Exhibit 10.2

MEZZANINE LOAN AGREEMENT

BY AND AMONG

BREOF UVA GP LLC

And

BREOF UVA LLC

And

PPC-UVA 15TH STREET LIMITED PARTNERSHIP

And

PPC CHARLOTTESVILLE GP, INC.

(“Borrowers”)

AND

BEHRINGER HARVARD UVA, LLC

(“Lender”)

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TABLE OF CONTENTS

1.

RECITALS

 

2

2.

DEFINITIONS

 

2

3.

THE LOAN; DISBURSEMENT OF LOAN

 

6

 

(a)

Loan

 

6

 

(b)

Loan Disbursements

 

6

4.

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

 

7

 

(a)

Interest

 

7

 

(b)

No Usury

 

7

 

(c)

Prepayment

 

7

 

(d)

Maturity Date

 

7

5.

SECURITY FOR LOAN

 

8

 

(a)

Pledge Agreement

 

8

 

(b)

Other Loan Documents

 

8

6.

CONDITIONS PRECEDENT TO CLOSING OF THE LOAN

 

8

 

(a)

Loan Documents

 

8

 

(b)

Third Party Agreements

 

8

 

(c)

Certification

 

9

 

(d)

Financial Statements

 

9

 

(e)

Insurance Policies

 

9

 

(f)

Contracts

 

10

 

(g)

Plans

 

10

 

(h)

Budget and Cost Review

 

10

 

(i)

Leases

 

10

 

(j)

Title Insurance Policy

 

10

 

(k)

UCC Policy

 

10

 

(l)

ALTA Survey

 

10

 

(m)

Zoning; Conditional Use Permits and Government Approvals

 

10

 

(n)

Flood Plain Certification

 

10

 

(o)

Appraisal

 

10

 

(p)

Engineering Report

 

11

 

(q)

Environmental Report

 

11

 

(r)

Certification of Organizational Documents

 

11

 

(s)

Legal Opinion

 

11

 

(t)

UCC Searches

 

11

 

(u)

Access and Utility Easements

 

11

 

(v)

Utilities

 

11

 

(w)

Environmental Disclosure

 

11

 

(x)

No Default

 

12

 

(y)

Additional Matters

 

12

7.

TITLE INSURANCE

 

12

 

(a)

Owner’s Policy of Title Insurance

 

12

 

(b)

UCC Policy

 

12

8.

INSURANCE

 

12

 

(a)

Insurance Requirements

 

12

 

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(b)

Insurance Premiums; Evidence of Renewal

 

13

 

(c)

Policy Requirements

 

13

 

(d)

Notice of Casualty

 

13

 

(e)

Settlement of Claim

 

13

 

(f)

Application of Insurance Proceeds

 

14

9.

EMINENT DOMAIN

 

14

 

(a)

Notice of Condemnation

 

14

 

(b)

Settlement of Claim

 

14

 

(c)

Application of Condemnation Awards

 

14

 

(d)

Lender Not Required to Act

 

14

10.

RIGHTS OF ACCESS AND INSPECTION

 

15

11.

EXPENSES

 

15

12.

FINANCIAL REPORTS, PROPERTY REPORTS AND BUDGET

 

15

13.

GENERAL COVENANTS OF BORROWERS

 

17

 

(a)

Commencement and Completion of Project

 

17

 

(b)

Lender Approval

 

17

 

(c)

Operation and Maintenance of Project

 

18

 

(d)

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

 

19

 

(e)

General Indemnity

 

20

 

(f)

Leases

 

20

 

(g)

Notices

 

21

 

(h)

Development

 

21

 

(i)

Management

 

22

 

(j)

Senior Loan

 

22

 

(k)

Principal Place of Business; Choice of Law

 

22

 

(l)

Compliance with Governmental Prohibitions

 

22

 

(m)

Compliance with REIT Regulations

 

23

14.

FURTHER ASSURANCES

 

23

15.

APPRAISALS

 

23

16.

GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWERS

 

23

 

(a)

Organization; Corporate Powers; Authorization of Borrowing

 

23

 

(b)

Title to Property; Matters Affecting Property

 

24

 

(c)

Financial Statements

 

26

 

(d)

Budget Projections

 

26

 

(e)

No Loan Broker

 

26

 

(f)

No Default

 

27

 

(g)

Solvency

 

27

 

(h)

Violations of Governmental Prohibitions

 

27

17.

EVENT OF DEFAULT

 

27

 

(a)

Non-Payment

 

27

 

(b)

Insurance

 

27

 

(c)

Special Purpose Entity Covenants

 

27

 

(d)

Fraud or Material Misrepresentation

 

28

 

(e)

Sale, Encumbrance or Other Indebtedness

 

28

 

(f)

Reports and Documents

 

28

 

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(g)

Contribution Agreement

28

 

(h)

Other Breaches under this Agreement

28

 

(i)

Other Breaches Under Other Loan Documents

28

 

(j)

Senior Loan Documents

28

 

(k)

Bankruptcy Proceedings

28

18.

REMEDIES

29

 

(a)

Actions upon Event of Default

29

 

(b)

Lender’s Right to Perform

29

 

(c)

Appointment of Lender as Attorney-in-Fact

30

 

(d)

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

30

19.

TRANSFER OF LOAN; LOAN SERVICER

30

 

(a)

Lender’s Right to Transfer

30

 

(b)

Loan Servicer

31

 

(c)

Dissemination of Information

31

20.

LENDER’S EXPENSES; RIGHTS OF LENDER

31

21.

MISCELLANEOUS

31

 

(a)

Notices

31

 

(b)

Waivers

32

 

(c)

Lender Not Partner of Borrowers; Borrower in Control

33

 

(d)

No Third Party

33

 

(e)

Time of Essence; Context

33

 

(f)

Successors and Assigns

33

 

(g)

Governing Jurisdiction

33

 

(h)

SUBMISSION TO JURISDICTION/SERVICE OF PROCESS

33

 

(i)

WAIVER WITH RESPECT TO DAMAGES

34

 

(j)

Entire Agreement

35

 

(k)

Headings

35

 

(l)

Severability

35

 

(m)

Counterparts

35

 

(n)

Waiver of Jury Trial

35

 

(o)

Sole and Absolute Discretion

35

 

(p)

Press Releases

36

 

(q)

Recourse Limitations

36

 

(r)

Joint and Several Liability

36

22.

SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS

37

 

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MEZZANINE LOAN AGREEMENT

This MEZZANINE LOAN AGREEMENT (this “Agreement”) is made and entered into as of
this 1st day of February 2007, by and between BREOF UVA GP LLC, a Delaware
limited liability company (“BREOF GP”), BREOF UVA LLC, a Delaware limited
liability company (“BREOF”), PPC-UVA 15TH STREET LIMITED PARTNERSHIP, a Texas
limited partnership (“Phoenix”) and PPC CHARLOTTESVILLE GP, INC., a Texas
corporation (“Phoenix GP”) , each of whose address is c/o Phoenix Property
Company, 2626 Howell St., Suite 800, Dallas, Texas 75204 (each of BREOF GP,
BREOF, Phoenix and Phoenix GP is a “Borrower” and collectively are “Borrowers”),
and BEHRINGER HARVARD UVA, 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.                                   PPC Charlottesville Limited Partnership, a
Delaware limited partnership (“Mortgagor”) is the owner of a leasehold interest
in that certain land located in the City of Charlottesville, Virginia and more
particularly described on Exhibit A attached hereto (together with all
improvements, fixtures and other appurtenances, the “Property”), and Mortgagor
is constructing on the Property a 649-bed student housing apartment project
known as The GrandMarc at the Corner (the “Project”).  The Senior Note (as
defined below) 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, amendments, modifications and/or restatements
thereof (the “Security Instrument”) in favor of Senior Lender (as defined below)
encumbering the Project.

B.                                     Keybank National Association, a national
banking association (“Senior Lender”) has made a mortgage loan in the amount of
Twenty-Nine Million Nine Hundred Eighteen Thousand Five Hundred Forty-Three
Dollars ($29,918,543.00) (the “Senior Loan”) to Mortgagor evidenced by an
Amended and Restated Promissory Note dated October 19, 2006 (the “Senior Note”).

C.                                     Borrowers are the legal and beneficial
owners of one hundred percent (100%) of the Equity Interests in Mortgagor.

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D.                                    Borrowers have requested that Lender, as
mezzanine lender, make a loan to Borrowers (the “Loan”) in the amount of Six
Million Forty Thousand Dollars ($6,040,000.00) (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.

E.                                      Borrowers desire to borrow the Loan
Amount from Lender, the proceeds of which are to be used by Borrowers 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 financial
statements and such records used to prepare and evaluate financial statements
including but not limited to: (i) a balance sheet, (ii) an income statement,
(iii) a trial balance, (iv) a project budget and (v) such other documentation in
the possession of Borrowers or their Affiliates or which Borrowers will use
commercially reasonable efforts to acquire, as Lender shall reasonably request
for the consolidation of the Project if required; provided, however, that
Borrowers shall not be required to change their accounting methods or make
adjustments to their statements to accommodate a consolidation desired by Lender
using Lender’s accounting methods.  During the term of the Loan, Lender shall
keep all such financial statements and Accounting Records confidential and shall
not divulge the contents of the Accounting Records to any persons other than to
those persons who are responsible for preparing or reviewing any reports,
records, budgets, statements, filings or disclosures using the Accounting
Records, including, but not limited to, Lender’s consultants, professionals,
lender, accountants, attorneys, partners, officers and employees, except to the
extent required by law, financial reporting requirements, or any court order or
as reasonably necessary in the administration of the Loan or in connection with
disclosures to investors.

(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

2

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authority over an entity.  Control of an entity shall be conclusively presumed
in the case of the ownership of more than fifty percent (50%) of the equity
interests in the entity.

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

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

(e)                                  “Borrowers”:  means the entities identified
as “Borrowers” in the first paragraph of this Agreement, together with their
successors and assigns, provided that no such successor or assign shall have any
liability for the Loan or any other obligation of Borrowers except to the
extent, if any, expressly otherwise specified in a formal writing signed by such
successor or assign.

(f)                                    “Borrowers’ Permitted Transfers”:  means
and includes any transfers of forty-nine percent (49%) or less of any
partnership or other ownership interests in any Borrower after ten (10) days
written notice to Lender, so long as such transfers do not violate, breach or
otherwise result in a default under the Senior Loan Documents and (i) such
transfers are made to any of the Borrowers, the Principals, J. Blake Pogue,
Jason P. Runnels or Brookfield Asset Management Inc. or any Affiliate thereof,
any members of the immediate families of the foregoing individuals or any trusts
for the benefit of any of the foregoing persons, any corporations or other
business entities controlled directly by any of the Borrowers, the Principals,
J. Blake Pogue, Jason P. Runnels or Brookfield Asset Management Inc. or any
Affiliate thereof (individually or collectively); and provided that (ii)
following such transfer, the Borrowers, the Principals, J. Blake Pogue, Jason P.
Runnels or Brookfield Asset Management Inc. or any Affiliate thereof
(individually or collectively) retain both the ability to direct the day-to-day
management of the business affairs of the entity in which such interest was
transferred and an economic interest in such entity that is not less than the
economic interest held on the date hereof.

(g)                                 “Budget”:  shall mean that construction
budget attached hereto as Exhibit B for the Property.

(h)                                 “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.

(i)                                     “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.

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

(k)                                  “Completion”:  means that the Project will
be deemed substantially completed in accordance with the Plans and
Specifications upon the issuance of the final certificate of occupancy, the
issuance of a certificate of substantial completion from the Mortgagor’s
architect, receipt of a contractor’s release and the receipt of lien waivers or
similar evidence of payment from the general contractor and all major
subcontractors (i.e.,

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subcontractors whose contract amount exceeds One Hundred Thousand Dollars
($100,000.00)) to Lender’s reasonable satisfaction, provided, however, that if
Senior Lender shall deem the Project substantially complete then Lender shall
deem the Project substantially complete.

(l)                                     “Contribution Agreement” means that
certain Contribution Agreement between Borrowers and Lenders dated of even date
herewith.

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

(n)                                 “Developer”:  shall mean any developer that
is an Affiliate of Phoenix Property Company or any other developer approved by
Lender pursuant to Section 13(h) hereof.

(o)                                 “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 Principals’ Equity Interests in Borrowers (other than Borrowers’
Permitted Transfers).

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

(q)                                 “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.

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

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

(t)                                    “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.

(u)                                 “Intercreditor Agreement”:  shall mean that
certain Intercreditor Agreement dated of even date herewith between Senior
Lender and Lender.

(v)                                 “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.

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

(x)                                   “Loan Documents”:  shall mean the Note,
this Loan Agreement, the Pledge Agreement, the Environmental Indemnity, the
Subordination of Management Agreement, the Contribution Agreement, the
Post-Closing Agreement and all other documents executed by Borrowers 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.

(y)                                 “Management Agreement”:  shall mean that
certain Management Agreement dated October 13, 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, or any
other management agreement approved by Lender pursuant to Section 13(i) hereof.

