exv10w11



 



Exhibit 10.11




	 	 	 
	Loan No.: 50-2859027
	 	Hidden Lakes Apartments






INDEMNITY AND GUARANTY AGREEMENT




     THIS INDEMNITY AND GUARANTY AGREEMENT (as the same may hereafter be amended, consolidated,
renewed or replaced, this “Agreement”), made as of December 28, 2006, by NNN APARTMENT REIT, INC.,
a Maryland corporation (“Indemnitor”), whose address is 1551 North Tustin Avenue, Suite 300, Santa
Ana, California 92705, in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (together with its successors and assigns, “Lender”), whose address is Commercial Real
Estate Services, 8739 Research Drive URP — 4, NC 1075, Charlotte, North Carolina 28262.



W I T N E S S E T H:




     WHEREAS, Apartment REIT Hidden Lakes, LP, a Texas limited partnership (“Borrower”), has
obtained a loan (the “Loan”) in the principal amount of Nineteen Million Two Hundred Eighteen
Thousand and No/100 Dollars ($19,218,000.00) from Lender; and



     WHEREAS, the Loan is evidenced by a Promissory Note (as the same may from time to time be
amended, consolidated, renewed or replaced, the “Note”) dated of even date herewith, executed by
Borrower and payable to the order of Lender, in the stated principal amount of Nineteen Million Two
Hundred Eighteen Thousand and No/100 Dollars ($19,218,000.00), and is secured by a Deed of Trust,
Security Agreement and Fixture Filing dated of even date herewith (as the same may from time to
time be amended, consolidated, renewed or replaced, the “Security Instrument”) from Borrower for
the benefit of Lender, encumbering that certain real property situated in the County of Bexar,
State of Texas, as more particularly described on Exhibit “A” attached hereto and
incorporated herein by this reference, together with the buildings, structures and other
improvements now or hereafter located thereon (the “Property”) and by other documents and
instruments (the Note, the Security Instrument and such other documents and instruments, as the
same may from time to time be amended, consolidated, renewed or replaced, being collectively
referred to herein as the “Loan Documents”); and



     WHEREAS, as a condition to making the Loan to Borrower, Lender has required that Indemnitor
indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower
is personally liable and for which Lender has recourse against Borrower under the terms of the Note
and the Security Instrument; and



     WHEREAS, the extension of the Loan to Borrower is of substantial benefit to Indemnitor and,
therefore, Indemnitor desires to indemnify Lender from and against and guarantee payment to Lender
of those items for which Borrower is personally liable and for which Lender has recourse against
Borrower under the terms of the Note and the Security Instrument.



     NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in consideration of the
foregoing premises and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Indemnitor hereby covenants and agrees for the benefit of Lender, as
follows:



     1. Indemnity and Guaranty. Indemnitor hereby assumes liability for, hereby
guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless
from and against, and hereby indemnifies Lender from and against any and all liabilities,
obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees),
causes of action, suits, claims, demands and



 









 







judgments of any nature or description whatsoever (collectively, “Costs”) which may at any
time be imposed upon, incurred by or awarded against Lender as a result of:



          (a) Proceeds paid under any insurance policies (or paid as a result of any other claim or
cause of action against any person or entity) by reason of damage, loss or destruction to all or
any portion of the Property, to the full extent of such proceeds not previously delivered to
Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender;




          (b) Proceeds or awards resulting from the condemnation or other taking in lieu of condemnation
of all or any portion of the Property to the full extent of such proceeds or awards not previously
delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered
to Lender;




          (c) All tenant security deposits or other refundable deposits paid to or held by Borrower or
any other person or entity in connection with leases of all or any portion of the Property, which
are not applied in accordance with the terms of the applicable lease or other agreement;




          (d) Rent and other payments received from tenants under leases of all or any portion of the
Property paid more than one (1) month in advance;




          (e) Rents, issues, profits and revenues of all or any portion of the Property received or
applicable to a period after the occurrence of an Event of Default under the Loan Documents, or any
event which with notice or the passage of time, or both, would constitute an Event of Default,
which are not either applied to the ordinary and necessary expenses of owning and operating the
Property or paid to Lender;




          (f) Waste committed on the Property, damage to the Property as a result of the intentional
misconduct or gross negligence of Borrower or any of its principals, officers, general partners or
members, any guarantor, any indemnitor, or any agent or employee of any such persons, or any
removal of all or any portion of the Property in violation of the terms of the Loan Documents, to
the full extent of the losses or damages incurred by Lender and/or any of its affiliates on account
of such occurrence;




