Document:

Exhibit 10.2

AMENDMENT TO
CHANGE OF CONTROL AGREEMENT

Now,
on this 13th day of November 2006, the Change of Control Agreement dated
September 8, 2006, between International Aluminum Corporation, a California
corporation, and William G. Gainer is hereby amended as follows:

Section
3.4 entitled “Payment of Severance Payment; Release Agreement” is hereby
amended to include as a new paragraph (c) thereof, the following:

(c)   The parties
intend that any Severance Payment pursuant to this Agreement either shall not
constitute “deferred compensation” or shall otherwise qualify for exemption
from excise and other tax penalties applicable under Section 409A of the
Internal Revenue Code.  If it is
determined that a Severance Payment under this Agreement otherwise would be
subject to excise or other tax penalty under said Section 409A the Company
and the Executive shall amend the terms of this Agreement to the minimum extent
necessary so that such Severance Payment will not be subject to excise or other
tax penalty under said Section 409A.

IN
WITNESS WHEREOF, the Company and the Executive have executed this amendment as
of the date set forth above.

	
  International Aluminum Corporation

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ronald L. Rudy

  	
   

  	
   

  
	
  Ronald L. Rudy

  	
   

  
	
  President and
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ William G. Gainer

  	
   

  	
   

  
	
  William G. Gainer

  	
   

  

 

 21Exhibit 10.3

AMENDMENT TO
CHANGE OF CONTROL AGREEMENT

Now,
on this 13th day of November 2006, the Change of Control
Agreement dated September 8, 2006, between International Aluminum Corporation,
a California corporation, and Mitchell K. Fogelman is hereby amended as
follows:

Section
3.4 entitled “Payment of Severance Payment; Release Agreement” is hereby
amended to include as a new paragraph (c) thereof, the following:

(c)   The parties
intend that any Severance Payment pursuant to this Agreement either shall not
constitute “deferred compensation” or shall otherwise qualify for exemption
from excise and other tax penalties applicable under Section 409A of the
Internal Revenue Code.  If it is
determined that a Severance Payment under this Agreement otherwise would be
subject to excise or other tax penalty under said Section 409A the Company
and the Executive shall amend the terms of this Agreement to the minimum extent
necessary so that such Severance Payment will not be subject to excise or other
tax penalty under said Section 409A.

IN
WITNESS WHEREOF, the Company and the Executive have executed this amendment as
of the date set forth above.

	
  International Aluminum Corporation

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ronald L. Rudy

  	
   

  
	
   

  	
  Ronald L. Rudy

  
	
   

  	
  President and Chief Executive Officer

  
	
   

  
	
   

  
	
  /s/ Mitchell K. Fogelman

  	
   

  
	
  Mitchell K. Fogelman

  
				

 

 22Exhibit 10.4

AMENDMENT TO
CHANGE OF CONTROL AGREEMENT

Now,
on this 13th day of November 2006, the Change of Control
Agreement dated September 8, 2006, between International Aluminum Corporation,
a California corporation, and Michael J. Norring is hereby amended as follows:

Section
3.4 entitled “Payment of Severance Payment; Release Agreement” is hereby
amended to include as a new paragraph (c) thereof, the following:

(c)   The parties
intend that any Severance Payment pursuant to this Agreement either shall not
constitute “deferred compensation” or shall otherwise qualify for exemption
from excise and other tax penalties applicable under Section 409A of the
Internal Revenue Code.  If it is
determined that a Severance Payment under this Agreement otherwise would be
subject to excise or other tax penalty under said Section 409A the Company
and the Executive shall amend the terms of this Agreement to the minimum extent
necessary so that such Severance Payment will not be subject to excise or other
tax penalty under said Section 409A.

IN
WITNESS WHEREOF, the Company and the Executive have executed this amendment as
of the date set forth above.

	
  International Aluminum Corporation

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ronald L. Rudy

  	
   

  	
   

  
	
   

  	
  Ronald L. Rudy

  	
   

  
	
   

  	
  President and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Michael J. Norring

  	
   

  	
   

  
	
  Michael J. Norring

  

 

 23Exhibit
10.1

MEZZANINE LOAN AGREEMENT

BY AND AMONG

BREOF TCU GP LLC

And

BREOF TCU LLC

And

PHOENIX BERRY
STREET LIMITED PARTNERSHIP

And

PHOENIX G.P.
XVIII, INC.

(“Borrowers”)

AND

BEHRINGER HARVARD TCU,
LLC

(“Lender”)

TABLE OF CONTENTS

	
  1.

  	
  RECITALS

  	
  2

  
	
  2.

  	
  DEFINITIONS

  	
  2

  
	
  3.

  	
  THE LOAN; DISBURSEMENT OF LOAN

  	
  6

  
	
   

  	
  (a)

  	
  Loan

  	
  6

  
	
   

  	
  (b)

  	
  Loan Disbursements

  	
  6

  
	
  4.

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

  	
  7

  
	
   

  	
  (a)

  	
  Interest

  	
  7

  
	
   

  	
  (b)

  	
  No Usury

  	
  7

  
	
   

  	
  (c)

  	
  Prepayment

  	
  8

  
	
   

  	
  (d)

  	
  Maturity Date

  	
  8

  
	
  5.

  	
  SECURITY FOR LOAN

  	
  8

  
	
   

  	
  (a)

  	
  Pledge Agreement

  	
  8

  
	
   

  	
  (b)

  	
  Other Loan Documents

  	
  8

  
	
  6.

  	
  CONDITIONS PRECEDENT TO CLOSING OF THE LOAN

  	
  8

  
	
   

  	
  (a)

  	
  Loan Documents

  	
  8

  
	
   

  	
  (b)

  	
  Third Party Agreements

  	
  9

  
	
   

  	
  (c)

  	
  Certification

  	
  9

  
	
   

  	
  (d)

  	
  Financial Statements

  	
  10

  
	
   

  	
  (e)

  	
  Insurance Policies

  	
  10

  
	
   

  	
  (f)

  	
  Contracts

  	
  10

  
	
   

  	
  (g)

  	
  Plans.

  	
  10

  
	
   

  	
  (h)

  	
  Budget and Cost Review

  	
  10

  
	
   

  	
  (i)

  	
  Leases

  	
  10

  
	
   

  	
  (j)

  	
  Title Insurance Policy

  	
  10

  
	
   

  	
  (k)

  	
  UCC Policy

  	
  10

  
	
   

  	
  (l)

  	
  ALTA Survey

  	
  10

  
	
   

  	
  (m)

  	
  Zoning; Conditional Use Permits and Government
  Approvals

  	
  11

  
	
   

  	
  (n)

  	
  Flood Plain Certification

  	
  11

  
	
   

  	
  (o)

  	
  Appraisal

  	
  11

  
	
   

  	
  (p)

  	
  Engineering Report

  	
  11

  
	
   

  	
  (q)

  	
  Environmental Report

  	
  11

  
	
   

  	
  (r)

  	
  Certification of Organizational Documents

  	
  11

  
	
   

  	
  (s)

  	
  Legal Opinion

  	
  11

  
	
   

  	
  (t)

  	
  UCC Searches

  	
  11

  
	
   

  	
  (u)

  	
  Access and Utility Easements

  	
  12

  
	
   

  	
  (v)

  	
  Utilities

  	
  12

  
	
   

  	
  (w)

  	
  Environmental Disclosure

  	
  12

  
	
   

  	
  (x)

  	
  No Default

  	
  12

  
	
   

  	
  (y)

  	
  Additional Matters

  	
  12

  
	
  7.

  	
  TITLE INSURANCE

  	
  12

  
	
   

  	
  (a)

  	
  Owner’s Policy of Title Insurance

  	
  12

  
	
   

  	
  (b)

  	
  UCC Policy

  	
  13

  
	
  8.

  	
  INSURANCE

  	
  13

  
	
   

  	
  (a)

  	
  Insurance Requirements

  	
  13

  

 

 i
 

 

	
  

  	
  (b)

  	
  Insurance Premiums; Evidence of Renewal

  	
  13

  
	
   

  	
  (c)

  	
  Policy Requirements

  	
  13

  
	
   

  	
  (d)

  	
  Notice of Casualty

  	
  14

  
	
   

  	
  (e)

  	
  Settlement of Claim

  	
  14

  
	
   

  	
  (f)

  	
  Application of Insurance Proceeds

  	
  14

  
	
  9.

  	
  EMINENT DOMAIN

  	
  14

  
	
   

  	
  (a)

  	
  Notice of Condemnation

  	
  14

  
	
   

  	
  (b)

  	
  Settlement of Claim

  	
  14

  
	
   

  	
  (c)

  	
  Application of Condemnation Awards

  	
  15

  
	
   

  	
  (d)

  	
  Lender Not Required to Act

  	
  15

  
	
  10.

  	
  RIGHTS OF ACCESS AND INSPECTION

  	
  15

  
	
  11.

  	
  EXPENSES

  	
  15

  
	
  12.

  	
  FINANCIAL REPORTS, PROPERTY REPORTS AND BUDGET

  	
  16

  
	
  13.

  	
  GENERAL COVENANTS OF BORROWERS

  	
  18

  
	
   

  	
  (a)

  	
  Commencement and Completion of Project

  	
  18

  
	
   

  	
  (b)

  	
  Lender Approval

  	
  18

  
	
   

  	
  (c)

  	
  Operation and Maintenance of Project

  	
  18

  
	
   

  	
  (d)

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

  	
  19

  
	
   

  	
  (e)

  	
  General Indemnity

  	
  20

  
	
   

  	
  (f)

  	
  Leases

  	
  21

  
	
   

  	
  (g)

  	
  Notices

  	
  22

  
	
   

  	
  (h)

  	
  Development

  	
  22

  
	
   

  	
  (i)

  	
  Management

  	
  22

  
	
   

  	
  (j)

  	
  Senior Loan

  	
  22

  
	
   

  	
  (k)

  	
  Principal Place of Business; Choice of Law

  	
  23

  
	
   

  	
  (l)

  	
  Compliance with Governmental Prohibitions

  	
  23

  
	
   

  	
  (m)

  	
  Compliance with REIT Regulations

  	
  23

  
	
  14.

  	
  FURTHER ASSURANCES

  	
  23

  
	
  15.

  	
  APPRAISALS

  	
  23

  
	
  16.

  	
  GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWERS

  	
  24

  
	
   

  	
  (a)

  	
  Organization; Corporate Powers; Authorization of
  Borrowing

  	
  24

  
	
   

  	
  (b)

  	
  Title to Property; Matters Affecting Property

  	
  25

  
	
   

  	
  (c)

  	
  Financial Statements

  	
  26

  
	
   

  	
  (d)

  	
  Budget Projections

  	
  27

  
	
   

  	
  (e)

  	
  No Loan Broker

  	
  27

  
	
   

  	
  (f)

  	
  No Default

  	
  27

  
	
   

  	
  (g)

  	
  Solvency

  	
  27

  
	
   

  	
  (h)

  	
  Violations of Governmental Prohibitions

  	
  27

  
	
  17.

  	
  EVENT OF DEFAULT

  	
  28

  
	
   

  	
  (a)

  	
  Non-Payment

  	
  28

  
	
   

  	
  (b)

  	
  Insurance

  	
  28

  
	
   

  	
  (c)

  	
  Special Purpose Entity Covenants

  	
  28

  
	
   

  	
  (d)

  	
  Fraud or Material Misrepresentation

  	
  28

  
	
   

  	
  (e)

  	
  Sale, Encumbrance or Other Indebtedness

  	
  28

  
	
   

  	
  (f)

  	
  Reports and Documents

  	
  28

  

 

 ii
 

 

	
  

  	
  (g)

  	
  Contribution Agreement

  	
  28

  
	
   

  	
  (h)

  	
  Other Breaches under this Agreement

  	
  28

  
	
   

  	
  (i)

  	
  Other Breaches Under Other Loan Documents

  	
  29

  
	
   

  	
  (j)

  	
  Senior Loan Documents

  	
  29

  
	
   

  	
  (k)

  	
  Bankruptcy Proceedings

  	
  29

  
	
  18.

