Document:

Exhibit 10.9

 

 

 

 

INTERCREDITOR AND SUBORDINATION AGREEMENT

 

 

by and between

 

 

BANK OF AMERICA, N.A.,
a national banking association,

in its capacity as Administrative Agent on behalf of the Senior Construction
Lenders

and for its own benefit, as Land Loan Lender

 

 

and

 

 

BEHRINGER HARVARD ST. ROSE REIT, LLC,

a Delaware limited liability company 

as Subordinate Lender

 

 

Dated as of December 31, 2008

 

 

Project: 
Alexan St. Rose Apartments, Henderson, Clark County, Nevada

 

 

 

 

INTERCREDITOR AND
SUBORDINATION AGREEMENT

 

This INTERCREDITOR AND SUBORDINATION AGREEMENT (this “Agreement”) dated as of December 31, 2008, by and
between BEHRINGER HARVARD ST. ROSE REIT, LLC, a
Delaware limited liability company (“Subordinate Lender”)
and BANK OF AMERICA, N.A., a national
banking association, as Administrative Agent for itself, and the other Senior
Construction Lenders now or hereafter made a party to the Senior Construction
Loan Agreement described and defined below (in such capacity, together with any
successor Administrative Agent appointed pursuant to such Senior Construction
Loan Agreement, the “Administrative Agent”),
and as Land Loan Lender and a Senior Construction Lender (as such terms are
defined below), whose address for the purposes of notice is 700 Louisiana, 5th
Floor, P.O. Box 2518, Houston, TX 77252-2518 Attention:  Real Estate Loan Administration; and
acknowledged and consented to by SW 132 St. Rose Senior Borrower LLC, a
Delaware limited liability company (“Borrower”), and
SW 131 St. Rose Mezzanine Borrower LLC, a Delaware limited liability company (“Mezzanine Borrower”).

 

R  E  C
I  T  A  L  S:

 

A.                                   Pursuant
to the terms, provisions and conditions set forth in that certain Construction
Loan Agreement, dated of even date herewith (“Senior
Construction Loan Agreement”), by and between Borrower,
Administrative Agent and the lenders now or hereafter made a party thereto
(such lenders are sometimes referred to herein, collectively, as the “Senior Construction Lenders”), Senior Construction Lenders
have made or are about to make a loan to Borrower in the original principal
amount of $38,600,000.00 (the “Senior Construction Loan”),
for the purpose of financing, in part, construction of the Improvements (as
defined in the Senior Construction Loan Agreement) on approximately 18.151
acres (such 18.151 acres more or less is referred to herein as the “Multi-Family Tract”) of the 24.423 acre parcel of real
property described on Exhibit A attached hereto (the “Site Parcel”);

 

B.                                     The
Senior Construction Loan is evidenced, in part, by one or more Deed of Trust
Notes issued by Borrower in accordance with the Senior Construction Loan
Agreement (such notes, together with any additional notes in substitution and
replacement thereof, issued by Borrower in accordance with the Senior Construction
Loan Agreement, as amended, modified, replaced, restated, extended or renewed
from time to time, are referred to herein, collectively, as the “Senior Construction Loan Note”);

 

C.                                     Borrower’s
Affiliate, SW 122 St. Rose Senior Borrower LLC, a Delaware limited liability
company (“Land Loan Borrower”) also intends to
obtain a $2,950,000 land loan (the “Senior Land Loan”)
from Bank of America, N.A., as a lender for its sole account (in such capacity,
“Land Loan Lender”), for the purpose of
financing all of the Site Parcel except the Multi-Family Tract (such portion of
the Site Parcel is referred to herein as the “Commercial
Tract”);

 

D.                                    The
Senior Land Loan is evidenced, in part, by (i) a Deed of Trust Note issued
by Land Loan Borrower to the order of Land Loan Lender in the amount of
$2,950,000 (such note, together with any note issued in substitution and
replacement thereof by Land Loan Borrower, as amended, modified, replaced,
restated, extended or renewed from time to time, are referred to 

 

 

herein, collectively, as
the “Senior Land Loan Note”); and (ii) a
certain Term Loan Agreement of even date with the Senior Land Loan Note between
Land Loan Lender and Land Loan Borrower (as amended, supplemented, modified,
restated, renewed or extended from time to time, the “Senior Land
Loan Agreement”);

 

E.                                      The
Senior Construction Loan Note and the Senior Land Loan Note and the total
indebtedness evidenced thereby are guaranteed by J. Ronald Terwilliger, CFP
Residential, L.P., Bruce Hart, and Kenneth J. Valach (collectively, the “Guarantors”), pursuant to one or more Limited Recourse
Guaranty Agreements dated of even date herewith, executed by Guarantors to and
for the benefit of Administrative Agent, for itself and on behalf of the Senior
Construction Lenders, and to Land Loan Lender, respectively (collectively, the “Senior Guaranties”);

 

F.                                      Borrower
and Guarantors also executed and delivered to Administrative Agent, for itself
and on behalf of the Senior Construction Lenders, and to Land Loan Lender,
respectively, Environmental Indemnity Agreements, each dated of even date
herewith (together, the “Senior Environmental
Indemnity”);

 

G.                                     Pursuant
to the terms, provisions and conditions set forth in that certain Senior
Mezzanine Loan Agreement, dated of even date herewith, between Mezzanine
Borrower and Subordinate Lender (the “Senior Mezzanine Loan
Agreement”), and that certain Junior Mezzanine Loan Agreement, dated
of even date herewith, between Mezzanine Borrower and Subordinate Lender (the “Junior Mezzanine Loan Agreement”; the Senior Mezzanine Loan
Agreement and the Junior Mezzanine Loan Agreement are sometimes referred to
herein, together, as the “Mezzanine Loan Agreement”),
Subordinate Lender made one or more loans to Mezzanine Borrower in the
aggregate principal amount of $21,043,197.00 (collectively, the “Mezzanine Loan”), which Mezzanine Loan is evidenced by that
certain Senior Mezzanine Promissory Note and Junior Mezzanine Promissory Note,
each dated of even date with the Mezzanine Loan Agreement (collectively, the “Mezzanine Note”), made by Mezzanine Borrower in favor of
Subordinate Lender in the amount of the Mezzanine Loan;

 

H.                                    The
Commercial Tract and Multi-Family Tract are not currently separate, legal lots
and, in order to properly convey fee title of the Commercial Tract to Land Loan
Borrower and to separate the legal entitlements that currently inure to the
entirety of the Site Parcel, Borrower must complete a legal subdivision of the
Site Parcel;

 

I.                                         Land
Loan Borrower has prepared and submitted to the appropriate governmental
authorities a proposed subdivision map, which map will, upon approval by all
applicable governmental authorities and recordation of the same, establish the
Multi-Family Tract and Commercial Tract as separate, legal lots;

 

J.                                        Because
the final subdivision of the Site Parcel has not yet been completed as
described in Section 1.2 of the Senior Construction Loan Agreement, on the
date hereof, Borrower will execute and deliver the following documents:  (i) to Administrative Agent, that certain
Deed of Trust, Assignment of Rents and Leases, Security Agreement, Fixture
Filing and Financing Statement dated of even date herewith, executed by
Borrower for the benefit of Administrative Agent, on behalf of the Senior
Construction Lenders, encumbering the entirety of the Site Parcel, which shall
be recorded as a first priority lien and security interest in the Official 

 

2

 

Records of Clark County,
Nevada (as amended, supplemented, modified, restated, renewed or extended from
time to time, collectively, the “Senior Construction Loan
Deed of Trust”); (ii) to Land Loan Lender, that certain Deed of
Trust, Assignment of Rents and Leases, Security Agreement, Fixture Filing and
Financing Statement dated of even date herewith, executed by Borrower for the
benefit of Commercial Tract Lender, encumbering the entirety of the Site
Parcel, which shall be recorded as a second priority lien and security interest
in the Official Records of Clark County, Nevada (the “Senior Land
Loan Deed of Trust”) (the Senior Construction Loan Deed of Trust and
the Senior Land Loan Deed of Trust are sometimes referred to herein as the “Senior Deed of Trust”); and (iii) to Subordinate
Lender, those certain Deeds of Trust, Assignment of Rents, Security Agreement
and Fixture Filing, dated as of even date herewith, executed by Borrower for
the benefit of Subordinate Lender, encumbering the entirety of the Site Parcel,
which shall be recorded as third and fourth priority liens and security
interests, respectively, in the Official Records of Clark County, Nevada
(collectively, the “Mezzanine Deed of Trust”);

 

K.                                    Upon
completion of the final subdivision of the Site Parcel as described in Section 1.2
of the Senior Construction Loan Agreement, (i) Borrower will convey the
Commercial Tract to Land Loan Borrower, subject to the lien of the Senior Land
Loan Deed of Trust, (ii) Land Loan Borrower will assume and perform the
obligations of Borrower under the Senior Land Loan Deed of Trust (whereupon
Borrower will be released from all obligations and liabilities of, under or in
respect of the Senior Land Loan or the loan documents executed in connection
with the Senior Land Loan), (iii) Administrative Agent will execute a
partial release as to the Senior Construction Loan Deed of Trust to release the
Commercial Tract from the lien thereof, (iv) Land Loan Lender will execute
a partial release as to the Senior Land Loan Deed of Trust to release the
Multi-Family Tract from the lien thereof, and (v) Subordinate Lender will
execute a partial release as to each Mezzanine Deed of Trust to release the
Commercial Tract from the lien thereof.

 

L.                                      The
Senior Construction Loan Documents contain restrictions on Borrower’s ability
to incur additional indebtedness.  Senior
Construction Lenders are unwilling to make the Senior Construction Loan and
Land Loan Lender is unwilling to make the Senior Land Loan, unless Subordinate
Lender agrees, subject to the provisions of this Agreement, to subordinate and
make inferior:  (i) the right,
title, security interest, lien and interest created by the Mezzanine Loan
Documents to the right, title, security interest, lien and interest of the
Senior Deed of Trust and the other Senior Construction Loan Documents and
Senior Land Loan Documents; and (ii) Subordinate Lender’s rights to
receive any payments under or on account of the Mezzanine Loan Obligations to
Senior Construction Lender’s and Land Loan Lender’s rights to receive payments
under or on account of the Senior Construction Loan Obligations and Senior Land
Loan Obligations, respectively.

 

NOW
THEREFORE, for and in consideration of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Administrative Agent,
for itself and on behalf of the Senior Construction Lenders, Land Loan Lender,
and Subordinate Lender hereby agree as follows:

 

1.                                       Recitals Incorporated.  The recitals set forth hereinabove are
incorporated herein by reference to the same extent and with the same force and
effect as if fully set forth herein 

 

3

 

below, provided, however,
that such recitals shall not be deemed to modify the express provisions
hereinafter set forth.

 

2.                                       Definitions.  The following terms shall have the meanings
indicated below:

 

“Affiliate”
means, as to any particular Person, any Person directly or indirectly, through
one or more intermediaries, controlling, Controlled by or under common Control
with the Person or Persons in question.

 

“Agreement”
means this Agreement, as the same may be amended, modified and in effect from
time to time, pursuant to the terms hereof.

 

“Award”
is defined in Section 16.

 

“Bankruptcy
Code” means the Bankruptcy Code of the United States of America, as the
same may be amended or modified from time to time.

 

“Bankruptcy
Event” means (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to Borrower, Mezzanine Borrower or
their partners or members, or (b) any liquidation, dissolution or other
winding up of Borrower, Mezzanine Borrower or their partners or members,
whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any
other marshalling of assets or liabilities of Borrower, Mezzanine Borrower or
their partners or members.

 

“Borrower
Affiliate” means Borrower, Mezzanine Borrower, and Guarantors and any of
their constituent partners, members or shareholders, however remote, of
Borrower, Mezzanine Borrower or any Guarantor, as applicable.

 

“Business
Day” means any day other than Saturday, Sunday or a day that is a legal
holiday under the laws of the State of Texas or the State of Nevada or on which
banking institutions in the State of Texas or the State of Nevada are required
by law or other governmental action to close.

 

“Buy-Sell
Rights” means any option of Subordinate Lender pursuant to the Partnership
Agreement to acquire any beneficial ownership interests of the Investment
Partnership.

 

“Commercial
Tract” is defined in the Recitals to this Agreement.

 

“Control”
means the ownership, directly or indirectly, in the aggregate of more than
fifty percent (50%) of the beneficial ownership interests of an entity and the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlled by,”
“controlling” and “under common
control with” shall have the respective correlative meaning thereto.

 

4

 

“Default”
means a “Default” as such term is defined in the Senior Loan Agreement.

 

“Default
Notice” is defined in Section 8(a).

 

“Enforcement
Action” means any (i) judicial or non-judicial foreclosure proceeding,
the exercise of any power of sale, the taking of a deed or assignment in lieu
of foreclosure, the obtaining of a receiver or the taking of any other
enforcement action against the Property or Borrower, including, without
limitation, the taking of possession or control of the Property, (ii) acceleration
of, or demand or action taken in order to collect, all or any indebtedness
secured by the Property (other than giving of notices of default and statements
of overdue amounts) or (iii) exercise of any right or remedy available to
Administrative Agent, on behalf of the Senior Construction Lenders, under the
Senior Construction Loan Documents, at law, in equity or otherwise with respect
to Borrower and/or the Property; or (iv) prior to the Transfer Date, the
exercise of any right or remedy available to Land Loan Lender under the Senior
Land Loan Documents, at law, in equity or otherwise with respect to Borrower
and/or the Property.

 

“Guarantors”
is defined in the Recitals to this Agreement.

 

“Improvements”
is defined in the Senior Construction Loan Agreement.

 

“Interest
Reserve” is defined in the Mezzanine Loan Agreement.

 

“Investment
Partnership” means SW 130 St. Rose Limited Partnership.

 

“Land Loan
Borrower” and “Land Loan Lender” each is defined in the Recitals to
this Agreement.

 

“Mezzanine
Deed of Trust” is defined in the Recitals to this Agreement.

