Document:

Exhibit
10.3

GUARANTY
AGREEMENT

This  GUARANTY
AGREEMENT (this “Guaranty”) is made as of the         day
of September, 2007, by BEHRINGER HARVARD SHORT-TERM OPPORTUNITY FUND I LP, a
Texas limited partnership (singly or collectively, “Guarantor”), in
favor of BANK OF AMERICA, N.A., a national banking association (together with
its successors and assigns, “Administrative Agent”), as Administrative
Agent on behalf of itself and each lender from time to time made a party to the
Loan Agreement (collectively, the “Lenders”).

PRELIMINARY
STATEMENTS

Administrative Agent, the Lenders, and Behringer
Harvard Mockingbird Commons, LLC, a Delaware limited liability company (“Borrower”),
have entered into, are entering into concurrently herewith, or contemplate
entering into, that certain Loan Agreement dated of even date herewith (herein
called, as it may hereafter be modified, supplemented, restated, extended, or
renewed and in effect from time to time, the “Loan Agreement”), which
Loan Agreement sets forth the terms and conditions of a loan (the “Loan”)
to Borrower for the refinance and additional funds for an existing hotel
currently known as the “Hotel Palomar” located in Dallas, Texas, as more
particularly described in the Loan Agreement and identified therein as the Land.  The Loan is secured in part by the Deed of
Trust as defined in the Loan Agreement (herein called, as it may hereafter be
modified, supplemented, restated, extended or renewed and in effect from time
to time, the “Deed of Trust”.

A condition precedent to Lenders’ obligation to make
the Loan to Borrower is Guarantor’s execution and delivery to Lenders of this
Guaranty.

The Loan is, or will be, evidenced by that certain
Deed of Trust Note of even date with the Loan Agreement, executed by Borrower
and payable to the order of Bank of America, N.A. in the principal face amount
of $42,000,000.00 (such note, as it may hereafter be renewed, extended,
supplemented, increased or modified and in effect from time to time, and all
other notes given in substitution therefor in accordance with the Loan
Agreement, or in modification, renewal, or extension thereof, in whole or in
part, is herein called the “Note”).

Borrower and Lenders may from time to time enter into
one or more “Swap Transactions” as defined in the Deed of Trust.

Any capitalized term used and not defined in this
Guaranty shall have the meaning given to such term in the Loan Agreement.  This Guaranty is one of the Loan Documents
described in the Loan Agreement.

STATEMENT OF AGREEMENTS

For
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and as a material inducement to Administrative Agent and the
other Lenders to extend credit to Borrower, Guarantor hereby guarantees to
Administrative Agent and the other Lenders the prompt and full payment and
performance of the indebtedness and obligations 

 1
 

described below in
this Guaranty (collectively called the “Guaranteed Obligations”), this
Guaranty being upon the following terms and conditions:

1.             Guaranty of Payment.  Guarantor hereby unconditionally and
irrevocably guarantees to Administrative Agent and the other Lenders the
punctual payment when due, whether by lapse of time, by acceleration of
maturity, or otherwise, of all principal, interest (including interest accruing
after the commencement of any bankruptcy or insolvency proceeding by or against
Borrower, whether or not allowed in such proceeding), fees, late charges,
costs, expenses, indemnification indebtedness, and other sums of money now or
hereafter due and owing, or which Borrower is obligated to pay, pursuant to (a)
the terms of the Note, the Deed of Trust, or any other Loan Documents, and any
indemnifications contained in the Loan Documents, now or hereafter existing,
and (b) all renewals, extensions, refinancings, modifications, supplements or
amendments of such indebtedness, or any of the Loan Documents, or any part
thereof (the indebtedness described in clauses (a) and (b) above in this Section
1 is herein collectively called the “Indebtedness”).  This Guaranty covers only the Guaranteed
Obligations and Guarantor shall not be liable for any indebtedness other than
the Guaranteed Obligations.  The guaranty
of Guarantor as set forth in this Section 1 is a continuing guaranty of
payment and not a guaranty of collection. 
Notwithstanding any contrary provision, if (but only if) all of the
Conditions to Liability Reduction (as defined below) are satisfied, Guarantor’s
liability shall be reduced to twenty-five percent (25%) of the payment of
principal.  Administrative Agent’s and
other Lenders’ agreement to the foregoing limitations on Guarantor’s liability
shall in no way be deemed to limit or restrict Administrative Agent’s and other
Lenders’ right to apply any sums paid by Guarantor to any portion of the
Loan.  Upon the written request of
Guarantor, Administrative Agent will advise Guarantor in writing as to whether
the Conditions to Liability Reduction have been satisfied.  The provisions of this Section 1 do
not limit, reduce or affect Guarantor’s obligations with respect to the
guaranty of payment in this Section 1 (other than the amount of
principal payment) or the guaranty of performance in Section 2
below.  Guarantor’s liability under this
Guaranty shall not be reduced or otherwise affected, except to the extent set
forth in the next sentence, by any amount applied against the Indebtedness as a
result of the foreclosure or other realization upon any of the security for the
Note.  To the extent Lenders receive any
payments under the Note or any proceeds from foreclosure of or other
realization upon of the security for the Note, such payments shall be applied
to that portion of the Obligations for which Guarantor has no personal
liability for payment, and then (and only after payment in full of the portion
of the Obligations for which Guarantor has no personal liability for payment)
be applied against the portion of the Obligations for whose payment Guarantor
is liable hereunder.

Unless otherwise defined herein, the following
capitalized terms when used in this Guaranty shall have the respective meanings
set forth below:

“Administrative Agent’s
NOI Confirmation Letter” means a letter from Administrative Agent to
Borrower confirming that the required NOI performance levels have been
obtained.

“Conditions to Liability Reduction” means that
all of the following are true: (i) no event has occurred and is continuing
which would constitute a Default or a Potential Default, (ii) Borrower shall
have paid off the loan with Texans Commercial Capital, LLC 

 2
 

secured, as of the date
hereof, by the adjacent residential condominium project (the “Residential
Project”) and there shall be no other liens on Borrower’s interest in the
Residential Project, securing obligations for borrowed money (but excluding the
Residential Units subject to the Deed of Trust), and (iii) Administrative Agent’s
NOI Confirmation Letter confirms that the NOI for the immediately preceding
twelve calendar months shall equal or exceed 140% of the Target Monthly
Amortization for the immediately preceding twelve calendar months.

“Deemed Principal Balance” shall have the
meaning given such term in the Loan Agreement.

“NOI” shall have the meaning given to such term
in the Loan Agreement.

“Target Monthly Amortization” shall have the
meaning given to such term in the Loan Agreement.

2.             Guaranty of Performance.  Guarantor additionally hereby unconditionally
and irrevocably guarantees to Administrative Agent and the other Lenders the
timely performance of all other obligations of Borrower under all of the Loan
Documents, including, without limiting the generality of the foregoing, that
Borrower will duly and punctually perform and observe all other terms,
covenants, and conditions of the Note, the Deed of Trust, the Loan Agreement or
any other Loan Document, or any Swap Transaction whether according to the
present terms thereof, at any earlier or accelerated date or dates as provided
therein, or pursuant to any extension of time or to any change or changes in
the terms, covenants, or conditions thereof now or hereafter made or
granted.  The obligations and liability
of Guarantor under this Section 2 shall not be limited or restricted by
the existence of (or any terms of) the guaranty of payment under Section 1.

3.             Primary Liability of Guarantor.

(a)           This Guaranty is an absolute,
irrevocable and unconditional guaranty of payment and performance.  Guarantor shall be liable for the payment and
performance of the Guaranteed Obligations as a primary obligor.  This Guaranty shall be effective as a waiver
of, and Guarantor hereby expressly waives, any and all rights to which
Guarantor may otherwise have been entitled under any suretyship laws in effect
from time to time, including any right or privilege, whether existing under
statute, at law or in equity, to require Administrative Agent, on behalf of the
Lenders, to take prior recourse or proceedings against any collateral, security
or Person (hereinafter defined) whatsoever.

(b)           Guarantor hereby agrees that in the
event of (i) default by Borrower in payment or performance of the Guaranteed
Obligations, or any part thereof, when such indebtedness or performance becomes
due, either by its terms or as the result of the exercise of any power to
accelerate; (ii) the failure of Guarantor to perform completely and
satisfactorily the covenants, terms and conditions of any of the Guaranteed
Obligations; (iii) the death, incompetency, dissolution or insolvency of
Guarantor; (iv) the inability of Guarantor to pay debts as they mature; (v) an
assignment by Guarantor for the benefit of creditors; (vi) the institution of
any proceeding by or against Guarantor in bankruptcy or for a reorganization or
an arrangement with 

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creditors, or for the
appointment of a receiver, trustee or custodian for any of them or for any of
their respective properties; (vii) the determination by Administrative Agent in
good faith that a material adverse change has occurred in the financial
condition of Guarantor; (viii) the entry of a judgment against Guarantor; (ix)
a writ or order of attachment, levy or garnishment is issued against Guarantor;
(x) the falsity in any material respect of, or any material omission in, any
representation made to Administrative Agent or the other Lenders by Guarantor;
(xi) the failure of Guarantor to comply with the financial covenants contained
in Section 18(c) hereof; and (xii) any transfer of assets of any
Guarantor, without the Administrative Agent’s prior consent (except for
transfers of assets for estate planning purposes valued at less than $50,000
per year per Guarantor, customary political and charitable contributions, and
transfers for which the Guarantor receives consideration substantially
equivalent to the fair market value of the transferred asset) (individually and
collectively an “Event of Default”); then upon the occurrence of such
Event of Default, the Guaranteed Obligations, for purposes of this Guaranty,
shall be deemed immediately due and payable at the election of Administrative
Agent, and Guarantor shall, on demand and without presentment, protest, notice
of protest, further notice of nonpayment or of dishonor, default or
nonperformance, or notice of acceleration or of intent to accelerate, or any
other notice whatsoever, without any notice having been given to Guarantor
previous to such demand of the acceptance by Administrative Agent of this
Guaranty, and without any notice having been given to Guarantor previous to
such demand of the creating or incurring of such indebtedness or of such
obligation to perform, all such notices being hereby waived by Guarantor, pay
the amount due to Administrative Agent or perform or observe the agreement,
covenant, term or condition, as the case may be, and pay all damages and all
costs and expenses that may arise in consequence of such Event of Default
(including, without limitation, all attorneys’ fees and expenses, investigation
costs, court costs, and any and all other costs and expenses incurred by
Administrative Agent and the Lenders in connection with the collection and
enforcement of the Note or any other Loan Document), whether or not suit is
filed thereon, or whether at maturity or by acceleration, or whether before or
after maturity, or whether in connection with bankruptcy, insolvency or
appeal.  It shall not be necessary for
Administrative Agent, on behalf of the Lenders, in order to enforce such
payment or performance by Guarantor, first to institute suit or pursue or
exhaust any rights or remedies against Borrower or others liable on such
indebtedness or for such performance, or to enforce any rights against any
security that shall ever have been given to secure such indebtedness or
performance, or to join Borrower or any others liable for the payment or
performance of the Guaranteed Obligations or any part thereof in any action to
enforce this Guaranty, or to resort to any other means of obtaining payment or
performance of the Guaranteed Obligations; provided, however, that nothing
herein contained shall prevent Administrative Agent or the other Lenders from
suing on the Note or foreclosing the Deed of Trust or from exercising any other
rights thereunder, and if such foreclosure or other remedy is availed of, only
the net proceeds therefrom, after deduction of all charges and expenses of
every kind and nature whatsoever, shall be applied in reduction of the amount
due on the Note and Deed of Trust, and Administrative Agent and the Lenders
shall not be required to institute or prosecute proceedings to recover any
deficiency as a condition of payment hereunder or enforcement hereof.  At any sale of the Property or other
collateral given for the Indebtedness or any part thereof, whether by
foreclosure or otherwise, Administrative Agent may at its discretion purchase
all or any part of the Property or collateral so sold or offered for sale for
its own account and may, in payment of 

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the amount bid therefor,
deduct such amount from the balance due it pursuant to the terms of the Note
and Deed of Trust.

(c)           Suit may be brought or demand may be
made against Borrower or against all parties who have signed this Guaranty or
any other guaranty covering all or any part of the Guaranteed Obligations, or
against any one or more of them, separately or together, without impairing the
rights of administrative Agent and the other Lenders against any party hereto.
Any time that Administrative Agent, on behalf of the Lenders, is entitled to
exercise its rights or remedies hereunder, it may in its discretion elect to
demand payment and/or performance.  If
Administrative Agent, on behalf of the Lenders, elects to demand performance,
it shall at all times thereafter have the right to demand payment until all of
the Guaranteed Obligations have been paid and performed in full.  If Administrative Agent, on behalf of the
Lenders, elects to demand payment, it shall at all times thereafter have the
right to demand performance until all of the Guaranteed Obligations have been
paid and performed in full.

4.             Certain Agreements and Waivers by Guarantor.

(a)           Guarantor hereby agrees that neither
Lenders’ rights or remedies nor Guarantor’s obligations under the terms of this
Guaranty shall be released, diminished, impaired, reduced or affected by any
one or more of the following events, actions, facts, circumstances or rights,
and the liability of Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:

(i)            any
limitation of liability or recourse in any other Loan Document or arising under
any law;

(ii)           any
claim or defense that this Guaranty was made without consideration or is not
supported by adequate consideration;

(iii)          the
taking or accepting of any other security or guaranty for, or right of recourse
with respect to, any or all of the Guaranteed Obligations;

(iv)          any homestead exemption or any other
exemption under applicable law;

(v)           any
release, surrender, abandonment, exchange, alteration, sale or other
disposition, subordination, deterioration, waste, failure to protect or
preserve, impairment, or loss of, or any failure to create or perfect any lien
or security interest with respect to, or any other dealings with, any
collateral or security at any time existing or purported, believed or expected
to exist in connection with any or all of the Guaranteed Obligations, including
any impairment of Guarantor’s recourse against any Person or collateral;

(vi)          whether
express or by operation of law, any partial release of the liability of
Guarantor hereunder, or if one or more other guaranties are now or hereafter
obtained by Lenders covering all or any part of the Guaranteed Obligations, any
complete or partial release of any one or more of such guarantors under any
such other guaranty, or any complete or partial release of Borrower or any
other party liable, directly or indirectly, for the payment or performance of
any or all of the Guaranteed Obligations;

 5
 

(vii)         the
death, insolvency, bankruptcy, disability, dissolution, liquidation,
termination, receivership, reorganization, merger, consolidation, change of
form, structure or ownership, sale of all assets, or lack of corporate,
partnership or other power of Borrower or any other party at any time liable
for the payment or performance of any or all of the Guaranteed Obligations;

(viii)        either
with or without notice to or consent of Guarantor: any renewal, extension,
modification, supplement, subordination or rearrangement of the terms of any or
all of the Guaranteed Obligations and/or any of the Loan Documents, including,
without limitation, material alterations of the terms of payment (including
changes in maturity date(s) and interest rate(s)) or performance or any other
terms thereof, or any waiver, termination, or release of, or consent to
departure from, any of the Loan Documents or any other guaranty of any or all
of the Guaranteed Obligations, or any adjustment, indulgence, forbearance, or
compromise that may be granted from time to time by Administrative Agent, on
behalf of the other Lenders, to Borrower, Guarantor, and/or any other Person at
any time liable for the payment or performance of any or all of the Guaranteed
Obligations;

(ix)           any
neglect, lack of diligence, delay, omission, failure, or refusal of
Administrative Agent, on behalf of the Lenders, to take or prosecute (or in
taking or prosecuting) any action for the collection or enforcement of any of
the Guaranteed Obligations, or to foreclose or take or prosecute any action to
foreclose (or in foreclosing or taking or prosecuting any action to foreclose)
upon any security therefor, or to exercise (or in exercising) any other right
or power with respect to any security therefor, or to take or prosecute (or in
taking or prosecuting) any action in connection with any Loan Document, or any
failure to sell or otherwise dispose of in a commercially reasonable manner any
collateral securing any or all of the Guaranteed Obligations;

(x)            any
failure of Administrative Agent, on behalf of the Lenders, to notify Guarantor
of any creation, renewal, extension, rearrangement, modification, supplement,
subordination, or assignment of the Guaranteed Obligations or any part thereof,
or of any Loan Document, or of any release of or change in any security, or of
any other action taken or refrained from being taken by Administrative Agent,
on behalf of the Lenders, against Borrower or any security or other recourse,
or of any new agreement between Lender and Borrower, it being understood that
unless otherwise expressly provided for in this Guaranty, Lenders shall not be
required to give Guarantor any notice of any kind under any circumstances with
respect to or in connection with the Guaranteed Obligations, any and all rights
to notice Guarantor may have otherwise had being hereby waived by Guarantor,
and the Guarantor shall be responsible for obtaining for itself information
regarding the Borrower, including, but not limited to, any changes in the
business or financial condition of the Borrower, and the Guarantor acknowledges
and agrees that the Administrative Agent and the other Lenders shall have no
duty to notify the Guarantor of any information which the Administrative Agent
and the other Lenders may have concerning the Borrower.

 6
 

(xi)           if
for any reason any Lender is required to refund any payment by Borrower to any
other party liable for the payment or performance of any or all of the
Guaranteed Obligations or pay the amount thereof to someone else;

(xii)          the
making of advances by Administrative Agent to protect its interest in the
Property, preserve the value of the Property or for the purpose of performing
any term or covenant contained in any of the Loan Documents;

(xiii)         the
existence of any claim, counterclaim, set-off or other right that
Guarantor may at any time have against Borrower, Administrative Agent, any
Lender, or any other Person, whether or not arising in connection with this
Guaranty, the Note, the Loan Agreement, or any other Loan Document;

(xiv)        the
unenforceability of all or any part of the Guaranteed Obligations against
Borrower, whether because the Guaranteed Obligations exceed the amount
permitted by law or violate any usury law, or because the act of creating the
Guaranteed Obligations, or any part thereof, is ultra vires, or because
the officers or Persons creating the Guaranteed Obligations acted in excess of
their authority, or because of a lack of validity or enforceability of or
defect or deficiency in any of the Loan Documents, or because Borrower has any
valid defense, claim or offset with respect thereto, or because Borrower’s
obligation ceases to exist by operation of law, or because of any other reason
or circumstance, it being agreed that Guarantor shall remain liable hereon
regardless of whether Borrower or any other Person be found not liable on the
Guaranteed Obligations, or any part thereof, for any reason (and regardless of
any joinder of Borrower or any other party in any action to obtain payment or
performance of any or all of the Guaranteed Obligations); or

(xv)         any
order, ruling or plan of reorganization emanating from proceedings under Title
11 of the United States Code with respect to Borrower or any other Person,
including any extension, reduction, composition, or other alteration of the
Guaranteed Obligations, whether or not consented to by Administrative Agent and
the other Lenders.

(b)           In the event any payment by Borrower
or any other Person to any Lender is held to constitute a preference,
fraudulent transfer or other voidable payment under any bankruptcy, insolvency
or similar law, or if for any other reason any Lender is required to refund
such payment or pay the amount thereof to any other party, such payment by
Borrower or any other party to any Lender shall not constitute a release of
Guarantor from any liability hereunder, and this Guaranty shall continue to be
effective or shall be reinstated (notwithstanding any prior release, surrender
or discharge by Lenders of this Guaranty or of Guarantor), as the case may be,
with respect to, and this Guaranty shall apply to, any and all amounts so
refunded by any such Lender or paid by any such Lender to another Person (which
amounts shall constitute part of the Guaranteed Obligations), and any interest
paid by any such Lender and any attorneys’ fees, costs and expenses paid or
incurred by Lender in connection with any such event.  It is the intent of Guarantor and Lenders
that the obligations and liabilities of Guarantor hereunder are absolute and
unconditional under any and all circumstances and that until the Guaranteed
Obligations are fully and finally paid and performed, and not subject to refund
or disgorgement, the obligations and liabilities of Guarantor hereunder shall
not be discharged or released, in whole or in part, by 

 7
 

any act or occurrence
that might, but for the provisions of this Guaranty, be deemed a legal or
equitable discharge or release of a guarantor. 
Administrative Agent, on behalf of the Lenders, shall be entitled to
continue to hold this Guaranty in its possession for the longer of (i) the
period after which any performance of obligations under the Loan Agreement
shall accrue, or (ii) a period of one year from the date the Guaranteed
Obligations are paid and performed in full and for so long thereafter as may be
necessary to enforce any obligation of Guarantor hereunder and/or to exercise
any right or remedy of Lenders hereunder.

(c)           If acceleration of the time for
payment of any amount payable by Borrower under the Note, the Loan Agreement,
or any other Loan Document that constitutes any of the Guaranteed Obligations
is stayed or delayed by any law or tribunal, all such amounts shall nonetheless
be payable by Guarantor on demand by Administrative Agent, on behalf of the
Lenders.

5.             Subordination.  If, for any reason whatsoever, Borrower is
now or hereafter becomes indebted to Guarantor:

(a)           such indebtedness and all interest
thereon and all liens, security interests and rights now or hereafter existing
with respect to property of Borrower securing such indebtedness shall, at all
times, be subordinate in all respects to the Guaranteed Obligations and to all
liens, security interests and rights now or hereafter existing to secure the
Guaranteed Obligations;

(b)           Guarantor shall not be entitled to
enforce or receive payment, directly or indirectly, of any such indebtedness of
Borrower to Guarantor (other than trade payables or other customary expenses
incurred in the ordinary course of business) until the Guaranteed Obligations
have been fully and finally paid and performed;

(c)           Guarantor hereby assigns and grants
to Administrative Agent, on behalf of the Lenders, a security interest in all
such indebtedness and security therefor, if any, of Borrower to Guarantor now
existing or hereafter arising, including any dividends and payments pursuant to
debtor relief or insolvency proceedings referred to below.  In the event of receivership, bankruptcy,
reorganization, arrangement or other debtor relief or insolvency proceedings
involving Borrower as debtor, Administrative Agent, on behalf of the Lenders,
shall have the right to prove its claim in any such proceeding so as to
establish its rights hereunder and shall have the right to receive directly
from the receiver, trustee or other custodian (whether or not a Default shall
have occurred or be continuing under any of the Loan Documents), dividends and
payments that are payable upon any obligation of Borrower to Guarantor now
existing or hereafter arising, and to have all benefits of any security
therefor, until the Guaranteed Obligations have been fully and finally paid and
performed.  If, notwithstanding the
foregoing provisions, Guarantor should receive any payment, claim or
distribution that is prohibited as provided above in this Section 5,
Guarantor shall pay the same to Administrative Agent, on behalf of the Lenders,
immediately, Guarantor hereby agreeing that it shall receive the payment, claim
or distribution in trust for Administrative Agent, on behalf of the Lenders,
and shall have absolutely no dominion over the same except to pay it
immediately to Administrative Agent; and

(d)           Guarantor shall promptly upon request
of Administrative Agent from time to time execute such documents and perform
such acts as Administrative Agent may require to evidence 

 8
 

and perfect its interest
and to permit or facilitate exercise of its rights under this Section 5,
including, but not limited to, execution and delivery of financing statements,
proofs of claim, further assignments and security agreements, and delivery to
Administrative Agent of any promissory notes or other instruments evidencing
indebtedness of Borrower to Guarantor. 
All promissory notes, accounts receivable ledgers or other evidences,
now or hereafter held by Guarantor, of obligations of Borrower to Guarantor
shall contain a specific written notice thereon that the indebtedness evidenced
thereby is subordinated under and is subject to the terms of this Guaranty.

