EX-10.4






	 	 	 	 	 
	RECORDING REQUESTED BY AND
	 	(El Dorado)

	WHEN RECORDED MAIL TO:
	 		(99-1069656	)






Ballard Spahr Andrews & Ingersoll, LLP



601 13th Street, N.W., Suite 1000 South



Washington, D.C. 20005-3607



Attention: John W. Gutowski, Esq.



Space Above This Line For Recorder’s Use




AGREEMENT OF ASSUMPTION AND

MODIFICATION OF SECURITY INSTRUMENT AND OTHER LOAN DOCUMENTS




by

EL DORADO APARTMENTS, LLC, a Texas limited liability company

(“Transferor”)




and




WENDELL A. JACOBSON, an Individual

(“Original Guarantor”)




and




APARTMENT REIT VILLAS OF EL DORADO, LLC, a Delaware limited liability company

(“New Borrower”)




and




NNN APARTMENT REIT, INC., a Maryland corporation

(“New Guarantor”)




and




THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF

MORGAN STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-IQ14

(“Lender”)




Dated as of November 1, 2007




THIS INSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS AND PROVISIONS LIMITING LENDER’S LIABILITY FOR

NEGLIGENCE NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE

ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL

PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR

DRIVERS LICENSE NUMBER




1




THIS AGREEMENT OF ASSUMPTION AND MODIFICATION OF SECURITY INSTRUMENT AND OTHER LOAN
DOCUMENTS (“Agreement”) made as of the 1st day of November, 2007, by and among EL DORADO
APARTMENTS, LLC, a Texas limited liability company, with an address at P.O. Box 400, 400 North
State Street, Fountain Green, Utah 84632 (“Transferor”), WENDELL A. JACOBSON having an address at
P.O. Box 400, 400 North State Street, Fountain Green, Utah 84632 (“Original Guarantor”), APARTMENT
REIT VILLAS OF EL DORADO, LLC, a Delaware limited liability company, having an address at 1551 N.
Tustin Avenue, Suite 300, Santa Ana, California 92705, having a phone number of 877-888-7348 and
facsimile number of 714-667-6860 (“New Borrower”), NNN APARTMENT REIT, INC. a Maryland corporation,
having an address at 1551 N. Tustin Avenue, Suite 300, Santa Ana, California 92705 (“New
Guarantor”), THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE
REGISTERED HOLDERS OF MORGAN STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2007-IQ14, having an address at c/o Capmark Finance Inc., 116 Welsh Road, Horsham,
Pennsylvania 19044 (“Lender”).



RECITALS




A. Lender is the present Lender under that certain Deed of Trust, Security Agreement, Fixture
Financing Statement and Assignment of Leases and Rents in the original principal sum of
$13,600,000.00, dated November 29, 2006, given by Transferor for the benefit of Royal Bank of
Canada, a Canadian chartered bank (“Original Lender”), as original lender, and recorded in Document
No. 20061129001688770 in the official records of Collin County, Texas (as amended, the “Mortgage”),
which Mortgage encumbers the real property described in Exhibit A attached hereto and the
improvements thereon and was given in connection with that certain first lien mortgage loan in the
amount of $13,600,000 made by Original Lender to Transferor (the “Loan”).



B. Lender is the owner and holder of that certain Promissory Note dated November 29, 2006
given by Transferor to Original Lender in the original principal sum of $13,600,000 (the “Note”)
which Note evidences the Loan, and is secured by, among other things, the Mortgage.



C. The Original Lender transferred Loan to Lender pursuant to that certain assignment recorded
in the official records of Collin County, Texas. The current servicer of the Loan is Capmark
Finance Inc., a California corporation (“Servicer”), acting as Master Servicer, pursuant to that
certain Pooling and Servicing Agreement dated May 1, 2007.



D. Original Guarantor is liable for Transferor’s obligations under the Note, Mortgage and all
other documents executed in connection with the Loan including, without limitation, those documents
listed in Exhibit B attached hereto and by this reference incorporated herein
(collectively, the “Loan Documents”) pursuant to the terms of (i) that certain Limited Guaranty
dated as of November 29, 2006, executed by Original Guarantor for the benefit of Original Lender
(the “Existing Guaranty”) and (ii) that certain Environmental Indemnity Agreement dated as of
November 29, 2006, executed by Original Guarantor and Transferor for the benefit of Original Lender
(the “Existing Environmental Indemnity”).