          (g) Failure to pay any valid taxes, assessments, mechanic’s liens, materialmen’s liens or
other liens which could create liens on any portion of the Property which would be superior to the
lien or security title of the Security Instrument or the other Loan Documents except, with respect
to any such taxes or assessments, to the extent that funds have been deposited with Lender pursuant
to the terms of the Security Instrument specifically for the applicable taxes or assessments and
not applied by Lender to pay such taxes and assessments; and




          (h) Fraud, intentional misrepresentation, failure to disclose a material fact, any untrue
statement of a material fact or omission to state a material fact in the written materials and/or
information provided to Lender or any of its affiliates by or on behalf of Borrower or any of its
affiliates, principals, officers, general partners or members, any guarantor, any indemnitor, or
any agent, employee or other person authorized or apparently authorized to make statements,
representations or disclosures on behalf of Borrower, any affiliate, principal, officer, general
partner or member of Borrower, or any guarantor or any indemnitor, to the full extent of any
losses, damages and expenses of Lender and/or any of its affiliates on account thereof.




          In addition to the foregoing, and notwithstanding anything to the contrary set forth in this
Agreement or any of the other Loan Documents, Indemnitor shall be fully liable for all principal,
interest

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and other amounts which may be due and owing by Borrower under the Note, the Security
Instrument and any other Loan Document from and after (i) a default by Borrower, Indemnitor or any
general partner, manager or managing member of Borrower of any of the covenants set forth in
Section 2.9 or Section 2.29 of the Security Instrument, or (ii) the Property or any
part thereof becoming an asset in (x) a voluntary bankruptcy or insolvency proceeding of Borrower
or Indemnitor, or (y) an involuntary bankruptcy or insolvency proceeding of Borrower or Indemnitor
in which Borrower or Indemnitor colludes with creditors in such bankruptcy or insolvency proceeding
and which is not dismissed within sixty (60) days of filing.




     This is a guaranty of payment and performance and not of collection. The liability of
Indemnitor under this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any remedies against Borrower or any other person (including, without
limitation, other guarantors, if any), nor against the collateral for the Loan. Indemnitor waives
any right to require that an action be brought against Borrower or any other person or to require
that resort be made to any collateral for the Loan or to any balance of any deposit account or
credit on the books of Lender in favor of Borrower or any other person. In the event of a default
under the Loan Documents which is not cured within any applicable grace or cure period, Lender
shall have the right to enforce its rights, powers and remedies (including, without limitation,
foreclosure of all or any portion of the collateral for the Loan) thereunder or hereunder, in any
order, and all rights, powers and remedies available to Lender in such event shall be non-exclusive
and cumulative of all other rights, powers and remedies provided thereunder or hereunder or by law
or in equity. If the indebtedness and obligations guaranteed hereby are partially paid or
discharged by reason of the exercise of any of the remedies available to Lender, this Agreement
shall nevertheless remain in full force and effect, and Indemnitor shall remain liable for all
remaining indebtedness and obligations guaranteed hereby, even though any rights which Indemnitor
may have against Borrower may be destroyed or diminished by the exercise of any such remedy.



     2. Indemnification Procedures.



          (a) If any action shall be brought against Lender based upon any of the matters for which
Lender is indemnified hereunder, Lender shall notify Indemnitor in writing thereof and Indemnitor
shall promptly assume the defense thereof, including, without limitation, the employment of counsel
acceptable to Lender and the negotiation of any settlement; provided, however, that
any failure of Lender to notify Indemnitor of such matter shall not impair or reduce the
obligations of Indemnitor hereunder. Lender shall have the right, at the expense of Indemnitor
(which expense shall be included in Costs), to employ separate counsel in any such action and to
participate in the defense thereof. In the event Indemnitor shall fail to discharge or undertake
to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder,
Lender may, at its sole option and election, defend or settle such claim, loss or liability. The
liability of Indemnitor to Lender hereunder shall be conclusively established by such settlement,
provided such settlement is made in good faith, the amount of such liability to include both the
settlement consideration and the costs and expenses, including, without limitation, attorneys’ fees
and disbursements, incurred by Lender in effecting such settlement. In such event, such settlement
consideration, costs and expenses shall be included in Costs and Indemnitor shall pay the same as
hereinafter provided. Lender’s good faith in any such settlement shall be conclusively established
if the settlement is made on the advice of independent legal counsel for Lender.




          (b) Indemnitor shall not, without the prior written consent of Lender: (i) settle or
compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does
not include as an unconditional term thereof the delivery by the claimant or plaintiff to Lender of
a full and complete written release of Lender (in form, scope and substance satisfactory to Lender
in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and
a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise
any action, suit,

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proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay
any sum or perform any obligation as determined by Lender in its sole discretion.




