Exhibit 10.8


 


MEZZANINE GUARANTY


 


This Mezzanine Guaranty (“Guaranty”)
is entered into as of December 31, 2008, by CFP Residential, L.P., a Texas
limited partnership, Kenneth J. Valach, an individual, Bruce Hart, an
individual, and J. Ronald Terwilliger, an individual (collectively, the “Guarantor”) for the benefit of Behringer Harvard St. Rose
REIT, LLC, a Delaware limited liability company, and/or any subsequent holder
of the Note (the “Lender”).


 


RECITALS


 


A.                                   SW 131 St. Rose
Mezzanine Borrower LLC, a Delaware limited liability company (the “Borrower”) has requested that Lender make one or more loans
(structured as one loan, or as a senior loan and a junior loan, or in another
manner agreed on by the Mezzanine Lender and the Borrower) in the aggregate
amount of up to Twenty One Million Forty Three Thousand One Hundred Ninety
Seven and No/100 Dollars ($21,043,197) (the “Loan”).  The Loan will be evidenced by a Senior
Mezzanine Promissory Note and a Junior Mezzanine Promissory Note from Borrower
to Lender each dated as of the date of this Guaranty (collectively, the “Note”).  As of the
date of this Guaranty, the Note will be secured by liens on the Land (as
defined in the Loan Agreement) created by subordinate deeds of trust, dated the
same date as the Note, for the benefit of Lender (each, a “Deed of Trust”), made by SW 132 St. Rose
Senior Borrower LLC, a Delaware limited liability company (“Mortgagor”), which is a wholly owned subsidiary of
Borrower.  Each Deed of Trust is referred
to herein collectively as the “Security Instrument.”


 


B.                                     The Loan is
being made as more particularly described in the Senior Mezzanine Loan
Agreement and Junior Mezzanine Loan Agreement, each dated as of the date of
this Guaranty, between Borrower and Lender (collectively, the “Loan Agreement”). 
Borrower will cause Mortgagor to construct on the Land (as defined in
the Loan Agreement) the Project (as defined in the Loan Agreement).


 


C.                                     The Project is
to be constructed in accordance with, and pursuant to the terms and conditions
and requirements of, the Loan Agreement and other Loan Documents.


 


D.                                    As a condition
to making the Loan to Borrower, Lender requires that the Guarantor execute this
Guaranty.  Guarantor has an economic
interest in Borrower or will otherwise obtain a material financial benefit from
the Loan.


 


NOW, THEREFORE, in order to induce Lender to make
the Loan to Borrower, and in consideration thereof, the Guarantor hereby
agrees, unconditionally and irrevocably as follows:


 


1.                                       Defined Terms. 
Unless otherwise expressly defined herein, capitalized terms used in
this Guaranty shall have the meaning given to such terms in the Loan Agreement.


 


2.                                       Guaranteed Obligations.


 


(a)                                  As an inducement to Lender to extend or
continue to extend credit and other financial accommodations to Borrower,
Guarantor, for value received, does hereby unconditionally and absolutely
guarantee the prompt and complete performance and 


 


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payment of the Guaranteed
Obligations.  For purposes of this Guaranty,
the term “Guaranteed Obligations” shall mean (i) the
“Completion Obligations” (as hereinafter
defined), and (ii) the “Bankruptcy Obligations”
(as hereinafter defined).


 


(i)                                     For purposes of this Guaranty, the term “Completion Obligations” shall mean that (i) Guarantor
will cause the Completion of the Project in substantial accordance with the
Plans, and in accordance with the terms and conditions of the Loan Agreement
and other Loan Documents, if for any reason, or under any contingency,
Mortgagor shall abandon construction of the Project or shall fail to cause the
Completion of the Project within the construction time set forth in the Loan
Agreement and Loan Documents, and (ii) Guarantor will pay all cost
overruns for construction of the Project. 
In the preceding sentence, “cost overruns” means costs of constructing
the Project that, in the aggregate, exceed the amount provided in the
Construction Budget, except that the following expenses shall not be included
in calculating cost overruns: operating deficits, taxes and, solely to the
extent increased by force majeure, construction interest.  “Completion” of
the Project will occur upon the issuance of the final certificate of occupancy;
the receipt of evidence reasonably satisfactory to Lender that no building has
been constructed over any easements or setback areas and no other improvements
prohibited by the terms of the easements or setbacks have been constructed
within such easements or setbacks, as applicable; the issuance of a certificate
of substantial completion from the Mortgagor’s architect; and 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., subcontractors whose contract amount exceeds $100,000)
to Lender’s reasonable satisfaction; provided, however, that if Senior Lender
shall deem the Project to have reached Completion, then Lender shall deem the
Project to have reached Completion.