(z)                                   “Manager”:  shall mean JPI Management
Services, L.P.or any other property management company approved by Lender
pursuant to Section 13(i) hereof.

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

(bb)                          “Note”:  shall mean that certain Mezzanine
Promissory Note, dated of even date herewith, in the Loan Amount, made payable
by Borrowers 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.

(cc)                            “Plans and Specifications”:  shall mean those
plans and specifications attached hereto as Exhibit C as modified from time to
time in accordance with the terms herein.

(dd)                          “Permitted Exceptions”:  shall mean 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.

(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.

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

(gg)                          “Principals”:  shall mean the holders of all of
the Equity Interests in BREOF GP, BREOF, Phoenix and Phoenix GP and any person
or entity who becomes the owner of any Equity Interest in Borrowers after the
date of this Agreement and is identified as such in an amendment or supplement
to this Agreement.

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(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, (iii) a full or partial release of the lien of the Security
Instrument in connection with a transfer of the Property or a defeasance of the
Senior Note, or (iv) all or any portion of the Principals’ Equity Interests in
Borrowers (other than Borrowers’ Permitted Transfers).  Notwithstanding the
foregoing, in the event that Lender has materially breached the Contribution
Agreement such that the transactions contemplated therein are not timely closed,
and if Borrowers are not then in default under the Contribution Agreement, then
“Sale” shall specifically exclude entering any agreement to sell or otherwise
transfer the Property, the Project or any part of or interest in either of them
provided that any closing date under such agreement would occur after repayment
of the Loan.

(ii)                                  “Senior Loan Agreement”:  shall mean that
certain Construction Loan Agreement dated October 14, 2005 between Senior Lender
and Mortgagor as amended pursuant to the terms of that certain Increase and
Modification Agreement dated as of October 19, 2006, between Senior Lender and
Mortgagor.

(jj)                                  “Senior Loan Documents”:  shall mean the
Senior Note, the Security Instrument, the Senior Loan Agreement and all other
documents and instruments evidencing, securing or pertaining to the Senior Loan,
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 Republic
Title of Texas, Inc., 2626 Howell St., 10th Floor, Dallas, Texas 75204, Attn:
Ms. Jeanne Ragland.

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

3.                                       THE LOAN; DISBURSEMENT OF LOAN.

(a)                                  Loan.  On the basis of the covenants,
agreements and representations of Borrowers contained herein and subject to the
terms and conditions hereinafter set forth, Lender shall lend to Borrowers and
Borrowers shall borrow from Lender a sum not to exceed the Loan Amount, 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, Borrowers hereby direct and
authorize Lender to disburse the principal balance of the Loan to Borrowers to
be used to pay for or reimburse Borrowers for payment of costs as described in
the Budget.  The Loan is not revolving.  In no event shall the aggregate amount
disbursed hereunder exceed the original principal amount of the Loan.

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

(a)                                  Interest.  Interest on the principal
balance of the Loan shall be payable in the amounts and at the times set forth
in the Note.  Borrowers agree to pay, on the Maturity Date, the unpaid principal
balance of the Loan, unless otherwise accelerated or prepaid pursuant to the
terms of the Note, together with all accrued but unpaid interest thereon.

(b)                                 No Usury.  The provisions of this Agreement,
the Note, the Contribution Agreement and of all other agreements between
Borrowers 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, after taking into account all amounts deemed interest
or as reducing the true principal balance of the Loan, in no contingency or
event whatsoever, whether by reason of demand or acceleration of the 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 Borrowers 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 Borrowers, 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 and amount 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.  This paragraph 4(b) will control all
agreements (including the Contribution Agreement) between Borrowers and Lender. 
The loan is not for family, household or personal purposes, but is a commercial
purpose loan.

(c)                                  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.

(d)                                 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 or
prepaid 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.

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5.                                       SECURITY FOR LOAN.

(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.

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 Borrowers 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:

(a)                                  Loan Documents.  Borrowers 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 Environmental Indemnity;

(v)                                 the Subordination of Management Agreement;

(vi)                              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;

(vii)                           Certification of Organizational Documents;

(viii)                        the Contribution Agreement;

(ix)                                the Post-Closing Agreement; and

(x)                                   such other agreements by Borrowers 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.  Borrowers shall have provided
to Lender executed copies, certified by the appropriate Borrower(s) 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.

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(ii)                                  Senior Lender Certificate.  If requested
by Lender, a certification signed by Senior Lender confirming that the copies of
the Senior Loan Documents delivered by Borrowers and Mortgagor to Lender are
true, correct and complete copies of the Senior Loan Documents and that there
are no other documents evidencing, securing or otherwise affecting the Senior
Loan.

(iii)                               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.

(iv)                              Manager’s Subordination Agreement.  The
Borrowers 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 the occurrence of an Event of Default or foreclosure against
the Collateral and,

2)              consents to the removal and replacement of Manager upon the
occurrence of an Event of Default or foreclosure against the Collateral.

(c)                                  Certification  Borrowers hereby certify
that as of the effective date of this Agreement (which is the date that the
commitment of Lender to make the Loan to Borrowers becomes binding on Lender),
the fair market value of the portion of the Project that is capitalized by
Mortgagor as real property for federal income tax purposes consistent with past
practices of the affiliates of Mortgagor exceeds the sum of all amounts actually
advanced and outstanding under the Senior Loan plus the stated principal amount
of this Loan and, upon completion of construction of the Project, the fair
market value of the portion of the Project that is capitalized by Mortgagor as
real property for federal income tax purposes consistent with past practices of
the affiliates of Mortgagor will exceed the sum of the stated principal amount
of the Senior Loan plus the stated principal amount of this Loan.

(d)                                 Financial Statements.  Borrowers shall have
provided to Lender with respect to each Borrower, the Project and the Mortgagor,
financial statements and other financial information, certified by the Borrowers
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.

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

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(f)                                    Contracts.  Borrowers 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.  Borrowers 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 or Senior Lender’s inspecting engineer with respect to
Mortgagor’s construction budget and the available plans for the Project, which
shall be satisfactory to Lender.

(i)                                     Leases.  Borrowers 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 title insurance policy 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
Senior Loan.

(k)                                  UCC Policy.  Lender shall have received a
commitment to issue the UCC Policy referred to in Section 7(b) hereof subject
only to conditions reasonably satisfactory to Lender.

(l)                                     ALTA Survey.  Lender shall have received
the most recent 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)                               Zoning; 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 Borrowers’ engineer or any other person satisfactory to Lender)
that the zoning of the Property is satisfactory and compatible with the
development of the Project according to the plans and 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.