          (c) All Costs shall be immediately reimbursable to Lender when and as incurred and, in the
event of any litigation, claim or other proceeding, without any requirement of waiting for the
ultimate outcome of such litigation, claim or other proceeding, and Indemnitor shall pay to Lender
any and all Costs within ten (10) days after written notice from Lender itemizing the amounts
thereof incurred to the date of such notice. In addition to any other remedy available for the
failure of Indemnitor to periodically pay such Costs, such Costs, if not paid within said ten-day
period, shall bear interest at the Default Interest Rate (as defined in the Note).




     3. Reinstatement of Obligations. If at any time all or any part of any
payment made by Indemnitor or received by Lender from Indemnitor under or with respect to this
Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited
to, the insolvency, bankruptcy or reorganization of Indemnitor or Borrower), then the obligations
of Indemnitor hereunder shall, to the extent of the payment rescinded or returned, be deemed to
have continued in existence, notwithstanding such previous payment made by Indemnitor, or receipt
of payment by Lender, and the obligations of Indemnitor hereunder shall continue to be effective or
be reinstated, as the case may be, as to such payment, all as though such previous payment by
Indemnitor had never been made.



     4. Waivers by Indemnitor. To the extent permitted by law, Indemnitor hereby
waives and agrees not to assert or take advantage of:



          (a) Any right to require Lender to proceed against Borrower or any other person or to proceed
against or exhaust any security held by Lender at any time or to pursue any other remedy in
Lender’s power or under any other agreement before proceeding against Indemnitor hereunder;




          (b) Any defense that may arise by reason of the incapacity, lack of authority, death or
disability of any other person or persons or the failure of Lender to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of any other person or
persons;




          (c) Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all
other notices of any kind, or the lack of any thereof, including, without limiting the generality
of the foregoing, notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action on the part of Borrower, Lender, any
endorser or creditor of Borrower or of Indemnitor or on the part of any other person whomsoever
under this or any other instrument in connection with any obligation or evidence of indebtedness
held by Lender;




          (d) Any defense based upon an election of remedies by Lender;




          (e) Any right or claim of right to cause a marshalling of the assets of Indemnitor;




          (f) Any principle or provision of law, statutory or otherwise, which is or might be in
conflict with the terms and provisions of this Agreement;




          (g) Any duty on the part of Lender to disclose to Indemnitor any facts Lender may now or
hereafter know about Borrower or the Property, regardless of whether Lender has reason to believe
that any such facts materially increase the risk beyond that which Indemnitor intends to assume or
has reason to believe that such facts are unknown to Indemnitor or has a reasonable opportunity to
communicate such facts to Indemnitor, it being understood and agreed that Indemnitor is fully
responsible for being and keeping informed of the financial condition of Borrower, of the condition
of the Property

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and of any and all circumstances bearing on the risk that liability may be incurred by
Indemnitor hereunder;




          (h) Any lack of notice of disposition or of manner of disposition of any collateral for the
Loan;




          (i) Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more
of the Loan Documents;




          (j) Any deficiencies in the collateral for the Loan or any deficiency in the ability of Lender
to collect or to obtain performance from any persons or entities now or hereafter liable for the
payment and performance of any obligation hereby guaranteed;




          (k) An assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the
voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any
other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be
interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any
of its rights, whether now or hereafter required, which Lender may have against Indemnitor or the
collateral for the Loan;




          (l) Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan
by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of
1978, as amended, or any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise. Without
limiting the generality of the foregoing, Indemnitor expressly waives any and all rights to which
Indemnitor may otherwise have been entitled under any suretyship laws in effect from time to time,
including (without limitation) any rights pursuant to Rule 31 of the Texas Rules of Civil
Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code, and Chapter 34 of the
Texas Business and Commerce Code.




          (m) Any action, occurrence, event or matter consented to by Indemnitor under Section
6(h) hereof, under any other provision hereof, or otherwise;




          5. Representation and Warranty. Indemnitor hereby represents, warrants and
covenants that Indemnitor’s net worth is, and at all times while this Agreement shall be in effect,
shall be not less than $10,000,000 with Liquid Assets (as hereinafter defined) exceeding
$1,000,000. For the purposes of this Section 5, “Liquid Assets” shall mean assets in the form of
cash, cash deposits, available lines of credit, accounts receivables, “soft” earnest money
deposits, obligations of (or fully guaranteed as to principal and interest by) the United States or
any agency or instrumentality thereof (provided the full faith and credit of the United States
supports such obligation or guarantee), securities listed and traded on a recognized stock exchange
or traded over the counter and listed in the National Association of Securities Dealers Automatic
Quotations, or liquid debt instruments that have a readily ascertainable value and are regularly
traded in a recognized financial market.