 


(ii)                                  For purposes of this Guaranty, the term “Bankruptcy Obligations” shall mean all principal, interest
and other amounts due and owing by Borrower under the Note, the Security
Instruments and any other Loan Documents, but only if there is a filing of a
voluntary bankruptcy or insolvency proceeding of the Borrower prior to
Completion.


 


(b)                                 Without limiting the rights and remedies
of Lender, if after the occurrence of an Event of Default and after Lender has
so requested, Guarantor does not promptly proceed with and diligently prosecute
the applicable Completion Obligations, then Lender may, at its option, without
notice to Guarantor or anyone else, cause Completion of the Project either
before or after commencement of foreclosure proceedings, and either on or
before the exercise of any other right or remedy of Lender against Borrower or
Guarantor, with such changes to the Plans that Lender deems necessary or
advisable to complete the Project, and Guarantor waives any right to contest
such necessary expenditures.  The amount
of any and all expenditures made by Lender for the foregoing purposes, to the
extent they exceed the unexpended portion of the Construction Budget shall bear
interest from the date made until repaid to Lender, at a rate per annum equal
to the Interest Rate provided for in the Note and, together with such interest,
shall be due 


 


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and payable by Guarantor
to Lender upon demand.  Lender does not
have and shall never have any obligation to cause the Completion of the Project
or take such action.


 


3.                                       Survival.  The
obligations of Guarantor under this Guaranty shall survive any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, and any release of record of the Security Instruments.


 


4.                                       Guaranty of Performance and Payment. 
Guarantor’s performance and payment obligations under this Guaranty
constitute a guaranty of performance and payment and not merely a guaranty of
collection.


 


5.                                       Present, Unconditional and Irrevocable
Guaranty; Waivers.  The obligations of Guarantor under this
Guaranty shall be performed without demand by Lender, other than as provided
herein and shall be present, unconditional, absolute and irrevocable
irrespective of the genuineness, validity, regularity or enforceability of the
Note, the Security Instruments, or any other Loan Document, and without regard
to any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. 
This Guaranty shall be effective as a waiver of, and Guarantor expressly
waives, any and all rights to which Guarantor 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.  Without limiting the generality of
the foregoing, Guarantor hereby waives, to the fullest extent permitted by law,
diligence in collecting the Guaranteed Obligations, presentment, demand for
payment, protest, all notices with respect to the Note and this Guaranty which
may be required by statute, rule of law or otherwise to preserve Lender’s
rights against Guarantor under this Guaranty, including notice of acceptance,
notice of any amendment of the Loan Documents, notice of the occurrence of any
default or Event of Default, notice of intent to accelerate, notice of
acceleration, notice of dishonor, notice of foreclosure, notice of protest, and
notice of the incurring by Borrower of any obligation or indebtedness.  Guarantor also waives, to the fullest extent
permitted by law, all rights to require Lender to (a) proceed against
Borrower or any other guarantor of Borrower’s payment or performance with respect
to the Guaranteed Obligations (an “Other Guarantor”),
(b) if Borrower or any Other Guarantor is a partnership, proceed against
any general partner of Borrower or the Other Guarantor, (c) proceed
against or exhaust any collateral held by Lender to secure the repayment of the
Guaranteed Obligations, or (d) pursue any other remedy it may now or
hereafter have against Borrower, or, if Borrower is a partnership, any general
partner of Borrower.


 


6.                                       Valuation of the Property Upon
Foreclosure.  The following shall be the basis for the
determination of the fair market value of any property encumbered by the Deed
of Trust (the “Mortgaged Property”) as of the
date of the foreclosure sale in proceedings governed by Sections 51.003, 51.004
and 51.005 of the Texas Property Code (as amended from time to time), to the
extent those provision apply: (i) the Mortgaged Property shall be valued
in an “as is” condition as of the date of the foreclosure sale, without any
assumption or expectation that the Mortgaged Property will be repaired or
improved in any manner before a resale of the Mortgaged Property after
foreclosure; (ii) the valuation shall be based upon an assumption that the
foreclosure purchaser desires a resale of the Mortgaged Property for cash
promptly (but no 


 