(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, Borrowers have 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

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Lender, but also addressed to Lender and its successors and assigns, in the
amount of Forty-Four Million Five Hundred Thousand Dollars ($44,500,000.00).

(p)                                 Engineering Report.  Lender shall have
received an engineering report covering the construction, structural integrity
and functional utility of the Property as well as its compliance with the
Americans With Disabilities Act and all other applicable laws, in form and
substance as required by Lender and certified to Lender, its successors and
assigns.

(q)                                 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.

(r)                                    Certification of Organizational
Documents.  Lender shall have received a written certification attaching the
required documents with respect to both Mortgagor and Borrowers, 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.

(s)                                  Legal Opinion.  Lender shall have received
a written legal opinion or legal opinions from Borrowers’ 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 herein and other such matters as Lender may reasonably require and (5)
no usury.

(t)                                    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 Borrowers and the
Mortgagor and disclosing no matters objectionable to Lender.

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

(v)                                 Utilities.  Lender shall have received
evidence that all sewer, water, electrical, telephone and any other utility
services necessary to obtain a certificate of occupancy for the Project are (or
upon Completion, will be) available at the Property in adequate supply for the
use and operation of the Project and each provider of utility services has (or
upon Completion, will have) a binding obligation to deliver the necessary
services to the completed residences.  This evidence may include letters from
the applicable utility providers.

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

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(x)                                   No Default.  The representations and
warranties of Borrowers contained in this Agreement shall be true, correct and
complete in all material respects, 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.  Borrowers 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. 
Borrowers 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;

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

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

(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.  Borrowers 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.  Borrowers, at
their sole cost (or at Mortgagor’s sole cost), for the mutual benefit of
Borrowers, 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.  Borrowers agree that they will cause Mortgagor or its
contractors, provided that in either case Lender shall be named as an additional
insured, to maintain coverage under its products/completed liability

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insurance for a period of no less than two (2) 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 a
period of no less than two (2) years with limits no less than Five Million
Dollars ($5,000,000.00), 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,
Borrowers agree to provide evidence of payment of all insurance premiums.
Borrowers shall use their best commercially reasonable efforts to deliver
originals of all policies and renewals (or certificates evidencing the same),
marked “paid” (or other evidence satisfactory to Lender of the continuing
coverage) to Lender at least ten (10) 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
Borrowers 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 reasonably satisfactory to
Lender, (iii) provide thirty (30) days’ advance written notice to Lender before
any cancellation, adverse material modification or notice of non-renewal and
(iv) to the extent limits are not otherwise specified herein, contain
deductibles which are in amounts acceptable to Lender.  All certificates of
insurance and “blanket” insurance policies shall reference the specific project
being covered by name and address.

(d)                                 Notice of Casualty.  Borrowers shall give to
Lender immediate notice of any 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 reasonable discretion, all claims thereunder, subject to the
rights of the Senior Lender.  In the event of any such adjustment, collection
and compromise by Lender, Borrowers covenant to sign upon demand, or Lender may
sign or endorse on Borrowers’ behalf, all necessary proofs of loss, receipts,
releases and other papers required by the insurance companies to be signed by
Borrowers.  Borrowers hereby irrevocably appoint Lender as their
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

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the fact of approving, disapproving, accepting, preventing, obtaining or failing
to obtain 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
Borrowers hereby expressly assume full responsibility therefor and all
liability, if any, with respect thereto.

(f)                                    Application of Insurance Proceeds.  Any
insurance proceeds received by Mortgagor or Borrowers under any of such 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
casualty awards to be used for the 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
decisions).

9.                                       EMINENT DOMAIN.

(a)                                  Notice of Condemnation.  Borrowers 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 Borrowers
hereby assign to the Lender, subject to the rights of the Senior Lender in the
same).  Borrowers covenant to sign upon demand, or Lender may sign or endorse on
Borrowers’ behalf, all necessary proofs of loss, receipts, releases and other
papers required by the condemning authority to be signed by Borrowers for such
purpose.  Borrowers hereby irrevocably appoint Lender as their attorney-in-fact
for the purposes set forth in this Section 9.  Lender may deduct from any
Condemnation Awards, any reasonable expenses incurred by Lender in the
collection and settlement thereof, including attorneys’ and adjusters’ fees and
charges.

(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 the 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 decisions).

(d)                                 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

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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.  Borrowers
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.  Borrowers shall
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
Borrowers, 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 Borrowers, Mortgagor or any other party against, or
to inform Borrowers 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 (but
excluding any damage or harm caused by Lender or its agents).  So long as no
Event of Default has occurred and is continuing, Lender shall give Borrowers and
Mortgagor reasonable prior notice of its intent to enter the Project.

11.                                 EXPENSES.  Borrowers shall pay, as and when
due, all reasonable fees, costs and expenses incurred in the procuring and
making of the Loan by Lender, including without limitation, Title Insurer’s fees
and premiums, charges for examination of title to the Property, 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,
professionals or independent contractors employed, retained or utilized by
Lender in connection with the Loan.  Borrowers 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 Borrowers 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. 
Borrowers shall pay upon demand or reimburse Lender for any and all 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
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 the
reports for public companies on

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Form 10-Q and Form 10-K and reporting under Rules 3-05, 3-09 or 3-14 of
Regulation S-X).  In addition, certain accounting requirements may dictate that
Lender report Borrowers, Mortgagor and/or the Project as a subsidiary of
Lender.  Therefore, Borrowers agree to provide Lender with all such information
requested by Lender that Borrowers or their Affiliates have in their possession,
and Borrowers will obtain such information not in its possession, as Lender
reasonably requires in order to consolidate, audit and/or review financial
statements of the Project, Mortgagor and Borrowers for the applicable reporting
periods.  As of the execution hereof, Lender’s fiscal year for purposes of such
reporting ends on December 31st, and Lender shall give reasonable notice to
Borrowers of any change in such fiscal year or any other such reporting
requirements.

(a)                                  Borrowers agree that all accounting for the
Project will be conducted by the Borrowers and/or the Mortgagor in accordance
with GAAP.  Borrowers agree to provide Lender with copies of all Accounting
Records (other than leases, which Borrowers and/or the Mortgagor may make
available at the Project rather than copying) on a monthly basis.

(b)                                 Borrowers agree to provide copies of all
Accounting Records by the 15th of the month for the preceding month.

(c)                                  Upon reasonable advance notice, Borrowers
agree 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.

(d)                                 Upon reasonable advance notice, Borrowers
agree 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)                                  Borrowers agree to provide a budget for the
project at the closing of this Agreement and to provide updates to the budget as
part of the Accounting Records provided by the 15th of the month for the
preceding month.