 

“Mezzanine
Loan” or “Mezzanine Loan Obligations” means all indebtedness,
obligations and liabilities of Mezzanine Borrower under the Mezzanine Loan
Documents, including all principal, interest (including interest accruing
subsequent to, and interest that would have accrued but for, the filing of any
petition under any bankruptcy, insolvency or similar law or the commencement of
any Proceeding), default interest, late charges, prepayment fees, expenses,
fees, reimbursements, indemnities and other amounts payable thereunder, in each
case whether now or hereafter arising, direct or indirect, primary or
secondary, joint, several or joint and several, liquidated or unliquidated,
final or contingent and whether incurred as a maker, endorser, guarantor or
otherwise.

 

“Mezzanine
Loan Agreement” is defined in the Recitals to this Agreement.

 

“Mezzanine
Loan Documents” means the Mezzanine Note, the Mezzanine Loan Agreement, the
Mezzanine Deed of Trust and the other documents listed on Exhibit B
hereto, as any of the foregoing may be modified, amended, extended,
supplemented, 

 

5

 

restated or replaced from time to time, subject to the limitations and
agreements contained in this Agreement.

 

“Mezzanine
Note” is defined in the Recitals to this Agreement

 

“Multi-Family
Tract” is defined in the Recitals to this Agreement.

 

“Partnership
Agreement” means the Limited Partnership Agreement of the Investment
Partnership dated on or about the date hereof between Behringer Harvard St. Rose
REIT, LLC, as the sole limited partner, and SW 129 St. Rose Limited
Partnership, as the sole general partner.

 

“Person”
means any person, individual, sole proprietorship, partnership, joint venture,
corporation, limited liability company, unincorporated organization,
association, institution, entity, party, including any government and any
political subdivision, agency, or instrumentality thereof.

 

“Proceeding”
means (a) any voluntary or involuntary case, action or proceeding before
any court or other governmental authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.

 

“Property”
means, collectively, the real property and all other property (whether real,
personal or otherwise) encumbered by the Senior Deed of Trust from time to
time; provided, however, that from and after the Transfer Date
the term “Property” shall not include the
Commercial Tract.

 

“Property
Manager” means Riverstone Residential Group, LLC, the initial property
manager for the Property or any successor thereto as property manager of the
Property, each as approved by Administrative Agent, on behalf of the Senior
Construction Lenders.

 

“Protective
Advances” means any and all sums advanced or expended by Senior Lender or
by Subordinate Lender (whether deemed optional or obligatory advances, or
otherwise) which Senior Lender or Subordinate Lender, as the case may be, deems
necessary or appropriate (a) to complete construction of the Improvements,
including any hard costs or soft costs incurred in connection therewith, with
such changes to the plans and specifications therefor as may be necessary or
desirable in the discretion of Administrative Agent to complete such
Improvements as expeditiously as possible on such terms and with such labor and
materials as may be available at any given time, (b) to pay and discharge
any liens against the Property, (c) to market the Property or any portion
thereof for sale or to pursue and obtain any development rights or approvals
required to make the same marketable for multi-family and commercial uses
including, the issuance or execution of standby letters of credit or developer’s
agreements pertaining to the Property or surrounding properties, (d) to
repair, maintain or otherwise protect the 

 

6

 

Property and the Improvements thereon or to prevent waste or
destruction or to defend Borrower’s title or the lien priority of Senior Lender,
(e) to pay taxes, assessments or insurance premiums in respect of the
Property or any improvements thereon or to otherwise protect the security
interests of Senior Lender in the Property, the Improvements and any other
Senior Loan Senior Loan Collateral, or (f) in connection with the
protection or exercise by Senior Lender or Subordinate Lender of its or their
rights or remedies under the Senior Construction Loan Documents, Senior Land
Loan Documents or the Mezzanine Loan Documents, as the case may be.

 

“Purchase”
is defined in Section 8.

 

“Purchase
Closing Date” is defined in Section 8.

 

“Qualified
Manager” shall mean a property manager of the Property which (i) is a
reputable management company having at least five (5) years’ experience in
the management of commercial properties with similar uses as the Property and
in the jurisdiction in which the Property is located, (ii) has, for at
least five (5) years prior to its engagement as property manager, managed
at least (5) properties of the same property type as the Property, (iii) at
the time of its engagement as property manager has at least 5,000 units under
management, and (iv) is not the subject of a bankruptcy or similar
insolvency proceeding.  Notwithstanding
the foregoing, the initial Person identified herein as the Property Manager is
hereby approved as a Qualified Manager.

 

“Required
Lenders” is defined in the Senior Construction Loan Agreement.

 

“Senior
Construction Loan,” “Senior Construction Loan Agreement,” and “Senior
Construction Loan Deed of Trust,” each is defined in the Recitals to this
Agreement.

 

“Senior
Construction Loan Documents” means the Senior Construction Loan Agreement,
the Senior Construction Loan Deed of Trust, the Senior Guaranties and the
Senior Environmental Indemnity executed in connection with the Senior
Construction Loan, and any security agreement, pledge agreement, UCC financing
statements, any interest rate swap, collar or other interest rate protection
agreement that Borrower may now or hereafter enter into with Administrative
Agent, on behalf of the Senior Construction Lenders, pertaining to the Senior
Construction Loan, and any other document listed on Exhibit C attached
hereto, as any of the foregoing may be modified, amended, extended,
supplemented, restated or replaced from time to time, subject to the
limitations and agreements contained in this Agreement.

 

“Senior
Construction Loan Lenders” and “Senior Construction Loan Note” each
is defined in the Recitals to this Agreement.

 

“Senior
Deed of Trust” is defined in the Recitals to this Agreement.

 

“Senior
Environmental Indemnity” is defined in the Recitals to this Agreement.

 

“Senior
Guaranties” is defined in the Recitals to this Agreement.

 

7

 

“Senior
Land Loan,” “Senior Land Loan Agreement,” “Senior Land Loan Deed
of Trust,” and “Senior Land Loan Note,” each is defined in the
Recitals to this Agreement.

 

“Senior
Land Loan Documents” means the Senior Land Loan Agreement, the Senior Land
Loan Deed of Trust, the Senior Guaranties and the Senior Environmental
Indemnity executed in connection with the Senior Land Loan, and any security
agreement, pledge agreement, UCC financing statements, any interest rate swap,
collar or other interest rate protection agreement that Borrower may now or
hereafter enter into with Land Loan Lender, pertaining to the Senior Land Loan,
as any of the foregoing may be modified, amended, extended, supplemented,
restated or replaced from time to time.

 

“Senior
Lender” means Administrative Agent, on behalf of the Senior Construction
Loan Lenders, Senior Construction Loan Lenders, and Land Loan Lender; provided,
however, that after the Transfer Date the term “Senior Lender” shall
mean and refer only to Administrative Agent, on behalf of the Senior Construction
Loan Lenders, and Senior Construction Loan Lenders.

 

“Senior
Loan” means, together, the Senior Construction Loan and the Senior Land
Loan; provided, however, that after the Transfer Date, “Senior Loan” shall mean and refer only to the Senior Construction
Loan.

 

“Senior
Loan Collateral” means, collectively, the Property, any improvements
thereon and any and all other property (whether real, personal or otherwise)
and interests in property which now constitutes or hereafter will constitute
collateral or other security for payment of the Senior Loan pursuant to the
Senior Loan Documents.

 

“Senior
Loan Documents” means the Senior Construction Loan Documents and the Senior
Land Loan Documents; provided, however, that after the Transfer
Date, “Senior Loan Documents” shall mean and
refer only to the Senior Construction Loan Documents.

 

“Senior
Loan Obligations” means all present and future indebtedness, obligations
and liabilities of Borrower under the Senior Loan Documents, including (a) all
principal (including principal which is borrowed, repaid and reborrowed),
interest (including interest accruing subsequent to, and interest that would
have accrued but for, the filing of any petition under any bankruptcy,
insolvency or similar law or the commencement of any Proceeding), default
interest, late charges, prepayment fees, expenses, fees, reimbursement
obligations relating to the issuance or execution by Senior Lender of standby
letters of credit or developer’s agreements pertaining to the Property or
surrounding properties, other reimbursements, interest rate swaps, collars or
other interest rate protection agreements that Borrower may enter into with
Senior Lender pertaining to the Senior Loan, indemnities and other amounts
payable thereunder, in each case whether now or hereafter arising, direct or
indirect, primary or secondary, joint, several or joint and several, liquidated
or unliquidated, final or contingent, and whether incurred as maker, endorser
or otherwise; (b) all indebtedness arising from all present and future
optional or obligatory advances (including advances to cover overdrafts that
pertain to the Property) under the Senior Note or any other Senior Loan
Document, (c) all amounts due 

 

8

 

and owing to Swap Bank (as defined in the Senior Construction Loan
Agreement) in respect of any Swap Transactions (as defined in the Senior
Construction Loan Deed of Trust), (c) any and all amendments,
modifications, extensions, renewals, refinancing or refundings of any of such
indebtedness, obligations or liabilities, and (d) any and all sums
advanced or expended by Senior Lender (whether deemed optional or obligatory
advances, or otherwise) which Senior Lender deems necessary or appropriate (1) to
market the Property or any portion thereof for sale, (2) to repair,
maintain or otherwise protect the Property and any improvements thereon or to
prevent waste or destruction or to pay or prevent liens or to defend Borrower’s
title or Senior Lender’s lien priority, (3) to pay taxes, assessments or
insurance premiums in respect of the Property or any improvements thereon or to
otherwise protect Senior Lender’s security interest in the Property, any such
improvements and any other Senior Loan Collateral, or (4) in connection
with Senior Lender’s protection or exercise of its rights or remedies under the
Senior Loan Documents.  To the extent any
payment on any of the Senior Loan Obligations, whether by or on behalf of
Borrower, as proceeds of security or enforcement of any right of setoff or
otherwise, is recovered by or required to be paid over to Borrower or a
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person in
a Proceeding, such Senior Loan Obligation or any part thereof originally
intended to be satisfied by such payment shall be deemed to be reinstated and
outstanding as if such payment had not occurred.  All outstanding Senior Loan Obligations shall
be and remain Senior Loan Obligations for all purposes of this Agreement,
regardless of whether they are allowed, not allowed or subordinated in any
Proceeding.

 

“Senior
Note” is defined in the Recitals to this Agreement.

 

“Special
Modification Terms” means any amendment or modification of the Senior Loan
Documents entered into after the date of this Agreement with respect to the
following:  (a) increase the
principal amount secured by the Senior Deed of Trust (other than increases in
respect of Protective Advances), (b) increase the interest rate (other
than an increase to a default rate and imposition of late charges), (c) amend
or modify the provisions limiting transfers of interests in Borrower or the
Property, (d) shorten the maturity date (except that the foregoing shall
not be deemed to restrict or prohibit Senior Lender from accelerating the maturity
of the Senior Loan or Senior Loan Obligations during the existence of a
Default), or (e) amend the default section under the Senior Loan Documents
in a manner that shortens grace or cure periods or adds any provisions to
cross-default or cross-collateralize the Senior Loan with any other
indebtedness.

 

“Subordinate
Lender’s Outside Date” means a date first occurring after the issuance of a
Default Notice that is the date Subordinate Lender’s cure period applicable to
such Default Notice, as more particularly set forth in Section 8(b) below,
expires unless Subordinate Lender has elected in writing to purchase the Senior
Loan pursuant to Section 8(c) below, in which event, “Subordinate Lender’s Outside Date” shall be the Purchase
Closing Date.

 

“Transfer Date”
has the meaning assigned to such term in the Senior Construction Loan
Agreement.

 

9

 

3.                                       Approval of Loans and Loan
Documents.

 

(a)                                  Subordinate Lender hereby acknowledges
that (i) it has received and reviewed and, subject to the terms and
conditions of this Agreement, hereby consents to and approves of the making of
the Senior Loan and, subject to the terms and provisions of this Agreement, all
of the terms and provisions of the Senior Loan Documents, (ii) the
execution, delivery and performance of the Senior Loan Documents will not
constitute a default or an event which, with the giving of notice or the lapse
of time, or both, would constitute a default under the Mezzanine Loan
Documents, (iii) Senior Lender is under no obligation or duty to, nor has
Senior Lender represented that Senior Lender will, see to the application of
the proceeds of the Senior Loan by Borrower or any other Person to whom Senior
Lender disburses such proceeds, and (iv) any application or use of the
proceeds of the Senior Loan for purposes other than those provided in the
Senior Loan Documents shall not affect, impair or defeat the terms and
provisions of this Agreement or the Senior Loan Documents.  The foregoing consent and acknowledgement by
Subordinate Lender is not intended and shall not be construed to (i) impose
any duty or obligation on Subordinate Lender with respect to Senior Lender or
with respect to the Senior Loan Documents other than as expressly set forth in
this Agreement (and no such duty or obligation shall be implied), or (ii) amend
or modify the respective obligations of the parties to the Mezzanine Loan
Documents other than as expressly set forth herein.

 

(b)                                 Senior Lender hereby acknowledges that (i) it
hereby consents to and approves of the making of the Mezzanine Loan and,
subject to the terms and provisions of this Agreement, the terms of the Mezzanine
Loan Documents, (ii) the execution and delivery of the Mezzanine Loan
Documents will not constitute a default or an event which, with the giving of
notice or the lapse of time, or both, would constitute a default under the
Senior Loan Documents, (iii) Subordinate Lender is under no obligation or
duty to, nor has Subordinate Lender represented that it will, see to the
application of the proceeds of the Mezzanine Loan by Mezzanine Borrower or any
other Person to whom Subordinate Lender disburses such proceeds and (iv) any
application or use of the proceeds of the Mezzanine Loan for purposes other
than those provided in the Mezzanine Loan Documents shall not affect, impair or
defeat the terms and provisions of this Agreement or the Mezzanine Loan Documents.  The foregoing consent and acknowledgement by
Senior Lender is not intended and shall not be construed to (i) impose any
duty or obligation on Senior Lender with respect to Subordinate Lender or with
respect to the Mezzanine Loan Documents other than as expressly set forth in
this Agreement (and no such duty or obligation shall be implied), or (ii) amend
or modify the respective obligations of the parties to the Senior Loan
Documents other than as expressly set forth herein.