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later than twelve (12) months) following the
foreclosure sale; (iii) all reasonable closing costs customarily borne by
the seller in commercial real estate transactions should be deducted from the
gross fair market value of the Mortgaged Property, including, without
limitation, brokerage commissions, title insurance, a survey of the Property,
tax prorations, attorneys’ fees, and marketing costs; (iv) the gross fair
market value of the Mortgaged Property shall be further discounted to account
for any estimated holding costs associated with maintaining the Mortgaged
Property pending sale, including, without limitation, utilities expenses,
property management fees, taxes and assessments (to the extent not accounted
for in (iii) above), and other maintenance, operational and ownership
expenses; and (v) any expert opinion testimony given or considered in
connection with a determination of the fair market value of the Mortgaged
Property must be given by persons having at least five (5) years
experience in appraising property similar to the Mortgaged Property and who
have conducted and prepared a complete written appraisal of the Mortgaged
Property taking into consideration the factors set forth above.


 


7.                                       Modification of Loan Documents. 
At any time or from time to time and any number of times, without notice
to Guarantor and without affecting the liability of Guarantor, (a) the
time for payment of the principal of or interest on the Guaranteed Obligations
may be extended or the Guaranteed Obligations may be renewed in whole or in
part; (b) the time for Borrower’s performance of or compliance with any
covenant or agreement contained in the Note, the Loan Agreement, the Security
Instruments or any other Loan Document, whether presently existing or
hereinafter entered into, may be extended or such performance or compliance may
be waived; (c) the Maturity Date may be accelerated as provided in the
Note, the Security Instruments or any other Loan Document; (d) the Note,
the Loan Agreement, the Security Instruments or any other Loan Document may be
modified or amended by Lender and Borrower in any respect, including an
increase in the principal amount; and (e) any security for the Guaranteed
Obligations may be modified, exchanged, surrendered or otherwise dealt with or
additional security may be pledged or mortgaged for the Guaranteed Obligations.


 


8.                                       Joint and Several Guaranty. 
If more than one person executes this Guaranty, the obligations of those
persons under this Guaranty shall be joint and several.  Lender, in its discretion, may (a) bring
suit against Guarantor, or any one or more of the Persons constituting
Guarantor, and any Other Guarantor, jointly and severally, or against any one
or more of them; (b) compromise or settle with any one or more of the
Persons constituting Guarantor, or any Other Guarantor, for such consideration
as Lender may deem proper; (c) release one or more of the Persons
constituting Guarantor, or any Other Guarantor, from liability; and (d) otherwise
deal with Guarantor and any Other Guarantor, or any one or more of them, in any
manner, and no such action shall impair the rights of Lender to collect from
another Guarantor any amount guaranteed by such other Guarantor under this
Guaranty.  Nothing contained in this
paragraph shall in any way affect or impair the rights or obligations of
Guarantor with respect to any Other Guarantor.


 


9.                                       Subordination. 
Any indebtedness of Borrower held by Guarantor now or in the future
(including but not limited to (i) all debts and liabilities of Borrower to
Guarantor whether the obligations of Borrower are direct, contingent, primary,
secondary, joint and several or otherwise, whether the obligations are
evidenced by note, contract, open account or otherwise and irrespective of the
creation of such debts or liabilities or manner acquired by Guarantor, (ii) any
dividends and payments pursuant to debtor relief or insolvency proceedings
referred to 


 


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below
and (iii) all liens, security interests, judgment liens, charges or other
encumbrances on Borrower’s assets securing payment thereof) is and shall be
subordinated to the Guaranteed Obligations, and upon the occurrence of an Event
of Default, but without reducing or affecting in any manner the liability of
Guarantor under the other provisions of this Guaranty, except to the extent
that such amounts are actually applied toward Borrower’s or Mortgagor’s
obligations under the Loan Documents, Guarantor shall not receive, or collect,
directly or indirectly any amount in connection with the foregoing.  If any amount is received by Guarantor on
such indebtedness of Borrower held by Guarantor at the time an Event of Default
exists, it shall be received by Guarantor in trust, as trustee for Lender, and
Guarantor agrees to pay such amounts promptly to Lender.  In the event of
receivership, bankruptcy, reorganization, arrangement or other debtor relief or
insolvency proceedings involving Borrower as debtor, Lender shall have the
right to prove its claims in any such proceeding so as to establish its rights
hereunder and shall have the right to receive directly from the receiver,
trustee or other custodian (whether or not an Event of Default shall have
occurred or be continuing under any of the Loan Documents), dividends and
payments that are payable upon any obligation of Borrower to Guarantor now
existing or hereafter arising, and to have all benefits of any security
therefor, until the Guaranteed Obligations have been fully and finally paid and
performed.  Guarantor hereby acknowledges and agrees that the
foregoing provisions shall be operative without the necessity of execution of
any further documents.  Notwithstanding
the foregoing, upon the request of Lender, Guarantor hereby agrees to execute a
subordination agreement, in form and content reasonably acceptable to Lender,
evidencing the provisions of this Section 9.