E. Transferor and New Borrower have requested (i) the consent of Lender to the transfer of the
Property (as that term is defined in the Mortgage) from Transferor to New Borrower, (ii) the
consent of Lender to the assumption by the New Borrower and New Guarantor of the obligations of the
Transferor and Original Guarantor, respectively, under the Loan Documents, and (iii) the release of
Transferor and Original Guarantor from all liability for the payment of the Loan and the
performance of the terms and conditions of the Loan Documents.



F. Lender has agreed to consent to the transfer of the Property, the assumption of the Loan
and to the release of Transferor and Original Guarantor provided, as a condition precedent to such
consent by Lender and in consideration of such consent, Transferor, Original Guarantor, New
Guarantor and New Borrower shall agree in the manner set forth herein that, (a) New Borrower shall
assume the obligations of Transferor to pay the indebtedness evidenced by the Note, (b) New
Borrower shall assume the Transferor’s liability and obligation for the performance of all terms
and conditions of the Note, the Mortgage, and all other Loan Documents, (c) New Guarantor shall
assume all liability of Original Guarantor under the Existing Guaranty and the Existing
Environmental Indemnity pursuant to a new guaranty and new environmental agreement to be entered
into of even date herewith and (d) the Loan Documents shall be modified in the manner set forth
herein.



AGREEMENT




NOW, THEREFORE, in pursuance of said agreement and, in consideration of Ten Dollars ($10.00),
the mutual covenants and agreements contained herein, and other valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as follows:



1. Assumption of Obligations. New Borrower hereby assumes and agrees to pay all sums
owed under the Note, the Mortgage and the other Loan Documents, including all principal and
interest due under the terms of the Note as the same may be amended pursuant to the terms hereof,
and New Borrower hereby assumes and covenants to perform all the terms and conditions of the Note,
the Mortgage, and the other Loan Documents, as all or any of the same may be amended pursuant to
the terms hereof, and agrees to be personally bound for such performance to the same extent as if
said Loan Documents had originally been executed by New Borrower, notwithstanding any failure of
Transferor to perform on warranties or covenants running from Transferor to New Borrower.
Transferor also hereby assigns, transfers, sells, and sets over unto New Borrower all of
Transferor’s right, title and interest in and to the Escrow Accounts (as defined in Section 3(c)
below) held by Servicer. New Borrower accepts the assignment of Transferor’s right, title and
interest in and to the Escrow Accounts, and assumes all of the obligations of Transferor under the
Mortgage, pursuant to which such Escrow Accounts are maintained to the extent that such obligations
arise from and after the date hereof.



2. Assumption of Guaranteed Obligations. New Guarantor hereby assumes all obligations
under the provisions of the Existing Guaranty by entering into that certain Guaranty of even date
herewith in favor of Lender (the “New Guaranty”) and all obligations under the provisions of the
Existing Environmental Indemnity by entering into that certain Environmental Indemnity Agreement of
even date herewith in favor of Lender (the “New Environmental Indemnity”).



3. Transferor’s and Original Guarantor’s Representations and Warranties. Transferor
and Original Guarantor represent and warrant to Lender and Servicer as of the date of this
Agreement that to Transferor’s and Original Guarantor’s best knowledge:




	 	(a)	 	The Note has an unpaid principal balance of $13,600,000.00, and
prior to default bears interest at the rate of five and sixty-eight hundredths
percent (5.68%) per annum (the “Interest Rate”);






	 	(b)	 	The Note requires monthly payments of interest only for each
Monthly Payment Date (as defined in the Note), until the December 1, 2016
payment date (the “Maturity Date”);






	 	(c)	 	The escrows and reserves for the loan are as follows:
$292,615.20 for real estates taxes, $41,330.00 for reserves and $13,421.70 for
property insurance (collectively, the “Escrow Accounts”);






	 	(d)	 	The Mortgage is a valid first lien on the Property for the full
unpaid principal amount of the Loan and all other amounts stated in the
Mortgage and the other Loan Documents;






	 	(e)	 	There are no defenses, offsets or counterclaims to the Note,
the Mortgage or the other Loan Documents;






	 	(f)	 	There are no defaults by Transferor or Original Guarantor under
the provisions of the Note, the Mortgage or the other Loan Documents;






	 	(g)	 	All provisions of the Note, the Mortgage and other Loan
Documents are in full force and effect;






	 	(h)	 	There are no subordinate liens of any kind covering or relating
to the Property, nor are there any mechanics’ liens or liens for unpaid taxes
or assessments encumbering the Property, nor has notice of a lien or notice of
intent to file a lien been received;






	 	(i)	 	No consent, which has not been obtained, to the transfer of the
Property to New Borrower is required under any agreement to which Transferor is
a party, including, without limitation, under any trust agreement, lease,
construction agreement, operating or management agreement or deed of trust,
mortgage or security instrument (other than the Loan Documents); and






	 	(j)	 	Transferor and Original Guarantor have no knowledge that any of
the representations made by New Borrower in Section 4 below are not true and
correct.





