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exv10w18

 

EXHIBIT
10.18

GUARANTY

(MEZZANINE LOAN)

     THIS GUARANTY (MEZZANINE LOAN) (this “Guaranty”) dated as of October 31, 2006, executed and
delivered by each of the undersigned and the other Persons from time to time party hereto pursuant
to the execution and delivery of a Joinder Agreement (Mezzanine Loan) (all of the undersigned,
together with such other Persons each a “Guarantor” and collectively, the “Guarantors”) in favor of
(a) WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the “Agent”) for the Lenders
under that certain Mezzanine Credit Agreement dated as of October 31, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the “Mezzanine Credit Agreement”), by and
among NNN APARTMENT REIT HOLDINGS, L.P., a Virginia limited partnership (the “Borrower”), the
financial institutions party thereto and their assignees under Section 12.5 thereof (the
“Lenders”), the Agent, and the other parties thereto, and (b) the Lenders (the parties described in
(a) and (b) are hereinafter referred to collectively as the “Credit Parties”).

     WHEREAS, pursuant to the Mezzanine Credit Agreement, the Credit Parties have agreed to make
available to the Borrower certain financial accommodations on the terms and conditions set forth in
the Mezzanine Credit Agreement;

     WHEREAS, either (i) Borrower is the owner, directly or indirectly, of at least a majority of
the issued and outstanding Equity Interests in each Guarantor, or (ii) each Guarantor is the owner,
directly or indirectly of a substantial amount of the Equity Interests in Borrower;

     WHEREAS, the Borrower and each of the Guarantors, though separate legal entities, are mutually
dependent upon each other in the conduct of their respective businesses as an integrated operation
and have determined it to be in their mutual best interests to obtain financing from the Credit
Parties through their collective efforts;

     WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from
the Credit Parties making such financial accommodations available to the Borrower under the
Mezzanine Credit Agreement and, accordingly, each Guarantor is willing to guarantee the Borrower’s
obligations to the Credit Parties on the terms and conditions contained herein; and

     WHEREAS, each Guarantor’s execution and delivery of this Guaranty is a condition to the Credit
Parties making, and continuing to make, such financial accommodations to the Borrower.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

     Section 1. Guaranty. Each Guarantor hereby absolutely, irrevocably and
unconditionally guaranties the due and punctual payment and performance when due, whether at stated
maturity, by acceleration or otherwise, of all of the following (collectively referred to as the
“Guarantied Obligations”): (a) all indebtedness and obligations owing by the Borrower to any Credit
Party under or in connection with the Mezzanine Credit Agreement and any other Loan Document,
including without limitation, the repayment of all principal of the Loans, and the payment of all
interest, Fees, charges, attorneys’ fees and other amounts payable to any Credit Party thereunder
or in connection therewith; (b) any and all extensions, renewals, modifications, amendments or
substitutions of the foregoing; (c) all expenses, including, without limitation, reasonable
attorneys’ fees and disbursements, that are actually incurred by the Credit Parties in the
enforcement of any of the foregoing or any obligation of such Guarantor hereunder; and (d) all
other Obligations.

 

 

     Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a guaranty of
payment, and not of collection, and a debt of each Guarantor for its own account. Accordingly,
none of the Credit Parties shall be obligated or required before enforcing this Guaranty against
any Guarantor: (a) to pursue any right or remedy any of them may have against Borrower, any other
Guarantor or any other Person or commence any suit or other proceeding against Borrower, any other
Guarantor or any other Person in any court or other tribunal; (b) to make any claim in a
liquidation or bankruptcy of Borrower, any other Guarantor or any other Person; or (c) to make
demand of Borrower, any other Guarantor or any other Person or to enforce or seek to enforce or
realize upon any collateral security held by a Credit Party which may secure any of the Guarantied
Obligations.

     Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the documents evidencing the
same, regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Credit Parties with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute, irrevocable and unconditional in accordance with
its terms and shall remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including without limitation, the following (whether or not such Guarantor consents
thereto or has notice thereof):

          (a) (i) any change in the amount, interest rate or due date or other term of any of the
Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or any
portion of the Guarantied Obligations, (iii) any amendment or waiver of, or consent to the
departure from or other indulgence with respect to, the Mezzanine Credit Agreement, any other Loan
Document, or any other document or instrument evidencing or relating to any Guarantied Obligations,
or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion from, or any other
action or inaction under or in respect of, the Mezzanine Credit Agreement, any of the other Loan
Documents, or any other documents, instruments or agreements relating to the Guarantied Obligations
or any other instrument or agreement referred to therein or evidencing any Guarantied Obligations
or any assignment or transfer of any of the foregoing;

          (b) any lack of validity or enforceability of the Mezzanine Credit Agreement, any of the other
Loan Documents, or any other document, instrument or agreement referred to therein or evidencing
any Guarantied Obligations or any assignment or transfer of any of the foregoing;

          (c) any furnishing to a Credit Party of any security for the Guarantied Obligations, or any
sale, exchange, release or surrender of, or realization on, any collateral securing any of the
Obligations;

          (d) any settlement or compromise of any of the Guarantied Obligations, any security therefor,
or any liability of any other party with respect to the Guarantied Obligations, or any
subordination of the payment of the Guarantied Obligations to the payment of any other liability of
the Borrower or any other Obligor;

          (e) any act or failure to act by Borrower, any other Obligor or any other Person which may
adversely affect such Guarantor’s subrogation rights, if any, against Borrower or any other Person
to recover payments made under this Guaranty;

          (f) any nonperfection or impairment of any security interest or other Lien on any collateral,
if any, securing in any way any of the Obligations;

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          (g) any application of sums paid by the Borrower, any other Guarantor or any other Person with
respect to the liabilities of the Credit Parties, regardless of what liabilities of the Borrower
remain unpaid;

          (h) any statute of limitations in any action hereunder or for the collection of the Notes or
for the payment or performance of the Guarantied Obligations;

          (i) the incapacity or lack of authority of Borrower or any other Person, or the failure of any
Credit Party to file or enforce a claim against the estate (either in administration, bankruptcy or
in any other proceeding) of Borrower or any Guarantor or any other Person;

          (j) the dissolution or termination of existence of Borrower, any Guarantor or any other
Person;

          (k) the voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of Borrower or any other Person;

          (l) the voluntary or involuntary receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, assignment, composition, or readjustment of, or any similar
proceeding affecting, Borrower or any Guarantor or any other Person, or any of Borrower’s or any
Guarantor’s or any other Person’s properties or assets;

          (m) the damage, destruction, condemnation, foreclosure or surrender of all or any part of any
Collateral, any Property or any of the improvements located thereon;

          (n) the failure of a Credit Party to give notice of the existence, creation or incurring of
any new or additional indebtedness or obligation or of any action or nonaction on the part of any
other person whomsoever in connection with any Guarantied Obligation;

          (o) any failure or delay of a Credit Party to commence an action against Borrower or any other
Person, to assert or enforce any remedies against Borrower or any other Person under the Notes or
the Loan Documents, or to realize upon any security;

          (p) any failure of any duty on the part of a Credit Party to disclose to any Guarantor any
facts it may now or hereafter know regarding Borrower, any other Person, the Collateral or the
Properties or any of the improvements located thereon, whether such facts materially increase the
risk to Guarantors or not;

          (q) failure to accept or give notice of acceptance of this Guaranty by the Credit Parties;

          (r) failure to make or give notice of presentment and demand for payment of any of the
indebtedness or performance of any of the Guarantied Obligations;

          (s) failure to make or give protest and notice of dishonor or of default to Guarantors or to
any other party with respect to the indebtedness or performance of the Guarantied Obligations;

