Document:

exv4w3

 

Exhibit 4.3

[FACE OF NOTE]

EOP OPERATING LIMITED PARTNERSHIP

FLOATING RATE NOTE DUE MAY 27, 2014

			
	No. 001

CUSIP No. 268766 CA 8
	 	Principal Amount

U.S. $45,000,000

     UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC,
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

     UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO
A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR
BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH
SUCCESSOR.

     THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF U.S. $1,000 AND INTEGRAL MULTIPLES THEREOF.

     EOP Operating Limited Partnership, a Delaware limited partnership (the
“Issuer,” which term includes any successor under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., as
nominee of The Depository Trust Company, or registered assigns, the principal
amount of Forty Five Million Dollars ($45,000,000) on May 27, 2014 (the “Stated
Maturity Date”) (unless accelerated prior to the Stated Maturity Date in
accordance with the terms of this Note and the Indenture) (the Stated Maturity
Date or date of acceleration is referred to as the “Maturity Date” with respect
to the principal repayable on such date) and to pay interest on the outstanding
principal amount of this Note from May 26, 2004 (or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or
duly provided for), quarterly in arrears on February 27, May 27, August 27 and
November 27 of each year, commencing August 27, 2004 (each, an “Interest
Payment Date”), and on the Maturity Date, at a rate per annum for each Interest
Period of three-month LIBOR, determined as provided herein, plus 77.5 basis
points, until payment of said principal amount has been made or duly provided
for. Interest on the notes will be calculated on the basis of the actual
number of days in an interest period and a 360-day year. Dollar amounts
resulting from such calculation will be rounded to the nearest cent, with
one-half cent being rounded upward.

 

 

     The interest so payable and punctually paid or duly provided for on an
Interest Payment Date will, subject to certain exceptions described below, be
paid to the Holder in whose name this Note (or one or more predecessor Notes)
is registered at the close of business on the “Regular Record Date” for such
payment, which will be the Business Day (as defined below) immediately
preceding such Interest Payment Date. Any interest not so punctually paid or
duly provided for on an Interest Payment Date (“Defaulted Interest”) shall
forthwith cease to be payable to the Holder on such Regular Record Date, and
shall be paid to the Holder in whose name this Note (or one or more predecessor
Notes) is registered at the close of business on a special record date (the
“Special Record Date”) for the payment of such Defaulted Interest to be fixed
by the Trustee hereinafter referred to, notice whereof shall be given to the
Holder of this Note by the Trustee not less than 10 calendar days prior to such
Special Record Date or may be paid at any time in any other lawful manner, all
as more fully provided for in the Indenture.

     The principal of this Note payable on the Maturity Date will be paid
against presentation and surrender of this Note at the office or agency of the
Issuer maintained for that purpose in New York, New York. The Issuer hereby
initially designates the Corporate Trust Office of the Trustee in New York, New
York as the office to be maintained by it where this Note may be presented for
payment, registration of transfer or exchange and where notices or demands to
or upon the Issuer or Equity Office Properties Trust, as guarantor of the Notes
(“Equity Office,” which term includes any successor under the Indenture), in
respect of this Note or the Indenture may be served.

     Interest payable on this Note on any Interest Payment Date and on the
Maturity Date, as the case may be, will be the amount of interest accrued
during the applicable Interest Period (as defined below).

     An “Interest Period” is each period from and including the immediately
preceding Interest Payment Date (or from and including May 26, 2004 in the case
of the first Interest Period) to, but excluding, the applicable Interest
Payment Date or the Maturity Date, as the case may be. If any Interest Payment
Date or Maturity Date falls on a day that is not a Business Day, principal and
interest payable on such date will be paid on the succeeding Business Day with
the same force and effect as if it were paid on the date such payment was due,
and no interest will accrue on the amount so payable for the period from and
after such date to such succeeding Business Day. “Business Day” means any day,
other than a Saturday or a Sunday, on which banking institutions in New York,
New York are not required or authorized by law or executive order to close.

     Payments of principal and interest in respect of this Note will be made by
U.S. dollar check or by wire transfer (such a wire transfer is required to be
made to the Holder if the aggregate principal amount of this Note is in excess
of U.S. $10,000,000, and only if such Holder shall have furnished wire
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date and acknowledged that a wire transfer fee shall be
payable) of immediately available funds in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.

     Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this

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place. Capitalized terms used herein, including on the reverse hereof, and not
defined herein or on the reverse hereof shall have the respective meanings
given to such terms in the Indenture.

     This Note shall not be entitled to the benefits of the Indenture or the
Guarantee of Equity Office or be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee.

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     IN WITNESS WHEREOF, each of the Issuer and Equity Office has caused this
Note to be signed manually or by facsimile by an authorized signatory.

	 	 	 	 	 	 	 	 	 
	Dated:

	May 26, 2004
	 	EOP OPERATING LIMITED PARTNERSHIP,
	

	 	 	 	as Issuer
	 
	 	 	 	 	 	 	 	 
	Attest:

	 	By:
	 	EQUITY OFFICE PROPERTIES TRUST, not
	

	 	 	 	 	 	individually but as General Partner
	 
	 	 	 	 	 	 	 	 
	By:

	/s/ Stanley M. Stevens
	 	 	 	By:
	 	/s/ Marsha C. Williams
	

	 	
 
	 	 	 	 	 	
 
	

	 	Stanley M. Stevens
	 	 	 	 	 	Marsha C. Williams
	

	 	Executive Vice President,
	 	 	 	 	 	Executive Vice President and Chief
	

	 	   Chief Legal Counsel
	 	 	 	 	 	   Financial Officer
	

	 	   and Secretary	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	EQUITY OFFICE PROPERTIES TRUST,
	

	 	 	 	as Guarantor
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Marsha C. Williams
	

	 	 	 	 	 	
 
	

	 	 	 	 	 	Marsha C. Williams
	

	 	 	 	 	 	Executive Vice President and Chief
	

	 	 	 	 	 	   Financial Officer

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes of the series designated herein referred to in the
within-mentioned Indenture.

	 	 	 	 	 
	Dated: May 26, 2004

	 	U.S. BANK NATIONAL ASSOCIATION, as Trustee
	 
	 	 	 	 
	

	 	By:	 	/s/ Richard Prokosch
	

	 	 	 	
 
	

	 	 	 	Authorized Officer

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[REVERSE OF NOTE]

EOP OPERATING LIMITED PARTNERSHIP

FLOATING RATE NOTE DUE MAY 27, 2014

     This Note is one of a duly authorized issue of senior debt securities of
the Issuer (hereinafter called the “Debt Securities”) of the series herein
specified, all issued or to be issued under and pursuant to an Indenture, dated
as of August 29, 2000, as supplemented by the First Supplemental Indenture,
dated as of June 18, 2001 (as supplemented, the “Indenture”), duly executed and
delivered by the Issuer and Equity Office to U.S. Bank National Association,
formerly known as U.S. Bank Trust National Association, as Trustee (herein
called the “Trustee,” which term includes any successor trustee under the
Indenture with respect to the series of Debt Securities of which this Note is a
part), to which Indenture and all indentures supplemental thereto reference is
hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Issuer,
Equity Office and the Holders of the Notes, and of the terms upon which the
Notes are, and are to be, authenticated and delivered. The Debt Securities may
be issued in one or more series, which different series may be issued in
various aggregate principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to different redemption
provisions (if any), and may otherwise vary as provided in the Indenture. This
Note is one of the outstanding Debt Securities of a series designated as the
“Floating Rate Notes due May 27, 2014” of the Issuer (the “Notes”), limited in
aggregate principal amount to U.S. $45,000,000, subject to the provisions in
the Indenture, and is a Guaranteed Security within the meaning of, and subject
to the provisions applicable to Equity Office as Guarantor thereof contained
in, the Indenture.

     This Note will bear interest for each Interest Period at a rate determined
by U.S. Bank National Association (or such other person as the Issuer may
appoint from time to time), acting as Calculation Agent. The interest rate on
this Note for a particular Interest Period will be a per annum rate equal to
three-month LIBOR, as determined on the related Interest Determination Date,
plus 77.5 basis points. The Interest Determination Date for an Interest Period
will be the second London business day preceding such Interest Period. The
Interest Determination Date for the first Interest Period was May 24, 2004.
Promptly upon determination, the Calculation Agent will inform the Trustee and
the Issuer of the interest rate for the next Interest Period. Absent manifest
error, the determination of the interest rate by the Calculation Agent shall be
binding and conclusive on the holders of Notes, the Trustee and the Issuer.