Transferor and Original Guarantor understand and intend that Lender will rely on the
representations and warranties contained herein.



4. New Borrower Representations. New Borrower represents and warrants to Lender and
Servicer as of the date of this Agreement that:




	 	(a)	 	New Borrower is duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has full power and
authority to own, lease and operate the Property, and to conduct its affairs as
now being conducted and as proposed to be conducted;






	 	(b)	 	New Borrower has full power and authority to enter into,
execute, deliver and carry out this Agreement and the other Loan Documents to
which it is a party, by assumption or otherwise, and to perform its obligations
hereunder and thereunder and all such actions have been duly authorized by all
necessary corporate action on its part;






	 	(c)	 	This Agreement and the other documents executed in connection
herewith have been duly executed and delivered by New Borrower, and the
execution, delivery and performance of the respective terms thereof will not
violate, conflict with, or constitute any default under any law, governmental
regulation, the governing instruments of New Borrower, or any other agreement
or instrument binding upon New Borrower;






	 	(d)	 	No consent, approval, or authorization of, or registration or
declaration with, any governmental authority is required in connection with the
execution, delivery and performance by New Borrower of this Agreement and the
other documents executed in connection herewith, and no other consent, which
has not been obtained, is required to the transfer of the Property to New
Borrower, or the assumption by New Borrower of the obligations under the Loan
Documents, under any agreement to which New Borrower is a party;






	 	(e)	 	This Agreement and the other Loan Documents to which it is a
party, by assumption or otherwise, constitute legal, valid and binding
obligations of New Borrower enforceable against it in accordance with their
respective terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally;






	 	(f)	 	New Borrower’s purchase of the Property has been conducted as
an arms-length transaction with Transferor;






	 	(g)	 	New Borrower is purchasing the property with funds that are a
capital contribution and are not secured directly or indirectly by an interest
in the New Borrower or the Property; and






	 	(h)	 	New Borrower has no knowledge that any of the representations
made by Transferor and Original Guarantor in Section 3 above are not true and
correct.





New Borrower understands and intends that Lender will rely on the representations and warranties
contained herein.



5. New Guarantor Representations. New Guarantor represents and warrants to Lender and
Servicer as of the date of this Agreement that:




	 	(a)	 	New Guarantor is duly organized, validly existing and in good
standing under the laws of the State of Maryland, and has full power and
authority to enter into, execute, deliver and carry out this Agreement and the
other Loan Documents to which it is a party, by assumption or otherwise, and to
perform its obligations hereunder and thereunder;






	 	(b)	 	This Agreement and the other documents executed in connection
herewith have been duly executed and delivered by New Guarantor, and the
execution, delivery and performance of the respective terms thereof will not
violate, conflict with, or constitute any default under any law, governmental
regulation, the governing instruments of New Guarantor, or any other agreement
or instrument binding upon New Guarantor;






	 	(c)	 	No consent, approval, or authorization of, or registration or
declaration with, any governmental authority is required in connection with the
execution, delivery and performance by New Guarantor of this Agreement and the
other documents New Guarantor has executed in connection herewith, and no other
consent, which has not been obtained, is required in connection with New
Guarantor’s execution and delivery of any other agreement to which New
Guarantor is a party;






	 	(d)	 	This Agreement and the other Loan Documents to which it is a
party, by assumption or otherwise, constitute legal, valid and binding
obligations of New Guarantor enforceable against New Guarantor in accordance
with their respective terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights of creditors generally; and






	 	(e)	 	New Guarantor has no knowledge that any of the representations
made by Transferor and Original Guarantor in Section 3 above are not true and
correct.





New Guarantor understands and intends that Lender will rely on the representations and warranties
contained herein.



6. Consent to Transfer. Lender hereby consents to the transfer of the Property and to
the assumption by the New Borrower of all of the obligations of the Transferor under the Loan
Documents as described in paragraph 1 above, subject to the terms and conditions set forth in this
Agreement. Lender’s consent to the transfer of the Property to the New Borrower is not intended to
be and shall not be construed as a consent to any subsequent transfer of the Property which
requires the Lender’s consent pursuant to the terms of the Mortgage. Transferor agrees that the
execution and delivery of this Agreement shall in no way release Transferor from any liability it
has under the Loan Documents, except as otherwise provided in this Agreement.



