Exhibit 10.2

DEVELOPMENT AGREEMENT

Between

CRESCENT DEVELOPMENT, LLC,

a Delaware limited liability company, as Developer

And

GGT CRESCENT ALEXANDER NC VENTURE, LLC,

a Delaware limited liability company, as Owner

Dated: November 27, 2012

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DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (this “Agreement”), is entered into as of the 27th
day of November, 2012 by and between GGT Crescent Alexander NC Venture, LLC, a
Delaware limited liability company (together with its successors and assigns,
“Owner”) and Crescent Development, LLC, a Delaware limited liability company
(“Developer”).

Article 1. Recitals and Definitions

1.1      Recitals.  Owner owns or will own land comprising approximately 22.43
acres, located at the intersection of Senator Royall Drive and Mallard Creek
Church Road in Mecklenburg County, North Carolina more particularly described in
Exhibit A attached hereto and incorporated herein by this reference (the
“Property”), and Owner desires to develop an apartment complex on the Property
which will contain 320 Class A rental apartment units and related amenities (the
“Project”) and be known as “Circle Alexander Village”. Owner desires to retain
Developer as the developer for the Project subject to and in accordance with the
terms hereof, and Developer wishes to serve as Developer of the Project subject
to and in accordance with the terms hereof.

1.2      Definitions.  The terms defined in this Section 1.2 shall, for the
purposes of this Agreement, have the meanings herein specified unless the
context expressly or by necessary implication otherwise requires:

“Affiliate” shall mean, for any party, (i) any entity directly or indirectly
controlled by, controlling or under common control with such party, or (ii) any
entity owning or controlling 10% or more of the outstanding voting interests of
such party, or (iii) any officer, director, general partner or managing member
of such party, or (iv) any entity or person who is an officer, director, general
partner, managing member or holder of 10% or more of the voting interests of any
entity or person described in clauses (i) through (iii) of this definition.

“Allowable Development Costs” shall have the meaning provided in Section 2.5.

“Architect” means The Preston Partnership, PLLC, a Georgia limited liability
company.

“Code Compliance Changes” shall have the meaning provided in Section 2.15.

“Completion” or “Completed” means the full and final completion of the
Improvements and the balance of the Project, in a good and workmanlike manner,
lien free on or before the Completion Date in compliance with all Requirements,
including, without limitation, the 1988 Fair Housing Act Amendments and all
guidelines, rules and regulations promulgated and adopted in connection
therewith to the extent they relate to construction, substantially in accordance
with the Plans and Specifications, and in accordance with the terms of this
Agreement and to a qualitative standard (including, without limitation, as to
construction standards and materials) at least equivalent to the standard
achieved at the property known as Circle at Concord Mills Apartments located in
Cabarrus County, North Carolina and previously developed by an Affiliate of
Crescent Member, as evidenced by issuance of a final certificate of occupancy
for all applicable components of the Project (including, without limitation, the
clubhouse, each apartment unit (or each building containing the apartment units
if separate

 

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certificates of occupancy are not issued for each apartment unit) and any of the
structures and material amenities to be constructed on the Property) and as
established by certification thereof by Developer, the Architect and the General
Contractor, and as established to the reasonable satisfaction of the
Construction Consultant for the Project, subject to completion of the Punchlist
Items and subject to the installation of landscaping, which in accordance with
good horticultural practices should be installed at a different time of year and
for which adequate provisions have been made for installation at a seasonally
appropriate time. When used with reference to any individual building that is
part of the Improvements, “Completion” or “Completed” shall mean such individual
building has been completed in accordance with the terms of the Construction
Contract, in a good and workmanlike manner, lien free in compliance with all
Requirements, including, without limitation, the 1988 Fair Housing Act
Amendments and all guidelines, rules and regulations promulgated and adopted in
connection therewith to the extent they relate to construction, substantially in
accordance with the Plans and Specifications, and in accordance with the terms
of this Agreement and to a qualitative standard (including, without limitation,
as to construction standards and materials) at least equivalent to the standard
achieved for individual buildings at the property known as Circle at Concord
Mills Apartments and located in Cabarrus County, North Carolina, as evidenced by
issuance of a final certificate of occupancy for such building and as
established by certification thereof by Developer, the Architect and the General
Contractor, and as established to the reasonable satisfaction of the
Construction Consultant for the Project, subject to completion of the Punchlist
Items related to such building.

“Completion Date” means the earlier of: (i) twenty-four (24) months following
the date on which all building permits and other government approvals required
for the General Contractor to begin construction of the buildings pursuant to
the Construction Contract have been issued, with such date extended one day for
each day of delays caused by any Event of Force Majeure, or (ii) the date
Completion of the Improvements and the balance of the Project actually occurs.

“Construction Consultant” means that certain construction consultant to be
selected by Owner in its sole and absolute discretion.

“Construction Contract” has the meaning set forth in Section 2.1.

“Construction Cost Overruns” has the meaning set forth in Section 2.6.

“Construction Lender” means Regions Bank, an Alabama banking corporation.

“Construction Loan” means that certain loan in the original principal amount of
no more than $25,000,000.00 provided by Construction Lender to finance the costs
of acquisition of the Property and construction of the Improvements.

“Construction Loan Documents” means those certain documents memorializing and
securing the Construction Loan including, but not limited to a construction loan
agreement, promissory note, mortgage and any other agreements, documents, or
instruments evidencing, guarantying, securing or otherwise relating to the
promissory note, or executed or delivered in connection with the Construction
Loan, as such agreements, documents, and instruments may be amended, modified,
extended, renewed or supplemented from time to time.

 

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“Crescent Member” means Crescent Alexander Village I, LLC, a Delaware limited
liability company, which is an Affiliate of Developer and a Member of Owner.

“Development Fee” has the meaning set forth in Section 4.1.

“Engineer” means Land Design, Inc. a North Carolina corporation.

“Event of Force Majeure” means any of the following: strike, lockout, fire or
other casualty, material or labor shortage, governmental regulation or control
not in effect on the date of this Agreement, inclement weather, or acts of God;
provided that Developer shall deliver to Owner written notice of the occurrence
of each such event within thirty (30) days after the date that Developer or any
of its Affiliates first becomes aware of the occurrence thereof. For the
avoidance of doubt, “Event of Force Majeure” shall not include (a) inability to
obtain financing or other lack of funds, (b) delays in obtaining any
governmental approval unless such delay is the result of a general moratorium on
issuing government approvals, or (c) delays due to adverse soil conditions, if
such delays due to adverse soil conditions continue for longer than thirty
(30) days in aggregate.

“Plans and Specifications” has the meaning set forth in Section 2.1.

“General Contractor” means Crescent Multifamily Construction, LLC, a Delaware
limited liability company.

“Guaranteed Price” has the meaning set forth in Section 2.4.

“Guarantor” shall mean, Crescent Resources, LLC, a Georgia limited liability
company.

“Guaranty” shall mean any guaranty delivered by Guarantor in connection with
this Agreement or the Construction Loan.

“Improvements” means, collectively, the improvements to be constructed on the
Property as shown in the Plans and Specifications.

“Joint Venture Agreement” shall mean the Limited Liability Company Agreement of
Owner of even date herewith, as the same may be amended or supplemented from
time to time.