6.             Other Liability of
Guarantor or Borrower.  If
Guarantor is or becomes liable, by endorsement or otherwise, for any
indebtedness owing by Borrower to Lenders other than under this Guaranty, such
liability shall not be in any manner impaired or affected hereby, and the
rights of Lenders hereunder shall be cumulative of any and all other rights
that Lenders may have against Guarantor. 
If Borrower is or becomes indebted to Lenders for any indebtedness other
than or in excess of the Indebtedness for which Guarantor is liable under this
Guaranty, any payment received or recovery realized upon such other
indebtedness of Borrower to Lenders may, except to the extent paid by Guarantor
on the Indebtedness or specifically required by law or agreement of
Administrative Agent to be applied to the Indebtedness, in Administrative Agent’s
sole discretion, be applied upon indebtedness of Borrower to Lenders other than
the Indebtedness.  This Guaranty is
independent of (and shall not be limited by) any other guaranty now existing or
hereafter given.  Further, Guarantor’s
liability under this Guaranty is in addition to any and all other liability
Guarantor may have in any other capacity, including without limitation, its
capacity as a general partner.

7.             Lenders’ Assigns.  This Guaranty is for the benefit of
Administrative Agent and the other Lenders and their successors and assigns,
and in the event of an assignment of the Guaranteed Obligations, or any part
thereof, the rights and benefits hereunder, to the extent applicable to the
Guaranteed Obligations so assigned, may be transferred with such Guaranteed
Obligations.  Guarantor waives notice of
any transfer or assignment of the Guaranteed Obligations, or any part thereof,
and agrees that failure to give notice of any such transfer or assignment will
not affect the liabilities of Guarantor hereunder.

8.             Binding Effect.  This Guaranty is binding not only on
Guarantor, but also on Guarantor’s heirs, personal representatives, successors
and assigns.  Upon the death of
Guarantor, if Guarantor is a natural person, this Guaranty shall continue
against Guarantor’s estate as to all of the Guaranteed Obligations, including
that portion incurred or arising after the death of Guarantor and shall be
provable in full against Guarantor’s estate, whether or not the Guaranteed
Obligations are then due and payable.  If
this Guaranty is signed by more than one Person, then all of the obligations of
Guarantor arising hereunder shall be jointly and severally binding on each of
the undersigned, and their respective heirs, personal representatives,
successors and assigns, and the term “Guarantor” shall mean all of such Persons
and each of them individually.

9.             Governing Law; Forum;
Consent to Jurisdiction.  
The validity, enforcement, and interpretation of this Guaranty, shall
for all purposes be governed by and construed in accordance with the laws of
the State of Texas and applicable United States federal law, and is intended to
be performed in accordance with, and only to the extent permitted by, such
laws.  All obligations of Guarantor
hereunder are payable and performable at the place or places where the 

 9
 

Guaranteed Obligations
are payable and performable.  Guarantor
hereby irrevocably submits generally and unconditionally for Guarantor and in
respect of Guarantor’s property to the nonexclusive jurisdiction of any state
court, or any United States federal court, sitting in the state specified in
the first sentence of this Section and to the jurisdiction of any state or
United States federal court sitting in the state in which any of the Land is
located, over any suit, action or proceeding arising out of or relating to this
Guaranty or the Guaranteed Obligations.  
Guarantor hereby irrevocably waives, to the fullest extent permitted by
law, any objection that Guarantor may now or hereafter have to the laying of
venue in any such court and any claim that any such court is an inconvenient
forum.  Final judgment in any such suit,
action or proceeding brought in any such court shall be conclusive and binding
upon Guarantor and may be enforced in any court in which Guarantor is subject
to jurisdiction.  Guarantor hereby agrees
and consents that, in addition to any methods of service of process provided
for under applicable law, all service of process in any such suit, action or
proceeding in any state court, or any United States federal court, sitting in
the state specified in the first sentence of this Section may be made by
certified or registered mail, return receipt requested, directed to Guarantor
at the address set forth at the end of this Guaranty, or at a subsequent
address of which Administrative Agent receives actual notice from Guarantor in
accordance with the notice provisions hereof, and service so made shall be
complete five (5) days after the same shall have been so mailed.  Nothing herein shall affect the right of
Administrative Agent to serve process in any manner permitted by law or limit the
right of Administrative Agent, on behalf of the Lenders, to bring proceedings
against Guarantor in any other court or jurisdiction.  Guarantor hereby releases, to the extent
permitted by applicable law, all errors and all rights of exemption, appeal, stay
of execution, inquisition, and other rights to which the Guarantor may
otherwise be entitled under the laws of the United States of America or any
State or possession of the United States of America now in force or which may
hereinafter be enacted.  The authority
and power to appear for and enter judgment against the Guarantor shall not be
exhausted by one or more exercises thereof or by any imperfect exercise thereof
and shall not be extinguished by any judgment entered pursuant thereto. Such
authority may be exercised on one or more occasions or from time to time in the
same or different jurisdiction as often as the Administrative Agent shall deem
necessary and desirable.

10.           Invalidity of Certain
Provisions. If any provision of this Guaranty or the application
thereof to any Person or circumstance shall, for any reason and to any extent,
be declared to be invalid or unenforceable, neither the remaining provisions of
this Guaranty nor the application of such provision to any other Person or
circumstance shall be affected thereby, and the remaining provisions of this
Guaranty, or the applicability of such provision to other Persons or
circumstances, as applicable, shall remain in effect and be enforceable to the
maximum extent permitted by applicable law.

11.           Attorneys’ Fees and Costs
of Collection.  Guarantor
shall pay on demand all attorneys’ fees and all other costs and expenses
incurred by Administrative Agent, on behalf of the other Lenders, in the
enforcement of or preservation of Lenders’ rights under this Guaranty
including, without limitation, all attorneys’ fees and expenses, investigation
costs, and all court costs, whether or not suit is filed hereon, or whether at
maturity or by acceleration, or whether before or after maturity, or whether in
connection with bankruptcy, insolvency or appeal, or whether in connection with
the collection and enforcement of this Guaranty against any other Guarantor, if
there be more than one.  Guarantor agrees
to pay interest on any expenses or other sums due to 

 10
 

Administrative Agent
under this Section 11 that are not paid when due, at a rate per annum
equal to the interest rate provided for in the Note.  Guarantor’s obligations and liabilities under
this Section 11 shall survive any payment or discharge in full of the
Guaranteed Obligations.

12.           Payments.  All sums payable under this Guaranty shall be
paid in lawful money of the United States of America that at the time of
payment is legal tender for the payment of public and private debts.

13.           Controlling Agreement.  It is not the intention of Lenders or
Guarantor to obligate Guarantor to pay interest in excess of that lawfully
permitted to be paid by Guarantor under applicable law.   Should it be determined that any portion of
the Guaranteed Obligations or any other amount payable by Guarantor under this
Guaranty constitutes interest in excess of the maximum amount of interest that
Guarantor, in Guarantor’s capacity as guarantor, may lawfully be required to
pay under applicable law, the obligation of Guarantor to pay such interest
shall automatically be limited to the payment thereof in the maximum amount so
permitted under applicable law.  The
provisions of this Section 13 shall override and control all other
provisions of this Guaranty and of any other agreement between Guarantor and
Administrative Agent, on behalf of the Lenders.

14.           Representations,
Warranties, and Covenants of Guarantor.  Guarantor hereby represents, warrants, and
covenants to Administrative Agent and the other Lenders that (a) Guarantor
owns, directly or indirectly, an interest in Borrower and will derive a
material and substantial benefit, directly or indirectly, from the making of
the Loan to Borrower and from the making of this Guaranty by Guarantor; (b)
this Guaranty is duly authorized and valid, and is binding upon and enforceable
against Guarantor; (c) Guarantor is not, and the execution, delivery and
performance by Guarantor of this Guaranty will not cause Guarantor to be, in
violation of any law or in default (or at risk of acceleration of indebtedness)
under any agreement or restriction by which Guarantor is bound or affected; (d)
Guarantor is duly organized, validly existing, and in good standing under the
laws of the state of its organization and has full power and authority to enter
into and perform this Guaranty; (e) Guarantor will indemnify Administrative
Agent and the other Lenders from any loss, cost or expense as a result of any
representation or warranty of the Guarantor being false, incorrect, incomplete
or misleading in any material respect; (f) there is no litigation pending or,
to the knowledge of Guarantor, threatened before or by any tribunal against or
affecting Guarantor; (g) all financial statements and information regarding
Guarantor heretofore furnished to Administrative Agent by Guarantor do, and all
financial statements and such information hereafter furnished to Administrative
Agent by Guarantor will, fairly and accurately present the condition (financial
or otherwise) of Guarantor as of their dates and the results of Guarantor’s
operations for the periods therein specified, and, since the date of the most
recent financial statements of Guarantor heretofore furnished to Administrative
Agent, no material adverse change has occurred in the financial condition of
Guarantor, nor, except as heretofore disclosed in writing to Administrative
Agent, has Guarantor incurred any material liability, direct or indirect, fixed
or contingent except liabilities incurred in the ordinary course of business;
(h) after giving effect to this Guaranty, Guarantor is solvent, is not engaged
or about to engage in business or a transaction for which the property of
Guarantor is an unreasonably small capital, and does not intend to incur or
believe that it will incur debts that will be beyond its ability to pay as such
debts mature; (i) Lenders 

 11
 

have no duty at any time
to investigate or inform Guarantor of the financial or business condition or
affairs of Borrower or any change therein, and Guarantor will keep fully
apprised of  Borrower’s financial and
business condition; (j) Guarantor acknowledges and agrees that Guarantor may be
required to pay and perform the Guaranteed Obligations in full without
assistance or support from Borrower or any other Person; and (k) Guarantor has
read and fully understands the provisions contained in the Note, the Loan
Agreement, the Deed of Trust, and the other Loan Documents.  Guarantor’s representations, warranties and
covenants are a material inducement to Lenders to enter into the other Loan
Documents and shall survive the execution hereof and any bankruptcy,
foreclosure, transfer of security or other event affecting Borrower, Guarantor,
any other party, or any security for all or any part of the Guaranteed
Obligations.

15.           Notices.  All notices, requests, consents, demands and
other communications required or which any party desires to give hereunder or
under any other Loan Document shall be in writing and, unless otherwise
specifically provided in such other Loan Document, shall be deemed sufficiently
given or furnished if delivered by personal delivery, by courier, or by
registered or certified United States mail, postage prepaid, addressed to the
party to whom directed at the addresses specified in this Guaranty (unless
changed by similar notice in writing given by the particular party whose
address is to be changed) or by facsimile with a confirmatory duplicate copy
sent by first class United States mail), addressed to the party to whom
directed or by electronic mail address, at the addresses set forth at the end
of this Agreement or to Administrative Agent or Lenders at the addresses
specified for notices in the Loan Agreement (unless changed by similar notice
in writing given by the particular party whose address is to be changed).  Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the
case of courier or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or, in the case of facsimile, upon
receipt; provided that, service of a notice required by any applicable statute
shall be considered complete when the requirements of that statute are
met.  Notwithstanding the foregoing, no
notice of change of address shall be effective except upon actual receipt.  This Section shall not be construed in any
way to affect or impair any waiver of notice or demand provided in this
Guaranty or in any Loan Document or to require giving of notice or demand to or
upon any Person in any situation or for any reason.

16.           Cumulative Rights.  The exercise by Administrative Agent, on
behalf of the other Lenders, of any right or remedy hereunder or under any
other Loan Document, or at law or in equity, shall not preclude the concurrent
or subsequent exercise of any other right or remedy.  Administrative Agent, on behalf of the
Lenders, shall have all rights, remedies and recourses afforded to Lenders by
reason of this Guaranty or any other Loan Document or by law or equity or
otherwise, and the same (a) shall be cumulative and concurrent, (b) may be
pursued separately, successively or concurrently against Guarantor or others
obligated for the Guaranteed Obligations, or any part thereof, or against any
one or more of them, or against any security or otherwise, at the sole and
absolute discretion of Administrative Agent, on behalf of the Lenders, (c) may
be exercised as often as occasion therefor shall arise, it being agreed by
Guarantor that the exercise of, discontinuance of the exercise of or failure to
exercise any of such rights, remedies, or recourses shall in no event be
construed as a waiver or release thereof or of any other right, remedy, or
recourse, and (d) are intended to be, and shall be, nonexclusive.  No waiver of any default on the part of
Guarantor or of any breach of any of the provisions of this 

 12
 

Guaranty or of any other
document shall be considered a waiver of any other or subsequent default or
breach, and no delay or omission in exercising or enforcing the rights and
powers granted herein or in any other document shall be construed as a waiver
of such rights and powers, and no exercise or enforcement of any rights or
powers hereunder or under any other document shall be held to exhaust such
rights and powers, and every such right and power may be exercised from time to
time. The granting of any consent, approval or waiver by Administrative Agent,
on behalf of the Lenders, shall be limited to the specific instance and purpose
therefor and shall not constitute consent or approval in any other instance or
for any other purpose.  No notice to or
demand on Guarantor in any case shall of itself entitle Guarantor to any other
or further notice or demand in similar or other circumstances.  No provision of this Guaranty or any right,
remedy or recourse of Lenders with respect hereto, or any default or breach,
can be waived, nor can this Guaranty or Guarantor be released or discharged in
any way or to any extent, except specifically in each case by a writing
intended for that purpose (and which refers specifically to this Guaranty)
executed, and delivered to Guarantor, by Administrative Agent, on behalf of the
Lenders.

17.           Term of Guaranty.  This Guaranty shall continue in effect until
all the Guaranteed Obligations are fully and finally paid, performed and
discharged, except that, and notwithstanding any return of this Guaranty to
Guarantor, this Guaranty shall continue in effect (i) with respect to any of
the Guaranteed Obligations that survive the full and final payment of the
indebtedness evidenced by the Note, (ii) with respect to all obligations and
liabilities of Guarantor under Section 11 and (iii) as provided in Section
4(b).

18.           Financial Statements.

(a)           As used in this Section, “Financial
Statements” means a balance sheet, income statement, statements of cash
flow and amount and sources of contingent liabilities, a reconciliation of
changes in equity and liquidity verification, and, unless Administrative Agent
otherwise consents, consolidated statements if the reporting party is a holding
company or a parent of a subsidiary entity. 
Each party for whom Financial Statements are required is a “reporting
party” and a specified period to which the required Financial Statements relate
is a “reporting period”.

(b)           Guarantor shall provide or cause to
be provided to Administrative Agent the following:

i)              within one hundred twenty (120)
days after the close of each fiscal year of Guarantor during the term of the
Loan, annual, audited Financial Statements of Guarantor;

ii)             within seventy-five (75) days after
the close of each quarter of each fiscal year of Guarantor during the term of
the Loan, quarterly, unaudited Financial Statements of Guarantor together with
a Compliance Certificate for Guarantor, executed by any executive level officer
of Guarantor, in the form of that attached hereto as Exhibit A (“Compliance
Certificate”) evidencing Guarantor’s compliance (or non-compliance, as
applicable) with the covenants in this Section 18; and

 13
 

iii)            from time to time promptly after
Administrative Agent’s request, such additional information, reports and
statements regarding the business operations and financial condition of each
reporting party as Administrative Agent may reasonably request.

All Financial Statements shall be in form and detail
satisfactory to Administrative Agent in its good faith business judgment and
shall contain or be attached to the signed and dated written certification of
the reporting party in form satisfactory to Administrative Agent to certify
that the Financial Statements are furnished to Administrative Agent in connection
with the extension of credit by Administrative Agent and constitute a true and
correct statement of the reporting party’s financial position.  Administrative Agent agrees that the
Financial Statements of Guarantor delivered to Administrative Agent in
satisfaction of the conditions to closing and funding of the Loan are
satisfactory as to form, detail and accounting principles used therein and
Financial Statements to be provided in satisfaction of the requirements of this
Guaranty shall be satisfactory to Administrative Agent as to form, detail and
accounting principles if consistent with such Financial Statements.  All certifications and signatures on behalf
of corporations, partnerships or other entities shall be by an authorized
representative of the entity satisfactory to Administrative Agent in its good
faith business judgment.  Except as
provided in Section 18(b) above, all Financial Statements shall be
audited or certified, as required by Administrative Agent, without any
qualification or exception not acceptable to Administrative Agent in its good
faith business judgment, by Travis, Wolff & Company, L.L.P. or another
independent certified public accountants acceptable to Administrative Agent,
and shall contain all reports and disclosures required by generally accepted
accounting principles for a fair presentation. All assets shown on the
Financial Statements provided by Guarantor, unless clearly designated to the
contrary shall, be conclusively deemed to be free and clear of any exemption or
any claim of exemption of Guarantor at the date of the Financial Statements and
at all times thereafter. Acceptance of any Financial Statement by
Administrative Agent, whether or not in the form prescribed herein, shall be
relied upon by Administrative Agent in the administration, enforcement, and
extension of the Guaranteed Obligations.

(c)           Guarantor covenants and agrees with
Administrative Agent and the other Lenders that it will comply with the
following:

i)              Guarantor will maintain, as of
each Test Date during the term of the Loan, Liquid Assets of at least
$2,000,000.00;

ii)             Guarantor will maintain, as of each
Test Date during the term of the Loan, a Tangible Net Worth of not less than
$30,000,000.00;

iii)            As of each Test Date during the term
of the Loan, the ratio (expressed as a percentage) of (A) all Liabilities
of Guarantor for the calendar quarter ending on such Test Date, to (B) all
assets of Guarantor determined in accordance with GAAP for the calendar quarter
ending on the same Test Date, shall not be greater than seventy-five percent
(75%).

(d)           For purposes of this Section 18,
the following capitalized terms have the meanings set forth below:

 14
 

“GAAP” means generally accepted accounting
principles in the United States set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable
to the circumstances as of the date of determination, consistently applied.

“Liabilities” means, as to Guarantor, without
duplication, all indebtedness, liabilities and obligations of Guarantor,
whether matured or unmatured, liquidated or unliquidated, primary or secondary,
direct or indirect, absolute, fixed or contingent, and whether or not required
to be considered pursuant to GAAP.

“Liquid Assets” means the sum of the total
assets of Guarantor that are cash, cash equivalents, accounts and other highly
liquid investments that are not pledged, hypothecated, subject to rights of
offset or otherwise restricted.

“Tangible Net Worth” shall mean the excess of
total assets over total liabilities (contingent or otherwise, including without
limitation, declared and unpaid distributions to partners of Guarantor)
determined in accordance with GAAP; excluding, however, all assets that are
classified under GAAP as intangible, including, without limitation, goodwill,
licenses, patents, trademarks, trade names, copyrights and franchises.

“Test Date” shall mean, the last date of each
calendar quarter (i.e., every December 31st, March 31st, June 30th and
September 30th) during the term of the Loan.

19.           Disclosure of Information.  Lenders may sell or offer to sell the Loan or
interests in the Loan to one or more assignees or participants and may disclose
to any such assignee or participant or prospective assignee or participant, to
Lenders’ affiliates, to any regulatory body having jurisdiction over Lenders
and to any other parties as necessary or appropriate in any Lender’s reasonable
judgment, any information Lenders now have or hereafter obtain pertaining to
the Guaranteed Obligations, this Guaranty, or Guarantor, including, without
limitation, information regarding any security for the Guaranteed Obligations
or for this Guaranty, credit or other information on Guarantor, Borrower,
and/or any other party liable, directly or indirectly, for any part of the Guaranteed
Obligations.  Any disclosures by Lenders
or Administrative Agent pursuant to this Section 19 shall be made in
compliance with the provisions of Section 6.6 of the Loan Agreement.

20.           Right of Set-Off.  Upon the occurrence and during the
continuance of any Default, however defined, in the payment or performance when
due of any of the Guaranteed Obligations, each Lender is hereby authorized at
any time and from time to time with prior notice to and consent of
Administrative Agent, to the fullest extent permitted by applicable law,
without notice to any Person (any such notice being expressly waived by
Guarantor to the fullest extent permitted by applicable law), to set off and
apply any and all deposits, funds, or assets at any time held and other indebtedness
at any time owing by such Lender to or for the credit or the account of
Guarantor against any and all of the obligations of Guarantor now or hereafter
existing under this Guaranty that are then due and payable.  Such Lender will promptly notify Guarantor
after any such set-off and application made by such Lender, provided that
the failure 

 15
 

to give such notice shall
not affect the validity of such set-off and application.  The rights of Lenders under this Section
20 are in addition to the other rights and remedies (including other rights
of set-off) that Administrative Agent may have, on behalf of all Lenders,
and every right of setoff and lien shall continue in full force and effect
until such right of setoff or lien is specifically waived or released by an
instrument in writing executed by Administrative Agent.

21.           Subrogation.  Notwithstanding anything to the contrary
contained herein, Guarantor shall not have any right of subrogation in or under
any of the Loan Documents or to participate in any way therein, or in any
right, title or interest in and to any security or right of recourse for the
Indebtedness or any right to reimbursement, exoneration, contribution,
indemnification or any similar rights against any party liable for the
Indebtedness, until the Indebtedness has been fully paid.  This waiver is given to induce Lenders to
make the Loan to Borrower.

22.           Further Assurances.  Guarantor at Guarantor’s expense will
promptly execute and deliver to Administrative Agent upon Administrative Agent’s
request all such other and further documents, agreements, and instruments in
compliance with or accomplishment of the agreements of Guarantor under this
Guaranty.