     A London business day is a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.

     On any Interest Determination Date, three-month LIBOR will be equal to the
offered rate for deposits in U.S. dollars having an index maturity of three
months for the next Interest Period, in amounts of at least $1,000,000, as such
rate appears on Telerate Page 3750 at approximately 11:00 a.m., London time, on
such Interest Determination Date. If the Telerate Page 3750 is replaced by
another service or ceases to exist, the Calculation Agent will use the
replacing service or such other service that may be nominated by the British
Bankers’ Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits.

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     If no offered rate appears on Telerate Page 3750 on an Interest
Determination Date at approximately 11:00 a.m., London time, then the
Calculation Agent (after consultation with the Issuer) will select four major
banks in the London interbank market and shall request each of their principal
London offices to provide a quotation of the rate at which three-month deposits
in U.S. dollars in amounts of at least $1,000,000 are offered by it to prime
banks in the London interbank market, on that date and at that time, that is
representative of single transactions at that time. If at least two quotations
are provided, three-month LIBOR will be the arithmetic average of the
quotations provided.

     Otherwise, the Calculation Agent will select three major banks in New York
City and shall request each of them to provide a quotation of the rate offered
by them at approximately 11:00 a.m., New York City time, on the Interest
Determination Date for loans in U.S. dollars to leading European banks having
an index maturity of three months for the applicable Interest Period in an
amount of at least $1,000,000 that is representative of single transactions at
that time. If three quotations are provided, three-month LIBOR will be the
arithmetic average of the quotations provided. Otherwise, the rate of
three-month LIBOR for the next Interest Period will be set equal to the rate of
three-month LIBOR for the current Interest Period.

     In case an Event of Default with respect to the Notes shall have occurred
and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect, and
subject to the conditions provided in the Indenture.

     The Issuer may not redeem the Notes prior to the Stated Maturity Date.

     The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein, which provisions apply to the Notes.

     The Indenture contains provisions permitting the Issuer, Equity Office and
the Trustee, with the consent of the Holders of not less than a majority of the
aggregate principal amount of the Debt Securities at the time Outstanding of
all series to be affected (voting as one class), evidenced as provided in the
Indenture, to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
Holders of the Debt Securities of each series; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Debt
Security at the time Outstanding so affected, (i) change the final maturity of
any Debt Security, or reduce the principal amount thereof or any premium or
Make-Whole Amount thereon, if any, or reduce the rate or extend the time of
payment of any interest thereon, or impair or affect the rights of any Holder
to institute suit for the payment on any Debt Security, or (ii) reduce the
percentage in principal amount of Outstanding Debt Securities the Holders of
which are required to consent to any such supplemental indenture, or (iii)
reduce the percentage in principal amount of Outstanding Debt Securities the
Holders of which are required to consent to any waiver of compliance with
certain provisions of the Indenture or any waiver of certain defaults
thereunder, or (iv) modify Equity Office’s Guarantee, if any, of the Debt
Securities. It is also provided in the Indenture that, with respect to certain
defaults or Events of Default regarding the Debt Securities of any series, the
Holders of a

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majority in aggregate principal amount of the Outstanding Debt Securities of
such series (or, in the case of certain defaults or Events of Default, all
series of Outstanding Debt Securities) may on behalf of the Holders of all the
Debt Securities of such series (or all of the Debt Securities, as the case may
be) waive any such past default or Event of Default and its consequences, prior
to any declaration accelerating the maturity of such Debt Securities, or,
subject to certain conditions, may rescind a declaration of acceleration and
its consequences with respect to such Debt Securities. The preceding sentence
shall not, however, apply to a default in or Event of Default relating to the
payment of the principal of or premium or Make-Whole Amount, if any, or
interest on, any of the Debt Securities or in respect of a covenant or
provision contained in the Indenture that cannot be modified or amended without
the consent of the Holders of each Debt Security at the time Outstanding
affected thereby. Any such consent or waiver by the Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and any
Notes that may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of, and interest on, this Note
in the manner, at the respective times, at the rate and in the coin or currency
herein prescribed or alter or impair the obligations of Equity Office in
respect of its unconditional guarantee of the aforementioned payments.

