization and valid existence, (2)
authority; (3) enforceability of the Loan Documents, (4) perfection of the
security interests described in the Pledge Agreement and (5) no usury.

(s)                                  UCC Searches.  Lender shall have received
full Uniform Commercial Code searches, performed by a search company and in
jurisdictions satisfactory to Lender, with respect to the Borrower and the
Mortgagor and disclosing no matters objectionable to Lender.

(t)                                    Access and Utility Easements.  Borrower
shall have established such easements as may be necessary to adequately assure
access and the availability of utilities to the Project.

(u)                                 Utilities.  Lender shall have received
evidence that all sewer, water, electrical, telephone and any other utility
services necessary to

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obtain a certificate of occupancy for the Project are available at the Property
in adequate supply for the use and operation of the Project and each provider of
utility services has a binding obligation to deliver the necessary services to
the completed residences.  This evidence may include letters from the applicable
utility providers.

(v)                                 Environmental Disclosure.  In accordance
with all applicable laws, including the laws of the jurisdiction of the
Property, Borrower shall provide a true, correct and complete copy of any
disclosure document or other instrument required by any such law relating to
environmental matters.

(w)                               Senior Lender Funding.  Senior Lender shall
have disbursed to or for the account of Mortgagor the disbursement of the
initial draw under the Senior Loan for the purchase of the La Scala Parcel and,
if Borrower is requesting the second draw on the Loan, the disbursement of the
portion of the Senior Loan for the acquisition of the Hart Parcel.

(x)                                   No Default.  The representations and
warranties of Borrower contained in this Agreement shall be true, correct and
complete in all material respects except the representation in 16(c) which need
be accurate only as of the date of this Agreement, and no Event of Default, as
defined below, or circumstance or event which upon the lapse of time, the giving
of notice or both, could become an Event of Default shall have occurred; and

(y)                                 Additional Matters.  Borrower shall have
delivered to Lender such other or additional documents, instruments, information
or items as the Lender may request prior to the initial disbursement of the
Loan.

7.           TITLE INSURANCE.  Concurrently with the closing of the Loan:

(a)                                  Owner’s Policy of Title Insurance. 
Borrower shall deliver or cause to be delivered to Lender a duplicate original
of Mortgagor’s Owner’s Policy of Title Insurance (the “Policy”) issued by the
Title Insurer, meeting the following requirements:

(i)                                     with coverage amount not less than the
purchase price of the Property, if the Property is being acquired by the
Mortgagor concurrently with the closing of the Loan;

(ii)                                  dated as of a date not earlier than the
disbursement of the Loan;

(iii)                               the Policy shall not be subject to any
exceptions other than the Senior Loan Documents and the Permitted Exceptions;

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(iv)                              the legal description insured under the Policy
shall include any easements benefiting the Property; and

(v)                                 if available under local regulations, the
Policy shall also contain a mezzanine financing endorsement, acknowledging that
the coverage afforded by the Policy runs to the Lender.

(b)                                 UCC Policy.  Borrower shall deliver or cause
to be delivered to Lender an Eagle 9 UCC Insurance Policy issued by First
American Title Insurance Company (or a similar policy), which policy shall
(i) insure Lender’s first priority security interest in all of the Equity
Interests covered by the Pledge Agreement, (ii) be dated not earlier than the
date of the disbursement of the Loan, (iii) be subject only to matters which
would customarily appear on such a policy, and (iv) be in form and substance
reasonably satisfactory to Lender (such policy, the “UCC Policy”).

8.           INSURANCE.

(a)                                  Insurance Requirements.  Borrower, at its
sole cost (or at Mortgagor’s sole cost), for the mutual benefit of Borrower,
Mortgagor and Lender, shall cause Mortgagor or Manager to obtain and maintain
policies of insurance with respect to the Project as required by the Senior Loan
Documents, as those requirements may from time to time be amended; provided that
Lender shall be named as an additional insured under such liability coverage. 
Borrower agrees that it will cause Mortgagor to maintain coverage under its
products/completed liability insurance for the period of the statute of repose
in the state where the Project is located, but no less than ten years after
Completion.  If commercial general liability insurance as required in the Senior
Loan Documents is unavailable for residential construction in the state where
the Project is located, Owner shall or shall cause Manager or the contractor to
purchase wrap-up construction insurance covering Mortgagor, contractor and all
subcontractors for general liability and products/completed operations for the
period of the statute of repose but no less than 10 years with limits no less
than $5,000,000, naming Lender as additional insured.

(b)                                 Insurance Premiums; Evidence of Renewal. 
All premiums on insurance policies required under this Section 8 shall be paid
in the manner required by the Senior Loan Documents, provided, however, that if
Senior Lender waives the requirement for impound of insurance premiums, Borrower
agrees to provide evidence of payment of all insurance premiums. Borrower shall
use its best efforts to deliver originals of all policies and renewals (or
certificates evidencing the same), marked “paid” (or other evidence satisfactory

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to Lender of the continuing coverage) to Lender at least fifteen (15) days
before the expiration of existing policies.  If Lender has not received
satisfactory evidence of such renewal or substitute insurance in the time frame
herein specified, Lender shall have the right, but not the obligation, to
purchase such insurance for Lender’s interest only.

(c)                                  Policy Requirements.  All Policies provided
for or contemplated by Section 8.1(b) shall name Mortgagor as the insured and,
in the case of liability coverage, Borrower as the insured or additional insured
and Lender as the additional insured, in each case as their interests may
appear.  All insurance policies and renewals of insurance policies required by
this Section 8 shall (i) be in such amounts and for such periods as Senior Loan
Documents may from time to time require, (ii) be issued by insurance companies
as required by the Senior Loan Documents, (iii) provide thirty (30) days’
advance written notice to Lender before any cancellation or adverse material
modification and (iv) to the extent limits are not otherwise specified herein,
contain deductibles which are in amounts acceptable to Lender.  (Lender
acknowledges that deductibles not in excess of $250,000 per occurrence will be
acceptable to it.)  All certificates of insurance and “blanket” insurance
policies shall reference the specific project being covered by name and address.

(d)                                 Notice of Casualty.  Borrower shall give to
Lender immediate notice of any material loss occurring on or with respect to the
Project.

(e)                                  Settlement of Claim.  In case of loss
covered by any of such policies, Lender is authorized to adjust, collect and
compromise, in its discretion, all claims thereunder if an Event of Default has
occurred and is continuing at the time, subject to the rights of the Senior
Lender.  In the event of any adjustment, collection and compromise by Lender,
Borrower covenants to sign upon demand, or Lender may sign or endorse on
Borrower’s behalf, all necessary proofs of loss, receipts, releases and other
papers required by the insurance companies to be signed by Borrower.  Borrower
hereby irrevocably appoints Lender as its attorney-in-fact for the purposes set
forth in the preceding sentence, subject to the rights of the Senior Lender. 
Subject to the rights of the Senior Lender, Lender may deduct from such
insurance proceeds any reasonable expenses incurred by Lender in the collection
and settlement thereof, including attorneys’ and adjustors’ fees and charges. 
Nothing contained in this Agreement shall create any responsibility or
obligation of the Lender to collect any amounts owing on any insurance policy,
to rebuild or replace the damaged or destroyed portions of the Project or to
perform any other related act.  The Lender shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to obtain

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any insurance, incur any liability for or with respect to the amount of
insurance carried, the form or legal sufficiency of insurance contracts,
solvency of insurance companies, or payment or defense of lawsuits, and the
Borrower hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.

(f)                                    Application of Insurance Proceeds.  Any
insurance proceeds received by Mortgagor or Borrower under any of such casualty
policies shall, subject to the rights of the Senior Lender, be applied, at the
option of the Lender, toward pre-payment or reimbursement of the Loan and any
other amounts evidenced or secured by the Loan Documents, or to the rebuilding
or repairing of the Project so damaged or destroyed, as the Lender in its sole
and unreviewable discretion may elect; provided, however, that Lender will allow
insurance proceeds to be used for restoration of the Project if the conditions
for Borrower’s use of insurance contained in the Senior Loan Documents are
satisfied (substituting Lender for Senior Lender thereunder in making related
decisions).  Lender’s election to apply such insurance proceeds to the Loan and
other amounts evidenced or secured by the Loan Documents shall not relieve the
Borrower of the duty to rebuild or repair.

9.           EMINENT DOMAIN.

(a)                                  Notice of Condemnation.  Borrower shall
give to Lender immediate notice of any taking by condemnation of any portion of
the Project or the institution of any proceedings the effect of which is to
achieve a taking of any portion of the Project by condemnation.

(b)                                 Settlement of Claim.  In case the Project,
or any part or interest in any thereof, is taken by condemnation, then subject
to the rights of the Senior Lender, the Lender is hereby empowered to collect
and receive all compensation and awards of any kind whatsoever (referred to
collectively herein as “Condemnation Awards”) which may be paid for any property
taken or for damages to any property not taken (all of which the Borrower hereby
assigns to the Lender, subject to the rights of the Senior Lender in the same). 
Borrower covenants to sign upon demand, or Lender may sign or endorse on
Borrower’s behalf, all necessary proofs of loss, receipts, releases and other
papers required by the condemning authority to be signed by Borrower for such
purpose.  Borrower hereby irrevocably appoints Lender as its attorney-in-fact
for the purposes set forth in this Section 9.  Lender may deduct from any
Condemnation Awards, any expenses reasonably incurred by Lender in the
collection and settlement thereof, including reasonable attorneys’ and
adjusters’ fees and charges.

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(c)                                  Application of Condemnation Awards.  All
Condemnation Awards so received shall, subject to the rights of the Senior
Lender, be forthwith applied by the Lender, as it may elect in its sole and
unreviewable discretion, to the payment or reimbursement of the Loan or the
other amounts evidenced or secured by the Loan Documents, or to the repair and
restoration of any property not so taken or damaged; provided, however, that
Lender will allow Condemnation Awards to be used for restoration of the Project
if the conditions for Borrower’s use of Condemnation Awards contained in the
Senior Loan Documents are satisfied (substituting Lender for Senior Lender
thereunder in making related decisions).

(d)                                 Continuing Obligation to Repair.  No
election made by the Lender under this Section 9 shall relieve the Borrower of
the duty to repair and restore.

(e)                                  Lender Not Required to Act.  Nothing
contained in this Agreement shall create a responsibility or obligation of
Lender to collect any amounts owing on account of any such condemnation or
proceedings relating to the Project, to rebuild or replace any damaged or
destroyed property or to perform any other related act.

10.         RIGHTS OF ACCESS AND INSPECTION.  Borrower shall cause Mortgagor to
permit agents, representatives and employees of Lender to inspect the Project
and the installation of the Project or any part thereof during reasonable
business hours upon reasonable advance notice.  Without limiting the foregoing,
Lender shall also be permitted access to the Project in order to examine, copy
and audit Mortgagor’s books and records (including as part of any audit
performed pursuant to Section 12(e) hereof) and any plans, drawings contracts,
books or records relating to the Project.  Borrower shall, to the extent within
its control, cause any contractors or subcontractors to cooperate with Lender or
its agents in connection with any inspection.  Lender is under no duty to visit
or observe the Project or to examine any books or records.  Any site visit,
observation or examination by Lender shall be solely for the purpose of
protecting Lender’s security and preserving Lender’s rights under the Loan
Documents.  Neither Borrower, Mortgagor nor any other party is entitled to rely
on any site visit, observation or testing by Lender or its agents or
representatives.  Lender owes no duty of care to protect Borrower, Mortgagor or
any other party against, or to inform Borrower or any other party of, any
adverse condition affecting the Project, including any defects in the design or
construction of any improvements on the Property or the presence of any
Hazardous Materials on the Property.  So long as no Event of Default has
occurred and is continuing, Lender shall give Borrower and Mortgagor reasonable
prior notice of its intent to enter the Project.