 

4.                                       Representations, Warranties
and Covenants.

 

(a)                                  Subordinate Lender hereby represents,
warrants and covenants as follows:

 

(i)                                     Exhibit B attached hereto and made a
part hereof is a true, correct and complete listing of all of the Mezzanine
Loan Documents.  To Subordinate Lender’s knowledge,
there currently exists no default or event which, with the 

 

10

 

giving of notice or the lapse of time, or both, would constitute a
default under any of the Mezzanine Loan Documents.

 

(ii)                                  Subordinate Lender is the legal and
beneficial owner of the entire Mezzanine Loan free and clear of any lien,
security interest, option or other charge or encumbrance.

 

(iii)                               There are no conditions precedent to the effectiveness
of this Agreement that have not been satisfied or waived.

 

(b)                                 Administrative Agent, for and on behalf
of the Senior Construction Loan Lenders and Land Loan Lender each hereby
severally represents, warrants and covenants as follows:

 

(i)                                     Exhibit C attached hereto and made a
part hereof is a true, correct and complete listing of the Senior Construction
Loan Documents and Senior Land Loan Documents, respectively, as of the date
hereof.  To Administrative Agent’s
knowledge, there currently exists no default or event which, with the giving of
notice or the lapse of time, or both, would constitute a default under any of
the Senior Construction Loan Documents. 
To Land Loan Lender’s knowledge, there currently exists no default or
event which, with the giving of notice or the lapse of time, or both, would
constitute a default under any of the Senior Land Loan Documents.

 

(ii)                                  There are no conditions precedent to the
effectiveness of this Agreement that have not been satisfied or waived.

 

5.                                       Subordination. 
Subject to the terms of this Agreement, Subordinate Lender, for itself
and its successors and assigns (including, without limitation, all subsequent
holders of the Mezzanine Note and the Mezzanine Deed of Trust) does hereby
subordinate (a) the Mezzanine Deed of Trust and the other Mezzanine Loan
Documents, (b) except as set forth in Section 6 below, payment of all
of the Mezzanine Loan Obligations, and (c) all of its right, title,
security interest, lien, and interest in and to the Property, any improvements
thereon and any other Senior Loan Collateral and all sales proceeds, other
proceeds, rents, issues, and profits therefrom, to (i) the Senior Deed of
Trust and all other Senior Loan Documents, (ii) payment of all of the
Senior Loan Obligations, (iii) all of the right, title, security interest,
lien and interest held by Senior Lender and the successors and assigns of
Senior Lender (including, without limitation, all subsequent holders of the
Senior Note and the Senior Deed of Trust), in and to the Property, any
improvements thereon and any other Senior Loan Collateral and all sales
proceeds, proceeds from insurance or condemnation, other proceeds, rents,
issues, and profits therefrom, under and pursuant to (1) the Senior Note, (2) the
Senior Deed of Trust, and (3) all other Senior Loan Documents, and any and
all extensions, renewals, modifications, and replacements thereof, subject to Section 9
hereof.  From and after the date hereof,
all of the documents, indebtedness, right, title, security interest, lien, and
interest described in clauses (a), (b) and (c) hereinabove shall
be subject and subordinate to all of the documents, indebtedness, right, title,
security interest, lien, and interest described in clauses (i), (ii) and
(iii) hereinabove.

 

11

 

6.                                       Restrictions Regarding
Payments.  Subordinate Lender, for itself and its
successors and assigns (including, without limitation, all subsequent holders
of the Mezzanine Note and the Mezzanine Deed of Trust) does hereby agree that,
notwithstanding anything provided in the Mezzanine Loan Documents to the
contrary, so long as the Senior Loan Obligations remain outstanding, unless
Administrative Agent, on behalf of the Senior Construction Loan Lenders, and
prior to the Transfer Date, Land Loan Lender, shall consent in writing:

 

(a)                                  Payments. 
Except as provided in paragraph (b) below, Subordinate Lender shall
not accept or receive payments (including, without limitation, whether in cash
or other property and whether received directly, indirectly or by set off, counterclaim
or otherwise) from Borrower, Guarantors and/or from the Property prior to the
date that all obligations of Borrower to Administrative Agent and Senior Lender
under the Senior Loan Documents are paid. 
If a Proceeding shall have occurred or a Default shall have occurred and
be continuing, Administrative Agent and Senior Lender shall be entitled to
receive payment and performance in full of all amounts due or to become due to
Administrative Agent and Senior Lender before Subordinate Lender is entitled to
receive any payment on account of the Mezzanine Loan Obligations.  All payments or distributions upon or with
respect to the Mezzanine Loan Obligations which are received by Subordinate
Lender contrary to the provisions of this Agreement shall be received and held
in trust by the Subordinate Lender for the benefit of Senior Lender and shall
be paid over to Administrative Agent, for the benefit of Senior Lender, in the
same form as so received (with any necessary endorsement) to be applied (in the
case of cash) to, or held as collateral (in the case of non cash property or
securities) for, the payment or performance of the Senior Loan Obligations in
accordance with the terms of the Senior Loan Documents.  Nothing contained herein shall prohibit the Subordinate
Lender from making Protective Advances (and adding the amount thereof to the
principal balance of the Mezzanine Loan Obligations) notwithstanding the
existence of a Default under the Senior Loan Obligations at such time.  Notwithstanding anything to the contrary
contained herein, Subordinate Lender shall not be permitted to accept any
prepayment of the Mezzanine Loan without the prior written consent of the
Required Lenders at any time that any of the Senior Loan Obligations remain
outstanding and unpaid.

 

(b)                                 Permitted Payments. 
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, provided that no Default shall then exist under the Senior Loan
Documents and no Proceeding is pending, Subordinate Lender may accept (i) commitment
fees and scheduled payments of interest (calculated at the non-default rate) as
and when the same is due and payable from the Interest Reserve in accordance
with the terms and conditions of the Mezzanine Loan Documents or from Net Cash
Flow (as such term is defined in the Mezzanine Note), and (ii) other
amounts payable to Subordinate Lender on any settlement statement evidencing
the initial advance of Mezzanine Loan to Mezzanine Borrower, and Subordinate
Lender shall have no obligation to pay over to Senior Lender any such amounts
paid to Subordinate Lender in accordance with the terms of this paragraph.

 

(c)                                  Payments Held in Trust for
Senior Lender.  In the event that any payment is made to
Subordinate Lender which is not permitted under this Agreement, 

 

12

 

such payments shall be held by Subordinate Lender in trust for the
benefit of Senior Lender and shall be paid forthwith over and delivered to
Senior Lender for application to the payment of all of the Senior Loan
Obligations remaining unpaid.

 

7.                                       Enforcement of Mezzanine
Loan Documents.  So long as any of the Senior Loan Obligations
remains outstanding, Subordinate Lender agrees as follows:

 

(a)                                  Subordinate Lender shall not assert,
foreclose, enforce, realize upon or bring a legal action with respect to the
Mezzanine Loan Obligations, or any part thereof, the Mezzanine Deed of Trust,
any of the other Mezzanine Loan Documents; provided, however,
that (i) upon the occurrence of any default under the Mezzanine Loan
Documents and so long as no Default exists under the Senior Loan Documents,
Subordinate Lender may seek collection from or otherwise pursue Guarantors
under the guaranty of the Mezzanine Loan described in Exhibit B attached
hereto; and/or (ii) Subordinate Lender may seek collection from or
otherwise pursue Guarantors under the applicable provisions of the Partnership
Agreement and the joinder page thereto. 
Subordinate Lender shall, prior to commencing any action to enforce any
rights against the Guarantors, give Administrative Agent written notice of the
default which would permit Subordinate Lender to commence such enforcement
action, and Subordinate Lender shall promptly provide Administrative Agent with
copies of any and all material notices, pleadings, agreements, motions and
briefs served upon, delivered to or with any party to any such enforcement
action and otherwise keep Administrative Agent reasonably apprised as to the
status of any enforcement action.

 

(b)                                 In addition, the Mezzanine Deed of Trust
shall, by its terms, be deemed to have been released and discharged and
Subordinate Lender shall have no further rights, claims or interests in the
Property or any other property, rights or interests encumbered by the Mezzanine
Deed of Trust and Subordinate Lender shall, if requested by Administrative
Agent or any title company, immediately deliver to Administrative Agent a
written release or reconveyance of lien confirming the release and termination
of the Mezzanine Deed of Trust upon the occurrence of any one or more of the
following events (each, a “Termination Event”):

 

(i)                                     the occurrence or commencement of any
Proceeding with respect to Borrower, Mezzanine Borrower or the Investment
Partnership, or any other owner of any interest, direct or indirect in
Borrower, Mezzanine Borrower or the Investment Partnership;

 

(ii)                                  the conveyance of the Property to
Administrative Agent, any Senior Lender, or their designees in connection with
a deed in lieu of foreclosure transaction; or

 

(iii)                               a Default resulting from a Monetary Default which is
not cured by Subordinate Lender within the cure period specified in Section 10
of this Agreement and following which the Senior Loan Obligations are
accelerated pursuant to the Senior Loan Documents.

 

13

 

To induce Administrative Agent and Senior Lender to
consent to the Mezzanine Deed of Trust, Subordinate Lender hereby covenants and
agrees that until the Senior Loan Obligations have been paid in full and all
preconditions to the release and discharge of the Senior Deed of Trust have
been satisfied (i) the Mezzanine Deed of Trust shall not be amended,
modified or supplemented without the prior written consent of the Required
Lenders, (ii) the Senior Deed of Trust shall govern and control over any
contrary provision of the Mezzanine Deed of Trust with respect to casualty and
condemnation and the distribution of insurance proceeds and condemnation
awards, and (iii) Subordinate Lender hereby appoints Administrative Agent
as its attorney-in-fact, coupled with an interest, to execute, deliver and
record such releases and discharges as may be necessary to fully release the
Mezzanine Deed of Trust from the Property and all other property, rights and
interests encumbered by the Mezzanine Deed of Trust, which such power may be
exercised only after a Termination Event.

 

(c)                                  Administrative Agent, on behalf of the
Senior Construction Lenders, hereby consents to Subordinate Lender’s right,
pursuant to the Mezzanine Loan Documents, under certain circumstances, to cause
the termination of the Property Manager. 
If both Subordinate Lender and Administrative Agent shall have such
rights at any time, and Administrative Agent shall fail to exercise such rights
on behalf of the Senior Construction Lenders, Subordinate Lender may exercise
such rights, provided such exercise may be superseded by any subsequent
exercise of such rights by Administrative Agent pursuant to the Senior Loan
Documents.  Upon the occurrence of any
event which would entitle Subordinate Lender to cause the termination of the
Property Manager pursuant to the Mezzanine Loan Documents, Subordinate Lender
shall have the right to select, or cause the selection, of a replacement
property manager (including any asset manager) or leasing agent for the
Property, which replacement manager, asset manager and/or leasing agent shall (i) be
a Qualified Manager and (ii) be subject to the reasonable approval of
Administrative Agent (or the Required Lenders if the consent of the Required
Lenders is necessary).  Notwithstanding
anything in this Section to the contrary, if a Default under the Senior
Loan then exists or any other event shall have occurred pursuant to which
Administrative Agent, on behalf of the Senior Construction Lenders, has the
right to select any replacement manager, asset manager and/or leasing agent
pursuant to the Senior Loan Documents, Administrative Agent shall have the sole
right to select any replacement manager, asset manager and/or leasing agent,
whether or not a new manager or leasing agent was retained by Subordinate
Lender.

 

8.                                       Default under Senior Loan
Documents.

 

(a)                                  Default Notice. 
Prior to commencing any Enforcement Action under the Senior Loan
Documents, Senior Lender shall provide Subordinate Lender with a copy of any
written notice (the “Default Notice”)
sent by Senior Lender to Borrower regarding the occurrence of a Default.

 

(b)                                 Subordinate Lender’s Cure
Right.  Subordinate Lender shall have the right, but
not the obligation, to cure any Default under any of the Senior Loan Documents
within the later of the (i) the expiration of Borrower’s cure period under
the Senior Loan 

 

14

 

Documents with respect to such Default or (ii) five (5) Business
Days after the giving of the Default Notice if such cure can be accomplished by
the payment of a liquidated sum of money (herein, a “Monetary
Default”).  In addition, if
the Default Notice relates to a Default other than a Monetary Default (herein,
a “Non-Monetary Default”), Subordinate
Lender shall have the right, but not the obligation to cure such Non-Monetary
Default provided  that if such Non Monetary Default is susceptible
of cure but cannot reasonably be cured within thirty (30) days and if curative
action was promptly commenced and is being continuously and diligently pursued
by Subordinate Lender, Subordinate Lender shall be given an additional period
of time as is reasonably necessary for Subordinate Lender in the exercise of
due diligence to cure such Non-Monetary Default for so long as (i) Subordinate
Lender makes or causes to be made timely payment of Borrower’s regularly
scheduled monthly principal and/or interest and/or other payments under the
Senior Loan Documents and any other amounts due under the Senior Loan
Documents, (ii) such additional period of time does not exceed thirty (30)
days, unless such Non-Monetary Default is of a nature that it cannot be cured
within such thirty (30) days, in which case, Subordinate Lender shall have such
additional time as is reasonably necessary to cure such Non-Monetary Default
not to exceed one hundred twenty (120) days from the Default Notice so long as
Subordinate Lender is diligently pursuing same, (iii) such Non-Monetary
Default is not caused by a Proceeding, and (iv) during such cure period,
there is (1) no material impairment to the value, use or operation of the
Property, and (2) no violations of any applicable law, regulation or
ordinance having jurisdiction over the Property.  Subordinate Lender acknowledges and agrees
that Senior Lender’s failure to provide Subordinate Lender with a copy of any
Default Notice delivered to Borrower shall not defeat or impair the
subordination and other agreements herein made, nor shall it defeat, impair or
prevent Senior Lender from exercising any of its rights or remedies as a result
of such Default in whole or in part subject to Subordinate Lender’s right to
cure upon Senior Lender’s delivery to Subordinate Lender of the applicable
Default Notice.  The foregoing cure
periods shall automatically terminate upon the occurrence of a Proceeding.  During any cure period granted herein to
Subordinate Lender, Senior Lender shall be entitled to begin exercising any
rights and remedies it has under the Senior Loan Documents and under applicable
law as a result of such Default, and such Default shall not be cured unless and
until the particular Default under the Senior Loan Documents has been remedied
and Senior Lender has been fully reimbursed for all costs and expenses incurred
by Senior Lender in so exercising its rights (including attorneys’ fees and
costs and foreclosure costs).