          (t) except as otherwise specifically provided in this Guaranty, any and all other notices
whatsoever to which Guarantors might otherwise be entitled;

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          (u) any lack of diligence by the Credit Parties in collection, protection or realization upon
any collateral securing the payment of the indebtedness or performance of the Guaranteed
Obligations;

          (v) the compromise, settlement, release or termination of any or all of the obligations of
Borrower under the Notes or the Loan Documents or any Collateral;

          (w) any transfer by Borrower or any other Person of all or any part of the security encumbered
by the Loan Documents;

          (x) any defense based upon an election of remedies by the Credit Parties, including any
election to proceed by judicial or nonjudicial foreclosure of any security, whether real property
or personal property security, or by deed in lieu thereof, and whether or not every aspect of any
foreclosure sale is commercially reasonable, or any election of remedies, including remedies
relating to real property or personal property security, which destroys or otherwise impairs the
subrogation rights of Guarantor or the rights of Guarantor to proceed against Borrower or any other
Person for reimbursement, or both (including, without limitation, California Code of Civil
Procedure Sections 580a, 580b, 580d and 726);

          (y) any defense based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in any other aspects more burdensome than that of a
principal;

          (z) any right of subrogation, reimbursement, exoneration, contribution or indemnity, or any
right to enforce any remedy which the Credit Parties now have or may hereafter have against
Borrower or any other Person or any benefit of, or any right to participate in, any security now or
hereafter held by the Credit Parties;

          (aa) any and all of the rights and defenses described in Section 2856(a) of the California
Civil Code;

          (bb) without limiting the generality of the foregoing or any other provision hereof, all
rights of subrogation, reimbursement, indemnification and contribution and any other rights and
defenses that are or may become available to Borrower, a Guarantor or any other surety by reason of
California Civil Code Sections 2787 to 2855 inclusive, or by reason of California Civil Code
Sections 2899 and 3433, or otherwise; or

          (cc) any right to require the Credit Parties to proceed against Borrower or any other
guarantor of the Obligations, proceed against or exhaust any security received from Borrower or any
other guarantor of the Guaranteed Obligations, or pursue any other remedy whatsoever;

     Guarantors understand that the exercise by the Credit Parties of certain rights and remedies
may affect or eliminate Guarantors’ right of subrogation against Borrower or other Persons and that
Guarantors may therefore incur partially or totally nonreimbursable liability hereunder.
Nevertheless, Guarantors hereby authorize and empower the Credit Parties, their successors,
endorsees and assigns, to exercise in its or their sole discretion, any rights and remedies, or any
combination thereof, which may then be available, it being the purpose and intent of Guarantors
that the obligations hereunder shall be absolute, continuing, independent and unconditional under
any and all circumstances. Notwithstanding any other provision of this Guaranty to the contrary
(but except as expressly provided in the Contribution Agreement), each Guarantor hereby waives and
releases any claim or other rights which such Guarantor may now have or hereafter acquire against
Borrower or any other Person of all or any of the obligations of Guarantors hereunder that arise
from the existence or performance of such Guarantors’ obligations

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under this Guaranty or any of the other Loan Documents, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or indemnification, any right to
participate in any claim or remedy of the Credit Parties against Borrower or any other Person or
any collateral which the Credit Parties now have or hereafter acquire, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law, by any payment made
hereunder or otherwise, including, without limitation, the right to take or receive from Borrower
or any other Person, directly or indirectly, in cash or other property or by setoff or in any other
manner, payment or security on account of such claim or other rights. Guarantors understand that:
(a) Section 580d of the California Code of Civil Procedure generally prohibits a deficiency
judgment against a borrower after a non-judicial foreclosure; (b) Guarantors’ subrogation rights
may be destroyed by a non-judicial foreclosure under the Security Documents (because Guarantors may
not be able to pursue Borrower or any other Person for a deficiency judgment by reason of the
application of Section 580d of the California Code of Civil Procedure); and (c) under Union Bank
v. Gradsky, 265 Cal. App. 2nd 40 (1968), a lender may be estopped from pursuing a guarantor for a
deficiency judgment after a non-judicial foreclosure (on the theory that a guarantor should be
exonerated if a lender elects a remedy that eliminates the guarantor’s subrogation rights) absent
an explicit waiver. Without limitation on the generality of the other waivers contained in this
Guaranty, Guarantors hereby waive (1) the defense that might otherwise be available under Gradsky,
supra (or any similar judicial decision or statute) in the event the Credit Parties pursue a
non-judicial foreclosure, and (2) all rights and defenses arising out of an election of remedies by
the Credit Parties, even though that election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed the Guarantors’ rights of
subrogation and reimbursement against the principal by the operation of Section 580d of the Code of
Civil Procedure or otherwise. In addition, Guarantors waive all rights and defenses that
Guarantors may have because the Borrower’s debt is secured by real property. This means, among
other things:

               (i) The Credit Parties may collect from the Guarantors without first foreclosing on any real
or personal property collateral pledged by the Borrower or any other Person; and

               (ii) If the Credit Parties foreclose on any real property collateral pledged by the Borrower
or any other Person: (A) the amount of the debt may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale
price; and (B) the Credit Parties may collect from the Guarantors even if the Credit Parties, by
foreclosing on the real property collateral, have destroyed any right the Guarantors may have to
collect from the Borrower or any other Person. This is an unconditional and irrevocable waiver of
any rights and defenses that the Guarantors may have because the Borrower’s debt is secured by real
property. These rights and defenses include, but are not limited to, any rights or defenses based
upon Section 580a, 580b, 580d or 726 of the Code of Civil Procedure.

          (dd) to the fullest extent permitted by law, any other legal, equitable or surety defenses
whatsoever to which Guarantors might otherwise be entitled or any other circumstances which might
otherwise constitute a discharge of a Guarantor (other than indefeasible payment in full or as to a
Guarantor, a release of such Guarantor pursuant to and as provided in the Mezzanine Credit
Agreement or as approved by all of the Lenders), it being the intention that the obligations of
Guarantors hereunder are absolute, unconditional and irrevocable.

     Section 4. Action with Respect to Guarantied Obligations. The Credit Parties may, at
any time and from time to time, without the consent of, or notice to, any Guarantor, and without
discharging any Guarantor from its obligations hereunder, take any and all actions described in
Section 3 and may otherwise: (a) amend, modify, alter or supplement the terms of any of the
Guarantied Obligations, including, but not limited to, extending or shortening the time of payment
of any of the Guarantied Obligations or changing the interest rate that may accrue on any of the
Guarantied Obligations;

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(b) amend, modify, alter or supplement the Mezzanine Credit Agreement or any other Loan
Document; (c) sell, exchange, release or otherwise deal with all, or any part, of any collateral
securing any of the Obligations; (d) release any other Obligor or other Person liable in any manner
for the payment or collection of the Guarantied Obligations; (e) exercise, or refrain from
exercising, any rights against Borrower, any other Guarantor or any other Person; and (f) apply any
sum, by whomsoever paid or however realized, to the Guarantied Obligations in such order as the
Agent shall elect.

     Section 5. Representations and Warranties. Each Guarantor hereby makes to the Credit
Parties all of the representations and warranties made by the Borrower with respect to or in any
way relating to such Guarantor in the Mezzanine Credit Agreement and the other Loan Documents, as
if the same were set forth herein in full.

     Section 6. Covenants. Each Guarantor will perform and comply with all covenants
applicable to such Guarantor, or which the Borrower is required to cause such Guarantor to comply
with under the terms of the Mezzanine Credit Agreement or any of the other Loan Documents, as if
the same were more fully set forth herein.