“Member” or “Members” shall mean the Members (as defined in the Joint Venture
Agreement) of Owner.

“Minor Field Changes” shall have the meaning set forth in Section 2.15.

“Plans and Specifications” has the meaning set forth in Section 2.1.

“Project” has the meaning set forth in Section 1.1.

“Project Budget” shall mean the Project Budget (as defined in the Joint Venture
Agreement), a copy of which is attached hereto as Exhibit C and incorporated
herein by this reference.

 

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“Project Contracts” has the meaning set forth in Section 2.7.

“Property” has the meaning set forth in Section 1.1.

“Punchlist Items” means, collectively, unfinished items of on-site construction
and correction of any such work that are not necessary for the issuance of any
temporary or final certificate of occupancy or for completion of the Project in
accordance with the terms of this Agreement, that will be completed by General
Contractor within 60 days following Completion, all as reasonably determined by
Construction Consultant; provided that such 60-day period shall be extended for
a reasonable period of time which shall not exceed, in any event, 120 days in
the aggregate, to enable completion of Punchlist Items, so long as Developer is
in good faith diligently overseeing General Contractor, and General Contractor
is in good faith pursuing a resolution to any outstanding Punchlist Item as of
the end of such 60-day period.

“Requirements” means, collectively, all laws, ordinances, rules, regulations,
codes, requirements of governmental authorities, permits, licenses, approvals,
the terms of all restrictions, easements and other arrangements of record
affecting all or any portion of the Property, and all contractual obligations of
Developer and Owner (including obligations related to the Construction Loan and
any other third-party financing).

Article 2. Developer’s Obligations

2.1      Certain Development Obligations.  Owner hereby retains Developer as,
and Developer hereby agrees to act as, the developer for the Project and to
develop, organize, supervise, monitor and manage the Project, subject to and in
accordance with the terms of this Agreement. Owner has approved the plans and
specifications for the Project listed on Exhibit B to this Agreement which have
been submitted to the applicable governmental agency in Mecklenburg County,
North Carolina (collectively, the “Plans and Specifications”). Owner has
approved the Project Budget, which is attached as Exhibit C to this Agreement.
Developer shall develop and cause Completion of the Project to occur in
accordance with the terms of this Agreement and at a cost (which shall be paid
by Owner, via draws under the Construction Loan or otherwise), including the
Development Fee, not to exceed the Guaranteed Price. Owner and General
Contractor will enter into a guaranteed maximum price construction contract for
construction of the Improvements in accordance with the Plans and Specifications
and the Project Budget (the “Construction Contract”). Notwithstanding anything
to the contrary, neither Owner’s entry into, nor any term of, the Construction
Contract or the contract with the Architect (the “Architectural Contract”),
shall in any way limit or amend Developer’s obligations under this Agreement
provided that the Construction Contract and the Architectural Contract are
consistent with the Plans and Specifications. Further, Developer agrees that it
shall not use or attempt to use any ambiguity, conflict or inconsistency between
this Agreement and the Construction Contract as a defense to any of its
obligations under this Agreement. Owner shall pay or cause to be paid, before
delinquency and prior to the addition of interest and penalties, all costs
associated with the Project prior to Completion, including, without limitation,
the costs of construction, ownership, operation and maintenance of the Project
in accordance with the terms of this Agreement, and additional costs associated
with or resulting from the occurrence of any Event of Force Majeure. Developer
will exercise diligent efforts to ensure the proper protection of and accounting
for the Project and all proceeds thereof, will deal at “arms-length” with all

 

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third parties and will serve the best interests of Owner in dealing with all
third parties in connection with the Project.

2.2      Draws.  Developer shall deliver to Owner copies of all draw requests
and related materials required by any lender for the disbursement of any portion
of any financing (including the Construction Loan). Such draw requests shall be
delivered to the Owner for execution and subsequent delivery of such draw
request to the relevant lender.

2.3      Construction Loan In-Balance.  Developer shall promptly deliver to
Construction Lender upon the request of Owner and from Developer’s own funds and
not proceeds of the Construction Loan such amounts as are required by
Construction Lender to maintain the Construction Loan “in-balance” to the extent
the Construction Loan is not “in-balance” for a reason directly and solely
caused by Developer or as a result of Construction Cost Overruns. The
Construction Loan shall be “in balance” only at such time and from time to time
as Construction Lender may determine, in its reasonable discretion in accordance
with the Construction Loan Documents, that the undisbursed portion of the
Construction Loan (as allocated pursuant to the Project Budget, as amended from
time to time) equals or exceeds the actual cost to complete construction of the
Project.

2.4      Guaranteed Price.  “Guaranteed Price” shall mean the amount equal to
the lesser of (i) actual, audited Allowable Development Costs for the Project
incurred through Completion, and (ii) the sum of (A) total project costs as
shown in the Project Budget plus (B) the aggregate cost of change orders
requested by the Owner, if any, on its own behalf and not as a result of any
change order requested by Developer, under Section 2.15. Owner shall have the
right from time to time and no later than one hundred twenty (120) days
following Completion to audit or have audited by independent accountants all
actual costs associated with the Project, including, without limitation,
Allowable Development Costs. Developer shall cooperate with any such audit,
including, without limitation, by providing access to all books and records
related to the Project. In no event (including, without limitation, on account
of any Event of Force Majeure) shall Owner, any of its Members, Construction
Lender or any other person or entity have any obligation to pay to Developer or
the General Contractor any amount that would cause the aggregate amount received
by Developer or the General Contractor under this Agreement, the Joint Venture
Agreement, or any other agreements between the aforementioned parties,
including, without limitation, through advances under the Construction Loan, to
exceed the Guaranteed Price.

2.5      Allowable Development Costs.  “Allowable Development Costs” means,
collectively, the costs and expenses associated with the acquisition,
development, construction, ownership, operation and maintenance of the Project
through Completion to the extent provided in a line item included in the Project
Budget, including, without limitation, interest, real estate taxes, marketing
and other operating costs and expenses of the Project. Income from the Property
received prior to the Completion Date shall be used only to pay Allowable
Development Costs.

2.6      Cost Overrun Funding.  If prior to Completion, costs and/or expenses
associated with the Project in excess of the aggregate total of the line items
in the Project Budget, following reallocation of savings, use of contingency and
amendment of the Project Budget, in each case in

 

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accordance with the terms of this Agreement and the Joint Venture Agreement
(collectively such excess being “Construction Cost Overruns”) must be paid,
Developer agrees to pay or cause Guarantor to pay one hundred percent (100%) of
such Construction Cost Overruns on or before the date they are due and in any
event no later than ten (10) days following receipt of notice from Owner. Each
Guarantor’s obligation to pay for any such Construction Cost Overruns shall be
memorialized in a Guaranty in the form attached hereto as Exhibit H and
incorporated herein by this reference. Any Construction Cost Overruns funded by
Developer shall not be treated as a contribution by Developer or Crescent Member
to Owner or in any manner construed so as to increase the Capital Account or
Initial Capital Contributions (as such terms are defined in the Joint Venture
Agreement) of Crescent Member under the Joint Venture Agreement, shall not be
treated as Additional Capital (as such term is defined in the Joint Venture
Agreement) of Crescent Member under the Joint Venture Agreement, shall not be
treated as a loan to Owner, and shall not entitle Developer or Crescent Member
to any interest on or refund of any amounts so advanced or to any other rights
or remedies against Owner or any Member.