     6. General Provisions.



          (a) Fully Recourse. All of the terms and provisions of this Agreement are recourse
obligations of Indemnitor and not restricted by any limitation on personal liability set forth in
any of the Loan Documents.




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          (b) Unsecured Obligations. Indemnitor hereby acknowledges that Lender’s appraisal of
the Property is such that Lender is not willing to accept the consequences of the inclusion of
Indemnitor’s indemnity set forth herein among the obligations secured by the Security Instrument
and the other Loan Documents and that Lender would not make the Loan but for the unsecured personal
liability undertaken by Indemnitor herein.




          (c) Survival. This Agreement shall be deemed to be continuing in nature and shall
remain in full force and effect and shall survive the exercise of any remedy by Lender under the
Security Instrument or any of the other Loan Documents, including, without limitation, any
foreclosure or deed in lieu thereof, even if, as a part of such remedy, the Loan is paid or
satisfied in full.




          (d) No Subrogation; No Recourse Against Lender. Notwithstanding the satisfaction by
Indemnitor of any liability hereunder, Indemnitor shall not have any right of subrogation,
contribution, reimbursement or indemnity whatsoever or any right of recourse to or with respect to
the assets or property of Borrower or to any collateral for the Loan. In connection with the
foregoing, Indemnitor expressly waives any and all rights of subrogation to Lender against
Borrower, and Indemnitor hereby waives any rights to enforce any remedy which Lender may have
against Borrower and any right to participate in any collateral for the Loan. In addition to and
without in any way limiting the foregoing, Indemnitor hereby subordinates any and all indebtedness
of Borrower now or hereafter owed to Indemnitor to all indebtedness of Borrower to Lender, and
agrees with Lender that Indemnitor shall not demand or accept any payment of principal or interest
from Borrower, shall not claim any offset or other reduction of Indemnitor’s obligations hereunder
because of any such indebtedness and shall not take any action to obtain any of the collateral from
the Loan. Further, Indemnitor shall not have any right of recourse against Lender by reason of any
action Lender may take or omit to take under the provisions of this Agreement or under the
provisions of any of the Loan Documents.




          (e) Reservation of Rights. Nothing contained in this Agreement shall prevent or in
any way diminish or interfere with any rights or remedies, including, without limitation, the right
to contribution, which Lender may have against Borrower, Indemnitor or any other party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (codified at Title 42
U.S.C. §9601 et seq.), as it may be amended from time to time, or any other
applicable federal, state or local laws, all such rights being hereby expressly reserved.




          (f) Financial Statements. Indemnitor hereby agrees, as a material inducement to
Lender to make the Loan to Borrower, to furnish to Lender, from time to time, promptly upon demand
by Lender annual financial statements for Indemnitor, within one hundred twenty (120) days after
the end of each calendar year, certified by or on behalf of Indemnitor, in form and substance
acceptable to Lender. Indemnitor hereby warrants and represents unto Lender that any and all
balance sheets, net worth statements and other financial data which have heretofore been given or
may hereafter be given to Lender with respect to Indemnitor did or will at the time of such
delivery fairly and accurately present the financial condition of Indemnitor.




          (g) Rights Cumulative; Payments. Lender’s rights under this Agreement shall be in
addition to all rights of Lender under the Note, the Security Instrument and the other Loan
Documents. Further, payments made by Indemnitor under this Agreement shall not reduce in any
respect Borrower’s obligations and liabilities under the Note, the Security Instrument and the
other Loan Documents except with respect to, and to the extent of, Borrower’s obligation and
liability for the payment made by Indemnitor.




          (h) No Limitation on Liability. Indemnitor hereby consents and agrees that Lender may
at any time and from time to time without further consent from Indemnitor do any of the following

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events (if applicable), and the liability of Indemnitor under this Agreement shall be
unconditional and absolute and shall in no way be impaired or limited by any of the following
events, whether occurring with or without notice to Indemnitor or with or without consideration:
(i) any extensions of time for performance required by any of the Loan Documents or extension or
renewal of the Note; (ii) any sale, assignment or foreclosure of the Note, the Security Instrument
or any of the other Loan Documents or any sale or transfer of the Property or any portion thereof;
(iii) any change in the composition of Borrower, including, without limitation, the withdrawal or
removal of Indemnitor from any current or future position of ownership, management or control of
Borrower; (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor
herein or by Borrower in any of the Loan Documents; (v) the release of Borrower or of any other
person or entity from performance or observance of any of the agreements, covenants, terms or
conditions contained in any of the Loan Documents by operation of law, Lender’s voluntary act or
otherwise; (vi) the release or substitution in whole or in part of any security for the Loan; (vii)
Lender’s failure to record the Security Instrument or to file any financing statement (or Lender’s
improper recording or filing thereof) or to otherwise perfect, protect, secure or insure any lien
or security interest given as security for the Loan; (viii) the modification of the terms of any
one or more of the Loan Documents; or (ix) the taking of, or failure to take any action of any type
whatsoever. No such action which Lender shall take or fail to take in connection with the Loan
Documents or any collateral for the Loan, nor any course of dealing with Borrower or any other
person, shall limit, impair or release Indemnitor’s obligations hereunder, affect this Agreement in
any way or afford Indemnitor any recourse against Lender. Nothing contained in this Section shall
be construed to require Lender to take or refrain from taking any action referred to herein.