7. Release of Transferor and Original Guarantor. In reliance on the Transferor’s and
Original Guarantor’s representations and warranties in Section 3 above, New Borrower’s
representations and warranties in Section 4 above, and New Guarantor’s representations and
warranties in Section 5 above, Lender hereby releases Transferor and Original Guarantor from all
their respective obligations under the Loan Documents, provided, however, Transferor and Original
Guarantor are not released from any liability pursuant to the Existing Environmental Indemnity
relating to the period of time prior to the date hereof, regardless of when any condition giving
rise to such liability is discovered. If any material element of the representations and
warranties made by Transferor or Original Guarantor contained in Section 3 above is false as of the
date of this Agreement, then the releases set forth in this Section 7 will be canceled as of the
date of this Agreement and the Transferor and the Original Guarantor will remain obligated under
the Loan Documents as though there has been no such releases; further, a breach of New Borrower’s
representations and warranties in Section 4 or New Guarantor’s representations and warranties in
Section 5, will not affect the release of Transferor and Original Guarantor set-forth in this
Section 7. This Agreement shall in no way affect, impair or diminish the priority or validity of
the liens or covenants of title evidenced by the Loan Documents, nor, except as expressly set forth
herein, release or discharge the liability of any party who may now be or after the date of this
Agreement, become liable, primarily or secondarily, under the Loan Documents.



8. Modification to the Mortgage. Section 5.3 of the Mortgage is hereby amended by
adding the following provisions:




	 	(a)	 	The second to last sentence in Section 5.3 the of the Mortgage
is hereby amended to include the following phrase at the end the sentence:






“and (C) any such statement that identifies all owners of any interest in
Borrower and the interest held by each need not include an identification of any of
the owners of the shares of a real estate investment trust of the type described in
this Section 5.3 below.”




	 	(b)	 	The following three paragraphs shall be added to the end of Section 5.3 of
the Mortgage:





“Notwithstanding anything to the contrary in this Article 5 or any other provision of any
of the other Loan Documents (A) NNN Apartment REIT, Inc., a Maryland corporation (the “REIT”),
shall remain as, or directly or indirectly own 100% of, the sole general partner of NNN Apartment
REIT Holdings, L.P., a Virginia limited partnership (the “Borrower Manager” and the sole member of
the Borrower), and shall directly or indirectly own (through the Borrower Manager or any
wholly-owned subsidiary thereof) not less than 51% of the issued and outstanding limited liability
company membership interests in the Borrower, and (B) the REIT (as the sole general partner of the
Borrower Manager) shall at all relevant times during which the Loan secured hereby is outstanding,
maintain a comparable right and ability to manage and control the Borrower and the Property as
existed as of the date of this Security Instrument.”



“Notwithstanding anything in this Security Instrument to the contrary, shares in an entity
that is a real estate investment trust may be offered and sold to investors in an offering of such
shares which has been registered with the Securities and Exchange Commission, or is exempt from
registration, without regard to the limitations and/or restrictions on transfer set forth in
Article 5 and any such sale or offering shall not constitute a transfer or sale of ownership
interests in the Borrower.”



“Notwithstanding anything in this Security Instrument to the contrary, the REIT may acquire
and/or dispose of shares of a real estate investment trust of the type described in Section 5.3,
including its own shares, and/or any interests in NNN Apartment REIT Advisor, LLC and/or ROC REIT
Advisors, LLC, or their successors, in each case without regard to the limitations and/or
restrictions on transfer set forth in this Article 5 and any such acquisition or disposition shall
not constitute a transfer or sale prohibited by this Article 5.”



9. Additional Conditions to Consent. In addition to the other conditions
required under this Agreement, Lender requires: (a) New Borrower to use Servicer’s Auto Debit
Service to make payments, (b) New Borrower to maintain insurance as required under the Mortgage and
(c) New Borrower to provide Lender with a survey certified to Lender within 30 days of the date
hereof.