11.         EXPENSES.  Borrower shall pay, as and when due, all reasonable costs
and expenses incurred in the procuring and making of the Loan by Lender,
including without limitation, to the extent reasonable, Title Insurer’s fees and
premiums, charges for examination of title to the Premises, expenses of surveys,
transfer taxes and recording expenses, appraisal and appraisal review fees, fees
of an inspector and fees and expenses of any attorneys, accountants, engineers,
architects, surveyors, contractors, inspectors or other consultants,

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professionals or independent contractors employed, retained or utilized by
Lender in connection with the Loan.  Borrower shall cause Mortgagor to pay when
due any and all insurance premiums, taxes, assessments, water, sewer and other
utility charges, impact fees, liens and encumbrances on the Project and any
other amounts payable for the cost of improvements to the Property, provided
that Borrower and/or Mortgagor may in good faith contest any such liens, claims
or amounts so long as it provides, for any filed lien, a bond in accordance with
statutory requirements or other security reasonably satisfactory to Lender. 
Borrower shall pay upon demand or reimburse Lender for any and all reasonable
fees, costs and expenses incurred by Lender in collecting the Indebtedness after
an Event of Default including reasonable attorneys’ fees.  All such amounts
shall be paid to Lender or at Lender’s direction to such other person to whom
payments are due or Lender may, at its option, pay such amounts and all sums
paid shall be deemed a portion of the Indebtedness and shall bear interest at
the Default Interest Rate.

12.         FINANCIAL REPORTS, PROPERTY REPORTS AND ANNUAL BUDGET.

The parent company of Lender is a real estate fund that issues securities,
maintains U.S. GAAP audited financial statements and/or is publicly registered
with the United States Securities and Exchange Commission (“SEC”).  As a result,
such parent company is subject to GAAP financial statement requirements and
other reporting requirements. These requirements include but are not limited to
quarterly and annual financial reporting (including for public companies on Form
10-Q and Form 10-K and reporting under Rule 3-14 of Regulation S-X, which
requires the filing of pro forma financial statements of acquired properties). 
In addition, certain accounting requirements may dictate that Lender report
Borrower, Mortgagor and/or the Project as a subsidiary of Lender.  Therefore,
Borrower agrees to provide Lender with all information that Borrower or its
Affiliates has in their possession and Borrower will use its best efforts to
obtain such information not in its possession as Lender reasonably requires in
order to prepare, audit and/or review financial statements of the Project,
Mortgagor and Borrower for the applicable reporting periods.

(a)                                  Borrower agrees that all accounting for the
Project will be conducted by the Borrower and/or the Mortgagor and also by the
Lender.  Borrower agrees to provide Lender with copies of all Accounting Records
(other than leases, which Borrower and/or the Mortgagor may make available at
the Project rather than copying) on a monthly basis in order to enable Lender to
prepare and maintain financial statements on the Borrower, Mortgagor and/or the
Project in accordance with accounting principles generally accepted in the
United States of America.

(b)                                 Borrower agrees to provide Accounting
Records by the 15th of the month for the preceding month.

(c)                                  Borrower agrees to allow Lender and
Lender’s external accountants access to original Accounting Records if needed in
the process of their quarterly reviews and various audit processes.

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(d)                                 Borrower agrees to cooperate with any
inquiries or interviews by Lender or its external independent accountants as may
be necessary in relation to Lender’s or its Affiliates’ compliance with the
Sarbanes-Oxley Act of 2002.

(e)                                  In addition, Borrower shall furnish to
Lender:

(i)                                     within 30 days after the end of each
fiscal year of Mortgagor, and at any other time upon Lender’s request, a
statement that identifies all owners of any interest in Mortgagor and the
interest held by each, if Mortgagor is a corporation, all officers and directors
of Mortgagor, and if Mortgagor is a limited liability company, all members and
managers (whether members or not);

(ii)                                  within 15 days after the end of each
month, a monthly property management report for the Project, showing the number
of inquiries made and rental applications received from tenants or prospective
tenants, deposits received from tenants and any other information reasonably
requested by Lender;

(iii)                               within 15 days following the end of each
month, a monthly statement of income and expense for the Project; and

(iv)                              beginning sixty (60) days prior to the first
occupancy of the Property and for each succeeding calendar year, not later than
ninety (90) days prior to the commencement of such calendar year, an annual
budget which sets forth, in sufficient detail, Borrower’s projection of gross
receipts and expenses for such period (the “Annual Budget”).  Each Annual Budget
shall be for a calendar year except that the Annual Budgets for the year of
first occupancy of the Property shall only cover the remainder of the
then-current year.

(f)                                    If Borrower fails to provide in a timely
manner the Accounting Records, statements, schedules and reports required by
this Section 12, Lender shall have the right to have Mortgagor’s and Borrower’s
books and records audited or to perform any other procedure reasonably requested
by Lender, at Borrower’s expense, by independent certified public accountants
selected by Lender in order to obtain such statements, schedules and reports,
and all related costs and expenses of Lender shall become immediately due and
payable and shall become an additional part of the Indebtedness as provided in
Section 20.

(g)                                 If Lender acquires the Project or acquires
the Collateral through foreclosure, Borrower shall deliver, or cause to be
delivered, to Lender upon written demand all books and records relating to the

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Project or its operation. Otherwise, during the term of the Loan, to the extent
that copies of such books and records have not been provided pursuant to the
provisions of this Section 12 set forth above, Borrower will provide Lender with
all cost records necessary for Lender to perform its accounting procedures
including, but not limited to, balance sheets, income statements, trial balance
activity reports, general ledger detail reports, cash receipts journal, check
register or cash disbursements journal and copies of checks and vendor invoices
for all invoices paid.   Borrower agrees to make available to Lender for
examination and copying any other books and records upon Lender’s written
demand.

(h)                                 Borrower authorizes Lender to obtain a
credit report on Borrower, Mortgagor and Guarantors at any time.

13.         GENERAL COVENANTS OF BORROWER.  Until the full and final payment of
the Loan, unless Lender waives compliance in writing, Borrower hereby covenants
and agrees as follows:

(a)                                  Commencement and Completion of Project. 
Borrower shall cause Mortgagor to begin demolition of the existing improvements
on the Property and/or construction and installation of the improvements in
connection with the Project on or before the commencement date set forth in the
Senior Loan Documents and shall cause Mortgagor to prosecute such construction
and installation with diligence so that the construction and Completion (as
defined in the Completion Guaranty) of the Project (other than payment of claims
that are being contested in accordance with the Loan Documents) shall have
occurred by the completion deadline set forth in the Senior Loan Documents.

(b)                                 Lender Approval.  No changes to the
construction budget included in the Senior Loan Documents or the Budget attached
hereto or the completion date required by the Senior Loan Documents shall be
permitted without Lender’s written consent, with the exception of (i) completion
date extensions due to force majeure and (ii) reallocation of amounts among the
line items of the budgets; provided that Borrower shall provide Lender with
notice of any changes in connection with (i) and (ii) above.  Lender shall have
the right to approve all contractors (except GC 124 Voss Construction Limited
Partnership) and all construction contracts between Mortgagor and such
contractors.  Lender shall approve the plans and specifications for the
improvements to be constructed on the Property prior to Borrower implementing
the same, and no changes to such approved plans and specifications shall be
permitted without Lender’s written consent, with the exception of (i) changes
required by governmental

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authorities or Senior Lender and (ii) other changes that, individually, do not
increase or decrease Project costs by more than $100,000 and, in the aggregate,
do not increase or decrease Project costs by more than $300,000.  Lender shall
have ten (10) business days to provide any approval required under this Section
13(b) but if Lender does not provide written notice that it does not approve
within the ten (10) business days, then the action shall be deemed approved.

(c)                                  Operation and Maintenance of Project.  In
addition to the terms, conditions and provisions set forth in the other Loan
Documents:

(i)                                     Payment of Lawful Claims.  Borrower
shall pay or discharge all lawful claims, including taxes, assessments and
governmental charges or levies imposed upon Borrower or its income or profits or
upon any property belonging to Borrower prior to the date upon which penalties
attach thereto; provided that Borrower may in good faith contest any such taxes,
assessments, charges or levies so long as it provides, for any filed lien, a
bond in accordance with statutory requirements or other security reasonably
satisfactory to Lender.  Without limiting the generality of the foregoing,
Borrower shall pay (a) all taxes and recording expenses, including stamp taxes,
if any, relating to all documents and instruments securing the Loan, (b) the
fees and commissions (if any) lawfully due to brokers engaged by Borrower or its
Affiliates in connection with this transaction (and Borrower shall hold Lender
harmless from all such claims, whether or not lawfully due), and (c) the fees
and expenses of Lender’s counsel relating to Lender’s consultation with such
counsel in connection with the negotiation, documentation and closing of the
Loan and any subsequent modifications of the Loan.

(ii)                                  No Amendments.  Borrower shall not, nor
shall it permit Mortgagor to, without Lender’s prior written consent, enter into
any amendments or modifications of (a) if Borrower or Mortgagor is a
corporation, the Borrower’s and Mortgagor’s by-laws and articles of
incorporation, (b) if Borrower or Mortgagor is a limited liability company, such
entity’s operating agreement or articles of organization, (c) if Borrower or
Mortgagor is a limited partnership, such entity’s partnership agreement or
partnership certificate, (d) the construction contract between Mortgagor and GC
124 Voss Construction Limited Partnership (except for change orders that,
individually, do not increase or decrease Project costs by more than $100,000
and, in the aggregate, do not increase or decrease Project costs by more than
$300,000), (e) the Management Agreement, or (f) the Senior Loan Documents.

(iii)                               Hazardous Substances.  So long as Mortgagor
owns the Project, Borrower shall cause Mortgagor to (a) keep the Project free
from

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Hazardous Substances, except those in de minimis amounts ancillary to the
Project activities that are used in compliance with all environmental laws, (b)
promptly notify Lender if Borrower or Mortgagor becomes aware that any Hazardous
Substance is on or near the Project in violation of any environmental laws or if
the Project otherwise is in violation of any environmental laws, and (c) remove
such Hazardous Substances contamination that violates any environmental laws
and/or cure such violations as required by law.

(iv)                              Maintenance and Repair of Project.  After
completion of the Project, Borrower shall cause Mortgagor to (a) maintain the
Project, including the parking and landscaping portions thereof, in good
condition and repair, (b) promptly make all necessary structural and
non-structural repairs to the Project, (c) not demolish, alter, remove or add to
any improvements on the Property, excepting (i) the repair and restoration of
improvements following damage thereto as required by this Agreement, and (ii) as
otherwise required by any applicable law, rule or regulations, and (d) not erect
any new buildings, structures or building additions on the Project other than in
accordance with the plans for the Project, without the prior written consent of
Lender.  Borrower shall pay when due all claims for labor performed and
materials furnished therefor in connection with any improvements or construction
activities on the Property; provided that Borrower may in good faith contest any
liens, claims or amounts so long as it provides, for any filed lien, a bond in
accordance with statutory requirements or other security reasonably satisfactory
to Lender.