          (i) Intentionally Reserved.




          (j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, EXCEPT TO THE EXTENT THAT THE
APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE
SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING.




          (k) Binding Effect; Waiver of Acceptance. This Agreement shall bind Indemnitor and
its heirs, personal representatives, successors and assigns and shall inure to the benefit of
Lender and the officers, directors, shareholders, agents and employees of Lender and their
respective heirs, successors and assigns. Notwithstanding the foregoing, Indemnitor shall not
assign any of its rights or obligations under this Agreement without the prior written consent of
Lender, which consent may be withheld by Lender in its sole discretion. Indemnitor hereby waives
any acceptance of this Agreement by Lender, and this Agreement shall immediately be binding upon
Indemnitor.




          (l) Notice. All notices, demands, requests or other communications to be sent by one
party to the other hereunder or required by law shall be in writing and shall be deemed to have
been validly given or served by delivery of the same in person to the intended addressee, or by
depositing the same with Federal Express or another reputable private courier service for next
business day delivery to the intended addressee at its address set forth on the first page of this
Agreement or at such other address as may be designated by such party as herein provided, or by
depositing the same in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, addressed to the intended addressee at its address set forth on the first
page of this Agreement or at such other address as may be designated by such party as herein
provided. All notices, demands and requests shall be effective upon such personal delivery, or one
(1) business day after being deposited with the private courier service, or two (2) business days
after being deposited in the United States mail as required above. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice was given as
herein required shall be deemed to be receipt of the notice, demand or request sent. By giving to
the

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other party hereto at least fifteen (15) days’ prior written notice thereof in accordance with
the provisions hereof, the parties hereto shall have the right from time to time to change their
respective addresses and each shall have the right to specify as its address any other address
within the United States of America.




          (m) No Waiver; Time of Essence; Business Day. The failure of any party hereto to
enforce any right or remedy hereunder, or to promptly enforce any such right or remedy, shall not
constitute a waiver thereof nor give rise to any estoppel against such party nor excuse any of the
parties hereto from their respective obligations hereunder. Any waiver of such right or remedy
must be in writing and signed by the party to be bound. This Agreement is subject to enforcement
at law or in equity, including actions for damages or specific performance. Time is of the essence
hereof. The term “business day” as used herein shall mean a weekday, Monday through Friday, except
a legal holiday or a day on which banking institutions in New York, New York are authorized by law
to be closed.




          (n) Captions for Convenience. The captions and headings of the sections and
paragraphs of this Agreement are for convenience of reference only and shall not be construed in
interpreting the provisions hereof.




          (o) Reasonable Attorney’s Fees. In the event it is necessary for Lender to retain the
services of an attorney or any other consultants in order to enforce this Agreement, or any portion
thereof, Indemnitor agrees to pay to Lender, in addition to Indemnitor’s other obligations to pay
Lender hereunder, any and all costs and expenses, including, without limitation, reasonable
attorneys’ fees, incurred by Lender as a result thereof and such costs, fees and expenses shall be
included in Costs.




          (p) Successive Actions. A separate right of action hereunder shall arise each time
Lender acquires knowledge of any matter indemnified or guaranteed by Indemnitor under this
Agreement. Separate and successive actions may be brought hereunder to enforce any of the
provisions hereof at any time and from time to time. No action hereunder shall preclude any
subsequent action, and Indemnitor hereby waives and covenants not to assert any defense in the
nature of splitting of causes of action or merger of judgments.




          (q) Joint and Several Liability. Notwithstanding anything to the contrary contained
herein, the representations, warranties, covenants and agreements made by Indemnitor herein, and
the liability of Indemnitor hereunder, is joint and several if Indemnitor is comprised of more than
one person or entity.




          (r) Reliance. Lender would not make the Loan to Borrower without this Agreement.
Accordingly, Indemnitor intentionally and unconditionally enters into the covenants and agreements
as set forth above and understands that, in reliance upon and in consideration of such covenants
and agreements, the Loan shall be made and, as part and parcel thereof, specific monetary and other
obligations have been, are being and shall be entered into which would not be made or entered into
but for such reliance.