23.           No Fiduciary Relationship.  The relationship between Lenders and
Guarantor is solely that of lender and guarantor.  Lenders have no fiduciary or other special
relationship with or duty to Guarantor and none is created hereby or may be
inferred from any course of dealing or act or omission of any Lender.

24.           Interpretation.  If this Guaranty is signed by more than one
Person as “Guarantor”, then the term “Guarantor” as used in this Guaranty shall
refer to all such Persons, jointly and severally, and all promises, agreements,
covenants, waivers, consents, representations, warranties and other provisions
in this Guaranty are made by and shall be binding upon each and every such
Person, jointly and severally and Administrative Agent, on behalf of all
Lenders, may pursue any Guarantor hereunder without being required (i) to
pursue any other Guarantor hereunder or (ii) pursue rights and remedies under
the Deed of Trust and/or applicable law with respect to the Property or any
other Loan Documents.  The term “Administrative
Agent” shall be deemed to include any subsequent administrative agent appointed
under the Loan Agreement.  Whenever the
context of any provisions hereof shall require it, words in the singular shall
include the plural, words in the plural shall include the singular, and
pronouns of any gender shall include the other gender. Captions and headings in
the Loan Documents are for convenience only and shall not affect the
construction of the Loan Documents.  All
references in this Guaranty to Schedules, Articles, Sections, Subsections,
paragraphs and subparagraphs refer to the respective subdivisions of this
Guaranty, unless such reference specifically identifies another document.  The terms “herein”, “hereof”, “hereto”, “hereunder”
and similar terms refer to this Guaranty and not to any particular Section or
subsection of this Guaranty.  The terms “include”
and “including” shall be interpreted as if followed by the words “without
limitation”.  All references in this
Guaranty to sums denominated in dollars or with the symbol “$” refer to the
lawful currency of the United States of America, unless such reference
specifically identifies another currency. 
For purposes of this Guaranty, “Person” or “Persons” shall include
firms, associations, partnerships (including limited partnerships), joint
ventures, trusts, corporations, limited liability companies, and other legal
entities, including governmental bodies, agencies, or instrumentalities, as
well as natural persons.

 16
 

25.           Time of Essence.  Time shall be of the essence in this Guaranty
with respect to all of Guarantor’s obligations hereunder.

26.           Counterparts.  This Guaranty may be executed in multiple
counterparts, each of which, for all purposes, shall be deemed an original, and
all of which taken together shall constitute but one and the same agreement.

27.           Entire Agreement.  This Guaranty embodies the entire agreement
between Lenders and Guarantor with respect to the guaranty by Guarantor of the
Guaranteed Obligations.  This Guaranty
supersedes all prior agreements and understandings, if any, with respect to the
guaranty by Guarantor of the Guaranteed Obligations.  No condition or conditions precedent to the
effectiveness of this Guaranty exist. 
This Guaranty shall be effective upon execution by Guarantor and
delivery to Administrative Agent.  This
Guaranty may not be modified, amended or superseded except in a writing signed
by Administrative Agent, on behalf of the Lenders, and Guarantor referencing
this Guaranty by its date and specifically identifying the portions hereof that
are to be modified, amended or superseded.

28.           Dispute Resolution.

 

(a)           Arbitration.  Except to the extent expressly provided
below, any controversy, claim or dispute between or among the parties hereto,
including any such controversy, claim or dispute arising out of or relating to
(i) this Guaranty, (ii) any other Loan Document, (iii) any related agreements
or instruments, or (iv) the transaction contemplated herein or therein
(including any claim based on or arising from an alleged personal injury or
business tort) (collectively, a “Dispute”), shall, upon the request of
either party, be determined by binding arbitration in accordance with the
Federal Arbitration Act, Title 9, United States Code (or if not applicable, the
applicable state law), the then current rules for arbitration of financial
services disputes of the American Arbitration Association, or any successor
thereof (“AAA”), and the “Special Rules” set forth below.  In the event of any inconsistency, the
Special Rules shall control.  The filing
of a court action is not intended to constitute a waiver of the right of
Guarantor or Lenders, including the suing party, thereafter to require
submittal of the Dispute to arbitration. 
Any party to this Guaranty may bring an action, including a summary or
expedited proceeding, to compel arbitration of any Dispute in any court having
jurisdiction over such action.  For the
purposes of this Dispute Resolution Section only, the terms “party” and “parties”
shall include any parent corporation, subsidiary or affiliate of Lenders
involved in the servicing, management or administration of any obligation
described in or evidenced by this Guaranty, together with the officers,
employees, successors and assigns of each of the foregoing.

(b)           Special Rules.

(i)            The arbitration shall be conducted in the City of Dallas,
Texas.

(ii)           The arbitration shall be administered by AAA, who will
appoint an arbitrator; if AAA is unwilling or unable to administer or legally
precluded from administering the arbitration or if AAA is unwilling or unable
to enforce or legally precluded from enforcing any and all provisions of this
Dispute Resolution Section, then any party to this Guaranty may substitute,
without the necessity of the agreement of 

 17
 

consent
of the other party or parties, another arbitration organization that has
similar procedures to AAA but that will observe and enforce any and all
provisions of this Dispute Resolution Section. 
All Disputes shall be determined by one arbitrator; however, if the
amount in controversy in a Dispute exceeds Five Million Dollars ($5,000,000),
upon the request of any party, the Dispute shall be decided by three
arbitrators (for purposes of this Guaranty, referred to collectively as the “arbitrator”).

(iii)          All arbitration hearings will be commenced within ninety
(90) days of the demand for arbitration and completed within ninety (90) days
from the date of commencement; provided, however, that upon a showing of good
cause, the arbitrator shall be permitted to extend the commencement of such
hearing for up to an additional sixty (60) days.

(iv)          The judgment and the award, if any, of the arbitrator shall
be issued within thirty (30) days of the close of the hearing.  The arbitrator shall provide a concise
written statement setting forth the reasons for the judgment and for the award,
if any.  The arbitration award, if any,
may be submitted to any court having jurisdiction to be confirmed and enforced,
and such confirmation and enforcement shall not be subject to arbitration.

(v)           The arbitrator will give effect to statutes of
limitations and any waivers thereof in determining the disposition of any
Dispute and may dismiss one or more claims in the arbitration on the basis that
such claim or claims is or are barred. 
For purposes of the application of the statute of limitations, the
service on AAA under applicable AAA rules of a notice of Dispute is the
equivalent of the filing of a lawsuit.

(vi)          Any dispute concerning this Dispute Resolution Section,
including any such dispute as to the validity or enforceability of this
provision, or whether a Dispute is arbitrable, shall be determined by the
arbitrator; provided, however, that the arbitrator shall not be permitted to
vary the express provisions of the Special Rules or the Reservation of Rights
in subsection (c) below.

(vii)         The arbitrator shall have the power to award legal fees and
costs pursuant to the terms of this Guaranty.

(viii)        The arbitration will take place on an
individual basis without reference to, resort to, or consideration of any form
of class or class action.

(c)           Reservations of Rights.  Nothing in this Guaranty shall be deemed to
(i) limit the applicability of any otherwise applicable statutes of
limitation and any waivers contained in this Guaranty, or (ii) apply to or
limit the right of Administrative Agent, on behalf of the Lenders, (A) to exercise
self help remedies such as (but not limited to) setoff, or (B) to
foreclose judicially or nonjudicially against any real or personal property
collateral, or to exercise judicial or nonjudicial power of sale rights,  (C) to obtain from a court provisional
or ancillary remedies such as (but not limited to) injunctive relief, writ of
possession, prejudgment attachment, or the appointment of a receiver , or (D)
to pursue rights against a party to this Guaranty in a third-party proceeding
in any action brought against any Lender in a state, federal or international
court, 

 18
 

tribunal or hearing body
(including actions in specialty courts, such as bankruptcy and patent
courts).  Administrative Agent, on behalf
of the Lenders, may exercise the rights set forth in clauses (A) through
(D), inclusive, before, during or after the pendency of any arbitration
proceeding brought pursuant to this Guaranty. 
Neither the exercise of self help remedies nor the institution or
maintenance of an action for foreclosure or provisional or ancillary remedies
shall constitute a waiver of the right of any party, including the claimant in
any such action, to arbitrate the merits of the Dispute occasioning resort to
such remedies.  No provision in the Loan
Documents regarding submission to jurisdiction and/or venue in any court is
intended or shall be construed to be in derogation of the provisions in any
Loan Document for arbitration of any Dispute.

(d)           Conflicting Provisions for Dispute
Resolution.  If there is any conflict
between the terms, conditions and provisions of this Section and those of any
other provision or agreement for arbitration or dispute resolution, the terms,
conditions and provisions of this Section shall prevail as to any Dispute
arising out of or relating to (i) this Guaranty, (ii) any other Loan Document,
(iii) any related agreements or instruments, or (iv) the transaction
contemplated herein or therein (including any claim based on or arising from an
alleged personal injury or business tort). 
In any other situation, if the resolution of a given Dispute is
specifically governed by another provision or agreement for arbitration or
dispute resolution, the other provision or agreement shall prevail with respect
to said Dispute.

(e)           Jury Trial Waiver in Arbitration.  By agreeing to this Section, the parties
irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of any Dispute.

29.           WAIVER OF JURY TRIAL.  WITHOUT INTENDING IN ANY
WAY TO LIMIT THE PARTIES’ AGREEMENT TO ARBITRATE ANY “DISPUTE” (FOR PURPOSES OF
THIS SECTION, AS DEFINED ABOVE) AS SET FORTH IN THIS GUARANTY, TO THE EXTENT
ANY “DISPUTE” IS NOT SUBMITTED TO ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR
BY ANY COURT WITH JURISDICTION TO BE NOT ARBITRABLE OR NOT REQUIRED TO BE
ARBITRATED, GUARANTOR AND ADMINISTRATIVE AGENT, ON BEHALF OF ALL LENDERS, WAIVE
TRIAL BY JURY IN RESPECT OF ANY SUCH “DISPUTE” AND ANY ACTION ON SUCH “DISPUTE.”  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY GUARANTOR AND ADMINISTRATIVE AGENT, ON BEHALF OF ALL
LENDERS, AND GUARANTOR AND ADMINISTRATIVE AGENT HEREBY REPRESENT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY
ACTING FOR OR ON BEHALF OF ADMINISTRATIVE AGENT OR LENDERS TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. 
GUARANTOR AND ADMINISTRATIVE AGENT ARE EACH HEREBY AUTHORIZED TO FILE A
COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF
JURY TRIAL.  GUARANTOR FURTHER REPRESENTS
AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS GUARANTY AND
IN THE MAKING OF 

 19
 

THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL
COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.

30.           Credit
Verification.  Each
legal entity and individual obligated on this Guaranty, whether as a Guarantor,
a general partner of a Guarantor or in any other capacity, hereby authorizes
Administrative Agent to check any credit references, verify his/her employment
and obtain credit reports from credit reporting agencies of Administrative
Agent’s choice in connection with any monitoring, collection or future
transaction concerning the Loan, including any modification, extension or
renewal of the Loan.  Also in connection
with any such monitoring, collection or future transaction, Administrative
Agent is hereby authorized to check credit references, verify employment and
obtain a third party credit report for the spouse of any married person
obligated on this Guaranty, if such person lives in a community property state.

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

[Remainder
of This Page Intentionally Left Blank]

 20

IN WITNESS WHEREOF, Guarantor duly executed this
Guaranty under seal as of the date first written above.

	
  Address of Guarantor:

  	
  GUARANTOR:

  	
   

  
	
   

  	
   

  	
   

  
	
  Behringer Harvard Short-Term 

  Opportunity Fund I, LP

  	
  BEHRINGER HARVARD SHORT-TERM OPPORTUNITY 

  FUND I LP, a Texas limited partnership

  
	
  15601 Dallas Parkway, Suite 600

  	
   

  	
   

  
	
  Dallas, TX 75001

  	
  By:

  	
  BEHRINGER HARVARD ADVISORS II LP,

  
	
  Attention: Gerald J. Reihsen, III

  	
   

  	
  a Texas limited partnership,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  HARVARD PROPERTY TRUST, LLC,

  
	
   

  	
   

  	
   

  	
  a Delaware limited liability company,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  
	
   

  	
   

  	
   

  	
  Development & Legal and Secretary

  
							

 

 

Signature Page

 

 

	
  Address of Administrative
  Agent:

  	
   

  	
  BANK OF AMERICA, N.A., individually as

  
	
   

  	
   

  	
  Administrative Agent and L/C Issuer

  
	
  Bank of America, N.A.

  	
   

  	
   

  
	
  901 Main Street, 21st Floor

  	
   

  	
   

  
	
  Dallas, Texas 75202

  	
   

  	
  By:

  	
   

  	
   

  
	
  Attention: Jamison L. Fox

  	
   

  	
  Name:

  	
  Jamison L. Fox

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

EXHIBIT “A”

FORM OF COMPLIANCE CERTIFICATE

COMPLIANCE
CERTIFICATE

	
  To:

  	
  Bank of America, N.A., Administrative Agent (“Administrative
  Agent”)

  
	
   

  	
  901 Main Street, 21st Floor

  
	
   

  	
  Dallas, Texas 75202-3714

  
	
   

  	
  Attention: Ms. Yelda Tuz

  
	
   

  	
   

  	
   

  
	
   

  	
  Re:

  	
  $42,000,000.00 Loan to Behringer Harvard Mockingbird
  Commons, LLC

  

 

1.             The undersigned certifies to Administrative Agent and
the other Lenders that he/she is the Chief Financial Officer of Behringer
Harvard Short-Term Opportunity Fund I, LP (“Guarantor”) or its general
partner and that this Compliance Certificate has been prepared pursuant to the
Guaranty Agreement dated as of September     , 2007 (“Guaranty”)
executed by Guarantor.  Capitalized terms
used herein but not otherwise defined herein shall have the meanings given to
such terms in the Guaranty.

2.             The undersigned further certifies
to Administrative Agent and the other Lenders that (i) a review of the
activities of Guarantor, as of the fiscal quarter ending                                    ,
(the “Reporting Period”) has been made under my supervision with a view
to determining whether Guarantor has fulfilled all of its obligations during
the Reporting Period under the Guaranty; (ii) Guarantor is in compliance with
all covenants and provisions in the Guaranty, and no Default or Potential
Default has occurred which is continuing.

3.             Pursuant to the Guaranty, the
following documents are delivered to Administrative Agent with this Compliance
Certificate and deemed a part of this Compliance Certificate [check appropriate box]:

o    Quarterly Financial Statements, or

o    Annual Financial Statements.

The Financial Statements
fairly and accurately present, in all material respects, the financial
condition of Guarantor and its Subsidiaries as of the Reporting Period, and
have been prepared in accordance with GAAP.

4.             The undersigned further certifies
to Administrative Agent and the other Lenders that the following amounts and
calculations made pursuant to the Guaranty are true and correct in all material
respects, for the referenced Reporting Period:

FINANCIAL
COVENANTS

1.             Minimum Tangible Net Worth.  Guarantor
will maintain, as of each Test Date during the term of the Loan, a Tangible Net
Worth of not less than $30,000,000.00.

Specify Test Date =

Actual Minimum Tangible Net Worth  as of such Test Date
=  $

In Compliance?  Check One:    o
Yes     o No

2.             Minimum Liquid Assets.  Guarantor shall have Liquid Assets at least
equal to $2,000,000.

Specify Test Date =

Actual Liquid Assets of  Guarantor as of such Test Date
=  $

In Compliance?  Check One:    o
Yes     o No

 1
 

3.                                       Liabilities/Assets.  As
of each Test Date during the term of the Loan, the ratio (expressed as a         percentage) of (A) all liabilities
of Guarantor determined in accordance with GAAP for the calendar         quarter ending on such Test Date, to
(B) the assets of Guarantor determined in accordance with GAAP for the
calendar quarter ending on the same Test Date, shall not be greater than
seventy-five percent (75%).

Specify Test Date =

a)  Actual GAAP Liabilities of
Guarantor as of such Test Date = 
$

b)  Actual GAAP Assets of
Guarantor as of such Test Date = 
$

c)  Ratio of Assets to Net
Worth of Guarantor as of such Test Date =

In Compliance?  Check One::    o
Yes     o No

WITNESS the due
execution of this Compliance Certificate on               200  .

GUARANTOR:

BEHRINGER HARVARD SHORT-TERM OPPORTUNITY FUND
I LP,

a Texas limited partnership

	
  By:

  	
  BEHRINGER HARVARD ADVISORS II LP,

  	
   

  
	
   

  	
  a Texas limited partnership,

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  HARVARD PROPERTY TRUST, LLC,

  	
   

  
	
   

  	
   

  	
  a Delaware limited liability company,

  	
   

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  	
   

  
	
   

  	
   

  	
   

  	
  Development & Legal and Secretary

  	
   

  
						

 

 2Exhibit
10.4

RECORDING
REQUESTED BY AND

WHEN RECORDED MAIL TO:

Ralph G. Santos

Greenberg Traurig, LLP

2200 Ross Avenue

Suite 5200

Dallas, Texas 75201

[SPACE
ABOVE LINE FOR RECORDER’S USE ONLY]

DEED OF
TRUST,  SECURITY AGREEMENT,

FIXTURE FILING AND FINANCING STATEMENT

(This
Document Serves as a fixture filing under Section 9.502
  of the Texas Business and Commerce Code)

Grantor’s Organizational Identification Number:  4374691

THIS DEED OF TRUST, SECURITY
AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (this “Mortgage”)
is made this           day
of September, 2007, by Behringer Harvard Mockingbird Commons, LLC, a Delaware
limited liability company (“Grantor”), whose address is 15601 Dallas
Parkway, Suite 600, Addison, Texas 75001, in favor of Trustee for the benefit
of Bank of America, N.A., a national banking association (“Administrative
Agent”), whose address is 901 Main Street, 21st Floor, Dallas, Texas 75201, Attention:  Real Estate Loan Administration, on behalf of
itself and the other Lenders.

ARTICLE 1

Definitions; Granting
Clauses; Secured Indebtedness

Section 1.1.  Principal Secured.  This Mortgage secures the aggregate principal
amount of Forty Two Million and No/100 Dollars ($42,000,000.00), plus such
additional  amounts as Lender may from time to time
advance pursuant to the terms and conditions of this Mortgage, with respect to
an obligation secured by a lien or encumbrance prior to the lien of this
Mortgage or for the protection of the lien of this Mortgage, together with
interest thereon.

Section
1.2.  Definitions.

(a)           In
addition to other terms defined herein, each of the following terms shall have
the meaning assigned to it, such definitions to be applicable equally to the
singular and the 

 1
 

plural forms of such terms and to all genders (all capitalized
terms used herein and not otherwise defined shall have the meanings given to
such terms in the Loan Agreement):

“Administrative Agent” means Bank of America, N.A., a
national banking association, as Administrative Agent, whose address is 901
Main Street, 21st Floor, Dallas, Texas 75201, Attention:  Real Estate Loan Administration, together
with its successors and assigns in such capacity, each acting hereunder on
behalf of the other Lenders.

“Collateral Assignment” means that certain
Collateral Assignment and Subordination of Hotel Operating Agreement dated on
or about the date hereof, executed by Grantor, Administrative Agent and Kimpton
Hotel & Restaurant Group, LLC, as the same may be modified, amended,
renewed, restated or supplemented from time to time.

“Debtor Relief Law” means any federal, state or local law,
domestic or foreign, as now or hereafter in effect relating to bankruptcy,
insolvency, liquidation, receivership, reorganization, arrangement,
composition, extension or adjustment of debts, or any similar law affecting the
right of creditors.

“Grantor” means Behringer Harvard Mockingbird Commons, LLC, a
Delaware limited liability company, whose address is 15601 Dallas Parkway,
Suite 600, Addison, Texas 75001, and its permitted successors and assigns.

“Guarantor” means Behringer Harvard Short-Term
Opportunity Fund I, LP, a Texas limited partnership.

“Loan” means the loan evidenced by the Loan Agreement and the
Note.

“Loan Agreement” means that certain Loan Agreement dated of
even date herewith, executed by and between Grantor and Administrative Agent
and any other Lenders now or hereafter made a party thereto.

“Note” means, collectively, whether one or more, (a) each
Deed of Trust Note issued by Grantor pursuant to the terms of the Loan Agreement,
in the aggregate principal amount of up to $42,000,000.00, bearing interest as
therein provided, containing a provision for, among other things, the payment
of attorneys’ fees, and (b) all other notes given in substitution thereof
or in modification, supplement, increase, renewal or extension thereof, in
whole or in part, as provided in the Loan Agreement, whether in whole or in
part or one or more, as any or all of such notes may from time to time be
renewed, extended, supplemented, increased or modified, each bearing interest
as provided in the Loan Agreement. 
Additionally, the Loan Agreement provides that the principal balance of
the Loan shall bear interest at a floating rate of interest subject to change from
time to time.

“Trustee” means PRLAP, Inc. or any successor or substitute
appointed and designated as herein provided from time to time acting hereunder,
any one of whom may act alone.

 2
 

“UCC” means the Texas Business and Commerce Code, as amended from time to time.

(b)           Any
term used or defined in the UCC, as in effect from time to time, and not
defined in this Mortgage has the meaning given to the term in the UCC, as in
effect from time to time, when used in this Mortgage. However, if a term is
defined in Chapter 9 of the UCC differently than in another chapter of the UCC,
the term has the meaning specified in Title 9.