 

(c)                                  Subordinate Lender’s Right
to Purchase Senior Loan.  Upon delivery
of a copy of the Default Notice to Subordinate Lender, Subordinate Lender shall
have the right, but not the obligation, to purchase the Senior Loan at par for
a purchase price equal to the sum of (i) all amounts, if any, due and
payable to Swap Bank in connection with the termination of any Swap
Transactions and the early termination and acceleration of all Swap
Transactions executed by Borrower, (ii) the outstanding principal balance
of the Senior Loan, together with all accrued interest and other amounts due
thereon (including, without limitation, any late charges, default interest,
breakage fees, exit fees, advances and post petition interest), and (iii) any
Protective Advances made by Administrative Agent, on behalf of Senior Lender,
and any interest charged by Senior Lender on any advances for monthly payments
of principal and/or interest on the Senior Loan 

 

15

 

Obligations and/or on any Protective Advances), including all costs and
expenses (including legal fees and expenses) actually incurred by
Administrative Agent and Senior Lender in enforcing the terms of the Senior
Loan Documents (the “Loan Purchase Price”).  If Subordinate Lender elects in writing to
purchase the Senior Loan (the “Purchase”), the
Purchase shall close (“Purchase Closing Date”)
on a date selected by Subordinate Lender that is no later than (30) days after
the delivery of a copy of the Default Notice to Subordinate Lender.  Concurrently with payment to Senior Lender of
the Loan Purchase Price, Senior Lender shall deliver or cause to be delivered
to Subordinate Lender all Senior Loan Documents held by or on behalf of Senior
Lender and will execute in favor of Subordinate Lender or its designee
assignment documentation, in form and substance reasonably acceptable to
Subordinate Lender, Administrative Agent and the Required Lenders, at the sole
cost and expense of Subordinate Lender, to assign the Senior Loan and the
rights of Senior Lender under the Senior Loan Documents (without recourse,
representations or warranties, except for representations as to the outstanding
balance of the Senior Loan and as to Senior Lender’s not having assigned or
encumbered its rights in the Senior Loan). 
Upon consummation of the Purchase, Subordinate Lender shall be
subrogated to the rights of Senior Lender under the Senior Loan Documents.

 

(d)                                 Failure to Elect to
Purchase Senior Loan.  If Subordinate Lender has the
right to purchase the Senior Loan under Section 8(c), and the Subordinate
Lender does not elect to purchase the Senior Loan and close the Purchase by the
Purchase Closing Date, then Senior Lender thereafter shall have the right to
amend, modify, restructure or extend the Senior Deed of Trust or any other
Senior Loan Documents (including without limitation any and all Special
Modification Terms) without notice to or the consent of Subordinate
Lender.  In such event, the Mezzanine
Loan, the Mezzanine Deed of Trust and the other Mezzanine Loan Documents and
all indebtedness, obligations, liens and security interests evidenced or
secured thereby or from time to time outstanding thereunder shall continue to
be junior, subject, and subordinate in all respects to the Senior Loan, the
Senior Deed of Trust and the Senior Loan Documents, as so amended, modified,
extended, or restructured (including without limitation any and all Special
Modification Terms).  Third parties
including title insurance companies insuring the priority of the Senior Deed of
Trust are hereby authorized to rely on this provision as to the priority of the
Senior Loan Documents, as so amended, modified, extended or restructured,
without any requirement to confirm such senior position from Subordinate
Lender.

 

(e)                                  No Sale to Borrower
Affiliate.  Senior Lender covenants not to sell any of
the Senior Loan Obligations to Borrower or any Borrower Affiliate without the
prior written consent of Subordinate Lender. 
Subordinate Lender covenants not to sell any of the Mezzanine Loan
Obligations to Borrower or any Borrower Affiliate without the prior written
consent of Administrative Agent and the Required Lenders.

 

9.                                       Changes in Special Modification
Terms.  Except as otherwise provided in Section 8(d),
Senior Lender shall not modify any of the Special Modification Terms in the
Senior Loan Documents without the prior written approval of Subordinate
Lender.  In addition and notwithstanding the
foregoing provisions of this Section 9, any amounts funded by Senior 

 

16

 

Lender under the Senior
Loan Documents as a result of (A) the making of any Protective Advances by
Senior Lender, or (B) interest accruals (including default interest and
late charges), shall not be deemed to contravene this Section 9.  Administrative Agent shall deliver to
Subordinate Lender copies of any and all modifications, amendments, extensions,
consolidations, spreaders, restatements, alterations, changes or revisions to
any one or more of the Senior Loan Documents (including, without limitation,
any side letters, waivers or consents entered into, executed or delivered by
Administrative Agent, on behalf of Senior Lender) within a reasonable time
after any of such applicable instruments have been executed by Administrative
Agent.

 

10.                                 Senior Lender’s Freedom of
Action.  Subordinate Lender agrees that Senior Lender
may at any time and from time to time, without notice to or the consent of
Subordinate Lender, and without affecting the subordination and other
agreements herein made by Subordinate Lender, do any one or more of the
following in Senior Lender’s sole and absolute discretion (subject, however,
to the restriction on Special Modification Terms set forth herein):

 

(a)                                  Extend, renew, modify, amend, increase,
diminish or waive any of the terms of any of the Senior Loan Documents,
including, without limitation, payment provisions under any of the Senior Loan
Documents and provisions relating to the Property or grant any other indulgence
to Borrower or any other Person in respect of any or all of the Senior Loan
Obligations or any other matter;

 

(b)                                 Make such Protective Advances as Senior
Lender may deem appropriate (it being understood that Senior Lender has not in
any way committed to make any such Protective Advances);

 

(c)                                  At any time after Subordinate Lender’s
Outside Date, add or substitute, or take any action or omit to take any action
which results in the release of any endorser, guarantor or any collateral or
security;

 

(d)                                 Apply any sums received from Borrower,
any guarantor, endorser, or cosigner, or from the disposition of any Senior
Loan Collateral or security, to any indebtedness whatsoever owing from such
Person or secured by such Senior Loan Collateral or security, in such manner
and order as Senior Lender determines in its sole discretion, and regardless of
whether such indebtedness is part of the Senior Loan Obligations, is secured,
or is due and payable;

 

(e)                                  Make loans or advances to Borrower
secured in whole or in part by the Senior Loan Collateral or refrain from
making any such loans or advances;

 

(f)                                    Accept partial payments of, compromise or
settle, refuse to enforce, or release all or any parties to, any or all of the
Senior Loan Obligations;

 

(g)                                 Settle, release (with or without receipt
of consideration therefor, and whether by operation of law or otherwise),
compound, compromise, collect or liquidate any of the Senior Loan Obligations
in any manner permitted by applicable law; provided, however,
Senior Lender shall not release any of the Senior Loan Collateral or any
guarantor of the Senior Loan Obligations prior to Subordinate Lender’s Outside
Date; and

 

17

 

(h)                                 Accept, release (with or without receipt
of consideration), waive, surrender, enforce, exchange, modify, impair or
extend the time for the performance, discharge or payment of, any and all
property of any kind securing any or all of the Senior Loan Obligations or any
guaranty of any or all of the Senior Loan Obligations, or on which Senior
Lender at any time may have a lien, or refuse to enforce its rights or make any
compromise or settlement or agreement therefor in respect of any or all of such
property; Senior Lender is not under and shall not hereafter be under any
obligation to marshal any assets in favor of Subordinate Lender, or against or
in payment of any or all of the Senior Loan Obligations, and may proceed
against any of the Senior Loan Collateral in such order and manner as it
elects; provided, however, Senior Lender shall not release any of
the Senior Loan Collateral or any guarantor of the Senior Loan Obligations
prior to Subordinate Lender’s Outside Date.

 

All such actions, rights and matters set forth in (a) through
(h) above shall be senior in all respects to the Mezzanine Loan
Obligations and the Mezzanine Loan Documents which shall automatically be
subordinate to such actions, rights and matters set forth in (a) through (h) above.  Third parties including title insurance
companies insuring the priority of the Senior Loan Documents are hereby
authorized to rely upon this provision as to the priority of such matters
without requirement to confirm such senior position from Subordinate Lender.

 

11.                                 Buy-Sell Rights. 
Notwithstanding any provision of this Agreement to the contrary,
Subordinate Lender shall have the right, without the consent of Senior Lender
in each instance, to exercise the Buy-Sell Rights after the Completion Date (as
defined in the Senior Loan Documents).

 

12.                                 No Transfer of Mezzanine
Loan; Refinancing.  Subordinate Lender agrees that
it shall not sell, assign, pledge, encumber or otherwise transfer any portion
of its interest in the Mezzanine Loan Documents without the prior written
consent of the Required Lenders, which consent shall be given or withheld in
the good faith business judgment of Required Lenders; provided, that
Subordinate Lender shall have the right to transfer its interest in the
Mezzanine Loan (or any part thereof or interest therein) to an Affiliate upon
fifteen (15) days’ prior written notice to Administrative Agent and
delivery to Administrative Agent by such affiliate of an assumption agreement
whereby it assumes all of Subordinate Lender’s obligations hereunder.  Any such transferee must assume in writing
the obligations of Subordinate Lender hereunder and agree to be bound by the
terms and provisions of this Agreement. 
Such transferee shall also reaffirm, in writing, in all material
respects each of the representations and warranties contained herein for the
benefit of Administrative Agent and Senior Lender.  Subordinate Lender shall provide
Administrative Agent, for the benefit of and distribution to Senior Lender,
such financial and other information on the proposed assignee as Administrative
Agent or Senior Lender reasonably requests. 
In addition, so long as any of the Senior Loan Obligations remains
outstanding, any refinance of the Mezzanine Loan Obligations shall be subject
to the prior written approval of the Required Lenders as to the terms thereof
and the refinance lender, which approval may be granted or withheld by Required
Lenders in their sole discretion.

 

13.                                 Modification of Mezzanine
Loan Documents.  Subordinate Lender shall have the right, without
the consent of Senior Lender in each instance, to enter into any amendment,
deferral, extension, modification, increase, renewal, replacement,
consolidation, supplement or 

 

18

 

waiver (collectively, a “Mezzanine Loan Modification”) of the Mezzanine Loan or the
Mezzanine Loan Documents; provided that no such Mezzanine Loan
Modification shall (a) increase the interest rate or principal amount of
the Mezzanine Loan; (b) increase in any other material respect any
monetary obligations of Mezzanine Borrower under the Mezzanine Loan Documents; (c) shorten
the scheduled maturity date of the Mezzanine Loan; (d) cross default the
Mezzanine Loan with any other indebtedness; or (e) amend the payment
provisions of the Mezzanine Note (or the definition of “Net Cash Flow” in the
Mezzanine Note) or otherwise modify the amount or timing of the payments on the
Mezzanine Note.  Notwithstanding the
foregoing provisions, any amounts funded by the Subordinate Lender under the
Mezzanine Loan Documents as a result of (i) the making of any Protective
Advances or other advances by the Subordinate Lender, or (ii) interest
accruals or accretions and any compounding thereof (including default
interest), shall not be deemed to contravene this Section 13.  Subordinate Lender shall deliver to
Administrative Agent, for distribution to Senior Lender, copies of any and all
modifications, amendments, extensions, consolidations, spreaders, restatements,
alterations, changes or revisions to any one or more of the Mezzanine Loan
Documents (including, without limitation, any side letters, waivers or consents
entered into, executed or delivered by Subordinate Lender) within a reasonable
time after any of such applicable instruments have been executed by Subordinate
Lender.

 

14.                                 Dealings with Borrower.

 

(a)                                  In making disbursements under any of the
Senior Loan Documents, Senior Lender has no duty to, nor has Senior Lender
represented that it will, see to the application of any proceeds by the Person
or Persons to whom Senior Lender disburses such proceeds.  Any application or use of such proceeds for
purposes other than those provided for in the Senior Loan Documents does not
and shall not defeat the subordination herein made, in whole or in part.

 

(b)                                 In making disbursements under any of the
Senior Loan Documents, Senior Lender may waive any and all conditions to a
disbursement contained in the Senior Loan Documents.  No such waiver shall defeat the subordination
herein made, in whole or in part.

 

(c)                                  The rights granted to Senior Lender
hereunder are solely for its protection and nothing herein contained shall
impose on Senior Lender any duties with respect to Borrower.

 

15.                                 Assignment of the Senior
Loan Obligations.  Senior Lender may assign or transfer any or
all of the Senior Loan Obligations and/or any interest therein or herein,
subject to this Agreement, and, notwithstanding any such assignment or transfer
or any subsequent assignment or transfer thereof, such Senior Loan Obligations
shall be and remain senior to the Mezzanine Loan Obligations, and the Mezzanine
Loan Obligations shall be and remain subject and subordinate to the Senior Loan
Obligations for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Loan Obligations or of
any interest therein or herein shall, to the extent of the interest of such
assignee or transferee in the Senior Loan Obligations, be entitled to the
benefits of this Agreement and subject to the burdens of this Agreement to the
same extent as if such assignee or transferee were Senior Lender;

 

19

 

provided,
however, that, unless Senior Lender shall otherwise consent in writing,
Senior Lender shall have an unimpaired right, prior and superior to that of any
such assignee or transferee, to enforce this Agreement, as to those portions of
the Senior Loan Obligations which Senior Lender has not assigned or
transferred.