     This Note is issuable only in registered form without coupons in
denominations of U.S. $1,000 and integral multiples thereof. Notes may be
exchanged for a like aggregate principal amount of Notes of other authorized
denominations at the office or agency of the Issuer in New York, New York in
the manner and subject to the limitations provided herein and in the Indenture,
but without the payment of any service charge except for any tax or other
governmental charge imposed in connection therewith.

     Upon due presentment for registration of transfer of this Note at the
office or agency of the Issuer in New York, New York, one or more new Notes of
authorized denominations in an equal aggregate principal amount will be issued
to the transferee in exchange therefor, subject to the limitations provided
herein and in the Indenture, but without the payment of any service charge
except for any tax or other governmental charge imposed in connection
therewith.

     This Note is not subject to a sinking fund requirement or to repayment at
the option of the Holder hereof.

     No recourse under or upon any obligation, covenant or agreement contained
in the Indenture or any Note, or because of any indebtedness evidenced hereby
or thereby (including, without limitation, any obligation or indebtedness
relating to the principal of, or interest or any other amounts due, or claimed
to be due on, this Note), or for any claim based thereon or otherwise in
respect thereof, shall be had (i) against any partner other than Equity Office,
as Guarantor, or any Person which owns an interest, directly or indirectly, in
any partner, in the Issuer, or (ii) against any promoter, as such, or against
any past, present or future shareholder, officer, trustee or partner, as such,
of the Issuer or Equity Office or any successor, either directly or through the
Issuer or Equity Office or any successor, under any rule of law, statute or

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constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance hereof and as part of the consideration
for the issue hereof.

     Prior to due presentation of this Note for registration of transfer, the
Issuer, Equity Office, the Trustee, and any authorized agent of the Issuer,
Equity Office or the Trustee may deem and treat the Person in whose name this
Note is registered as the absolute owner of the Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon) for the purpose of receiving payment of, or on account of, the
principal hereof and subject to the provisions herein and on the face hereof,
interest hereon, and for all other purposes, and none of the Issuer, Equity
Office or the Trustee nor any authorized agent of the Issuer, Equity Office or
the Trustee shall be affected by any notice to the contrary, except as required
by law.

     The Indenture, this Note and the Guarantee shall be governed by and
construed in accordance with the law of the State of New York, United States of
America without regard to the principles of conflicts of laws.

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ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER

     To assign this Note fill in the form below:

     (I) or (we) assign and transfer this Note to

(Insert assignee’s social security or tax identification number, if any)

(Print or type assignee’s name, address and zip code)

	 	 	 	 
	 	Your signature:
	 	 
	 	

	 	
 
	 	

	 	(Sign exactly as your name appears on the other side of this Note)

	 	 	 	 
	 	Date:
	 	 
	 	

	 	
 

	 	 	 	 
	 	Signature Guarantee:*
	 	 
	 	

	 	
 

	*	 	Signature must be guaranteed by a commercial bank, trust company or member firm of a major stock exchange.

9<PAGE>
                                                                    EXHIBIT 10.2

                          STRATEGIC ALLIANCE AGREEMENT

         This Strategic Alliance Agreement (this "Agreement") is entered into as
of the ____ day of _____________, 2004 (the "Effective Date"), by and between
Desert Capital REIT, Inc., a Maryland corporation ("Desert Capital") and
Consolidated Mortgage, Inc., a Nevada corporation ("Consolidated Mortgage").

         WHEREAS, Consolidated Mortgage is regularly and actively engaged in the
business of arranging for the financing of and servicing mortgage loans for the
acquisition of, development of, and construction on real estate (collectively,
"Mortgage Loans");

         WHEREAS, Desert Capital is a real estate investment trust that intends
to originate and invest in, among other things, Mortgage Loans; and

         WHEREAS, Consolidated Mortgage and Desert Capital wish to enter into a
strategic alliance regarding the origination and servicing of Mortgage Loans by
Consolidated Mortgage and the funding of Mortgage Loans by Desert Capital.

         NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises hereinafter expressed, the parties hereto do mutually agree as follows:

                    ARTICLE I. SCOPE OF STRATEGIC ALLIANCE.