(d)                                 Restricted Sale and Encumbrance of Project
and of Borrower Interests; Other Indebtedness.  Neither Borrower nor Principal
shall engage in any Sale or Encumbrance without the prior written consent of
Lender (which may be withheld by Lender in Lender’s sole and absolute
discretion).  Borrower will not issue any additional Equity Interests in
Borrower.  In addition, Borrower shall not permit Mortgagor to issue any
additional Equity Interests in Mortgagor.  In addition, Borrower shall not, nor
shall it permit Mortgagor to, incur any indebtedness, whether secured or
unsecured, other than (i) the Senior Loan and this Loan, (ii) obligations under
interest rate hedging arrangements related to the Senior Loan and (iii) trade
and operational indebtedness incurred in the ordinary course of business
(including construction and operation of the Project) or for its administrative
functions.  Notwithstanding the foregoing, Lender’s consent shall not be
required for:

(i)                                     the grant of a leasehold interest in an
individual dwelling unit for a term of two years or less not containing an
option to purchase and otherwise in compliance with Section 13(f) hereof;

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(ii)                                  a Sale of obsolete, worn out or damaged
property or fixtures that is contemporaneously replaced by items of equal or
better function and quality, which are free of liens, encumbrances and security
interests other than Permitted Exceptions, those created by the Loan Documents
or the Senior Loan Documents or those otherwise consented to by Lender;

(iii)                               a Sale that results from theft, condemnation
or other involuntary conversion;

(iv)                              the Sale (including through consumption) of
personal property in the ordinary course of business that is contemporaneously
replaced by items of equal or better function and quality;

(v)                                 the grant of an easement if, before the
grant, Lender determines (which determination must be made reasonably) that the
easement will not materially affect the operation or value of the Project and
Borrower pays to Lender, upon demand, all reasonable costs and expenses incurred
by Lender in connection with reviewing Borrower’s request; and

(vi)                              the creation of (1) a lien for taxes,
assessments or other governmental charges or levies that are not then due or
that are being contested in good faith and in accordance with applicable
statutory procedures or (2) a mechanic’s lien against the Project which is
bonded off, released of record or otherwise remedied to Lender’s reasonable
satisfaction within 30 days of the date of creation.

(e)                                  General Indemnity.  Borrower shall, at
Borrower’s expense, protect, defend, indemnify, save and hold Lender and each of
its members and its respective members, stockholders, directors, officers,
employees and agents (collectively the “Indemnified Parties”) harmless against
any and all claims, demands, losses, expenses (including court costs and
reasonable attorney’s fees and expenses), damages and causes of action (whether
legal or equitable in nature) asserted by any person or entity arising out of,
caused by or relating to the Project and the Lender’s exercise of its rights
under the Loan Documents upon an Event of Default, except to the extent the same
arises out of, is caused by or results from the gross negligence or willful
misconduct of an Indemnified Party.  Borrower shall pay to Lender upon demand
all claims, judgments, damages, losses and expenses (including court costs and
reasonable attorneys’ fees and expenses) incurred by Lender as a result of any
legal or other action arising out of the aforesaid matters.  Borrower
acknowledges that the Indemnified Parties may defend any matter covered by the
above indemnification by counsel of the relevant Indemnified Party’s choice, and
the costs of such defense (including reasonable

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attorney’s fees) are part of the costs covered by the indemnity.  The foregoing
indemnification shall survive repayment of the Loan.

(f)                                    Leases.

(i)                                     Residential Lease Requirements.
 Mortgagor shall have the right, and Borrower may permit Mortgagor, to enter
into residential Leases without Lender’s prior written consent, so long as: 
(A) all Leases for residential dwelling units are on forms approved by Lender,
and shall not include options to purchase and (B) all Leases shall be for
initial terms of at least six months and not more than two years (with the
exception of Leases for up to 3% of the units in the Project, which may have
terms of less than six months).

(ii)                                  Commercial Lease Requirements.  Mortgagor
shall not, nor shall Borrower permit Mortgagor to, enter into any
non-residential Leases without Lender’s prior written consent in each instance.
 Mortgagor shall not, nor shall Borrower permit Mortgagor to, modify the terms
of, or extend or terminate, any Lease for non-residential use (including any
Lease in existence on the date of this Agreement) without the prior written
consent of Lender.  Borrower shall, without request by Lender, deliver a copy of
each executed non-residential Lease to Lender promptly after such Lease is
signed.

(iii)                               Advance Rent.  Mortgagor shall not, nor
shall Borrower permit Mortgagor to, receive or accept rent under any Lease
(whether residential or non-residential) for more than two months in advance.

(iv)                              Performance of Obligations.  Borrower shall
cause Mortgagor to pay, perform and discharge, as and when payment, performance
and discharge are due, all obligations of Mortgagor as landlord under all
Leases.

(v)                                 Security Interest.  Except for the
assignment to Senior Lender, Borrower shall not permit Mortgagor to further
assign, pledge, transfer or otherwise encumber the Leases or the rents under the
Leases.

(vi)                              Defense; Pursuit of Remedies.  Borrower shall,
or shall cause Mortgagor to, at its sole cost and expense, appear in and defend
any action or proceeding arising from or connected with any of the Leases or any
obligation or liability of Mortgagor as landlord thereunder.  Borrower shall, or
shall cause Mortgagor to, use commercially reasonable efforts to pursue all
remedies, including claims for damages available at law or in equity, against
any tenant under a Lease who defaults in the performance of its obligations
under the Lease.

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(g)                                 Notices.  Borrower shall promptly notify
Lender in writing of any litigation affecting (a) Borrower, Mortgagor or any
Principal and, any general partner, managing member or controlling shareholder
of Borrower, Mortgagor or Principal (excluding a Principal, general partner,
managing member or controlling shareholder which is a natural person or trust),
or (b) the Project, to the extent the same may result in a material adverse
change in (i) the financial condition of any of the foregoing parties,
(ii) Borrower’s ability to timely perform any of its obligations under any of
the Loan Documents or Mortgagor’s ability to timely perform any of its
obligations under any of the Senior Loan Documents, or (iii) the physical
condition or operation of the Project.

(h)                                 Development.  If after the date of this
Agreement, Borrower or Mortgagor intends to engage a developer of the Project,
Lender shall have the right to approve such new developer and the written
development agreement for the Project.

(i)                                     Management.  The Project shall be
managed at all times by Manager or a professional residential rental property
manager satisfactory to Lender under a contract approved by Lender.  Lender
hereby accepts the Manager as the initial property manager and the Management
Agreement as the initial management agreement. If after the date of this
Agreement, Borrower or Mortgagor intends to change the management of the
Project, Lender shall have the right to approve such new property manager and
the written contract for the management of the Project and, if the manager is an
Affiliate or Borrower, require that Borrower and such new property manager enter
into a Subordination of Management Agreement on a form reasonably acceptable to
Lender.

(j)                                     Senior Loan.  The Borrower shall, or
shall cause Mortgagor to, fully and timely pay all amounts owing under the
Senior Loan Documents and timely and fully perform all of the Mortgagor’s
covenants and agreements contained therein.  Borrower shall provide Lender with
copies of all notices (except routine notices which would not include any notice
related to any failure to comply with any terms of the Senior Loan Documents or
regarding any event of default under the Senior Loan Documents) given or
received by Mortgagor under or pursuant to the Senior Loan Documents, promptly
upon delivery or receipt as the case may be.  Without limiting the Lender’s
right to declare an Event of Default on account of a failure to comply with the
terms and provisions of the Senior Loan Documents, if Borrower or Mortgagor fail
to so pay or perform such obligations, and if such failure either (i) becomes an
Event of Default hereunder or (ii) prior to becoming an Event of Default
continues for twenty (20) days after Lender gives written notice to Borrower to
cure, the Lender may pay

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or perform the same pursuant to Section 18(b) hereof.  Notwithstanding the
foregoing, (i) Lender shall have no obligation whatsoever to pay any of the
amounts evidenced or secured by, or to perform any of the covenants or
obligations imposed by, any Senior Loan Documents, and (ii) any such payment by
Lender shall not cure Mortgagor’s default hereunder or under the Senior Loan
Documents but shall only protect Lender’s interest in the Project.  Borrower
shall not, nor shall it permit Mortgagor to, amend or modify any of the Senior
Loan Documents without the prior written consent of Lender.

(k)                                  Principal Place of Business; Choice of Law 
Borrower shall not change its principal place of business or, if Borrower has
more than one place of business, its chief executive office, from its address
set forth in the first paragraph of this Agreement.  In addition, Borrower shall
not make an election under the Uniform Commercial Code to treat, as the
governing law for perfection of uncertificated securities, the law of any
jurisdiction other than the jurisdiction of its formation.  Lender agrees not to
unreasonably withhold its consent to any change in the Borrower’s principal
place of business or the governing law with respect to uncertificated securities
so long as (1) Borrower and any other party reasonably requested by Lender
executes all documents and instruments reasonably deemed necessary by Lender to
perfect the security interests granted pursuant to the Loan Documents, (2) the
Borrower pays all of the Lender’s reasonable costs and expenses of perfecting
such security interests and (3) if requested by Lender, Borrower delivers to
Lender an opinion from counsel reasonably satisfactory to Lender opining as to
the continued perfection of such security interest.

(l)                                     Compliance with Governmental
Prohibitions.  No portion of the Loan proceeds will be used, disbursed or
distributed by Borrower or any Principal for any purpose, or to any person, in
violation of any Law (as defined in Section 16 (h)) including, without
limitation, any of the Terrorism Laws (as defined in Section 16 (h)).  Borrower
shall provide Lender with immediate written notice (a) of any failure of any of
the representations and warranties set forth in Section 16(h) of this Agreement
to be true, correct and complete in all material respects at any time, or (b) if
Borrower obtains knowledge that Borrower, Principal, or any holder at any time
of any direct or indirect equitable, legal or beneficial interest in Borrower or
Principal is the subject of any of the Terrorism Laws.  Borrower shall
immediately and diligently take, or cause to be immediately and diligently
taken, all necessary action to comply with all Terrorism Laws and to cause the
representations and warranties set forth in Section 16(h) to be true, correct
and complete in all material respects.

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14.         FURTHER ASSURANCES.  Borrower shall, from time to time, upon
Lender’s request, at Borrower’s sole cost and expense, execute, deliver, record
and furnish such documents and do such other acts as Lender may reasonably deem
necessary or desirable to (i) perfect and maintain valid liens upon the security
contemplated by the Loan Documents, (ii) correct any errors of a typographical
or other manifest nature which may be contained in any of the Loan Documents,
(iii) evidence Borrower’s compliance with the Loan Documents, and (iv)
consummate fully and carry out the intent of the transactions contemplated under
this Agreement or the Loan Documents.

15.         APPRAISALS.  Lender has the right to obtain a new appraisal or
update an existing appraisal of the Project at any time while the Loan or any
portion thereof remains outstanding (a) when, in Lender’s reasonable judgment,
such an appraisal is warranted as a result of Lender’s internal evaluation of
the Loan, and/or (b) to comply with statutes, rules, regulations or directives
of governmental agencies having jurisdiction over Lender.  Borrower shall pay,
upon demand, all reasonable appraisers’ fees and related expenses incurred by
Lender from time to time in obtaining such appraisal reports; provided, however,
that Borrower shall not be required to pay for a re-appraisal more than once
every three years unless an Event of Default has occurred and is continuing.

16.         GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWER.  Borrower
represents and warrants to Lender, which representations and warranties shall
survive the termination of this Agreement, the repayment of the Loan, any
investigations, inspections or inquiries made by Lender or any of Lender’s
representatives, and any disbursements made by Lender hereunder, as follows:

(a)                                  Organization; Corporate Powers;
Authorization of Borrowing.