 

16.           Casualty.  In the event of a casualty to the
Improvements or a condemnation or taking under a power of eminent domain of all
or any portion of the Property, Senior Lender shall have a first and prior
interest in and to any payments, awards, proceeds, distributions, or
consideration arising from any such event (the “Award”).  However, if the amount of the Award is in
excess of all amounts owed to Administrative Agent and Senior Lender under the
Senior Loan Documents, then upon payment in full of the Senior Loan
Obligations, such excess Award shall be paid to or at the direction of
Subordinate Lender, unless other Persons have claims to such awards or
proceeds, in which case Administrative Agent shall only be required to provide
notice to Subordinate Lender of such excess Award and of any such claims
thereto.  In the event of any competing
claims for any such excess Award other than claims by Borrower, Administrative
Agent shall continue to hold such excess Award until Administrative Agent
receives an agreement signed by all Persons making a claim to the excess Award
or a final order of a court of competent jurisdiction directing Administrative
Agent as to how and to which Persons, the excess Award is to be
distributed.  Alternatively,
Administrative Agent may tender such excess Award to the registry of any state
or federal court sitting in Dallas, Texas, pending resolution of all competing
claims thereto, whereupon Administrative Agent shall have no further
obligations with respect to such excess Award. 
If Administrative Agent shall release any Award or portion thereof to
Borrower pursuant to the Senior Loan Documents in order to repair and restore
the Property in accordance with the terms and provisions of the Senior Loan
Documents, such Award or portion thereof made available to Borrower for the
repair or restoration of the Property shall not be subject to attachment by
Subordinate Lender

 

17.           Bankruptcy.

 

(a)           Upon
any distribution of the assets or properties of Borrower or upon any
dissolution, winding up, liquidation, bankruptcy or reorganization involving
Borrower (whether in bankruptcy, insolvency or receivership proceedings or any
other Proceeding, or upon an assignment for the benefit of creditors or
otherwise):

 

(i)            Senior
Lender shall first be entitled to receive payment in full of the principal of
and interest on the Senior Loan Obligations and all fees and any other payments
(including post-petition interest and all costs and expenses) due pursuant to
the terms of the Senior Loan Documents, before Subordinate Lender is entitled
to receive any payment on account of the Mezzanine Loan Obligations; and

 

(ii)           any
payment or distribution of the assets or properties of Borrower of any kind or
character, whether in cash, property, or securities, to which Subordinate
Lender would be entitled except for the provisions of this Agreement, shall be
paid by the debtor in possession, liquidating trustee or agent or other person
making such payment or distribution directly to Senior Lender; and

 

20

 

(iii)          in the event that, notwithstanding the
foregoing, any payment or distribution of the assets or properties of Borrower
of any kind or character, whether in cash, property, or securities, shall be
received by Subordinate Lender on account of principal, interest, fees, or
other amounts on or with respect to the Mezzanine Loan Obligations before all
of the Senior Loan Obligations are paid in full, such payments or distribution
shall be received and held in trust for and shall be paid over to Senior Lender
forthwith, for application to the payment of the Senior Loan Obligations until
all such Senior Loan Obligations shall have been paid in full in accordance
with the terms of the Senior Loan Documents.

 

(b)           To
effectuate the foregoing, Subordinate Lender does hereby irrevocably assign to
Senior Lender all of Subordinate Lender’s rights as a secured or unsecured
creditor in any Proceeding and authorizes Senior Lender to take, or refrain
from taking, any action to assert, enforce, modify, waive, release or extend
Subordinate Lender’s lien and/or claim in such Proceeding, including but not
limited to (i) filing a proof of claim arising out of the Mezzanine Loan
Obligations, (ii) voting or refraining from voting claims arising from the
Mezzanine Loan Obligations, either in Administrative Agent’s name, on behalf of
Senior Lender, or in the name of Administrative Agent as attorney-in-fact of
Subordinate Lender including without limitation, the right to vote to accept or
reject a plan, or to make any election under Section 1111(b) of the
Bankruptcy Code, and no other parties other than Administrative Agent shall
have the right to exercise such voting rights, (iii) accepting or
rejecting any payment or distribution made with respect to any claim arising
from the Mezzanine Loan Obligations and applying such payment and distribution
to payment of Senior Lender’s claim until the Senior Loan Obligations are paid
and satisfied in full in accordance with their terms, and (iv) taking any
and all actions and executing any and all instruments necessary to effectuate
the foregoing and, among other things, to establish Senior Lender’s entitlement
to assert Subordinate Lender’s claim in such Proceeding.  Notwithstanding the foregoing provisions,
with respect to any plan of reorganization proposed in a Proceeding in respect
of which creditors are voting, Administrative Agent may vote on behalf of
Subordinate Lender only if the proposed plan would result in Senior Lender
being “impaired” (as such term is defined in
the Bankruptcy Code).

 

(c)           Subordinate
Lender agrees that Administrative Agent and Senior Lender owe no fiduciary duty
to Subordinate Lender in connection with the administration of the Senior Loan
Obligations and the Senior Loan Documents and Subordinate Lender agrees not to
assert any such claim.  Administrative
Agent, on behalf of Senior Lender, agrees that Subordinate Lender owes no
fiduciary duty to Administrative Agent and Senior Lender in connection with the
administration of the Mezzanine Loan and the Mezzanine Loan Documents and each
of Administrative Agent and Senior Lender agree not to assert any such claim.

 

(d)           No
payment or distribution to Administrative Agent or Senior Lender pursuant to
the provisions of this Agreement and no Protective Advance by Subordinate
Lender shall entitle Subordinate Lender to exercise any right of subrogation in
respect thereof prior to the payment in full of the Senior Loan Obligations,
and Subordinate Lender agrees that, except with respect to the enforcement of
its remedies under the

 

21

 

Mezzanine Loan Documents permitted hereunder, prior to the satisfaction
of all Senior Loan Obligations, Subordinate Lender shall not acquire, by
subrogation or otherwise, any lien, security interest, estate, right or other
interest in any portion of the Property or any other collateral now securing
the Senior Loan Obligations or the proceeds therefrom, including without
limitation, any lien, security interest, estate, right or other interest in any
portion of the Property that is or may be prior to, or of equal priority to,
any of the Senior Loan Documents or the liens, rights, estates and interests created
thereby.

 

(e)           The
provisions of this Agreement shall be applicable both before and after the
commencement, whether voluntary or involuntary, of any Proceeding involving
Borrower, Mezzanine Borrower or Investment Partnership.  For as long as the Senior Loan Obligations
shall remain outstanding, Subordinate Lender shall not, and shall not solicit
any person or entity to, and shall not direct or cause any Borrower Affiliate
to:  (i) commence any Proceeding; (ii) institute
proceedings to have any Borrower Affiliate adjudicated a bankrupt or insolvent;
(iii) consent to, or acquiesce in, the institution of bankruptcy or
insolvency proceedings against any Borrower Affiliate; (iv) file a
petition or consent to the filing of a petition seeking reorganization, arrangement,
adjustment, winding up, dissolution, composition, liquidation or other relief
by or on behalf of any Borrower Affiliate; (v) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for any Borrower Affiliate, the Property (or
any portion thereof) or any other collateral securing the Senior Loan
Obligations (or any portion thereof); (vi) make an assignment for the
benefit of any creditor of any Borrower Affiliate; (vii) seek to
consolidate the Property or any other assets of any Borrower Affiliate with the
assets of any other Borrower Affiliate in any Proceeding; or (viii) take
any action in furtherance of any of the foregoing.

 

18.           Additional
Waivers and Agreements.

 

(a)           Subordinate
Lender waives the right to require Senior Lender to proceed against Borrower or
any other Person liable on any Senior Loan Obligation, to proceed against or
exhaust any security held from Borrower or other Person, or to pursue any other
remedy in Senior Lender’s power whatsoever, and Subordinate Lender waives the
right to have the property of Borrower first applied to the discharge of any
Senior Loan Obligation.  Subject to the
terms of this Agreement, Senior Lender may, at its election, exercise any right
or remedy Senior Lender may have against Borrower or any security held by
Senior Lender, including, without limitation, the right to foreclose upon any
such security by one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable, without affecting or
impairing in any way the obligations of Subordinate Lender hereunder, except to
the extent the Senior Loan Obligations have been paid, and Subordinate Lender
waives any defense arising out of the absence, impairment or loss of any right
of reimbursement, contribution or subrogation or any other right or remedy
against Borrower or any such security, whether resulting from such election by
Senior Lender or otherwise except to the extent expressly set forth in this
Agreement.

 

(b)           Subordinate
Lender assumes all responsibility for keeping itself informed as to the
condition (financial or otherwise), business, assets and operations of
Borrower,

 

22

 

the condition of any Senior Loan Collateral and all other circumstances
that might in any way affect Subordinate Lender’s risk under this Agreement
(including, without limitation, the risk of nonpayment of the Senior Loan
Obligations), and Senior Lender shall have no duty or obligation whatsoever to
obtain or disclose to Subordinate Lender any information or documents relative
to such condition, business, assets, or operations of Borrower or such risk,
whether acquired by Senior Lender in the course of its relationship with
Borrower or otherwise.

 

(c)           Subordinate
Lender acknowledges that Senior Lender has made no warranties or
representations to it with respect to the due execution, legality, validity,
completeness or enforceability of the Senior Loan Documents or the
collectability of the Senior Loan Obligations evidenced thereby.

 

(d)           If
any of the Senior Loan Obligations or any lien securing same, should be
invalidated, avoided or set aside, the subordination provided for herein
nevertheless shall continue in full force and effect and, as between Senior
Lender and Subordinate Lender, shall be and be deemed to remain in full force
and effect.

 

(e)           So
long as Subordinate Lender receives a Default Notice as provided in this
Agreement and fails to cure the applicable Default within the time period
provide in Section 8(b) above, Subordinate Lender expressly waives
the right to receive any additional notice from Senior Lender of any judicial
or nonjudicial foreclosure or sale of any real property or interest therein
subject to the Senior Deed of Trust or other instruments, and Subordinate
Lender’s failure to receive any such additional notice shall not impair or
affect Subordinate Lender’s obligations to Senior Lender or the enforceability
of this Agreement or any lien or any liens created hereby, granted to or
otherwise held by Senior Lender.

 

(f)            Subordinate
Lender hereby expressly, unconditionally and irrevocably waives all rights (i) under
Sections 361 through 365, 502(e) and 509 of the Bankruptcy Code (or
any similar sections hereafter in effect under any other Federal or state laws
or legal or equitable principles relating to bankruptcy, insolvency,
reorganizations, liquidations or otherwise for the relief of debtors or
protection of creditors), and (ii) to seek or obtain conversion to a
different type of proceeding or to seek or obtain dismissal of a proceeding, in
each case in relation to a bankruptcy, reorganization, insolvency or other
proceeding under similar laws with respect to Borrower.  Without limiting the generality of the
foregoing, Subordinate Lender hereby expressly, unconditionally and irrevocably
waives (A) the right to seek to provide credit (secured or otherwise) to
Borrower in any way under Section 364 of the Bankruptcy Code unless the
same is subordinated in right and time of payment in all aspects to the Senior
Loan Obligations in a manner acceptable to Senior Lender in its sole and
absolute discretion; (B) the right to take a position inconsistent with or
contrary to that of Senior Lender (including a position by Senior Lender to
take no action) if Borrower seeks to use, sell or lease Senior Loan Collateral
(or the proceeds or products thereof) under Section 363 of the Bankruptcy
Code; (C) the right to receive any Senior Loan Collateral security (including
any “super priority” or equal or “priming” or replacement lien) for any Mezzanine Loan
Obligation unless Senior Lender has received a senior position acceptable to
Senior Lender in its

 

23

 

sole and absolute discretion to secure all Senior Loan Obligations (in
the same Senior Loan Collateral to the extent Senior Loan Collateral is
involved); and (D) the right to seek adequate protection in respect of
Senior Loan Collateral (or the proceeds or products thereof) under Section 363
or 361 of the Bankruptcy Code.

 

(g)           Notwithstanding
anything contained in the Mezzanine Loan Documents to the contrary, Subordinate
Lender shall not have any approval rights with respect to the Senior Loan
Obligations relating to the construction of the Improvements on the Property,
revisions to the plans and specifications for the Improvements, changes in the
construction budget, change orders, amendments to construction contracts and
subcontracts and approval of completion of the Improvements and revisions to
the construction schedule, disbursement conditions and completion date if such
items have been approved by Administrative Agent or the Required Lenders;
provided, however, the foregoing shall not affect any covenants or provisions
of the Mezzanine Loan Documents relating to same as between Mezzanine Borrower
and Subordinate Lender.

 

(h)           Subordinate
Lender agrees that it shall not prohibit Borrower from performing any act that
Borrower is permitted to perform under the Senior Loan Documents, subject to
any restrictions contained in this Agreement.

 

(i)            This
Agreement shall bind all successors and permitted assigns of Subordinate
Lender, Administrative Agent and Senior Lender and shall inure to the benefit
of all successors and permitted assigns of Administrative Agent, Senior Lender
and Subordinate Lender.  The rights of
Administrative Agent and Senior Lender hereunder may be exercised only by
Administrative Agent and any successor to Administrative Agent appointed
pursuant to the Senior Construction Loan Agreement, on behalf of Senior Lender;
provided, however, that Subordinate Lender shall have no obligation to deal
with or accept performance from any party other than Administrative Agent
unless and until Subordinate Lender receives notice of the resignation or
replacement of the Administrative Agent named herein.  Administrative Agent may, but shall not be
required to, at any time request instructions from the Required Lenders with
respect to any actions or approvals which, by the terms of this Agreement or of
any of the Senior Construction Loan Documents, Administrative Agent is
permitted or required to take or to grant without instructions from the
Required Lenders, and if such instructions are requested, Administrative Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever for refraining
from taking any action or withholding any approval under this Agreement until
it shall have received such instructions from the Required Lenders.

 

(j)            Nothing
provided herein is intended to create a joint venture, partnership, tenancy in
common or joint tenancy relationship between or among any of the parties
hereto.

 

(k)           Nothing
herein contained shall operate to release (i) Borrower from its obligation
to keep and perform all of the terms, conditions, obligations, covenants and
agreements contained in the Senior Loan Documents, or any liability of Borrower
under the Senior Loan Documents, or (ii) Mezzanine Borrower from its
obligation to keep and

 

24

 

perform all of the terms, conditions, obligations, covenants and
agreements contained in the Mezzanine Loan Documents or any liability of
Mezzanine Borrower under the Mezzanine Loan Documents.  This Agreement is a continuing agreement and
shall remain in full force and effect until the earliest of (i) payment in
full of the Senior Loan Obligations, or (ii) transfer of the Property by
foreclosure of the Senior Deed of Trust or the exercise of the power of sale
contained therein or by deed in lieu of foreclosure; provided, however, that
any rights or remedies of either party hereto arising out of any breach of any
provision hereof occurring prior to such date of termination shall survive such
termination.