     Section 7. Waiver. Each Guarantor, to the fullest extent permitted by Applicable Law,
hereby waives notice of acceptance hereof or any presentment, demand, protest or notice of any
kind, and any other act or thing, or omission or delay to do any other act or thing, which in any
manner or to any extent might vary the risk of such Guarantor or which otherwise might operate to
discharge such Guarantor from its obligations hereunder.

     Section 8. Reinstatement of Guarantied Obligations. If a claim is ever made on a
Credit Party for repayment or recovery of any amount or amounts received in payment or on account
of any of the Guarantied Obligations, and such Credit Party repays all or part of said amount by
reason of (a) any judgment, decree or order of any court or administrative body of competent
jurisdiction, or (b) any settlement or compromise of any such claim effected by such Credit Party
with any such claimant (including Borrower or a trustee in bankruptcy for Borrower), then and in
such event each Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding on it, notwithstanding any revocation hereof, any release herefrom, or the
cancellation of the Mezzanine Credit Agreement, any of the other Loan Documents, or any other
instrument evidencing any liability of the Borrower, and such Guarantor shall be and remain liable
to the Credit Parties for the amounts so repaid or recovered to the same extent as if such amount
had never originally been paid to such Credit Party.

     Section 9. No Contest with Credit Parties; Subordination. So long as any Guarantied
Obligation remains unpaid or undischarged, Guarantors will not, by paying any sum recoverable
hereunder (whether or not demanded by any Credit Party) or by any means or on any other ground,
claim any set-off or counterclaim against Borrower in respect of any liability of Guarantors to
Borrower or, in proceedings under federal bankruptcy law or insolvency proceedings of any nature,
prove in competition with any Credit Party in respect of any payment hereunder or be entitled to
have the benefit of any counterclaim or proof of claim or dividend or payment by or on behalf of
Borrower or the benefit of any other security for any obligation hereby guaranteed which, now or
hereafter, any Credit Party may hold or in which it may have any share. Except as expressly
provided in the Contribution Agreement, Guarantors hereby expressly waive any right of contribution
from or indemnity against Borrower, whether at law or in equity, arising from any payments made by
Guarantors pursuant to the terms of this Guaranty, and Guarantors acknowledge that Guarantors have
no right whatsoever to proceed against Borrower for reimbursement of any such payments. In
connection with the foregoing, Guarantors expressly waive any and all rights of subrogation to the
Credit Parties against Borrower, and Guarantors hereby waive any rights to enforce any remedy which
a Credit Party may have against Borrower and any rights to participate in any collateral for
Borrower’s obligations under the Loan Documents. Guarantors hereby

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subordinate any and all indebtedness of Borrower now or hereafter owed to Guarantors to all
indebtedness of Borrower to the Credit Parties, and agree with the Credit Parties that (a)
Guarantors shall not demand or accept any payment from Borrower on account of such indebtedness,
provided that, without modifying any limitations on Indebtedness in the Mezzanine Credit Agreement,
Guarantor shall be entitled to receive and retain payments of indebtedness made from Borrower to
Guarantor so long as no Default or Event of Default shall exist at the time of such payment and no
Default or Event of Default shall occur as a result of any such payment, (b) Guarantors shall not
claim any offset or other reduction of Guarantors’ obligations hereunder because of any such
indebtedness, and (c) Guarantors shall not take any action to obtain any interest in any of the
security described in and encumbered by the Loan Documents because of any such indebtedness;
provided, however, that, if a Credit Party so requests, such indebtedness shall be collected,
enforced and received by Guarantors as trustee for the Credit Parties and be paid over to the
Credit Parties on account of the indebtedness of Borrower to the Credit Parties, but without
reducing or affecting in any manner the liability of Guarantors under the other provisions of this
Guaranty except to the extent the principal amount of such outstanding indebtedness shall have been
reduced by such payment.

     Section 10. Payments Free and Clear. All sums payable by each Guarantor hereunder,
whether of principal, interest, Fees, expenses, premiums or otherwise, shall be paid in full,
without set-off or counterclaim or any deduction or withholding whatsoever (including any Taxes),
and if any Guarantor is required by Applicable Law or by a Governmental Authority to make any such
deduction or withholding, such Guarantor shall pay to the Credit Parties such additional amount as
will result in the receipt by the Credit Parties of the full amount payable hereunder had such
deduction or withholding not occurred or been required.

     Section 11. Set-off. In addition to any rights now or hereafter granted under any of
the other Loan Documents or Applicable Law and not by way of limitation of any such rights, each
Guarantor hereby authorizes the Credit Parties, at any time during the continuance of an Event of
Default, without any prior notice to such Guarantor or to any other Person, any such notice being
hereby expressly waived, but in the case of a Credit Party other than the Agent subject to receipt
of the prior written consent of the Agent exercised in its sole discretion, to set off and to
appropriate and to apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by such Credit Party or any affiliate of such Credit Party,
to or for the credit or the account of such Guarantor against and on account of any of the
Guarantied Obligations, although such obligations shall be contingent or unmatured. Promptly
following any such set-off, the Agent shall notify the applicable Guarantor thereof and of the
application of such set-off, provided that the failure to give such notice shall not invalidate
such set-off.

     Section 12. Business Failure, Bankruptcy or Insolvency. In the event of the business
failure of any Guarantor or if there shall be pending any bankruptcy or insolvency case or
proceeding with respect to any Guarantor under federal bankruptcy law or any other applicable law
or in connection with the insolvency of any Guarantor, or if a liquidator, receiver, or trustee
shall have been appointed for any Guarantor or any Guarantor’s properties or assets, the Credit
Parties may file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of such Person allowed in any proceedings relative to such
Guarantor, or any of such Guarantor’s properties or assets, and, irrespective of whether the
indebtedness or other obligations of Borrower guaranteed hereby shall then be due and payable, by
declaration or otherwise, the Credit Parties shall be entitled and empowered to file and prove a
claim for the whole amount of any sums or sums owing with respect to the indebtedness or other
obligations of Borrower guaranteed hereby, and to collect and receive any moneys or other property
payable or deliverable on any such claim. Guarantors covenant and agree that upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against Borrower, Guarantors

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shall not seek a supplemental stay or otherwise pursuant to 11 U.S.C. §105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended (the “Bankruptcy Code”), 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 the Credit Parties to enforce any rights of such Person
against Guarantors by virtue of this Guaranty or otherwise. If a Credit Party is prevented under
Applicable Law or otherwise from demanding or accelerating payment of any of the Guarantied
Obligations by reason of any automatic stay or otherwise, the Credit Parties shall be entitled to
receive from each Guarantor, upon demand therefor, the sums which otherwise would have been due had
such demand or acceleration occurred.

     Section 13. Additional Guarantors; Release of Guarantors. Section 2.18 of the
Mezzanine Credit Agreement provides that certain Subsidiaries must become Guarantors by, among
other things, executing and delivering to Agent a Joinder Agreement. Any Subsidiary which executes
and delivers to the Agent a Joinder Agreement shall be a Guarantor for all purposes hereunder.
Under certain circumstances described in Section 7.12 of the Mezzanine Credit Agreement, certain
Subsidiaries may obtain from the Agent a written release from this Guaranty pursuant to the
provisions of such section, and upon obtaining such written release, any such Subsidiary shall no
longer be a Guarantor hereunder. Each other Guarantor consents and agrees to any such release and
agrees that no such release shall affect its obligations hereunder.

     Section 14. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of the financial condition of the Borrower and the other Guarantors, and of
all other circumstances bearing upon the risk of nonpayment of any of the Guarantied Obligations
and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Credit Parties shall have any duty whatsoever to advise any Guarantor of
information regarding such circumstances or risks.