 


10.                                 Waiver of Subrogation Rights. 
Any right or claim for subrogation or reimbursement against Borrower by reason
of any payment by Guarantor under this Guaranty, is subordinated to the
Guaranteed Obligations on the terms provided in Section 9 above, whether
such right or claim arises at law or in equity or under any contract or
statute.


 


11.                                 No Discharge of Guarantor. 
If any payment by Borrower is held to constitute a preference under any
applicable bankruptcy, insolvency, or similar laws, or if for any other reason
Lender is required to refund any sums to Borrower, such refund shall not
constitute a release of any liability of Guarantor under this Guaranty.


 


12.                                 Financial Statements. 
Guarantor agrees that, until Completion, Guarantor will provide to
Lender no later than December 31 of each year a Collateral Value Statement
for each of the Persons constituting Guarantor dated as of the preceding June 30,
prepared using substantially the same methodology as the Collateral Value
Statements of the Guarantors dated as of June 30, 2008, with the exception
that the capitalization rate employed in establishing property values may be
reduced to a rate not lower than 6.5%. 
Each such Collateral Value Statement shall be accompanied by a
certificate executed by the Person to whom such Collateral Value Statement
relates certifying that, to the knowledge of such Person, the Collateral Value
Statement fairly presents the collateral value of the assets shown in such
Collateral Value Statement determined on the same basis as described in the
notes to the Collateral Value Statements, dated as of June 30, 2008,
qualified as appropriate if the capitalization rate employed in establishing
property values is reduced as contemplated above.


 


13.                                 Representation and Warranty. 
Guarantor represents and warrants to Lender, jointly and severally, that
(i) CFP Residential, L.P., has the limited partnership power and 


 


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authority
to enter into this Guaranty, to incur the obligations provided for herein, and
to execute and deliver the same to Lender, (ii) when executed and
delivered, this Guaranty will constitute a valid and legally binding obligation
of each Guarantor, enforceable against such Guarantor in accordance with its
terms (subject to bankruptcy, insolvency, reorganization and similar laws and
to general principles of equity) and (iii) each Guarantor will directly or
indirectly benefit from the Loan.


 


14.                                 Counterparts. 
This Guaranty may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which, when taken together, shall
constitute one and the same instrument. 
The persons comprising Guarantor may execute different counterparts of
this Guaranty.


 


15.                                 Notices.  Any notice,
election, communication, request, approval or other document or demand required
or permitted under this Guaranty shall be in writing.  Each notice, election, communication,
request, approval or other document or demand shall be addressed to the
intended recipient, in the case of Lender, at its address set forth in the Loan
Agreement or, in the case of a Guarantor, at its address set forth on the
signature page of this Guaranty. 
Each notice, election, communication, request, approval or other
document or demand shall be deemed given on the earliest to occur of (1) the
date when the notice is received by the addressee; (2) the first Business
Day after the notice is delivered to a recognized overnight courier service,
with arrangements made for payment of charges, for next Business Day delivery;
or (3) the third Business Day after the notice is deposited in the United
States mail with postage prepaid, certified mail, return receipt
requested.  As used in this Section 15,
the term “Business Day” means any day other than a Saturday, a Sunday or any
other legal holiday.  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 15.


 


16.                                 Assignment by Lender. 
Lender may assign its rights under this Guaranty in whole or in part
and, upon any such assignment, all the terms and provisions of this Guaranty
shall inure to the benefit of such assignee to the extent so assigned. The
terms used to designate any of the parties herein shall be deemed to include
the estate, legal representatives, successors and assigns of such party.


 


17.                                 Entire Agreement. 
This Guaranty and the other Loan Documents 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.  All
prior or contemporaneous agreements, understandings, representations, and
statements, oral or written, are merged into this Guaranty and the other Loan
Documents.  Guarantor acknowledges that
it has received a copy of the Note and all other Loan Documents.  Neither this Guaranty nor any of its
provisions may be waived, modified, amended, discharged, or terminated except
by an agreement in writing signed by the party against which the enforcement of
the waiver, modification, amendment, discharge, or termination is sought, and
then only to the extent set forth in that agreement.