(i)                                     Organization.  Borrower’s ownership
structure set forth on Exhibit ”D” attached hereto is a true and correct
depiction of the Equity Interests in Borrower and Mortgagor, and each entity set
forth on Exhibit ”D” is duly organized and is validly existing and in good
standing under the laws of the state of its organization, and Mortgagor is
qualified to do business in the jurisdiction where the Property is located.

(ii)                                  Power and Authority.  Borrower has the
full limited liability company power and authority to execute the Loan Documents
and to undertake and consummate the transactions contemplated hereby and
thereby, and to pay, perform and observe the conditions, covenants, agreements
and obligations herein and therein contained; and the Loan Documents have been
duly and validly executed by Borrower and constitute the legal, valid and
binding obligations of Borrower and are enforceable against Borrower in
accordance with their respective terms, except as such enforcement may be
qualified or limited by bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally and general principles of equity.

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(iii)                               Not a Foreign Person.  Neither Borrower, nor
any entity that is a holder of an Equity Interest in Borrower, is organized
under the laws of any jurisdiction other than the United States or one of the
states thereof.

(iv)                              No Defaults Under Existing Agreements.  The
consummation of the transactions contemplated hereby and the performance by
Borrower of its obligations under the Loan Documents will not result in any
breach of, or constitute a default under, the Senior Loan Documents, any other
material Third Party Agreements or any mortgage, deed of trust, bank loan or
security agreement, or other material instrument to which Borrower, Mortgagor or
Principal are a party or by which the Property, the Borrower or the Principal
are bound.

(v)                                 True and Correct Copies of Documents.  All
due diligence documents required to be delivered by Borrower to Lender hereunder
(including those due diligence documents referred to in Section 6 hereof) are
true, correct and complete copies thereof and the same have not been amended or
modified except as expressly disclosed therein.

(vi)                              Ownership.  GC 123 Voss Limited Partnership, a
Delaware limited partnership (“Parent”), owns and will own at all times during
the term of the Loan one hundred percent (100%) of the ownership interests in
Principal and Parent has not transferred, conveyed, pledged or encumbered (and
will not transfer, convey, pledge or encumber) such interests except with the
prior written consent of Lender.  Parent is (and at all times during the term of
the Loan will be) treated as a partnership for federal income tax purposes. 
During the term of the Loan, neither Parent nor Principal nor Borrower nor
Mortgagor will borrow funds from Lender or an Affiliate of Lender other than the
Loan or the Junior Mezzanine Loan.

(b)                                 Title to Property; Matters Affecting
Property.

(i)                                     Title to Property.  Mortgagor, upon the
closing of the acquisition of the Property, will have good and marketable fee
simple title to the Property, subject only to the Senior Loan Documents and the
Permitted Exceptions, and good, marketable and freely alienable title to all
personal property located on the Property, subject only to the Senior Loan
Documents and the Permitted Exceptions; Borrower will cause Mortgagor to protect
or cause to be protected the title to the Project, and Borrower will forever
warrant and defend the same against any other claims of any persons or parties
whomsoever, subject to the Senior Loan Documents and the Permitted Exceptions.

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(ii)                                  Mortgagor’s Equity Interests.  Borrower
owns and will own one hundred percent (100%) of the Equity Interests in
Mortgagor, and Borrower has not transferred, conveyed, pledged or encumbered
(and will not transfer, convey, pledge or encumber) such interests except to
Lender pursuant to the Loan Documents.  Borrower has and will have authority to
encumber its Equity Interests in Mortgagor pursuant to the terms of the Pledge
Agreement.

(iii)                               Borrower’s Equity Interests.  Principal owns
and will own one hundred percent (100%) of the ownership interests in Borrower,
and Principal has not transferred, conveyed, pledged or encumbered (and will not
transfer, convey, pledge or encumber) such interests except as expressly
permitted pursuant to the Junior Mezzanine Loan or otherwise with the prior
written consent of Lender.

(iv)                              No Actions.  There are no actions, suits or
proceedings at law or in equity (including condemnation or eminent domain
proceedings) currently pending, or to the knowledge of Borrower threatened,
against Mortgagor, Borrower, Principal or the Project or, to the knowledge of
Borrower, involving the validity or enforceability of the Senior Loan Documents
or the Loan Documents or the priority of the liens granted thereunder, by or
before any governmental authority having or exercising jurisdiction over the
Project.  Borrower will promptly notify Lender of any such future actions, suits
or proceedings.  Except as provided in Exhibit “E”, to Borrower’s knowledge,
neither Borrower, nor Mortgagor, nor the Property is in default with respect to,
or in violation of, any order, writ, injunction, decree or demand of any court
or any governmental authority having or exercising jurisdiction over the
Property.

(v)                                 No Contracts Giving Rise to Liens.  Neither
Borrower nor Mortgagor has made any contract or arrangement of any kind, that
does or could give rise to a lien on the Project, except for (i) the Senior Loan
Documents and the Permitted Exceptions and (ii) contracts related to design and
construction of the Project which have been provided to Lender.  Neither
Borrower nor the Principal has made any contract or arrangement of any kind that
does or could give rise to a lien or encumbrance on any of the Equity Interests
in Mortgagor.

(vi)                              No Construction.  Prior to the disbursement of
this Loan and the recordation of the Security Instrument, no construction
whatsoever has been performed on the Property by Borrower or its Affiliates.

(vii)                           Compliance with Property Agreements.  Except as
provided in Exhibit “F”, the Property in all respects conforms to and complies
with all covenants, conditions, restrictions, reservations, regulatory

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agreements, conditional use permits and zoning ordinances affecting the Property
whether or not recorded against the Property.

(viii)                        Leases.  Except as provided in Exhibit ”G”, there
are no Leases of the Property in effect as of the closing of the Loan.

(ix)                                Tax Treatment.  Principal, Borrower and
Mortgagor are (and at all times during the term of the Loan will be) disregarded
as entities separate from Parent within the meaning of Treasury Regulation
§301.7701-3(b)(i)(2).  Principal, Borrower and Mortgagor have not (and at all
times during the term of the Loan will not) elect to be classified as an
association taxable as a corporation within the meaning of Treasury Regulation
§301.7701-3(c).

(x)                                   Permits.  All permits required for the
operation and construction of the Project are in effect or Borrower expects them
to be available as required for construction of the Project in accordance with
the schedule required by the Senior Loan Documents.  Once issued, all such
permits will remain in effect and the Project and its contemplated use and
operation will comply therewith.  All discretionary approvals for the
construction of the Project in accordance with the Plans and Specifications have
been obtained.

(c)                                  Financial Statements.  The financial
statements heretofore delivered to Lender by Borrower, Mortgagor, and Principal
are true and correct in all material respects, have been prepared in accordance
with sound accounting practices, and fairly present the financial condition(s)
of the person(s) referred to therein as of the date(s) indicated; no materially
adverse change has occurred in the financial condition(s) reflected in such
financial statements since the date(s) shown thereon and no additional
borrowings or liabilities have been made or incurred by such person(s) since the
date(s) thereof other than the borrowing contemplated hereby, the Senior Loan,
the Junior Mezzanine Loan or other borrowings disclosed in writing to and
approved by Lender.  The Estimated Collateral Value Statement, dated as of June
30, 2005, for each Guarantor accurately lists the Available Assets of the
Guarantor (as defined in the Completion Guaranty) as of such date and the value
of such Available Assets calculated on the basis provided in the notes thereto.

(d)                                 Budget Projections.  Borrower’s and/or
Mortgagor’s budget projections indicate that monthly income from Project
operations will be sufficient to pay the combined monthly accrual of interest on
the Senior Loan and the Loan by the Maturity Date and the projections are
reasonable in Borrower’s opinion and have been prepared in a manner consistent
with the past practices of affiliates of the Borrower.

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(e)                                  No Loan Broker.  Borrower has not dealt
with any person, firm or corporation who is or may be entitled to any finder’s
fee, brokerage commission, loan commission or other sum in connection with the
execution of this Agreement or the making of the Loan by Lender to Borrower. 
Borrower does hereby indemnify and agree to defend and hold Lender harmless from
and against any and all loss, liability or expense, including court costs and
reasonable attorneys’ fees and expenses, which Lender may suffer or sustain
should such warranty or representation prove inaccurate in whole or in part.

(f)                                    No Default.  There are no defaults under
any of the Senior Loan Documents or the Loan Documents on the part of Borrower,
Mortgagor or the other parties signatory thereto, and no event has occurred and
is continuing which, with the giving of notice or the passage of time, or both,
would constitute a default under any thereof.

(g)                                 Solvency.  As of the date hereof, Borrower
and Mortgagor are each solvent and able to pay their debts as the same shall
become due and payable.

(h)                                 Violations of Governmental Prohibitions. 
Neither the making of the Loan, nor the receipt of Loan proceeds by Borrower,
violates any federal, state, county, municipal and other governmental and
quasi-governmental statutes, laws, rules, orders, regulations, ordinances,
judgments or decrees (collectively, “Law”) applicable to Borrower, including,
without limitation, any of the Terrorism Laws.  Neither the making of the Loan,
nor the receipt of Loan proceeds by Borrower or Mortgagor or Principal, violates
any of the Terrorism Laws applicable thereto.  To Borrower’s best knowledge, no
holder of any direct or indirect equitable, legal or beneficial interest in
Borrower or Principal is the subject of any of the Terrorism Laws.  No portion
of the Loan proceeds will be used, disbursed or distributed by Borrower for any
purpose, or to any person, directly or indirectly, in violation of any Law
including, without limitation, any of the Terrorism Laws.  “Terrorism Laws”
means Executive Order 13224 issued by the President of the United States of
America, the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code
of Federal Regulations), the Terrorism List Governments Sanctions Regulations
(Title 31 Part 596 of the U.S. Code of Federal Regulations), and the Foreign
Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S.
Code of Federal Regulations), and all other present and future federal, state
and local laws, ordinances, regulations, policies and any other requirements of
any governmental agency (including, without limitation, the United States
Department of the Treasury Office of Foreign Assets Control) addressing,
relating to, or attempting to eliminate, terrorist acts and

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acts of war, each as hereafter supplemented, amended or modified from time to
time, and the present and future rules, regulations and guidance documents
promulgated under any of the foregoing.

17.         EVENT OF DEFAULT.

Borrower shall be in default under this Agreement upon the occurrence of any of
the following events (hereinafter referred to as an “Event of Default”):

(a)                                  Non-Payment.  The failure of Borrower to
pay when due any amount required by the Note, this Agreement or any other Loan
Documents which continues, in the case of monthly interest payments required
under the Note, for five (5) days or, in the case of other sums payable under
the Note, this Agreement or the Loan Documents, for 20 days following written
demand for payment on Borrower by Lender.

(b)                                 Insurance.  The failure of Borrower to keep
in force any insurance policy required hereunder or to deliver evidence of its
renewal to Lender and the continuation of such failure for 10 days following
written demand on Borrower by Lender.

(c)                                  Special Purpose Entity Covenants.  The
failure of Borrower to comply with the provisions of Section 22.