         A. Consolidated Mortgage shall continue arranging for the financing of
Mortgage Loans in accordance with its historical practices. Commencing as of
________, 2004, on a weekly basis, Consolidated Mortgage shall send a written
report (a "Mortgage Loan Report") to Desert Capital setting forth in reasonable
detail all Mortgage Loans identified by Consolidated Mortgage for funding
(including loan to value ratio, credit scores, interest rates and other
criteria) applicable to Mortgage Loans. Desert Capital shall have a right of
first refusal to fund all or a portion of such Mortgage Loans as set forth
herein. No later than 15 Business Days following its receipt of a Mortgage Loan
Report (the "Initial Election Period"), Desert Capital shall send written
notice to Consolidated Mortgage specifying the Mortgage Loans set forth in the
Mortgage Loan Report that Desert Capital is interested in funding all or an
identified portion thereof (a "Preliminary Funding Notice"). The Preliminary
Funding Notice shall constitute an offer by Desert Capital to fund all or a
portion of the Mortgage Loans set forth therein on the terms and conditions set
forth in the Mortgage Loan Report, with such changes thereto as Desert Capital
shall deem appropriate for its funding thereof and upon the terms set forth
herein. If Desert Capital fails to deliver a Preliminary Funding Notice to
Consolidated Mortgage prior to the expiration of the Initial Election Period,
then Consolidated Mortgage may arrange for the funding of the Mortgage Loans
set forth in the applicable Mortgage Loan Report through one or more third
parties without regard to this Agreement.

<PAGE>

         B. No later than five Business Days after its receipt of a Preliminary
Funding Notice (the "Election Period"), Consolidated Mortgage shall elect to
accept any changes made to the terms of the Mortgage Loans set forth in the
Mortgage Loan Report, as set forth in the applicable Preliminary Funding
Notice. If Consolidated Mortgage rejects any modified terms requested by Desert
Capital, it may withdraw such Mortgage Loans from the Mortgage Loan Report and
shall permit Desert Capital to fund all or the identified portion of the
remaining Mortgage Loans. If Consolidated Mortgage agrees to the modified terms
as specified by Desert Capital in its Preliminary Funding Notice, then
Consolidated Mortgage shall permit Desert Capital to fund all or the identified
portion of the Mortgage Loans set forth in the Mortgage Loan Report. For
purposes hereof "Business Day" means any day other than Saturday or Sunday or
other day on which national banks in Las Vegas, Nevada are required or permitted
by applicable law to close.

                                       2
<PAGE>

         C. Consolidated Mortgage may freely arrange for the financing of any
Mortgage Loans that were set forth in a Mortgage Loan Report that Desert Capital
did not elect to fund in the applicable Preliminary Funding Notice or as to
which any modified terms set forth in the Preliminary Funding Notice were not
accepted.

         D. No later than the Business Day immediately following the delivery of
a Mortgage Loan Report, Consolidated Mortgage shall deliver to Desert Capital
those due diligence materials, reports and documents relating to the Mortgage
Loans to be participated in or purchased at such Closing further described in
Attachment "C" hereto (the "Specified Materials"). In addition, Consolidated
Mortgage shall provide Desert Capital with any additional documents and other
information that Desert Capital may reasonably request with respect to any
Mortgage Loans to be purchased by Desert Capital hereunder. It shall be a
condition to the obligation of Desert Capital to fund any Mortgage Loan at a
Closing that Consolidated Mortgage shall have timely provided to Desert Capital
all of the Specified Materials (and any other documents and other information
reasonably requested by Desert Capital).

         E. Each closing of a funding of a Mortgage Loan by Desert Capital
hereunder (each a "Closing") shall take place at the principal offices of Desert
Capital, at the address specified in Article IX hereof, on the Business Day
specified as the closing date for the applicable Mortgage Loan in the applicable
Mortgage Loan Report. At the Closing, Consolidated Mortgage shall arrange for
the execution and delivery to Desert Capital of a standard set of investment
documents, in a form acceptable to Desert Capital (and shall provide Desert
Capital with customary representations and warranties as well as adequate
assurances that such Mortgage Loans are valid obligations of the respective
borrowers and that no default, event of default, potential default or similar
occurrence exists with respect to such Mortgage Loans). At the Closing, unless
otherwise agreed upon by the parties, Desert Capital shall fund all or the
identified portion of the applicable Mortgage Loan in the applicable amount
payable in immediately available funds.