Section 1.3.  Granting
Clause.  In consideration of the
provisions of this Mortgage and the sum of TEN DOLLARS ($10.00) cash in hand
paid and other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Grantor, to secure the obligations of Grantor under
the Loan Documents and all other matters and indebtedness constituting the
Secured Indebtedness, Grantor does hereby GRANT, BARGAIN, SELL, CONVEY,
TRANSFER, ASSIGN and SET OVER to Trustee in trust, with the power of sale, for
the benefit of Administrative Agent, the following:  all estate, right, title and interest which
Grantor now has or may hereafter acquire in and to the following Premises, Accessories
and other rights, interests and properties, and all rights, estates, powers and
privileges appurtenant thereto (collectively, the “Property”):

(a)  Grantor’s
right, title and interest in and to the real property described in Exhibit A
which is attached hereto and incorporated herein by reference (the “Land”)
together with (i) any and all buildings, structures, improvements, alterations
or appurtenances now or hereafter situated or to be situated on the Land
(collectively the “Improvements”); (ii) all rights, estates, powers, privileges
and interests of whatever kind or character appurtenant or incident to the
foregoing; and (iii) all right, title and interest of Grantor, now owned or
hereafter acquired, in and to (1) all common area and other use rights,
tenements, hereditaments, streets, roads, alleys, easements, rights-of-way,
licenses, rights of ingress and egress, vehicle parking rights and public
places, existing or proposed, abutting, adjacent, used in connection with or
pertaining or appurtenant to any of the Land or the Improvements; (2) any
strips or gores between the Land and abutting or adjacent properties; and (3)
all options to purchase the Land or the Improvements or any portion thereof or
interest therein, and any greater estate in the Land or the Improvements; and
(4) all water and water rights or shares of stock evidencing water rights,
timber, crops and mineral interests on or pertaining to the Land (the Land,
Improvements and other rights, titles and interests referred to in this clause
(a) being herein sometimes collectively called the “Premises”);

(b) all fixtures, equipment, systems, machinery,
furniture, furnishings, appliances, inventory, goods, building and construction
materials, supplies, elevator fixtures, inventory and goods, inventory and
articles of personal property and accessions thereof and renewals, replacements
thereof and substitutions therefor (including, but not limited to, beds,
bureaus, chiffonniers, chests, chairs, desks lamps, mirrors, bookcases, tables,
rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens,
paintings, hangings, pictures, divans, couches, luggage carts, luggage racks,
stools, sofas, chinaware, linens, pillows, blankets, glassware, silverware,
foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, bars, bar fixtures, liquor and other drink dispensers,
icemakers, radios, 

 3
 

television sets, intercom and paging equipment,
electric and electronic equipment, dictating equipment, private telephone
systems, medical equipment, potted plants, heating, lighting and plumbing
fixtures, fire prevention and extinguishing apparatus, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, stoves,
ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos,
motors, boilers, incinerators, switchboards, conduits, compressors, vacuum
cleaning systems, floor cleaning, waxing and polishing equipment, call systems,
brackets, electrical signs, bulbs, bells, ash and fuel, conveyors, cabinets,
lockers, shelving, spotlighting equipment, dishwashers, garbage disposals,
washers and dryers), other customary hotel equipment and other articles of
personal property, of every kind and character, tangible and intangible
(including software embedded therein), now owned or hereafter acquired by
Grantor, which are now or hereafter attached to or situated in, on or about the
Land or the Improvements, or used in or necessary to the complete and proper
planning, development, use, occupancy or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use or installation in
or on the Land or the Improvements, and all renewals and replacements of,
substitutions for and additions to the foregoing (the properties referred to in
this clause (b) being herein sometimes collectively called the “Accessories,”
all of which are hereby declared to be permanent accessions to the Land);

(c) all (i) plans and specifications for the
Improvements; (ii) Grantor’s rights, but not liability for any breach by
Grantor, under all commitments (including any commitments for financing to pay
any of the Secured Indebtedness, as defined below), insurance policies (or
additional or supplemental coverage related thereto, including  from an
insurance provider meeting the requirements of the Loan Documents or from or
through any state or federal government sponsored program or entity),
Swap Transactions (as hereinafter defined), contracts and agreements for the
design, construction, operation or inspection of the Improvements and other
contracts and general intangibles (including but not limited to payment
intangibles, trademarks, trade names, goodwill, software and symbols) related
to the Premises or the Accessories or the operation thereof; (iii) deposits and
deposit accounts arising from or related to any transactions related to the
Premises or the Accessories (including but not limited to Grantor’s rights in
tenants’ security deposits, deposits with respect to utility services to the
Premises, and any deposits, deposit accounts or reserves hereunder or under any
other Loan Documents (hereinafter defined) for taxes, insurance or otherwise),
rebates or refunds of impact fees or other taxes, assessments or charges,
money, accounts, (including deposit accounts), instruments, documents,
promissory notes and chattel paper (whether tangible or electronic) arising
from or by virtue of any transactions related to the Premises or the
Accessories, and any account, securities account or deposit account (including,
without limitation, reserve accounts and escrow accounts) from which Grantor
may from time to time authorize Administrative Agent to debit and/or credit
payments due with respect to the Loan or any Swap Transaction, all rights to
the payment of money from the counterparty under any Swap Transaction, and all
accounts, deposit accounts and general intangibles, including payment
intangibles, described in any Swap Transaction; (iv) permits, licenses,
franchises, certificates, development rights, commitments and rights for
utilities, and other rights and privileges obtained in connection with the
Premises or the Accessories; (v) leases, rents, royalties, bonuses, issues,
profits, revenues and other benefits of the Premises and the Accessories
(without derogation of Article 3 hereof); (vi) as-extracted 

 4
 

collateral produced from or allocated to the Land
including, without limitation, oil, gas and other hydrocarbons and other
minerals and all products processed or obtained therefrom, and the proceeds
thereof; and (vii) engineering, accounting, title, legal, and other technical
or business data concerning the Property, including software, which are in the
possession of Grantor or in which Grantor can otherwise grant a security
interest;

(d) any all rights and appurtenances
to the Units comprising the Land, including any interest in the Common
Elements, if any, established by the Condominium Declaration, together with any
and all rights (but not the obligations or liabilities) of Grantor arising by
virtue of the Condominium Declaration,
whether as an owner of the Units comprising the Land or Declarant (as such term
is defined in the Condominium Act), including the right to vote, as provided in
the Condominium Declaration;

(e) all rights, titles,
estates, interests and privileges which Grantor has or may have (collectively,
the “Contract Rights”) with respect to any contracts or agreements now
or hereafter executed by Grantor (each a “Unit Sales Contract”)
regarding the sale by Assignor of a Residential Unit including, without
limitation, (A) all of Grantor’s rights in and to (i) all earnest money and
escrow deposits made by any purchaser under such Unit Sales Contract
(collectively, “Earnest Money Deposits”); and (ii) any loan commitment,
guaranty or other financial obligation made by a third party with respect to
the payment of any sums owed to Grantor under such Unit Sales Contract, and (B)
the right to amend and supplement the Unit Sales Contract and to waive any
material obligation or duty thereunder, and the right to terminate and extend
the Unit Sales Contract;

(f)            all (i) rights of Grantor as
Declarant under the Condominium Declaration (including, but not limited to, all
Development Rights, Special Declarant Rights and other rights set forth in
Section 3.6 of the Condominium Declaration Master) to the fullest extent the
forgoing rights arise from or relate to, either directly or indirectly, the
Property and (ii) voting rights of Grantor (including, but not limited to all
voting rights in the Condominium Association Master) as the owner of the
Property; and

(g)              all (i) accounts and proceeds
(cash or non-cash and including payment intangibles) of or arising from the
properties, rights, titles and interests referred to above in this Section 1.3,
including but not limited to proceeds of any sale, lease or other disposition
thereof, proceeds of each policy of insurance (or additional or supplemental
coverage related thereto, including  from an insurance provider meeting the
requirements of the Loan Documents or from or through any state or federal
government sponsored program or entity) relating thereto (including
premium refunds), proceeds of the taking thereof or of any rights appurtenant
thereto, including change of grade of streets, curb cuts or other rights of
access, by condemnation, eminent domain or transfer in lieu thereof for public
or quasi-public use under any law, and proceeds arising out of any damage
thereto; (ii) all letter-of-credit rights (whether or not the letter of credit
is evidenced by a writing) Grantor now has or hereafter acquires relating to
the properties, rights, titles and interests referred to in this Section 1.3;
(iii) all commercial tort claims Grantor now has or hereafter acquires relating
to the properties, rights, titles and interests 

 5
 

referred to in this Section 1.3; and (iv) other
interests of every kind and character which Grantor now has or hereafter
acquires in, to or for the benefit of the properties, rights, titles and
interests referred to above in this Section 1.3 and all property used or
useful in connection therewith, including but not limited to rights of ingress
and egress and remainders, reversions and reversionary rights or interests; and
if the estate of Grantor in any of the property referred to above in this Section
1.3 is a leasehold estate, this conveyance shall include, and the lien and
security interest created hereby shall encumber and extend to, all other or
additional title, estates, interests or rights which are now owned or may
hereafter be acquired by Grantor in or to the property demised under the lease
creating the leasehold estate;

TO HAVE AND TO HOLD the foregoing rights, interests
and properties, and all rights, estates, powers and privileges appurtenant
thereto (herein collectively called the “Property”), unto Trustee, and its
successors or substitutes in this trust, and to its successors and assigns, in
trust, forever, subject to the terms, provisions and conditions herein set
forth, to secure the obligations of Grantor under the Loan Agreement and Loan Documents
(as hereinafter defined) and all other indebtedness and matters defined as “Secured
Indebtedness” (as hereinafter defined).

Section 1.4.  Security
Interest.  Grantor hereby grants to
Administrative Agent a security interest in all of the Property which
constitutes personal property or fixtures, all proceeds and products thereof,
and all supporting obligations ancillary to or arising in any way in connection
therewith (herein sometimes collectively called the “Collateral”) to secure the
obligations of Grantor under the Note, Loan Agreement and Loan Documents and
all other indebtedness and matters defined as Secured Indebtedness in Section 1.5
of this Mortgage.  In addition to its
rights hereunder or otherwise, Administrative Agent shall have all of the
rights of a secured party under the UCC, as in effect from time to time, or
under the Uniform Commercial Code in force, from time to time, in any other
state to the extent the same is applicable law.

Section 1.5.  Secured
Indebtedness, Note, Loan Documents, Other Obligations.    This Mortgage is made to secure
and enforce the payment and performance of the following promissory notes,
obligations, indebtedness, duties and liabilities and all renewals, extensions,
supplements, increases, and modifications thereof in whole or in part from time
to time (collectively the “Secured Indebtedness”): (a) the Note;
(b)  all indebtedness, liabilities,
duties, covenants, promises and other obligations whether joint or several,
direct or indirect, fixed or contingent, liquidated or unliquidated, and the
cost of collection of all such amounts, owed by Grantor to Lenders now or
hereafter incurred or arising pursuant to or permitted by the provisions of the
Loan Agreement, the Note, this Mortgage, or any other document now or hereafter
evidencing, governing, guaranteeing, securing or otherwise executed by Grantor
or Guarantor for the benefit of Administrative Agent and/or the Lenders in
connection with the Loan, including but not limited to any loan or Loan
Agreement, letter of credit or reimbursement agreement, tri-party
financing agreement, Master Agreement relating to any Swap Transactions or
other agreement between Grantor and Administrative Agent, or among Grantor,
Administrative Agent and any other party or parties, pertaining to the
repayment or use of the proceeds of the Loan (the Note, the Loan Agreement,
this Mortgage, any Master Agreement 

 6
 

relating to any Swap Transactions and such other
documents, as they or any of them may have been or may be from time to time renewed,
extended, supplemented, increased or modified, being herein sometimes
collectively called the “Loan Documents”).  The term “Swap Transaction” means any
agreement, whether or not in writing, entered into between Grantor and with
a Lender acceptable to the Required Lenders (such financial institution is
referred to herein as “Swap Bank”) relating
to any transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or bill option, interest rate option, forward foreign exchange
transaction, cap, collar or floor transaction, currency swap, cross-currency
rate swap, swap option currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any combination of
the foregoing, and, unless the context otherwise clearly requires, any form of
master agreement (the “Master Agreement”) published by the International Swaps and
Derivatives Association, Inc., or any other master agreement, entered into
between a Swap Bank and Grantor, together with any related schedules, as
amended, supplemented, superseded or replaced from time to time, relating to or
governing any or all of the foregoing.

ARTICLE
2

Representations,
Warranties and Covenants

Section
2.1.  Grantor represents, warrants, and
covenants as follows (with respect to representations and warranties, except as
otherwise disclosed to Administrative Agent in writing):

(a)           Payment
and Performance.  Grantor will make
due and punctual payment of the Secured Indebtedness.  Grantor will timely and properly perform and
comply with all of the covenants, agreements, and conditions imposed upon it by
this Mortgage and the other Loan Documents and will not permit a default to
occur hereunder or thereunder.  Time
shall be of the essence in this Mortgage.

(b)           Title
and Permitted Encumbrances.  Grantor
has, in Grantor’s own right, and Grantor covenants to maintain, lawful, good
and indefeasible title to the Property, is lawfully seized and possessed of the
Property and every part thereof, and has the right to convey the same, free and
clear of all liens, charges, claims, security interests, and encumbrances
except for (i) the matters, if any, set forth on Schedule B-1 of the mortgagee
policy of title insurance issued to Administrative Agent and insuring the lien
of this Mortgage, (ii) the liens and security interests evidenced by this
Mortgage, (iii) statutory liens for real estate taxes and assessments on the
Property which are not yet delinquent, (iv) other liens and security interests
(if any) in favor of Administrative Agent and (v) any other matters affecting
the Property to which the Administrative Agent may consent in writing, which
consent may be given in Administrative Agent’s sole discretion (the matters
described in the foregoing clauses (i), (ii), (iii), (iv), and (v) being herein
called the “Permitted
Encumbrances”).  Grantor will
warrant generally and forever defend title to the Property, subject as
aforesaid, to Trustee and its successors or substitutes and assigns, against
the claims and demands of all persons claiming or to claim the same or any part
thereof.  Grantor will, prior to
delinquency, punctually pay, perform, observe and keep all 

 7
 

covenants, obligations and conditions in or pursuant
to any Permitted Encumbrance and will not modify or permit modification of any
Permitted Encumbrance without the prior written consent of Administrative
Agent.  Inclusion of any matter as a
Permitted Encumbrance does not constitute approval or waiver by Administrative
Agent of any existing or future violation or other breach thereof by Grantor,
by the Property or otherwise.  No part of
the Property constitutes all or any part of the principal residence of
Grantor  if Grantor is an
individual.  If any right or interest of
Administrative Agent in the Property or any part thereof shall be endangered or
questioned or shall be attacked directly or indirectly, Administrative Agent
and Trustee, or either of them (whether or not named as parties to legal
proceedings with respect thereto), are hereby authorized and empowered to take
such steps as in its discretion may be proper for the defense of any such legal
proceedings or the protection of such right or interest of Administrative
Agent, including but not limited to the employment of independent counsel, the
prosecution or defense of litigation, and the compromise or discharge of
adverse claims.  All expenditures so made
of every kind and character shall be a demand obligation (which obligation
Grantor hereby promises to pay owing by Grantor to Administrative Agent or
Trustee (as the case may be), and the party (Administrative Agent or Trustee,
as the case may be) making such expenditures shall be subrogated to all rights
of the person receiving such payment.

(c)           Taxes
and Other Impositions.  Grantor will
pay, or cause to be paid, all taxes, assessments and other charges or levies
imposed upon or against or with respect to the Property or the ownership, use,
occupancy or enjoyment of any portion thereof, or any utility service thereto,
prior to delinquency, including but not limited to all real estate taxes
assessed against the Property or any part thereof (including assessments under
the Condominium Declaration); and shall deliver to Administrative Agent, within
fifteen (15) days after request by Administrative Agent, such evidence of the
payment thereof as Administrative Agent may require.

(d)           Insurance;
Use  of Insurance Proceeds.  Grantor shall obtain and maintain at Grantor’s
sole expense: (1) mortgagee title insurance issued to Administrative Agent
covering the Premises as required by Administrative Agent without exception for
mechanics’ liens; (2) property insurance with respect to all insurable
Property, against loss or damage by fire, lightning, windstorm, explosion,
hail, tornado and such additional hazards as are presently included in Special
Form (also known as “all-risk”) coverage and against any and all acts of
terrorism and such other insurable hazards as Administrative Agent may require,
in an amount not less than 100% of the full replacement cost, including the
cost of debris removal, without deduction for depreciation and sufficient to
prevent Grantor and Administrative Agent from becoming a coinsurer, such
insurance to be in “builder’s risk” completed value(non-reporting) form
during and with respect to any construction on the Premises; (3) if and to the
extent any portion of the Improvements is, under the Flood Disaster Protection
Act of 1973 (“FDPA”), as it may be amended from time to time, in a
Special Flood Hazard Area, within a Flood Zone designated A or V in a
participating community, a flood insurance policy in an amount required by
Administrative Agent, but in no event less than the amount sufficient to meet
the requirements of applicable law and the FDPA, as such requirements may from
time to time be in effect; (4) general liability insurance, on an “occurrence”
basis against claims for “personal injury” liability, including bodily injury,
death or property damage liability, insurance, including 

 8
 

“Dram Shop” or other liquor liability coverage if
alcoholic beverages are sold from or may be consumed at the Property, for the
benefit of Grantor as named insured and Administrative Agent as additional
insured; (5) statutory workers’ compensation insurance with respect to any work
on or about the Premises (including employer’s liability insurance, if required
by Administrative Agent), covering all employees of Grantor and any contractor;
to the extent such coverage is covered by the contractor or subcontractor on
behalf of Grantor, Administrative Agent will accept such coverage on behalf of
Grantor upon receipt of evidence of such coverage; (6) if there is a
general contractor, commercial general liability insurance, including products
and completed operations coverage, and in other respects similar to that
described in clause (4) above, for the benefit of the general contractor
as named insured and Grantor and Administrative Agent as additional insureds,
in addition to statutory workers’ compensation insurance with respect to any
work on or about the Premises (including employer’s liability insurance, if
required by Administrative Agent), covering all employees of the general
contractor and any contractor; (7) blanket fidelity bond and errors and
omissions (to the extent not covered by the blanket fidelity bond) insurance
coverage insuring against losses resulting from dishonest or fraudulent acts
committed by (A) Grantor’s personnel; (B) any employees of outside firms that
provide appraisal, legal, data processing or other services for Grantor or (C)
temporary contract employees or student interns and (8) such other insurance on
the Property and endorsements as may from time to time be required by
Administrative Agent (including but not limited to soft cost coverage,
automobile liability insurance, business interruption insurance or delayed
rental insurance, boiler and machinery insurance, earthquake insurance, wind
insurance, sinkhole coverage, and/or permit to occupy endorsement)) and against
other insurable hazards or casualties which at the time are commonly insured
against in the case of premises similarly situated, due regard being given to
the height, type, construction, location, use and occupancy of buildings and
improvements, and in the event such coverages are economically feasible and
obtainable.  Any insurance as to the
Condominium or the Units comprising the Land, may be written in the name of the
Condominium Association or an insurance trustee, as trustee for all of the
owners in the Condominium, if the Condominium Declaration requires or permits
the Condominium Association or an insurance trustee to be designated as the
insured under such policies.  So long as
the Condominium Association maintains any insurance policies required under
this Mortgage as to the Condominium or the Units comprising the Land, the
obligations of Grantor under this Section shall be deemed satisfied as to the
Condominium and the Units comprising the Land; provided that Grantor shall
remain obligated to obtain and maintain insurance with respect to all personal
property and equipment owned by Grantor and located within the Units comprising
the Land and all other Property not covered by the insurance maintained by the
Condominium Association. Grantor shall provide Administrative Agent with a
certificate evidencing all insurance maintained by the Condominium Association
as to insurance Grantor would otherwise be obligated to maintain and to deliver
a copy of such required policies of insurance to Administrative Agent upon
request. At least fifteen (15) days prior to the expiration of each such
policy, Grantor shall furnish Administrative Agent with evidence satisfactory
to Administrative Agent of the payment of premiums and the reissuance of
policies continuing insurance in force as required by this Mortgage. Except as
otherwise required by the Condominium Declaration all such policies of
insurance shall contain an endorsement or 

 9
 

agreement by the insurer that any loss is payable in
accordance with the terms of such policies notwithstanding any act or
negligence of Grantor which might otherwise result in forfeiture of said
insurance, and the further agreement of the insurer waiving all rights of
setoff, counterclaim or deductions against Grantor .  Unless prohibited by the Condominium Act or
the Condominium Declaration, Grantor shall cause, at the request of
Administrative Agent, Administrative Agent to be named as an additional insured
on any liability insurance policy maintained by the Condominium Association
with respect to the Condominium and Units comprising the Land.  Except as may be required by the Condominium
Declaration and the Condominium Act, all insurance policies shall be issued and
maintained by insurers, in amounts, with deductibles, limits and retentions,
and in forms satisfactory to Administrative Agent, and shall require not less
than ten (10) days’ prior written notice to Administrative Agent of any
cancellation for nonpayment of premiums, and 
not less than thirty (30) days’ prior written notice to Administrative
Agent of any other cancellation or any change of coverage. All insurance
companies must be licensed to do business in the state in which the Property is
located and must have an A. M. Best Company financial and performance ratings
of A-:IX or better.  All insurance
policies maintained, or caused to be maintained, by Grantor with respect to the
Property, except for general liability insurance, shall provide that each such
policy shall be primary without right of contribution from any other insurance
that may be carried by Grantor or Administrative Agent and that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured.  At least fifteen (15) days prior to the
expiration of each such policies, Grantor shall furnish Administrative Agent
with evidence satisfactory to Administrative Agent of the payment of premiums
and the reissuance of policies continuing insurance in force as required by
this Mortgage. All such policies of insurance shall contain an endorsement or
agreement by the insurer that any loss is payable in accordance with the terms
of such policies notwithstanding any act or negligence of Grantor which might
otherwise result in forfeiture of said insurance, and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deductions against
Grantor.  If any insurer which has issued
a policy of title, hazard, liability or other insurance required pursuant to
this Mortgage or any other Loan Document becomes insolvent or the subject of
any petition, case, proceeding or other action pursuant to any Debtor Relief
Law, or if in Administrative Agent’s reasonable opinion the financial
responsibility of such insurer is or becomes inadequate, Grantor shall, in each
instance promptly upon its discovery thereof or upon the request of
Administrative Agent therefor, and at Grantor’s expense, promptly obtain and
deliver to Administrative Agent a like policy (or, if and to the extent
permitted by Administrative Agent, acceptable evidence of insurance) issued by
another insurer, which insurer and policy meet the requirements of this
Mortgage or such other Loan Document, as the case may be.  Without limiting the discretion of
Administrative Agent with respect to required endorsements to insurance
policies, and unless prohibited by the Condominium Act, all such policies for
loss of or damage to the Property shall contain a standard mortgagee clause
(without contribution) naming Administrative Agent as mortgagee with loss
proceeds payable to Administrative Agent notwithstanding (i) any act, failure
to act or negligence of or violation of any warranty, declaration or condition
contained in any such policy by any named or additional insured; (ii) the occupation
or use of the Property for purposes more hazardous than permitted by the terms
of 

 10
 

any such policy; (iii) any foreclosure or other action
by Administrative Agent under the Loan Documents; or (iv) any change in title
to or ownership of the Property or any portion thereof, such proceeds to be
held for application as provided in the Loan Documents.  The originals of each initial insurance
policy (or to the extent permitted by Administrative Agent, a copy of the
original policy and such evidence of insurance acceptable to Administrative
Agent) and unless prohibited by the Condominium Act shall be delivered to
Administrative Agent at the time of execution of this Mortgage, with all
premiums fully paid current, and each renewal or substitute policy (or evidence
of insurance) shall be delivered to Administrative Agent, with all premiums
fully paid current, at least ten (10) days before the termination of the policy
it renews or replaces.  Grantor shall pay
all premiums on policies required hereunder as they become due and payable and
promptly deliver to Administrative Agent evidence satisfactory to
Administrative Agent of the timely payment thereof.  If any loss occurs at any time when Grantor
has failed to perform Grantor’s covenants and agreements in this paragraph with
respect to any insurance payable because of loss sustained to any part of the
Property, whether or not such insurance is required by Administrative Agent,
Administrative Agent shall nevertheless be entitled to the benefit of all
insurance covering the loss and held by or for Grantor, to the same extent as
if it had been made payable to Administrative Agent.  Upon any foreclosure hereof or transfer of
title to the Property in extinguishment of the whole or any part of the Secured
Indebtedness, all of Grantor’s right, title and interest in and to the
insurance policies referred to in this Section (including unearned premiums)
and all proceeds payable thereunder shall thereupon vest in the purchaser at
foreclosure or other such transferee, to the extent permissible under such
policies.  Administrative Agent shall
have the right (but not the obligation) to make proof of loss for, settle and
adjust any claim under, and receive the proceeds of, all insurance for loss of
or damage to the Property regardless of whether or not such insurance policies
are required by Administrative Agent, and the expenses incurred by
Administrative Agent in the adjustment and collection of insurance proceeds
shall be a part of the Secured Indebtedness and shall be due and payable to
Lenders on demand, provided, that, except during an Event of
Default, any settlement or adjustment of any claim may be negotiated by the
Grantor if the amount involved is equal to or less than $100,000, if the amount
involved is greater than $100,000 then the same shall remain subject to the
final approval of Administrative Agent and the requirements of this
Mortgage.  Administrative Agent shall not
be, under any circumstances, liable or responsible for failure to collect or
exercise diligence in the collection of any of such proceeds or for the
obtaining, maintaining or adequacy of any insurance or for failure to see to
the proper application of any amount paid over to Grantor.  Except as may be required by the Collateral
Assignment, any such proceeds received by Administrative Agent shall, after
deduction therefrom of all reasonable expenses actually incurred by
Administrative Agent, including attorneys’ fees, at Administrative Agent’s
option be (1) released to Grantor, or (2) applied (upon compliance with such
terms and conditions as may be required by Administrative Agent) to repair or
restoration, either partly or entirely, of the Property so damaged, or (3)
applied to the payment of the Secured Indebtedness in such order and manner as
Administrative Agent, in its sole discretion, may elect, whether or not
due.  In any event, the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused.  Grantor
shall at all times comply with the requirements of the insurance policies
required hereunder and of the issuers of such policies 

 11
 

and of any board of fire underwriters or similar body
as applicable to or affecting the Property. 
Notwithstanding anything contained in this Section 2.1(d), Grantor shall
have no obligation to Administrative Agent that violates the Condominium Act.