     Section 15. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE.

     Section 16. WAIVER OF JURY TRIAL.

          (a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY
GUARANTOR, THE AGENT OR ANY OTHER CREDIT PARTY WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF
LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE CREDIT PARTIES AND EACH GUARANTOR HEREBY WAIVES ITS RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN
WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN
OR AMONG THE BORROWER, THE AGENT OR ANY OTHER CREDIT PARTY OF ANY KIND OR NATURE.

          (b) EACH OF THE GUARANTORS, THE AGENT AND EACH OTHER CREDIT PARTY HEREBY AGREES THAT THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, ATLANTA DIVISION OR, AT THE
OPTION OF THE AGENT, ANY STATE COURT LOCATED IN ATLANTA, GEORGIA, SHALL HAVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG ANY GUARANTOR, THE AGENT OR ANY OTHER CREDIT
PARTY, PERTAINING

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DIRECTLY OR INDIRECTLY TO THIS GUARANTY, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO
ANY MATTER ARISING HEREFROM OR THEREFROM. EACH GUARANTOR AND EACH CREDIT PARTY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.
EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH
IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE AGENT OR ANY
OTHER CREDIT PARTY OR THE ENFORCEMENT BY THE AGENT OR ANY OTHER CREDIT PARTY OF ANY JUDGMENT
OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

          (c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY AFTER CONSULTATION WITH
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE
PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS AND
THE TERMINATION OF THIS GUARANTY.

     Section 17. Loan Accounts. Each Credit Party may maintain books and accounts setting
forth the amounts of principal, interest and other sums paid and payable with respect to the
Guarantied Obligations, and in the case of any dispute relating to any of the outstanding amount,
payment or receipt of any of the Guarantied Obligations or otherwise, the entries in such books and
accounts shall be deemed prima facie evidence of the amounts and other matters set forth herein.
The failure of a Credit Party to maintain such books and accounts shall not in any way relieve or
discharge any Guarantor of any of its obligations hereunder.

     Section 18. Waiver of Remedies. No delay or failure on the part of a Credit Party in
the exercise of any right or remedy it may have against any Guarantor hereunder or otherwise shall
operate as a waiver thereof, and no single or partial exercise by a Credit Party of any such right
or remedy shall preclude any other or further exercise thereof or the exercise of any other such
right or remedy.

     Section 19. Termination. This Guaranty shall remain in full force and effect until
indefeasible payment in full of the Guarantied Obligations, the cancellation of all other
Obligations and the termination or cancellation of the Mezzanine Credit Agreement in accordance
with its terms.

     Section 20. Successors and Assigns. Each reference herein to the Agent or the other
Credit Parties shall be deemed to include such Person’s respective successors and assigns in whose
favor the provisions of this Guaranty also shall inure, and each reference herein to each Guarantor
shall be deemed to include such Guarantor’s permitted successors and assigns, upon whom this
Guaranty also shall be binding. The Lenders may, in accordance with the applicable provisions of
the Mezzanine Credit Agreement, assign, transfer or sell any Guarantied Obligation, or grant or
sell participations in any Guarantied Obligations, to any Person without the consent of, or notice
to, any Guarantor and without releasing, discharging or modifying any Guarantor’s obligations
hereunder. Each Guarantor hereby consents to the delivery by the Agent or any Lender to any
Assignee or Participant (or any prospective Assignee or Participant) of any financial or other
information regarding the Borrower or any Guarantor. No Guarantor may assign or transfer its
obligations hereunder to any Person without the prior written consent of all Lenders and any such
assignment or other transfer to which all of the Lenders have not so consented shall be null and
void.

9

 

     Section 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE GUARANTORS
HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE
FOR THE FULL AMOUNT OF THE “GUARANTIED OBLIGATIONS” AND ALL OF THE OBLIGATIONS AND LIABILITIES OF
EACH OF THE OTHER GUARANTORS HEREUNDER.

     Section 22. Amendments. This Guaranty may not be amended except in writing signed by
the Requisite Lenders (or all of the Lenders if required under the terms of the Mezzanine Credit
Agreement), the Agent and each Guarantor.

     Section 23. Payments. All payments to be made by any Guarantor pursuant to this
Guaranty shall be made in Dollars, in immediately available funds to the Agent at the Principal
Office, not later than 2:00 p.m. on the date of demand therefor.

     Section 24. Notices. All notices, requests and other communications hereunder shall
be in writing (including facsimile transmission or similar writing) and shall be given (a) to each
Guarantor at its address set forth below its signature hereto, (b) to the Agent or any Lender, at
its respective address for notices provided for in the Mezzanine Credit Agreement, or (c) as to
each such party at such other address as such party shall designate in a written notice to the
other parties. Each such notice, request or other communication shall be effective (i) if mailed,
when received; (ii) if telecopied, when transmitted; or (iii) if hand delivered, when delivered;
provided, however, that any notice of a change of address for notices shall not be
effective until received.

     Section 25. Severability. In case any provision of this Guaranty shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     Section 26. Headings. Section headings used in this Guaranty are for convenience only
and shall not affect the construction of this Guaranty.

     Section 27. Limitation of Liability. Neither the Agent, any other Credit Party nor
any affiliate, officer, director, employee, attorney, or agent of such Persons, shall have any
liability with respect to, and each Guarantor hereby waives, releases, and agrees not to sue any of
them upon, any claim for any special, indirect, incidental, or consequential damages suffered or
incurred by a Guarantor in connection with, arising out of, or in any way related to, this Guaranty
or any of the other Loan Documents, or any of the transactions contemplated by this Guaranty, the
Mezzanine Credit Agreement or any of the other Loan Documents. Each Guarantor hereby waives,
releases, and agrees not to sue the Agent, any other Credit Party or any of such Person’s
affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of
any claim in connection with, arising out of, or in any way related to, this Guaranty, the
Mezzanine Credit Agreement or any of the other Loan Documents, or any of the transactions
contemplated by Mezzanine Credit Agreement or financed thereby.

     Section 28. Definitions. Capitalized terms used herein that are not otherwise defined
herein shall have the meanings given them in the Mezzanine Credit Agreement.

[Signatures Begin on Next Page]

10

 

     IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty (Mezzanine
Loan) under seal as of the date and year first written above.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NNN APARTMENT REIT, INC., a Maryland corporation	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Stanley J. Olander, Jr.	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Stanley J. Olander, Jr.	 	 
	 	 	Title:	 	CEO	 	 
	 	 	 	 	[SEAL]
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	APARTMENT REIT WALKER RANCH, LP, a Texas

 limited
partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	APARTMENT REIT WALKER RANCH GP, LLC, a

 Delaware limited liability company, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	NNN APARTMENT REIT HOLDINGS, L.P., a	 	 
	 	 	 	 	 	 	Virginia limited partnership, its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	NNN APARTMENT REIT, INC., a
Maryland corporation, its General
Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:

Name:
	 	/s/ Stanley J. Olander, Jr.
 

Stanley J. Olander, Jr.
	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	CEO	 	 
	 

	 	 	 	 	 	 	 	 	 	[SEAL]	 	 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	APARTMENT REIT WALKER RANCH GP, LLC, 

a Delaware
limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	NNN APARTMENT REIT HOLDINGS, L.P., a Virginia
limited partnership, its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	NNN APARTMENT REIT, INC., a Maryland
corporation, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:

Name:
	 	/s/ Stanley J. Olander, Jr.
 

Stanley J. Olander, Jr.
	 	 