 


18.                                 Governing Law. 
This Guaranty shall be governed by, and construed in accordance with,
the substantive law of the State of Texas without regard to the application of
choice of law principles.


 


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19.                                 SUBMISSION TO
JURISDICTION/SERVICE OF PROCESS.  GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS OF THE STATE OF TEXAS
LOCATED IN DALLAS COUNTY, TEXAS FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY, THE SUBJECT MATTER
HEREOF, OR THE LOAN. GUARANTOR TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS
ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS,
THAT 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 GUARANTY,
THE SUBJECT MATTER HEREOF, OR THE LOAN (AS APPLICABLE) MAY NOT BE ENFORCED
IN OR BY SUCH COURT AND (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH
ACTION, SUIT OR PROCEEDING INSTITUTED BY LENDER IN STATE COURT TO FEDERAL
COURT, OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT
(UNLESS THE FEDERAL COURT HAS NO SUBJECT MATTER JURISDICTION).  EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT
HERETO, BUT SERVICE WILL BE EFFECTIVE ONLY UPON DELIVERY.  GUARANTOR AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF LENDER AND ITS ASSIGNS.  FINAL
JUDGMENT AGAINST GUARANTOR 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 GUARANTOR THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER
PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.  LENDER MAY AT ITS OPTION BRING SUIT, OR
INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST GUARANTOR 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.


 


20.                                 WAIVER WITH RESPECT TO DAMAGES.  GUARANTOR
ACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP WITH, OR
FIDUCIARY DUTY TO, GUARANTOR ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND GUARANTOR,
IN CONNECTION HEREWITH AND THEREWITH IS SOLELY THAT OF GUARANTOR OF A DEBTOR
AND CREDITOR.  TO THE EXTENT PERMITTED BY
APPLICABLE LAW, GUARANTOR AND LENDER EACH SHALL NOT ASSERT, AND GUARANTOR AND
LENDER EACH HEREBY WAIVES, ANY CLAIMS AGAINST THE OTHER, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES 


 


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(AS
OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS
A RESULT OF, THIS GUARANTY, ANY OTHER LOAN DOCUMENT, ANY AGREEMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.


 


21.                                 Liability.


 


(a)                                  Notwithstanding anything in this Guaranty
to the contrary, Lender shall look for satisfaction of the obligations of a Guarantor
under this Guaranty only to the following real and personal property of such
Guarantor (the “Available Assets”):


 


(1)                                                                                  the legal and beneficial interests of
such Guarantor in any entity that is, at the time of enforcement of this
Guaranty, (i) engaged in the business of holding, constructing, developing
or providing property management or overhead services for real estate designed
for residential use in the United States and (ii) affiliated in any way
with Trammell Crow Residential Company, or any subsidiary thereof or any
successor or assign of all or substantially all of the assets thereof; and


 


(2)                                                                                  any receivables due the Guarantors from
any entity described in the foregoing item (1).


 


Except
for the Available Assets, Lender shall not look to a Guarantor’s tangible or
intangible real and personal property (including cash, cash equivalents,
securities, partnership interests, receivable or similar intangible personal
property) for satisfaction of any Guarantor’s obligations under this
Guaranty.  Subject to Section 21(b),
Lender may not look to the tangible or intangible proceeds of any assets of a
Guarantor, including proceeds of the Available Assets, except as specifically
provided in paragraph (2) above.


 


(b)                                 Notwithstanding the limitations in Section 21(a),
Lender may look to proceeds of Available Assets realized by a Guarantor (i) after
the Aggregate Collateral Value, as reported in the annual Collateral Value
Statements prepared for the Guarantors, is less than $80,000,000 or (ii) as
a result of a transaction that causes the Aggregate Collateral Value to be less
than $80,000,000.  As used in this
paragraph, the term “Aggregate Collateral Value” means the aggregate value of
the Available Assets as calculated on the basis provided in the notes to the
Collateral Value Statements of the Guarantors dated as of June 30, 2008,
with the exception that the capitalization rate employed in establishing
property values may be reduced to a rate not lower than 6.5% at the option of
Guarantor.  However, notwithstanding this
Section 21(b), in no event will Lender be entitled to satisfy any
obligation of a Guarantor from any of the following assets (collectively, “Excluded
Assets”): (i) the personal residences of the Guarantor, (ii) the
Guarantor’s nonbusiness real estate, including rural, vacation and resort
property, up to $1,000,000 in value, (iii) the Guarantor’s personal
automobiles and other tangible personal property, including household goods,
clothing, silverware, gems, jewelry and works of art, not to exceed $1,500,000
in values, (iv) the interests listed in Section 21(c) and (v) proceeds
of Excluded Assets.