(f)                                    In addition, Borrowers 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

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(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, Borrowers’ 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.

(g)                                 If Borrowers fail 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 Borrowers’
books and records audited or to perform any other procedure reasonably requested
by Lender, at Borrowers’ 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.

(h)                                 If Lender acquires the Project or acquires
the Collateral through foreclosure, Borrowers shall deliver, or cause to be
delivered, to Lender upon written demand all books and records relating to the
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, Borrowers 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.  Borrowers agree to make available to Lender for
examination and copying any other books and records upon Lender’s written
demand.

(i)                                     Borrowers authorize Lender to obtain a
credit report on each Borrower and Mortgagor at any time.

13.                                 GENERAL COVENANTS OF BORROWERS.  Until the
full and final payment of the Loan, unless Lender waives compliance in writing,
Borrowers hereby covenant and agree as follows:

(a)                                  Commencement and Completion of Project. 
Borrowers shall cause Mortgagor to construct and install the improvements in
connection with the Project with diligence so that the construction and
Completion of the Project (other than payment of claims that are being contested
in accordance with the Loan Documents) shall have occurred by December 31, 2007.

(b)                                 Lender Approval.  No changes to the Budget
attached hereto or the completion date set forth above 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 Borrowers shall provide Lender with notice
of any changes in connection with (i) and (ii) above.  Lender has approved the
plans and

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specifications for the improvements to be constructed on the Property described
in Exhibit C attached hereto, and no substantial changes to such approved plans
and specifications shall be permitted without Lender’s written consent.  Lender
shall have five (5) 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 five (5) 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.  Borrowers
shall pay or discharge all lawful claims, including taxes, assessments and
governmental charges or levies imposed upon Borrowers or its income or profits
or upon any property belonging to Borrowers prior to the date upon which
penalties attach thereto; provided that Borrowers 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, Borrowers 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
Borrowers or their Affiliates in connection with this transaction (and Borrowers
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.  Borrowers shall not, nor
shall it permit Mortgagor to, without Lender’s prior written consent, enter into
any amendments or modifications of (a) if Borrowers or Mortgagor is a
corporation, the Borrowers’ and Mortgagor’s by-laws and articles of
incorporation, (b) if Borrowers or Mortgagor is a limited liability company,
such entity’s operating agreement or articles of organization, (c) if Borrowers
or Mortgagor is a limited partnership, such entity’s partnership agreement or
partnership certificate, (d) the Third Party Agreements, or (e) the Senior Loan
Documents.  Nothing herein shall require lender’s consent for any amendments in
connection with Borrowers’ Permitted Transfers but Borrowers shall provide prior
written notice to Lender of same.

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

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

(iv)                              Maintenance and Repair of Project.  After
completion of the Project, Borrowers 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 or permitted 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 substantial accordance with the plans for
the Project, without the prior written consent of Lender.  Borrowers shall pay
when due all claims for labor performed and materials furnished therefor in
connection with any improvements or construction activities on the Property
(subject to right to contest set out in Section 13(c)(i) above).

(d)                                 Restricted Sale and Encumbrance of Project
and of Borrowers Interests; Other Indebtedness.  Neither Borrowers nor the
Principals 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).  Borrowers will not issue any additional Equity Interests in
Borrowers.  In addition, Borrowers shall not permit Mortgagor to issue any
additional Equity Interests in Mortgagor.  In addition, Borrowers shall not, nor
shall it permit Mortgagor to, incur any indebtedness, whether secured or
unsecured, other than (i) the Senior Loan and this Loan and (ii) trade and
operational indebtedness incurred in the ordinary course of business. 
Notwithstanding the foregoing, Lender’s consent shall not be required for any
Borrowers’ Permitted Transfers or for:

(i)                                     the grant of a leasehold interest in a
portion of 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;

(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;

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(iii)                               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;

(iv)                              the grant of an easement if, before the grant,
Lender determines that the easement will not materially affect the operation or
value of the Project and Borrowers pays to Lender, upon demand, all costs and
expenses incurred by Lender in connection with reviewing Borrowers’ request; and

(v)                                 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.  Borrowers shall, at
Borrowers’ 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.  Borrowers 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.  Borrowers acknowledge 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
attorney’s fees) are part of the costs covered by the indemnity.  The foregoing
indemnification shall survive repayment of the Loan.  Nothing herein or
elsewhere in the Loan Documents is intended or shall be construed to require
Borrowers or Guarantor to indemnify any of the Indemnified Parties with regard
to any loss resulting in whole or part from any Indemnified Party’s willful
misconduct or gross negligence.

(f)                                    Leases.

(i)                                     Residential Lease Requirements. 
Mortgagor shall have the right, and Borrowers 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 form attached hereto as
Exhibit F as approved by Lender, and shall not include options to purchase and
(B) all Leases shall be for initial terms of not more than (2) two years.

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(ii)                                  Commercial Lease Requirements.  Mortgagor
shall not, nor shall Borrowers permit Mortgagor to, enter into any material
non-residential Leases without Lender’s prior written consent in each instance. 
Mortgagor shall not, nor shall Borrowers permit Mortgagor to, modify the terms
of, or extend or terminate, any material Lease for non-residential use
(including any Lease in existence on the date of this Agreement) without the
prior written consent of Lender.  Borrowers 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 Borrowers 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.  Borrowers 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, Borrowers 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.  Borrowers
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.  Borrowers
shall, or shall cause Mortgagor to, diligently 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.

(g)                                 Notices.  Borrowers shall promptly notify
Lender in writing of any litigation affecting (a) Borrowers or Mortgagor and,
any general partner, managing member or controlling shareholder of Borrowers
(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) Borrowers’ 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.  The Project shall be developed
at all times by Developer or a professional developer selected by Mortgagor and
reasonably satisfactory to Lender under a contract approved by Lender.  If after
the date of this Agreement, Borrowers or Mortgagor

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intends to change the development of the Project, Lender shall have the right to
approve such new developer and the written contract for the development of the
Project and, if the developer is an Affiliate of Borrowers, require that
Borrowers and such new developer enter into a Subordination of Development
Agreement on a form reasonably acceptable to Lender.

(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, Borrowers 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 Borrowers, require that Borrowers and such new property manager
enter into a Subordination of Management Agreement on a form reasonably
acceptable to Lender.