  	
  REMEDIES

  	
  30

  
	
   

  	
  (a)

  	
  Actions upon Event of Default

  	
  30

  
	
   

  	
  (b)

  	
  Lender’s Right to Perform

  	
  30

  
	
   

  	
  (c)

  	
  Appointment of Lender as Attorney-in-Fact

  	
  30

  
	
   

  	
  (d)

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

  	
  31

  
	
  19.

  	
  TRANSFER OF LOAN; LOAN SERVICER

  	
  31

  
	
   

  	
  (a)

  	
  Lender’s Right to Transfer

  	
  31

  
	
   

  	
  (b)

  	
  Loan Servicer

  	
  31

  
	
   

  	
  (c)

  	
  Dissemination of Information

  	
  31

  
	
  20.

  	
  LENDER’S EXPENSES; RIGHTS OF LENDER

  	
  31

  
	
  21.

  	
  MISCELLANEOUS

  	
  32

  
	
   

  	
  (a)

  	
  Notices

  	
  32

  
	
   

  	
  (b)

  	
  Waivers

  	
  33

  
	
   

  	
  (c)

  	
  Lender Not Partner of Borrowers; Borrower in Control

  	
  33

  
	
   

  	
  (d)

  	
  No Third Party

  	
  33

  
	
   

  	
  (e)

  	
  Time of Essence; Context

  	
  34

  
	
   

  	
  (f)

  	
  Successors and Assigns

  	
  34

  
	
   

  	
  (g)

  	
  Governing Jurisdiction

  	
  34

  
	
   

  	
  (h)

  	
  SUBMISSION TO JURISDICTION/SERVICE OF PROCESS

  	
  34

  
	
   

  	
  (i)

  	
  WAIVER WITH RESPECT TO DAMAGES

  	
  35

  
	
   

  	
  (j)

  	
  Entire Agreement

  	
  35

  
	
   

  	
  (k)

  	
  Headings

  	
  35

  
	
   

  	
  (l)

  	
  Severability

  	
  35

  
	
   

  	
  (m)

  	
  Counterparts

  	
  36

  
	
   

  	
  (n)

  	
  Waiver of Jury Trial

  	
  36

  
	
   

  	
  (o)

  	
  Sole and Absolute Discretion

  	
  36

  
	
   

  	
  (p)

  	
  Press Releases

  	
  36

  
	
   

  	
  (q)

  	
  Recourse Limitations

  	
  36

  
	
   

  	
  (r)

  	
  Joint and Several Liability

  	
  37

  
	
  22.

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF
  BORROWERS

  	
  37

  

 

 iii

MEZZANINE LOAN AGREEMENT

This
MEZZANINE LOAN AGREEMENT (this “Agreement”) is
made and entered into as of this 1st day of February 2007, by and between BREOF TCU
GP LLC, a Delaware limited liability company (“BREOF GP”),
BREOF TCU LLC, a Delaware limited liability company (“BREOF”),
PHOENIX BERRY STREET LIMITED PARTNERSHIP, a Texas limited partnership (“Phoenix”) and PHOENIX G.P. XVIII, INC. a Texas corporation (“Phoenix GP”) , each of whose address is c/o Phoenix Property
Company, 2626 Howell St., Suite 800, Dallas, Texas 75204 (each of BREOF GP,
BREOF, Phoenix and Phoenix GP is a “Borrower” and
collectively are “Borrowers”),
and BEHRINGER HARVARD TCU, LLC, a Delaware limited liability company, whose
address is 15601 Dallas Parkway, Suite 600, Addison, Texas 75001 (“Lender”).

R E C I T A L S:

This Agreement is
made with reference to the following facts:

A.                                   Berry
Street Limited Partnership, a Texas limited partnership (“Mortgagor”)
is the owner of a leasehold interest in that certain land located in Tarrant County,
Texas and more particularly described on Exhibit A attached hereto
(together with all improvements, fixtures and other appurtenances, the “Property”), and Mortgagor is constructing on the Property a
644-bed student housing apartment project known as The GrandMarc at Westberry
Place (the “Project”).  The Senior Note (as defined below) is secured
by a deed of trust, mortgage, or deed to secure debt, of even date herewith
(together with any and all extensions, renewals, substitutions, replacements,
amendments, modifications and/or restatements thereof (the “Security Instrument”) in favor of Senior Lender (as defined
below) encumbering the Project.

B.                                     Wachovia
Bank, a national banking association (“Senior Lender”)
has made a mortgage loan in the amount of Thirty-Eight Million Two Hundred
Fifty Thousand Dollars ($38,250,000.00) (the “Senior Loan”)
to Mortgagor evidenced by a Promissory Note dated January 25, 2005 (the “Senior Note”).

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

 1
 

D.                                    Borrowers
have requested that Lender, as mezzanine lender, make a loan to Borrowers (the “Loan”) in the amount of Eight Million One Hundred
Twenty-Five Thousand Dollars ($8,125,000.00) (the “Loan Amount”)
subject to the term and provisions of this Agreement, which Loan is to be
advanced as hereinafter provided and is to be evidenced by the Note.  The Note is to be secured by the Pledge and
Security Agreement and the other collateral referred to in Section 5
below.

E.                                      Borrowers
desire to borrow the Loan Amount from Lender, the proceeds of which are to be
used by Borrowers to, among other things, pay the costs and expenses, if any,
referred to in Section 3(b) below.

NOW, THEREFORE, in
consideration of the foregoing and the mutual promises and agreements
hereinafter contained and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.                                       RECITALS.  The
recitals set forth above are true and correct and are incorporated herein by
reference.

2.                                       DEFINITIONS.  The
following terms, when used in this Agreement (including when used in the above
recitals), shall have the following meanings:

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

(b)                                 “Affiliate”:  of any
specified person or entity shall mean any other person or entity, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified person or entity. 
For purposes of this definition, “control” shall mean the ability,
whether by the ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a corporation, to make management
decisions on behalf of, or independently to select the managing partner of, a
partnership, or otherwise to have the power independently to remove and then
select a majority of those individuals exercising managerial

 2
 

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

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

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

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

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

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

(h)                                 “Business Day”:  shall mean all days other than Saturday,
Sunday or any other day on which national banks doing business in
Dallas, Texas are not open for business.

(i)                                     “Code”:  the Internal
Revenue Code of 1986, as amended from time to time, or the corresponding
provisions of any successor federal income tax law.  Any reference to a particular provision of
the Code shall include any amendment of such provision or the corresponding
provision of any successor federal income tax law.

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

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

 3
 

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

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

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

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

(o)                                 “Encumbrance”:  shall
mean any pledge, encumbrance, hypothecation or other grant of security
interest, whether direct or indirect, voluntary or involuntary or by operation
of law, and whether or not consented to by Lender, of or in (i) all or any
portion of, or interest in, the Project (other than any encumbrance by the
Senior Loan Documents and the Permitted Exceptions), or (ii) any Equity
Interests in Mortgagor, or (iii) any part of the Principals’ Equity Interests
in Borrowers (other than Borrowers’ Permitted Transfers).

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

(q)                                 “Equity Interests”: 
means, with respect to any Person, shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in such Person, and
any warrants, options or other rights entitling the holder thereof to purchase
or acquire from such Person any such equity interest issued by such Person.

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

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

(t)                                    “Indebtedness”:  shall
mean the principal of, interest on, and any other amounts due at any time
under, this Agreement, the Note, the Pledge Agreement or any other Loan
Document, including prepayment premiums, late charges, default interest, and
advances to protect the security of the Collateral.

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

(v)                                 “Leases”:  shall mean
all present and future leases, subleases, licenses, concessions or other
possessory interests now or hereafter in force, whether oral or written,
covering or affecting the Project, or any portion of the Project, and all
modifications, extensions or renewals.

 4
 

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

(x)                                   “Loan Documents”: 
shall mean the Note, this Loan Agreement, the Pledge Agreement, the
Environmental Indemnity, the Subordination of Management Agreement, the
Contribution Agreement, the Post-Closing Agreement and all other documents
executed by Borrowers to evidence, secure or set out the terms of the Loan,
each as the same may hereafter be amended, modified and restated from time to
time.

(y)                                 “Management Agreement”: 
shall mean that certain Management Agreement dated September 23, 2005,
entered into by and between Mortgagor and Manager, pursuant to which Manager
has agreed to manage the operations of the Project, as the same may be amended
from time to time, or any other management agreement approved by Lender
pursuant to Section 13(i) hereof.

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

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

(bb)                          “Note”:  shall mean
that certain Mezzanine Promissory Note, dated of even date herewith, in the
Loan Amount, made payable by Borrowers to the order of Lender, evidencing all
amounts outstanding under the Loan from time to time, as the same may be
amended from time to time.

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

(dd)                          “Permitted Exceptions”: 
shall mean the title exceptions included in the Policy required to be
delivered to Lender pursuant to Section 7(a) hereof, as the same may be
endorsed from time to time with the consent of the Lender.

(ee)                            “Person”:  shall mean
any individual, corporation, partnership, limited liability company, joint
venture, estate, trust, or unincorporated association, any other entity, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of the
foregoing.

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

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

 5
 

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

(ii)                                  “Senior Loan Agreement”: 
shall mean that certain Construction Loan Agreement dated January 25,
2005 between Senior Lender and Mortgagor as amended pursuant to the terms of
that certain First Amendment of Construction Loan Agreement of even date
herewith between Senior Lender and Mortgagor.

(jj)                                  “Senior Loan Documents”: 
shall mean the Senior Note, the Security Instrument, the Senior Loan
Agreement and all other documents and instruments evidencing, securing or
pertaining to the Senior Loan, as they each may be amended, modified or restated
in accordance with the terms of the Intercreditor Agreement.

(kk)                            “Senior Note”:  shall
mean the Promissory Note described in the Recitals to this Agreement, and all
schedules, riders, allonges and addenda, as such Promissory Note may be amended
from time to time in accordance with the terms of the Intercreditor Agreement.

(ll)                                  “Title Insurer”:  shall
mean Republic Title of Texas, Inc., 2626 Howell St., 10th Floor, Dallas, Texas 75204, Attn: Ms. Jeanne
Ragland.

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

3.                                       THE LOAN; DISBURSEMENT OF LOAN.

(a)                                  Loan.  On the
basis of the covenants, agreements and representations of Borrowers contained
herein and subject to the terms and conditions hereinafter set forth, Lender
shall lend to Borrowers and Borrowers shall borrow from Lender a sum not to
exceed the Loan Amount, the proceeds of which are to be disbursed by Lender in
accordance with the provisions of Section 3(b) hereof.

(b)                                 Loan
Disbursements.  Upon satisfaction of all the conditions set forth in Section
6 hereof, Borrowers hereby direct and authorize Lender to disburse the
principal balance of the Loan to Borrowers to be used to pay for or reimburse
Borrowers for payment of costs as described in the Budget.  The Loan is not revolving.  In no event shall the aggregate amount
disbursed hereunder exceed the original principal amount of the Loan.