2.7      Enforcement of Contracts.  Developer agrees, at Developer’s expense, to
enforce or cause to be enforced, performance, as applicable, of the provisions
of the Construction Contract, the Architectural Contract and all other contracts
associated with the development of the Project (collectively, the “Project
Contracts”) in a commercially reasonable manner such that all work performed and
services provided under each Project Contract will be performed and provided, as
the case may be, in accordance with its terms. Notwithstanding the foregoing,
Owner shall have the right to enforce each such contract directly, and Developer
shall cooperate with Owner in all reasonable respects with respect to such
enforcement. Upon the request of Owner from time to time, Developer shall
provide or cause to be provided to Owner a list and copies of all Project
Contracts. Each of the Construction Contract and the Architectural Contract
shall be in form and substance satisfactory to Owner and shall not be amended,
modified, supplemented or terminated without the prior written approval of
Owner. Each Project Contract shall contain an express provision requiring such
Project Contract to be assigned to Owner upon notice from Owner to the
contractor or third party under such Project Contract, unless such Project
Contract is already in the name of the Owner.

2.8      Assignment of Guaranties and Warranties.  Developer, as assignor,
hereby conditionally assigns, transfers and sets over to Owner, as assignee, all
of its right, title and interest in and to all guarantees and warranties
received by the Developer from contractors and suppliers in connection with the
design, construction and development of the Project, provided that Developer
shall be subrogated to the rights of the Owner with respect to any claims which
have been guaranteed hereunder and satisfied by Developer pursuant hereto.
Developer shall not take, and has not taken, any action or done anything which
could limit the enforceability of such guarantees and warranties.

2.9      Correction of Defective or Non-Conforming Work.  Without limiting any
other term of this Agreement, Developer agrees to repair, correct or replace (or
cause the repair, correction or replacement of), at its own cost and expense,
all of the work to be performed and all materials to be furnished or installed
in connection with construction of the Improvements (including, without
limitation, any change orders, modifications or corrections thereto) that may
prove not to be substantially in accordance with the Plans and Specifications
(as supplemented and/or modified in accordance with the terms of this Agreement
and as may be determined by the

 

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Architect to be out of compliance with the Plans and Specifications) or the
Requirements or not to be free from material defects in workmanship and/or
materials; provided, however, that any such claim of defective or non-conforming
work shall be made with respect to any building or related Improvements
constructed pursuant to the Construction Contract, if at all, on or prior to the
date which is one (1) year following Completion with respect to building or
related Improvements and Developer’s obligation to repair, correct or replace
such work shall, with respect to each building or related Improvements, expire
one (1) year following Completion of such building or related Improvements (the
“Correction Period”). Developer further agrees to pay the cost of repairing all
damage to other property resulting from material defects in the work to be
performed or materials to be furnished or installed in connection with
construction of the Improvements and to pay the cost and expenses of replacing
other property which may be damaged or disturbed in repairing, correcting or
replacing any material defects in work or materials as provided herein.

2.10      Fidelity Bonds and Indemnity.  Developer agrees that it will
indemnify, defend and save Owner harmless from any loss, cost, damage or expense
incurred by Owner by reason of (i) any unauthorized use of funds by Developer or
its Affiliates, (ii) fraud, theft, dishonesty or other wrongful act of Developer
or any employee of Developer or its Affiliates, or (iii) any liability, cost or
expense of or to Owner under the Construction Contract or the Architectural
Contract, other than amounts due and owing by Owner under the Construction
Contract or the Architectural Contract. At the request of Owner or Construction
Lender, Developer shall obtain fidelity bonds from reputable surety companies
covering all employees of Developer having access to funds relating to the
Property and indemnifying Owner against all losses to Owner from fraud, theft,
dishonesty or other wrongful acts of Developer or such persons or for such acts
or omissions of Developer which may be imputed to Owner by virtue of Crescent
Member’s membership interest in Owner, and the fees or costs for such fidelity
bonds shall be included in the Project Budget. Developer’s obligations to
indemnify, defend and save Owner harmless in this Section 2.10 shall survive the
expiration or termination of this Agreement.

2.11      Liens.  If any direct or indirect contractor, subcontractor, supplier
or any other party affiliated with or otherwise party to any contract with the
General Contractor establishes a lien against the Project and/or the Property or
the work done or materials supplied in connection with the Improvements,
Developer shall, within ten (10) business days following the earlier of
Developer’s receipt of notice from the Owner regarding such lien and such time
as Developer becomes aware of the lien, cause the lien to be discharged of
record (either by obtaining and recording a lien discharge bond from a surety
and in a form reasonably acceptable to Owner, or otherwise causing such lien to
be discharged of record) at no cost to Owner; provided, however, that if such
lien is established as a result of Owner’s failure to make payments under the
Construction Contract (provided Owner had received all of the requisite
invoices, lien waivers and evidence of expenditures ), then Developer shall not
be responsible for the removal or satisfaction of such lien under this
Section 2.11. If a lien for which Developer is responsible hereunder is not so
discharged prior to the expiration of such ten (10) business day period, Owner
shall thereafter have the right to withhold all further payments and fees to the
Developer until the lien is discharged. Owner may either (a) apply amounts so
withheld to discharging such lien, or (b) retain such amounts until such lien is
discharged or released by the lienor, and shall thereafter deliver to Developer
any amounts remaining of such withheld payments and fees after payment of the
fees and expenses Owner incurs in connection with such lien. Developer agrees

 

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to indemnify, defend, and hold Owner harmless from and against any and all
costs, expenses, liabilities, claims and obligations incurred in connection with
any such lien for which Developer is responsible hereunder and to have such lien
discharged of record. Developer’s obligations under this Section 2.11, including
the obligation to indemnify, defend and hold Owner harmless, shall survive the
expiration or termination of this Agreement.

2.12      Developer’s Services.  Without limiting any other term of this
Agreement, Developer shall, and shall have the right to:

(a)      Keep Owner and Construction Consultant advised generally as to
developments affecting the Property and the Project and respond, coordinate and
cooperate with all reasonable requests by Owner or Construction Consultant
inquiring as to the status of the progress of the Project for the purpose of
enabling Owner or Construction Consultant to monitor Developer’s progress;

(b)      Allow Construction Consultant to attend monthly Project meetings,
provide Construction Consultant reasonable advance notice of each such meeting,
and furnish Construction Consultant with minutes, notes and reports reasonably
requested by Construction Consultant to document administration of the Project;

(c)      Obtain and maintain (or cause to be obtained and maintained) in full
force and effect all necessary authorizations, agreements, permits, licenses
(including, without limitation, surety bonds) and similar documents with the
appropriate governmental authorities and utility companies pertaining to the
Project and necessary for Completion of the Project by the Completion Date and
full use and occupancy of the Project;

(d)      Supervise the performance of all contracts with and coordinate the
activities of all designated Project consultants;

(e)      Organize and administer Owner’s insurance program during development
and construction of the Project;

(f)      Perform such other related business and development functions
pertaining to the development of the Project as agreed between Owner and the
Developer;