(d)                                 Fraud or Material Misrepresentation  Fraud
or material misrepresentation by Borrower, Mortgagor, or Principal or any of
their officers, directors or managers, or by any Guarantor in connection with
(i) the application for or creation of the Indebtedness, (ii) any financial
statement, rent roll, or other report or information provided to Lender during
the term of the Indebtedness, or (iii) any request for Lender’s consent to any
proposed action;

(e)                                  Sale, Encumbrance or Other Indebtedness. 
The taking of any action by Borrower, Mortgagor, Principal or any other person
contrary to the provisions of Section 13(d) of this Agreement;

(f)                                    Reports and Documents.  The failure of
Borrower to deliver any notice, report, assignment, certificate, instrument or
other document which Borrower is required to deliver to Lender under any of the
Loan Documents within the twenty (20) days following written demand by Lender
therefor;

(g)                                 Option Agreement.  The failure of Borrower
or Principal to comply with the terms of the Option Agreement with respect to
transfer of the Voss Membership Interests (as defined in the Option Agreement)
upon the exercise of the Purchase Option including but not limited to

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Borrower’s or Principal’s satisfaction of all of the Conditions to Closing and
Closing Deliveries set forth therein.

(h)                                 Other Breaches under this Agreement. The
failure by Borrower to perform any of its obligations under this Agreement, as
and when required, except as specifically set forth otherwise herein, which
continues for a period of 30 days after notice of such failure by Lender to
Borrower, if such failure is not reasonably susceptible of cure within such 30
day period and if Borrower promptly commences such cure within such 30 day
period and diligently prosecutes the same to completion, then the cure period
shall be extended for such period of time as may be reasonably necessary to
effect a cure but in no event shall such period exceed 90 days;

(i)                                     Other Breaches Under Other Loan
Documents.  The failure of Borrower, Principal or any Guarantor, indemnitor or
obligor to perform and observe any covenant, obligation, agreement or
undertaking under any Loan Document other than this Agreement following such
notice and/or grace period, if any, as may be provided therein for curing such
failure;

(j)                                     Senior Loan Documents.  The failure of
Borrower or Mortgagor or any Guarantor to perform and observe any covenant,
obligation, agreement or undertaking under any Senior Loan Documents following
any notice or cure period, if any, as may be provided therein for curing such
failure; or

(k)                                  Bankruptcy Proceedings.

(1)                                  If the Borrower or Mortgagor shall become
insolvent, make a transfer in fraud of, or a general assignment for the benefit
of, creditors, or admit in writing its inability, generally to pay its debts as
they become due; or

(2)                                  If the Borrower or Mortgagor shall have a
receiver, custodian, liquidator or trustee appointed for all or substantially
all of its assets or for the Project in any proceeding brought by the Borrower,
Mortgagor or the Project, or any such receiver or trustee is appointed in any
proceeding brought against the Borrower, Mortgagor or the Project and such
appointment is not promptly contested and is not dismissed or discharged within
ninety (90) days after such appointment; or

(3)                                  If the Borrower or Mortgagor shall file a
petition under Title 11 of the United States Code as amended or under any
similar Federal or state law or statute; or

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(4)                                  If the Borrower or Mortgagor shall have a
petition filed against it commencing an involuntary case under any present or
future Federal or state bankruptcy or similar law and such petition is not
dismissed or discharged within ninety (90) days after the filing thereof; or

(5)                                  If the Borrower or Mortgagor shall request
any composition, rearrangement, liquidation, extension, reorganization or other
relief as a debtor under any present or future Federal or state bankruptcy or
similar law now or hereafter existing.

The proceedings or events set forth in this paragraph (j) are collectively
referred to as “Bankruptcy Proceedings”.

18.         REMEDIES.

(a)                                  Actions upon Event of Default.  Upon the
occurrence and during the continuance of an Event of Default beyond any
applicable grace and cure period, Lender may, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan Documents
or at law or in equity, take such action, without notice or demand, that Lender
deems advisable to protect and enforce its rights against Borrower and in the
Collateral, including, without limitation, at its option and without prior
notice or demand, declare the unpaid principal balance of the Note and all
accrued but unpaid interest thereon, as well as all other sums owing under the
Loan Documents, immediately due and payable, Lender may make any advances on the
Loan after the happening of any one or more of said Events of Default without
thereby waiving the right to demand payment in full of the Note and such other
amounts and without liability to make any other or further advances.

(b)                                 Lender’s Right to Perform.  If Borrower
fails to perform any covenant or obligation contained herein or in the other
Loan Documents and such failure continues for a period of 30 days after written
notice of such failure by Lender to Borrower, or if such failure is not
reasonably susceptible of cure within such 30 day period and if Borrower
promptly commences such cure within such 30 day period and diligently prosecutes
the same to completion, then the cure period shall be extended for such period
of time as may be reasonably necessary to effect a cure but in no event shall
such period exceed 90 days, without in any way limiting Lender’s right to
exercise any of its rights, powers or remedies as provided hereunder, or under
any of the other Loan Documents, Lender may, but shall have no obligation to,
perform, or cause performance of, such covenant or obligation, and all costs,
expenses, liabilities, penalties and fines of Lender reasonably incurred or paid
in connection

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therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Indebtedness (and to the extent permitted under applicable
laws, secured by the Pledge Agreement and other Loan Documents) and shall bear
interest from the date expended at the Default Interest Rate.  Notwithstanding
the foregoing, Lender shall have no obligation to send notice to any Borrower of
any such failure.

(c)                                  Appointment of Lender as Attorney-in-Fact. 
Borrower hereby irrevocably, unconditionally and presently constitutes Lender as
Borrower’s attorney-in-fact, with full power of substitution, to be exercised by
Lender only upon the occurrence and during the continuation of an Event of
Default, to exercise its rights under the Pledge Agreement (in its own name or
the name of a designee) for purposes of preserving and protecting the Project or
the collateral pledged under the Pledge Agreement; and, as Lender in its sole
discretion deems necessary or proper, to execute, acknowledge (when appropriate)
and deliver all instruments and documents in the name of Borrower which may be
necessary or desirable in order to do any and every act which Borrower might do
on its own behalf in the performance of its obligations hereunder.  This power
of attorney is a power coupled with an interest and is irrevocable.

(d)                                 Cross-Default to Note, Pledge Agreement and
Other Loan Documents.  At the option of Lender, any Event of Default by Borrower
under this Agreement shall constitute a default under the Note, the Pledge
Agreement or any of the other Loan Documents to the same extent as though the
Note had by its own terms become due and payable at maturity and payment thereof
had been refused, and in such event Lender may, without liability to Borrower,
assert and exercise any and all rights and remedies provided for herein or in
the Note, the Pledge Agreement or any of the other Loan Documents or otherwise
as may be provided by law.  Such rights and remedies may be asserted
concurrently or successively from time to time (either before or after
commencement of foreclosure proceedings or before or after the exercise of any
other remedy of Lender) until the Note, including interest thereon, and all of
the Indebtedness of Borrower to Lender under this Agreement and the other Loan
Documents, have been paid in full.

(e)                                  Recourse Limitations.  Borrower’s liability
in connection with this Agreement, the Note and the other Loan Documents
(including Borrower’s liability for all amounts due hereunder or thereunder) is
collectible only from the Collateral against which a security interest is
created by the Pledge Agreement.  In no case will any person who holds a direct
or indirect ownership interest in Borrower, or any officer, director, manager,
trustee, employee, agent or affiliate of

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Borrower or any such direct or indirect owner, have any responsibility for
Borrower’s obligations in connection with this Agreement, the Note and the other
Loan Documents (including Borrower’s liability for any amounts due hereunder or
thereunder); provided, however, that nothing in this Section 18(e) limits the
liability of any person under a guaranty or other agreement executed by such
person.

19.         TRANSFER OF LOAN; LOAN SERVICER.

(a)                                  Lender’s Right to Transfer  Borrower hereby
acknowledges that Lender shall have the right to transfer, assign or sell the
Loan Documents, or grant participation interests in all or any portion of the
Loan, in such manner and to such entities as Lender in its sole and absolute
discretion shall select.

(b)                                 Loan Servicer.  At the option of Lender, the
Loan may be serviced by a servicer selected by Lender and Lender may delegate
all or any portion of its responsibilities under this Agreement and the other
Loan Documents to such servicer pursuant to a servicing agreement between Lender
and such servicer.  A sale may result in a change of the Loan servicer.  There
also may be one or more changes of Loan servicer unrelated to a sale of the
Note.  If there is a change of Loan servicer, Borrower will be given notice of
the change.

(c)                                  Dissemination of Information.  Lender may
forward to each purchaser, transferee, assignee, or servicer of, and each
participant or investor in, the Loan (collectively, the “Investor”), any
governmental regulators or others as may be required by securities law, all
documents and information which Lender now has or may hereafter acquire relating
to the Indebtedness and to Borrower, Mortgagor and Principal, including
financial statements, whether furnished by Borrower or otherwise, as Lender
determines necessary or desirable.  Borrower irrevocably waives any and all
rights it may have under applicable Laws to prohibit such disclosure.

20.         LENDER’S EXPENSES; RIGHTS OF LENDER.  Borrower shall promptly pay to
Lender, upon demand, with interest thereon from the date of demand at the
Default Interest Rate, reasonable attorneys’ fees and all other reasonable costs
and expenses paid or incurred by Lender in enforcing or exercising its rights or
remedies created by, connected with or provided for in this Agreement or any of
the other Loan Documents following an Event of Default, and payment thereof
shall be secured by the Pledge Agreement.

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21.         MISCELLANEOUS.

(a)                      Notices. All notices, demands and other communications
(“Notice”) under or concerning this Agreement shall be in writing.  Each Notice
shall be addressed to the intended recipient at its address set forth below, and
a Notice shall be deemed given on the earliest to occur of (1) the date when the
Notice is received by the addressee; (2) the first Business Day after the Notice
is delivered to a recognized overnight courier service, with arrangements made
for payment of charges for next Business Day delivery; or (3) the third Business
Day after the Notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.

If to Lender:

 

Behringer Harvard Alexan Voss, LLC

 

 

15601 Dallas Parkway, Suite 600

 

 

Addison, Texas 75001

 

 

Attention: Chief Legal Officer

 

 

Facsimile: (214) 655-1610

 

 

 

with copy to:

 

Powell & Coleman, L.L.P.

 

 

8080 North Central Expressway, Suite 1380

 

 

Dallas, Texas 75206

 

 

Attention: Carol D. Satterfield

 

 

Facsimile: (214) 373-8768

 

 

 

If to Borrower:

 

GC 128 VOSS SM LLC

 

 

Attention: Timothy J. Hogan

 

 

2001 Bryan Street, Suite 3700

 

 

Dallas, Texas 75201

 

 

Facsimile: (214) 922-8553

 

 

 

with copy to:

 

Michael K. Ording

 

 

Jones Day

 

 

325 John H. McConnell Blvd., Suite 600

 

 

Columbus, Ohio 43215

 

 

Facsimile: (614) 461-4198

Any party to this Agreement may change the address to which notices intended for
it are to be directed by means of notice given to the other party in accordance
with this Section 21(a).  Each party agrees that it will not refuse or reject
delivery of any notice given in accordance with this Section 21(a), that it will
acknowledge, in writing, the receipt of any notice upon request by the other
party and that any notice rejected or refused by it shall be deemed for purposes
of this Section 21(a) to have been received by the rejecting party on the date
so refused or rejected, as conclusively established by the

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records of the U.S. Postal Service or the courier service. Any notice under the
Note and any other Loan Document which does not specify how notices are to be
given shall be given in accordance with this Section 21(a).

(b)                                 Waivers.  No delay or omission in exercising
any right or power arising from any default shall be construed as a waiver of
such default or as acquiescence therein, nor shall any single or partial
exercise thereof preclude any further exercise thereof or the exercise of any
other right or power arising from any default.  No waiver of any breach of any
of the covenants or conditions of this Agreement shall be construed to be a
waiver of or acquiescence in or consent to any previous or subsequent breach of
the same or of any other condition or covenant.