	 

	 	 	 	 	 	Title:
	 	CEO	 	 
	 

	 	 	 	 	 	 	 	[SEAL]	 	 

11exv10w19

 

EXHIBIT 10.19

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY
OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC
RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

SECOND ASSIGNMENT OF LEASES AND RENTS

     THIS SECOND ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to as this “Assignment”), is
made and entered into as of the _31st___ day of ___October___, 2006, by [NAME OF
ASSIGNOR], a Texas limited partnership (“Assignor”) to WACHOVIA BANK, NATIONAL ASSOCIATION, a
national banking association (“Wachovia”), as Agent for itself and the other Banks from time to
time party to the Mezzanine Credit Agreement (as hereinafter defined) (Wachovia, in its capacity as
Agent, hereinafter referred to as “Agent”).

W I T N E S S E T H:

     THAT FOR AND IN CONSIDERATION of the sum of Ten and No/100 Dollars ($10.00) and other good and
valuable considerations, the receipt and sufficiency whereof are hereby acknowledged, and in order
to secure the Obligations as defined herein, Assignor does hereby presently, irrevocably and
unconditionally grant, transfer and assign to Agent, its successors, successors-in-title and
assigns, all of Assignor’s right, title and interest in, to and under any and all leases,
tenancies, agreements or licenses, written or oral, now existing or hereafter entered into by
Assignor as “landlord”, “lessor” or “licensor”, for the use or occupancy of all or any portion of
the property (hereinafter referred to as the “Property”) located at Bexar County, Texas, more
particularly described in Exhibit A attached hereto and by this reference made a part
hereof, including any and all extensions, renewals, amendments and modifications thereof and
guaranties of or letters of credit relating to the performance or obligations of any tenants,
lessees or licensees thereunder (such leases, tenancies, agreements and licenses are hereinafter
referred to collectively as the “Leases,” and such tenants, lessees and licensees are hereinafter
referred to collectively as “Tenants” or individually as a “Tenant” as the context requires),
together with any and all security, damage and lease deposits, all of Assignor’s right, title and
interest in and to all revenues, lease termination payments, royalties, rights or benefits of every
nature arising from the possession, use, enjoyment or operation of the Property and all rents,
issues, income and profits from the Leases and from the Property. This Assignment constitutes a
present and absolute assignment of leases and rents, subject only to Assignor’s rights under
Paragraph 1.03(a) hereof.

     TO HAVE AND TO HOLD unto Agent, its successors and assigns forever, subject to and upon the
terms and conditions set forth herein.

     This Assignment is made for the purpose of securing the full and prompt payment and
performance when due, whether by acceleration or otherwise, with such interest as may accrue
thereon, either before or after maturity thereof, of the Notes and the other Obligations, all as
defined below.

 

 

     As further security for the Obligations and the full and prompt payment and performance of any
and all duties of Assignors to Agent under the Security Documents, Assignor hereby assigns to Agent
any awards or payments which may be made in respect of Assignor’s interest in any of the Leases in
any bankruptcy, insolvency or reorganization proceedings in any state or federal court. From and
after the occurrence and during the continuance of an Event of Default, Assignor hereby appoints
Agent as its attorney-in-fact to appear in any such proceeding and/or to collect any such award or
payment.

ARTICLE I

WARRANTIES AND COVENANTS

     1.01 Representations and Warranties of Assignor. Assignor hereby represents and
warrants as follows as of the date hereof:

          (a) Assignor is the sole and absolute owner of the entire landlord’s or lessor’s interest in
the Leases and such rents, issues and profits.

          (b) Assignor has made no prior assignment of any of the Leases or with respect to any of such
rents, issues or profits, other than pursuant to the Senior Deed of Trust and the Senior Assignment
of Leases and Rents.

          (c) Assignor has neither done any act nor omitted to do any act which might prevent Agent
from, or limit Agent in, acting under any of the provisions of this Assignment.

          (d) Neither the execution and delivery of this Assignment or any of the Leases, the
performance of each and every covenant of Assignor under this Assignment and the Leases, nor the
meeting of each and every condition contained in this Assignment, conflicts with, or constitutes a
breach or default under, any agreement, indenture or other instrument to which Assignor is a party
or by which Assignor is bound, or any law, ordinance, administrative regulation or court decree
which is applicable to Assignor.

          (e) No action has been brought or, so far as is known to Assignor, is threatened, which would
interfere in any way with the right of Assignor to execute this Assignment and perform all of
Assignor’s obligations contained in this Assignment and in the Leases.

          (f) All Leases existing as of the date of this Assignment are listed and described on the rent
roll delivered by Assignor to Agent on or about the date hereof (the “Rent Roll”). No Tenant under
any Lease is entitled to any free rent, partial rent, rebate of rent payments, credit, offset or
deduction in rent, including, without limitation, lease support payments or lease buy-outs, except
as reflected in the Rent Roll. No property other than the Property which is the subject of the
applicable Lease is necessary to comply with the requirements (including, without limitation,
parking requirements) contained in such Lease. The Leases represent the entire agreement between
Assignor and the Tenants with respect to the Leased Premises.

2

 

          (g) The Leases existing as of the date of this Assignment and listed and described on the Rent
Roll were, to the knowledge of Assignor, duly executed and delivered by each Tenant pursuant to
authority legally adequate therefor, are now in full force and effect, and are the legal, valid and
binding obligations of such Assignor, and to the knowledge of Assignor, the Tenants, enforceable in
accordance with their terms, and, except as disclosed in writing to Agent, no condition exists,
which with the passage of time or the giving of notice, or both, could give rise to any right or
option by any Tenant to terminate its Lease.

          (h) Except as set forth on the Rent Roll, no default exists on the part of Assignor in the
fulfillment, performance or observance of any of the terms, conditions or covenants of landlord or
lessor contained in any of the Leases, and, to the best of Assignor’s knowledge, except as set
forth on the Rent Roll, no default exists on the part of any Tenant in the fulfillment, performance
or observance of any of the terms, conditions or covenants of tenant or lessee contained in any of
the Leases.

          (i) Except as set forth on the Rent Roll, nothing contained in any Lease violates any other
Lease or any other agreement, covenant or, to the knowledge of Assignor, any governmental
requirement affecting the Property.

     1.02 Covenants of Assignor. Assignor hereby covenants and agrees as follows:

          (a) Except as permitted in the Mezzanine Credit Agreement or the Security Instrument, Assignor
shall (i) fulfill, perform and observe each and every material term, condition and covenant of
landlord or lessor contained in each of the Leases; (ii) at no cost or expense to Agent, enforce,
short of termination, the performance and observance of each and every material term, condition and
covenant of each of the Leases to be performed or observed by the Tenant thereunder; and (iii)
appear in and defend any action arising out of, or in any manner connected with, any of the Leases,
or the obligations or liabilities of such Assignor as the landlord or lessor thereunder, or of the
Tenant or any guarantor thereunder.

          (b) Assignor shall not, without the prior written consent of Agent, (i) permit the prepayment
of any rents under any of the Leases for more than one (1) month prior to the accrual thereof; or
(ii) assign its interest in, to or under any of the Leases or the rents, issues, income and profits
from any of the Leases or from the Property to any person or entity other than Agent.

          (c) Except as otherwise permitted in the Mezzanine Credit Agreement, Assignor shall not,
without the prior written consent of Agent (i) enter into any new Lease of all or any part of the
Property; (ii) amend or modify any Lease; (iii) terminate the term or accept the surrender of any
of the Leases; (iv) waive or release the Tenant from the performance or observation by the Tenant
of any material obligation or condition of any of the Leases; (v) agree to subordinate any of the
Leases to any mortgage or other encumbrance; or (vi) in the event any bankruptcy, insolvency or
other debtor relief proceeding shall be instituted by or against any Tenant, settle any claims
which Assignor may have against such Tenant.