(g)      Supervise the design and construction of the Project, including all
buildings constructed as a part of the Project and all off-site improvements and
on-site common area improvements, such as site preparation and grading,
above-ground and underground utility systems, parking lots, surface
improvements, lighting, roads, and landscaping, in each case strictly in
accordance with the Plans and Specifications;

(h)      Maintain a review function over the Architect and General Contractor
with respect to:

 

  (i) Approval of shop drawings and equipment manuals;

 

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  (ii) Revisions to working drawings and specifications required by reason of:
(1) design omission or error; (2) field conditions; (3) governmental review; or
(4) changes requested by Owner;

 

  (iii) Periodic technical inspections; and

 

  (iv) Construction inspection;

(i)      Make final inspections of the Project with the Architect and General
Contractor and prepare or cause to be prepared and issue an exception report and
process all exception report items, warranties, guarantees, bonds and other
matters required with respect thereto and procure all necessary operating and
occupancy certificates and permits for the use of the Project;

(j)      Within thirty (30) days following Completion, Developer shall deliver
to Owner and Construction Consultant a complete set of as-built drawings or a
complete set of annotated Plans and Specifications prepared by the Architect,
General Contractor or any subcontractor, as applicable, and showing all of the
Improvements as actually constructed by General Contractor. Such as-built
drawings shall be in form reasonably satisfactory to Owner, and Developer shall
cause any corrections requested by Owner or Construction Consultant to be made
in such as-built drawings;

(k)      Perform the following services:

Distribute (or cause to be distributed) weekly to Owner, minutes of weekly
project meetings, if any and monthly to Owner, as such documents are available:

 

  (i) copies of all current construction schedules,

 

  (ii) a variance report,

 

  (iii) construction status reports,

 

  (iv) current Project Budget with pending change orders and notations for any
cost savings,

 

  (v) all field reports of the Architect and Engineer,

 

  (vi) all summaries of material test reports,

 

  (vii) all other threshold inspection reports and an open items report,

 

  (viii) a narrative description of leasing status, development and construction
issues and a variance explanation,

 

  (ix) following Completion, a balance sheet, operating statement and cash flow
statement, each certified by the Developer as true and correct in all material
respects,

 

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  (x) all Construction Loan disbursement requests and related certificates,
releases and lien waivers from the previous Construction Loan application and
approvals of payment by Construction Lender, and

 

  (xi) copies of all other documents and written communications between
Developer and Construction Lender;

(l)      Deliver or cause to be delivered to Owner a copy of each interim
progress report, each in substantially the form as is attached hereto as Exhibit
D, not less frequently than monthly prior to Completion and otherwise make
available to Owner and its representatives, employees, officers and agents the
books and records of Owner possessed by Developer or within Developer’s control.
Owner shall have the right to audit, examine and make copies of or extracts from
the books of account and records of Developer and Owner (but nothing herein
shall require a Member to pay for the preparation of audited financial
statements required by Section 7.1 of the Joint Venture Agreement). The costs of
any such audit included within the Project Budget shall be an Allowable
Development Cost. The costs of any such audit in excess of the expenses included
in the Project Budget shall be paid by Owner. Such books of account and all
records of Owner possessed by Developer or within Developer’s control shall
remain the property of Owner;

(m)      Complete all Punchlist Items within the time period provided in the
definition of “Punchlist Items” to the reasonable satisfaction of Owner and
otherwise in accordance with the terms of this Agreement;

(n)      Deliver to Owner upon Completion an as-built survey of the Project
prepared by a registered land surveyor in the state where the Property is
located and in form and substance reasonably satisfactory to Owner;

(o)      Perform such other services as are usual and customary to assist Owner
in the development, construction and operation of the Project; and

(p)      At all times during construction of the Project, Developer shall
procure or cause to be procured for the benefit of Owner in accordance with the
Project Budget:

 

  (i)

“special perils” or equivalent policy form of builder’s risk insurance in the
amount of one hundred percent (100%) of the completed value of the Improvements,
plus the value of subsequent Construction Contract modifications, if any, and
cost of materials supplied or installed by others, comprising the total value of
the Improvements, which shall be converted to permanent property hazard
insurance for all Improvements included within the Project upon issuance of a
certificate of occupancy for each such building, and, for both forms of
coverage, Developer’s and Owner’s lenders’ interests shall be protected under a
loss payable clause. The builder’s risk insurance policy must provide (A) a
permission

 

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  to occupy endorsement (B) include coverage for the perils of fire, lightning,
wind, collapse, flood and/or surface water, earthquake/volcanic action, theft,
vandalism, malicious mischief, and terrorism, (C) include coverage for soft
costs and (D) include coverage for materials temporarily stored off site and/or
in transit (unless such risk of loss is transferred to others by written
contract). Owner and Developer shall be included as a named insured;

 

  (ii) standard business income/loss of rents insurance against loss of
income/rents from the Project as a result of covered damage to the Project on a
“special perils” or equivalent policy form and including the perils of
terrorism, flood and earthquake. Such insurance shall cover one hundred percent
(100%) of the actual loss sustained for at least twelve (12) months with
coinsurance waived by an agreed value clause (to the extent such a provision is
commercially available);

 

  (iii) a policy of commercial general liability insurance (occurrence form)
having a limit of not less than $1,000,000 per single occurrence, $2,000,000
aggregate. Owner and its designees shall be named as additional insured on
Developer’s, General Contractor’s and all subcontractor’s policies. The
additional insured coverage shall be provided on either (A) CG2010 covering
ongoing operations and CG2037 covering additional insured completed operations;
or (B) an equivalent form which includes both Ongoing and Completed Operations,
if acceptable to Owner;

 

  (iv) commercial automobile liability including coverage for owned, hired and
non-owned vehicles with a limit not less than $1,000,000 combined single limit;

 

  (v) worker’s compensation insurance having limits not less than those required
by state statute and federal statute, if applicable, and employers liability
insurance in an amount not less than $500,000, each accident; $500,000 disease
policy limit; $500,000 each employee, covering all persons employed by Owner,
Developer and the General Contractor in the conduct of its operations at the
Project (including the all states endorsement and, if applicable, the volunteers
endorsement); and

 

  (vi) an umbrella policy of commercial general liability insurance having a
limit of not less than $10,000,000.00 per occurrence and $10,000,000 general
aggregate.

Such insurance policies shall be issued by insurance companies with a rating of
not less than A- Class VIII in the latest edition of Best’s Insurance Guide.
Owner’s lenders shall

 

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be listed as Mortgagee on all property insurance policies and additional insured
parties on all liability insurance policies, and Developer shall deliver to
Owner certified copies of such insurance policies, together with certificates
evidencing the coverage of Owner and its lenders under the liability policy,
promptly upon issuance or renewal thereof. Developer shall not take or fail to
take any action that would cause the cancellation of, diminish coverage under or
result in an increased premium for any of the insurance described in this
Section.

2.13      Coordination with Joint Venture Agreement.  Notwithstanding anything
herein to the contrary, without the written approval of the Owner, Developer
shall not take any action which would require the prior approval of the
Member(s) as a “Major Decision” under the Joint Venture Agreement.

2.14      [Intentionally Deleted].