 

(l)            In
the event that any provision of this Agreement or the application hereof to any
party hereto shall, to any extent, be invalid or unenforceable under any
applicable statute, regulation, or rule of law, then such provision shall
be deemed inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform to such statute, regulation or rule of law, and
the remainder of this Agreement and the application of any such invalid or
unenforceable provisions to parties, jurisdictions or circumstances other than
to whom or to which it is held invalid or unenforceable, shall not be affected
thereby nor shall same affect the validity or enforceability of any other
provision of this Agreement.

 

(m)          Time
is of the essence of this Agreement.

 

(n)           Each
of Administrative Agent and Senior Lender and Subordinate Lender are
sophisticated lenders and/or investors in real estate and their respective
decision to enter into the Senior Loan Obligations and the Mezzanine Loan
Obligations, respectively, is based upon their own independent expert
evaluation of the terms, covenants, conditions and provisions of, respectively,
the Senior Loan Documents and the Mezzanine Loan Documents and such other
matters, materials and market conditions and criteria which each of
Administrative Agent, Senior Lender, and Subordinate Lender deem relevant.  Each of Administrative Agent and Subordinate
Lender has not relied in entering into this Agreement, and respectively, the
Senior Loan Obligations, the Senior Loan Documents, the Mezzanine Loan or the
Mezzanine Loan Documents, upon any oral or written information, representation,
warranty or covenant from the other, or any of the other’s representatives,
employees, Affiliates or agents other than the representations and warranties
of the other contained herein.  Each of
Administrative Agent and Subordinate Lender further acknowledges that no
employee, agent or representative of the other has been authorized to make, and
that each of Administrative Agent and Subordinate Lender have not relied upon,
any statements, representations, warranties or covenants other than those
specifically contained in this Agreement. 
Without limiting the foregoing, each of Administrative Agent and
Subordinate Lender acknowledges that the other has made no representations or
warranties as to the Senior Loan Obligations or the Mezzanine Loan or the
Property (including, without limitation, the cash flow of the Property, the
value, marketability, condition or future performance thereof, the existence,
status, adequacy or sufficiency of the leases, the tenancies or occupancies of
the Property, or the sufficiency of the cash flow of the Property, to pay all
amounts which may become due from time to time pursuant to the Senior Loan
Documents or the Mezzanine Loan Documents).

 

25

 

19.                                 Continuing Benefits.  No right of Senior Lender or any present or
future holder of the Senior Loan Obligations to enforce the subordination as
provided herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of Borrower or any other party, whether
borrower, guarantor or otherwise, or by any noncompliance by Borrower or any
borrower, guarantor or otherwise with the terms of the Senior Note or any other
of the Senior Loan Documents regardless of any knowledge thereof which such
holder may have or be otherwise charged with.

 

20.                                 No Waiver; Modification.  Except as otherwise expressly provided in
this Agreement, neither this Agreement nor the transactions herein contemplated
shall operate to waive the enforcement after the date hereof of any due on
sale, due on encumbrance or accelerating transfer provision contained in the
Senior Loan Documents or the Mezzanine Loan Documents.  No delay on the part of Senior Lender or Subordinate
Lender in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by Senior Lender or Subordinate
Lender of any right or remedy shall preclude other or further exercise thereof
or the exercise of any right or remedy; nor shall any modification or waiver of
any of the provisions of this Agreement be binding upon Senior Lender or
Subordinate Lender except as expressly set forth in a writing duly signed and
delivered by or on behalf of Senior Lender or Subordinate Lender.  This Agreement may be executed in any number
of counterparts.

 

21.                                 Reinstatement of Agreement.  The provisions of this Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Loan Obligations or the Mezzanine Loan
Obligations is invalidated, declared to be fraudulent or preferential, set
aside, rescinded or must otherwise be returned by Senior Lender or Subordinate
Lender, as the case may be, under any bankruptcy law, state or federal law,
common law or equitable cause, all as though such payment had not been made.

 

22.                                 Borrower’s Waiver.  Each of Borrower and Mezzanine Borrower
hereby waives (a) notice of acceptance of this Agreement by Senior Lender
and Subordinate Lender, (b) notice of the existence or creation or
nonpayment of all or any of the Senior Loan Obligations and the Mezzanine Loan
Obligations, and (c) all diligence in the collection or protection of or
realization upon the Senior Loan Obligations or the collateral therefor or the
Mezzanine Loan Obligations.

 

23.                                 Book Entry.  Subordinate Lender will make appropriate
entries in the books and records of Subordinate Lender to indicate that the
Mezzanine Loan Obligations are subject to the Senior Loan Obligations.

 

24.                                 Notices.  Any notice which a party is required or may
desire to give the other shall be in writing and may be sent by facsimile,
personal delivery or by mail (either (i) by United States registered or
certified mail, return receipt requested, postage prepaid, or (ii) by
Federal Express or similar generally recognized overnight carrier regularly
providing proof of delivery), addressed as follows (subject to the right of a
party to designate a different address for itself by notice similarly given at
least fifteen (15) days in advance):

 

26

 

	
  If to Subordinate Lender:

  	
   

  	
  Behringer Harvard St. Rose REIT, LLC

  15601 Dallas Parkway, Suite 600

  Dallas, TX 75001

  Attention: Chief Legal Officer

  Telecopy: (214) 655-1610

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Behringer Harvard St. Rose REIT, LLC

  15601 Dallas Parkway, Suite 600

  Dallas, TX 75001

  Attention: Mark Alfieri

  Telecopy: (214) 655-1610

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Wick Phillips, LLP

  2100 Ross Avenue, Suite 950

  Dallas, TX 75201

  Attention: Walter D. Miller

  Telecopy: (214) 692-6255

  
	
   

  	
   

  	
   

  
	
  If to Senior Lender:

  	
   

  	
  Bank of America, N.A.

  TX4-213-05-06

  700 Louisiana, 5th Floor

  P.O. Box 2518

  Houston, TX 77252-2518

  Attention: Real Estate Loan Administration

  Telecopy: (713) 247-6124

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Greenberg Traurig, LLP

  2200 Ross Avenue, Suite 5200

  Dallas, TX 75201

  Attention: Tina M. Ross

  Telecopy: (972) 665-3601

  
	
   

  	
   

  	
   

  
	
  If to Borrower or

  Mezzanine Borrower:

  	
   

  	
  2001 Bryan Street, Suite 3250

  Dallas, Texas 75201

  Attention: Tim Hogan

  Facsimile: (214) 922-8553

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Jones Day

  325 John H. McConnell Blvd.

  Suite 600

  Columbus, Ohio 43215-2673

  Attention: Michael Ording

  Telecopy: (614) 461-4198

  

 

25.                                 Priority.  The priorities herein specified are
applicable irrespective of the time of creation of Senior Lender Obligations or
the Subordinate Lender Obligations.

 

27

 

26.                                 Further Assurances.  So long as the Senior Loan Obligations and
the Mezzanine Loan Obligations remain outstanding, either party shall execute,
acknowledge, and deliver upon the demand of the other party, at any time or
times, any and all further documents or instruments in recordable form for the
purpose of further confirming the subordination and the agreements herein set
forth.

 

27.                                 Estoppel Certificate.  Each of Senior Lender and Subordinate Lender
hereby agrees that within ten (10) days after written demand of the other
party, it shall execute, acknowledge and deliver a certification setting forth
the total amount of indebtedness owed to it under the Senior Loan Documents or
the Mezzanine Loan Documents, as the case may be, and such other certifications
as may be reasonably requested by the other party.  Notwithstanding the foregoing, neither Senior
Lender or Subordinate Lender shall be obligated to give such certification more
frequently than once every other calendar month.

 

28.                                 Governing Law.  This Agreement shall be governed by the laws
of the State of Texas (without reference to its conflict of laws principles).

 

29.                                 Forum.  Senior Lender and Subordinate Lender each
hereby irrevocably submits generally and unconditionally to any state or
federal court sitting in Dallas County, Texas, over any suit, action or
proceeding arising out of or relating to this Agreement or the Senior Loan or
the Mezzanine Loan.  Senior Lender and
Subordinate Lender each hereby irrevocably waives, to the fullest extent
permitted by law, any objection that it 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.

 

30.                                 Waiver of Jury Trial.  SENIOR LENDER AND SUBORDINATE LENDER WAIVE
TRIAL BY JURY IN RESPECT OF ANY CLAIM, COUNTERCLAIM, ACTION OR CAUSE OF ACTION
RELATING TO OR ARISING OUT OF THIS AGREEMENT. 
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY SENIOR LENDER
AND SUBORDINATE LENDER AND SENIOR LENDER AND SUBORDINATE LENDER HEREBY
REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
PERSON OR ENTITY 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 THIS AGREEMENT.  SENIOR LENDER AND SUBORDINATE LENDER ARE EACH
HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION 30 IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL.  SENIOR LENDER AND SUBORDINATE LENDER EACH
FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF
THIS AGREEMENT AND IN THE MAKING OF 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.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]

 

28

 

IN WITNESS
WHEREOF, the undersigned have executed this Agreement
as of the day and year first above written.

 

	
   

  	
  SUBORDINATE LENDER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD ST. ROSE REIT, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard St. Rose Venture, LLC,

  a Delaware limited liability company, its manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer Harvard St Rose, LLC,

  a Delaware limited liability company, its manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  Executive Vice President-Corporate

  Development & Legal and Secretary

  

 

Signature Page

 

 

	
   

  	
  SENIOR LENDER:  

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., a national banking
  association, in its capacity as Administrative Agent on behalf of the Senior
  Construction Lenders and for its own benefit, as Land Loan Lender 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Johanna
  Christiansen

  
	
   

  	
   

  	
  Name:

  	
  Johanna Christiansen

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  

 

Signature Page

 

 

ACKNOWLEDGMENT AND
CONSENT

 

The
undersigned hereby executes and delivers this Acknowledgment and Consent to and
regarding the terms, conditions and covenants set forth in the Intercreditor
and Subordination Agreement attached hereto (the “Intercreditor
Agreement”).  The undersigned
states that it has received a copy of the foregoing Intercreditor Agreement and
agrees that it will recognize all rights granted therein to the respective
lenders that are party thereto, and that it will not undertake any act or
perform any obligation which is not in accordance with the provisions of the
Intercreditor Agreement.

 

The
undersigned further acknowledges and agrees that it is not an intended
beneficiary under the Intercreditor Agreement.

 

EXECUTED
as of December 31, 2008.

 

	
   

  	
  BORROWER: 

  
	
   

  	
   

  
	
   

  	
  SW 132 ST. ROSE SENIOR BORROWER, LLC, a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SW 131 St. Rose Mezzanine Borrower, LLC, a Delaware limited liability
  company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SW 130 St. Rose Limited Partnership, a Delaware limited partnership,
  its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 129 St. Rose Limited Partnership, a Delaware limited partnership,
  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP LLC, a Delaware limited liability company, its
  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Timothy J. Hogan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: 

  	
  Timothy J. Hogan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Acknowledgement and Consent

 

 

	
   

  	
  MEZZANINE BORROWER:

  
	
   

  	
   

  
	
   

  	
  SW 131 ST. ROSE MEZZANINE BORROWER, LLC, a
  Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SW 130 St. Rose Limited Partnership, a Delaware limited partnership,
  its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SW 129 St. Rose Limited Partnership, a Delaware limited partnership,
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP LLC, a Delaware limited liability company, its
  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Timothy J. Hogan 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Timothy J. Hogan 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

Acknowledgement and Consent

 

 

EXHIBIT A

 

PROPERTY DESCRIPTION

 

PARCEL I:

 

THE NORTH HALF (N 1⁄2) OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE SOUTHWEST
QUARTER (SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 35, TOWNSHIP 22
SOUTH, RANGE 61 EAST, M.D.B.&M., CLARK COUNTY, NEVADA.

 

PARCEL II:

 

THE SOUTH HALF (S 1⁄2) OF THE NORTHEAST QUARTER (NE 1⁄4) OF THE SOUTHWEST
QUARTER (SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 35, TOWNSHIP 22
SOUTH, RANGE 61 EAST, M.D.B.&M.

 

EXCEPTING THEREFROM THAT PORTION LYING WITHIN ST. ROSE PARKWAY.

 

PARCEL III:

 

THAT PORTION OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 35,
TOWNSHIP 22 SOUTH, RANGE 61 EAST, M.D.M., CITY OF HENDERSON, CLARK COUNTY,
NEVADA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

THE SOUTH HALF (S 1⁄2) OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE SOUTHWEST
QUARTER (SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35.

 

TOGETHER WITH:

 

THOSE PORTIONS OF THE NORTH HALF (N 1⁄2) OF THE SOUTH HALF (S 1⁄2) OF THE
SOUTHWEST QUARTER (SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35
LYING NORTHWESTERLY OF THE NORTHWESTERLY RIGHT-OF-WAY OF ST. ROSE PARKWAY.

 

PARCEL IV:

 

BEING A PORTION OF THE SOUTH HALF (S 1⁄2) OF THE SOUTHEAST QUARTER (SE 1⁄4)
OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 35,
TOWNSHIP 22 SOUTH, RANGE 61 EAST, M.D.B & M., CLARK COUNTY, NEVADA.