(c)                                  Lender Not Partner of Borrower; Borrower in
Control.  Neither the execution nor the performance of any of the Loan Documents
by Lender, nor the exercise by the Lender of any of its rights, privileges or
remedies conferred under the Loan Documents or under applicable law, shall be
deemed to render the Lender a partner or a joint venturer with the Borrower, any
guarantor of the Loan or any other person, or to render Borrower an agent of
Lender for any purposes.  Nothing contained herein shall characterize or be
deemed to characterize, or be used as a basis for characterizing, Lender as a
“mortgagee-in-possession”.  Lender and Borrower agree that Mortgagor remains in
control of the Project, and that it determines the business plan for the Project
and employment, management, leasing and operating directions and decisions for
the Project.  All of Lender’s rights, and actions taken by Lender as provided or
permitted, in or under this Agreement or the other Loan Documents are for and in
its capacity as a secured lender attempting to protect the collateral security
for the Loan and to collect the Indebtedness and any other amounts owing or
outstanding under the Note or the Loan Documents.

(d)                                 No Third Party.  This Agreement is made for
the sole benefit of Borrower and Lender and Lender’s successors and assigns, and
no other person or persons shall have any rights or remedies under or by reason
of this Agreement or any right to the exercise of any right or power hereunder
or arising from any default, nor shall Lender owe any duty whatsoever to any
claimant for labor performed or materials furnished in connection with the
construction of the improvements to apply any undisbursed portion of the Loan to
the payment of any such claims.

(e)                                  Time of Essence; Context.  Time is hereby
declared to be of the essence of this Agreement and of every part hereof.  When
the

39

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context and construction so require, all words used in the singular herein shall
be deemed to have been used in the plural and the masculine shall include the
feminine and the neuter and vice versa.

(f)                                    Successors and Assigns.  This Agreement
shall bind, and the rights granted by this Agreement shall inure to, the
respective successors and assigns of Lender and Borrower.  However, a Sale or
Encumbrance prohibited by Section 13(d) shall be an Event of Default.

(g)                                 Governing Jurisdiction.  This Agreement and
all of the other Loan Documents (except as otherwise expressly provided therein
with respect to the enforcement of specific remedies) shall be governed by and
construed in accordance with the substantive law of the State of Texas without
regard to the application of choice of law principles.

(h)                                 SUBMISSION TO JURISDICTION/SERVICE OF
PROCESS.  BORROWER AND LENDER EACH HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY,
TEXAS FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR
BASED UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER LOAN DOCUMENT
AND THE SUBJECT MATTER THEREOF, OR THE LOAN.  EACH OF BORROWER AND LENDER TO THE
EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER
PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION BY ANY SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS  AGREEMENT, THE SUBJECT MATTER
HEREOF, THE OTHER LOAN DOCUMENTS, THE SUBJECT MATTER THEREOF, OR THE LOAN (AS
APPLICABLE) MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT
TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED IN STATE COURT TO
FEDERAL COURT, OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT
AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING

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ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR
OTHERWISE ARISE FROM THE SAME SUBJECT MATTER.  BORROWER AND LENDER EACH HEREBY
CONSENTS TO SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE
GIVEN TO IT PURSUANT TO SECTION 21(a) HEREOF, BUT ANY SUCH SERVICE WILL BE
EFFECTIVE ONLY WHEN RECEIVED AT SUCH ADDRESS.  BORROWER AND LENDER EACH AGREES
THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS
MADE FOR THE EXPRESS BENEFIT OF THE OTHER PARTY.  FINAL JUDGMENT AGAINST A PARTY
IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED
IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF
THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE PARTY THEREIN DESCRIBED, OR (Y)
IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER
JURISDICTION.

(i)                                     WAIVER WITH RESPECT TO DAMAGES. 
BORROWER ACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP WITH,
OR FIDUCIARY DUTY TO, BORROWER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND
BORROWER, IN CONNECTION HEREWITH AND THEREWITH, IS SOLELY THAT OF DEBTOR AND
CREDITOR.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER SHALL NOT ASSERT,
AND BORROWER HEREBY WAIVES, ANY CLAIMS AGAINST LENDER, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED
TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

(j)                                     Entire Agreement.  This Agreement and
all of the other Loan Documents constitute the entire understanding between the
parties hereto with respect to the subject matter hereof, superseding all prior
written or oral understandings, and may not be modified, amended or

41

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terminated except by a written agreement signed by each of the parties hereto or
thereto that is to be bound by the modification, amendment or termination. 
Notwithstanding the foregoing, the provisions of this Agreement are not intended
to supersede the provisions of the Pledge Agreement, but shall be construed as
supplemental thereto.  Borrower and Lender each hereby acknowledges that this
Agreement and the other Loan Documents accurately reflect the agreements and
understandings of the parties hereto with respect to the subject matter hereof
and hereby waives any claims against the other which it may now have or may
hereafter acquire to the effect that the actual agreements and understandings of
the parties hereto with respect to the subject matter hereof may not be
accurately set forth in this Agreement or such other Loan Documents.

(k)                                  Headings.  The various headings of this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.

(l)                                     Severability.  Each provision of this
Agreement shall be interpreted so as to be effective and valid under applicable
law, but if any such provision shall in any respect be ineffective or invalid
under such law, such ineffectiveness or invalidity shall not affect the
remainder of such provision or the remaining provisions of this Agreement.

(m)                               Counterparts.  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute but one and the same document.

(n)                                 WAIVER OF JURY TRIAL.  BORROWER AND LENDER
EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION
WITH THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF THE LENDER OR BORROWER RELATED THERETO.  BORROWER AND
LENDER EACH ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE OTHER
TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT, AND THAT THIS WAIVER
SHALL BE EFFECTIVE AS TO EACH OF THE OTHER LOAN DOCUMENTS AS IF FULLY
INCORPORATED THEREIN.

(o)                                 Sole and Absolute Discretion.  Any option,
consent, approval, or discretion or similar right of Lender set forth in this
Agreement or any of the other Loan Documents may be exercised by Lender in its

42

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sole, absolute and unreviewable discretion, unless the provisions of this
Agreement or the other Loan Documents specifically requires a different
standard.

(p)                                 Straight Debt Harbor.  It is the intent of
Borrower and Lender that the Loan shall be treated as a security that satisfies
the requirements of Section 856(m)(1)(A) and Section 856(m)(2) of the Code (the
“Straight Debt Safe Harbor”).  Accordingly, notwithstanding any indication
herein to the contrary, the parties hereto agree that the terms of the Loan
shall be interpreted in such a manner that the Loan satisfies the Straight Debt
Safe Harbor for so long as it is owned by Lender; and the terms of the Note
shall be applied such that the Note has a constant effective yield to maturity,
as determined under Section 1272 of the Code, at a fixed rate over the entire
term of the Note equal to the Interest Rat (as defined in the Note); provided,
however, that such contraction shall not alter the dates of the principal or
interest payments (described in Section 1.1 of the Note) or the amounts of the
principal or interest payments required to be paid on an interest payment date
(described in Section 1.1. of the Note) prior to the Maturity Date or earlier
prepayment date.

22.         SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
Borrower shall do all things necessary to preserve the existence of Borrower and
Mortgagor each as a separate Special Purpose Bankruptcy Remote Entity unless
Lender otherwise consents, in its sole discretion, in writing.  Borrower
covenants and agrees that with respect to Borrower and Mortgagor, until payment
in full of the Indebtedness, it will not do or permit Mortgagor to do, directly
or indirectly, any of the following unless Lender consents thereto, in its sole
discretion, in writing.  A “Special Purpose Bankruptcy Remote Entity” means a
corporation, limited partnership or limited liability company which shall not:

(a)                                  engage in any business or activity other
than the ownership, construction, operation and maintenance, in each case
directly or indirectly, of the Property and the Project (in case of Mortgagor)
or the Equity Interests in Mortgagor (in case of Borrower), and activities
incidental thereto;

(b)                                 acquire or own any material assets other
than (i) the Equity Interests, (ii) the Property and the Project, and (iii) such
incidental personal property as may be necessary for the operation of the
Project or as may arise out of the other activities of the Borrower or the
Mortgagor;

(c)                                  merge into or consolidate with any person,
or dissolve, terminate or liquidate, or transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure;

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(d)                                 fail to preserve its existence as a person
duly organized, validly existing and in good standing (if applicable) under the
laws of the jurisdiction of its organization or formation, or amend, modify, or
terminate the provisions of its organizational documents if such amendment,
modification, or termination would adversely affect the ability of such Person
to perform its obligations hereunder or under the other Loan Documents or would
affect any other clause of this Section 22;

(e)                                  own any subsidiary (except, in the case of
Borrower, the Mortgagor) or make any investment in any person (except, in the
case of Borrower, the Mortgagor);

(f)                                    commingle its assets with the assets of
any of its general partners, members, shareholders, affiliates, principals or of
any other Person in such a manner that it will be costly or difficult segregate,
ascertain or identify its individual assets from those of any general partner,
member, shareholder, principal or Affiliate of Borrower or Mortgagor or any
other Person;

(g)                                 incur any debt, secured or unsecured, direct
or contingent (including guaranteeing any obligation), other than (i) the Senior
Loan and this Loan, (ii) obligations under interest rate hedging arrangements
related to the Senior Loan and (iii) trade and operational indebtedness incurred
in the ordinary course of business (including construction and operation of the
Project) or for its administrative functions;

(h)                                 fail to maintain its records, books of
account and bank accounts separate and apart from those of its general partners,
members, shareholders, principals and Affiliates and any other Person;

(i)                                     enter into any contract or agreement
with any general partner, member, shareholder, principal or Affiliate of
Borrower or Mortgagor except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an
arms-length basis with third parties other than any general partner, member,
shareholder, principal or Affiliate of Borrower or Mortgagor;

(j)                                     seek the dissolution or winding up of
Borrower or Mortgagor;

(k)                                  maintain its assets in such a manner that
it will be costly or difficult to segregate, ascertain or identify its
individual assets from those of any general partner, member, shareholder,
principal or Affiliate of Borrower or Mortgagor or any other Person.

44

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(l)                                     hold itself out to be responsible for
the debts of another person, except through endorsement of negotiable
instruments in the ordinary course of collection;

(m)                               make any loans or advances to any third party,
including any general partner, member, shareholder, principal or Affiliate of
Borrower or Mortgagor (except, in the case of Borrower, to the Mortgagor);

(n)                                 fail to file its own tax returns, if any, as
may be required under applicable law, to the extent that the Borrower or
Mortgagor are (1) not part of a consolidated group filing a consolidated return
or returns or (2) not treated as a “disregarded entity” for tax purposes not
required to file tax returns under applicable law; or

(o)                                 fail either to hold itself out to the public
as a legal person separate and distinct from any other person or to conduct its
business solely in its own name if the result is (a) to mislead others as to the
identity of the person with which such other party is transacting business; or
(b) to suggest that it is responsible for the debts of any third party
(including any general partner, principal or Affiliate of Borrower or Mortgagor,
provided, however, Mortgagor and Borrower may hold itself out at doing business
under the “Trammell Crow Residential” name.