2.15      Amendments to Plans and Specifications; Change Orders.  Developer
shall not amend the Plans and Specifications or utilize a change order except
upon the terms and conditions set forth in this Section. Except for Minor Field
Changes and Code Compliance Changes (each as defined below), if Developer
desires to amend or modify the Plans and Specifications or utilize a change
order, Developer shall provide three (3) business days’ prior written notice to
Owner (each, a “Change Notice”). Simultaneously with the delivery of such Change
Notice to Owner, Developer shall deliver a copy of such Change Notice to the
attention of the person at Construction Consultant designated by Owner from time
to time. The Change Notice shall specify the proposed change to the Plans and
Specifications, the amount of any cost increases or cost decreases in connection
with such proposed change and other relevant information to permit Owner to
evaluate the proposed amendment, modification or change order and the actual or
potential effect upon the Project and Improvements. Owner, in its sole
discretion, may approve of any proposed amendment, modification or change order
set forth in the Change Notice, by providing Developer with written notice of
such approval within three (3) business days after Owner’s receipt of such
Change Notice (the “Approval Notice”). Unless Owner, in its sole discretion,
sends Developer notice within such three (3) business day period, that Owner
will not send the Approval Notice, the proposed amendment or modification shall
be deemed to have been approved by Owner. Notwithstanding anything herein to the
contrary, Developer may make Minor Field Changes and Code Compliance Changes in
the Plans and Specifications without the consent of Owner.

As used herein, the term “Minor Field Changes” means any changes to the Plans
and Specifications which satisfy all of the following conditions and
requirements:

(a)      the change shall not involve any substitution or elimination of
materials; or if it does involve material substitution, the substituted
materials are of equal or superior quality, durability and appearance to the
materials which are being replaced, and the substitution shall not materially
change the appearance or use of the Improvements;

(b)      the change shall not diminish the value or utility of the Project or
the mechanical, structural or architectural integrity thereof;

 

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(c)      the value of the work represented by such proposed change shall not
exceed $50,000 and, when combined with all previous Minor Field Changes, shall
not have a cumulative value in excess of $400,000; and

(d)      the change shall not require any change or modification to or amendment
of the building permits issued by Mecklenburg County, North Carolina for
construction of the Improvements.

“Code Compliance Changes” means any changes in the Plans and Specifications
which are required by any governmental agency in connection with its review and
inspection process and which also comply with the requirements set forth in
subparagraphs (a), (b) and (c) above with respect to Minor Field Changes.

Developer shall give notice to Owner of the change within five (5) business days
after the change is effected. Nothing in this subsection shall be deemed in any
way to excuse, delay or otherwise affect Developer’s obligations to deliver to
Owner as-built drawings as described in Section 2.12.

Notwithstanding anything to the contrary contained in this Section 2.15, in no
event may Developer amend the Plans and Specifications or utilize change orders
in any manner which would modify, change or otherwise alter the foundations of
the Improvements. Developer shall enter into any change order which Owner may
request in writing so long as such change order is reasonably acceptable to
Developer and acceptable to Construction Lender. Any increased costs
attributable to such an Owner requested change order shall increase Allowable
Development Costs and the Project Budget on a dollar-for-dollar basis.
Notwithstanding anything herein to the contrary, in no event shall Allowable
Development Costs or the Project Budget be deemed increased by any Minor Field
Change, Code Compliance Change or change order approved in an Approval Notice.

2.16      Negative Covenants of Developer.  Developer shall not, without the
prior written consent of the Owner (which consent may be granted or withheld in
the sole and absolute discretion of the Owner), do or permit to be done any of
the following:

(a)      Enter into the Construction Contract, any architectural contract, or
any other contract relating to the construction of the Project;

(b)      Amend or modify the Construction Contract;

(c)      Enter into any additional contracts, agreements or obligations with any
of its Affiliates in connection with the Project; or

(d)      Subject to the terms of this item (d), amend or modify the Project
Budget, other than to reallocate demonstrated line item savings and amounts set
forth in the contingency line item to demonstrated line item overruns. In no
event shall Developer have the right to reallocate amounts in the contingency
line item in excess of $100,000 for each individual reallocation and $600,000
for all such reallocations except (i) as necessary to cause the applicable line
items in the Project Budget to match the guaranteed

 

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maximum price under the Construction Contract or (ii) with the prior written
consent of Owner, which shall not be unreasonably withheld.

Article 3. Developer’s Staff

Developer acknowledges that in order to perform the services required of it
hereunder, it will be necessary for Developer to have in its employ certain key
staff personnel. Accordingly, Developer agrees that the staff available to it in
connection with its performance of this Agreement shall at all times consist of
sufficient qualified personnel who shall use at least such of their time and
effort as is necessary to assure the full performance of this Agreement by
Developer.

Article 4. Developer Compensation

4.1      Development Fee.  For Developer’s services in connection with the
development of the Project as set forth in this Agreement, Owner shall pay a
development fee (the “Development Fee”) to the Developer in an amount equal to
3% of the final Project Budget. The Development Fee shall be paid by Owner to
Developer as follows: 25% of the total fee at the closing of the Construction
Loan; fifty (50) percent of the total fee which shall be paid beginning on the
first day of the month following the month during which the Construction Loan is
closed based on the percentage of Completion of the Improvements and the balance
of the Project and which will be drawn pursuant to draw requests submitted for
draws of equity from the Owner and draws under the Construction Loan; and the
remaining twenty-five (25) percent of the total fee will be paid at Completion.
Payments of the Development Fee shall be paid from the proceeds of the
Construction Loan to the extent allowable under the terms and conditions of such
Construction Loan and, to the extent not so allowable, by Owner out of capital
contributions from the Members required under the Joint Venture Agreement or out
of cash flow from the Project as and when available. Developer’s requisitions
for payment of costs as described above in this Agreement shall include a
requisition for the applicable portion of the Development Fee, and in any event
shall be subject to the approval of Owner, which approval shall be deemed given
if the requisition is consistent with the Project Budget and payments of
installments of the Development Fee are not being withheld pursuant to the
following sentence. Notwithstanding the foregoing, (i) payment of installments
of the Development Fee shall be withheld for any periods during which Developer
is in default under this Agreement beyond any applicable notice and cure period,
and (ii) the aggregate amount of the Development Fee shall in no event exceed
the amount stated as the development fee in the final line item of the final
Project Budget and Owner and Developer shall reconcile downward, as applicable,
the aggregate amount of the Development Fee at such time as the final Project
Budget is determined.

Article 5. Covenants, Representations and Warranties of Developer.

Developer hereby covenants, represents and warrants to Owner as follows:

(a)      Developer is a limited liability company duly formed and in good
standing under the laws of the State of Delaware and duly qualified to do
business within the State of North Carolina. Developer has full power and
authority to enter into and perform this Agreement and all documents,
instruments and agreements entered into by Developer

 

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pursuant to this Agreement and to carry out the transactions contemplated
hereby. This Agreement and all documents, instruments and agreements entered
into by Developer pursuant to this Agreement constitute the valid, legal and
binding obligations of Developer enforceable in accordance with their respective
terms upon proper execution and delivery thereof by Developer, subject as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles. This Agreement has been executed and such other documents,
instruments and agreements have been or will be executed by duly authorized
representatives of Developer.