(j)                                     Senior Loan.  The Borrowers 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.  Borrowers shall provide Lender with
copies of all notices 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 Borrowers or Mortgagor fail to so pay or perform such obligations, the Lender
may pay 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.  Borrowers
shall not, nor shall they 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 
Borrowers shall not change their principal place of business or, if Borrowers
have more than one place of business, their chief executive office, from their
address set forth in the first paragraph of this Agreement.  In addition,
Borrowers 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 their formation.  Lender agrees not
to unreasonably withhold its consent to any change in the Borrowers’ principal
place of business or the governing law with respect to uncertificated securities
so long as (1) Borrowers and any other party requested by Lender execute all
documents and instruments deemed necessary by Lender to perfect the security
interests granted pursuant to the Loan Documents, (2) the Borrowers pay all of
the Lender’s costs and expenses of perfecting such security interests and (3) if
requested by Lender, Borrowers deliver to Lender an opinion from counsel
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 Borrowers for any purpose, or to any person, in violation of any
Law (as defined in Section 16(h)) including, without limitation, any of the

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Terrorism Laws (as defined in Section 16(h)).  Borrowers 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 respects at any time, or (b) if Borrowers obtain knowledge
that Borrowers, Principal, or any holder at any time of any direct or indirect
equitable, legal or beneficial interest in Borrowers or Principal has violated
any of the Terrorism Laws.  Borrowers 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.

(m)                               Compliance with REIT Regulations.  At all
times during the term of the Loan, Borrowers shall cause Mortgagor to operate
the Project so that, if Mortgagor were a REIT, Mortgagor could satisfy (i) the
ninety-five percent (95%) gross income test of Section 856(c)(2) of the Code,
(ii) the seventy-five percent (75%) gross income test of Section 856(c)(3) of
the Code and (iii) the asset tests of Section 856(c)(4) of the Code.

14.                                 FURTHER ASSURANCES.  Borrowers shall, from
time to time, upon Lender’s request, at Borrowers’ 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 Borrowers’ 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.  Borrowers 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 Borrowers 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
BORROWERS.  Borrowers represent and warrant 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.  Borrowers’ ownership
structure set forth on Exhibit D attached hereto is a true and correct depiction
of the Equity Interests in Borrowers and Mortgagor, and each entity set forth on
Exhibit D is duly organized and is validly existing and in

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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.  Borrowers have the
full 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
Borrowers and constitute the legal, valid and binding obligations of Borrowers
and are enforceable against Borrowers 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.

(iii)                               Not a Foreign Person.  Neither Borrowers,
nor any entity that is a holder of an Equity Interest in Borrowers, are
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
Borrowers or by any other parties signatory thereto of their respective
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 Borrowers or Mortgagor are a
party or by which the Property, the Borrowers or the Mortgagor or such other
parties are bound.

(v)                                 True and Correct Copies of Documents.  All
due diligence documents required to be delivered by Borrowers 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.

(b)                                 Title to Property; Matters Affecting
Property.

(i)                                     Title to Property.  Mortgagor has good
and indefeasible leasehold title to the Property, subject only to the Senior
Loan Documents and the Permitted Exceptions, and good, indefeasible and freely
alienable title to all personal property owned by Mortgagor and located on the
Property, subject only to the Senior Loan Documents and the Permitted
Exceptions; Borrowers will cause

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Mortgagor to protect or cause to be protected the title to the Project, and
Borrowers 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.

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

(iii)                               Borrowers’ Equity Interests.  Principals own
and will own one hundred percent (100%) of the ownership interests in Borrowers,
and Principals have not transferred, conveyed, pledged or encumbered (and will
not transfer, convey, pledge or encumber) such interests except with the prior
written consent of Lender and except for any Borrowers’ Permitted Transfers.

(iv)                              No Other Interests.  Since the date of
formation of each Borrower, Borrowers have only owned the Equity Interests of
Mortgagor and have not owned interests in any other entity or owned any real
property or any other material assets.

(v)                                 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 Borrowers threatened,
against Mortgagor, Borrowers or the Project or, to the knowledge of Borrowers,
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. 
Borrowers will promptly notify Lender of any such future actions, suits or
proceedings.  To Borrowers’ knowledge, neither Borrowers, 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.

(vi)                              No Contracts Giving Rise to Liens.  Neither
Borrowers 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.  Borrowers have
not made any

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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.

(vii)                           Compliance with Property Agreements.  The
Property in all respects conforms to and complies with all covenants,
conditions, restrictions, reservations, regulatory agreements, conditional use
permits and zoning ordinances affecting the Property whether or not recorded
against the Property.

(viii)                        Leases.  There are no Leases of the Property in
effect as of the closing of the Loan other than those set forth on Exhibit E.

(ix)                                Tax Treatment.  Borrowers 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.  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 Borrowers and Mortgagor 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 other than standard trade payables have been made or incurred by
such person(s) since the date(s) thereof other than the borrowing contemplated
hereby, the Senior Loan or other borrowings disclosed in writing to and approved
by Lender.

(d)                                 Budget Projections.  Borrowers’ 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 Borrowers’ opinion and have been prepared in a manner consistent
with the past practices of affiliates of the Borrowers.

(e)                                  No Loan Broker.  Borrowers 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 Borrowers. 
Borrowers do 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.

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(f)                                    No Default.  There are no defaults under
any of the Senior Loan Documents or the Loan Documents on the part of Borrowers,
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, Borrowers
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 Borrowers,
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 Borrowers, including,
without limitation, any of the Terrorism Laws.  Neither the making of the Loan,
nor the receipt of Loan proceeds by Borrowers or Mortgagor or Principals,
violates any of the Terrorism Laws applicable thereto.  To Borrowers’ best
knowledge, no holder of any direct or indirect equitable, legal or beneficial
interest in Borrowers or Principal is in violation of any of the Terrorism
Laws.  No portion of the Loan proceeds will, to Borrowers’ actual knowledge, be
used, disbursed or distributed by Borrowers 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 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.  Borrowers 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 Borrowers 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, under the
Note, or in the case of other sums payable under the Note, this Agreement or the
Loan Documents, for a period of five (5) Business Days after notice of such
failure by Lender.

(b)                                 Insurance.  The failure of Borrowers to keep
in force any insurance policy required hereunder.

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

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(d)                                 Fraud or Material Misrepresentation  Fraud
or material misrepresentation or material omission by Borrowers or Mortgagor, or
any of their officers, directors or managers 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 Borrowers, Mortgagor, Principals or any other person
contrary to the provisions of Section 13(d) of this Agreement;

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

(g)                                 Contribution Agreement.  The failure of
Borrowers to comply with the terms of the Contribution Agreement including but
not limited to Borrowers’ satisfaction of all of the Conditions to Closing and
Closing Deliveries set forth therein (after taking into account any applicable
grace, notice and opportunity for cure provided in such agreement.