         F. Desert Capital may, at its election, request periodic accounting and
other financial records from Consolidated Mortgage that demonstrate its
performance of this Agreement. Any proprietary information and associated
products, copyrights, trademarks and logos developed by parties to this
Agreement shall remain the property of the party which developed them.

         G. Each party hereto shall, in a professional manner, take all steps
necessary to perform its duties hereunder.

         H. In addition to the other matters set forth in this Article I, the
parties agree to the covenants and other matters set forth in Attachment "A"
hereto, which are incorporated by reference as if fully set forth herein.

                                       3
<PAGE>

                       ARTICLE II. PERIOD OF PERFORMANCE.

         This Agreement shall be effective as of the Effective Date and shall
expire on the later of (i) three years after the Effective Date, or (ii) with
respect to any projects, commercial loans or open contracts and/or related
residual income such date that all business has been completed. Thereafter, this
Agreement shall be automatically renewed for successive one year periods unless
any party gives written notice of termination to the other party at least 30
days prior to the scheduled date of expiration. Notwithstanding the foregoing,
this Agreement shall be earlier terminated (x) at any time by mutual agreement
of the parties, (y) by any party, if Desert Capital has not completed a public
offering of its securities (an "IPO") on or before September 30, 2004, or (z) at
any time by Desert Capital or Consolidated Mortgage upon 60 days' advance
written notice after an event constituting "cause" has occurred to the other
party. For purposes of this Agreement "cause" means a judgment by a competent
court that the subject party has committed fraud either against third parties or
against the other party to this Agreement; the bankruptcy, insolvency or
dissolution of the subject party; or the material breach of this Agreement by
the subject party (that is not cured by the subject party within 30 days after
receipt of written notice). Time is of the essence in the performance of the
obligations under this Agreement.

                            ARTICLE III. MANAGEMENT.

         Each party shall designate a partner, officer or other senior person to
be responsible for the overall administration of such party's responsibilities
under this Agreement. Neither party shall have management authority over the
other outside the scope and performance of this Agreement.

                     ARTICLE IV. CONFIDENTIAL INFORMATION.

         Consolidated Mortgage acknowledges and agrees that in the course of the
performance of this Agreement or additional services pursuant to this Agreement,
it may be given access to, or come into possession of, confidential information
of Desert Capital, which information may contain trade secrets, proprietary data
or other confidential material of Desert Capital. Therefore, the parties have
executed a Non-Disclosure Agreement which is attached hereto as "Attachment B",
and incorporated by reference as if fully set forth herein. Materials used in
any engagement undertaken pursuant to this Agreement shall not be altered or
changed without the consent of both parties.

                           ARTICLE V. NO PARTNERSHIP.

         Nothing herein contained shall be construed to imply a joint venture,
partnership or principal-agent relationship between Desert Capital and
Consolidated Mortgage, and neither party shall have the right, power or
authority to obligate or bind the other in any manner whatsoever,

                                       4
<PAGE>

except as otherwise agreed to in writing. The parties do not contemplate a
sharing of profits relating to the business of Desert Capital or Consolidated
Mortgage so as to create a separate taxable entity under Section 761 of the
Internal Revenue Code of 1986, as amended, nor co-ownership of a business or
property so as to create a separate partnership under the law of any
jurisdiction, including, without limitation, the state of Nevada or Maryland.
Revenues and expenses relating to the Mortgage Loans hereunder and any
activities relating thereto shall be reported separately by the parties for tax
purposes. This provision does not eliminate the possibility that the parties may
enter into various revenue or equity sharing agreements with regard to any
Mortgage Loans that the parties may consider on a case by case basis. During the
performance of the any of the contemplated business activities set forth herein,
Desert Capital's employees will not be considered employees of Consolidated
Mortgage, and vice versa, within the meaning or the applications of any federal,
state or local laws or regulations including, but not limited to, laws or
regulations covering unemployment insurance, old age benefits, worker's
compensation, industrial accident, labor or taxes of any kind.

               ARTICLE VI. TRADEMARK, TRADE NAME AND COPYRIGHTS.

         This Agreement does not give any party any ownership rights or interest
in another party's trade name, trademarks or copyrights.