(b)      As of the date hereof, there is no petition in bankruptcy or any
petition or answer seeking an assignment for the benefit of creditors, the
appointment of a receiver, trustee, liquidation or dissolution or similar relief
under the U.S. Bankruptcy Code or any state law filed by or against or, to the
best of Developer’s knowledge, threatened to be filed by or against Developer,
its managing member, or any Guarantor under any Guaranty. Developer does
disclose the existence of the confirmed plan of reorganization of Guarantor and
its Affiliates effective June 9, 2010 in Case No. 09-11507 (CAG) in the United
States Bankruptcy Court for the Western District of Texas, Austin Division.

(c)      Developer has no actual knowledge of the existence of a criminal
investigation concerning Developer, its members, or any Guarantor.

(d)      Neither the execution and the delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement is subject to
any requirement that Developer or, to Developer’s knowledge, General Contractor
obtain any consent, approval or authorization of, or make any declaration or
filing with, any governmental authority or third party which has not been
obtained (other than building permits, certificates of occupancy and operating
permits which Developer or General Contractor will obtain on behalf of Owner) or
which, in any case or in the aggregate, if not obtained or made would have an
adverse effect, financial or otherwise, on the Project or render such execution,
delivery or consummation illegal or invalid.

(e)      The holders of direct and indirect interests in Developer as of the
date hereof are set forth on Exhibit I attached hereto and incorporated herein
by reference. Developer’s sole member holds such interest for its own account
and not for the account of others, free and clear of all liens and encumbrances.

(f)      To Developer’s knowledge, the factual matters set forth in the Recitals
are true, complete and accurate in all respects.

(g)      As of the date hereof, there are no actions, suits, proceedings or
investigations, at law or in equity, or before any governmental agency or other
person, (i) pending against Developer, its members or any Guarantor or (ii) to
Developer’s knowledge, threatened against Developer, its members or any
Guarantor, which, in any case or in the aggregate, will have a materially
adverse effect on their respective abilities to meet their obligations in
connection with this transaction or have a material adverse effect on the value,
use, operation or occupancy of the Project. Developer shall deliver or

 

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shall cause to be delivered to Owner promptly following receipt thereof any
notice of any action, suit, proceeding or investigation, at law or in equity,
against Developer, its members or any Guarantor which reasonably could have a
material adverse effect on their respective abilities to meet their obligations
in connection with this transaction or have a material adverse effect on the
value, use, operation or occupancy of the Project.

(h)      The Property is zoned for the purpose contemplated by this Agreement
and such purpose is consistent with the development of the Property for a garden
apartment community (collectively, the “Land Use Approval”). The Plans and
Specifications for the Project comply with the Land Use Approval. The Land Use
Approval is currently in effect and has not been amended in any respect to
materially affect the use of the Property as a rental apartment complex. The
Property is a stand-alone parcel with respect to the requirements of the Land
Use Approval.

(i)      The Property is not dependent upon any other parcel of real estate
(other than public drainage facilities or drainage facilities provided by
private easement) to satisfy drainage, parking, open space or other legal
requirements under any Requirements.

(j)      The Property is a legal parcel which does not include any real estate
other than the Property.

(k)      If constructed in accordance with the Plans and Specifications, the
Project will comply in all respects with all applicable Requirements (including
but not limited to, the Fair Housing Act to the extent relating to construction
and all covenants, conditions and restrictions, including, without limitation,
design guidelines, applicable to the Project).

(l)      Developer believes that Mecklenburg County, North Carolina and all
other applicable governmental authorities shall have approved the Plans and
Specifications for issuance of a land disturbance permit and building permits
for construction of the Improvements (the “Building Permits”) and shall issue
all of the Building Permits in accordance with the schedule described in Exhibit
F attached hereto. Developer has paid, or will pay on behalf of Owner to the
extent provided in the Project Budget, as and when due, all building permit
fees, applicable to the Building Permits. The Building Permits constitute all of
the permits and licenses necessary to authorize construction of the Improvements
substantially in accordance with the Plans and Specifications. The architectural
plans and specifications submitted for approval by Mecklenburg County, North
Carolina for purposes of obtaining issuance of the Building Permits are the
Plans and Specifications. Developer has delivered to Owner true, correct and
complete copies of the Plans and Specifications and shall deliver to Owner the
Building Permits in accordance with the schedule described in Exhibit F attached
hereto.

(m)      The Property is taxed as one or more separate parcel(s) (i.e., not as
part of a larger tax parcel that includes the Property) for real estate tax
purposes.

 

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(n)      To Developer’s knowledge, the Property is not in violation of any law
applicable to the Property. Developer has neither received nor been threatened
with a notice of violation of any law applicable to the Property.

(o)      Pedestrian and vehicular access to the Property is provided by streets
which are contiguous with the Property. There are no special assessments pending
or, to Developer’s knowledge, threatened against or with respect to the Property
on account of or in connection with such public streets, roads or any other
public improvements including, but not limited to, storm and sanitary sewer,
water or other utility lines, curbs, gutters, drainage facilities, sidewalks,
lighting and the like.

(p)      To Developer’s knowledge, and except as may have been previously
disclosed in writing to Owner pursuant to the Environmental Report (hereinafter
defined), there are no Hazardous Materials (as defined below) or petroleum
underground storage tanks on or near (except as disclosed in the Environmental
Report or any other environmental report ordered by and provided to Owner prior
to the date hereof) the Property, and Developer has no reason to believe that
any such Hazardous Materials or petroleum underground storage tanks are on or
near (except as disclosed in the Environmental Report or any other environmental
report ordered by and provided to Owner prior to the date hereof) the Property
in either case, which would require, necessitate or require remediation,
cleanup, non-disturbance or any other action pursuant to any Environmental Laws.
Developer has delivered to Owner the following environmental report: “Phase I
Environmental Site Assessment dated December 12, 2011” prepared by Summit
Engineering and Construction Services, Inc. (the “Environmental Report”), which
has been or shall be certified to and in favor of Owner on or before the
effective date of this Agreement. Developer has no reason to believe that the
Environmental Report is not true and correct in all respects. As used in this
Agreement, the term “Hazardous Materials” shall be defined to include, without
limitation, (i) asbestos or any material composed of or containing asbestos or
urea formaldehyde in any form and in any type; (ii) polychlorinated biphenyl
compounds; (iii) oil hydrocarbons, petroleum, petroleum products or products
containing or derived from petroleum; (iv) any hazardous or toxic waste,
substance, material, smoke, gas or particulate matter, as presently defined by
or for purposes of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.A. Section 9601, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C.A. Section 1801, et seq.; the Resource Conversation
and Recovery Act, 42 U.S.C.A. Section 6901, et seq.; the Toxic Substances
Control Act, 15 U.S.C.A. Section 2601, et seq.; the Federal Water Pollution
Control Act, 33 U.S.C.A. Section 1251, et seq.; and any State of North Carolina
environmental laws; or any successor to such laws (in existence on the date this
representation is made or updated), or any other federal, state or local
environmental, health or safety statute, ordinance, code, rule, regulation,
order or decree regulating, relating to or imposing liability or standards
concerning or in connection with hazardous or toxic wastes, substances,
material, smoke, gas or particulate matters as now or at any time hereinafter in
effect, or any common law theory based on nuisance or strict liability
(collectively, “Environmental Laws”).