 6
 

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

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

(b)                                 No
Usury.  The provisions of this
Agreement, the Note, the Contribution Agreement and of all other agreements
between Borrowers and Lender, whether now existing or hereafter arising and
whether written or oral, including, but not limited to, the Loan Documents, are
hereby expressly limited so that, after taking into account all amounts deemed
interest or as reducing the true principal balance of the Loan, in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount contracted for,
charged, taken, reserved, paid, or agreed to be paid to Lender for the use,
forbearance, retention or detention of the money loaned under this Note and
related indebtedness exceed the maximum amount permissible under applicable
law.  If, from any circumstance
whatsoever, performance or fulfillment of any provision hereof or of any
agreement between Borrowers and Lender shall, at the time performance or
fulfillment of such provision shall be due, exceed the limit for interest
prescribed by law or otherwise transcend the limit of validity prescribed by
applicable law, then ipso facto the obligation to be performed or fulfilled
shall be reduced to such limit; and if, from any circumstance whatsoever,
Lender shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excessive
interest shall be applied to the reduction of the principal balance owing under
this Note in the inverse order of its maturity (whether or not then due) or at
the option of Lender be paid over to Borrowers, and not to the payment of
interest.  All interest (including any
amounts or payments judicially or otherwise under the law deemed to be
interest) contracted for, charged, taken, reserved, paid or agreed to be paid
to Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term and amount of the Note,
including any extensions or renewals thereof, until payment in full of the
Indebtedness, so that the interest thereof for such full period will not exceed
at any time the maximum amount permitted by applicable law.  In this regard, Borrowers acknowledge with
Lender, as a material inducement to Lender to enter into this Agreement and
advance the Loan, that the Contribution Agreement is “an option or right to
purchase capital stock or other equity securities of an obligor or of an
affiliate of an obligor” as such phrase is used in Section 306.101(b)(3) of the
Texas Finance Code, and, accordingly, that the neither execution of the
Contribution Agreement nor exercise by Lender of such purchase shall constitute
or result in a charge of interest under Texas law.  To the extent that Lender is relying on
Chapter 303, as amended, of the Texas Finance Code to determine the
maximum amount of interest permitted by applicable law on the principal of the
Loan, Lender will utilize the weekly rate ceiling from time to time in effect
as provided in such Chapter 303, as amended.  To the extent United States federal law
permits a greater amount of interest than is permitted under Texas law, Lender
will rely on United States federal law instead of such Chapter 303, as
amended, for the purpose of determining the maximum amount permitted by
applicable law.  Additionally, to the
extent permitted by applicable law now or hereafter in effect, Lender may, at
its option and from time to time, implement any other method of computing the
maximum lawful rate under such Chapter 303, as amended, or under other
applicable law by giving notice, if required,to

 7
 

Borrowers as provided by applicable law now or
hereafter in effect.  This paragraph 4(b)
will control all agreements (including the Contribution Agreement) between
Borrowers and Lender.

(c)                                  Prepayment.  All amounts due and owing under the Note from
time to time may only be prepaid in accordance with the terms of the Note.

(d)                                 Maturity
Date .  The outstanding principal
balance of the Note and all accrued and unpaid interest thereon shall become
due and payable on the Maturity Date unless the same is otherwise accelerated or
prepaid in accordance with the provisions hereof or the other Loan
Documents.  Subject to the provisions of Section
13(d) hereof, in the event that the Senior Note is paid in full at any time
prior to the Maturity Date of the Loan, the Indebtedness shall then be
immediately due and payable regardless of the then stated maturity date of the
Loan.

5.                                       SECURITY FOR LOAN.

(a)                                  Pledge
Agreement.  The Loan shall be secured
by, among other things, the Pledge Agreement.

(b)                                 Other
Loan Documents.  The Loan shall be
further secured and supported by the Environmental Indemnity and the other Loan
Documents.

6.                                       CONDITIONS PRECEDENT TO CLOSING OF THE LOAN.  Prior to the funding of the Loan (unless
otherwise provided), all of the following conditions shall have been satisfied
and/or Borrowers or Mortgagor, as applicable, shall have furnished to Lender
the following, all in form and substance satisfactory to Lender in its sole and
absolute discretion:

(a)                                  Loan
Documents.  Borrowers or Mortgagor,
as applicable, shall have provided to Lender duly executed and, where
appropriate, notarized originals of the Loan Documents, each satisfactory to
Lender in its sole and absolute discretion, including the following:

(i)                                     this
Agreement;

(ii)                                  the
Note;

(iii)                               the
Pledge Agreement;

(iv)                              the
Environmental Indemnity;

(v)                                 the
Subordination of Management Agreement;

(vi)                              UCC
Financing Statements, both state and local, as appropriate, with respect to
items which are, or may be, personal property or other collateral including the
Collateral as described in the Pledge Agreement;

(vii)                           Certification
of Organizational Documents;

 8
 

(viii)                        the
Contribution Agreement;

(ix)                                the
Post-Closing Agreement; and

(x)                                   such
other agreements by Borrowers or Mortgagor as may be required by other
provisions of this Agreement or as Lender may reasonably require in order to
evidence or secure the Loan.

(b)                                 Third Party Agreements.

(i)                                     Copies.  Borrowers shall have provided to Lender
executed copies, certified by the appropriate Borrower(s) and Mortgagor as
being true, correct and complete, of the Senior Loan Documents, the Management
Agreement and the other Third Party Agreements then in effect, if any.

(ii)                                  Senior
Lender Certificate.  If requested by
Lender, a certification signed by Senior Lender confirming that the copies of
the Senior Loan Documents delivered by Borrowers and Mortgagor to Lender are
true, correct and complete copies of the Senior Loan Documents and that there
are no other documents evidencing, securing or otherwise affecting the Senior
Loan; provided, however, that no copies of any construction-related documents
shall be required to be certified by Senior Lender, including without
limitation, prior draw requests and supporting documentation.

(iii)                               Intercreditor
Agreement.  Senior Lender shall have
provided to Lender an executed copy of that certain Intercreditor Agreement by
and between Senior Lender and Lender dated of even date herewith, which shall
be satisfactory to Lender in form and substance.

(iv)                              Manager’s
Subordination Agreement.  The
Borrowers shall cause the Manager to enter into an agreement with the Lender
whereby the Manager:

1)              consents to the
termination of the Management Agreement without fee or penalty upon the
occurrence of an Event of Default or foreclosure against the Collateral and,

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

(c)                                  Certification  Borrowers hereby certify that as of the
effective date of this Agreement (which is the date that the commitment of
Lender to make the Loan to Borrowers becomes binding on Lender), the fair
market value of the portion of the Project that is capitalized

 9
 

by Mortgagor as real
property for federal income tax purposes consistent with past practices of the
affiliates of Mortgagor (the “Real Property Amount”).  It is a condition precedent to the closing of
the Loan that (i) the Real Property Amount exceeds (ii) the sum of (A) the
stated principal amount of the Senior Loan and (B) the stated principal amount
of the Loan.

(d)                                 Financial
Statements.  Borrowers shall have
provided to Lender with respect to each Borrower, the Project and the
Mortgagor, financial statements and other financial information, certified by
the Borrowers and Mortgagor as being true, correct and complete in all material
respects, and in the form and containing the detail and supporting information
as required by Lender for the underwriting for the Loan.

(e)                                  Insurance
Policies.  The Borrowers shall have
provided to Lender the original insurance policies, certified copies thereof or
certificates thereof, together with evidence of premium payments, for the
insurance as more fully provided in Section 8 hereof, which should
include Builder’s Risk, Hazard and Public Liability and Worker’s Compensation
Insurance in the event such insurance is not required by Senior Lender.

(f)                                    Contracts.  Borrowers shall have provided to Lender
copies of any contracts regarding the Project entered into by Mortgagor with
any contractors or engineers and, if requested by Lender, copies of contracts
with any subcontractors for the construction or installation of the
improvements made in connection with the Project.

(g)                                 Plans.  Borrowers shall have provided to Lender
copies of all available plans prepared by any engineers or architects in
connection with the Project.

(h)                                 Budget
and Cost Review.  Lender shall have
received a report of its  or Senior
Lender’s inspecting engineer with respect to Mortgagor’s construction budget
and the available plans for the Project, which shall be satisfactory to Lender.

(i)                                     Leases.  Borrowers shall have provided to Lender (i)
the form lease for residential units within the Project and (ii) copies of any
non-residential Leases affecting the Project.

(j)                                     Title
Insurance Policy.  Lender shall have
received, reviewed and approved the title insurance policy with respect to the
Property and copies of all exceptions to such title insurance that have been
delivered to Senior Lender in connection with its review and approval of the
Senior Loan.

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

(l)                                     ALTA
Survey.  Lender shall have received
the most recent ALTA survey of the Property (the “Survey”)
completed in accordance with Senior Lender’s requirements, satisfactory to
Lender and to the Title Insurer and certified to Senior Lender, Lender (and its
successors and assigns) and the Title Insurer.

 10
 

(m)                               Zoning;
Conditional Use Permits and Government Approvals.  Lender shall have received any conditional
use permit(s) affecting the Property and such evidence as Lender may require
(including the written certification of Borrowers’ engineer or any other person
satisfactory to Lender) that the zoning of the Property is satisfactory and
compatible with the development of the Project according to the plans and that
the Project will be developed in accordance with all applicable governmental
requirements and upon completion will satisfy all applicable governmental
requirements.  Any such certifications
shall also be certified to Lender and its successors and assigns.

(n)                                 Flood
Plain Certification.  To the extent
not provided on the Survey, Lender shall have received evidence that the
Property is not located within any flood plain or, if the Property is located
within a flood plain, Borrowers have obtained and is maintaining in full force
and effect a policy or policies of flood insurance pursuant to Section 8
hereof.  Any such certifications shall
also be certified to Lender and its successors and assigns.

(o)                                 Appraisal.  Lender shall have received an appraisal of
the Property prepared by a licensed appraiser acceptable to Lender, in form and
substance required by Senior Lender, but also addressed to Lender and its
successors and assigns, in the amount of Fifty-Three Million Dollars
($53,000,000.00).

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

(q)                                 Environmental
Report.  Lender shall have received
an environmental report covering the Property, prepared by a professional
acceptable to Lender, in form and substance as required by Senior Lender, and
also certified to Lender and its successors and assigns.

(r)                                    Certification
of Organizational Documents.  Lender
shall have received a written certification attaching the required documents
with respect to both Mortgagor and Borrowers, confirming (i) that true,
complete and correct copies of the organizational documents have been attached
to the certification, (ii) that no modifications of such documents exist
which have not been provided to Lender, and (iii) that the provisions of Section
22 hereof have been incorporated into the organizational documents.

(s)                                  Legal
Opinion.  Lender shall have received
a written legal opinion or legal opinions from Borrowers’ counsel (which
counsel must be acceptable to Lender) in form acceptable to Lender and its
counsel, opining as to such matters as Lender may reasonably require, including
an opinion regarding:  (1) due organization
and valid existence, (2) authority; (3) enforceability of the Loan Documents,
(4) perfection of the security interests described herein and other such
matters as Lender may reasonably require and (5) no usury.

(t)                                    UCC
Searches.  Lender shall have received
full Uniform Commercial Code searches, performed by a search company and in
jurisdictions satisfactory to Lender, with respect to the Borrowers and the
Mortgagor and disclosing no matters objectionable to Lender.

 11
 

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

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

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

(x)                                   No
Default.  The representations and
warranties of Borrowers contained in this Agreement shall be true, correct and
complete in all material respects, and no Event of Default, as defined below,
or circumstance or event which upon the lapse of time, the giving of notice or
both, could become an Event of Default shall have occurred; and

(y)                                 Additional
Matters.  Borrowers shall have
delivered to Lender such other or additional documents, instruments,
information or items as the Lender may request prior to the initial
disbursement of the Loan.

7.                                       TITLE INSURANCE. 
Concurrently with the closing of the Loan:

(a)                                  Owner’s
Policy of Title Insurance.  Borrowers
shall deliver or cause to be delivered to Lender a duplicate original of
Mortgagor’s Owner’s Policy of Title Insurance (the “Policy”)
issued by the Title Insurer, meeting the following requirements:

(i)            with
coverage amount not less than the purchase price of the Property;

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

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

(iv)          the
legal description insured under the Policy shall include any easements
benefiting the Property; and

(v)           if
available under local regulations, the Policy shall also contain a mezzanine
financing endorsement, acknowledging that the coverage afforded by the Policy
runs to the Lender.

 

 12
 

(b)                                 UCC
Policy.  Borrowers shall deliver or
cause to be delivered to Lender an Eagle 9 UCC Insurance Policy issued by First
American Title Insurance Company (or a similar policy), which policy shall
(i) insure Lender’s first priority security interest in all of the Equity
Interests covered by the Pledge Agreement, (ii) be dated not earlier than
the date of the disbursement of the Loan, (iii) be subject only to matters
which would customarily appear on such a policy, and (iv) be in form and
substance reasonably satisfactory to Lender (such policy, the “UCC Policy”).