10. Lender’s Rights and Remedies. Lender’s rights hereunder shall be reinstated and
revived, with respect to any amount at any time paid on account of the Loan which thereafter shall
be required to be restored or returned by Lender upon the bankruptcy, insolvency or reorganization
of Transferor, as though such amount had not been paid. Lender’s rights hereunder shall be
reinstated and revived, with respect to any amount at any time paid on account of the Loan which
thereafter shall be required to be restored or returned by Lender upon the bankruptcy, insolvency
or reorganization of New Borrower, as though such amount had not been paid. The lien created or
granted by, and the enforceability of the Loan Documents at all times shall remain effective as to
the full amount of the indebtedness evidenced and/or secured thereby, even though the indebtedness,
including any part thereof or any other security or guaranty therefore, may be or hereafter may
become invalid or otherwise unenforceable as against any of Transferor and/or New Borrower and
whether or not any of them shall have any personal liability with respect thereto.



11. Costs. Transferor and/or New Borrower agree to pay all fees and costs (including
reasonable attorney’s fees) incurred by Lender and Servicer in connection with Lender’s consent to
and approval of the transfer of the Property, including an assumption fee equal to thirty-three
hundredths percent (0.33%) of the outstanding principal balance of the Loan.



12. Payment of Interest and Principal. New Borrower shall pay and hereby promises to
pay to Lender, or order, at the office of Servicer located at 116 Welsh Road, Horsham, Pennsylvania
19044 or at such other place as may be designated from time to time in writing by Lender, the
outstanding principal balance of the Loan in the amount of $13,600,000.00 in lawful money of the
United States of America, with interest thereon from the date of this Agreement to and including
the Maturity Date payable in the manner as set forth in the Note and the Loan Agreement. During
the term of the Loan, New Borrower shall establish and maintain a deposit account with a bank or
other financial institution acceptable to Lender and authorize such bank or financial institution
to permit Lender to debit said deposit account for all principal, interest, escrow and reserve
payments due Lender under the Loan on the due dates for such payments through servicer’s automatic
mortgage payment service.



13. No Impairment of Lien. Nothing set forth herein shall affect the priority or
extent of the lien of any of the Loan Documents, nor, except as expressly set forth herein, release
or change the liability of any party who may now be or after the date of this Agreement, become
liable, primarily or secondarily, under the Loan Documents.



14. Information and Materials Accurate. New Borrower and New Guarantor each represent
and warrant to Lender and Servicer that all information and materials regarding New Borrower, New
Guarantor and/or the Property provided to Servicer were true and correct in all respects as of the
date provided to Servicer and remain true and correct as of the date of this Agreement.



15. References to Transferor. All references to Transferor, having an address at P.O.
Box 400, 400 North State Street, Fountain Green, Utah 84632 as “Borrower” under the Note, the
Mortgage and the other Loan Documents (except the “Existing Environmental Indemnity”) are hereby
deleted in their entirety and all references to “Borrower” under the Note, the Mortgage and the
other Loan Documents (except for the Existing Environmental Indemnity) shall be deemed to refer to
Apartment REIT Villas of El Dorado, LLC, having an address at 1551 N. Tustin Avenue, Suite 300,
Santa Ana, California 92705.



16. References to Original Guarantor. All references to the term “Guaranty” contained
in any of the Loan Documents shall be deemed to refer to the New Guaranty, as defined above. All
references to the Original Guarantor in the Note, the Mortgage and the other Loan Documents are
hereby deleted in their entirety and shall be deemed to refer to the New Guarantor.



17. Notice. Each notice given hereunder and under the other Loan Documents shall be
addressed to the intended recipient at its address set forth in this Agreement and shall be given
in accordance with the requirements for notice set forth in the Mortgage.



18. No Offsets, Counterclaims or Defenses. New Borrower represents, warrants and
covenants that there are no offsets, counterclaims or defenses against the Loan, this Agreement,
the Mortgage, the Note, or any of the other Loan Documents and that New Borrower (and the
undersigned representative of New Borrower) has full power, authority and legal right to execute
this Agreement and to keep and observe all of the terms of this Agreement on New Borrower’s part to
be observed and/or performed, and that the Note, the Mortgage and all other Loan Documents, and
this Agreement constitute valid and binding obligations of New Borrower. New Guarantor represents,
warrants and covenants that there are no offsets, counterclaims, or defenses against the New
Guaranty or this Agreement and that New Guarantor has full power, authority and legal right to
execute this Agreement and observe all of the terms of this Agreement on New Guarantor’s part to be
observed and/or performed, and that the New Guaranty and this Agreement constitute valid and
binding obligations of New Guarantor. All of the covenants, representations and warranties set
forth in the Mortgage, the Note, and the other Loan Documents, as the same may have been modified
or amended by the terms of this Agreement, are hereby restated, ratified and confirmed in all
respects by New Borrower as of the date hereof and are and shall remain in full force and effect.