          (s) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be effective only upon delivery and thereafter shall be deemed an original, and all
of which shall be taken to be one and the same instrument, for the same effect as if all parties
hereto had signed the same signature page. Any signature page of this Agreement may be detached
from any counterpart of this Agreement without impairing the legal effect of any signatures thereon
and may be attached to another counterpart of this Agreement identical in form hereto but having
attached to it one or more additional signature pages.




          (t) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.




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	 	(1)	 	INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, (A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE
PROPERTY IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING
FROM OR RELATING TO THIS AGREEMENT, (B) AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN THE COUNTY AND STATE IN WHICH THE PROPERTY IS LOCATED,
(C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREES THAT INDEMNITOR WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).
	 
	 	(2)	 	INDEMNITOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR INDEMNITOR, OR
ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR
ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR INDEMNITOR, IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.





          (u) Waiver by Indemnitor. Indemnitor covenants and agrees that, upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against Borrower, Indemnitor shall not
seek or cause Borrower or any other person or entity to seek a supplemental stay or other relief,
whether injunctive or otherwise, pursuant to 11 U.S.C. §105 or any other provision of the
Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law, (whether statutory,
common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect,
which may be or become applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against Indemnitor or the collateral for the Loan by virtue
of this Agreement or otherwise.




          (v) SPECIFIC NOTICE. IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS AGREEMENT
INCLUDES INDEMNIFICATION PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES, COULD INCLUDE AN
INDEMNIFICATION BY INDEMNITOR OF LENDER FROM CLAIMS OR LOSSES ARISING AS A RESULT OF LENDER’S OWN
NEGLIGENCE.




          (w) Secondary Market. Lender may sell, transfer and deliver the Loan Documents to one
or more investors in the secondary mortgage market. In connection with such sale or otherwise,
Lender may retain or assign responsibility for servicing the Loan or may delegate some or all of
such responsibility and/or obligations to a servicer, including, but not limited to, any
subservicer or master servicer, on behalf of the investors. All references to Lender herein shall
refer to and include, without limitation, any such servicer, to the extent applicable.




9









 








          (x) Decisions. Wherever pursuant to this Agreement (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory or
acceptable to Lender, or (iii) any other decision or determination is to be made by Lender, the
decision of Lender to approve or disapprove or to accept or not accept, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other decisions and
determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be
final and conclusive, except as may be otherwise expressly and specifically provided herein.




          (y) Dissemination of Information. If Lender determines at any time to sell, transfer
or assign the Note, the Security Instrument and the other Loan Documents, and any or all servicing
rights with respect thereto, or to grant participations therein (the “Participations”) or issue
mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated
or unrated public offering or private placement (the “Securities”), Lender may forward to each
purchaser, transferee, assignee, servicer, participant, investor, or their respective successors in
such Participations and/or Securities (collectively, the “Investor”) or any Rating Agency (as
defined in the Security Instrument) rating such Securities, each prospective Investor and each of
the foregoing’s respective counsel, all documents and information which Lender now has or may
hereafter acquire relating to the Loan and to Borrower, any Indemnitor and the Property, which
shall have been furnished by Borrower, or any Indemnitor as Lender determines necessary or
desirable.




          (z) Costs. Wherever pursuant to this Agreement it is provided that Indemnitor shall
pay any costs and expenses, such costs and expenses shall include, but not be limited to,
reasonable legal fees and disbursements of Lender.




[The Remainder of the Page is Intentionally Blank]




10









 








          (aa) Entire Agreement; Amendment; Severability. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE
OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.
THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. This Agreement contains the entire
agreement between the parties respecting the matters herein set forth and supersedes all prior
agreements, whether written or oral, between the parties respecting such matters. Any amendments
or modifications hereto, in order to be effective, shall be in writing and executed by the parties
hereto. A determination that any provision of this Agreement is unenforceable or invalid shall not
affect the enforceability or validity of any other provision, and any determination that the
application of any provision of this Agreement to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.




     IN WITNESS WHEREOF, Indemnitor has executed this Indemnity and Guaranty Agreement as of the
day and year first written above.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	INDEMNITOR:	 	 
	 
	 	 	 	 	 	 	 	 
	NOTICE OF INDEMNIFICATION: 

INDEMNITOR HEREBY ACKNOWLEDGES AND AGREES THAT THIS INDEMNITY AGREEMENT CONTAINS CERTAIN INDEMNIFICATION PROVISIONS
PURSUANT TO SECTION 1 HEREOF	 	 	 	NNN APARTMENT REIT, INC.,


a Maryland corporation
 	 	 
	 	 	 	By:	 	/s/ Andrea R. Biller
	 	 	 	 	 	 
	 	 
	 	 	 	Name:	 	Andrea R. Biller
	 	 	 	 	 	 
	 	 
	 	 	 	 	Title:	 	Secretary
	 	 	 	 	 	 	 
	 	 