8.                                       INSURANCE.

(a)                                  Insurance
Requirements.  Borrowers, at their
sole cost (or at Mortgagor’s sole cost), for the mutual benefit of Borrowers,
Mortgagor and Lender, shall cause Mortgagor or Manager to obtain and maintain
policies of insurance with respect to the Project as required by the Senior
Loan Documents, as those requirements may from time to time be amended;
provided that Lender shall be named as an additional insured under such
liability coverage.  Borrowers agree that
they will cause Mortgagor or its contractors, provided that in either case
Lender shall be named as an additional insured, to maintain coverage under its
products/completed liability insurance for a period of no less than two (2)
years after Completion.  If commercial
general liability insurance as required in the Senior Loan Documents is
unavailable for residential construction in the state where the Project is
located, Owner shall or shall cause Manager or the contractor to purchase
wrap-up construction insurance covering Mortgagor, contractor and all
subcontractors for general liability and products/completed operations for a
period of no less than two (2) years with limits no less than Five Million
Dollars ($5,000,000.00), naming Lender as additional insured.

(b)                                 Insurance
Premiums; Evidence of Renewal.  All
premiums on insurance policies required under this Section 8 shall be
paid in the manner required by the Senior Loan Documents, provided, however,
that if Senior Lender waives the requirement for impound of insurance premiums,
Borrowers agree to provide evidence of payment of all insurance premiums.
Borrowers shall use their best commercially reasonable efforts to deliver
originals of all policies and renewals (or certificates evidencing the same),
marked “paid” (or other evidence satisfactory to Lender of the continuing
coverage) to Lender at least ten (10) days before the expiration of existing
policies.  If Lender has not received
satisfactory evidence of such renewal or substitute insurance in the time frame
herein specified, Lender shall have the right, but not the obligation, to
purchase such insurance for Lender’s interest only.

(c)                                  Policy
Requirements.  All Policies provided
for or contemplated by Section 8.1(b) shall name Mortgagor as the
insured and Borrowers as the insured or additional insured and Lender as the
additional insured, in each case as their interests may appear.  All insurance policies and renewals of
insurance policies required by this Section 8 shall (i) be in such
amounts and for such periods as Senior Loan Documents may from time to time
require, (ii) be issued by insurance companies reasonably satisfactory to
Lender, (iii) provide thirty (30) days’ advance written notice to Lender
before any cancellation, adverse material modification or notice of non-renewal
and (iv) to the extent limits are not otherwise specified herein, contain
deductibles which are in amounts acceptable to Lender.  All certificates of insurance and “blanket”
insurance policies shall reference the specific project being covered by name
and address.

 13
 

(d)                                 Notice
of Casualty.  Borrowers shall give to
Lender immediate notice of any loss occurring on or with respect to the
Project.

(e)                                  Settlement
of Claim.  In case of loss covered by
any of such policies, Lender is authorized to adjust, collect and compromise,
in its reasonable discretion, all claims thereunder, subject to the rights of
the Senior Lender.  In the event of any
such adjustment, collection and compromise by Lender, Borrowers covenant to
sign upon demand, or Lender may sign or endorse on Borrowers’ behalf, all
necessary proofs of loss, receipts, releases and other papers required by the
insurance companies to be signed by Borrowers. 
Borrowers hereby irrevocably appoint Lender as their attorney-in-fact
for the purposes set forth in the preceding sentence, subject to the rights of
the Senior Lender.  Subject to the rights
of the Senior Lender, Lender may deduct from such insurance proceeds any
reasonable expenses incurred by Lender in the collection and settlement
thereof, including attorneys’ and adjustors’ fees and charges.  Nothing contained in this Agreement shall
create any responsibility or obligation of the Lender to collect any amounts
owing on any insurance policy, to rebuild or replace the damaged or destroyed
portions of the Project or to perform any other related act.  The Lender shall not, by the fact of
approving, disapproving, accepting, preventing, obtaining or failing to obtain
any insurance, incur any liability for or with respect to the amount of
insurance carried, the form or legal sufficiency of insurance contracts,
solvency of insurance companies, or payment or defense of lawsuits, and the
Borrowers hereby expressly assume full responsibility therefor and all
liability, if any, with respect thereto.

(f)                                    Application
of Insurance Proceeds.  Any insurance
proceeds received by Mortgagor or Borrowers under any of such policies shall,
subject to the rights of the Senior Lender, be applied, at the option of the
Lender, toward pre-payment or reimbursement of the Loan and any other amounts
evidenced or secured by the Loan Documents, or to the rebuilding or repairing of
the Project so damaged or destroyed, as the Lender in its sole and unreviewable
discretion may elect; provided, however, that Lender will allow casualty awards
to be used for the restoration of the Project if the conditions for Borrower’s
use of insurance contained in the Senior Loan Documents are satisfied
(substituting Lender for Senior Lender thereunder in making decisions).

9.                                       EMINENT DOMAIN.

(a)                                  Notice
of Condemnation.  Borrowers shall
give to Lender immediate notice of any taking by condemnation of any portion of
the Project or the institution of any proceedings the effect of which is to
achieve a taking of any portion of the Project by condemnation.

(b)                                 Settlement
of Claim.  In case the Project, or
any part or interest in any thereof, is taken by condemnation, then subject to
the rights of the Senior Lender, the Lender is hereby empowered to collect and
receive all compensation and awards of any kind whatsoever (referred to
collectively herein as “Condemnation Awards”)
which may be paid for any property taken or for damages to any property not
taken (all of which the Borrowers hereby assign to the Lender, subject to the
rights of the Senior Lender in the same). 
Borrowers covenant to sign upon demand, or Lender may sign or endorse on
Borrowers’ behalf, all necessary proofs of loss, receipts, releases and other
papers required by the condemning authority to be signed by

 14
 

Borrowers for such
purpose.  Borrowers hereby irrevocably
appoint Lender as their attorney-in-fact for the purposes set forth in this Section
9.  Lender may deduct from any
Condemnation Awards, any reasonable expenses incurred by Lender in the
collection and settlement thereof, including attorneys’ and adjusters’ fees and
charges.

(c)                                  Application
of Condemnation Awards.  All
Condemnation Awards so received shall, subject to the rights of the Senior
Lender, be forthwith applied by the Lender, as it may elect in its sole and
unreviewable discretion, to the payment or reimbursement of the Loan or the
other amounts evidenced or secured by the Loan Documents, or to the repair and
restoration of any property not so taken or damaged; provided, however, that
Lender will allow condemnation awards to be used for the restoration of the
Project if the conditions for Borrower’s use of insurance contained in the
Senior Loan Documents are satisfied (substituting Lender for Senior Lender
thereunder in making decisions).

(d)                                 Lender
Not Required to Act.  Nothing
contained in this Agreement shall create a responsibility or obligation of
Lender to collect any amounts owing on account of any such condemnation or
proceedings relating to the Project, to rebuild or replace any damaged or
destroyed property or to perform any other related act.

10.                                 RIGHTS OF ACCESS AND INSPECTION.  Borrowers shall cause Mortgagor to permit
agents, representatives and employees of Lender to inspect the Project and the
installation of the Project or any part thereof during reasonable business
hours upon reasonable advance notice. 
Without limiting the foregoing, Lender shall also be permitted access to
the Project in order to examine, copy and audit Mortgagor’s books and records
(including as part of any audit performed pursuant to Section 12(e)
hereof) and any plans, drawings contracts, books or records relating to the
Project.  Borrowers shall cause any
contractors or subcontractors to cooperate with Lender or its agents in
connection with any inspection.  Lender
is under no duty to visit or observe the Project or to examine any books or
records.  Any site visit, observation or
examination by Lender shall be solely for the purpose of protecting Lender’s
security and preserving Lender’s rights under the Loan Documents.  Neither Borrowers, Mortgagor nor any other
party is entitled to rely on any site visit, observation or testing by Lender
or its agents or representatives.  Lender
owes no duty of care to protect Borrowers, Mortgagor or any other party
against, or to inform Borrowers or any other party of, any adverse condition
affecting the Project, including any defects in the design or construction of
any improvements on the Property or the presence of any Hazardous Materials on
the Property (but excluding any damage or harm caused by Lender or its
agents).  So long as no Event of Default
has occurred and is continuing, Lender shall give Borrowers and Mortgagor
reasonable prior notice of its intent to enter the Project.

11.                                 EXPENSES.  Borrowers
shall pay, as and when due, all reasonable fees, costs and expenses incurred in
the procuring and making of the Loan by Lender, including without limitation,
Title Insurer’s fees and premiums, charges for examination of title to the
Property, expenses of surveys, transfer taxes and recording expenses, appraisal
and appraisal review fees, fees of an inspector and fees and expenses of any
attorneys, accountants, engineers, architects, surveyors, contractors,
inspectors or other consultants, professionals or independent contractors
employed, retained or utilized by Lender in connection with the Loan.  Borrowers shall cause Mortgagor to pay when
due any and all insurance premiums, taxes, assessments, water, sewer and other
utility charges, impact fees, liens and encumbrances on the Project and any
other 

 15

amounts payable for the cost of improvements to the
Property, provided that Borrowers and/or Mortgagor may in good faith contest
any such liens, claims or amounts so long as it provides, for any filed lien, a
bond in accordance with statutory requirements or other security reasonably
satisfactory to Lender.  Borrowers shall
pay upon demand or reimburse Lender for any and all fees, costs and expenses
incurred by Lender in collecting the Indebtedness after an Event of Default
including reasonable attorneys’ fees. 
All such amounts shall be paid to Lender or at Lender’s direction to
such other person to whom payments are due or Lender may, at its option, pay
such amounts and all sums paid shall be deemed a portion of the Indebtedness
and shall bear interest at the Default Interest Rate.

12.                                 FINANCIAL REPORTS, PROPERTY REPORTS AND BUDGET.  The parent company of Lender is a real estate
fund that issues securities, maintains U.S. GAAP audited financial statements
and/or is publicly registered with the United States Securities and Exchange
Commission (“SEC”).  As a result, such parent company is subject
to GAAP financial statement requirements and other reporting requirements.
These requirements include but are not limited to quarterly and annual
financial reporting (including the reports for public companies on Form 10-Q
and Form 10-K and reporting under Rules 3-05, 3-09 or 3-14 of Regulation
S-X).  In addition, certain accounting
requirements may dictate that Lender report Borrowers, Mortgagor and/or the
Project as a subsidiary of Lender. 
Therefore, Borrowers agree to provide Lender with all such information
requested by Lender that Borrowers or their Affiliates have in their
possession, and Borrowers will obtain such information not in its possession,
as Lender reasonably requires in order to consolidate, audit and/or review
financial statements of the Project, Mortgagor and Borrowers for the applicable
reporting periods.  As of the execution
hereof, Lender’s fiscal year for purposes of such reporting ends on December 31st, and Lender shall give
reasonable notice to Borrowers of any change in such fiscal year or any other
such reporting requirements.

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

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

(c)                                  Upon
reasonable advance notice, Borrowers agree to allow Lender and Lender’s
external accountants access to original Accounting Records if needed in the
process of their quarterly reviews and various audit processes.

(d)                                 Upon
reasonable advance notice, Borrowers agree to cooperate with any inquiries or
interviews by Lender or its external independent accountants as may be
necessary in relation to Lender’s or its Affiliates’ compliance with the Sarbanes-Oxley
Act of 2002.

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

 16
 

(f)                                    In
addition, Borrowers shall furnish to Lender:

(i)            within
30 days after the end of each fiscal year of Mortgagor, and at any other time
upon Lender’s request, a statement that identifies all owners of any interest
in Mortgagor and the interest held by each, if Mortgagor is a corporation, all
officers and directors of Mortgagor, and if Mortgagor is a limited liability
company, all members and managers (whether members or not);

(ii)           within
15 days after the end of each month, a monthly property management report for
the Project, showing the number of inquiries made and rental applications
received from tenants or prospective tenants, deposits received from tenants
and any other information reasonably requested by Lender;

(iii)          within
15 days following the end of each month, a monthly statement of income and
expense for the Project; and

(iv)          beginning
sixty (60) days prior to the first occupancy of the Property and for each
succeeding calendar year, not later than ninety (90) days prior to the
commencement of such calendar year, an annual budget which sets forth, in
sufficient detail, Borrowers’ projection of gross receipts and expenses for
such period (the “Annual Budget”).  Each Annual Budget shall be for a calendar
year except that the Annual Budgets for the year of first occupancy of the
Property shall only cover the remainder of the then-current year.