 

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(q)      Other than as previously disclosed to Owner by Developer, any previous
owner of the Property, or any other third party, the Property is not
(i) designated by the Secretary of Housing and Urban Development, the Army Corps
of Engineers, the State of North Carolina or any other governmental or
quasi-governmental authority as a flood plain or wetlands area, or
(ii) designated by any other governmental or quasi-governmental authority as an
area subject to environmental or other regulation that would materially affect
the use of the Project as the apartment complex contemplated by the Plans and
Specifications or otherwise for multifamily residential rental housing.

(r)      The Property is benefited by (or will be benefited by prior to
Completion) easements of unlimited duration as are necessary for the Project. No
additional easements are required for the provision of utilities, access, egress
and drainage to or for the benefit of the Property or the Project in connection
with the use and operation of the Project as a multi-family housing development
and related facilities as depicted on the Plans and Specifications.

(s)      Developer or General Contractor has obtained, or will obtain on behalf
of Owner prior to starting construction of each component of the Project, the
Building Permits (which shall be obtained by the date provided in the schedule
described in item (l) of this Section) and all other permits, licenses, waivers,
consents, approvals and authorizations, and Developer or General Contractor has
made, or will make in a timely fashion, all material registrations,
qualifications, designations, declarations and filings required (collectively,
the “Approvals”) for each component of the Project, so that General Contractor
may construct the Improvements and, subject only to the issuance of customary
temporary or permanent certificates of occupancy by Mecklenburg County, North
Carolina and any other necessary operating permits, the Project can be operated
as an apartment complex and related facilities as depicted on the Plans and
Specifications. As of the date hereof, Developer has no reason to believe that
such certificates of occupancy will not be issued in the ordinary course of
business following completion of construction of the Improvements. All of the
Approvals for each component of the Project are, or prior to the commencement of
construction of each component of the Project will be, in full force and effect
and no cancellation or suspension of any of them is or will be threatened.
Developer has delivered (or has caused to be delivered) to Owner true, correct
and complete copies of the Approvals received by Developer or the General
Contractor on or before the date hereof. Developer shall promptly deliver (or
cause to be delivered) to Owner true, correct and complete copies of all
Approvals thereafter received by Developer or General Contractor promptly upon
receipt thereof by Developer or General Contractor. Without limiting the
foregoing, Developer has delivered to Owner a true, complete and correct copy of
the final site plan for the Project as approved by all applicable authorities
and attached hereto as Exhibit G.

(t)      The Construction Contract provides for the General Contractor to
perform all construction work for the Project for a guaranteed maximum price.
Owner has delivered or shall deliver to Developer a true, correct and complete
copy of the executed Construction Contract. Developer shall deliver to Owner, on
request, a true, correct and complete list and copy of each subcontract and
material supply contract to which Developer is a party or has been provided a
copy, as required by Owner.

 

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(u)      Upon their issuance, the liability insurance policies required under
this Agreement shall name Owner and Construction Lender as additional insured
parties. Promptly following issuance thereof, Developer shall deliver to Owner
true, correct and complete copies of all of such insurance policies.

(v)      No broker, finder, agent or other intermediary has been employed by or
on behalf of Developer or any of its Affiliates in connection with the
negotiation or consummation of this Agreement or any of the transactions
contemplated hereby, and no such party has any right or claim to any commission,
finder’s fee or similar amount payable as a result of any act of, or engagement
of, such party by Developer or any of its Affiliates. Developer hereby
indemnifies Owner against all liabilities and expenses (including, without
limitation, attorneys’ fees and costs), in connection with any claims for
commission, fee, compensation, or otherwise, for the bringing about of this
transaction, or the consummation hereof, which may be made against Owner, as a
result of any acts of Developer or any Developer Affiliate. Developer’s
obligation to indemnify Owner in this Section 5(v) shall survive the expiration
or termination of this Agreement.

(w)      Neither Developer nor any of its Affiliates has received any notice of
condemnation or of eminent domain proceedings or negotiations for the purchase
of any of the Land or the Project in lieu of condemnation, and no condemnation
or eminent domain proceedings or negotiations have been commenced or, to the
best of their knowledge, threatened in connection with the Property or the
Improvements which would have a material and adverse effect on the value of the
Project or on the continued utilization of the Project as an apartment complex
or in accordance with the Plans and Specifications.

(x)      All utility services, including, but not limited to, storm and sanitary
sewer, water, electric power, gas, cable television and telephone service are,
or will be prior to Completion, available to the Property in form and with
capacity sufficient for the useful enjoyment and operation of the Project and no
unpaid assessments, impact fees, development fees, tap-on fees or recapture
costs are payable in connection therewith except charges for which provision has
been made in the Project Budget.

(y)      Promptly upon its receipt, but in no event later than five (5) days
after receipt, Developer shall provide Owner with true, accurate and complete
copies of any notice of any material default or of any matter or event which
will, with the lapse of time or the giving of notice or both, become a material
default under any service or other contract to which Developer or Owner is a
party or by which any of their assets are bound; neither Developer nor any
Affiliate of Developer has received any notice of any violation of any building,
health and safety code or other governmental regulation which has not been fully
corrected.

(z)      Upon Completion, all temporary or permanent certificates of occupancy
and other consents and approvals required from Mecklenburg County, North
Carolina, and other governmental authorities and associations and boards with
jurisdiction over the Project shall have been issued and be in full force and
effect without the presence or existence of any unsatisfied conditions or
requirements with respect thereto, and true,

 

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correct and complete copies of such consents, approvals and certificates of
occupancy shall have been delivered to Owner.

(aa)      Developer shall not at any time use, store or keep at the Project any
Hazardous Materials, except those customarily and prudently used in construction
or operation of projects similar to the Project and in compliance with all
Environmental Laws.

(bb)      Developer represents and warrants that (i) all of the ownership
interests of Developer are owned as set forth in Article 5(e), (ii) Developer is
classified as a limited liability company for Federal income tax purposes and
(iii) Developer’s U.S. employer identification number is 45-2656657. Developer
covenants that it will not take any action (or fail to take any action, as the
case may be) that would cause the representation in this clause (bb) to fail to
be true throughout the term of this Agreement.

Article 6. Termination

6.1      Events of Default.  Unless earlier terminated by the express provisions
hereof, this Agreement shall continue in full force and effect from the date
hereof until the Completion of all portions of the Project. Notwithstanding the
foregoing, this Agreement may be terminated by Owner upon the occurrence of any
of the following events (“Event(s) of Default”):

(a)      The removal of Crescent Member as a Member of Owner or as the
“Operating Member” with “Cause” (as such term is defined in the Joint Venture
Agreement) pursuant to the Joint Venture Agreement. Without limiting the
foregoing, the removal of Crescent Member as the “Operating Member” (as such
term is defined in the Joint Venture Agreement) without “Cause” in accordance
with Section 6.7 of the Joint Venture Agreement, shall not constitute an Event
of Default under this Agreement.

(b)      Intentionally omitted.

(c)      The failure of Developer to cause Completion (with the exception of
completion of Punchlist Items and out-of-season landscaping) to occur by the
Completion Date.

(d)      A breach by the Developer of any of the obligations described in this
Agreement, which breach continues for twenty (20) days after notice by Owner to
the Developer of such breach; provided that, if such breach cannot practically
be cured within twenty (20) days, such breach has no material adverse impact on
the Owner or the Project, and Developer is in good faith actively prosecuting
with diligence and continuity a cure, then such breach shall not constitute an
Event of Default.