(e)           Reserve
for Insurance, Taxes and Assessments. 
Upon request of Administrative Agent, to secure the payment and
performance of the Secured Indebtedness, but not in lieu of such payment and
performance, Grantor will deposit with Administrative Agent a sum equal to real
estate taxes, assessments and charges (which charges for the purposes of this
paragraph shall include without limitation any recurring charge which could
result in a lien against the Property) against the Property for the current
year and the premiums for such policies of insurance for the current year
(other than for insurance maintained solely by the Condominium Association),
all as estimated by Administrative Agent and prorated to the end of the
calendar month following the month during which Administrative Agent’s request
is made, and thereafter will deposit with Administrative Agent, on each date
when an installment of principal and/or interest is due on the Loan, sufficient
funds (as estimated from time to time by Administrative Agent) to permit
Administrative Agent to pay at least fifteen (15) days prior to the due date
(or, in the case of real estate taxes and assessments, the delinquency date)
thereof, the next maturing real estate taxes, assessments and charges and
premiums for such policies of insurance. 
Administrative Agent shall have the right to rely upon tax information
furnished by applicable taxing authorities in the payment of such taxes or
assessments and shall have no obligation to make any protest of any such taxes
or assessments.  To the extent permitted
by law, any excess over the amounts required for such purposes shall be held by
Administrative Agent for future use, applied to any Secured Indebtedness or
refunded to Grantor, at Administrative Agent’s option, and any deficiency in
such funds so deposited shall be made up by Grantor upon demand of
Administrative Agent.  All such funds so
deposited shall bear no interest, may be co-mingled with the general funds of
Administrative Agent and shall be applied by Administrative Agent toward the
payment of such taxes, assessments, charges and premiums when statements
therefor are presented to Administrative Agent by Grantor (which statements
shall be presented by Grantor to Administrative Agent a reasonable time before
the applicable amount is due); provided, however, that, if a Default shall have
occurred hereunder, such funds may at Administrative Agent’s option be applied
to the payment of the Secured Indebtedness in the order determined by
Administrative Agent in its sole discretion, and that Administrative Agent may
(but shall have no obligation) at any time, in its discretion, apply all or any
part of such funds toward the payment of any such taxes, assessments, charges
or premiums which are past due, together with any penalties or late charges
with respect thereto.  The conveyance or
transfer of Grantor’s interest in the Property for any reason (including
without limitation the foreclosure of a subordinate lien or security interest
or a transfer by operation of law) shall constitute an assignment or transfer
of Grantor’s interest in and rights to such funds held by Administrative Agent
under this paragraph but subject to the rights of Administrative Agent
hereunder.

(f)            Condemnation.  Grantor shall notify Administrative Agent
promptly of any threatened or pending proceeding for condemnation affecting the
Property or arising out of damage to the Property, and Grantor shall, at
Grantor’s expense, diligently prosecute any such proceedings.  Administrative Agent shall have the right
(but not the obligation) to participate in 

 12
 

any such proceeding and to be represented by counsel
of its own choice.  Administrative Agent
shall be entitled to receive all sums which may be awarded or become payable to
Grantor for the condemnation of the Property, or any part thereof, for public
or quasi-public use, or by virtue of private sale in lieu thereof, and
any sums which may be awarded or become payable to Grantor for injury or damage
to the Property. Grantor shall, promptly upon request of Administrative Agent,
execute such additional assignments and other documents as may be necessary
from time to time to permit such participation and to enable Administrative
Agent to collect and receipt for any such sums. 
All such sums are hereby assigned to Administrative Agent, and except as
may be required by the Collateral Assignment, shall, after deduction therefrom
of all reasonable expenses actually incurred by Administrative Agent, including
attorneys’ fees, at Administrative Agent’s option be (1) released to Grantor,
or (2) applied (upon compliance with such terms and conditions as may be
required by Administrative Agent) to repair or restoration of the Property, or
(3) applied to the payment of the Secured Indebtedness in such order and manner
as Administrative Agent, in its sole discretion, may elect, whether or not
due.  In any event the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused. 
Administrative Agent shall not be, under any circumstances, liable or
responsible for failure to collect or to exercise diligence in the collection
of any such sum or for failure to see to the proper application of any amount
paid over to Grantor.  Administrative
Agent is hereby authorized, in the name of Grantor, to execute and deliver
valid acquittances for, and to appeal from, any such award, judgment or decree.  All costs and expenses (including but not
limited to attorneys’ fees) incurred by Administrative Agent in connection with
any condemnation shall be a demand obligation owing by Grantor (which Grantor
hereby promises to pay) to Administrative Agent pursuant to this Mortgage.

(g)           Compliance
with Legal Requirements.  The
Grantor, the Property and the use, operation and maintenance thereof and all
activities thereon do and shall at all times comply with the terms, conditions,
covenants, representations and warranties of the Loan Agreement and all
applicable Legal Requirements (hereinafter defined).  The Property is not, and shall not be,
dependent on any other property or premises or any interest therein other than
the Property to fulfill any requirement of any Legal Requirement.  Grantor shall not, by act or omission, permit
any building or other improvement not subject to the lien of this Mortgage to
rely on the Property or any interest therein to fulfill any requirement of any
Legal Requirement.  No improvement upon
or use of any part of the Property constitutes a nonconforming use under any
zoning law or similar law or ordinance. 
Grantor has obtained and shall preserve in force all requisite zoning,
utility, building, health, environmental and operating permits from the
governmental authorities having jurisdiction over the Property.  If Grantor receives a notice or claim from
any person that the Property, or any use, activity, operation or maintenance
thereof or thereon, is not in compliance, in any material respect, with any
Legal Requirement, Grantor will promptly furnish a copy of such notice or claim
to Administrative Agent.  Grantor has
received no notice and has no knowledge of any such noncompliance.  As used in this Mortgage:  (i) the term “Legal Requirement” means
any Law (hereinafter defined), agreement, covenant, restriction, easement or
condition (including, without limitation of the foregoing, any condition or
requirement imposed by any insurance or surety company), as any of the same now
exists or may be changed or amended or come into effect in the future; and (ii)
the term “Law” means any 

 13
 

federal, state or local law, statute, ordinance, code,
rule, regulation, license, permit, authorization, decision, order, injunction
or decree, domestic or foreign.

(h)           Maintenance,
Repair and Restoration.  Grantor will
keep the Property in first class order, repair, operating condition and
appearance, causing all necessary repairs, renewals, replacements, additions
and improvements to be promptly made, and will not allow any of the Property to
be misused, abused or wasted or to deteriorate. 
Notwithstanding the foregoing, Grantor will not, without the prior
written consent of Administrative Agent, (i) remove from the Property any
fixtures or personal property covered by this Mortgage except such as is
replaced by Grantor by an article of comparable quality and utility, owned by
Grantor, free and clear of any lien or security interest (except that created
by this Mortgage), or (ii) make any structural alteration to the Property or
any other alteration thereto which impairs, except to an immaterial extent, the
value thereof. If any act or occurrence of any kind or nature (including any
condemnation or any casualty for which insurance was not obtained or
obtainable) shall result in damage to or loss or destruction of the Property,
Grantor shall give prompt notice thereof to Administrative Agent and Grantor
shall promptly, at Grantor’s sole cost and expense and regardless of whether
insurance or condemnation proceeds (if any) shall be available or sufficient
for the purpose, secure the Property as necessary and commence and continue
diligently to completion to restore, repair, replace and rebuild the Property
as nearly as possible to its value, condition and character immediately prior
to the damage, loss or destruction. 
Notwithstanding the foregoing, Grantor shall not be required to perform
the obligations contained under this subparagraph (k) with respect to (A) any
Units comprising the Land released from the lien of this Mortgage, or (B) the
Common Elements of the Condominium so long as the Condominium Association is
performing such obligations.

(i)            No
Other Liens.  Grantor will not,
without the prior written consent of Administrative Agent, create, place or
permit to be created or placed, or through any act or failure to act, acquiesce
in the placing of, or allow to remain, any deed of trust, mortgage, voluntary
or involuntary lien, whether statutory, constitutional or contractual, security
interest, encumbrance or charge, or conditional sale or other title retention
document, against or covering the Property, or any part thereof, other than the
Permitted Encumbrances, regardless of whether the same are expressly or
otherwise subordinate to the lien or security interest created in this
Mortgage, and should any of the foregoing become attached hereafter in any
manner to any part of the Property without the prior written consent of
Administrative Agent, Grantor will cause the same to be promptly discharged and
released.  Notwithstanding the foregoing,
Administrative Agent shall not unreasonably delay or withhold its consent to
financing or leasing of (A) certain types of office equipment, such as copiers
or fax machines, provided, that, such office equipment (i) is
readily replaceable and the removal and replacement of such equipment will not
significantly impact the operation of the hotel, and (ii) will not be used to
store or hold any proprietary information or information necessary for the
operation of the Improvements as a hotel that is not readily available
otherwise and (B) televisions, provided, that, the underlying
lease or financing documentation will provide Administrative Agent with notice
of any defaults of Grantor under such documentation and the opportunity, but
not the obligation, to cure such defaults within a period of at least thirty
(30) days.  Grantor will own all parts of
the Property 

 14
 

and will not acquire any fixtures, equipment or other
property (including software embedded therein) forming a part of the Property
pursuant to a lease, license, security agreement or similar agreement, whereby
any party has or may obtain the right to repossess or remove same, without the
prior written consent of Administrative Agent. 
If Administrative Agent consents to the voluntary grant by Grantor of any
deed of trust or mortgage, lien, security interest, or other encumbrance
(hereinafter called “Subordinate Lien”) covering any of the Property or
if the foregoing prohibition is determined by a court of competent jurisdiction
to be unenforceable as to a Subordinate Lien, any such Subordinate Lien shall
contain express covenants to the effect that: (1) the Subordinate Lien is
unconditionally subordinate to this Mortgage and all Leases (as defined in the
Assignment of Rents); (2) if any action (whether judicial or pursuant to a
power of sale) shall be instituted to foreclose or otherwise enforce the
Subordinate Lien, no tenant of any of the Leases shall be named as a party
defendant, and no action shall be taken that would terminate any occupancy or
tenancy without the prior written consent of Administrative Agent; (3) Rents
(as defined in the Assignment of Rents), if collected by or for the
Administrative Agent of the Subordinate Lien, shall be applied first to the
payment of the Secured Indebtedness then due and expenses incurred in the
ownership, operation and maintenance of the Property in such order as
Administrative Agent may determine, prior to being applied to any indebtedness
secured by the Subordinate Lien; (4) written notice of default under the Subordinate
Lien and written notice of the commencement of any action (whether judicial or
pursuant to a power of sale) to foreclose or otherwise enforce the Subordinate
Lien or to seek the appointment of a receiver for all or any part of the
Property shall be given to Administrative Agent with or promptly after the
occurrence of any such default or commencement; and (5) neither the
Administrative Agent of the Subordinate Lien, nor any purchaser at foreclosure
thereunder, nor anyone claiming by, through or under any of them shall succeed
to any of Grantor’s rights hereunder without the prior written consent of
Administrative Agent.

(j)            Operation
of Property.  Grantor will operate
the Property in a good and workmanlike manner and in accordance with all Legal
Requirements and will pay all fees or charges of any kind in connection
therewith.  Grantor will keep the
Property occupied so as not to impair the insurance carried thereon.  Grantor will not use or occupy or conduct any
activity on, or allow the use or occupancy of or the conduct of any activity
on, the Property in any manner which violates any Legal Requirement or which
constitutes a public or private nuisance or which makes void, voidable or
cancelable, or increases the premium of, any insurance then in force with
respect thereto.  Except with
Administrative Agent’s prior written consent, Grantor will not initiate or
permit any zoning reclassification of the Property or seek any variance under
existing zoning ordinances applicable to the Property or use or permit the use
of the Property in such a manner which would result in such use becoming a
nonconforming use under applicable zoning ordinances or other Legal
Requirement.  Grantor will not impose any
easement, restrictive covenant or encumbrance upon the Property, execute or
file any subdivision plat affecting the Property or consent to the annexation
of the Property to any municipality, without the prior written consent of
Administrative Agent.  Grantor will not
knowingly do or suffer to be done any act whereby the value of any part of the
Property may be lessened.  Grantor will
preserve, protect, renew, extend and retain all material rights and privileges
granted for or applicable to the Property. 
Without the prior written consent of Administrative Agent, there 

 15
 

shall be no drilling or exploration for or extraction,
removal or production of any mineral, hydrocarbon, gas, natural element,
compound or substance (including sand and gravel) from the surface or
subsurface of the Land regardless of the depth thereof or the method of mining
or extraction thereof.

(k)           Financial
Matters.  Grantor is solvent after
giving effect to all borrowings contemplated by the Loan Documents and no
proceeding under any Debtor Relief Law is pending (or, to Grantor’s knowledge,
threatened) by or against Grantor, or any affiliate of Grantor, as a
debtor.  All reports, statements, plans,
budgets, applications, agreements and other data and information heretofore
furnished or hereafter to be furnished by or on behalf of Grantor to Administrative
Agent in connection with the loan or loans evidenced by the Loan Documents
(including, without limitation, all financial statements and financial
information) are and will be true, correct and complete in all material
respects as of their respective dates and do not and will not omit to state any
fact or circumstance necessary to make the statements contained therein not
misleading.  No material adverse change
has occurred since the dates of such reports, statements and other data in the
financial condition of Grantor or, to Grantor’s knowledge, of any tenant under
any lease described therein.  For the
purposes of this paragraph, “Grantor” shall also include any affiliate of
Grantor, Guarantor, any affiliate of Guarantor and each of their respective
successors and assigns liable directly or indirectly for the Secured
Indebtedness.

(l)            Status
of Grantor; Suits and Claims; Loan Documents.  If Grantor is a corporation, partnership,
limited liability company, or other legal entity, Grantor is and will continue
to be (i) duly organized, validly existing and in good standing under the laws
of its state of organization, (ii) authorized to do business in, and in good
standing in, each state in which the Land is located, and (iii) possessed of
all requisite power and authority to carry on its business and to own and
operate the Property.  Each Loan Document
executed by Grantor has been duly authorized, executed and delivered by
Grantor, and the obligations thereunder and the performance thereof by Grantor
in accordance with their terms are and will continue to be within Grantor’s
power and authority (without the necessity of joinder or consent of any other
person, except for such as have been obtained), are not and will not be in
contravention of any Legal Requirement or any other document or agreement to
which Grantor or the Property is subject, and do not and will not result in the
creation of any encumbrance against any assets or properties of Grantor,
Guarantor, any affiliate of Grantor, or any affiliate of Guarantor liable,
directly or indirectly, for any of the Secured Indebtedness, except as
expressly contemplated by the Loan Documents. 
There is no suit, action, claim, investigation, inquiry, proceeding or
demand pending (or, to Grantor’s knowledge, threatened) against Grantor,
Guarantor, any affiliate of Grantor, or any affiliate of Guarantor liable
directly or indirectly for the Secured Indebtedness or which to, Grantor’s best
knowledge, affects the Property (including, without limitation, any which challenges
or otherwise pertains to Grantor’s title to the Property) or the validity,
enforceability or priority of any of the Loan Documents.  There is no judicial or administrative
action, suit or proceeding pending (or, to Grantor’s knowledge, threatened)
against Grantor, Guarantor, any affiliate of Grantor, or any affiliate of
Guarantor liable directly or indirectly for the Secured Indebtedness, except as
has been disclosed in writing to Administrative Agent in connection with the
loan evidenced by the Note.  The Loan
Documents, to which Grantor is a party, constitute legal, valid 

 16
 

and binding obligations of Grantor enforceable in
accordance with their terms, except as the enforceability thereof may be
limited by Debtor Relief Laws and except as the availability of certain
remedies may be limited by general principles of equity.  Grantor is not a “foreign person” within the
meaning of the Internal Revenue Code of 1986, as amended, Sections 1445 and
7701 (i.e. Grantor is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate as those terms are defined
therein and in any regulations promulgated thereunder).  The Loan is solely for business and/or
investment purposes, and is not intended for personal, family, household or
agricultural purposes.  Grantor further
warrants that the proceeds of the Loan shall be used for commercial purposes
and stipulates that the Loan shall be construed for all purposes as a
commercial loan.  Grantor’s exact legal
name is correctly set forth at the end of this Mortgage.  If Grantor is not an individual, Grantor is
an organization of the type and (if not an unregistered entity) is incorporated
in or organized under the laws of the state specified in the introductory
paragraph of this Mortgage.  If Grantor
is an unregistered entity (including, without limitation, a general
partnership) it is organized under the laws of the state specified in the
introductory paragraph of this Mortgage. 
Grantor will not cause or permit any change to be made in its name,
identity, (including its trade name or names), organizational structure, unless
Grantor shall have notified Administrative Agent in writing of such change at
least 30 days prior to the effective date of such change, and shall have first
taken all action required by Administrative Agent for the purpose of further
perfecting or protecting the lien and security interest of Administrative Agent
in the Property.  In addition, Grantor
shall not change its organizational structure without first obtaining the prior
written consent of Administrative Agent. 
Grantor’s principal place of business and chief executive office, and
the place where Grantor keeps its books and records (in addition to at the
Property), including recorded data of any kind or nature, regardless of the
medium of recording including, without limitation, software, writings, plans,
specifications and schematics concerning the Property, has for the preceding
four months (or, if less, the entire period of the existence of Grantor) been and
will continue to be (unless Grantor notifies Administrative Agent of any change
in writing at least 30 days prior to the date of such change) the address of
Grantor set forth Article I of this Mortgage. 
If Grantor is an individual, Grantor’s principal residence has for the
preceding four months been and will continue to be (unless Grantor notifies
Administrative Agent of any change in writing at least 30 days prior to the
date of such change) the address of the principal residence of Grantor set
forth in Article I of this Mortgage. 
Grantor’s organizational identification number, assigned by the state of
incorporation or organization is 4374691. 
Grantor shall promptly notify Administrative Agent (i) of any change of
its organizational identification number, or (ii) if Grantor does not now have
an organization identification number and later obtains one, of such
organizational identification number.

(m)          Further
Assurances.  Grantor will, within a
reasonable period of time following 
request of Administrative Agent, (i) correct any defect, error or
omission which may be discovered in the contents, execution or acknowledgment
of this Mortgage or any other Loan Document; (ii) execute, acknowledge,
deliver, procure and record and/or file such further documents (including,
without limitation, further mortgages, deeds of trust, security agreements, and
assignments of rents or leases) and do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes of this
Mortgage, to more fully identify and 

 17
 

subject to the liens and security interests hereof any
property intended to be covered hereby (including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property) or as deemed advisable by Administrative Agent
in its commercially reasonable judgment to protect the lien or the security
interest hereunder against the rights or interests of third persons; and (iii)
use best efforts to provide such certificates, documents, reports, information,
affidavits and other instruments and do such further acts as may be necessary,
desirable or proper in the reasonable determination of Administrative Agent to
enable Administrative Agent to comply with the requirements or requests of any
agency having jurisdiction over Administrative Agent or any examiners of such
agencies with respect to the indebtedness secured hereby, Grantor or the
Property.  Grantor shall pay all costs
connected with any of the foregoing, which shall be a demand obligation owing
by Grantor (which Grantor hereby promises to pay) to Administrative Agent
pursuant to this Mortgage.