 

TOGETHER WITH THAT PORTION OF THE NORTH HALF (N 1⁄2) OF THE NORTHEAST
QUARTER (NE 1⁄4) OF THE SOUTHWEST QUARTER (SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4),
ALSO TOGETHER WITH THAT PORTION OF THE NORTH HALF (N 1⁄2) OF THE NORTHWEST
QUARTER (NW 1⁄4) OF SAID SECTION 35, LYING NORTHWESTERLY OF ST. ROSE
PARKWAY, FURTHER DESCRIBED AS FOLLOWS:

 

A-1

 

BEGINNING AT THE SOUTHEAST CORNER OF THE NORTHWEST QUARTER (NW 1⁄4) OF
THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35, SAID CORNER BEING MARKED
BY AN ALUMINUM CAP MARKED “PLS 5269, 1994, NW 1/16”;

 

THENCE SOUTH 41°41’09” EAST, 174.75 FEET TO THE NORTHWESTERLY LINE OF
ST. ROSE PARKWAY AS GRANTED IN BOOK 250 AS DOCUMENT NO. 202981, OFFICIAL
RECORDS OF CLARK COUNTY, NEVADA;

 

THENCE ALONG SAID NORTHWESTERLY LINE, SOUTH 46°18’51” WEST, 297.97 FEET
TO A POINT OF INTERSECTION OF SAID NORTHWESTERLY LINE WITH THE SOUTH LINE OF
THE NORTH HALF (N 1⁄2) OF THE NORTHEAST QUARTER (NE 1⁄4) OF THE SOUTHWEST QUARTER
(SW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35;

 

THENCE ALONG THE LINES OF SAID NORTH HALF (N 1⁄2) THE FOLLOWING THREE (3) COURSES:

 

1.                                       NORTH 89°22’43”
WEST, 553.55 FEET;

2.                                       NORTH 00°33’34”
WEST, 330.00 FEET;

3.                                       SOUTH 89°22’04”
EAST, 663.09 FEET TO THE POINT OF BEGINNING.

 

EXCEPTING THEREFROM:

 

A PORTION OF THE SOUTH HALF (S 1⁄2) OF THE SOUTHEAST QUARTER (SE 1⁄4) OF
THE NORTHWEST QUARTER (NW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35,
DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE SOUTHWEST CORNER OF THE SOUTH HALF (S 1⁄2) OF THE
SOUTHEAST QUARTER (SE 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE NORTHWEST
QUARTER (NW 1⁄4) OF SAID SECTION 35; THENCE NORTH 00 33’55” WEST, 330.09
FEET TO THE NORTHWEST CORNER OF THE SOUTH HALF (S 1⁄2) OF THE SOUTHEAST QUARTER
(SE 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION
35; THENCE SOUTH 89°21’56” EAST, 663.21 FEET TO THE NORTHEAST CORNER OF THE
SOUTH HALF (S 1⁄2) OF THE SOUTHEAST QUARTER (SE 1⁄4) OF THE NORTHWEST QUARTER (NW
1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF SAID SECTION 35; THENCE SOUTH 00°32’39”
EAST, 330.06 FEET TO THE SOUTHEAST CORNER OF THE SOUTH HALF (S 1⁄2) OF THE
SOUTHEAST QUARTER (SE 1⁄4) OF THE NORTHWEST QUARTER (NW 1⁄4) OF THE NORTHWEST
QUARTER (NW 1⁄4) OF SAID SECTION 35; THENCE NORTH 41°41’09” WEST, 316.13
FEET; THENCE SOUTH 48°18’51” WEST, 153.68 FEET TO THE BEGINNING OF A 500 FOOT
RADIUS CURVE, CONCAVE NORTHWESTERLY; THENCE ALONG SAID CURVE TO THE RIGHT,
369.29 FEET THROUGH A CENTRAL ANGLE OF 42°19’05” TO THE POINT OF BEGINNING.

 

A-2

 

EXHIBIT B

 

DESCRIPTION OF
MEZZANINE LOAN DOCUMENTS

 

1.                                       Senior
Mezzanine Loan Agreement and Junior Mezzanine Loan Agreement, each dated December 31,
2008 (the “Effective Date”), between
Subordinate Lender and Mezzanine Borrower, relating to the Mezzanine Loan.

 

2.                                       Senior
Mezzanine Promissory Note and Junior Mezzanine Promissory Note, each dated as
of the Effective Date in the aggregate principal amount of the Mezzanine Loan,
executed by Mezzanine Borrower payable to the order of Subordinate Lender.

 

3.                                       Senior
Mezzanine Deed of Trust, Assignment of Rents, Security Agreement, Fixture
Filing and Financing Statement and Junior Mezzanine Deed of Trust, Assignment
of Rents, Security Agreement, Fixture Filing and Financing Statement, each
dated as of the Effective Date and executed by Borrower in favor of the Trustee
named therein for the benefit of Subordinate Lender.

 

4.                                       Mezzanine
Guaranty, dated as of the Effective Date and executed by Guarantors in favor of
Subordinate Lender.

 

5.                                       Mezzanine
Environmental Indemnity Agreement, dated as of the Effective Date and executed
by Mezzanine Borrower in favor of Subordinate Lender.

 

B-1

 

EXHIBIT C 

 

DESCRIPTION OF
SENIOR LOAN DOCUMENTS

 

Senior Construction Loan Documents.

 

1.                                       Construction
Loan Agreement dated as of the Effective Date between Administrative Agent,
Senior Construction Lenders and Borrower.

 

2.                                       One
or more Deed of Trust Notes issued by Borrower to and for the benefit of the
Senior Construction Lenders, in the aggregate principal amount of the Senior
Construction Loan.

 

3.                                       Deed
of Trust, Assignment of Rents and Leases, Security Agreement, Financing
Statement and Fixture Filing dated as of the Effective Date, executed by
Borrower in favor of the Trustee named therein to Administrative Agent, for the
benefit of Senior Construction Lenders.

 

4.                                       Limited
Recourse Guaranty Agreements, each dated as of the Effective Date, executed by
Guarantors to and for the benefit of Administrative Agent, on behalf of the
Senior Construction Lenders.

 

5.                                       Environmental
Indemnity Agreement dated as of the Effective Date, executed by Borrower and
Guarantor to and for the benefit of Administrative Agent, on behalf of the
Senior Construction Lenders.

 

6.                                       Notice
of Final Agreement dated as of the Effective Date, executed by Borrower and
Guarantors in favor of Administrative Agent, on behalf of the Senior
Construction Lenders.

 

7.                                       UCC-1
Financing Statements covering Borrower in favor of Administrative Agent, on
behalf of the Senior Construction Lenders.

 

8.                                       Any
Master Agreement now or hereafter executed by Borrower and Swap Bank and any
and all amendments thereto and Swap Transactions executed thereunder.

 

Senior Land Loan Documents.

 

1.                                       Term
Loan Agreement dated as of the Effective Date between Land Loan Lender and Land
Loan Borrower.

 

2.                                       Deed
of Trust Note issued by Land Loan Borrower to and for the benefit of Land Loan
Lender, in the aggregate principal amount of the Land Loan.

 

3.                                       Deed
of Trust, Assignment of Rents and Leases, Security Agreement, Financing
Statement and Fixture Filing dated as of the Effective Date, executed by
Borrower in favor of the Trustee named therein for the benefit of Land Loan
Lender.

 

C-1

 

4.                                       Limited
Recourse Guaranty Agreements, each dated as of the Effective Date, executed by
Guarantors to and for the benefit of Land Loan Lender.

 

5.                                       Environmental
Indemnity Agreement dated as of the Effective Date, executed by Land Loan
Borrower and Guarantor to and for the benefit of Land Loan Lender.

 

6.                                       Notice
of Final Agreement dated as of the Effective Date, executed by Land Borrower
and Guarantors and Land Loan Lender.

 

7.                                       UCC-1
Financing Statements covering Land Loan Borrower in favor of Land Loan Lender.

 

C-2Exhibit 10.10

 

SALE, PURCHASE AND ESCROW AGREEMENT

 

BETWEEN

 

 

VERANDAH OWNER LIMITED PARTNERSHIP

(Seller)

 

 

AND

 

 

HARVARD PROPERTY TRUST, LLC

(Purchaser)

 

 

AND

 

 

PARTNERS TITLE COMPANY

(Escrow Agent)

 

 

TABLE OF CONTENTS

 

Table of Contents

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I PURCHASE AND SALE

  	
   

  	
  1

  
	
   

  	
  1.1

  	
   

  	
  Background

  	
   

  	
  1

  
	
   

  	
  1.2

  	
   

  	
  Purchase and Sale

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE PRICE

  	
   

  	
  3

  
	
   

  	
  2.1

  	
   

  	
  Price

  	
   

  	
  3

  
	
   

  	
  2.2

  	
   

  	
  Investments

  	
   

  	
  3

  
	
   

  	
  2.3

  	
   

  	
  Interest on the Deposit

  	
   

  	
  4

  
	
   

  	
  2.4

  	
   

  	
  Existing Loan

  	
   

  	
  4

  
	
   

  	
  2.5

  	
   

  	
  Option Consideration

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS TO THE PARTIES’ OBLIGATIONS

  	
   

  	
  5

  
	
   

  	
  3.1

  	
   

  	
  Conditions to Purchaser’s Obligation to Purchase

  	
   

  	
  5

  
	
   

  	
  3.2

  	
   

  	
  Conditions to Seller’s Obligation to Sell

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV PURCHASER’S DELIVERIES AND SELLER’S DELIVERIES TO ESCROW
  AGENT

  	
   

  	
  7

  
	
   

  	
  4.1

  	
   

  	
  Purchaser’s Deliveries

  	
   

  	
  7

  
	
   

  	
  4.2

  	
   

  	
  Seller’s Deliveries

  	
   

  	
  7

  
	
   

  	
  4.3

  	
   

  	
  Failure to Deliver

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V INVESTIGATION OF PROPERTY

  	
   

  	
  8

  
	
   

  	
  5.1

  	
   

  	
  Survey

  	
   

  	
  8

  
	
   

  	
  5.2

  	
   

  	
  Intentionally Deleted

  	
   

  	
  8

  
	
   

  	
  5.3

  	
   

  	
  Review of Survey and Title

  	
   

  	
  8

  
	
   

  	
  5.4

  	
   

  	
  Inspection of Property

  	
   

  	
  9

  
	
   

  	
  5.5

  	
   

  	
  Operational Information

  	
   

  	
  10

  
	
   

  	
  5.6

  	
   

  	
  No Obligation to Cure

  	
   

  	
  11

  
	
   

  	
  5.7

  	
   

  	
  Inspection Period

  	
   

  	
  11

  
	
   

  	
  5.8

  	
   

  	
  Right to Audit

  	
   

  	
  11

  
	
   

  	
  5.9

  	
   

  	
  Proprietary Documents; Confidentiality

  	
   

  	
  11

  
	
   

  	
  5.10

  	
   

  	
  Purchaser’s Responsibilities

  	
   

  	
  12

  
	
   

  	
  5.11

  	
   

  	
  Purchaser’s Agreement to Indemnify

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI THE CLOSING

  	
   

  	
  13

  
	
   

  	
  6.1

  	
   

  	
  Date and Manner of Closing

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII PRORATION, FEES, COSTS AND ADJUSTMENTS

  	
   

  	
  13

  
	
   

  	
  7.1

  	
   

  	
  Prorations

  	
   

  	
  13

  
	
   

  	
  7.2

  	
   

  	
  Seller’s Closing Costs

  	
   

  	
  16

  

 

 

	
   

  	
  7.3

  	
   

  	
  Purchaser’s Closing Costs

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII DISTRIBUTION OF FUNDS AND DOCUMENTS

  	
   

  	
  16

  
	
   

  	
  8.1

  	
   

  	
  Delivery of the Purchase Price

  	
   

  	
  16

  
	
   

  	
  8.2

  	
   

  	
  Other Monetary Disbursements

  	
   

  	
  16

  
	
   

  	
  8.3

  	
   

  	
  Recorded Documents

  	
   

  	
  16

  
	
   

  	
  8.4

  	
   

  	
  Documents to Purchaser

  	
   

  	
  16

  
	
   

  	
  8.5

  	
   

  	
  Documents to Seller

  	
   

  	
  17

  
	
   

  	
  8.6

  	
   

  	
  All Other Documents

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX RETURN OF DOCUMENTS AND FUNDS UPON TERMINATION

  	
   

  	
  17

  
	
   

  	
  9.1

  	
   

  	
  Return of Seller’s Documents

  	
   

  	
  17

  
	
   

  	
  9.2

  	
   

  	
  Return of Purchaser’s Documents

  	
   

  	
  17

  
	
   

  	
  9.3

  	
   

  	
  Deposit

  	
   

  	
  18

  
	
   

  	
  9.4

  	
   

  	
  Disbursement of Deposit

  	
   

  	
  18

  
	
   

  	
  9.5

  	
   

  	
  No Effect on Rights of Parties; Survival

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X DEFAULT

  	
   

  	
  18

  
	
   

  	
  10.1

  	
   

  	
  Seller’s Remedies

  	
   

  	
  18

  
	
   

  	
  10.2

  	
   

  	
  Purchaser’s Remedies

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI REPRESENTATIONS AND WARRANTIES

  	
   

  	
  20

  
	
   

  	
  11.1

  	
   

  	
  Seller’s Warranties and Representations

  	
   

  	
  20

  
	
   

  	
  11.2

  	
   

  	
  Purchaser’s Warranties and Representations

  	
   

  	
  23

  
	
   

  	
  11.3

  	
   

  	
  No Other Warranties and Representations

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII CASUALTY AND CONDEMNATION

  	
   

  	
  25

  
	
   

  	
  12.1

  	
   

  	
  Uniform Vendor and Purchaser Act Not Applicable

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII CONDUCT PRIOR TO CLOSING

  	
   

  	
  26

  
	
   

  	
  13.1

  	
   

  	
  Conduct

  	
   

  	
  26

  
	
   

  	
  13.2

  	
   

  	
  Actions Prohibited

  	
   

  	
  27

  
	
   

  	
  13.3

  	
   

  	
  Modification of Existing Leases and Service Contracts

  	
   

  	
  28

  
	
   

  	
  13.4

  	
   

  	
  New Leases and Contracts

  	
   

  	
  28

  
	
   

  	
  13.5

  	
   

  	
  Right to Cure

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV OCCUPANCY CONTINGENCY

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV NOTICES

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI TRANSFER OF POSSESSION

  	
   

  	
  31

  
	
   

  	
  16.1

  	
   

  	
  Transfer of Possession

  	
   

  	
  31

  
	
   

  	
  16.2

  	
   

  	
  Delivery of Documents at Closing

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII GENERAL PROVISIONS

  	
   

  	
  31

  
	
   

  	
  17.1

  	
   

  	
  Captions

  	
   

  	
  31

  
	
   

  	
  17.2

  	
   

  	
  Exhibits

  	
   

  	
  31

  

 

 

	
   

  	
  17.3

  	
   

  	
  Entire Agreement

  	
   

  	
  31

  
	
   

  	
  17.4

  	
   

  	
  Modification

  	
   

  	
  32

  
	
   

  	
  17.5

  	
   

  	
  Attorneys’ Fees

  	
   

  	
  32

  
	
   

  	
  17.6

  	
   

  	
  Governing Law

  	
   