(e)      In the event that (i) the Developer shall make an assignment for the
benefit of creditors, or apply for the appointment of a trustee, liquidator or a
receiver of any substantial part of its assets, or shall commence any proceeding
relating to itself under any bankruptcy, reorganization, arrangement or similar
law; or (ii) if any such application is filed or proceeding is commenced against
the Developer and the Developer indicates its consent thereto, or an order is
entered appointing any such trustee, liquidator or

 

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receiver or approving a petition in any such proceedings and such order remains
in effect for more than 60 days; or (iii) if the Developer shall admit, in
writing, its inability to pay its debts as they become due.

(f)      If the Developer shall be dissolved.

6.2      Termination.  If any of the above Events of Default shall occur, Owner
shall have the right, in its sole discretion, on behalf of Owner, to terminate
this Agreement by written notice to Developer, whereupon this Agreement shall
immediately terminate, and no further payments of any fees payable pursuant to
Article 4 shall be payable other than Development Fees earned and accrued prior
to such termination. Further, in the event of any such termination, Developer
and its Affiliates shall be relieved of any further obligation hereunder, except
to the extent of any indemnity obligation set forth in this Agreement, each of
which shall survive the expiration or termination of this Agreement.

Article 7. Notices

Any and all notices and other communications required or permitted under this
Agreement shall be deemed adequately given only if in writing delivered either
in hand, or by expedited commercial carrier which provides evidence of delivery
or refusal, addressed to the recipient, or with all freight charges prepaid, if
by commercial carrier. All notices and other communications shall be deemed to
have been given for all purposes of this Agreement upon the date of receipt or
refusal. All such notices and other communications shall be addressed to the
parties at their respective addresses set forth below or at such other addresses
as any of them may designate by notice to the other parties.

Notices to the Developer shall be addressed to:

Crescent Development, LLC

c/o Crescent Resources

227 W. Trade Street

Suite 1000

Charlotte, NC 28202

Attention: Mr. Brian J. Natwick, President - Multifamily Division

with a copy to:

Sanford H. Zatcoff, Esq.

Holt Ney Zatcoff & Wasserman, LLP

100 Galleria Parkway

Suite 1800

Atlanta, GA 30339

 

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Notices to Owner shall be addressed to:

GGT Crescent Alexander NC Venture, LLC

c/o Crescent Resources

227 W. Trade Street

Suite 1000

Charlotte, NC 28202

Attention: Mr. Brian J. Natwick, President - Multifamily Division

with a copy to:

Sanford H. Zatcoff, Esq.

Holt Ney Zatcoff & Wasserman, LLP

100 Galleria Parkway

Suite 1800

Atlanta, GA 30339

with a copy to:

GGT Crescent Alexander Holdings, LLC

CNL Center at City Commons

450 South Orange Avenue

Orlando, Florida 32801

Attention: Steven D. Shackelford, Chief Financial Officer

with a copy to:

GGT Crescent Alexander Holdings, LLC

CNL Center at City Commons

450 South Orange Avenue

Orlando, Florida 32801

Attention: Holly J. Greer, Esq., General Counsel

and a copy to:

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

450 South Orange Avenue, Suite 800

Orlando, Florida 32801

Attention: Joaquin E. Martinez, Esq.

Article 8. Miscellaneous

8.1      Successor and Assigns.  The agreements contained herein shall be
binding upon and inure to the benefit of the permitted successors and assigns of
the respective parties hereto. The Developer shall not mortgage, pledge, sell,
assign, hypothecate, or otherwise encumber,

 

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transfer or permit to be transferred in any manner or by any means whatsoever
whether voluntarily or by operation of law, all or any part of its interest in
this Agreement.

8.2      Applicable Law.  This Agreement shall be construed and enforced in
accordance with the laws of the state in which the Property is located.

8.3      Severability.  If for any reason any provision of this Agreement is
determined to be invalid, or unenforceable in any circumstance, such invalidity
or unenforceability shall not impair the effectiveness of the other provisions
in this Agreement or, to the extent permissible, the effectiveness of such
provision in other circumstances.

8.4      Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement
binding on the parties hereto.

8.5      Entire Agreement.  This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all prior understandings or agreements between the parties.

8.6      Titles.  Titles of provisions of this Agreement are for descriptive
purposes only and shall not control or alter the meanings of this Agreement as
set forth in the text.

8.7      Further Assurances.  The parties agree to execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.

8.8      Consent to Jurisdiction.  The Developer consents to the personal
jurisdiction of the federal and state courts of the state in which the Property
is located and agrees that service of process may be made upon the Developer by
certified mail, return-receipt requested, or in any other manner permitted by
law. The Developer agrees not to assert in any action brought in any such court
that such action is brought in an inconvenient forum, or otherwise make any
objection to venue or jurisdiction.

8.9      Waiver of Jury Trial.  Each of the parties hereto waives trial by jury
in any litigation, suit or proceeding between them in any court with respect to,
in connection with or arising out of this Agreement, or the validity,
interpretation or enforcement thereof.

8.10      Amendments.  No amendment or modification of this Agreement shall be
effective unless reflected in a document executed and delivered by all parties
hereto.

8.11      Remedies Cumulative.  All rights, privileges and remedies afforded the
parties by this Agreement shall be cumulative and not exclusive, and the
exercise of any one of such remedies shall not be deemed to be a waiver of any
other right, remedy or privilege provided for herein or available at law or
equity.

8.12      Gender.  The use herein of (i) the singular number shall be deemed to
mean the plural, (ii) the masculine gender shall be deemed to mean the feminine
or neuter and (iii) the neuter gender shall be deemed to mean the masculine or
feminine whenever the sense of this Agreement so requires.

 

23

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8.13      Exculpation.  Owner’s liability pursuant to this Agreement is limited
to Owner’s interest in the Property and Owner (but not Developer or any
Affiliate of Developer) is exculpated from any personal liability hereunder.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

24

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

OWNER

GGT CRESCENT ALEXANDER NC VENTURE, LLC,

a Delaware limited liability company

By:  

Crescent Alexander Village I, LLC, a Delaware

limited liability company, its Operating Member

  By:  

Crescent Resources, LLC,

a Georgia limited liability company, its manager

    By:   /S/    Brian J. Natwick       Brian J. Natwick      

President - Multifamily Division

 

25

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DEVELOPER

CRESCENT DEVELOPMENT, LLC,

a Delaware limited liability company

By:  

Crescent Resources, LLC,

a Georgia limited liability company,

its sole member and manager

    By:   /S/ Brian J. Natwick       Name: Brian J. Natwick       Title:
  President – Multifamily

 

26

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EXHIBIT A

LEGAL DESCRIPTION

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT B

PLANS AND SPECIFICATIONS

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT C

PROJECT BUDGET

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT D

INTERIM PROGRESS REPORT

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT E

INTENTIONALLY OMITTED

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EXHIBIT F

PERMITS SCHEDULE

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT G

FINAL SITE PLAN

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT H

FORM OF CONSTRUCTION COST OVERRUN GUARANTY

[Omitted as not necessary to an understanding of the Agreement]

EXHIBIT I

OWNERSHIP OF DEVELOPER

[Omitted as not necessary to an understanding of the Agreement]