                         ARTICLE VII. INDEMNIFICATION.

         Each of Desert Capital and Consolidated Mortgage, at its own expense,
shall indemnify, defend and hold the other, its partners, shareholders,
directors, officers, employees and agents harmless from and against any and all
third-party suits, actions, investigations and proceedings, and related costs
and expenses (including, reasonable attorney's fees), resulting solely and
directly from the indemnifying party's gross negligence, willful misconduct or
material breach of this Agreement. Neither Desert Capital nor Consolidated
Mortgage shall be required hereunder to defend, indemnify or hold harmless the
other or its partners, shareholders, directors, officers, employees and agents,
or any of them, from any liability resulting from the negligence, willful
misconduct or material breach of this Agreement by the party seeking
indemnification or by any third party. Each of Desert Capital and Consolidated
Mortgage agrees to give the other prompt written notice of any claim or other
matter as to which it believes this indemnification provision is applicable.

                      ARTICLE VIII. INTELLECTUAL PROPERTY.

         Work performed pursuant to this Agreement by either Desert Capital or
Consolidated Mortgage and information, materials, products and deliverables
developed in connection with business endeavors pursuant to this Agreement shall
be the property of the respective parties performing the work or creating the
information. All underlying methodology utilized by

                                       5
<PAGE>

Consolidated Mortgage and Desert Capital, which was created or developed prior
to the date of this Agreement and utilized in the course of performing their
duties pursuant to this Agreement, shall not become the property of the other.

                        ARTICLE IX. GENERAL PROVISIONS.

         A. Entire Agreement. This Agreement, together with the attachments
hereto and all documents incorporated by reference herein, constitutes the
entire and sole agreement between the parties with respect to the subject matter
hereof and supersedes any prior agreements, negotiations, understandings or
other matters, whether oral or written, with respect to the subject matter
hereof. This Agreement cannot be modified, changed or amended, except in writing
signed by a duly authorized representative of each of the parties.

         B. Conflict. In the event of any conflict, ambiguity or inconsistency
between this Agreement and any other document which may be annexed hereto, the
terms of this Agreement shall govern. Any conflicts or disputes that are not
amicably settled in the due course of this business relationship shall be
settled through binding arbitration, in accordance with the latest edition of
rules as set forth by the American Arbitration Association, such arbitration to
be held in Las Vegas, Nevada. Said rulings in arbitration shall be considered
final and binding on the parties hereto and shall be enforceable in any
competent United States court.

         C. Assignment and Delegation. No party shall voluntarily assign or
delegate this Agreement or any rights, duties or obligations hereunder to any
other person or entity without prior express written approval of the other
party, provided that, notwithstanding the foregoing, a party may assign this
Agreement by operation of law to any successor to such party by merger or
consolidation (without the prior consent of the other parties).

         D. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, by hand delivery, commercial overnight courier or
registered or certified U.S. Mail, to the address stated below across from such
party's name, and shall be deemed duly given upon receipt, or if by registered
or certified mail three Business Days following deposit in the U.S. Mail. The
parties hereto may from time to time designate in writing other addresses
expressly for the purpose of receipt of notice hereunder.

         If to Desert Capital:           Desert Capital REIT, Inc.
                                         2357 Renaissance Drive, Suite A
                                         Las Vegas, Nevada  89119

         If to Consolidated Mortgage:    Consolidated Mortgage, Inc.
                                         2381 Renaissance Drive, Suite C
                                         Las Vegas, Nevada  89119

         E. Severability. If any provision of this Agreement is declared invalid
or unenforceable, such provision shall be deemed modified to the extent
necessary and possible to render it valid and enforceable. In any event, the
unenforceability or invalidity of any provision

                                       6
<PAGE>

shall not affect any other provision of this Agreement, and this Agreement shall
continue in full force and effect, and be construed and enforced, as if such
provision had not been included, or had been modified as above provided, as the
case may be.

         F. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada without giving effect to its
choice of law principles.

         G. Headings. The article and paragraph headings set forth in this
Agreement are for the convenience of the parties, and in no way define, limit,
or describe the scope or intent of this Agreement and are to be given no legal
effect.

         H. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

         I. Attachments. The Attachments attached hereto are made a part of this
Agreement as if fully set forth herein.

                  [Remainder of page intentionally left blank.]