19. INDEMNIFICATION. NEW BORROWER, TRANSFEROR, ORIGINAL GUARANTOR AND NEW GUARANTOR,
JOINTLY AND SEVERALLY, UNCONDITIONALLY AND IRREVOCABLY RELEASE AND FOREVER DISCHARGE LENDER AND
SERVICER AND THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES, AND
ATTORNEYS, AND EACH CURRENT OR SUBSTITUTE TRUSTEE UNDER THE MORTGAGE (COLLECTIVELY, THE
“INDEMNITEES”) FROM ALL CLAIMS, AS DEFINED BELOW, AND JOINTLY AND SEVERALLY AGREE TO INDEMNIFY
INDEMNITEES, AND HOLD THEM HARMLESS FROM ANY AND ALL CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND
EXPENSES OF EVERY KIND OR CHARACTER IN CONNECTION WITH THE CLAIMS OR THE TRANSFER OF THE PROPERTY.
NOTWITHSTANDING THE FOREGOING, TRANSFEROR AND/OR ORIGINAL GUARANTOR SHALL NOT BE RESPONSIBLE FOR
ANY CLAIMS ARISING FROM THE ACTION OR INACTION OF NEW BORROWER AND/OR NEW GUARANTOR, AND NEW
BORROWER AND NEW GUARANTOR SHALL NOT BE RESPONSIBLE FOR ANY CLAIMS ARISING FROM THE ACTION OR
INACTION OF TRANSFEROR AND/OR ORIGINAL GUARANTOR. AS USED IN THIS AGREEMENT, THE TERM “CLAIMS”
SHALL MEAN ANY AND ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, COSTS, EXPENSES AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART, ON OR BEFORE
THE DATE OF THIS AGREEMENT, WHICH THE TRANSFEROR, ORIGINAL GUARANTOR, NEW BORROWER AND NEW
GUARANTORS, OR ANY OF THEIR RESPECTIVE PARTNERS, MEMBERS, OFFICERS, AGENTS OR EMPLOYEES, MAY NOW OR
HEREAFTER HAVE AGAINST THE INDEMNITEES, IF ANY AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE
OUT OF CONTRACT, TORT, VIOLATION OF LAWS, OR REGULATIONS, OR OTHERWISE IN CONNECTION WITH ANY OF
THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING,
RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE THERETO
AND ANY LOSS, COST OR DAMAGE, OF ANY KIND OR CHARACTER, ARISING OUT OF OR IN ANY WAY CONNECTED WITH
OR IN ANY WAY RESULTING FROM THE ACTS, ACTIONS OR OMISSIONS OF INDEMNITEES, INCLUDING ANY
REQUIREMENT THAT THE LOAN DOCUMENTS BE MODIFIED AS A CONDITION TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, ANY CHARGING, COLLECTING OR CONTRACTING FOR PREPAYMENT PREMIUMS, TRANSFER FEES, OR
ASSUMPTION FEES, ANY BREACH OF FIDUCIARY DUTY, BREACH OF ANY DUTY OF FAIR DEALING, BREACH OF
CONFIDENCE, BREACH OF FUNDING COMMITMENT, UNDUE INFLUENCE, DURESS, ECONOMIC COERCION, VIOLATION OF
ANY FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS OR REGULATIONS, CONFLICT OF INTEREST, NEGLIGENCE,
BAD FAITH, MALPRACTICE, VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
INTENTIONAL OR NEGLIGENT INFLICTION OF MENTAL DISTRESS, TORTIOUS INTERFERENCE WITH CONTRACTUAL
RELATIONS, TORTIOUS INTERFERENCE WITH CORPORATE GOVERNANCE OR PROSPECTIVE BUSINESS ADVANTAGE,
BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES, LIBEL, SLANDER, CONSPIRACY OR ANY CLAIM FOR
WRONGFULLY ACCELERATING THE NOTE OR WRONGFULLY ATTEMPTING TO FORECLOSE ON ANY COLLATERAL RELATING
TO THE NOTE, BUT IN EACH CASE ONLY TO THE EXTENT PERMITTED BY APPLICABLE LAW. TRANSFEROR AND NEW
BORROWER AGREE THAT LENDER AND SERVICER HAVE NO FIDUCIARY OR SIMILAR OBLIGATIONS TO TRANSFEROR AND
NEW BORROWER AND THAT THEIR RELATIONSHIP IS STRICTLY THAT OF CREDITOR AND DEBTOR. THIS RELEASE AND
DISCHARGE IS ACCEPTED BY LENDER AND SERVICER PURSUANT TO THIS AGREEMENT AND SHALL NOT BE CONSTRUED
AS AN ADMISSION OF LIABILITY ON THE PART OF EITHER. TRANSFEROR AND NEW BORROWER AND THE ORIGINAL
GUARANTOR AND NEW GUARANTOR HEREBY REPRESENT AND WARRANT THAT THEY ARE THE CURRENT LEGAL AND
BENEFICIAL OWNERS OF ALL CLAIMS, IF ANY, RELEASED HEREBY AND HAVE NOT ASSIGNED, PLEDGED OR
CONTRACTED TO ASSIGN OR PLEDGE ANY SUCH CLAIM TO ANY OTHER PERSON.