In addition to the foregoing, Borrower shall have at least one independent
manager who is provided by a nationally recognized company that provides
professional independent directors and who shall not be at the time of initial
appointment, and may not have been during the preceding five years (i) a
stockholder, director, officer, employee, partner, member, attorney or counsel
of Mortgagor or an Affiliate of Mortgagor or Borrower, (ii) a customer, supplier
(other than a supplier of registered agent or registered office service) or
other Person who derives any of its purchases or revenues from its activities
with Mortgagor or Borrower, (iii) a Person or other entity controlling or under
common control with any such stockholder, director, officer employee, partner,
customer, supplier (other than a supplier of registered agent or registered
office service) or other Person or (iv) a member of the immediate family of any
such stockholder, director, officer, employee, partner, customer, supplier or
other Person (the “Independent Director”).  At any time that the Senior Loan,
this Loan or the Junior Mezzanine Loan is outstanding, the consent of the
Independent Director should be required to : (i) file, consent to the filing of,
or join in any filing of, a bankruptcy or insolvency petition; (ii) dissolve,
liquidate, merge, or consolidate; (iii) engage in any other business activity;
and (iv) amend the articles of organization or limited liability agreement.

23.           RESTRUCTURING TO ONE PHASE.  Lender and Borrower recognize that
contingencies remain to the acquisition of the Hart Parcel, including
termination of a lease of the existing building located on the Hart Parcel. 
Borrower shall cause Mortgagor to use its best efforts to obtain the termination
of the Hart Lease and to complete the purchase of the Hart Parcel.  If Mortgagor
has not acquired the Hart Parcel by December 22, 2006, Lender and Borrower shall
restructure the Loan to provide for (i) development of a 222-unit Project on the

45

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La Scala Parcel only, using the budget attached as Exhibit ”B-1” to this
Agreement, and (ii) a decrease in the Loan Amount to $3,850,000.  In the event
that the Hart Parcel is not acquired, the amount of the Senior Loan will not
exceed $23,283,913.  In such case, Lender and Borrower, each acting in good
faith, shall negotiate modifications to this Agreement and the other Loan
Documents to redefine the Project, to adjust the Loan Amount and to reflect
related changes.

[Signatures Follow on Next Page]

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.

 

BORROWER:

 

 

 

GC 128 VOSS SM LLC

 

 

 

By:

 

GC 129 Voss JM, LLC, a Delaware limited liability
company, its sole member

 

 

 

 

 

 

 

By:

GC 123 Voss Limited Partnership, a Delaware
limited partnership, its sole member

 

 

 

 

 

 

 

 

 

By:

GC 112 Development 2006 GP LLC, a
Delaware limited liability company, its
general partner

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Timothy J. Hogan, Vice President

 

 

 

 

 

 

 

 

LENDER:

 

 

 

 

 

BEHRINGER HARVARD ALEXAN VOSS, LLC,

 

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

 

Gerald J. Reihsen, III

 

 

 

Secretary

 

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JOINDER

The undersigned have duly executed and delivered this Agreement as of the day
and year first above written for the purpose of agreeing and consenting to the
provisions of Section 22 of the Agreement.

MORTGAGOR:

 

 

 

GC 127 VOSS HOLDINGS LLC

 

 

 

By:

 

GC 128 Voss SM LLC, a Delaware limited liability
company, its sole member

 

 

 

 

 

 

 

By:

GC 129 Voss JM LLC, a Delaware limited
liability company, its sole member

 

 

 

 

 

 

 

 

 

By:

GC 123 Voss Limited Partnership, a
Delaware limited partnership, its sole
member

 

 

 

 

 

 

 

 

 

 

 

By:

GC 112 Development 2006 GP
LLC, a Delaware limited liability
company, its general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Timothy J. Hogan
Vice President

 

48

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EXHIBIT A-1

THE LA SCALA PARCEL

FIELD NOTE DESCRIPTION OF 3.234 ACRES (140,890 SQUARE FEET) OF LAND IN THE JOHN
D. TAYLOR SURVEY, ABSTRACT No. 72, BEING ALL OF UNRESTRICTED RESERVE “A”, IN THE
PLAT OF “WESTHEIMER – VOSS APARTMENTS” AS RECORDED IN VOLUME 109, PAGE 51, OF
THE HARRIS COUNTY MAP RECORDS, ALL BEING LOCATED IN THE CITY OF HOUSTON, HARRIS
COUNTY, TEXAS AND BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS
FOLLOWS:

BEGINNING at a 5/8-inch iron rod with cap set for the intersection point of the
west right-of-way line of South Voss Road (100-feet wide) and the north
right-of-way line of Burgoyne Road (60-feet wide) and being the southeast corner
of both Unrestricted Reserve “A” and the herein described tract, from said point
a found 5/8-inch iron rod bears N 03°27’ W, a distance of 0.39 feet;

THENCE, S 87°31’24” W, along the north right-of-way line of Burgoyne Road,
common with the south line of both Unrestricted Reserve “A” and the herein
described tract, a distance of 205.00 feet to a PK nail with shiner set for a
point for a curve to the right;

THENCE, along the aforementioned curve to the right, being the north
right-of-way line of Burgoyne Road, common with the south line of both
Unrestricted Reserve “A” and the herein described tract, having a radius of
300.00 feet, a delta of 33°33’26”, an arc length of 175.71 feet, a chord bearing
N 75°41’53” W, and a chord distance of 173.20 feet to PK nail with shiner set
for a point for a reverse curve to the left;

THENCE, along the aforementioned reverse curve to the left, being the north
right-of-way line of Burgoyne Road, common with the south line of both
Unrestricted Reserve “A” and the herein described tract, having a radius of
60.00 feet, a delta of 123°33’26”, an arc length of 129.39 feet, a chord bearing
S 59°18’07” W, and a chord distance of 105.74 feet to PK nail with shiner set
for the Southwest corner of both Unrestricted Reserve “A” and the herein
described tract;

THENCE, departing the north right-of-way line of Burgoyne Road, N 02°28’36” W,
along the west line of both Unrestricted Reserve “A” and the herein described
tract, a distance of 319.54 feet to a 5/8-inch iron rod found for the northwest
corner of both Unrestricted Reserve “A” and the herein described tract, said
point

--------------------------------------------------------------------------------

being on the south line of the plat of “Hammersmith, Section Two” as recorded in
Volume 122, Page 68, of the Harris County Map Records;

THENCE, N 87°31’24” E, along the south line of “Hammersmith Section Two”, common
with the north line of both Unrestricted Reserve ‘‘A” and the herein described
tract, a distance of 464.00 feet to a 5/8-inch iron rod with cap set for the
northeast corner of both Unrestricted Reserve “A” and the herein described
tract, said point also being on the west right-of-way line of South Voss Road;

THENCE, S 02°28’36” E, along the west right-of-way line of South Voss Road,
common with the east line of both Unrestricted Reserve “A” and the herein
described tract, a distance of 319.54 feet to the POINT OF BEGINNING, and
containing 3.234 acres (140,890 square feet) of land.

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EXHIBIT A-2

THE HART PARCEL

FIELD NOTE DESCRIPTION OF 2.609 ACRES (113,647 SQUARE FEET) OF LAND IN THE JOHN
D. TAYLOR SURVEY, ABSTRACT No. 72, AND BEING THAT SAME TRACT OF LAND CONVEYED TO
HART RESOURCE CENTER, L.P., AS RECORDED UNDER CLERK’S FILE No. T868460 OF THE
HARRIS COUNTY OFFICIAL PUBLIC RECORDS OF REAL PROPERTY, AND BEING MORE
PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:

BEGINNING at a 1-inch iron pipe with cap found for the southwest corner of the
herein described tract, common with the northwest corner of a called 1.4675 acre
tract conveyed to Private Mini Storage Group 1, Ltd., as recorded under Clerk’s
File No. S323297, of the Harris County Official Public Records of Real Property,
and being on the east right-of-way line of S. Voss Road (100-feet wide); from
said corner, the northerly most point of a cutback for the intersection of the
east right-of-way of S. Voss Road and the north right-of-way line of Westheimer
Road (also known as Farm-to-Market Highway 1093; 120-feet wide) bears S
02°28’39” E, a called distance of 1,715.91 feet;

THENCE, N 02°28’36” W, along the east right-of-way of S. Voss Road, common with
the west line of the herein described tract, a distance of 258.00 feet to a PK
Nail found in the sidewalk for the northwest corner of the herein described
tract, said point also being common with the southwest corner of a called 0.1719
acre tract conveyed to Automated Carwash Systems, Inc., as recorded under
Clerk’s File No. K556204, of the Harris County Official Public Records of Real
Property;

THENCE, N 87°31’24” E, along the north line of the herein described tract,
common with the south line of the called 0.1719 acre tract, a distance of 440.38
feet to a 5/8-inch iron rod found under a brick wall slab for the northeast
corner of the herein described tract, common with the southeast corner of the
aforementioned 0.1719 acre tract, and being on the west line of Briarwest
Townhouse Condominiums, as recorded in Volume 12, Page 93, of the Harris County
Condominium Records;

THENCE, S 02°31’36” E, along the east line of the herein described tract, common
with the west line of the aforementioned Briarwest Townhouse Condominiums, a
distance of 258.00 feet to a 5/8-inch iron rod with cap set for the southeast
corner of the herein described tract, common with northeast corner of the

--------------------------------------------------------------------------------

aforementioned 1.4675 acre tract, from said point, a found 5/8-inch iron rod
bears N 87° 31’ E, a distance of 0.72 feet;

THENCE, S 87°31’24 W, along the south line of the herein described tract, common
with the north line of the aforementioned 1.4675 acre tract, a distance of
440.61 feet to the POINT OF BEGINNING, and containing 2.609 acres (113, 647
square feet) of land.

--------------------------------------------------------------------------------

EXHIBIT B-1

LA SCALA DEVELOPMENT BUDGET

 

CAPITALIZED

 

 

 

 

 

 

 

Land & Improvements

 

 

 

 

 

 

 

GC Fee

 

49,167

 

 

 

 

 

Land

 

7,351,304

 

 

 

 

 

Standard Site Development

 

1,650,470

 

 

 

 

 

Total

 

 

 

9,050,941

 

 

 

 

 

 

 

 

 

 

 

Real Property

 

 

 

 

 

 

 

All other Hard Costs & Contingency

 

15,533,221

 

 

 

 

 

Legal

 

100,000

 

 

 

 

 

Closing Costs

 

185,000

 

 

 

 

 

Municipal Fees

 

200,600

 

 

 

 

 

Arch & Engineering

 

750,000

 

 

 

 

 

GC Fee

 

49,167

 

 

 

 

 

Interest

 

716,865

 

 

 

 

 

Financing Fees

 

352,000

 

 

 

 

 

Soft Costs & Contingency

 

175,000

 

 

 

 

 

Taxes

 

141,501

 

 

 

 

 

Total

 

 

 

18,203,354

 

 

 

Total Capitalized to Real Property

 

 

 

27,254,295

 

 

 

 

 

 

 

 

 

 

 

Personal Property

 

 

 

 

 

 

 

GC Fee

 

49,167

 

 

 

 

 

Appliances

 

383,950

 

 

 

 

 

Marketing

 

470,000

 

 

 

 

 

Total

 

 

 

903,117

 

 

 

 

 

 

 

 

 

 

 

TOTAL CAPITALIZED

 

 

 

 

 

28,157,411

 

 

 

 

 

 

 

 

 

NON-CAPITALIZED

 

 

 

 

 

 

 

Taxes

 

94,499

 

 

 

 

 

Dev Allowance

 

1,779,286

 

 

 

 

 

Interest

 

524,021

 

 

 

 

 

Marketing Brochures

 

30,000

 

 

 

 

 

Pre-Leasing

 

200,000

 

 

 

 

 

Op Deficits

 

260,000

 

 

 

 

 

TOTAL NON-CAPITALIZED

 

 

 

2,877,806

 

2,877,806

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

31,045,217

 

31,045,217

 

 