                                       7
<PAGE>

         IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, have caused this Agreement to be executed as of the date first
written above.

                                            DESERT CAPITAL REIT, INC.

                                            By:
                                               -----------------------------
                                               Name:
                                                    ------------------------
                                               Title:
                                                     -----------------------

                                            CONSOLIDATED MORTGAGE, INC.

                                            By:
                                               -----------------------------
                                               Name:
                                                    ------------------------
                                               Title:
                                                     -----------------------

                                       8
<PAGE>

                                 ATTACHMENT "A"

                              ADDITIONAL PROVISIONS

In accordance with the provisions set forth in the foregoing Strategic Alliance
Agreement of which this Attachment forms an integral part, it is agreed and
understood between the parties as follows:

         1)   Consolidated Mortgage is entitled to retain origination fees with
              respect to any Mortgage Loans funded by Desert Capital hereunder,
              as well as any agreed to shared equity if either an acquisition or
              participatory loan.

         2)   Consolidated Mortgage can identify, and present for purchase by
              Desert Capital, qualified commercial and/or residential loan
              portfolios on a case by case basis, as well as arrange for conduit
              financing to other qualified commercial lenders. Fees and
              potential participations will be agreed to on a case by case
              basis, and said additional agreements, if so applicable, shall be
              added to this schedule and agreement as further attachments.

          3)  Consolidated Mortgage is entitled to service any Mortgage Loans
              sold to Desert Capital hereunder, and to receive servicing fees
              for doing so, provided that, in the event Desert Capital, in its
              reasonable good faith judgment (as communicated to Consolidated
              Mortgage in writing), determines that the servicing of any
              Mortgage Loan, in which it owns or in which it is an investor, by
              Consolidated Mortgage is being administered in such a manner so as
              jeopardize the value of such Mortgage Loan, including, without
              limitation, the collection of principal and interest on such
              Mortgage Loan or realization on the collateral therefor,
              Consolidated Mortgage shall, upon receipt of such written request,
              transfer the servicing right to sell Mortgage Loan to Desert
              Capital.

<PAGE>

                                 ATTACHMENT "B"

                   NON-CIRCUMVENTION/NON-DISCLOSURE AGREEMENT

         The undersigned, Consolidated Mortgage, Inc., intending to be legally
bound, hereby irrevocably agrees not to circumvent, avoid, bypass or obviate
Desert Capital, directly or indirectly, in connection with the origination and
sale of mortgage loans or any other transaction involving any sale, disposition
or funding of any mortgage loans.

         Nor shall Consolidated Mortgage disclose or otherwise reveal to any
third party any confidential information provided by Desert Capital,
particularly that concerning Desert Capital's lenders, business, securities,
borrowers, sellers, buyers, affiliates, agent's names, addresses, telex,
telephone, email, fax numbers or other means of access thereto, bank accounts,
codes or references, or any such information, advised to Consolidated Mortgage
as being confidential or privileged, without the specific written consent of
Desert Capital.

         In the event of circumvention, either directly or indirectly,
Desert Capital shall be entitled to a legal monetary penalty equal to the
maximum financial benefits it should have realized from such transactions,
including all legal expenses in the recovery of funds. Further, any dispute
arising from the performance of this agreement shall be settled through binding
arbitration under the rules of the American Arbitration Association, and any
said arbitration proceedings shall be held in Las Vegas, Nevada.

         This agreement shall be binding on the parties, hereunder signed, their
successors, heirs, and assigns.

         Facsimile copies are considered to be legal documents.

                  [Remainder of page intentionally left blank.]

<PAGE>

                                            SIGNATURES:

                                            DESERT CAPITAL REIT, INC.

                                            By:
                                               -----------------------------
                                               Name:
                                                    ------------------------
                                               Title:
                                                     -----------------------

                                            CONSOLIDATED MORTGAGE, INC.

                                            By:
                                               -----------------------------
                                               Name:
                                                    ------------------------
                                               Title:
                                                     -----------------------

<PAGE>

                                 ATTACHMENT "C"

                               SPECIFIED MATERIALS

1.       All customary due diligence reports, documents and analyses

2.       All other materials, documents and information reasonably requested by
         Desert Capital

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