(g)                                 If
Borrowers fail to provide in a timely manner the Accounting Records,
statements, schedules and reports required by this Section 12, Lender
shall have the right to have Mortgagor’s and Borrowers’ books and records
audited or to perform any other procedure reasonably requested by Lender, at
Borrowers’ expense, by independent certified public accountants selected by
Lender in order to obtain such statements, schedules and reports, and all
related costs and expenses of Lender shall become immediately due and payable
and shall become an additional part of the Indebtedness as provided in Section
20.

(h)                                 If
Lender acquires the Project or acquires the Collateral through foreclosure,
Borrowers shall deliver, or cause to be delivered, to Lender upon written
demand all books and records relating to the Project or its operation.
Otherwise, during the term of the Loan, to the extent that copies of such books
and records have not been provided pursuant to the provisions of this Section
12 set forth above, Borrowers will provide Lender with all cost records
necessary for Lender to perform its accounting procedures including, but not
limited to, balance sheets, income statements, trial balance activity reports,
general ledger detail reports, cash receipts journal, check register or cash
disbursements journal and copies of checks and vendor invoices for all invoices
paid.  Borrowers agree to make available
to Lender for examination and copying any other books and records upon Lender’s
written demand.

 17
 

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

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

(a)                                  Commencement
and Completion of Project.  Borrowers
shall cause Mortgagor to construct and install the improvements in connection
with the Project with diligence so that the construction and Completion of the
Project (other than payment of claims that are being contested in accordance
with the Loan Documents) shall have occurred by August 15, 2007.

(b)                                 Lender
Approval.  No changes to the Budget
attached hereto or the completion date set forth above shall be permitted
without Lender’s written consent, with the exception of (i) completion date
extensions due to force majeure and (ii) reallocation of amounts among the line
items of the budgets; provided that Borrowers shall provide Lender with notice
of any changes in connection with (i) and (ii) above.  Lender has approved the plans and
specifications for the improvements to be constructed on the Property described
in Exhibit C attached hereto, and no substantial changes to such
approved plans and specifications shall be permitted without Lender’s written
consent.  Lender shall have five (5)
Business Days to provide any approval required under this Section 13(b)
but if Lender does not provide written notice that it does not approve within
the five (5) Business Days, then the action shall be deemed approved.

(c)                                  Operation
and Maintenance of Project.  In
addition to the terms, conditions and provisions set forth in the other Loan
Documents:

(i)                                     Payment
of Lawful Claims.  Borrowers shall
pay or discharge all lawful claims, including taxes, assessments and
governmental charges or levies imposed upon Borrowers or its income or profits
or upon any property belonging to Borrowers prior to the date upon which
penalties attach thereto; provided that Borrowers may in good faith contest any
such taxes, assessments, charges or levies so long as it provides, for any
filed lien, a bond in accordance with statutory requirements or other security
reasonably satisfactory to Lender. 
Without limiting the generality of the foregoing, Borrowers shall pay
(a) all taxes and recording expenses, including stamp taxes, if any, relating
to all documents and instruments securing the Loan, (b) the fees and
commissions (if any) lawfully due to brokers engaged by Borrowers or their
Affiliates in connection with this transaction (and Borrowers shall hold Lender
harmless from all such claims, whether or not lawfully due), and (c) the fees
and expenses of Lender’s counsel relating to Lender’s consultation with such
counsel in connection with the negotiation, documentation and closing of the
Loan and any subsequent modifications of the Loan.

 18
 

(ii)                                  No
Amendments.  Borrowers shall not, nor
shall it permit Mortgagor to, without Lender’s prior written consent, enter
into any amendments or modifications of (a) if Borrowers or Mortgagor is a
corporation, the Borrowers’ and Mortgagor’s by-laws and articles of
incorporation, (b) if Borrowers or Mortgagor is a limited liability company,
such entity’s operating agreement or articles of organization, (c) if Borrowers
or Mortgagor is a limited partnership, such entity’s partnership agreement or
partnership certificate, (d) the Third Party Agreements, or (e) the Senior Loan
Documents.  Nothing herein shall require
lender’s consent for any amendments in connection with Borrowers’ Permitted
Transfers but Borrowers shall provide prior written notice to Lender of same.

(iii)                               Hazardous
Substances.  So long as Mortgagor
owns the Project, Borrowers shall cause Mortgagor to (a) keep the Project free
from Hazardous Substances, except those in de minimis amounts ancillary to the
Project activities that are used in compliance with all environmental laws, (b)
promptly notify Lender if Borrowers or Mortgagor becomes aware that any
Hazardous Substance is on or near the Project except those in de minimis
amounts ancillary to the Project activities that are used in compliance with
all environmental laws or if the Project otherwise is in violation of any
environmental laws, and (c) remove such Hazardous Substances and/or cure such
violations as required by law.

(iv)                              Maintenance
and Repair of Project.  After
completion of the Project, Borrowers shall cause Mortgagor to (a) maintain
the Project, including the parking and landscaping portions thereof, in good
condition and repair, (b) promptly make all necessary structural and
non-structural repairs to the Project, (c) not demolish, alter, remove or
add to any improvements on the Property, excepting (i) the repair and restoration
of improvements following damage thereto as required or permitted by this
Agreement, and (ii) as otherwise required by any applicable law, rule or
regulations, and (d) not erect any new buildings, structures or building
additions on the Project other than in substantial accordance with the plans
for the Project, without the prior written consent of Lender.  Borrowers shall pay when due all claims for
labor performed and materials furnished therefor in connection with any
improvements or construction activities on the Property (subject to right to
contest set out in Section 13(c)(i) above).

(d)                                 Restricted
Sale and Encumbrance of Project and of Borrowers Interests; Other Indebtedness.  Neither Borrowers nor the Principals shall
engage in any Sale or Encumbrance without the prior written consent of Lender
(which may be withheld by Lender in Lender’s sole and absolute
discretion).  Borrowers will not issue
any additional Equity

 19
 

Interests in
Borrowers.  In addition, Borrowers shall
not permit Mortgagor to issue any additional Equity Interests in
Mortgagor.  In addition, Borrowers shall
not, nor shall it permit Mortgagor to, incur any indebtedness, whether secured
or unsecured, other than (i) the Senior Loan and this Loan and (ii) trade and
operational indebtedness incurred in the ordinary course of business.  Notwithstanding the foregoing, Lender’s
consent shall not be required for any Borrowers’ Permitted Transfers or for:

(i)            the
grant of a leasehold interest in a portion of an individual dwelling unit for a
term of two years or less not containing an option to purchase and otherwise in
compliance with Section 13(f) hereof;

(ii)           a
Sale of obsolete, worn out or damaged property or fixtures that is
contemporaneously replaced by items of equal or better function and quality,
which are free of liens, encumbrances and security interests other than
Permitted Exceptions, those created by the Loan Documents or the Senior Loan
Documents or those otherwise consented to by Lender;

(iii)          the
Sale (including through consumption) of personal property in the ordinary
course of business that is contemporaneously replaced by items of equal or
better function and quality;

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

(v)           the
creation of (1) a lien for taxes, assessments or other governmental charges or
levies that are not then due or that are being contested in good faith and in
accordance with applicable statutory procedures or (2) a mechanic’s lien
against the Project which is bonded off, released of record or otherwise
remedied to Lender’s reasonable satisfaction within 30 days of the date of
creation.

(e)                                  General
Indemnity.  Borrowers shall, at
Borrowers’ expense, protect, defend, indemnify, save and hold Lender and each
of its members and its respective members, stockholders, directors, officers,
employees and agents (collectively the “Indemnified Parties”)
harmless against any and all claims, demands, losses, expenses (including court
costs and reasonable attorney’s fees and expenses), damages and causes of
action (whether legal or equitable in nature) asserted by any person or entity
arising out of, caused by or relating to the Project and the Lender’s exercise
of its rights under the Loan Documents upon an Event of Default.  Borrowers shall pay to Lender upon demand all
claims, judgments, damages, losses and expenses (including court costs and
reasonable attorneys’ fees and expenses) incurred by Lender as a result of any
legal or other action arising out of the aforesaid matters.  Borrowers acknowledge that the Indemnified
Parties may defend any matter covered by the above

 20
 

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

(f)                                    Leases.

(i)                                     Residential
Lease Requirements.  Mortgagor shall
have the right, and Borrowers may permit Mortgagor, to enter into residential
Leases without Lender’s prior written consent, so long as: (A) all Leases
for residential dwelling units are on form attached hereto as Exhibit F
as approved by Lender, and shall not include options to purchase and
(B) all Leases shall be for initial terms of not more than two (2) years.

(ii)                                  Commercial
Lease Requirements.  Mortgagor shall
not, nor shall Borrowers permit Mortgagor to, enter into any material
non-residential Leases without Lender’s prior written consent in each
instance.  Mortgagor shall not, nor shall
Borrowers permit Mortgagor to, modify the terms of, or extend or terminate, any
material Lease for non-residential use (including any Lease in existence on the
date of this Agreement) without the prior written consent of Lender.  Borrowers shall, without request by Lender,
deliver a copy of each executed non-residential Lease to Lender promptly after
such Lease is signed.

(iii)                               Advance
Rent.  Mortgagor shall not, nor shall
Borrowers permit Mortgagor to, receive or accept rent under any Lease (whether
residential or non-residential) for more than two months in advance.

(iv)                              Performance
of Obligations.  Borrowers shall
cause Mortgagor to pay, perform and discharge, as and when payment, performance
and discharge are due, all obligations of Mortgagor as landlord under all
Leases.

(v)                                 Security
Interest.  Except for the assignment
to Senior Lender, Borrowers shall not permit Mortgagor to further assign,
pledge, transfer or otherwise encumber the Leases or the rents under the
Leases.

(vi)                              Defense;
Pursuit of Remedies.  Borrowers
shall, or shall cause Mortgagor to, at its sole cost and expense, appear in and
defend any action or proceeding arising from or connected with any of the
Leases or any obligation or liability of Mortgagor as landlord

 21
 

thereunder.  Borrowers shall, or shall cause Mortgagor to,
diligently pursue all remedies, including claims for damages available at law
or in equity, against any tenant under a Lease who defaults in the performance
of its obligations under the Lease.

(g)                                 Notices.  Borrowers shall promptly notify Lender in
writing of any litigation affecting (a) Borrowers or Mortgagor and, any general
partner, managing member or controlling shareholder of Borrowers (excluding a
Principal, general partner, managing member or controlling shareholder which is
a natural person or trust), or (b) the Project, to the extent the same may
result in a material adverse change in (i) the financial condition of any of
the foregoing parties, (ii) Borrowers’ ability to timely perform any of
its obligations under any of the Loan Documents or Mortgagor’s ability to
timely perform any of its obligations under any of the Senior Loan Documents,
or (iii) the physical condition or operation of the Project.

(h)                                 Development.  The Project shall be developed at all times
by Developer or a professional developer selected by Mortgagor and reasonably
satisfactory to Lender under a contract approved by Lender.  If after the date of this Agreement,
Borrowers or Mortgagor intends to change the development of the Project, Lender
shall have the right to approve such new developer and the written contract for
the development of the Project and, if the developer is an Affiliate of
Borrowers, require that Borrowers and such new developer enter into a
Subordination of Development Agreement on a form reasonably acceptable to
Lender.

(i)                                     Management.  The Project shall be managed at all times by
Manager or a professional residential rental property manager satisfactory to
Lender under a contract approved by Lender. 
Lender hereby accepts the Manager as the initial property manager and
the Management Agreement as the initial management agreement. If after the date
of this Agreement, Borrowers or Mortgagor intends to change the management of
the Project, Lender shall have the right to approve such new property manager
and the written contract for the management of the Project and, if the manager
is an Affiliate or Borrowers, require that Borrowers and such new property
manager enter into a Subordination of Management Agreement on a form reasonably
acceptable to Lender.