 









 





EXHIBIT “A”

Legal Description




TRACT I



A 48.80 acre, or 2,125,701 square feet, tract of land, out of a 69.40 acre tract recorded in Volume
6447, Pages 1192-1195 of the Official Public Records of Real Property of Bexar County, Texas, a
portion of the called 48.97 acre tract of land (“Tract I”) recorded in Volume 10288, Pages 623-627
of the Official Public Records of Real Property of Bexar County, Texas, and being all of Lot 30,
Block 8 of the Replat and Subdivision Plat Establishing Bandera Springs as recorded in Volume 9559,
Pages 114-116 of the Deed and Plat Records of Bexar County, Texas, also being out of the Perry
Davis Survey Number 267, Abstract Number 189, County Block 4528, now all in New City Block (N.C.B.)
14614, In the City of San Antonio, Bexar County, Texas, said 48.88 acre being more particularly
described by metes and bounds as follows, with the basis of bearings being the said Bandera Springs
Subdivision:



BEGINNING at a found Texas Department of Transportation monument with brass plate, a point on the
southeast right-of-way line of F.M. 1604, the northwest corner of the above referenced 69.40 acre
tract, the northeast corner of a 13.923 acre tract recorded in Volume 10593, Pages 769-772 of the
Official Public Records of Real Property of Bexar County, Texas, the northwest corner of the herein
described tract, from which a found 1/2 inch iron rod bears S 45° 39’ 57” W, a distance of 126.85
feet; thence N 45° 30’ 49” E, along and with the southeast right-of-way of said F.M. 1604, a
distance of 196.51 feet to a set “x” in concrete; thence : N 44° 34’ 21” E, along and with the
southeast right-of-way of said F.M. 1604, a distance of 40.71 feet to a set “x” in concrete, the
west corner of a 47.04 acre tract recorded in Volume 7321, Page 1004-1007 of the Official Public
Records of Real Property of Bexar County, Texas, the north corner of the herein described tract;
thence departing the southeast right-of-way line of said F.M. 1604, along and with the southwest
line of said 47.04 acre tract, the northeast line of herein described tract the following calls and
distances: S 44° 27’ 48” E, a distance of 68.58 feet to the center of a sanitary sewer manhole
lid; S 30° 13’ 45” E, a distance of 397.94 feet to a set “x” on a sanitary sewer manhole lid; S 60°
22’ 03” E. a distance of 698.23 feet to the center of a sanitary sewer manhole lid; S 22° 51’ 53”
E. a distance of 251.38 feet to a set “x” on a sanitary sewer manhole lid; S 78° 38’ 40” E. a
distance of 491.06 feet, to a found 1/2 inch iron rod with a yellow cap marked “Pape-Dawson”, the
southeast corner of said 47.04 acre tract, the northeast corner of this tract, a point on the west
right-of-way line of South Hausman Road (a variable width right-of-way); thence S 00° 03’ 57” W,
along and with the west right-of-way of said South Hausman Road, a distance of 245.33 feet to a set
1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence N 84° 21’ 08” W, departing the west
right-of-way of said South Hausman Road, a distance of 10.05 feet to a set 1/2 inch iron rod with
yellow cap marked “Pape-Dawson” being a northeast corner of said Lot 30; thence S 00°03’57” W,
along and with the west right-of-way of said South Hausman Road, the west line of a 10-dedication
for future street widening recorded fn Volume 9559, Pages 114-116 of the Deed and Plat Records of
Bexar County, Texas, the east line of said Lot 30, a distance of 351.58 feet to a set 1/2 inch iron
rod with yellow cap marked “Pape-Dawson”; thence N 17° 06’ 38” E, departing the west right-of-way
of said South Hausman Road, Along the south line of a said 10-dedication for future street
widening, the east line of said Lot 30, a distance of 34.12 to a set 1/2 inch iron rod with yellow
cap marked “Pape-Dawson” in the west right-of-way line of said South Hausman Road; thence S 00° 03’
57” W, along and with the west right-of-way of said South Hausman Road, a distance of 551.48 feet
to a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence S 80° 07’ 33’’ W, departing
the west right-of-way line of said South Hausman Road, at a distance of 5.08 feet passing the
northeast corner of Oakridge Pointe Unit-4 Subdivision, as recorded in Volume 9534, Page 117, Deed
and Plat Records of Bexar County, Texas, continuing along the north line of said Oakridge Pointe,
Unit-4 at a distance of 181.40 passing the southwest corner of said Lot 30, Block 8, in all a total
distance of 298.93 feet to a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence S
46° 06’ 14” W, with the northwest line of Oakridge Pointe Unit-4, a distance of 50.04 feet to a set
1/2 inch iron rod with yellow cap marked “Pape-Dawson”’,
the northwest corner of said subdivision
the northeast corner of Lot 20, Block 8, N.C.B. 14614, South Hausman Road Elementary, as recorded
in Volume 9535, Pages 34-35, Deed and Plat Records of Bexar County, Texas, being the southeast
corner of the remaining portion of that 16.12 acre tract conveyed to Northside Independent School
District in Volume 6761, Pages