3

 

          (d) Assignor shall take no action which will cause or permit the estate of the Tenant under
any of the Leases to merge with the interest of Assignor in the Property or any portion thereof.

          (e) Assignor does hereby authorize and empower Agent, upon the occurrence and during the
continuance of an Event of Default, to collect all rents, issues, income and profits arising or
accruing under the Leases or from the Property as they become due, whether or not the Agent shall
have made entry or become a mortgagee-in-possession pursuant to the Security Instrument, and upon
the occurrence and during the continuance of an Event of Default does hereby irrevocably authorize
and direct, each and every present and future Tenant of the whole or any part of the Property, upon
receipt of written notice from Agent, to pay all rents, issues, income and profits thereafter
arising or accruing under the Leases or from the Property to Agent and to continue to do so until
otherwise notified by Agent, and Assignor agrees that each and every Tenant shall have the right to
rely upon such notice by Agent without any obligation or right to inquire as to whether any Event
of Default exists and notwithstanding any notice or claim of Assignor to the contrary, and that
Assignor shall have no right or claim against any Tenant for any rents or other amounts paid by
such Tenant to Agent following receipt of such notice.

          (f) Assignor will permit any officer designated by Agent, at Assignor’s expense, to visit and
inspect any of the properties of Assignor, to examine the records and books of account from time to
time as requested but only during normal business hours of Assignor (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts of Assignor with, and to be
advised as to the same by, its officers, all at such reasonable times and intervals Agent may
reasonably request. Agent shall use good faith efforts to coordinate such visits and inspections
so as to minimize the interference with and disruption to the normal business operations of
Assignor. From and after the occurrence of an Event of Default which is continuing, Assignor shall
bear the costs and expenses incurred by Agent or its representatives in conducting such visits or
inspections.

     1.03 Covenants of Agent. Agent hereby covenants and agrees with Assignor as follows:

          (a) This Assignment constitutes a present, current and absolute assignment of all Leases and
all rents, issues, income and profits from the Property, provided, that so long as no Event
of Default has occurred, Agent shall not demand that such rents, issues, income and profits be paid
directly to Agent, and Assignor shall have a license (revocable upon the occurrence of an Event of
Default) to collect, but no more than one (1) month prior to accrual, all such rents, issues,
income and profits from the Property (including, but not by way of limitation, all rents payable
under the Leases), further provided, however, that Assignor shall collect and receive all
such rents, issues, income and profits from the Property for the account of Agent, and shall apply
such rents, issues, income and profits so collected to the Obligations, to the extent then due and
payable, then to the payment of normal and customary operating expenses of the Property then due
and payable, with the balance, so long as no Event of Default has occurred, to the account of
Assignor.

4

 

          (b) Except as otherwise provided in the Mezzanine Credit Agreement, upon the payment in full
of the Obligations, as evidenced by the recording or filing of an instrument of satisfaction or
full release of the Security Instrument without the recording of another security instrument in
favor of Agent affecting the Property, this Assignment shall be terminated and released in fact and
of record by Agent and shall thereupon be of no further force or effect.

          (c) Assignor and Agent are each represented by competent counsel and are aware of the legal
effects of this Assignment. This Assignment is intended by Assignor and Agent to create, and shall
be construed to create, an absolute assignment to Agent and not an assignment as security for the
performance of the obligation evidenced by the Security Documents or any other indebtedness of
Assignor. It is further the intent of Assignor and Agent hereunder that the rents hereby
absolutely assigned are no longer, during the term of this Assignment, property of Assignor or
property of any estate of Assignor as defined by 11 U.S.C. Section 541, and shall not constitute
collateral, cash or otherwise, of Assignor. The term “rents” as used herein shall mean the gross
capital rents without deduction or offset of any kind.

ARTICLE II

DEFAULT

     2.01 Event of Default. Upon the occurrence and during the continuance of an Event of
Default, Agent may exercise any and all remedies provided in Paragraph 2.02 of this Assignment,
under the Security Instrument, under the Mezzanine Credit Agreement and under any and all other
instruments and documents providing security for the Obligations, or any other remedies available
under applicable law or any one or more of such remedies.

     2.02 Remedies. Upon the occurrence and during the continuance of any Event of
Default, Agent may at its option, with or without notice or demand of any kind (except as may be
provided herein or in any of the Security Documents), and without waiving such Event of Default,
exercise any or all of the following rights and remedies.

          (a) Declare any part or all of the Obligations to be immediately due and payable, whereupon
the same shall be become immediately due and payable.

          (b) Either with or without entry or taking possession of the Property, give or require
Assignor to give notice to any or all Tenants under the Leases authorizing and directing such
Tenants under the Leases to pay all rents, issues, income and profits and any other sums due under
their Leases directly to Agent, whether or not Agent shall have made entry or become a mortgagee in
possession pursuant to the Security Instrument, and collect and receive all rents, issues, income
and profits and other sums due under the Leases with respect to which such notice is given.
Assignor hereby irrevocably appoints Agent as its true and lawful agent and attorney-in-fact for
the purpose of endorsing notes, drafts, money orders and other evidence of payment of rents,
issues, income and profits and any other sums due under the Leases, which power of attorney is
irrevocable and coupled with an interest.

          (c) Either with or without entry or taking possession of the Property, perform any and all
obligations of Assignor under any or all of the Leases or this Assignment and

5

 

exercise any and all rights of Assignor herein or therein as fully as Assignor itself could
do, including, without limiting the generality of the foregoing, enforcing, modifying, extending or
terminating any or all of the Leases, collecting, modifying, compromising, waiving or increasing
any or all of the rents payable thereunder, and obtaining new Tenants and entering into new Leases
on the Property on any terms and conditions deemed desirable by Agent, and, to the extent Agent
shall incur any costs in connection with the performance of any such obligations of Assignor,
including reasonable attorneys’ fees and costs of litigation, then all such reasonable costs shall
become a part of the Obligations, shall bear interest from the incurring thereof at the
Post-Default Rate (but in no event shall the interest payable exceed the maximum amount allowed by
law), and shall be due and payable on demand.

          (d) Either with or without entry or taking possession of the Property, in Assignor’s or
Agent’s name, institute any legal or equitable action which Agent in its sole discretion deems
desirable to collect and receive any or all of the rents, issues, income and profits assigned
herein or to evict or remove any Tenants.

          (e) Enter upon, take possession of, and use and operate all or any portion of the Property
which Agent in its sole discretion deems desirable to effectuate any or all of the foregoing
remedies, with full power to make alterations, renovations, repairs or replacements thereto.

Agent shall have the full right to exercise any or all of the foregoing remedies and rights and
without regard to the adequacy of security for any or all of the Obligations, and with or without
the commencement of any legal or equitable action or the appointment of any receiver or trustee.

     2.03 Application of Rents. All rents, issues, income and profits and any other sums
due under the Leases and with respect to the Property which are collected by Agent shall be applied
by Agent in such order as Agent in its sole discretion may elect against: (i) all reasonable costs
and expenses, including reasonable attorneys’ fees, incurred in connection with the operation of
the Property, the performance of Assignor’s obligations under the Leases or the collection of the
rents thereunder; (ii) all reasonable costs and expenses, including reasonable attorneys’ fees,
incurred in the collection of any or all of the Obligations, including all costs, expenses and
attorneys’ fees incurred in seeking to realize on or to protect or preserve Agent’s interest in any
other collateral securing any or all of the Obligations; and (iii) any or all unpaid principal of,
and interest on, the Obligations; with any remainder to Assignor.