(h)                                 Other Breaches under this Agreement. The
failure by Borrowers 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 twenty (20) days after notice of such failure by
Lender to Borrowers or if such failure is not reasonably susceptible of cure
within such 20-day period and if Borrowers promptly commence such cure within
such 20-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 60 days, but
no such notice or grace period shall apply in the case of any such failure which
could, in Lender’s judgment, absent immediate exercise by Lender of a right or
remedy under this Agreement, result in material harm to Lender, impairment of
the Note, this Agreement, Pledge Agreement or any other security given under any
other Loan Document;

(i)                                     Other Breaches Under Other Loan
Documents.  The failure of Borrowers, Mortgagor, or any indemnitor or obligor to
perform and observe any covenant, obligation, agreement or undertaking on the
part of such party under any Loan Document other than this Agreement following
such notice and/or grace and/or cure periods, if any, as may be provided therein
for curing such failure;

(j)                                     Senior Loan Documents.  The failure of
Borrowers or Mortgagor or any indemnitor or obligor to perform and observe any
covenant, obligation, agreement or undertaking on the part of such party under
any Senior Loan Documents following any grace, notice or cure periods, if any,
as may be provided therein for curing such failure; or

(k)                                  Bankruptcy Proceedings.

(i)                                     If the Borrowers or Mortgagor shall
become insolvent, make a transfer in fraud of, or a general assignment for the
benefit of,

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creditors, or admit in writing its inability, or is unable, generally to pay its
debts as they become due; or

(ii)                                  If the Borrowers 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 Borrowers,
Mortgagor or the Project, or any such receiver or trustee is appointed in any
proceeding brought against the Borrowers, 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

(iii)                               If the Borrowers 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

(iv)                              If the Borrowers 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

(v)                                 If the Borrowers 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 (k) 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, 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 Borrowers 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 Borrowers
fail to perform any monetary covenant or obligation contained herein or in the
other Loan Documents and such failure continues for a period of five (5)
Business Days after written notice of such failure by Lender to Borrowers, or if
Borrowers fail to perform any non-monetary covenant or obligation contained

29

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herein or in the other Loan Documents and such failure continues for a period of
20 days after written notice of such failure by Lender to Borrowers, or if such
failure is not reasonably susceptible of cure within such 20 day period and if
Borrowers promptly commence such cure within such 20 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 60 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 incurred or
paid in connection therewith shall be payable by Borrowers 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 Borrowers of any such failure.

(c)                                  Appointment of Lender as Attorney-in-Fact. 
Borrowers hereby irrevocably, unconditionally and presently constitute Lender as
Borrowers’ attorney-in-fact, with full power of substitution, to be exercised by
Lender only upon the occurrence 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 Borrowers which may be necessary or
desirable in order to do any and every act which Borrowers 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
Borrowers under this Agreement, or in the performance of any of the Borrowers’
covenants, agreements or obligations contained herein, 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 Borrowers, 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 Borrowers to Lender under this
Agreement and the other Loan Documents, have been paid in full.

19.                                 TRANSFER OF LOAN; LOAN SERVICER.

(a)                                  Lender’s Right to Transfer  Borrowers
hereby acknowledge that Lender shall have the right to transfer, assign or sell
the Loan Documents to an Affiliate, 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, so long as Lender remains the lead
lender and administrative agent.

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(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 (but no such delegation shall relieve lender from any
liability or consequences arising from any breach or other act or omission by
the servicer).  There may be one or more changes of Loan servicer.  If there is
a change of Loan servicer, Borrowers will be given notice of the change.

(c)                                  Dissemination of Information.  Lender may
forward to each permitted 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 Borrowers, Mortgagor and Principals, including
financial statements, whether furnished by Borrowers or otherwise, as Lender
reasonably determines necessary or desirable.  Borrowers irrevocably waive any
and all rights they may have under applicable Laws to prohibit such disclosure.

20.                                 LENDER’S EXPENSES; RIGHTS OF LENDER. 
Borrowers 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 costs and expenses paid or incurred by Lender in enforcing or
exercising its rights or remedies in connection with a default created by,
connected with or provided for in this Agreement or any of the other Loan
Documents, and payment thereof shall be secured by the Pledge Agreement.  If at
any time Borrowers fail, refuse or neglect to do any of the things herein
provided to be done by Borrowers, Lender shall have the right but not the
obligation, to do the same but at the expense and account of Borrowers.  The
amount expended by Lender shall be added to the Indebtedness and shall accrue
interest thereon at the Default Interest Rate, shall be repaid to Lender upon
written demand and payment shall be secured by the Pledge Agreement.

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 actually 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 UVA, LLC
15601 Dallas Parkway, Suite 600
Addison, Texas  75001
Attn: Chief Legal Officer
Facsimile: (214) 655-1610

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with copy to:                                                  Powell & Coleman,
L.L.P.
8080 North Central Expressway, Suite 1380
Dallas, Texas 75206
Attn: Carol D. Satterfield
Facsimile: (214) 373-8768

If to Borrowers:                                     PPC-UVA 15th Street Limited
Partnership
and PPC Charlottesville GP, Inc.,
c/o Phoenix Property Company
2626 Howell St., Suite 800
Dallas, Texas 75204
Attn: Jason P. Runnels
Facsimile: (214) 880-0320

with copy to:                                                  Brookfield Real
Estate Opportunity Fund
BCE Place, 181 Bay St., Suite 300
Toronto, Ontario
Canada M5J 2T3
Attn: David Arthur
Facsimile: (416) 359-8650

and with copy to:                           Stutzman, Bromberg, Esserman &
Plifka
2323 Bryan St., Suite 2200
Dallas, Texas 75201
Attn: John J. Reoch, Jr.
Facsimile: (214) 969-4999

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 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 by Lender in
exercising any right or power arising from any default by Borrowers 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 by Borrowers.  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.

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(c)                                  Lender Not Partner of Borrowers; Borrowers
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
Borrowers, any guarantor of the Loan or any other person, or to render Borrowers
agents 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 Borrowers 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 Borrowers 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 of
Lender hereunder or arising from any default by Borrowers, 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 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 Borrowers.  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 Commonwealth of Virginia
without regard to the application of choice of law principles.

(h)                                 SUBMISSION TO JURISDICTION/SERVICE OF
PROCESS.  BORROWERS AND LENDER EACH HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE COMMONWEALTH OF VIRGINIA SITTING IN
ALBEMARLE COUNTY, VIRGINIA 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. 
BORROWERS TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVE, AND AGREE
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH

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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 ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE
COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER.  BORROWERS 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.  BORROWERS
AGREE THAT THEIR SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE OTHER PARTY.  FINAL JUDGMENT AGAINST
BORROWER 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 BORROWER THEREIN
DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE LENDER MAY AT ITS OPTION
BRING SUIT OR INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST BORROWERS OR ANY OF
ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY
OR PLACE WHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.