20. No Modification or Waiver. This Agreement and any provisions hereof may not be
modified, amended, waived, extended, changed, discharged or terminated orally or by any act or
failure to act on the part of Transferor, Original Guarantor, New Borrower, New Guarantor or
Lender, but only by an agreement in writing executed by the party against whom the enforcement of
any modification, amendment, waiver, extension, change, discharge or termination is sought.



21. Insurance. Notwithstanding anything to the contrary contained in the Loan
Documents the “all-risk” policy of insurance or the policy covering “special” causes against loss
or damage by fire, casualty and other hazards must not exclude coverage for mold and terrorism.



22. Entire Agreement. This Agreement embodies and constitutes the entire
understanding among the parties with respect to the transactions contemplated herein, and all prior
or contemporaneous agreements, understandings, representations, and statements, oral or written,
are merged into this Agreement. Except as expressly modified hereby, the Note, Mortgage and other
Loan Documents shall remain in full force and effect. Transferor and Original Guarantor hereby
ratify the agreements made by them to Lender in connection with the Loan and agree that, except to
the extent modified hereby, all of such agreements remain in full force and effect.



23. Same Indebtedness: Priority of Liens Not Affected. This Agreement and the
execution of other documents contemplated hereby do not constitute the creation of a new debt or
the extinguishment of the debt evidenced by the Loan Documents, nor will they in any way affect or
impair the liens and security interests created by the Loan Documents, which New Borrower
acknowledges to be valid and existing liens on and security interests in the Property. New
Borrower agrees that the lien and security interests created by the Mortgage continue to be in full
force and effect, unaffected and unimpaired by this Agreement or by the transfer of the Property or
any collateral described in financing statements filed in connection with the Loan Documents and
that said liens and security interests shall so continue in their perfection and priority until the
debt secured by the Loan Documents is fully discharged.



24. Incorporation of Recitals. The Recitals above are hereby incorporated herein and
made a part hereof by this reference.



25. Severability. If any term, covenant or condition of this Agreement shall be held
to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without
such provision.



26. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas and the applicable laws of the United States of America.



27. Terms Not Defined. All capitalized words and phrases not otherwise defined herein
shall have the meaning ascribed to them in the Note and/or the Mortgage.



28. Successors and Assignees Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their, respective heirs, legal representatives, successors
and assigns.



29. Counterparts. This Agreement may be executed in any number of counterparts with
the same effect as if all parties hereto had signed the same document. All such counterparts shall
be construed together and shall constitute one instrument, but in making proof hereof it shall only
be necessary to produce one such counterpart.



30. Conflicting Provisions. It is hereby agreed that the terms and conditions of the
Mortgage, the Note and other Loan Documents not specifically modified herein shall remain in full
force and effect and shall be binding upon New Borrower. It is understood and agreed that in the
event there are any conflicting or omitted provisions or variations between the terms, conditions,
rights, or remedies in the Mortgage, the Note or any other Loan Document and the terms of this
Agreement (other than those specifically modified herein), those terms, conditions, rights or
remedies which are most favorable to Lender shall remain in full force and effect and shall
prevail. A default under the terms and conditions of this Agreement shall constitute a default
under the terms and conditions of the aforesaid Mortgage, Note and other Loan Documents.



31. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW, TRANSFEROR,
ORIGINAL GUARANTOR, NEW GUARANTOR, NEW BORROWER, AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY OR ANY EXERCISE
BY ANY PARTY OD THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE LOAN
OR THE PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND
ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER THIS AGREEMENT.



32. Final Agreement. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED
HEREBY, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




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IN WITNESS WHEREOF, Transferor, New Borrower, Original Guarantor, New Guarantor and
Lender have duly executed this Agreement the day and year first above written.