 









 







1256-1274 of the Official Public Records of Real Property of Bexar County, Texas, a point on curve
of a non-tangent curve to the left; thence Northwesterly, along and with the east tine of said
remaining portion of that 16.12 acre tract and along the arc of said curve to the left, said curve
having a radial bearing of S 43° 51’ 41” W, a radius of 375.00 feet, a central angle of 101° 1’
53”, a chord bearing and distance of N 46° 44’ 15” W, 7.84 feet, an arc length of 7.84 feet to a
set 1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence N 47° 20’ 12” W, a distance of
20.00 feet to a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson” at the north corner of
said remaining portion of that 16.12 acre tract; thence S 58° 56’ 36” W, along and with the west
line of said remaining portion of that 16.12 acre tract, the south line of said 48.80 acre tract
and said Lot 30, a distance of 62.28 feet to a set 1/2 inch iron rod with yellow cap marked
“Pape-Dawson”, at the southwest corner of said remaining portion of that 16.12 acre tract, and
angle point in the north line of said Lot 20, Block 8 of South Hausman Road Elementary, the
beginning of a curve to the right; thence Southwesterly, along and with the northwest and north
line of said South Hausman Road Elementary, the south line of said Lot 30 and said 48.80 acre tract
and arc of said curve to the right, said curve having a radius of 300.00 feet, a central angle of
36° 02’ 40”, a chord bearing and distance of S 76° 57’ 56” W, 185.63 feet, an arc length of 188.73
feet to a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence N 85° 00’ 44” W, along
and with the north line of said South Hausman Road Elementary, the south line of said Lot 30 and
said 48.80 acre tract, a distance of 115.39 feet to a set 1/2 inch iron rod with yellow cap marked
“Pape-Dawson”; thence Northwesterly, along and with the north and northeast line of said South
Hausman Road Elementary, the south line of said Lot 30 and said 48.80 acre tract and the arc of
said curve to the right, said curve having a radius of 350.00 feet, a central angle of 44° 59’ 40”,
a chord bearing and distance of N 62° 31’ 12” W. 267.79 feet, an arc length of 274.79 feet to a set
1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence N 40° 01’ 40” W, along and with the
northeast line of said South Hausman Road Elementary, the south line of said Lot 30 and said 48.80
acre tract, a distance of 245.43 feet to a set 1/2 inch iron rod with yellow cap marked
“Pape-Dawson”, the beginning of a curve to the left; thence Northwesterly, along and with the
northeast line of said South Hausman Road Elementary, the south line of said Lot 30 and said 48.80
acre tract and the arc of said curve to the left, said curve having a radius of 250.00 feet, a
central angle of 49° 57’ 50”, a chord bearing and distance of N 65° 00’ 35” W, 211.17 feet, an arc
length of 218.01 feet to a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson”; thence N 89°
59’ 30” W, along and with the north line of said South Hausman Road Elementary, the south line of
said Lot 30 and said 48.80 acre tract, a distance of 52.06 feet to a set 1/2 inch iron rod with
yellow cap marked “Pape-Dawson”, a point on the west line of a 3 8.966 acre tract recorded in
Volume 2569, Page 1217, Official Public Records of Real Property of Bexar County, Texas, the
southwest corner of said Lot 30 and the southwest corner of the herein described tract; thence N
00° 00’ 12” E, along and with the east line of said 38.966 acre tract, a distance of 706.02 feet to
a set 1/2 inch iron rod with yellow cap marked “Pape-Dawson” at a common corner between said 38.966
acre tract and said 13.923 acre tract; thence N 14°12’ 23” W. along and with the east line of said
13.923 acre tract, the
west line of said Lot 30 and said 48.80 acre tract, a distance of 1071.43
feet to the POINT OF BEGINNING and containing 48.80 acres of land in the City of San Antonio, Bexar
County, Texas.




TRACT II:



Drainage easement as provided by document recorded in Volume 7032, Page 1269, Real Property Records
of Bexar County, Texas.




TRACT III:



Landscape buffer, lighting and access easement agreement as prodded by document recorded in Volume
41880, Page 1700, Real Property Records of Bexar County, Texas.