(i)                                     WAIVER WITH RESPECT TO DAMAGES. 
BORROWERS ACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP
WITH, OR FIDUCIARY DUTY TO, BORROWERS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND
BORROWERS, IN CONNECTION HEREWITH AND THEREWITH, IS SOLELY THAT OF DEBTOR AND
CREDITOR.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS SHALL NOT
ASSERT, AND BORROWERS HEREBY WAIVE, 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.

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(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 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.  Borrowers 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.  THIS
WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS
BETWEEN THE PARTIES.

(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.  BORROWERS 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.  BORROWERS ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT
FOR THE LENDER 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
sole, absolute and unreviewable discretion, unless the provisions of this
Agreement or the other Loan Documents specifically requires a different
standard.

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(p)                                 Press Releases.  After the closing of this
Loan, Lender shall have the right to issue press releases and other
communications to the media disclosing the identities of the parties, the terms
of this Loan and the Loan Documents and details of the transactions contemplated
therein.

(q)                                 Recourse Limitations.  Subject to the
provisions of this Section 21(q), the personal liability of Borrowers to pay the
Indebtedness shall be limited to Borrowers’ interest in the Collateral and in
any other collateral given to Lender.  The provisions of this Section shall not,
however, (1) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (2) impair the right of
Lender to name Borrowers as parties defendant in any action or suit for
foreclosure and sale under the Pledge Agreement; (3) affect the validity or
enforceability of any guaranty made in connection with the Loan or any of the
rights and remedies of Lender thereunder; (4) impair the right of Lender to
obtain the appointment of a receiver; (5) constitute a prohibition against
Lender to seek a deficiency judgment against Borrowers solely in order to fully
realize on any security given by Borrowers in connection with the Loan or to
commence any other appropriate action or proceeding solely in order for Lender
to exercise its remedies against such security (provided Lender shall not seek
any personal recourse against Borrowers by virtue of such deficiency other than
Borrowers’ interest in such security); or (6) constitute a waiver of the right
of Lender to enforce the liability and obligation of Borrowers, by money
judgment or otherwise, to the extent of any loss, damage (excluding
consequential damages), cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys’ fees and costs reasonably incurred)
arising out of or in connection with the following:

(i)                                     fraud or intentional misrepresentation
by Borrowers or Mortgage Borrower in connection with the Loan;

(ii)                                  the willful misconduct of Borrowers or
Mortgage Borrower;

(iii)                               the breach of any covenant or
indemnification provision in the Environmental Indemnity or in the Security
Instrument by Mortgage Borrower concerning environmental laws, hazardous
substances and asbestos and any indemnification therein;

(iv)                              the intentional removal or disposal of any
portion of the Collateral after an Event of Default;

(v)                                 the failure to maintain the Policies in full
force and effect pursuant to the terms and provisions of Section 8; or

(vi)                              any physical damage to the Property caused by
intentional waste committed by Borrowers, Mortgage Borrower or any Affiliate
thereof.

(r)                                    Joint and Several Liability.  Subject to
Section 21(q) above, if more than one Person has executed this Agreement as a
“Borrower,” the representations, covenants, warranties and obligations of all
such Persons hereunder shall be joint and several.

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22.                                 SPECIAL REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BORROWERS. So long as any of the Indebtedness has been advanced or
accrued and remains outstanding, Borrowers shall do all things necessary to
preserve the existence of Borrowers and Mortgagor each as a separate Special
Purpose Bankruptcy Remote Entity.  Borrowers covenant and agree that with
respect to Borrowers 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 Borrowers), 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 Borrowers 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;

(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
Borrowers, the Mortgagor) or make any investment in any person (except, in the
case of Borrowers, the Mortgagor);

(f)                                    commingle its assets with the assets of
any of its general partners, members, shareholders, affiliates, principals or of
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 and (ii) 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
Borrowers or Mortgagor except upon terms and conditions

37

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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 Borrowers or Mortgagor;

(j)                                     seek the dissolution or winding up of
Borrowers 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 Borrowers or Mortgagor or any other Person;

(l)                                     hold itself out to be responsible for
the debts of another person;

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

(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 in order not (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 Borrowers or
Mortgagor;

(p)                                 fail to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character in light of its contemplated business operations; or

(q)                                 file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or make an
assignment for the benefit of creditors;

[Signatures Follow on Next Page]

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WITNESS the following signatures and seals with the intent that this shall be
deemed an instrument under seal.

BORROWERS:

 

 

 

BREOF UVA GP LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Steven Ganeless

(SEAL)

 

 

Name:

Steven Ganeless

 

 

Title:

Authorized Signing Officer

 

 

 

 

 

 

 

 

BREOF UVA LLC,

 

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Steven Ganeless

(SEAL)

 

 

Name:

Steven Ganeless

 

 

Title:

Authorized Signing Officer

 

 

 

 

 

 

 

 

PPC-UVA 15TH STREET LIMITED PARTNERSHIP,

 

a Texas limited partnership

 

 

 

 

By:

PPC Charlottesville GP, Inc.,

 

 

 

a Texas corporation

 

 

 

 

 

 

By:

/s/ Jason P. Runnels

(SEAL)

 

 

Name:

Jason P. Runnels

 

 

Title:

Vice President

 

 

 

 

 

 

PPC CHARLOTTESVILLE GP, INC.,

 

a Texas corporation

 

 

 

 

 

By:

/s/ Jason P. Runnels

(SEAL)

 

 

Name:

Jason P. Runnels

 

 

Title:

Vice President

 

 

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

 

LENDER:

 

 

 

 

 

BEHRINGER HARVARD UVA, LLC,

 

a Delaware limited liability company

 

 

 

By:

/s/ Gerald J. Reihsen, III

(SEAL)

 

 

 

Gerald J. Reihsen, III

 

 

 

Secretary

 

 

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

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.

WITNESS the following signatures and seals with the intent that this shall be
deemed an instrument under seal.

MORTGAGOR:

 

 

 

PPC CHARLOTTESVILLE LIMITED PARTNERSHIP,

 

a Delaware limited partnership

 

 

 

By:

PPC Charlottesville GP, Inc.,

 

 

a Texas corporation,

 

 

its Managing General Partner

 

 

 

 

 

 

 

By:

/s/ Jason P. Runnels

(SEAL)

 

 

Name: 

Jason P. Runnels

 

 

 

Title:

Vice President

 

 

 

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