TRANSFEROR:




EL DORADO APARTMENTS, LLC, a Texas limited liability
company




By: /s/ Wendell K. Jacobson

Name: Wendell K. Jacobson

Title: Vice President




ACKNOWLEDGMENT




STATE OF TEXAS


COUNTY OF DALLAS



On October 31, 2007, before me Joanna Clements, Notary Public, personally appeared EVAN K.
JACOBSON, personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity(ies) and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.




/s/ Joanna Clements




	 	 	Notary Public





[Seal] Jo-Anna Clements


[Seal] Notary Public, State of Texas


[Seal] My Commission Expires


[Seal] October 25, 2011



3




NEW BORROWER:




APARTMENT REIT VILLAS OF EL DORADO, LLC, a Delaware




limited liability company




	 	 	 	By:
NNN Apartment REIT Holdings, L.P., a Virginia
limited partnership, its sole member






	 	 	 	By:
NNN Apartment REIT, Inc., a Maryland
corporation, its general partner






By: /s/ S. Jay Olander

Name: S. Jay Olander

Title: Chief Executive Officer




ACKNOWLEDGMENT




STATE OF VIRGINIA


CITY OF RICHMOND



On October 31, 2007, before me Brenda S. Holmes, Notary Public, personally appeared S. Jay Olander
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he executed the same
in his authorized capacity(ies) and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.




/s/ Brenda M. Holmes




	 	 	Notary Public






Registration Number:      



[Seal] Brenda M. Holmes


[Seal] Notary Public


[Seal] Reg # 224930


[Seal] My Commission Expires


[Seal] 09/30/2011


[Seal] Commonwealth of Virginia



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ORIGINAL GUARANTOR:




/s/ Wendell A. Jacobson




	 	 	WENDELL A. JACOBSON





ACKNOWLEDGMENT




STATE OF Utah


COUNTY OF Sanpete



On October 30, 2007, before me Tina Stephensen, Notary Public, personally appeared WENDELL A.
JACOBSON personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity(ies) and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.




/s/ Tina Stephensen




	 	 	Notary Public





[Seal] Tina Stephensen


[Seal] Notary Public -State of Utah


[Seal] 255 West Center POB 194


[Seal] Fountain Green, UT 84632


[Seal] Comm. Exp. 08-24 2010



5




NEW GUARANTOR:




NNN APARTMENT REIT, INC., a Maryland corporation



	 	 	 	 	 
	By:	 	/s/ S. Jay Olander
	
 
	 	Name:

Title:
	 	S. Jay Olander

Chief Executive Officer






ACKNOWLEDGMENT




STATE OF VIRGINIA


CITY OF RICHMOND



On October 31, 2007, before me Brenda M. Holmes, Notary Public, personally appeared S. Jay Olander
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he executed the same
in his authorized capacity(ies) and that by his signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.




/s/ Brenda M. Holmes




	 	 	Notary Public






Registration Number:      



[Seal] Brenda M. Holmes


[Seal] Notary Public


[Seal] Reg # 224930


[Seal] My Commission Expires


[Seal] 09/30/2011


[Seal] Commonwealth of Virginia



6




LENDER:




THE BANK OF NEW YORK TRUST COMPANY, NATIONAL




ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF
MORGAN STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 2007-IQ14




	 	 	 	By:
Capmark Finance Inc., a California corporation
(f/k/a GMAC Commercial Mortgage Corporation), as
Master Servicer





	 	 	 	 	 	 	 
	ATTEST:

	 	

	 	

	 	

	 	 	By:	 	/s/ Gary A. Routzahn
	By:      

Name:

	 	 	 	Title:
	 	Name:Gary A. Routzahn

Vice President, Manager






ACKNOWLEDGMENT




	 	 	 
	State of Pennsylvania

	 	:
	County of Montgomery

	 	:ss

:






On this the 30th day of October, 2007, before me, a Notary Public, the undersigned
officer, personally appeared Gary A. Routzahn, known to me or satisfactorily proven
to be the person whose name is subscribed to the within instrument, and who
acknowledged to me that he is the Vice President of CAPMARK FINANCE INC., a
California corporation, and that he, being duly authorized to do so, did execute the
same on behalf of CAPMARK FINANCE INC. by signing his/her name as such Vice
President, for all the purposes therein contained.



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




/s/ Sandy (illegible)




	 	 	Notary Public





[Seal] Notarial Seal


[Seal] Sandy (illegible), Notary Public


[Seal] (illegible), Montgomery County


[Seal] My Commission Expires April 25, 2009




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