     2.04 No Liability of Agent. Agent shall not be obligated to perform or discharge, nor
does Agent hereby undertake to perform or discharge, any obligation, duty or liability of Assignor
under any of the Leases or under or by reason of this Assignment, except those arising after Agent
takes possession of the Property after an Event of Default. Prior to Agent’s taking possession of
the Property after an Event of Default, this Assignment shall not operate to place upon Agent
responsibility for the control, care, management or repair of the Property, nor for the carrying
out of any of the terms and conditions of any of the Leases, nor shall it operate to make Agent
responsible or liable for any waste committed on the Property, for any dangerous or defective
condition of the Property, or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any person. Agent shall not be liable for any
loss sustained by Assignor resulting from Agent’s failure to let the Property after

6

 

taking possession of the Property after an Event of Default, unless such loss is caused by the
willful misconduct or gross negligence of Agent.

     2.05 Indemnification. Assignor shall and does hereby agree to indemnify and to hold
Agent and the Banks harmless from and against any and all costs, expenses, claims, demands,
liability, loss or damage (including all costs, expenses, and attorneys’ fees incurred in the
defense thereof) actually asserted against, imposed on or incurred by Agent or the Banks in
connection with or as a result of this Assignment or the exercise of any rights or remedies under
this Assignment or under any of the Leases or by reason of any alleged obligations or undertakings
of Agent or the Banks to perform or discharge any of the terms, covenants or agreements contained
in any of the Leases; provided, however, that nothing herein shall be construed to obligate
Assignor to indemnify and hold Agent or the Banks harmless from and against any and all costs,
expenses, claims, demands, liability, loss or damage asserted against, imposed on or incurred by
Agent or the Banks by reason of Agent’s or such Bank’s willful misconduct or gross negligence.
Should Agent or a Bank incur any such costs, expenses, liabilities, loss or damage for which it is
to be indemnified by Assignor as aforesaid, the amount thereof shall be added to the Obligations,
shall bear interest at the interest rate for overdue amounts stated in the Mezzanine Credit
Agreement from the date incurred until paid (but in no event shall the interest payable exceed the
maximum amount allowed by law), shall be secured by this Assignment, the Security Instrument and
the other Security Documents, and shall be payable immediately upon demand. ASSIGNOR AGREES THAT
THE INDEMNIFICATION OF AGENT BY ASSIGNOR SET FORTH IN THIS PARAGRAPH 2.05 INCLUDES INDEMNIFICATION
IN THE EVENT OF ORDINARY NEGLIGENCE ON THE PART OF AGENT BUT DOES NOT INCLUDE INDEMNIFICATION OF
AGENT FOR AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

ARTICLE III

DEFINITIONS

     Terms used herein and not defined herein shall have the meanings as set forth in the Mezzanine
Credit Agreement.

     The following terms as used herein shall have the following meanings:

     “Agent” shall mean Wachovia Bank, National Association and its successors and assigns,
as Agent for itself and the other lenders from time to time party to the Mezzanine Credit
Agreement.

     “Assignment” shall mean this Second Assignment of Leases and Rents between Assignor
and Agent.

     “Mezzanine Credit Agreement” shall mean the Mezzanine Credit Agreement dated as of
                    , 2006, by and among NNN Apartment REIT Holdings, L.P., a Virginia limited partnership
(the “Borrower”), Agent, Wachovia, the other lenders which are parties thereto, and such other
lenders as may from time to time become parties thereto, as originally executed, or if

7

 

varied, extended, supplemented, consolidated, amended or restated from time to time as so
varied, extended, supplemented, consolidated, amended or restated.

     “Default” shall mean any event which, with the giving of notice or the lapse of time,
or both, would become an Event of Default.

     “Event of Default” shall mean (a) any “Event of Default” under and as defined in the
Security Instrument or the Mezzanine Credit Agreement, or (b) any default in the performance of the
obligations of Assignor hereunder which is not cured within thirty (30) days following receipt by
Assignor of written notice of such default, or (c) any representation or warranty of Assignor in
this Assignment proving to have been false or incorrect in any material respect upon the date when
made or deemed to be made or repeated, or (d) any default in the performance of the obligations of
Assignor under any of the Security Documents beyond the expiration of any applicable notice and
cure period.

     “Notes” shall collectively mean (i) those certain Notes made or to be made by the
Borrower to the Banks in the aggregate principal amount of up to Fifteen Million and No/100 Dollars
($15,000,000.00), and (ii) each other note as may be issued under the Mezzanine Credit Agreement,
each as originally executed or if varied, extended, supplemented, consolidated, amended, replaced,
renewed, modified or restated from time to time as so varied, extended, supplemented, consolidated,
amended, replaced, renewed, modified or restated.

     “Obligations” shall mean:

          (a) The debt evidenced by the Notes together with interest as therein provided;

          (b) The full and prompt payment and performance by Borrower of all of the provisions,
agreements, covenants and obligations contained in the Mezzanine Credit Agreement;

          (c) The full and prompt payment and performance by Guarantors of all of the provisions,
agreements, covenants and obligations contained in the Guaranty;

          (d) The full and prompt payment and performance of all of the provisions, agreements,
covenants and obligations herein contained and contained in any other of the Loan Documents or the
Security Documents, and the payment of all other sums therein covenanted to be paid; and

          (e) Any and all additional advances made by Agent as provided in the Security Instrument.

     “Security Documents” shall mean the Security Instrument (as hereinafter defined), this
Assignment, the Mezzanine Credit Agreement, the Guaranty and the UCC-1 financing statements
executed and delivered with respect to the Property and any and all other documents or instruments
now or hereafter securing the Obligations.

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     “Security Instrument” shall mean the Second Deed of Trust, Security Agreement and
Fixture Filing dated as of ___October 31_, 2006_, executed by Assignor to ___John M. Nolan_, as
trustee, for the benefit of Agent pursuant to which Assignor has conveyed the Property as security
for the Obligations.

     “Senior Assignment of Leases and Rents” shall mean the Assignment of Leases and Rents
dated _October 31_, 2006, executed by the Assignor, for the benefit of Wachovia, in its capacity as
agent for itself and the other “Lenders” referred to therein.

     “Senior Deed of Trust” shall have the meaning assigned to that term in the Security
Instruments.

ARTICLE IV

GENERAL PROVISIONS

     4.01 Successors and Assigns. This Assignment shall inure to the benefit of and be
binding upon Assignor and Agent and their respective heirs, executors, legal representatives,
successor and assigns to the extent only permitted under the Mezzanine Credit Agreement (but in the
case of assigns of Assignor, only if and to the extent that Agent has consented in writing to
Assignor’s assignment of its rights or obligations hereunder to such assigns). Whenever a
reference is made in this Assignment to “Assignor” or “Agent”, such reference shall be deemed to
include a reference to the heirs, executors, legal representatives, successors and assigns of
Assignor or Agent.

     4.02 Agent’s Rights of Assignment; Rights of Assignees. Agent may assign to any
subsequent holder of the Notes or the Security Instrument, or to any person acquiring title to the
Property, all of Agent’s right, title and interest in any of the Leases and rents, issues, income
and profits from the Property. No such assignee shall have any liability for any obligation which
accrued under any of the Leases prior to the assignment to such assignee nor shall any such
assignee have any obligation to account to Assignor for any rental payments which accrued prior to
such assignment unless actually received by such assignee. After Assignor’s right, title and
interest in the Property has been foreclosed or otherwise terminated, no assignee of Assignor’s
interest in the Leases shall be liable to account to Assignor for any rents, issues, income or
profits thereafter accruing.

     4.03 Terminology. All personal pronouns used in this Assignment, whether used in the
masculine, feminine or neuter gender, shall include all other genders, and the singular shall
include the plural, and vice versa. Titles of Articles are for convenience only and neither limit
nor amplify the provisions of this Assignment.