(j)                                     Senior
Loan.  The Borrowers shall, or shall
cause Mortgagor to, fully and timely pay all amounts owing under the Senior
Loan Documents and timely and fully perform all of the Mortgagor’s covenants
and agreements contained therein. 
Borrowers shall provide Lender with copies of all notices given or
received by Mortgagor under or pursuant to the Senior Loan Documents, promptly
upon delivery or receipt as the case may be. 
Without limiting the Lender’s right to declare an Event of Default on
account of a failure to comply with the terms and provisions of the Senior Loan
Documents, if Borrowers or Mortgagor fail to so pay or perform such
obligations, the Lender may pay or perform the same pursuant to Section
18(b) hereof.  Notwithstanding the
foregoing, (i) Lender shall have no obligation whatsoever to pay any of
the amounts evidenced or secured by, or to perform any of the covenants or
obligations imposed by, any Senior Loan Documents, and (ii) any such
payment by Lender shall not cure Mortgagor’s default hereunder or under the
Senior Loan Documents but shall only protect Lender’s interest in the
Project.  Except for amendments and
modifications not requiring Lender’s prior consent pursuant to the terms of the
Intercreditor Agreement, Borrowers shall not, nor shall they permit

 22
 

Mortgagor to, amend or modify any of the Senior Loan
Documents except as permitted under the terms of the Intercreditor Agreement.

(k)                                  Principal
Place of Business; Choice of Law 
Borrowers shall not change their principal place of business or, if
Borrowers have more than one place of business, their chief executive office,
from their address set forth in the first paragraph of this Agreement.  In addition, Borrowers shall not make an
election under the Uniform Commercial Code to treat, as the governing law for
perfection of uncertificated securities, the law of any jurisdiction other than
the jurisdiction of their formation. 
Lender agrees not to unreasonably withhold its consent to any change in
the Borrowers’ principal place of business or the governing law with respect to
uncertificated securities so long as (1) Borrowers and any other party
requested by Lender execute all documents and instruments deemed necessary by
Lender to perfect the security interests granted pursuant to the Loan Documents,
(2) the Borrowers pay all of the Lender’s costs and expenses of perfecting such
security interests and (3) if requested by Lender, Borrowers deliver to Lender
an opinion from counsel satisfactory to Lender opining as to the continued
perfection of such security interest.

(l)                                     Compliance
with Governmental Prohibitions.  No
portion of the Loan proceeds will be used, disbursed or distributed by
Borrowers for any purpose, or to any person, in violation of any Law (as
defined in Section 16(h)) including, without limitation, any of the
Terrorism Laws (as defined in Section 16(h)).  Borrowers shall provide Lender with immediate
written notice (a) of any failure of any of the representations and warranties
set forth in Section 16(h) of this Agreement to be true, correct and
complete in all respects at any time, or (b) if Borrowers obtain knowledge that
Borrowers, Principal, or any holder at any time of any direct or indirect
equitable, legal or beneficial interest in Borrowers or Principal has violated
any of the Terrorism Laws.  Borrowers
shall immediately and diligently take, or cause to be immediately and
diligently taken, all necessary action to comply with all Terrorism Laws and to
cause the representations and warranties set forth in Section 16(h) to
be true, correct and complete in all material respects.

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

14.                                 FURTHER ASSURANCES. 
Borrowers shall, from time to time, upon Lender’s request, at Borrowers’
sole cost and expense, execute, deliver, record and furnish such documents and
do such other acts as Lender may reasonably deem necessary or desirable to (i)
perfect and maintain valid liens upon the security contemplated by the Loan
Documents, (ii) correct any errors of a typographical or other manifest nature
which may be contained in any of the Loan Documents, (iii) evidence Borrowers’
compliance with the Loan Documents, and (iv) consummate fully and carry out the
intent of the transactions contemplated under this Agreement or the Loan
Documents.

15.                                 APPRAISALS.  Lender
has the right to obtain a new appraisal or update an existing appraisal of the
Project at any time while the Loan or any portion thereof remains

 23
 

outstanding (a) when, in Lender’s reasonable judgment,
such an appraisal is warranted as a result of Lender’s internal evaluation of
the Loan, and/or (b) to comply with statutes, rules, regulations or directives
of governmental agencies having jurisdiction over Lender.  Borrowers shall pay, upon demand, all
reasonable appraisers’ fees and related expenses incurred by Lender from time
to time in obtaining such appraisal reports; provided, however, that Borrowers
shall not be required to pay for a re-appraisal more than once every three
years unless an Event of Default has occurred and is continuing.

16.                                 GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWERS.  Borrowers represent and warrant to Lender,
which representations and warranties shall survive the termination of this
Agreement, the repayment of the Loan, any investigations, inspections or
inquiries made by Lender or any of Lender’s representatives, and any
disbursements made by Lender hereunder, as follows:

(a)                                  Organization;
Corporate Powers; Authorization of Borrowing.

(i)                                     Organization.  Borrowers’ ownership structure set forth on Exhibit D
attached hereto is a true and correct depiction of the Equity Interests in
Borrowers and Mortgagor, and each entity set forth on Exhibit D is
duly organized and is validly existing and in good standing under the laws of
the state of its organization, and Mortgagor is qualified to do business in the
jurisdiction where the Property is located.

(ii)                                  Power
and Authority.  Borrowers have the
full power and authority to execute the Loan Documents and to undertake and
consummate the transactions contemplated hereby and thereby, and to pay,
perform and observe the conditions, covenants, agreements and obligations
herein and therein contained; and the Loan Documents have been duly and validly
executed by Borrowers and constitute the legal, valid and binding obligations
of Borrowers and are enforceable against Borrowers in accordance with their
respective terms, except as such enforcement may be qualified or limited by
bankruptcy, insolvency or other similar laws affecting creditors’ rights
generally and general principles of equity.

(iii)                               Not
a Foreign Person.  Neither Borrowers,
nor any entity that is a holder of an Equity Interest in Borrowers, are
organized under the laws of any jurisdiction other than the United States or
one of the states thereof.

(iv)                              No
Defaults Under Existing Agreements. 
The consummation of the transactions contemplated hereby and the
performance by Borrowers or by any other parties signatory thereto of their
respective obligations under the Loan Documents will not result in any breach
of, or constitute a default under, the Senior Loan Documents, any other
material Third Party Agreements or any

 24
 

mortgage, deed of trust,
bank loan or security agreement, or other material instrument to which
Borrowers or Mortgagor are a party or by which the Property, the Borrowers or
the Mortgagor or such other parties are bound.

(v)                                 True
and Correct Copies of Documents.  All
due diligence documents required to be delivered by Borrowers to Lender
hereunder (including those due diligence documents referred to in Section 6
hereof) are true, correct and complete copies thereof and the same have not
been amended or modified except as expressly disclosed therein.

(b)                                 Title
to Property; Matters Affecting Property.

(i)                                     Title
to Property.  Mortgagor has good and
indefeasible leasehold title to the Property, subject only to the Senior Loan
Documents and the Permitted Exceptions, and good, indefeasible and freely
alienable title to all personal property owned by Mortgagor and located on the
Property, subject only to the Senior Loan Documents and the Permitted
Exceptions; Borrowers will cause Mortgagor to protect or cause to be protected
the title to the Project, and Borrowers will forever warrant and defend the
same against any other claims of any persons or parties whomsoever, subject to
the Senior Loan Documents and the Permitted Exceptions.

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

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

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

 25
 

(v)                                 No
Actions.  There are no actions, suits
or proceedings at law or in equity (including condemnation or eminent domain
proceedings) currently pending, or to the knowledge of Borrowers threatened,
against Mortgagor, Borrowers or the Project or, to the knowledge of Borrowers,
involving the validity or enforceability of the Senior Loan Documents or the
Loan Documents or the priority of the liens granted thereunder, by or before
any governmental authority having or exercising jurisdiction over the
Project.  Borrowers will promptly notify
Lender of any such future actions, suits or proceedings.  To Borrowers’ knowledge, neither Borrowers,
nor Mortgagor, nor the Property is in default with respect to, or in violation
of, any order, writ, injunction, decree or demand of any court or any
governmental authority having or exercising jurisdiction over the Property.

(vi)                              No
Contracts Giving Rise to Liens. 
Neither Borrowers nor Mortgagor has made any contract or arrangement of
any kind, that does or could give rise to a lien on the Project, except for (i)
the Senior Loan Documents and the Permitted Exceptions and (ii) contracts
related to design and construction of the Project which have been provided to
Lender.  Borrowers have not made any
contract or arrangement of any kind that does or could give rise to a lien or
encumbrance on any of the Equity Interests in Mortgagor.

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

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

(ix)                                Tax
Treatment.  Borrowers and Mortgagor
have not (and at all times during the term of the Loan will not) elect to be
classified as an association taxable as a corporation within the meaning of
Treasury Regulation §301.7701-3(c).

(x)                                   Permits.  All permits required for the operation and
construction of the Project are in effect. 
All such permits will remain in effect and the Project and its
contemplated use and operation will comply therewith.  All discretionary approvals for the
construction of the Project in accordance with the Plans and Specifications
have been obtained.

(c)                                  Financial
Statements.  The financial statements
heretofore delivered to Lender by Borrowers and Mortgagor are true and correct
in all material respects, have been

 26
 

prepared in accordance
with sound accounting practices, and fairly present the financial condition(s)
of the person(s) referred to therein as of the date(s) indicated; no materially
adverse change has occurred in the financial condition(s) reflected in such
financial statements since the date(s) shown thereon and no additional
borrowings or liabilities other than standard trade payables have been made or
incurred by such person(s) since the date(s) thereof other than the borrowing
contemplated hereby, the Senior Loan or other borrowings disclosed in writing
to and approved by Lender.

(d)                                 Budget
Projections.  Borrowers’ and/or
Mortgagor’s budget projections indicate that monthly income from Project
operations will be sufficient to pay the combined monthly accrual of interest
on the Senior Loan and the Loan by the Maturity Date and the projections are
reasonable in Borrowers’ opinion and have been prepared in a manner consistent
with the past practices of affiliates of the Borrowers.

(e)                                  No
Loan Broker.  Borrowers has not dealt
with any person, firm or corporation who is or may be entitled to any finder’s
fee, brokerage commission, loan commission or other sum in connection with the
execution of this Agreement or the making of the Loan by Lender to
Borrowers.  Borrowers do hereby indemnify
and agree to defend and hold Lender harmless from and against any and all loss,
liability or expense, including court costs and reasonable attorneys’ fees and
expenses, which Lender may suffer or sustain should such warranty or
representation prove inaccurate in whole or in part.

(f)                                    No
Default.  There are no defaults under
any of the Senior Loan Documents or the Loan Documents on the part of
Borrowers, Mortgagor or the other parties signatory thereto, and no event has
occurred and is continuing which, with the giving of notice or the passage of
time, or both, would constitute a default under any thereof.

(g)                                 Solvency.  As of the date hereof, Borrowers and
Mortgagor are each solvent and able to pay their debts as the same shall become
due and payable.

(h)                                 Violations
of Governmental Prohibitions. 
Neither the making of the Loan, nor the receipt of Loan proceeds by
Borrowers, violates any federal, state, county, municipal and other
governmental and quasi-governmental statutes, laws, rules, orders, regulations,
ordinances, judgments or decrees (collectively, “Law”)
applicable to Borrowers, including, without limitation, any of the Terrorism
Laws.  Neither the making of the Loan,
nor the receipt of Loan proceeds by Borrowers or Mortgagor or Principals,
violates any of the Terrorism Laws applicable thereto.  To Borrowers’ best knowledge, no holder of
any direct or indirect equitable, legal or beneficial interest in Borrowers or
Principal is in violation of any of the Terrorism Laws.  No portion of the Loan proceeds will, to
Borrowers’ actual knowledge, be used, disbursed or distributed by Borrowers for
any purpose, or to any person, directly or indirectly, in violation of any Law
including, without limitation, any of the Terrorism Laws.  “Terrorism Laws”
means Executive Order 13224 issued by the President of the United States of
America, the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S.
Code of Federal Regulations), the Terrorism List Governments Sanctions
Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), and
the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of
the U.S. Code of Federal Regulations), and all other present and future
federal, state and local laws, ordinances, regulations, policies and any other
requirements of any governmental agency

 27
 

(including, without
limitation, the United States Department of the Treasury Office of Foreign
Assets Control) addressing, relating to, or attempting to eliminate, terrorist
acts and acts of war, each as hereafter supplemented, amended or modified from
time to time, and the present and future rules, regulations and guidance
documents promulgated under any of the foregoing.