--------------------------------------------------------------------------------

EXHIBIT B-2

HART DEVELOPMENT BUDGET

CAPITALIZED

 

 

 

 

 

 

 

Land & Improvements

 

 

 

 

 

 

 

GC Fee

 

34,167

 

 

 

 

 

Land

 

6,225,000

 

 

 

 

 

Standard Site Development

 

1,500,000

 

 

 

 

 

Total

 

 

 

7,759,167

 

 

 

 

 

 

 

 

 

 

 

Real Property

 

 

 

 

 

 

 

All other Hard Costs & Contingency

 

9,940,351

 

 

 

 

 

Legal

 

50,000

 

 

 

 

 

Closing Costs

 

115,000

 

 

 

 

 

Municipal Fees

 

139,400

 

 

 

 

 

Arch & Engineering

 

350,000

 

 

 

 

 

GC Fee

 

34,167

 

 

 

 

 

Interest

 

543,002

 

 

 

 

 

Financing Fees

 

248,000

 

 

 

 

 

Soft Costs & Contingency

 

50,000

 

 

 

 

 

Taxes

 

101,680

 

 

 

 

 

Total

 

 

 

11,571,600

 

 

 

Total Capitalized to Real Property

 

 

 

19,330,767

 

 

 

 

 

 

 

 

 

 

 

Personal Property

 

 

 

 

 

 

 

GC Fee

 

34,167

 

 

 

 

 

Appliances

 

272,550

 

 

 

 

 

Marketing

 

188,000

 

 

 

 

 

Total

 

 

 

494,717

 

 

 

 

 

 

 

 

 

 

 

TOTAL CAPITALIZED

 

 

 

 

 

19,825,483

 

 

 

 

 

 

 

 

 

NON-CAPITALIZED

 

 

 

 

 

 

 

Taxes

 

62,320

 

 

 

 

 

Dev Allowance

 

1,264,555

 

 

 

 

 

Interest

 

406,602

 

 

 

 

 

Marketing Brochures

 

12,000

 

 

 

 

 

Pre-Leasing

 

50,000

 

 

 

 

 

Op Deficits

 

148,578

 

 

 

 

 

TOTAL NON-CAPITALIZED

 

 

 

1,944,055

 

1,944,055

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

21,769,538

 

21,769,538

 

 

--------------------------------------------------------------------------------

EXHIBIT C

DRAW REQUEST

(BORROWER’S LETTERHEAD)

DRAW REQUEST NO.

TO:  BEHRINGER HARVARD ALEXAN VOSS, LLC (the “Lender”)

DATE

 

 

PROJECT

 

ALEXAN VOSS

LOCATION

 

HOUSTON, TEXAS

BORROWER

 

GC 128 VOSS SM, LLC, a Delaware limited liability company

 

 

 

FOR
PERIOD
ENDING

 

 

 

In accordance with the Senior Mezzanine Loan Agreement in the amount of
$           dated           , among Borrower, and the Lender as defined therein,
Borrower requests that $           be advanced from Loan proceeds.  The proceeds
should be credited to the account of                     , Account No.
          , at                     .

1.

 

CURRENT DRAW REQUEST FOR HARD COSTS

 

$

 

 

 

 

 

2.

 

CURRENT DRAW REQUEST FOR SOFT COSTS

 

$

 

 

 

 

 

3.

 

TOTAL DRAW REQUEST

 

$

 

 

AUTHORIZED SIGNER:

 

 

 

 

 

 

 

Dated:

 

--------------------------------------------------------------------------------

EXHIBIT D

VOSS OWNERSHIP CHART

 

[g203302ka13i001.jpg]

 

--------------------------------------------------------------------------------

EXHIBIT E

PENDING ACTIONS AT LAW

None.

--------------------------------------------------------------------------------

EXHIBIT F

VIOLATIONS OF PROPERTY AGREEMENTS

None.

--------------------------------------------------------------------------------

EXHIBIT G

LEASES

La Scala Parcel

Please see attached Rent Roll.

Hart Parcel

Retail Center Lease, dated July 26, 1999

between Hart Resources Center LP and

Hart Galleries, Inc.

--------------------------------------------------------------------------------

SENIOR MEZZANINE LOAN AGREEMENT

BY

AND BETWEEN

GC 128 Voss SM LLC

(“Borrower”)

AND

BEHRINGER HARVARD ALEXAN VOSS, LLC

(“Lender”)

--------------------------------------------------------------------------------

TABLE OF CONTENTS

1.

 

RECITALS

 

2

2.

 

DEFINITIONS

 

2

3.

 

THE LOAN; DISBURSEMENT OF LOAN

 

7

 

 

(a)

Loan

 

7

 

 

(b)

Loan Disbursements

 

7

4.

 

INTEREST PAYMENTS; NO USURY, LOAN COMMITMENT FEE; PREPAYMENT; MATURITY;
REPAYMENT

 

7

 

 

(a)

Interest

 

7

 

 

(b)

No Usury

 

7

 

 

(c)

Loan Commitment Fee

 

9

 

 

(d)

Prepayment

 

9

 

 

(e)

Maturity Date

 

9

5.

 

SECURITY FOR LOAN; GUARANTY

 

9

 

 

(a)

Pledge Agreement

 

9

 

 

(b)

Other Loan Documents

 

9

 

 

(c)

Completion Guaranty

 

9

6.

 

CONDITIONS PRECEDENT TO CLOSING OF THE LOAN

 

9

 

 

(a)

Loan Documents

 

10

 

 

(b)

Third Party Agreements

 

10

 

 

(c)

Certification

 

11

 

 

(d)

Financial Statements

 

11

 

 

(e)

Insurance Policies

 

11

 

 

(f)

Contracts

 

12

 

 

(g)

Plans

 

12

 

 

(h)

Budget and Cost Review

 

12

 

 

(i)

Leases

 

12

 

 

(j)

Title Insurance Policy

 

12

 

 

(k)

UCC Policy

 

12

 

 

(l)

ALTA Survey

 

12

 

 

(m)

Conditional Use Permits and Government Approvals

 

12

 

 

(n)

Flood Plain Certification

 

13

 

 

(o)

Appraisal

 

13

 

 

(p)

Environmental Report

 

13

 

 

(q)

Certification of Organizational Documents

 

13

 

 

(r)

Legal Opinion

 

13

 

 

(s)

UCC Searches

 

13

 

 

(t)

Access and Utility Easements

 

13

 

 

(u)

Utilities

 

13

 

 

(v)

Environmental Disclosure

 

14

 

 

(w)

Senior Lender Funding

 

14

 

 

(x)

No Default

 

14

 

 

(y)

Additional Matters

 

14

7.

 

TITLE INSURANCE

 

14

 

i

--------------------------------------------------------------------------------

 

 

 

(a)

Owner’s Policy of Title Insurance

 

14

 

 

(b)

UCC Policy

 

15

8.

 

INSURANCE

 

15

 

 

(a)

Insurance Requirements

 

15

 

 

(b)

Insurance Premiums; Evidence of Renewal

 

15

 

 

(c)

Policy Requirements

 

16

 

 

(d)

Notice of Casualty

 

16

 

 

(e)

Settlement of Claim

 

16

 

 

(f)

Application of Insurance Proceeds

 

17

9.

 

EMINENT DOMAIN

 

17

 

 

(a)

Notice of Condemnation

 

17

 

 

(b)

Settlement of Claim

 

17

 

 

(c)

Application of Condemnation Awards

 

18

 

 

(d)

Continuing Obligation to Repair

 

18

 

 

(e)

Lender Not Required to Act

 

18

10.

 

RIGHTS OF ACCESS AND INSPECTION

 

18

11.

 

EXPENSES

 

18

12.

 

FINANCIAL REPORTS, PROPERTY REPORTS AND ANNUAL BUDGET

 

19

13.

 

GENERAL COVENANTS OF BORROWER

 

21

 

 

(a)

Commencement and Completion of Project

 

21

 

 

(b)

Lender Approval

 

21

 

 

(c)

Operation and Maintenance of Project

 

22

 

 

(d)

Restricted Sale and Encumbrance of Project and of Borrower Interests; Other
Indebtedness

 

23

 

 

(e)

General Indemnity

 

24

 

 

(f)

Leases

 

25

 

 

(g)

Notices

 

26

 

 

(h)

Development

 

26

 

 

(i)

Management

 

26

 

 

(j)

Senior Loan

 

26

 

 

(k)

Principal Place of Business; Choice of Law

 

27

 

 

(l)

Compliance with Governmental Prohibitions

 

27

14.

 

FURTHER ASSURANCES

 

28

15.

 

APPRAISALS

 

28

16.

 

GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWER

 

28

 

 

(a)

Organization; Corporate Powers; Authorization of Borrowing

 

28

 

 

(b)

Title to Property; Matters Affecting Property

 

28

 

 

(c)

Financial Statements

 

31

 

 

(d)

Budget Projections

 

31

 

 

(e)

No Loan Broker

 

32

 

 

(f)

No Default

 

32

 

 

(g)

Solvency

 

32

 

 

(h)

Violations of Governmental Prohibitions

 

32

17.

 

EVENT OF DEFAULT

 

33

 

 

(a)

Non-Payment

 

33

 

 

(b)

Insurance

 

33

 

ii

--------------------------------------------------------------------------------

 

 

 

(c)

Special Purpose Entity Covenants

 

33

 

 

(d)

Fraud or Material Misrepresentation

 

33

 

 

(e)

Sale, Encumbrance or Other Indebtedness

 

33

 

 

(f)

Reports and Documents

 

33

 

 

(g)

Option Agreement

 

33

 

 

(h)

Other Breaches under this Agreement

 

34

 

 

(i)

Other Breaches Under Other Loan Documents

 

34

 

 

(j)

Senior Loan Documents

 

34

 

 

(k)

Bankruptcy Proceedings

 

34

18.

 

REMEDIES

 

35

 

 

(a)

Actions upon Event of Default

 

35

 

 

(b)

Lender’s Right to Perform

 

35

 

 

(c)

Appointment of Lender as Attorney-in-Fact

 

36

 

 

(d)

Cross-Default to Note, Pledge Agreement and Other Loan Documents

 

36

 

 

(e)

Recourse Limitations

 

36

19.

 

TRANSFER OF LOAN; LOAN SERVICER

 

37

 

 

(a)

Lender’s Right to Transfer

 

37

 

 

(b)

Loan Servicer

 

37

 

 

(c)

Dissemination of Information

 

37

20.

 

LENDER’S EXPENSES; RIGHTS OF LENDER

 

37

21.

 

MISCELLANEOUS

 

38

 

 

(a)

Notices

 

38

 

 

(b)

Waivers

 

39

 

 

(c)

Lender Not Partner of Borrower; Borrower in Control

 

39

 

 

(d)

No Third Party

 

39

 

 

(e)

Time of Essence; Context

 

39

 

 

(f)

Successors and Assigns

 

40

 

 

(g)

Governing Jurisdiction

 

40

 

 

(h)

SUBMISSION TO JURISDICTION/SERVICE OF PROCESS

 

40

 

 

(i)

WAIVER WITH RESPECT TO DAMAGES

 

41

 

 

(j)

Entire Agreement

 

41

 

 

(k)

Headings

 

42

 

 

(l)

Severability

 

42

 

 

(m)

Counterparts

 

42

 

 

(n)

Waiver of Jury Trial

 

42

 

 

(o)

Sole and Absolute Discretion

 

42

 

 

(p)

Straight Debt Harbor

 

43

22.

 

SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

 

43

23.

 

RESTRUCTURING TO ONE PHASE

 

45

 

iii

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