     4.04 Severability. If any provision of this Assignment or the application thereof to
any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this
Assignment and the application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.

     4.05 Applicable Law. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF TEXAS.

9

 

     4.06 No Third Party Beneficiaries. This Assignment is made solely for the benefit of
Agent and its assigns. No Tenant under any of the Leases nor any other person shall have standing
to bring any action against Agent as the result of this Assignment, or to assume that Agent will
exercise any remedies provided herein, and no person other than Agent shall under any circumstances
be deemed to be a beneficiary of any provision of this Assignment.

     4.07 No Oral Modifications. Neither this Assignment nor any provisions hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or termination is sought.

     4.08 Cumulative Remedies. The remedies herein provided shall be in addition to and
not in substitution for the rights and remedies vested in Agent in any of the Security Documents or
at law or in equity, all of which rights and remedies are specifically reserved by Agent. The
remedies herein provided or otherwise available to Agent shall be cumulative and may be exercised
concurrently. The failure to exercise any of the remedies herein provided shall not constitute a
waiver thereof, nor shall use of any of the remedies herein provided prevent the subsequent or
concurrent resort to any other remedy or remedies. It is intended that this clause shall be
broadly construed so that all remedies herein provided or otherwise available to Agent shall
continue and be each and all available to Agent until the Obligations shall have been paid in full.

     4.09 Cross-Default. An Event of Default by Assignor under this Assignment shall
constitute an “Event of Default” under the Security Documents.

     4.10 Counterparts. This Assignment may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any of the parties or
signatories hereto may execute this Assignment by signing any such counterpart.

     4.11 Further Assurance. At any time and from time to time, upon request by Agent,
Assignor will make, execute and deliver, or cause to be made, executed and delivered, to Agent and,
where appropriate, cause to be recorded and/or filed and from time to time thereafter to be
re-recorded and/or refiled at such time and in such offices and places as shall be deemed desirable
by Agent in its reasonable judgment, any and all such other and further assignments, deeds to
secure debt, mortgages, deeds of trust, security agreements, financing statements, continuation
statements, instruments of further assurance, certificates and other documents as may, in the
reasonable opinion of Agent, be necessary in order to effectuate, complete, or perfect, or to
continue and preserve (a) the obligations of Assignor under this Assignment and (b) the security
interest created by this Assignment as a first and prior security interest upon the Leases and the
rents, issues, income and profits from the Property, subject to the prior lien of the Senior Deed
of Trust and the Senior Assignment of Leases and Rents. Upon any failure by Assignor so to do,
Agent may make, execute, record, file, re-record and/or refile any and all such assignments, deeds
to secure debt, mortgages, deeds of trust, security agreements, instruments, certificates, and
documents for and in the name of Assignor, and Assignor hereby irrevocably appoints Agent the agent
and attorney-in-fact of Assignor so to do.

10

 

     4.12 Notices. Except for any statutory notices required prior to exercise of the
remedies provided herein, which must be delivered in accordance with such statutes, all notices,
requests and other communications hereunder shall be made and delivered in the manner provided in
the Security Instrument.

     4.13 Modifications, Etc. Assignor hereby consents and agrees that Agent may at any
time and from time to time, without notice to or further consent from Assignor, either with or
without consideration, surrender any property or other security of any kind or nature whatsoever
held by it or by any person, firm or corporation on its behalf or for its account, securing the
Obligations; substitute for any collateral so held by it, other collateral of like kind; agree to
modification of the terms of the Mezzanine Credit Agreement or any of the other Security Documents
or Loan Documents; extend or renew the Notes, the Mezzanine Credit Agreement or any of the other
Security Documents or Loan Documents for any period; grant releases, compromises and indulgences
with respect to the Notes, the Mezzanine Credit Agreement or any of the other Security Documents or
Loan Documents for any period; grant releases, compromises and indulgences with respect to the
Notes, the Mezzanine Credit Agreement or any of the other Security Documents or Loan Documents to
any persons or entities now or hereafter liable thereunder or hereunder; release any guarantor or
endorser of the Notes, the Security Instrument, the Mezzanine Credit Agreement, or any other
Security Documents or Loan Documents; or take or fail to take any action of any type whatsoever;
and no such action which Agent shall take or fail to take in connection with the Security Documents
or Loan Documents, or any of them, or any security for the payment of the Obligations or for the
performance of any obligations or undertakings of Assignor, nor any course of dealing with Assignor
or any other person, shall release Assignor’s obligations hereunder, affect this Assignment in any
way or afford Assignor any recourse against Agent. The provisions of this Assignment shall extend
and be applicable to all renewals, amendments, extensions, consolidations and modifications of the
Loan Documents and the Leases, and any and all references herein to the Security Documents or the
Leases shall be deemed to include any such renewals, amendments, extensions, consolidations or
modifications thereof.

     4.14 Interpretation. Any provision in the Mezzanine Credit Agreement or the Security
Instrument that pertains to this Assignment shall be deemed to be incorporated herein as if such
provision were fully set forth in this Assignment. In the event of any conflict between the terms
of this Assignment and the terms of the Mezzanine Credit Agreement, the terms of the Mezzanine
Credit Agreement shall prevail. In the event of any conflict between the terms of this Assignment
and the Security Instrument, the terms of the Security Instrument shall prevail. A provision in
this Assignment shall not be deemed to be inconsistent with the Mezzanine Credit Agreement or the
Security Instrument by reason of the fact that no provision in the Mezzanine Credit Agreement or
the Security Instrument covers such provision in this Assignment.

     4.15 Prior Assignment of Leases and Rents. This Assignment is subject and subordinate
to the Senior Assignment of Leases and Rents.

11

 

     IN WITNESS WHEREOF, Assignor has executed this Assignment under seal as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ASSIGNOR:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	APARTMENT REIT WALKER RANCH, LP, a Texas limited
partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	APARTMENT REIT WALKER RANCH GP, LLC, a	 	 
	 	 	 	 	Delaware limited liability company, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	NNN APARTMENT REIT HOLDINGS, L.P., a	 	 
	 	 	 	 	 	 	Virginia limited partnership, its Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	NNN APARTMENT REIT,
INC., a 

Maryland corporation, its General
Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:

Name:
	 	/s/ Stanley J. Olander
 

Stanley J. Olander, Jr.
	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	CEO	 	 
	 
	 

	 	 	 	 	 	 	 	 	 	[CORPORATE SEAL]	 	 

[Signature
Page to Mezzanine Assignment of Leases and Rents — Wachovia/NNN
October 2006]

12

 

STATE OF VIRGINIA               )

COUNTY OF
 [ILLEGIBLE]      )

     This
instrument was acknowledged before me on October 27, 2006, by S J Olander the CEO of NNN Apartment REIT, Inc., a Maryland corporation, on behalf
of said corporation as the General Partner of NNN Apartment REIT Holdings, L.P., a Virginia limited partnership, on behalf of such limited partnership as
the Manager of Apartment REIT Walker Ranch GP, LLC, a Delaware
limited liability company as the General Partner of APARTMENT REIT WALKER RANCH, LP, a Texas limited partnership.

	 	 	 	 	 
	 

	 	/s/ [ILLEGIBLE]
 

Notary Public, in and for
	 	 
	 
	 	 	 	 
	(SEAL)

	 	THE STATE OF VIRGINIA	 	 
	 
	 	 	 	 
	 

	 	My Commission Expires: 6/30/10	 	 

[Signature
Page to Mezzanine Assignment of Leases and Rents — Wachovia/NNN
October 2006]

13

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