17.                                 EVENT OF DEFAULT.  Borrowers
shall be in default under this Agreement upon the occurrence of any of the
following events (hereinafter referred to as an “Event of
Default”):

(a)                                  Non-Payment.  The failure of Borrowers to pay when due any
amount required by the Note, this Agreement or any other Loan Documents which
continues, in the case of monthly interest payments, under the Note, or in the
case of other sums payable under the Note, this Agreement or the Loan
Documents, for a period of five (5) Business Days after notice of such failure
by Lender.

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

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

(d)                                 Fraud
or Material Misrepresentation  Fraud
or material misrepresentation or material omission by Borrowers or Mortgagor,
or any of their officers, directors or managers in connection with (i) the
application for or creation of the Indebtedness, (ii) any financial
statement, rent roll, or other report or information provided to Lender during
the term of the Indebtedness, or (iii) any request for Lender’s consent to
any proposed action;

(e)                                  Sale,
Encumbrance or Other Indebtedness. 
The taking of any action by Borrowers, Mortgagor, Principals or any
other person contrary to the provisions of Section 13(d) of this
Agreement;

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

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

(h)                                 Other
Breaches under this Agreement. The failure by Borrowers to perform any of
its obligations under this Agreement, as and when required, except as
specifically set forth otherwise herein, which continues for a period of twenty
(20) days after notice of such failure by Lender to Borrowers or if such
failure is not reasonably susceptible of cure within such 20-day period and if
Borrowers promptly commence such cure within such 20-day period and diligently
prosecutes the same to completion, then the cure period shall be extended for
such period of time as may be reasonably necessary to effect a cure but in no
event shall such period

 28
 

exceed 60 days, but no
such notice or grace period shall apply in the case of any such failure which
could, in Lender’s judgment, absent immediate exercise by Lender of a right or
remedy under this Agreement, result in material harm to Lender, impairment of
the Note, this Agreement, Pledge Agreement or any other security given under
any other Loan Document;

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

(j)                                     Senior
Loan Documents.  The failure of
Borrowers or Mortgagor or any indemnitor or obligor to perform and observe any
covenant, obligation, agreement or undertaking on the part of such party under
any Senior Loan Documents following any grace, notice or cure periods, if any,
as may be provided therein for curing such failure; provided, however, in the
case of monetary defaults, failure to cure within five (5) Business Days of
notice by Senior Lender and in the case of non-monetary defaults, failure to  cure within twenty (20) days of notice by
Senior Lender or if such failure is not susceptible of a cure within twenty
(20) days and Borrowers or Mortgagor commences such cure within such 20-day
period and diligently prosecutes such cure, failure to cure within sixty (60)
days of initial notice by Senior Lender; or

(k)                                  Bankruptcy
Proceedings.

(i)                                     If
the Borrowers or Mortgagor shall become insolvent, make a transfer in fraud of,
or a general assignment for the benefit of, creditors, or admit in writing its
inability, or is unable, generally to pay its debts as they become due; or

(ii)                                  If
the Borrowers or Mortgagor shall have a receiver, custodian, liquidator or
trustee appointed for all or substantially all of its assets or for the Project
in any proceeding brought by the Borrowers, Mortgagor or the Project, or any
such receiver or trustee is appointed in any proceeding brought against the
Borrowers, Mortgagor or the Project and such appointment is not promptly
contested and is not dismissed or discharged within ninety (90) days after such
appointment; or

(iii)                               If
the Borrowers or Mortgagor shall file a petition under Title 11 of the United
States Code as amended or under any similar Federal or state law or statute; or

(iv)                              If
the Borrowers or Mortgagor shall have a petition filed against it commencing an
involuntary case under any present or future Federal or state bankruptcy or
similar law and such petition is not dismissed or discharged within ninety (90)
days after the filing thereof; or

 29
 

(v)                                 If
the Borrowers or Mortgagor shall request any composition, rearrangement,
liquidation, extension, reorganization or other relief as a debtor under any
present or future Federal or state bankruptcy or similar law now or hereafter
existing.

The proceedings or events
set forth in this paragraph (k) are collectively referred to as “Bankruptcy Proceedings”.

18.                                 REMEDIES.

(a)                                  Actions
upon Event of Default.  Upon the
occurrence and during the continuance of an Event of Default, Lender may, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrowers and in the Collateral, including, without
limitation, at its option and without prior notice or demand, declare the
unpaid principal balance of the Note and all accrued but unpaid interest
thereon, as well as all other sums owing under the Loan Documents, immediately
due and payable, Lender may make any advances on the Loan after the happening
of any one or more of said Events of Default without thereby waiving the right
to demand payment in full of the Note and such other amounts and without
liability to make any other or further advances.

(b)                                 Lender’s
Right to Perform.  If Borrowers fail
to perform any monetary covenant or obligation contained herein or in the other
Loan Documents and such failure continues for a period of five (5) Business
Days after written notice of such failure by Lender to Borrowers, or if
Borrowers fail to perform any non-monetary covenant or obligation contained
herein or in the other Loan Documents and such failure continues for a period
of 20 days after written notice of such failure by Lender to Borrowers, or if
such failure is not reasonably susceptible of cure within such 20 day period
and if Borrowers promptly commence such cure within such 20 day period and
diligently prosecutes the same to completion, then the cure period shall be
extended for such period of time as may be reasonably necessary to effect a
cure but in no event shall such period exceed 60 days, without in any way
limiting Lender’s right to exercise any of its rights, powers or remedies as
provided hereunder, or under any of the other Loan Documents, Lender may, but
shall have no obligation to, perform, or cause performance of, such covenant or
obligation, and all costs, expenses, liabilities, penalties and fines of Lender
incurred or paid in connection therewith shall be payable by Borrowers to
Lender upon demand and if not paid shall be added to the Indebtedness (and to
the extent permitted under applicable laws, secured by the Pledge Agreement and
other Loan Documents) and shall bear interest from the date expended at the
Default Interest Rate.  Notwithstanding
the foregoing, Lender shall have no obligation to send notice to any Borrowers
of any such failure.

(c)                                  Appointment
of Lender as Attorney-in-Fact. 
Borrowers hereby irrevocably, unconditionally and presently constitute
Lender as Borrowers’ attorney-in-fact, with full power of substitution, to be
exercised by Lender only upon the occurrence of an Event of Default, to
exercise its rights under the Pledge Agreement (in its own name or the name of
a designee) for purposes of preserving and protecting the Project or the
collateral pledged under the Pledge Agreement and, as Lender in its sole
discretion deems necessary or proper, to execute,

 30

acknowledge (when
appropriate) and deliver all instruments and documents in the name of Borrowers
which may be necessary or desirable in order to do any and every act which
Borrowers might do on its own behalf in the performance of its obligations
hereunder.  This power of attorney is a
power coupled with an interest and is irrevocable.

(d)                                 Cross-Default
to Note, Pledge Agreement and Other Loan Documents.  At the option of Lender, any Event of Default
by Borrowers under this Agreement, or in the performance of any of the
Borrowers’ covenants, agreements or obligations contained herein, shall
constitute a default under the Note, the Pledge Agreement or any of the other
Loan Documents to the same extent as though the Note had by its own terms
become due and payable at maturity and payment thereof had been refused, and in
such event Lender may, without liability to Borrowers, assert and exercise any
and all rights and remedies provided for herein or in the Note, the Pledge
Agreement or any of the other Loan Documents or otherwise as may be provided by
law.  Such rights and remedies may be
asserted concurrently or successively from time to time (either before or after
commencement of foreclosure proceedings or before or after the exercise of any
other remedy of Lender) until the Note, including interest thereon, and all of
the Indebtedness of Borrowers to Lender under this Agreement and the other Loan
Documents, have been paid in full.

19.                                 TRANSFER OF LOAN; LOAN SERVICER.

(a)                                  Lender’s
Right to Transfer  Borrowers hereby
acknowledge that Lender shall have the right to transfer, assign or sell the
Loan Documents to an Affiliate, or grant 
participation interests in all or any portion of the Loan, in such
manner and to such entities as Lender in its sole and absolute discretion shall
select, so long as Lender remains the lead lender and administrative agent.

(b)                                 Loan
Servicer.  At the option of Lender,
the Loan may be serviced by a servicer selected by Lender and Lender may
delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to such servicer pursuant to a servicing agreement
between Lender and such servicer (but no such delegation shall relieve lender
from any liability or consequences arising from any breach or other act or
omission by the servicer).  There may be
one or more changes of Loan servicer.  If
there is a change of Loan servicer, Borrowers will be given notice of the
change.

(c)                                  Dissemination
of Information.  Lender may forward
to each permitted purchaser, transferee, assignee, or servicer of, and each
participant or investor in, the Loan (collectively, the “Investor”),
any governmental regulators or others as may be required by securities law, all
documents and information which Lender now has or may hereafter acquire
relating to the Indebtedness and to Borrowers, Mortgagor and Principals,
including financial statements, whether furnished by Borrowers or otherwise, as
Lender reasonably determines necessary or desirable.  Borrowers irrevocably waive any and all rights
they may have under applicable Laws to prohibit such disclosure.

20.                                 LENDER’S EXPENSES; RIGHTS OF LENDER.  Borrowers shall promptly pay to Lender, upon
demand, with interest thereon from the date of demand at the Default Interest
Rate, reasonable attorneys’ fees and all other costs and expenses paid or
incurred by

 31
 

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

21.                                 MISCELLANEOUS.

(a)                                  Notices.
All notices, demands and other communications (“Notice”)
under or concerning this Agreement shall be in writing.  Each Notice shall be addressed to the
intended recipient at its address set forth below, and a Notice shall be deemed
given on the earliest to occur of (1) the date when the Notice actually is
received by the addressee; (2) the first Business Day after the Notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third Business
Day after the Notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.

	
  

  	
  If to Lender:

  	
  Behringer Harvard TCU, LLC

  
	
   

  	
  15601 Dallas
  Parkway, Suite 600

  
	
   

  	
  Addison, Texas
  75001

  
	
   

  	
  Attn: Chief
  Legal Officer

  
	
   

  	
  Facsimile: (214)
  655-1610

  
	
   

  	
   

  
	
   

  	
  with copy to:

  	
  Powell & Coleman, L.L.P.

  
	
   

  	
  8080 North
  Central Expressway, Suite 1380

  
	
   

  	
  Dallas, Texas
  75206

  
	
   

  	
  Attn: Carol D.
  Satterfield

  
	
   

  	
  Facsimile: (214)
  373-8768

  
	
   

  	
   

  
	
   

  	
  If to Borrowers:

  	
  Phoenix Berry
  Street Limited Partnership

  
	
   

  	
  and Phoenix G.P.
  XVIII, Inc.,

  
	
   

  	
  c/o Phoenix
  Property Company

  
	
   

  	
  2626 Howell St.,
  Suite 800

  
	
   

  	
  Dallas, Texas
  75204

  
	
   

  	
  Attn: Jason P.
  Runnels

  
	
   

  	
  Facsimile: (214)
  880-0320

  
	
   

  	
   

  
	
   

  	
  with copy to:

  	
  Brookfield Real
  Estate Opportunity Fund

  
	
   

  	
  BCE Place, 181
  Bay St., Suite 300

  
	
   

  	
  Toronto, Ontario

  
	
   

  	
  Canada M5J 2T3

  
	
   

  	
  Attn: David
  Arthur

  
	
   

  	
  Facsimile: (416)
  359-8650

  
	
   

  	
   

  

 32
 

 

	
  

  	
  and with copy
  to:

  	
  Stutzman,
  Bromberg, Esserman & Plifka

  
	
   

  	
  2323 Bryan St.,
  Suite 2200

  
	
   

  	
  Dallas, Texas
  75201

  
	
   

  	
  Attn: John J.
  Reoch, Jr.