 


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(c)                                  In no case may Lender look to any of the
following owned by a Guarantor (even if it otherwise would be available under
the terms of this Section 21) or any proceeds thereof: stock in AvalonBay
Communities, Inc., units in Avalon DownREIT V, L.P., stock in Gables
Residential Trust, units in Gables Realty Limited Partnership, units in Equity
Residential Properties Trust, units in ERP Operating Limited Partnership, stock
in BRE Properties, Inc, units in BRE Property Investors, LLC, units in AMLI
Residential Property Trust, units in AMLI Residential Properties, L.P., units
in Merry Land DownREIT I, L.P., ownership in J. Ronald Terwilliger Grantor
Trust, stock in JRT Holdings, Inc., ownership in Terwilliger Partners,
LLLP and interests in TCR Affordable Housing Limited Partnership.


 


(d)                                 The term “residential” as used in this Section 21
means single family and multi family dwellings, residential land/lot
developments, and senior living communities.


 


(e)                                  If the collective aggregate value of the
Available Assets of the Guarantor, as reported in the Collateral Value
Statement delivered under Section 12 (prepared using substantially the
same methodology as the Collateral Value Statements of the Guarantors dated as
of June 30, 2008, with the exception that the capitalization rate employed
in establishing property values may be reduced to a rate not lower than 6.5%)
falls to less than $80,000,000 and if the Guarantor, Mortgagor and/or Borrower
fail to correct such deficiency within 30 days following delivery of a
deficiency notice from Lender, then such failure shall, at the option of
Lender, constitute an Event of Default on the part of Borrower under the Loan
Documents.  Guarantor, Mortgagor and/or
the Borrower shall have the right to correct any deficiency in Available Assets
by (i) obtaining and delivering to Lender one or more new guaranties, each
of which shall be in the form and content substantially the same as this
Guaranty from one or more persons whose Available Assets  are sufficient to correct the deficiency, (ii) delivering
to Lender and thereafter maintaining in full force and effect (for so long as
the deficiency exists) an unconditional and irrevocable letter of credit, in a
face amount sufficient to correct the deficiency, naming Lender as beneficiary,
and otherwise in form and content and issued by an institution acceptable to
Lender in the exercise of good faith business judgment, or (iii) the
amendment of this Guaranty (in form and substance acceptable to Lender in the
exercise of its good faith business judgment) in such a manner such that the
definition of Available Assets is expanded to include  additional assets that are not then included
in the definition of Available Assets, sufficient to correct the deficiency and
otherwise acceptable to Lender in its good faith business judgment.


 


22.                                 Change of Address. 
Guarantor (or each Guarantor, if more than one) agrees to notify Lender
(in the manner for giving notices provided in Section 15 above) of
any change in Guarantor’s address within a reasonable time after such change of
address occurs.


 


23.                                 Successors and Assigns. 
This Guaranty shall be binding upon Guarantor and Guarantor’s executors,
personal representatives, successors and assigns and shall inure to the benefit
of Lender and its successors and assigns.


 


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24.                                 Attorney’s Fees. 
If it becomes necessary for Lender to employ counsel to enforce the
obligations of Guarantor hereunder, Guarantor agrees to pay the reasonable
attorneys’ fees and expenses incurred by Lender in connection therewith.


 


25.                                 WAIVER OF JURY TRIAL. 
GUARANTOR AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP
BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO
THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.


 


[Signature Pages Follow]


 


-10-

















IN WITNESS WHEREOF, Guarantor has signed and
delivered this Guaranty or has caused this Guaranty to be signed and delivered
by its duly authorized representative.


 


	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  CFP Residential, L.P., a
  Texas limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Crow Family, Inc., a
  Texas corporation, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harlan R. Crow

  
	
   

  	
   

  	
   

  	
  Harlan R. Crow, Chief
  Executive Officer

  
					



 

















 


	
   

  	
  Kenneth Valach, an
  individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Kenneth Valach

  



 

















 


	
   

  	
  J. Ronald Terwilliger, an
  individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ J. Ronald Terwilliger

  



 

















 


	
   

  	
  Bruce Hart, an individual

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Bruce Hart