(n)           Fees
and Expenses.  Without limitation of
any other provision of this Mortgage or of any other Loan Document and to the
extent not prohibited by applicable law, Grantor will pay, and will reimburse
to Administrative Agent and/or Trustee on demand to the extent paid by
Administrative Agent and/or Trustee: (i) all reasonable appraisal fees, filing,
registration and recording fees, recordation, transfer and other taxes,
brokerage fees and commissions, abstract fees, title search or examination
fees, title policy and endorsement premiums and fees, uniform commercial code
search fees, judgment and tax lien search fees, escrow fees, attorneys’ fees,
architect fees, engineer fees, construction consultant fees, environmental
inspection fees, survey fees, and all other costs and expenses of every
character incurred by Grantor or Administrative Agent and/or Trustee in
connection with the preparation of the Loan Documents, the evaluation, closing
and funding of the Loan, and any and all amendments and supplements to this
Mortgage, the Loan Agreement, or any other Loan Documents or any approval,
consent, waiver, release or other matter requested or required hereunder or
thereunder, or otherwise attributable or chargeable to Grantor as owner of the
Property; and (ii) all costs and expenses, including attorneys’ fees and
expenses, incurred or expended in connection with the exercise of any right or
remedy, or the defense of any right or remedy or the enforcement of any
obligation of Grantor, hereunder or under any other Loan Document.

(o)           Indemnification.

(i)            Grantor
will indemnify and hold harmless Administrative Agent and Trustee from and
against, and reimburse it on demand for, any and all Indemnified Matters
(hereinafter defined).  For purposes of
this subparagraph (i), the term “Administrative Agent” and “Trustee”
shall include Administrative Agent, and Trustee, and any persons owned or
controlled by, owning or controlling, or under common control or affiliated
with Administrative Agent or Trustee respectively and the directors, officers,
partners, employees, attorneys, agents and representatives of each of
them.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON
WITH RESPECT TO MATTERS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF, OR ARE CLAIMED TO BE CAUSED BY OR ARISE OUT OF, THE NEGLIGENCE (WHETHER
SOLE, COMPARATIVE OR CONTRIBUTORY) OR STRICT LIABILITY

 18

OF SUCH
(AND/OR ANY OTHER) INDEMNIFIED PERSON. 
HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO A PARTICULAR INDEMNIFIED
PERSON TO THE EXTENT THAT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR
ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT INDEMNIFIED
PERSON.  Any amount to
be paid under this paragraph (o) by Grantor to Administrative Agent and/or
Trustee shall be a demand obligation owing by Grantor (which Grantor hereby
promises to pay) to Administrative Agent and/or Trustee pursuant to this
Mortgage.  Upon demand by Administrative
Agent, Grantor shall diligently
defend any Indemnified Matter which affects the Property or is made or
commenced against Administrative Agent, whether alone or together with Grantor or any other person, all at Grantor’s own cost and expense and by
counsel to be approved by Administrative Agent in the exercise of its
reasonable judgment.  In the alternative,
at any time Administrative Agent may elect to conduct its own defense through
counsel selected by Administrative Agent and at the cost and expense of Grantor. 
Nothing in this paragraph, elsewhere in this Mortgage or in any other
Loan Document shall limit or impair any rights or remedies of Administrative
Agent and/or Trustee (including without limitation any rights of contribution
or indemnification) against Grantor or any other person under any other
provision of this Mortgage, any other Loan Document, any other agreement or any
applicable Legal Requirement.

(ii)           For
purposes of this subparagraph (ii), the term “Administrative Agent” shall include
Administrative Agent and each Lender, the directors, officers, partners,
employees and agents of Administrative Agent and such Lenders or Trustee,
respectively, and any persons owned or controlled by, owning or controlling, or
under common control or affiliated with Administrative Agent and the Lenders or
Trustee, respectively.  As used herein, the term “Indemnified
Matters” means any and all claims, demands, liabilities (including
strict liability), losses, damages (including consequential damages), causes of
action, judgments, penalties, fines, costs and expenses (including without
limitation, reasonable fees and expenses of attorneys and other professional
consultants and experts, and of the investigation and defense of any claim,
whether or not such claim is ultimately withdrawn or defeated, and the
settlement of any claim or judgment including all value paid or given in
settlement) of every kind, known or unknown, foreseeable or unforeseeable,
which may be imposed upon, asserted against or incurred or paid by
Administrative Agent and/or Trustee at any time and from time to time, whenever
imposed, asserted or incurred, because of, resulting from, in connection with,
or arising out of any transaction, act, omission, event or circumstance in any
way connected with the Property or with this Mortgage or any other Loan
Document, including but not limited to any bodily injury or death or property
damage occurring in or upon or in the vicinity of the Property through any cause
whatsoever at any time on or before the Release Date (hereinafter defined) any
act performed or omitted to be performed hereunder or under any other Loan
Document, any breach by Grantor of any representation, warranty, covenant,
agreement or condition contained in this Mortgage or in any other Loan
Document, any default as defined herein, any claim under or with respect to any
Lease.  The term “Release Date”
as used herein means the earlier of the following two dates:  (i) the date on which the indebtedness and
obligations secured by this Mortgage have been paid and performed in full and
the Mortgage has been released; or (ii) the date on which the lien of the
Mortgage is fully and finally foreclosed or a conveyance by deed in lieu of
such 

 19
 

foreclosure is fully and finally effective and
possession of the Property has been given to and accepted by the purchaser or
grantee free of occupancy and claims to occupancy by Grantor and their heirs,
devisees, representatives, successors and assigns; provided that, if such
payment, performance, release, foreclosure or conveyance is challenged, in
bankruptcy proceedings or otherwise, the Release Date shall be deemed not to
have occurred until such challenge is validly released, dismissed with
prejudice or otherwise barred by law from further assertion.  The indemnities in this paragraph (o) shall
not terminate upon the Release Date or upon the release, foreclosure or other
termination of this Mortgage but will survive the Release Date, foreclosure of
this Mortgage or conveyance in lieu of foreclosure, the repayment of the
Secured Indebtedness the termination of any and all Swap Transactions, the
discharge and release of this Mortgage and the other Loan Documents, any
bankruptcy or other debtor relief proceeding, and any other event whatsoever.

(p)           Taxes
on Note or Mortgage.  Grantor will
promptly pay all income, franchise and other taxes owing by Grantor and any
stamp, documentary, recordation and transfer taxes or other similar taxes
(unless such payment by Grantor is prohibited by law) which may be required to
be paid with respect to the Loan, this Mortgage or any other instrument
evidencing or securing any of the Secured Indebtedness.  In the event of the enactment after this date
of any law of any governmental entity applicable to Lenders, the Loan, the
Property or this Mortgage deducting from the value of property for the purpose
of taxation any lien or security interest thereon, or imposing upon Lenders the
payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Grantor, or changing in any way the laws
relating to the taxation of deeds of trust or mortgages or security agreements
or debts secured by deeds of trust or mortgages or security agreements or the
interest of the mortgagee or secured party in the property covered thereby, or
the manner of collection of such taxes, so as to affect this Mortgage or the
Secured Indebtedness or Lenders, then, and in any such event, Grantor, upon
demand by Administrative Agent, shall pay such taxes, assessments, charges or
liens, or reimburse Lenders therefor; provided, however, that if in the opinion
of counsel for Administrative Agent (i) it might be unlawful to require Grantor
to make such payment or (ii) the making of such payment might result in the
imposition of interest beyond the maximum amount permitted by law, then and in
such event, the Required Lenders may elect, by notice in writing given to
Grantor, to declare all of the Secured Indebtedness to be and become due and
payable ninety (90) days from the giving of such notice.

(q)           Statement
Concerning Note or Mortgage.  Grantor
shall at any time and from time to time furnish within seven (7) days of
request by Administrative Agent a written statement in such form as may be
required by Administrative Agent in its commercially reasonable judgment
stating that (i) the Note, the Loan Agreement, this Mortgage and the other Loan
Documents are valid and binding obligations of Grantor, enforceable against
Grantor in accordance with their terms; (ii) the unpaid principal balance of
the Loan; (iii) the date to which interest on the Loan is paid; (iv) the Loan,
this Mortgage and the other Loan Documents have not been released, subordinated
or modified; and (v) there are no known offsets or defenses against the
enforcement of the Loan, this Mortgage or any other Loan Document.  If any of the foregoing statements in clauses
(i), (iv) and (v) are untrue, Grantor shall, alternatively, specify the reasons
therefor.

 20
 

Section 2.2.  Performance
by Administrative Agent on Grantor’s Behalf.  Grantor agrees that, if Grantor fails to
perform any act or to take any action which under this Mortgage Grantor is
required to perform or take, or to pay any money which under this Mortgage
Grantor is required to pay, and such failure constitutes an Event of Default
under this Mortgage, then Administrative Agent, in Grantor’s name or its own
name, may (but shall not be obligated to) perform or cause to be performed such
act or take such action or pay such money, and any expenses so incurred by
Administrative Agent and any money so paid by Administrative Agent shall be a
demand obligation owing by Grantor to Administrative Agent (which obligation
Grantor hereby promises to pay), shall be a part of the Secured Indebtedness,
and Administrative Agent, upon making such payment, shall be subrogated to all
of the rights of the person, entity or body politic receiving such
payment.  Administrative Agent and its
designees shall have the right to enter upon the Property at any time and from
time to time for any such purposes.  No
such payment or performance by Administrative Agent shall waive or cure any
default or waive any right, remedy or recourse of Administrative Agent.  Any such payment may be made by Administrative
Agent in reliance on any statement, invoice or claim without inquiry into the
validity or accuracy thereof.  Each
amount due and owing by Grantor to Administrative Agent pursuant to this
Mortgage shall bear interest, from the date such amount becomes due until paid,
at the rate per annum provided in the Loan Agreement for interest on past due
principal owed on the Loan, which interest shall be payable to Administrative
Agent on demand; and all such amounts, together with such interest thereon,
shall automatically and without notice be a part of the Secured
Indebtedness.  The amount and nature of
any expense by Administrative Agent hereunder and the time when paid shall be
fully established by the certificate of Administrative Agent or any of
Administrative Agent’s officers or agents.

Section 2.3.  Absence
of Obligations of Administrative Agent with Respect to Property.  Notwithstanding anything in this Mortgage to
the contrary, including, without limitation, the definition of “Property”
and/or the provisions of Article 3 hereof, (i) to the extent permitted by applicable
law, the Property is composed of Grantor’s rights, title and interests therein
but not Grantor’s obligations, duties or liabilities pertaining thereto, (ii)
Administrative Agent neither assumes nor shall have any obligations, duties or
liabilities in connection with any portion of the items described in the
definition of “Property” herein, either prior to or after obtaining title to
such Property, whether by foreclosure sale, the granting of a deed in lieu of
foreclosure or otherwise, and (iii) Administrative Agent may, at any time prior
to or after the acquisition of title to any portion of the Property as above
described, advise any party in writing as to the extent of Administrative Agent’s
interest therein and/or expressly disaffirm in writing any rights, interests,
obligations, duties and/or liabilities with respect to such Property or matters
related thereto.  Without limiting the
generality of the foregoing, it is understood and agreed that Administrative
Agent shall have no obligations, duties or liabilities prior to or after
acquisition of title to any portion of the Property, as lessee under any lease
or purchaser or seller under any contract or option unless Administrative Agent
elects otherwise by written notification.

Section 2.4.  Authorization to File Financing
Statements; Power of Attorney. 
Grantor hereby authorizes Administrative Agent at any time and from time
to time to file any initial financing statements, amendments thereto and
continuation statements as authorized by 

 21
 

applicable law, required
by Administrative Agent to establish or maintain the validity, perfection and
priority of the security interests granted in this Mortgage.  For purposes of such filings, Grantor agrees
to furnish any information requested by Administrative Agent promptly upon
request by Administrative Agent.  Grantor
also ratifies its authorization for Administrative Agent to have filed any like
initial financing statements, amendments thereto or continuation statements if
filed prior to the date of this Mortgage. 
Grantor hereby irrevocably constitutes and appoints Administrative Agent
and any officer or agent of Administrative Agent, with full power of substitution,
as its true and lawful attorneys-in-fact with full irrevocable power and
authority in the place and stead of Grantor or in Grantor’s own name to execute
in Grantor’s name any such documents and to otherwise carry out the purposes of
this Section
2.4, to the extent that Grantor’s authorization above is not
sufficient.  To the extent permitted by
law, Grantor hereby ratifies all acts said attorneys-in-fact shall lawfully do
or cause to be done in the future by virtue hereof.  This power of attorney is a power coupled
with an interest and shall be irrevocable.

Section 2.5  Compliance
with Condominium Act and Condominium Documents.

(a)           Grantor
shall comply with and perform all of its obligations, regardless of whether
said obligations arise from the status of Grantor as an owner of Units comprising
the Land or as Declarant (as such term is defined in the Condominium Act),
under the Condominium Declaration, Condominium Act, the Interstate Land Sales
Act, the Condominium By-laws, and any rules and regulations of the Condominium
Association (the Condominium Declaration, the Condominium By-laws and the rules
and regulations of the Condominium Association being collectively hereinafter
referred to as the “Condominium Documents”), and Grantor shall not
violate or breach any material warranty, representation, covenant or agreement
contained therein and binding on it. 
Grantor shall promptly deliver to Administrative Agent a true and full
copy of each and every notice of default received by Grantor with respect to any
obligation of Grantor under the provisions of the Condominium Act, the
Interstate Land Sales Act, or the Condominium Documents.

(b)           During
the period of Declarant control, if any, specified in the Condominium
Declaration, no material amendments, modifications, supplements or releases
shall be made to any of the Condominium Documents (excluding any rules and
regulations of the Condominium Association) without the prior written approval
of Administrative Agent, which approval shall not be unreasonably withheld or
delayed.

(c)           Grantor
shall not, without the prior written consent of Administrative Agent,
intentionally terminate, cancel, surrender or abandon any material rights of
the Declarant provided under the Condominium Declaration or the Condominium
Act, and any such termination, cancellation, surrender or abandonment, or
attempt thereof, without Administrative Agent’s consent, shall be invalid and
of no force and effect.

(d)           Grantor
shall pay to the Condominium Association all common expenses and other
assessments required of it by the Condominium Declaration and shall deliver
proof of such payment (and an accounting of the balance of funds on deposit
from time to time in the common 

 22
 

expense fund or funds required to be established by
the Condominium Declaration) upon reasonable demand by Administrative Agent
made at reasonable intervals.

(e)           Upon
the occurrence and during the continuation of an Event of Default under the
terms of this Mortgage, Administrative Agent shall have all rights and
privileges which Grantor (as the owner of a Unit) has by virtue of the
Condominium Act and the Condominium Declaration as though Administrative Agent
were in fact an owner, including without limiting the generality of the
foregoing, all voting rights accruing to Grantor under the terms of the
Condominium Declaration; and Grantor hereby nominates and appoints
Administrative Agent irrevocably so long as this Mortgage remains in effect as
Grantor’s exclusive proxy to vote and, as Grantor’s exclusive agent, to act
with respect to all of said rights, upon the occurrence and during the
continuation of an Event of Default under the terms of this Mortgage.  The Condominium Association (or the Board of
Directors of the Condominium Association) shall be entitled to rely conclusively
on written notice of default from Administrative Agent to the Condominium
Association (or the Board of Directors of the Condominium Association) as to
the existence of such Event of Default and as to Administrative Agent’s rights
and privileges under this subparagraph (e), including all voting rights
accruing to Grantor under the terms of the Condominium Declaration and the
Condominium Act.  In no event shall
Administrative Agent be liable for any assessments of common expenses provided
for in the Condominium Documents, or under any resolution adopted by the
Condominium Association, nor shall Administrative Agent be deemed to be a
Declarant, by the exercise of its rights under this Mortgage, unless and until
Administrative Agent agrees and assumes, in writing, the obligations of
Declarant arising under the Condominium Declaration.

(f)            Grantor
shall not, except after notice to Administrative Agent and with the prior
written consent of Administrative Agent, (i) vote for or consent to any
material modification of, material amendment to or relaxation in the
enforcement of any provision of the Condominium Declaration; (ii) in the event
of damages to or destruction of the Condominium, exercise any vote with respect
to casualty or condemnation proceeds; (iii) partition or subdivide any Unit;
(iv) consent to or vote for the termination of the Condominium, except for
abandonment or termination deemed to have occurred, if at all, by law in the
case of substantial destruction by fire or other casualty or in the case of a
taking by condemnation or eminent domain; (v) consent to or vote for any
material amendment to the Condominium Documents including, without limitation,
any amendment which would change the allocated interests of the owners in the
Condominium; or (vi) consent to or vote for the effectuation of any decision by
the Condominium Association to terminate professional management and assume
self-management of the Condominium.

 23
 

ARTICLE
3

Reserved

ARTICLE
4

Event of Default

Section 4.1.  Events
of Default.  The occurrence of any
one of the following shall be a default under this Mortgage (“Event of
Default”):

(a)           Nonperformance
of Covenants.  Any covenant,
agreement or condition herein or in any other Loan Document (other than
covenants otherwise addressed in another paragraph of this Section) is not fully
and timely performed, observed or kept, and such failure is not cured within
the applicable notice and cure period (if any) provided for herein or in such
other Loan Document.

(b)           Default
under Loan Agreement or other Loan Documents.  The occurrence of an Default under (and as
defined in) the Loan Agreement or a default or event of default (however
defined in) any other Loan Document (after giving effect to any notice or cure
periods, if any).

Section 4.2.  Notice
and Cure.  If any provision of this
Mortgage or any other Loan Document provides for Administrative Agent to give
to Grantor any notice regarding a default or incipient default, then if
Administrative Agent shall fail to give such notice to Grantor as provided, the
sole and exclusive remedy of Grantor for such failure shall be to seek
appropriate equitable relief to enforce the agreement to give such notice and
to have any acceleration of the maturity of the Loan and the Secured
Indebtedness postponed or revoked and foreclosure proceedings in connection
therewith delayed or terminated pending or upon the curing of such default in
the manner and during the period of time permitted by such agreement, if any,
and Grantor shall have no right to damages or any other type of relief not
herein specifically set out against Administrative Agent, all of which damages
or other relief are hereby waived by Grantor. 
Nothing herein or in any other Loan Document shall operate or be
construed to add on or make cumulative any cure or grace periods specified in
any of the Loan Documents.

ARTICLE
5

Remedies

Section 5.1.  Certain
Remedies.  If an Event of Default
shall occur and be continuing, Administrative Agent may (but shall have no
obligation to) exercise any one or more of the following remedies, without
notice (unless notice is required by applicable statute):

(a)           Acceleration;
Termination.  Administrative Agent
may at any time and from time to time declare any or all of the Secured
Indebtedness immediately due and payable and may terminate any and all Swap
Transactions.  Upon any such declaration,
such Secured Indebtedness shall, thereupon be immediately due and payable, and
such Swap Transactions shall immediately terminate, without presentment,
demand, protest, notice of protest, notice of acceleration or of intention to
accelerate or any other notice or declaration of any kind, all of which are
hereby expressly waived by Grantor.

(b)           Enforcement
of Assignment of Rents. 
Administrative Agent may take any of the actions described in that
certain Assignment of Rents, Leases and Receivables (the “Assignment 

 24
 

of Rents”)
dated of even date herewith executed by Grantor for the benefit of
Administrative Agent on behalf of itself and the Lenders with or without taking
possession of any portion of the Property or taking any action with respect to
such possession.

(c)           Foreclosure.  Upon the occurrence of an Event of Default,
Trustee, or his successor or substitute, is authorized and empowered and it
shall be his special duty at the request of Administrative Agent to sell the
Property or any part thereof situated in the State of Texas, at the courthouse
of any county (whether or not the counties in which the Property is located are
contiguous, if the Property is located in more than one county) in the State of
Texas in which any part of the Property is situated, at public venue to the
highest bidder for cash between the hours of ten o’clock a.m. and four o’clock  p.m. on the first Tuesday in any month or at
such other place, time and date as provided by the statutes of the State of
Texas then in force governing sales of real estate under powers of sale
conferred by deed of trust, after having given notice of such sale in
accordance with such statutes.  Any sale
made by Trustee hereunder may be as an entirety or in such parcels as
Administrative Agent may request.  To the
extent permitted by applicable law, any sale may be adjourned by announcement
at the time and place appointed for such sale without further notice except as
may be required by law.  The sale by
Trustee of less than the whole of the Property shall not exhaust the power of
sale herein granted, and Trustee is specifically empowered to make successive
sale or sales under such power until the whole of the Property shall be sold;
and, if the proceeds of such sale of less than the whole of the Property shall
be less than the aggregate of the Secured Indebtedness and the expense of
executing this trust as provided herein, this Mortgage and the lien hereof
shall remain in full force and effect as to the unsold portion of the Property
just as though no sale had been made; provided, however, that Grantor shall
never have any right to require the sale of less than the whole of the Property
but Administrative Agent shall have the right, at its sole election, to request
Trustee to sell less than the whole of the Property.  Trustee may, after any request or direction
by Administrative Agent, sell not only the real property but also the
Collateral and other interests which are a part of the Property, or any part
thereof, as a unit and as a part of a single sale, or may sell any part of the
Property separately from the remainder of the Property.  It shall not be necessary for Trustee to have
taken possession of any part of the Property or to have present or to exhibit
at any sale any of the Collateral.  After
each sale, Trustee shall make to the purchaser or purchasers at such sale good
and sufficient conveyances in the name of Grantor, conveying the property so
sold to the purchaser or purchasers with general warranty of title of Grantor,
subject to the Permitted Encumbrances (and to such leases and other matters, if
any, as Trustee may elect upon request of Administrative Agent), and shall
receive the proceeds of said sale or sales and apply the same as herein
provided.  Payment of the purchase price
to the Trustee shall satisfy the obligation of purchaser at such sale therefor,
and such purchaser shall not be responsible for the application thereof.  The power of sale granted herein shall not be
exhausted by any sale held hereunder by Trustee or his substitute or successor,
and such power of sale may be exercised from time to time and as many times as
Administrative Agent may deem necessary until all of the Property has been duly
sold and all Secured Indebtedness has been fully paid.  In the event any sale hereunder is not
completed or is defective in the opinion of Administrative Agent, such sale
shall not exhaust the power of sale hereunder and Administrative Agent shall
have the right to cause a subsequent sale or sales to be made 

 25
 

hereunder.  Any
and all statements of fact or other recitals made in any deed or deeds or other
conveyances given by Trustee or any successor or substitute appointed hereunder
as to nonpayment of the Secured Indebtedness or as to the occurrence of any default,
or as to Administrative Agent’s having declared all of said indebtedness to be
due and payable, or as to the request to sell, or as to notice of time, place
and terms of sale and the properties to be sold having been duly given, or as
to the refusal, failure or inability to act of Trustee or any substitute or
successor trustee, or as to the appointment of any substitute or successor
trustee, or as to any other act or thing having been duly done by
Administrative Agent or by such Trustee, substitute or successor, shall be
taken as prima facie evidence of the truth of the facts so stated and
recited.  The Trustee or his successor or
substitute may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale held by Trustee, including
the posting of notices and the conduct of sale, but in the name and on behalf
of Trustee, his successor or substitute. 
If Trustee or his successor or substitute shall have given notice of
sale hereunder, any successor or substitute Trustee thereafter appointed may
complete the sale and the conveyance of the property pursuant thereto as if
such notice had been given by the successor or substitute Trustee conducting
the sale.