  
	
   

  	
  Facsimile: (214)
  969-4999

  

 

Any party to
this Agreement may change the address to which notices intended for it are to
be directed by means of notice given to the other party in accordance with this
Section 21(a).  Each party agrees
that it will not refuse or reject delivery of any notice given in accordance
with this Section 21(a), that it will acknowledge, in writing, the
receipt of any notice upon request by the other party and that any notice
rejected or refused by it shall be deemed for purposes of this Section 21(a)
to have been received by the rejecting party on the date so refused or
rejected, as conclusively established by the records of the U.S. Postal Service
or the courier service. Any notice under the Note and any other Loan Document
which does not specify how notices are to be given shall be given in accordance
with this Section 21(a).

(b)                                 Waivers.  No delay or omission by Lender in exercising
any right or power arising from any default by Borrowers shall be construed as
a waiver of such default or as acquiescence therein, nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right or power arising from any default by Borrowers.  No waiver of any breach of any of the
covenants or conditions of this Agreement shall be construed to be a waiver of
or acquiescence in or consent to any previous or subsequent breach of the same
or of any other condition or covenant.

(c)                                  Lender
Not Partner of Borrowers; Borrowers in Control.  Neither the execution nor the performance of
any of the Loan Documents by Lender, nor the exercise by the Lender of any of
its rights, privileges or remedies conferred under the Loan Documents or under
applicable law, shall be deemed to render the Lender a partner or a joint
venturer with the Borrowers, any guarantor of the Loan or any other person, or
to render Borrowers agents of Lender for any purposes.  Nothing contained herein shall characterize
or be deemed to characterize, or be used as a basis for characterizing, Lender
as a “mortgagee-in-possession”.  Lender
and Borrowers agree that Mortgagor remains in control of the Project, and that
it determines the business plan for the Project and employment, management,
leasing and operating directions and decisions for the Project.  All of Lender’s rights, and actions taken by
Lender as provided or permitted, in or under this Agreement or the other Loan
Documents are for and in its capacity as a secured lender attempting to protect
the collateral security for the Loan and to collect the Indebtedness and any
other amounts owing or outstanding under the Note or the Loan Documents.

(d)                                 No
Third Party.  This Agreement is made
for the sole benefit of Borrowers and Lender and Lender’s successors and
assigns, and no other person or persons shall have any rights or remedies under
or by reason of this Agreement or any right to the exercise of any right or
power of Lender hereunder or arising from any default by Borrowers, nor shall
Lender owe any duty whatsoever to any claimant for labor performed or materials
furnished in connection with the construction of the improvements to apply any
undisbursed portion of the Loan to the payment of any such claims.

 33
 

(e)                                  Time
of Essence; Context.  Time is hereby
declared to be of the essence of this Agreement and of every part hereof.  When the context and construction so require,
all words used in the singular herein shall be deemed to have been used in the
plural and the masculine shall include the feminine and the neuter and vice
versa.

(f)                                    Successors
and Assigns.  This Agreement shall
bind, and the rights granted by this Agreement shall inure to, the respective
successors and assigns of Lender and Borrowers. 
However, a Sale or Encumbrance prohibited by Section 13(d) shall
be an Event of Default.

(g)                                 Governing
Jurisdiction.  This Agreement and all
of the other Loan Documents (except as otherwise expressly provided therein
with respect to the enforcement of specific remedies) shall be governed by and
construed in accordance with the substantive law of the State of Texas without
regard to the application of choice of law principles.

(h)                                 SUBMISSION
TO JURISDICTION/SERVICE OF PROCESS. 
BORROWERS AND LENDER EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE STATE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY, TEXAS FOR
THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER LOAN DOCUMENT AND THE
SUBJECT MATTER THEREOF, OR THE LOAN. 
BORROWERS TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVE,
AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY
SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS,
THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION BY ANY SUCH
COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM,
THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS  AGREEMENT, THE SUBJECT MATTER HEREOF, THE
OTHER LOAN DOCUMENTS, THE SUBJECT MATTER THEREOF, OR THE LOAN (AS APPLICABLE)
MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED IN STATE COURT TO FEDERAL COURT,
OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT AND (C)
HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE
ARISE FROM THE SAME SUBJECT MATTER. 
BORROWERS AND LENDER EACH HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL
AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT TO SECTION 21(a)
HEREOF.  BORROWERS AGREE THAT THEIR
SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE
FOR THE EXPRESS BENEFIT OF THE OTHER PARTY. 
FINAL JUDGMENT AGAINST BORROWER IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT,
ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL
BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS

 34
 

OR LIABILITY OF THE
BORROWER THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT
TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE LENDER MAY
AT ITS OPTION BRING SUIT OR INSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST
BORROWERS OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED
STATES OR OF ANY COUNTRY OR PLACE WHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY
BE FOUND.

(i)                                     WAIVER
WITH RESPECT TO DAMAGES.  BORROWERS
ACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP WITH, OR
FIDUCIARY DUTY TO, BORROWERS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND
BORROWERS, IN CONNECTION HEREWITH AND THEREWITH, IS SOLELY THAT OF DEBTOR AND
CREDITOR.  TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWERS SHALL NOT ASSERT, AND BORROWERS HEREBY WAIVE, ANY
CLAIMS AGAINST LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR
THEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

(j)                                     Entire
Agreement.  This Agreement and all of
the other Loan Documents constitute the entire understanding between the
parties hereto with respect to the subject matter hereof, superseding all prior
written or oral understandings, and may not be modified, amended or terminated
except by a written agreement signed by each of the parties hereto or thereto
that is to be bound by the modification, amendment or termination.  Notwithstanding the foregoing, the provisions
of this Agreement are not intended to supersede the provisions of the Pledge
Agreement, but shall be construed as supplemental thereto.  Borrowers and Lender each hereby acknowledges
that this Agreement and the other Loan Documents accurately reflect the
agreements and understandings of the parties hereto with respect to the subject
matter hereof and hereby waives any claims against the other which it may now
have or may hereafter acquire to the effect that the actual agreements and
understandings of the parties hereto with respect to the subject matter hereof
may not be accurately set forth in this Agreement or such other Loan Documents.  THIS WRITTEN LOAN
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.

(k)                                  Headings.  The various headings of this Agreement are
included for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.

(l)                                     Severability.  Each provision of this Agreement shall be
interpreted so as to be effective and valid under applicable law, but if any
such provision shall in any respect be

 35
 

ineffective or invalid
under such law, such ineffectiveness or invalidity shall not affect the
remainder of such provision or the remaining provisions of this Agreement.

(m)                               Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same document.

(n)                                 WAIVER
OF JURY TRIAL.  BORROWERS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS LOAN
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OTHER STATEMENTS OR
ACTIONS OF THE LENDER.  BORROWERS
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER
INTO THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT, AND THAT THIS WAIVER SHALL BE
EFFECTIVE AS TO EACH OF THE OTHER LOAN DOCUMENTS AS IF FULLY INCORPORATED
THEREIN.

(o)                                 Sole
and Absolute Discretion.  Any option,
consent, approval, or discretion or similar right of Lender set forth in this
Agreement or any of the other Loan Documents may be exercised by Lender in its
sole, absolute and unreviewable discretion, unless the provisions of this
Agreement or the other Loan Documents specifically requires a different
standard.

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

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

 36
 

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

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

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

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

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

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

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

22.                                 SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWERS.
So long as any portion of the Indebtedness has been advanced or accrued and
remains outstanding, Borrowers shall do all things necessary to preserve the
existence of Borrowers and Mortgagor each as a separate Special Purpose
Bankruptcy Remote Entity.  Borrowers
covenant and agree that with respect to Borrowers and Mortgagor, until payment
in full of the Indebtedness, it will not do or permit Mortgagor to do, directly
or indirectly, any of the following unless Lender consents thereto, in its sole
discretion, in writing.  A “Special Purpose Bankruptcy Remote Entity” means a
corporation, limited partnership or limited liability company which shall not:

(a)                                  engage
in any business or activity other than the ownership, construction, operation
and maintenance, in each case directly or indirectly, of the Property and the
Project (in case of Mortgagor) or the Equity Interests in Mortgagor (in case of
Borrowers), and activities incidental thereto;

(b)                                 acquire
or own any material assets other than (i) the Equity Interests, (ii) the
Property and the Project, and (iii) such incidental personal property as may be
necessary for the operation of the Project or as may arise out of the other
activities of the Borrowers or the Mortgagor;

(c)                                  merge
into or consolidate with any person, or dissolve, terminate or liquidate, or
transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure;

 37
 

(d)                                 fail
to preserve its existence as a person duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, or amend, modify, or terminate the provisions of its
organizational documents if such amendment, modification, or termination would
adversely affect the ability of such Person to perform its obligations
hereunder or under the other Loan Documents or would affect any other clause of
this Section 22;

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

(f)                                    commingle
its assets with the assets of any of its general partners, members,
shareholders, affiliates, principals or of any other Person;

(g)                                 incur
any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation), other than (i) the Senior Loan and this Loan and (ii) trade
and operational indebtedness incurred in the ordinary course of business
(including construction and operation of the Project) or for its administrative
functions;

(h)                                 fail
to maintain its records, books of account and bank accounts separate and apart
from those of its general partners, members, shareholders, principals and
Affiliates and any other Person;

(i)                                     enter
into any contract or agreement with any general partner, member, shareholder,
principal or Affiliate of Borrowers or Mortgagor except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than any
general partner, member, shareholder, principal or Affiliate of Borrowers or
Mortgagor;

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

(k)                                  maintain
its assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any general partner,
member, shareholder, principal or Affiliate of Borrowers or Mortgagor or any
other Person;

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

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

(n)                                 fail
to file its own tax returns, if any, as may be required under applicable law,
to the extent that the Borrowers or Mortgagor are (1) not part of a
consolidated group filing a consolidated return or returns or (2) not treated
as a “disregarded entity” for tax purposes not required to file tax returns
under applicable law;

(o)                                 fail
either to hold itself out to the public as a legal person separate and distinct
from any other person or to conduct its business solely in its own name in
order not (a) to mislead others as to the identity of the person with which
such other party is transacting

 38
 

business; or (b) to suggest that it is responsible for
the debts of any third party (including any general partner, principal or
Affiliate of Borrowers or Mortgagor;

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

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

[Signatures Follow
on Next Page]

 39

IN WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Agreement as
of the day and year first above written.

	
   

  	
  BORROWERS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BREOF TCU GP LLC,

  	
   

  
	
   

  	
  a Delaware limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Ganeless

  	
   

  
	
   

  	
  Name:

  	
  Steven Ganeless

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signing Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BREOF TCU LLC,

  	
   

  
	
   

  	
  a Delaware limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Ganeless

  	
   

  
	
   

  	
  Name:

  	
  Steven Ganeless

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signing Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PHOENIX BERRY STREET LIMITED PARTNERSHIP,

  	
   

  
	
   

  	
  a Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Phoenix G.P. XVIII, Inc.,

  	
   

  
	
   

  	
   

  	
  a Texas corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jason P. Runnels

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jason P. Runnels

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PHOENIX G.P. XVIII, INC.,

  	
   

  
	
   

  	
  a Texas corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason P. Runnels

  	
   

  
	
   

  	
  Name:

  	
  Jason P. Runnels

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
														

 

 

	
  

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD TCU, LLC,

  	
   

  
	
   

  	
  a Delaware limited liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  

 

JOINDER

The undersigned
have duly executed and delivered this Agreement as of the day and year first
above written for the purpose of agreeing and consenting to the provisions of Section
22 of the Agreement.

	
  

  	
  MORTGAGOR:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BERRY STREET LIMITED PARTNERSHIP,

  
	
   

  	
  a Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Phoenix G.P. XVIII, Inc.,

  	
   

  
	
   

  	
   

  	
  a Texas corporation,

  	
   

  
	
   

  	
   

  	
  its Managing General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jason P. Runnels

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jason P. Runnels

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

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