(d)           Uniform Commercial Code.  Without limitation of Administrative Agent’s
rights of enforcement with respect to the Collateral or any part thereof in
accordance with the procedures for foreclosure of real estate, Administrative
Agent may exercise its rights of enforcement with respect to the Collateral or
any part thereof under the UCC, as in effect from time to time (or under the
Uniform Commercial Code in force, from time to time, in any other state to the
extent the same is applicable law) and in conjunction with, in addition to or
in substitution for those rights and remedies: (1)  Administrative Agent may enter upon Grantor’s
premises to take possession of, assemble and collect the Collateral or, to the
extent and for those items of the Collateral permitted under applicable law, to
render it unusable; (2) Administrative Agent may require Grantor to assemble
the Collateral and make it available at a place Administrative Agent designates
which is mutually convenient to allow Administrative Agent to take possession
or dispose of the Collateral; (3) written notice mailed to Grantor as provided
herein at least five (5) days prior to the date of public sale of the
Collateral or prior to the date after which private sale of the Collateral will
be made shall constitute reasonable notice; provided that, if Administrative
Agent fails to comply with this clause (3) in any respect, its liability for
such failure shall be limited to the liability (if any) imposed on it as a
matter of law under the UCC, as in effect from time to time (or under the
Uniform Commercial Code, in force from time to time, in any other state to the
extent the same is applicable law); (4) any sale made pursuant to the
provisions of this paragraph shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously with
and upon the same notice as required for the sale of the Property under power
of sale as provided in paragraph (c) above in this Section 5.1; (5) in the event of a
foreclosure sale, whether made by Trustee under the terms hereof, or under
judgment of a court, the Collateral and the other Property may, at the option
of Administrative Agent, be sold as a whole; (6) it shall not be necessary that
Administrative Agent take possession of the Collateral or any part thereof
prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale; (7) with respect to application of
proceeds from 

 26
 

disposition of the
Collateral under Section 5.2 hereof, the costs and expenses incident to
disposition shall include the reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and the reasonable
attorneys’ fees and legal expenses (including, without limitation, the
allocated costs for in-house legal services) incurred by Administrative Agent;
(8) any and all statements of fact or other recitals made in any bill of sale
or assignment or other instrument evidencing any foreclosure sale hereunder as
to nonpayment of the Secured Indebtedness or as to the occurrence of any Event
of Default, or as to Administrative Agent having declared all of such
indebtedness to be due and payable, or as to notice of time, place and terms of
sale and of the properties to be sold having been duly given, or as to any
other act or thing having been duly done by Administrative Agent, shall be
taken as prima facie evidence of the truth of the facts so stated and recited;
(9) Administrative Agent may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Administrative Agent, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Administrative Agent; (10) Administrative
Agent may comply with any applicable state or federal law or regulatory
requirements in connection with a disposition of the Collateral, and such
compliance will not be considered to affect adversely the commercial
reasonableness of any sale of the Collateral; (11) Administrative Agent may
sell the Collateral without giving any warranties as to the Collateral, and
specifically disclaim all warranties including, without limitation, warranties
relating to title, possession, quiet enjoyment and the like, and all warranties
of quality, merchantability and fitness for a specific purpose, and this
procedure will not be considered to affect adversely the commercial
reasonableness of any sale of the Collateral; (12) Grantor acknowledges that a
private sale of the Collateral may result in less proceeds than a public sale;
and (13) Grantor acknowledges that the Collateral may be sold at a loss to
Grantor, and that, in such event, subject to applicable law, Administrative
Agent shall have no liability or responsibility to Grantor for such loss.

(e)           Lawsuits.  Administrative Agent may, to the fullest
extent permitted by applicable law, proceed by a suit or suits in equity or at
law, whether for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted, or for any
foreclosure hereunder or for the sale of the Property under the judgment or
decree of any court or courts of competent jurisdiction.

(f)            Entry
on Property.  Administrative Agent is
authorized, prior or subsequent to the institution of any foreclosure
proceedings, to the fullest extent permitted by applicable law, to enter upon
the Property, or any part thereof, and to take possession of the Property and
all books and records, and all recorded data of any kind or nature, regardless
of the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics relating thereto, and to
exercise without interference from Grantor any and all rights which Grantor has
with respect to the management, possession, operation, protection or
preservation of the Property. 
Administrative Agent shall not be deemed to have taken possession of the
Property or any part thereof except upon the exercise of its right to do so,
and then only to the extent evidenced by its demand and overt act specifically
for such purpose.  All costs, expenses
and liabilities of every character incurred by Administrative Agent in
managing, operating, maintaining, protecting or preserving the Property shall
constitute a demand obligation of 

 27
 

Grantor (which obligation Grantor hereby promises to
pay) to Administrative Agent pursuant to this Mortgage.  If necessary to obtain the possession
provided for above, Administrative Agent may invoke any and all legal remedies
to dispossess Grantor.  In connection
with any action taken by Administrative Agent pursuant to this Section,
Administrative Agent shall not be liable for any loss sustained by Grantor
resulting from any failure to let the Property or any part thereof, or from any
act or omission of Administrative Agent in managing the Property unless such
loss is caused by the gross negligence, willful misconduct or bad faith of
Administrative Agent, nor shall Administrative Agent be obligated to perform or
discharge any obligation, duty or liability of Grantor arising under any lease
or other agreement relating to the Property or arising under any Permitted
Encumbrance or otherwise arising. 
Grantor hereby assents to, ratifies and confirms any and all lawful
actions of Administrative Agent with respect to the Property taken under this
Section.

(g)           Receiver.  Administrative Agent shall as a matter of
right be entitled to the appointment of a receiver or receivers for all or any
part of the Property whether such receivership be incident to a proposed sale
(or sales) of such property or otherwise, and without regard to the value of
the Property or the solvency of any person or persons liable for the payment of
the indebtedness secured hereby, and Grantor does hereby irrevocably consent to
the appointment of such receiver or receivers, waives notice of such
appointment, of any request therefor or hearing in connection therewith, and
any and all defenses to such appointment, agrees not to oppose any application
therefor by Administrative Agent, and agrees that such appointment shall in no
manner impair, prejudice or otherwise affect the rights of Administrative Agent
to application of Rents as provided in this Mortgage.  Nothing herein is to be construed to deprive
Administrative Agent of any other right, remedy or privilege it may have under
the law to have a receiver appointed. 
Any money advanced by Administrative Agent in connection with any such
receivership shall be a demand obligation (which obligation Grantor hereby
promises to pay) owing by Grantor to Administrative Agent pursuant to this
Mortgage.

(h)           Powers of Administrative Agent.  Administrative Agent may, either directly or
through an agent or court-appointed receiver, and without regard to the
adequacy of any security for the Secured Indebtedness:

(i)            enter,
take possession of, manage, operate, protect, preserve and maintain, and
exercise any other rights of an owner of, the Property, and use any other
properties or facilities of Grantor relating to the Property, all without payment of rent or other
compensation to Grantor;

(ii)           enter
into such contracts and take such other action as Administrative Agent deems
appropriate to complete all or any part of the Improvements or any other
construction on the Land, subject to such modifications and other changes in
the Improvements or the plan of development as Administrative Agent may deem
appropriate;

 28
 

(iii)          make,
cancel, enforce or modify leases, obtain and evict tenants, fix or modify rents
and, in its own name or in the name of Grantor, otherwise conduct any business of Grantor
in relation to the Property and deal with Grantor’s creditors, debtors,
tenants, agents and employees and any other persons having any relationship
with Grantor in relation to the
Property, and amend any contracts between them, in any manner Administrative
Agent may determine in its commercially reasonable judgment;

(iv)          subject
to the terms of the Collateral Assignment, either with or without taking
possession of the Property, notify obligors on any contracts that all payments
and other performance are to be made and rendered directly and exclusively to
Administrative Agent, and in its own name supplement, modify, amend, renew,
extend, accelerate, accept partial payments or performance on, make allowances
and adjustments and issue credits with respect to, give approvals, waivers and
consents under, release, settle, compromise, compound, sue for, collect or
otherwise liquidate, enforce or deal with any contracts or other rights, including
collection of amounts past due and unpaid (Grantor agreeing not to take any such action, with
respect to any obligation in excess of $5,000, 
during the continuation of a Default without prior written authorization
from Administrative Agent);

(v)           endorse,
in the name of Grantor,
all checks, drafts and other evidences of payment relating to the Property, and
receive, open and dispose of all mail addressed to Grantor and notify the
postal authorities to change the address for delivery of such mail to such
address as Administrative Agent may designate; and

take such other action as
Administrative Agent deems appropriate to protect the security of this
Mortgage.

(i)            Termination
of Commitment to Lend. 
Administrative Agent may terminate any commitment or obligation to lend
or disburse funds under any Loan Document or enter into any other credit
arrangement to or for the benefit of Grantor.

(j)            Other
Rights and Remedies.  Administrative
Agent may exercise any and all other rights and remedies which Administrative
Agent may have under the Loan Documents, or at law or in equity or otherwise.

Section 5.2.  Proceeds
of Foreclosure.  The proceeds held by
Trustee or Administrative Agent or any receiver or public officer in
foreclosure of the liens and security interests evidenced hereby shall be
applied in accordance with the requirements of applicable laws and to the
extent consistent therewith as follows: 
(i) FIRST,
to the payment of all necessary costs and expenses incident to such foreclosure
sale, including but not limited to all attorneys’ fees and legal expenses,
advertising costs, auctioneer’s fees, costs of title rundowns and lien
searches, inspection fees, appraisal costs, fees for professional services,
environmental assessment and remediation fees, 
all court costs and charges of every character (not exceeding five
percent (5%) of the gross proceeds of such sale), to Trustee acting under the
provisions of paragraph (c) of 

 29
 

Section 5.1 hereof if foreclosed
by power of sale as provided in said paragraph, and to the payment of the other
Secured Indebtedness, including specifically without limitation the principal,
accrued interest and attorneys’ fees due and unpaid on the Loan and the amounts
due and unpaid and owed to Administrative Agent under this Mortgage the order
and manner of application to the items in this clause (all with interest at the
rate per annum provided in the Loan Agreement all in Administrative Agent’s
sole discretion; (ii) SECOND,
to amounts due and payable to Swap Bank under any Swap Transactions, and (iii) THIRD, the remainder, if any,
shall be paid to Grantor, or to Grantor’s successors or assigns, or such other
persons (including the Administrative Agent or beneficiary of any inferior
lien) as may be entitled thereto by law; provided, however, that if
Administrative Agent is uncertain which person or persons are so entitled,
Administrative Agent may interplead such remainder in any court of competent
jurisdiction, and the amount of any attorneys’ fees, court costs and expenses
incurred in such action shall be a part of the Secured Indebtedness and shall
be reimbursable (without limitation) from such remainder.

Section 5.3.  Administrative
Agent as Purchaser.  Administrative
Agent or any Lender shall have the right to become the purchaser at any sale
held by Trustee or substitute or successor or by any receiver or public officer
or at any public sale, and Administrative Agent or any Lender shall have the
right to credit upon the amount of Administrative Agent’s or such Lender’s
successful bid, to the extent necessary to satisfy such bid, all or any part of
the Secured Indebtedness held by such Lender or, alternatively, all Lenders, in
the case of a purchase by Administrative Agent or its Affiliate acting on
behalf of and with the consent of the Required Lenders, in such manner and
order as Administrative Agent or such Lender may elect.

Section 5.4.  Foreclosure
as to Matured Debt.  Upon the
occurrence of a default, Holder shall have the right to proceed with
foreclosure (judicial or nonjudicial) of the liens and security interests
hereunder without declaring the entire Secured Indebtedness due, and in such
event any such foreclosure sale may be made subject to the unmatured part of
the Secured Indebtedness; and any such sale shall not in any manner affect the
unmatured part of the Secured Indebtedness, but as to such unmatured part this
Mortgage shall remain in full force and effect just as though no sale had been
made.  The proceeds of such sale shall be
applied as provided in Section 5.2 hereof except that the amount paid under
clause FIRST thereof shall be only the matured portion of the Secured
Indebtedness and any proceeds of such sale in excess of those provided for in
clause FIRST (modified as provided above) shall be applied to the prepayment
(without penalty) of any other Secured Indebtedness in such manner and order
and to such extent as Holder deems advisable, and the remainder, if any, shall
be applied as provided in clause SECOND of Section 5.2 hereof.  Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the Secured
Indebtedness..

Section 5.5.  Remedies
Cumulative.  All rights and remedies
provided for herein and in any other Loan Document are cumulative of each other
and of any and all other rights and remedies existing at law or in equity, and
Trustee and Administrative Agent shall, in addition to the rights and remedies
provided herein or in any other Loan Document, be entitled to avail themselves
of all such other rights and remedies as may now or hereafter exist at law or
in equity 

 30
 

for the collection of the Secured Indebtedness and the
enforcement of the covenants herein and the foreclosure of the liens and
security interests evidenced hereby, and the resort to any right or remedy
provided for hereunder or under any such other Loan Document or provided for by
law or in equity shall not prevent the concurrent or subsequent employment of
any other appropriate right or rights or remedy or remedies.

Section 5.6.  Discretion
as to Security.  Administrative Agent
may resort to any security given by this Mortgage or to any other security now
existing or hereafter given to secure the payment of the Secured Indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Administrative Agent in its sole and uncontrolled discretion, and any such
action shall not in anywise be considered as a waiver of any of the rights,
benefits, liens or security interests evidenced by this Mortgage.

Section 5.7.  Grantor’s
Waiver of Certain Rights.  To the
full extent Grantor may do so, Grantor agrees that Grantor will not at any time
insist upon, plead, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension
or redemption, homestead, moratorium, reinstatement, marshaling or forbearance,
and Grantor, for Grantor, Grantor’s heirs, devisees, representatives,
successors and assigns, and for any and all persons ever claiming any interest
in the Property, to the extent permitted by applicable law, hereby waives and
releases all rights of redemption, valuation, appraisement, stay of execution,
notice of intention to mature or declare due the whole of the Secured
Indebtedness, notice of election to mature or declare due the whole of the
Secured Indebtedness and all rights to a marshaling of assets of Grantor,
including the Property, or to a sale in inverse order of alienation in the
event of foreclosure of the liens and/or security interests hereby created.  Grantor shall not have or assert any right
under any statute or rule of law including Chapter 34 of the Texas Business and
Commerce Code, pertaining to the marshaling of assets, sale in inverse order of
alienation, the exemption of homestead, the administration of estates of
decedents, or other matters whatsoever to defeat, reduce or affect the right of
Administrative Agent under the terms of this Mortgage to a sale of the Property
for the collection of the Secured Indebtedness without any prior or different resort
for collection, or the right of Administrative Agent under the terms of this
Mortgage to the payment of the Secured Indebtedness out of the proceeds of sale
of the Property in preference to every other claimant whatsoever.  Grantor waives any right or remedy which
Grantor may have or be able to assert pursuant to any provision of any statute
or rule of law pertaining to the rights and remedies of sureties.  If any law referred to in this Section and
now in force, of which Grantor or Grantor’s heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in the
Property might take advantage despite this Section, shall hereafter be repealed
or cease to be in force, such law shall not thereafter be deemed to preclude the
application of this Section.

Section 5.8.  Delivery
of Possession After Foreclosure.  In
the event there is a foreclosure sale hereunder and at the time of such sale,
Grantor or Grantor’s successors as owners of the Property are occupying or
using the Property, or any part thereof, each and all shall immediately become
the tenant of the purchaser at such sale, which tenancy shall be a tenancy from
day to day, terminable at the will of purchaser, at a reasonable rental per day
based upon the value of 

 31
 

the property occupied, such rental to be due daily to
the purchaser; and to the extent permitted by applicable law, the purchaser at
such sale shall, notwithstanding any language herein apparently to the
contrary, have the sole option to demand immediate possession following the
sale or to permit the occupants to remain as tenants at will.  After such foreclosure, any leases to tenants
or subtenants that are subject to this Mortgage (either by their date, their
express terms, or by agreement of the tenant or subtenant) shall, at the sole
option of Administrative Agent or any purchaser at such sale, but subject to
any express agreement between Administrative Agent and such tenant or
subtenant, either (i) continue in full force and effect, and the tenant(s) or subtenant(s)
thereunder will, upon request, attorn to and acknowledge in writing to the
purchaser or purchasers at such sale or sales as landlord thereunder, or (ii)
upon notice to such effect from Administrative Agent, the Trustees or any
purchaser or purchasers, terminate within thirty (30) days from the date of
sale.  Subject to the foregoing, in the
event the tenant fails to surrender possession of the Property upon demand, the
purchaser shall be entitled to institute and maintain a summary action for possession
of the Property (such as an action for forcible detainer) in any court having
jurisdiction.

Section 5.9.            Right
of Rescission; Adjournment. 
Administrative Agent may from time to time rescind any notice of default
or notice of sale before any Trustee’s sale in accordance with the laws of the
State of California.  The exercise by
Administrative Agent of such right of rescission shall not constitute a waiver
of any breach or default then existing or subsequently occurring, or impair the
right of Administrative Agent to execute and deliver to Trustee, as above
provided, other declarations or notices of default to satisfy the obligations
of this Mortgage or secured hereby, nor otherwise affect any provision,
covenant or condition of this Mortgage or any other security document or any of
the rights, obligations or remedies of Trustee or Administrative Agent
hereunder or thereunder.  Administrative
Agent may adjourn from time to time any sale by it to be made under or by
virtue of this Mortgage by announcement at the time and place appointed for
such sale or for such adjourned sale or sales; and, except as otherwise
provided by any applicable provision of law, Administrative Agent, without
further notice or publication, may make such sale at the time and place to
which the same shall be so adjourned.

Section 5.10.  Effective
as Mortgage.  This instrument shall
be effective as a mortgage as well as a deed of trust and upon the occurrence
of an Event of Default may be foreclosed as to any of the Property in any
manner permitted by applicable law, and any foreclosure suit may be brought by
Trustee or by Administrative Agent; and to the extent, if any, required to
cause this instrument to be so effective as a mortgage as well as a deed of
trust, Grantor hereby mortgages the Property to Administrative Agent.  In the event a foreclosure hereunder shall be
commenced by Trustee, or his substitute or successor, Administrative Agent may
at any time before the sale of the Property direct Trustee to abandon the sale,
and may then institute suit for the collection of the Secured Indebtedness, and
for the foreclosure of this Mortgage.  It
is agreed that if Administrative Agent should institute a suit for the
collection of the Secured Indebtedness and for the foreclosure of this
Mortgage, Administrative Agent may at any time before the entry of a final
judgment in said suit dismiss the same, and require Trustee, his substitute or
successor to sell the Property in accordance with the provisions of this
Mortgage.

 32

ARTICLE
6

Miscellaneous

Section 6.1.  Scope of Mortgage.  This Mortgage is a deed of trust and mortgage
of both real and personal property, a security agreement, an assignment of
rents and leases, a financing statement and fixture filing and a collateral assignment,
and also covers proceeds and fixtures.

Section 6.2.  Effective as a Financing Statement and
Fixture Filing.  This Mortgage shall
be effective as a financing statement filed as a fixture filing with respect to
all fixtures included within the Property and is to be filed for record in the
real estate records of each county where any part of the Property (including
said fixtures) is situated.  This
Mortgage shall also be effective as a financing statement covering minerals or
the like (including oil and gas), timber, accounts and general intangibles
under the UCC, as amended, and similar provisions (if any) of the Uniform
Commercial Code as enacted in any other state where the Property is situated
which will be financed at the wellhead or minehead of the wells or mines
located on the Property and is to be filed for record in the real estate
records of each county where any part of the Property is situated.  To the extent permitted under applicable law,
this Mortgage shall also be effective as a financing statement covering any
other Property and may be filed in any other appropriate filing or recording
office.  The mailing address of Grantor
and the Administrative Agent are set forth in the introductory paragraph of
this Mortgage.  To the extent permitted
under applicable law, a carbon, photographic or other reproduction of this
Mortgage or of any financing statement relating to this Mortgage shall be
sufficient as a financing statement for any of the purposes referred to in this
Section.

Section 6.3.  Notice to Account Debtors.  In addition to the rights granted elsewhere
in this Mortgage, Administrative Agent may at any time notify the account
debtors or obligors of any accounts, chattel paper, general intangibles,
negotiable instruments or other evidences of indebtedness included in the
Collateral to pay Administrative Agent directly.

Section 6.4.  Waiver by Administrative Agent.  Administrative Agent may at any time and from
time to time by a specific writing intended for the purpose: (a) waive compliance
by Grantor with any covenant herein made by Grantor to the extent and in the
manner specified in such writing; (b) consent to Grantor’s doing any act which
hereunder Grantor is prohibited from doing, or to Grantor’s failing to do any
act which hereunder Grantor is required to do, to the extent and in the manner
specified in such writing; (c) release any part of the Property or any interest
therein from the lien and security interest of this Mortgage, without the
joinder of Trustee; or (d) release any party liable, either directly or
indirectly, for the Secured Indebtedness or for any covenant herein or in any
other Loan Document, without impairing or releasing the liability of any other
party.  No such act shall in any way
affect the rights or powers of Administrative Agent or Trustee hereunder except
to the extent specifically agreed to by Administrative Agent in such writing.

Section 6.5.  No Impairment of Security.  The lien, security interest and other
security rights of Administrative Agent hereunder or under any other Loan
Document shall not be

 33
 

impaired (except
to the extent expressly stated therein) by any indulgence, moratorium or
release granted by Administrative Agent including, but not limited to, any
renewal, extension or modification which Administrative Agent may grant with
respect to any Secured Indebtedness, or any surrender, compromise, release,
renewal, extension, exchange or substitution which Administrative Agent may
grant in respect of the Property, or any part thereof or any interest therein,
or any release or indulgence granted to any endorser, guarantor or surety of
any Secured Indebtedness.  The taking of
additional security by Administrative Agent shall not release or impair the
lien, security interest or other security rights of Administrative Agent
hereunder or affect the liability of Grantor or of any endorser, guarantor or
surety, or improve the right of any junior lienholder in the Property (without
implying hereby Administrative Agent’s consent to any junior lien).

Section 6.6.  Acts Not Constituting Waiver by
Administrative Agent.  Administrative
Agent may waive any default without waiving any other prior or subsequent
default.  Administrative Agent may remedy
any default without waiving the default remedied.  Neither failure by Administrative Agent to
exercise, nor delay by Administrative Agent in exercising, nor discontinuance
of the exercise of any right, power or remedy (including but not limited to the
right to accelerate the maturity of the Secured Indebtedness or any part
thereof) upon or after any default shall be construed as a waiver of such
default or as a waiver of the right to exercise any such right, power or remedy
at a later date.  No single or partial
exercise by Administrative Agent of any right, power or remedy hereunder shall
exhaust the same or shall preclude any other or further exercise thereof, and
every such right, power or remedy hereunder may be exercised at any time and
from time to time.  No modification or
waiver of any provision hereof nor consent to any departure by Grantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by Administrative Agent and then such waiver or consent shall be
effective only in the specific instance, for the purpose for which given and to
the extent therein specified.  No notice
to nor demand on Grantor in any case shall of itself entitle Grantor to any
other or further notice or demand in similar or other circumstances.  Remittances in payment of any part of the
Secured Indebtedness other than in the required amount in immediately available
U.S. funds shall not, regardless of any receipt or credit issued therefor,
constitute payment until the required amount is actually received by
Administrative Agent in immediately available U.S. funds and shall be made and
accepted subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank or
banks.  Acceptance by Administrative
Agent of any payment in an amount less than the amount then due on any Secured
Indebtedness shall be deemed an acceptance on account only and shall not in any
way excuse the existence of a default hereunder notwithstanding any notation on
or accompanying such partial payment to the contrary.

Section 6.7.  Grantor’s Successors.  If the ownership of the Property or any part
thereof becomes vested in a person other than Grantor, Administrative Agent
may, without notice to Grantor, deal with such successor or successors in
interest with reference to this Mortgage and to the Secured Indebtedness in the
same manner as with Grantor, without in any way vitiating or discharging
Grantor’s liability hereunder or for the payment of the indebtedness or
performance of the obligations secured hereby. 
No transfer of the Property, no forbearance on the part of

 34
 

Administrative
Agent, and no extension of the time for the payment of the Secured Indebtedness
given by Administrative Agent shall operate to release, discharge, modify,
change or affect, in whole or in part, the liability of Grantor hereunder for
the payment of the indebtedness or performance of the obligations secured
hereby or the liability of any other person hereunder for the payment of the
indebtedness secured hereby.  Unless
agreed to in writing in connection with Administrative Agent’s consent to the
transfer, each Grantor agrees that it shall be bound by any modification of
this Mortgage or any of the other Loan Documents made by Administrative Agent
and any subsequent owner of the Property, with or without notice to such
Grantor, and no such modifications shall (i) impair the obligations of such
Grantor under this Mortgage or any other Loan Document or (ii) increase the
obligations of Grantor, unless consented to in writing by Grantor, under this
Mortgage or any other Loan Document. Nothing in this Section or elsewhere in
this Mortgage shall be construed to imply Administrative Agent’s consent to any
transfer of the Property.

Section 6.8.  Place of Payment; Forum; Waiver of Jury
Trial.  All Secured Indebtedness
which may be owing hereunder at any time by Grantor shall be payable at the
place designated in the Loan Agreement (or if no such designation is made, at
the address of Administrative Agent indicated at the end of this Mortgage).  Grantor hereby irrevocably submits generally
and unconditionally for itself and in respect of its property to the non-exclusive
jurisdiction of any State court, or any United States federal court, sitting in
Dallas, Texas, and to the non-exclusive jurisdiction of any State court
or any United States federal court sitting in the state in which any of the
Property is located, over any suit, action or proceeding arising out of or
relating to this Mortgage or the Secured Indebtedness.  Grantor hereby irrevocably waives, to the
fullest extent permitted by law, any objection that Grantor may now or
hereafter have to the laying of venue in any such court and any claim that any
such court is an inconvenient forum. 
Grantor hereby agrees and consents that, in addition to any methods of service
of process provided for under applicable law, all service of process in any
such suit, action or proceeding in any State court in which the Property is
located, or any United States federal court, sitting in the State in which the
Secured Indebtedness is payable may be made by certified or registered mail,
return receipt requested, directed to Grantor at its address stated at the end
of this Mortgage, or at a subsequent address of Grantor of which Administrative
Agent received actual notice from Grantor in accordance with this Mortgage, and
service so made shall be complete five (5) days after the same shall have been
so mailed.  Nothing herein shall affect
the right of Administrative Agent to serve process in any manner permitted by
law or limit the right of Administrative Agent to bring proceedings against
Grantor in any other court or jurisdiction. 
TO THE FULLEST EXTENT PERMITTED BY LAW, GRANTOR, ADMINISTRATIVE AGENT
AND THE LENDERS EACH WAIVE THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY
ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF OR RELATING TO THIS MORTGAGE OR
ANY OTHER LOAN DOCUMENT.

Section 6.9.  Subrogation to Existing Liens; Vendor’s/Purchase
Money Lien. To the extent that proceeds of the Loan are used to pay
indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, such proceeds have been advanced by
Administrative Agent at Grantor’s request, and Administrative Agent shall be

 35
 

subrogated to any
and all rights, security interests and liens owned by any owner or
Administrative Agent of such outstanding liens, security interests, charges or
encumbrances, however remote, irrespective of whether said liens, security
interests, charges or encumbrances are released, and all of the same are
recognized as valid and subsisting and are renewed and continued and merged
herein to secure the Secured Indebtedness, but the terms and provisions of this
Mortgage shall govern and control the manner and terms of enforcement of the
liens, security interests, charges and encumbrances to which Administrative
Agent is subrogated hereunder.  It is
expressly understood that, in consideration of the payment of such indebtedness
by Administrative Agent, Grantor hereby waives and releases all demands and
causes of action for offsets and payments in connection with the said
indebtedness.  If all or any portion of
the proceeds of the Loan or of any other Secured Indebtedness has been advanced
for the purpose of paying the purchase price for all or a part of the Property,
no vendor’s or purchase money lien is waived; and Administrative Agent shall
have, and is hereby granted, a vendor’s or purchase money lien on the Property
as cumulative additional security for the Secured Indebtedness.  Administrative Agent may foreclose under this
Mortgage or under the vendor’s or purchase money lien without waiving the other
or may foreclose under both.

Section 6.10.  Application of Payments to Certain
Indebtedness.  If any part of the
Secured Indebtedness cannot be lawfully secured by this Mortgage or if any part
of the Property cannot be lawfully subject to the lien and security interest
hereof to the full extent of such Secured Indebtedness, then all payments made
shall be applied on said Secured Indebtedness first in discharge of that
portion thereof which is not secured by this Mortgage.

Section 6.11.  Compliance with Usury Laws.  It is the intent of Grantor and
Administrative Agent and all other parties to the Loan Documents to conform to
and contract in strict compliance with applicable usury law from time to time
in effect.  All agreements between
Administrative Agent and Grantor (or any other party liable with respect to any
indebtedness under the Loan Documents) are hereby limited by the provisions of
this Section which shall override and control all such agreements, whether now
existing or hereafter arising.  In no
way, nor in any event or contingency (including but not limited to prepayment,
default, demand for payment, or acceleration of the maturity of any
obligation), shall the interest taken, reserved, contracted for, charged,
chargeable, or received under this Mortgage, the Loan Agreement, the Note or
any other Loan Document or otherwise, exceed the maximum nonusurious amount
permitted by applicable law (the “Maximum Amount”).  If, from any possible construction of any
document, interest would otherwise be payable in excess of the Maximum Amount,
any such construction shall be subject to the provisions of this Section and
such document shall ipso facto be automatically reformed and the interest
payable shall be automatically reduced to the Maximum Amount, without the
necessity of execution of any amendment or new document.  If Administrative Agent shall ever receive
anything of value which is characterized as interest under applicable law and
which would apart from this provision be in excess of the Maximum Amount, an
amount equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount owing on the
Secured Indebtedness in the inverse order of its maturity and not to the
payment of interest, or refunded to Grantor or the other payor thereof if and
to the extent such amount which would have been excessive

 36
 

exceeds such
unpaid principal.  The right to
accelerate maturity of the Loan or any other Secured Indebtedness does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Administrative Agent does not intend to
charge or receive any unearned interest in the event of acceleration.  All interest paid or agreed to be paid to
Administrative Agent shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full stated term
(including any renewal or extension) of such indebtedness so that the amount of
interest on account of such indebtedness does not exceed the Maximum
Amount.  As used in this Section, the
term “applicable
law” shall mean the laws of the State of Texas, or the federal laws of the
United States applicable to this transaction, whichever laws allow the greatest
interest, as such laws now exist or may be changed or amended or come into
effect in the future.

Section 6.12.  Release.

(a)           Release from
Mortgage.  If (i) all of the Secured
Indebtedness be paid as the same becomes due and payable and all of the
covenants, warranties, undertakings and agreements made in this Mortgage are
kept and performed, and all Swap Transactions and all other obligations under
the Loan Documents, if any, of Administrative Agent for further advances have
been terminated, or (ii) Grantor is entitled to a release of this Mortgage in
accordance with the terms of the Loan Agreement, then, and in that event only,
all rights under this Mortgage shall terminate (except to the extent expressly
provided herein with respect to indemnifications, representations and
warranties and other rights which are to continue following the release hereof)
and the Property shall become wholly clear of the liens, security interests,
conveyances and assignments evidenced hereby, and the Property shall be
released by Administrative Agent in due form at Grantor’s cost.  Without limitation, all provisions herein for
indemnity of Administrative Agent or Trustee shall survive discharge of the
Secured Indebtedness, the termination of any and all Swap Transactions and any
foreclosure, release or termination of this Mortgage.

(b)           Partial Release; No
Release in Default.  Administrative
Agent may, regardless of consideration, cause the release of any part of the
Property from the lien of this Mortgage without in any manner affecting or
impairing the lien or priority of this Mortgage as to the remainder of the
Property.  No
partial release shall be sought, requested or required if any Default has
occurred which has not been cured.

(c)           Release Fee. 
Grantor agrees to pay reasonable fees, not to exceed the maximum amounts
legally permitted, for Trustee’s rendering of services in connection with each
partial or complete release of the Property from the lien of this Mortgage.

Section 6.13.  Notices.  All such notices, demands, requests, consents
and other communications shall be deemed sufficiently given or furnished if
delivered by personal delivery, by courier, by registered or certified United
States mail, postage prepaid, or by facsimile (with, subject to Subsection
6.3.2 of the Loan Agreement, a confirmatory duplicate copy sent by first class
United States mail), addressed to the party to whom directed or by

 37
 

(subject to
Subsection 6.3.3 of the Loan Agreement) electronic mail address to Grantor, at
the addresses set forth at the end of this Agreement or to Administrative Agent
or Lenders at the addresses specified for notices in the Loan Agreement (unless
changed by similar notice in writing given by the particular party whose
address is to be changed). Any such notice or communication shall be deemed to
have been given and received either at the time of personal delivery or, in the
case of courier or mail, as of the date of first attempted delivery at the
address and in the manner provided herein, or, in the case of facsimile, upon
receipt; provided, however, that service of a notice required by Texas Property
Code Section 51.002, as amended, shall be considered complete when the
requirements of that statute are met. 
Notwithstanding the foregoing, no notice of change of address shall be
effective except upon actual receipt. 
This Section shall not be construed in any way to affect or impair any
waiver of notice or demand provided in any Loan Document or to require giving
of notice or demand to or upon any person in any situation or for any reason.

Section 6.14.  Invalidity of Certain Provisions.  A determination that any provision of this
Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and the determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.

Section 6.15.  Gender; Titles; Construction.  Within this Mortgage, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires.  Titles
appearing at the beginning of any subdivisions hereof are for convenience only,
do not constitute any part of such subdivisions, and shall be disregarded in
construing the language contained in such subdivisions.  The use of the words “herein,” “hereof,”
“hereunder” and other similar compounds of the word “here” shall
refer to this entire Mortgage and not to any particular Article, Section,
paragraph or provision.  The term “person”
and words importing persons as used in this Mortgage shall include firms,
associations, partnerships (including limited partnerships), joint ventures,
trusts, corporations, limited liability companies and other legal entities,
including public or governmental bodies, agencies or instrumentalities, as well
as natural persons.

Section 6.16.  Reporting Compliance.  Grantor agrees to comply with any and all
reporting requirements imposed upon Grantor, Grantor’s affiliates, Guarantor,
Guarantor’s affiliates with respect to the transaction evidenced by the Loan
Documents and secured by this Mortgage which are set forth in any law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority, including but not limited to The International Investment Survey Act
of 1976, The Agricultural Foreign Investment Disclosure Act of 1978, The
Foreign Investment in Real Property Tax Act of 1980 and the Tax Reform Act of
1984 and further agrees upon request of Administrative Agent to furnish
Administrative Agent with evidence of such compliance.

 38
 

Section 6.17.  Grantor.  Unless the context clearly indicates
otherwise, as used in this Mortgage, “Grantor” means the grantors named
in Section
1.1 hereof or any of them. 
The obligations of Grantor hereunder shall be joint and several.  If any Grantor, or any signatory who signs on
behalf of any Grantor, is a corporation, partnership or other legal entity,
Grantor and any such signatory, and the person or persons signing for it, represent
and warrant to Administrative Agent that this instrument is executed,
acknowledged and delivered by Grantor’s duly authorized representatives. If
Grantor is an individual, no power of attorney granted by Grantor herein shall
terminate on Grantor’s disability.

Section 6.18.  Execution; Recording.  This Mortgage may be executed in several
counterparts, all of which are identical, and all of which counterparts
together shall constitute one and the same instrument.  The date or dates reflected in the
acknowledgments hereto indicate the date or dates of actual execution of this
Mortgage, but such execution is as of the date shown on the first page hereof,
and for purposes of identification and reference the date of this Mortgage
shall be deemed to be the date reflected on the first page hereof.  Grantor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or
Administrative Agent shall reasonably request and will pay all such recording,
filing, re-recording and refiling taxes, fees and other charges.

Section 6.19.  Successors and Assigns.  The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the successors and assigns
of Grantor, and shall inure to the benefit of Trustee and Administrative Agent
and shall constitute covenants running with the Land.  All references in this Mortgage to Grantor
shall be deemed to include all such heirs, devisees, representatives,
successors and assigns of Grantor.

Section 6.20.  No Partnership, Etc..  The relationship between Administrative Agent
and Grantor is solely that of lender and borrower.  Administrative Agent has no fiduciary or
other special relationship with Grantor. 
Nothing contained in the Loan Documents is intended to create any
partnership, joint venture, association or special relationship between Grantor
and Administrative Agent or in any way make Administrative Agent a co-principal
with Grantor with reference to the Property. 
All agreed contractual duties between or among Administrative Agent,
Trustee and Grantor are set forth herein and in the other Loan Documents and
any additional implied covenants or duties are hereby disclaimed.  Any inferences to the contrary of any of the
foregoing are hereby expressly negated.

Section 6.21.  Substitution of Trustee.  
Trustee may resign by an instrument in writing addressed to
Administrative Agent or Trustee may be removed at any time with or without
cause by an instrument in writing executed by Administrative Agent.  In case of the resignation, removal or
disqualification of Trustee, or if for any reason Administrative Agent shall
deem it desirable to appoint a substitute or successor trustee to act instead
of the herein-named trustee or any substitute or successor trustee, then
Administrative Agent shall have the right and is hereby authorized and
empowered to appoint a successor trustee(s) or a substitute trustee(s) without
any

 39
 

formality other
than appointment and designation in writing executed by Administrative Agent
and the authority hereby conferred shall extend to the appointment of other
successor and substitute trustees successively until the Secured Indebtedness
has been paid in full or until the Property is fully and finally sold
hereunder.  If Administrative Agent is a
corporation or association and such appointment is executed on its behalf by an
officer of such corporation or association, such appointment shall be
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any
superior officer of the corporation or association.  Upon the making of any such appointment and
designation, all of the estate and title of Trustee in the Property shall vest
in the named successor or substitute Trustee(s) and it shall thereupon succeed
to, and shall hold, possess and execute, all of the rights, powers, privileges,
immunities and duties herein conferred upon Trustee.  All references herein to “Trustee”
shall be deemed to refer to Trustee (including any successor(s) or
substitute(s) appointed and designated as herein provided) from time to time
acting hereunder.

Section 6.22.  No Liability of Trustee.  Trustee shall not be liable for any error of
judgment or act done by Trustee in good faith, or be otherwise responsible or
accountable under any circumstances whatsoever (including Trustee’s
negligence), except for Trustee’s gross negligence or willful misconduct.  Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by it hereunder, believed by it in good faith to be
genuine.  All moneys received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by law), and Trustee shall
be under no liability for interest on any moneys received by it hereunder.  Grantor hereby ratifies and confirms any and
all acts which the herein-named Trustee or its successor or successors,
substitute or substitutes, in this trust, shall do lawfully by virtue
hereof.  Grantor will reimburse Trustee
for, and save Trustee harmless against, any and all liability and expenses
which may be incurred by Trustee in the performance of its duties.  The foregoing indemnity shall not terminate
upon discharge of the Secured Indebtedness or foreclosure, release or other
termination of this Mortgage.

Section 6.23.  Applicable Law.  THIS MORTGAGE, AND ITS VALIDITY, ENFORCEMENT
AND INTERPRETATION, SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND
ENFORCED IN ACCORDANCE WITH AND PURSUANT TO THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND APPLICABLE UNITED
STATES FEDERAL LAW.

Section 6.24.  No Merger of Estates.  So long as any part of the Secured
Indebtedness secured hereby remain unpaid and unperformed or undischarged, the
fee and leasehold estates to the Property shall not merge but rather shall
remain separate and distinct, notwithstanding the union of such estates either
in Grantor, Administrative Agent, any lessee, or any third party purchaser or
otherwise.

 40
 

Section 6.25  Entire Agreement.  The Loan Documents constitute the entire
understanding and agreement between Grantor and Administrative Agent with
respect to the transactions arising in connection with the Secured Indebtedness
and supersede all prior written or oral understandings and agreements between
Grantor and Administrative Agent with respect to the matters addressed in the
Loan Documents.  Grantor hereby
acknowledges that, except as incorporated in writing in the Loan Documents,
there are not, and were not, and no persons are or were authorized by
Administrative Agent to make, any representations, understandings,
stipulations, agreements or promises, oral or written, with respect to the
matters addressed in the Loan Documents.

THE WRITTEN LOAN
DOCUMENTS REPRESENT 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 ORAL AGREEMENTS BETWEEN THE PARTIES.

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 41

IN
WITNESS WHEREOF, Grantor has executed this instrument is executed by Grantor as
of the date first written on page 1 hereof.

	
  

  	
  GRANTOR:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MOCKINGBIRD

  COMMONS, LLC, a Delaware limited liability

  company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BEHRINGER HARVARD

  	
   

  
	
   

  	
   

  	
  MOCKINGBIRD COMMONS GP, LLC,

  	
   

  
	
   

  	
   

  	
  a Texas limited liability company,

  	
   

  
	
   

  	
   

  	
  its Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
  Executive Vice President – Corporate

  	
   

  
	
   

  	
   

  	
   

  	
  Development & Legal and Secretary

  	
   

  
						

 

	
  STATE
  OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF DALLAS

  	
   

  	
  §

  

 

This instrument
was acknowledged before me on the day of      
September, 2007, by Gerald J. Reihsen, III, Executive Vice President-Corporate
Development & Legal and Secretary of Behringer Harvard Mockingbird Commons
GP, LLC, a Texas limited liability company, on behalf of said limited liability
company, in its capacity as the General Partner of Behringer Harvard
Mockingbird Commons, LLC, a Delaware limited liability company, on behalf of
said limited liability company.

 

	
  

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Notary Public, State of Texas

  

 

Signature Page

EXHIBIT A

LAND

BEING:

(i)  certain condominium
units of M CENTRAL MASTER CONDOMINIUM, as described in that certain MASTER
CONDOMINIUM DECLARATION FOR M CENTRAL MASTER CONDOMINIUM, filed September 16,
2005, recorded in Volume 2005182, Page 00111, Condominium Records of Dallas
County, Texas (the “Master Condominium Declaration”), and being the following
Units: the Hotel Unit, the Retail Unit, the Hotel Room Units and certain
Sub-Units described in (ii) below, and which are more particularly described in
the Map (as defined in the Master Condominium Declaration), together with all
General Common Elements and Limited Common Elements (as defined in the Master
Condominium Declaration) appurtenant thereto and all other rights, title and
interest appurtenant thereto under the Master Condominium Declaration,

together with

(ii)  certain condominium units of M
CENTRAL RESIDENCES, A CONDOMINIUM, as described in that certain RESIDENTIAL
CONDOMINIUM DECLARATION FOR M CENTRAL RESIDENCES, A CONDOMINIUM (the “Residential
Condominium Declaration”), filed September 16, 2005, recorded in Volume
2005182, Page 00204, Condominium Records of Dallas County, Texas, which is a
Sub-Unit Declaration and creates a Sub-Unit Condominium, and being the
following Residences designated in Exhibit C to the Residential Condominium
Declaration: Loft 201, Loft 205, Loft 304 and the Penthouse in Hotel Tower, and
which are more particularly described in the Residential Map (as defined in the
Residential Condominium Declaration), together with all Residential Common
Elements (as defined in the Residential Condominium Declaration) appurtenant
thereto and all other rights, title and interest appurtenant thereto under the
Residential Condominium Declaration.

 1

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