  	
  32

  
	
   

  	
  17.7

  	
   

  	
  Time of Essence

  	
   

  	
  32

  
	
   

  	
  17.8

  	
   

  	
  Survival of Warranties

  	
   

  	
  32

  
	
   

  	
  17.9

  	
   

  	
  Assignment by Purchaser

  	
   

  	
  32

  
	
   

  	
  17.10

  	
   

  	
  Severability

  	
   

  	
  33

  
	
   

  	
  17.11

  	
   

  	
  Successors and Assigns

  	
   

  	
  33

  
	
   

  	
  17.12

  	
   

  	
  Interpretation

  	
   

  	
  33

  
	
   

  	
  17.13

  	
   

  	
  Counterparts

  	
   

  	
  33

  
	
   

  	
  17.14

  	
   

  	
  Recordation

  	
   

  	
  33

  
	
   

  	
  17.15

  	
   

  	
  Limitation on Liability

  	
   

  	
  33

  
	
   

  	
  17.16

  	
   

  	
  Possession of Advisor

  	
   

  	
  34

  
	
   

  	
  17.17

  	
   

  	
  Business Day

  	
   

  	
  34

  
	
   

  	
  17.18

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII ESCROW AGENT DUTIES AND DISPUTES 

  	
   

  	
  34

  
	
   

  	
  18.1

  	
   

  	
  Other Duties of Escrow Agent

  	
   

  	
  34

  
	
   

  	
  18.2

  	
   

  	
  Disputes

  	
   

  	
  35

  
	
   

  	
  18.3

  	
   

  	
  Reports

  	
   

  	
  35

  

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  —

  	
   

  	
  Description of
  Land

  
	
  EXHIBIT B

  	
   

  	
  —

  	
   

  	
  Rent Roll

  
	
  EXHIBIT C

  	
   

  	
  —

  	
   

  	
  Form of
  Assignment of Leases and Contracts

  
	
  EXHIBIT D

  	
   

  	
  —

  	
   

  	
  Form of
  Blanket Conveyance, Bill of Sale and Assignment

  
	
  EXHIBIT E

  	
   

  	
  —

  	
   

  	
  Intentionally
  Omitted

  
	
  EXHIBIT F

  	
   

  	
  —

  	
   

  	
  Service
  Contracts

  
	
  EXHIBIT G

  	
   

  	
  —

  	
   

  	
  Form of
  Notice to Tenants

  
	
  EXHIBIT H

  	
   

  	
  —

  	
   

  	
  FIRPTA Affidavit

  
	
  EXHIBIT I

  	
   

  	
  —

  	
   

  	
  Form of
  Deed

  
	
  EXHIBIT J

  	
   

  	
  —

  	
   

  	
  Personal
  Property

  
	
  EXHIBIT K

  	
   

  	
  —

  	
   

  	
  Due Diligence
  Materials

  
	
  EXHIBIT L

  	
   

  	
  —

  	
   

  	
  Lease Guidelines

  

 

 

INDEX OF
DEFINED TERMS

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Additional Funds

  	
   

  	
  2.1.2

  
	
  Advisor

  	
   

  	
  5.4

  
	
  Apartment
  Development

  	
   

  	
  1.1

  
	
  Assignment of
  Escrow Accounts

  	
   

  	
  4.2.9

  
	
  Assignment of
  Leases and Contracts

  	
   

  	
  4.1.2

  
	
  Assumption
  Documents

  	
   

  	
  4.2.8

  
	
  Blanket
  Conveyance

  	
   

  	
  4.1.3

  
	
  Closing

  	
   

  	
  6.1

  
	
  Code

  	
   

  	
  11.2.5

  
	
  Deed

  	
   

  	
  4.2.1

  
	
  Deposit

  	
   

  	
  2.1.1

  
	
  Due Diligence
  Materials

  	
   

  	
  5.4

  
	
  ERISA

  	
   

  	
  11.2.5

  
	
  Escrow Agent

  	
   

  	
  Introduction

  
	
  Existing Survey

  	
   

  	
  5.1

  
	
  Final Closing
  Date

  	
   

  	
  6.1

  
	
  Guarantor

  	
   

  	
  3.2.4

  
	
  Improvements

  	
   

  	
  1.2(a)

  
	
  Indemnitor

  	
   

  	
  3.2.4

  
	
  Inspection
  Period

  	
   

  	
  5.6

  
	
  Intangibles

  	
   

  	
  1.2(e)

  
	
  Land

  	
   

  	
  1.2(a)

  
	
  Lender

  	
   

  	
  2.4

  
	
  Lender Consent

  	
   

  	
  2.4(e)

  
	
  Lender Consent
  Notice

  	
   

  	
  2.4(e)

  
	
  Leases

  	
   

  	
  1.2(c)

  
	
  Limitation
  Period

  	
   

  	
  10.2

  
	
  Lists

  	
   

  	
  11.1.11(2)(a)

  
	
  Loan

  	
   

  	
  2.4(a)

  
	
  Loan Assumption
  Fee

  	
   

  	
  7.2

  
	
  Loan Documents

  	
   

  	
  2.4(a)

  
	
  Maximum
  Liability Cap

  	
   

  	
  16.15

  
	
  Mortgage

  	
   

  	
  2.4(a)

  
	
  Note

  	
   

  	
  2.4(a)

  
	
  Occupancy
  Condition

  	
   

  	
  Art. XV

  
	
  OFAC

  	
   

  	
  11.1.14

  
	
  Option
  Consideration

  	
   

  	
  2.5

  
	
  Order(s)

  	
   

  	
  11.1.14

  
	
  Original Lender

  	
   

  	
  2.4(a)

  
	
  Owner’s
  Affidavit

  	
   

  	
  4.2.10

  
	
  Permitted
  Exceptions

  	
   

  	
  5.3

  

 

 

	
  Permitted
  Outside Parties

  	
   

  	
  5.9

  
	
  Personal
  Property

  	
   

  	
  1.2(b)

  
	
  Property

  	
   

  	
  1.2

  
	
  Property
  Documents

  	
   

  	
  5.9

  
	
  Purchase Price

  	
   

  	
  2.1

  
	
  Purchaser

  	
   

  	
  Introduction

  
	
  Purchaser’s
  Action

  	
   

  	
  10.1

  
	
  Purchaser
  Assumption Documents

  	
   

  	
  4.1.6

  
	
  Real Property

  	
   

  	
  1.2(a)

  
	
  Rent Ready
  Condition

  	
   

  	
  13.1.4

  
	
  Rent Roll

  	
   

  	
  1.2(c)

  
	
  Seller

  	
   

  	
  Introduction

  
	
  Seller Assumption
  Documents

  	
   

  	
  4.2.8

  
	
  Seller Parties

  	
   

  	
  16.15

  
	
  Seller’s Broker

  	
   

  	
  11.1.1

  
	
  Service
  Contracts

  	
   

  	
  1.2(d)

  
	
  Survey

  	
   

  	
  5.1

  
	
  Tenant Payments

  	
   

  	
  7.1.1

  
	
  Title Commitment

  	
   

  	
  3.1.3(i)

  
	
  Title Company

  	
   

  	
  3.1.3

  
	
  Title Cure
  Period

  	
   

  	
  5.3

  
	
  Title Documents

  	
   

  	
  5.3

  
	
  Title Objections

  	
   

  	
  5.3

  
	
  Title Policy

  	
   

  	
  3.1.3

  
	
  Title Report

  	
   

  	
  5.2

  
	
  Title Review
  Period

  	
   

  	
  5.3

  
	
  Underlying
  Documents

  	
   

  	
  3.1.3(i)

  

 

 

SALE,
PURCHASE AND ESCROW AGREEMENT

 

This Agreement, dated as of January 26, 2009, is
made by and between Verandah Owner Limited Partnership, a Delaware limited
partnership (“Seller”), and Harvard Property
Trust, LLC, a Delaware limited liability company (“Purchaser”)
and constitutes (i) a contract of sale and purchase between the
parties and (ii) an escrow agreement among Seller, Purchaser and
Partners Title Company (“Escrow Agent”),
the consent of which appears at the end hereof.

 

ARTICLE I

 

PURCHASE AND SALE

 

1.1                               Background.  Seller
is the owner of a 301-unit apartment development commonly known as The Verandah
at Meyerland Apartments (the “Apartment Development”)
located at 4620 N. Braeswood Avenue, Houston, Harris County, Texas.  Purchaser is willing to enter into a contract
to buy the Apartment Development on the terms provided in this Agreement, and
Seller has indicated that it is willing to enter into a contract to sell the
Apartment Development to Purchaser on the terms provided herein.

 

1.2                               Purchase
and Sale.  Seller shall sell and
convey to Purchaser, and Purchaser shall buy from Seller, the Property (as
hereinafter defined) for the consideration and upon and subject to the terms,
provisions, and conditions of this Agreement. The “Property”
means:

 

(a)                                  to the extent owned by Seller, the land
situated in Harris County, Texas, more particularly described in Exhibit A
(the “Land”), together with: (i) the
Apartment Development and other improvements situated on the Land and all other
structures, fixtures, buildings, and improvements situated on the Land (such
buildings, structures, fixtures, and improvements being herein called the “Improvements”); (ii) any and
all rights, titles, powers, privileges, easements, licenses, rights-of-way and
interests appurtenant to the Land and the Improvements; (iii) all rights,
titles, powers, privileges, licenses, easements, rights-of-way, and interests,
if any, of Seller, either at law or in equity, in possession or in expectancy,
in and to any real estate lying in the streets, highways, roads, alleys,
rights-of-way or sidewalks, open or proposed, in front of, above, over, under,
through or adjoining the Land and in and to any strips or gores of real estate
adjoining the Land; (iv) and all rights, titles, powers, privileges,
interests, licenses, easements, and rights-of-way appurtenant or incident to
any of the foregoing, including, without limitation, to the extent owned by
Seller, all mineral, oil, gas and other hydrocarbon substances on and under and
that may be produced from the Land, as well as all development rights, land use
entitlements, air rights, water, water rights, riparian rights, and water stock
relating to the Land (Land and Improvements being sometimes collectively herein
referred to as the “Real Property”);

 

(b)                                 all equipment, fixtures, appliances,
inventory, and other personal property of whatever kind or character owned by
Seller and attached to or installed or located on or in the Land or the
Improvements, including, without limitation, furniture, furnishings, 

 

1

 

drapes
and floor coverings, office equipment and supplies, heating, lighting,
refrigeration, plumbing, ventilating, incinerating, cooking, laundry,
communication, electrical, dishwashing, and air conditioning equipment,
disposals, window screens, storm windows, recreational equipment, pool
equipment, patio furniture, sprinklers, hoses, tools and lawn equipment (the “Personal Property”), a current list
of the Personal Property being attached hereto as Exhibit J;

 

(c)                                  all right, title, and interest of Seller in
and to all leases, rental agreements, licenses, and other similar arrangements
permitting occupancy or use by another of any apartment unit in the
Improvements or any other space or area on the Land or in the Improvements, a
current rent roll as of the date shown thereon being attached hereto as Exhibit B
(the “Rent Roll”) (collectively, “Leases”), all guaranties of Leases,
all rents, revenues, income, profits and receipts due under Leases or otherwise
receivable by the owner of the Property for use or occupancy of any of the
Property, and all security and other deposits and advance payments under Leases
(subject to proration as provided in this Agreement);

 

(d)                                 all right, title, and interest of Seller in
and to all contracts to which Seller is a party relating to the operation,
maintenance, or management of the Property, including any agreements for
electric, gas, telephone, cable television, security alarm monitoring, sewer,
trash collection or similar services, supply contracts, and brokerage and
leasing agreements (collectively, the “Service Contracts”)
to the extent that Service Contracts are assignable without consent, a current
list of Service Contracts being attached hereto as Exhibit F, but
specifically excluding any contract with any affiliate of Seller (which shall
be terminated on or prior to the date of Closing (as hereinafter defined)) and
specifically excluding any contracts terminated by Seller pursuant to Section 5.6;

 

(e)                                  all right, title and interest of Seller in
and to (i) all transferable permits, licenses, approvals, utility rights,
development rights and similar rights related to the Property, if any, whether
granted by governmental authorities or private persons, to the extent that such
transferable permits, licenses, approvals, utility rights, development rights
and similar rights are assignable without consent, (ii) all trademarks,
trade names, or symbols under which the Land or the Improvements (or any part
thereof) is operated including, without limitation, the name of “The Verandah
at Meyerland” and the Internet domain name www.verandahmeyerland.com, (iii) all
telephone numbers serving the Apartment Development, (iv) all of the
right, title, and interest in and to all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications,
engineering plans and studies, floor plans, landscape plans and other plans or
studies of any kind that relate to the Land, the Improvements or the Personal
Property in the possession of or under the control of Seller, and (v) all
assignable warranties and  guaranties covering all or any
part of the Property provided by any person and expressly including any
warranty or guaranty from an affiliate of Seller, if any, (collectively, the “Intangibles”), provided that any
cost to assign or transfer any of the Intangibles shall be paid by Purchaser;
and

 

2

 

(f)                                    all other rights, privileges and
appurtenances owned by Seller directly relating to the above-described
properties.

 

ARTICLE II

 

PURCHASE PRICE

 

2.1                               Price.  In consideration of the covenants herein
contained, Seller hereby agrees to sell and Purchaser hereby agrees to purchase
the Property for a total purchase price of TWENTY-NINE MILLION AND TWO-HUNDRED
THOUSAND DOLLARS ($29,200,000) (the “Purchase Price”), which shall be
paid by Purchaser as follows:

 

2.1.1                     Deposit.  Purchaser has delivered concurrently with its
execution of this Agreement, or will deliver within two (2) business days,
to Escrow Agent by bank wire of immediately available funds the sum of TWO-HUNDRED
THOUSAND  DOLLARS ($200,000)
(the “Deposit”).

 

2.1.2                     Addition
to Deposit.  On or before the
expiration of the Investigation Period (as defined in Section 5.7),
Purchaser shall deliver to Escrow Agent, by bank wire transfer of immediately
available funds, an additional TWO-HUNDRED THOUSAND DOLLARS ($200,000) (the “Additional Funds”), unless
Purchaser shall have terminated this Agreement in accordance with Section 5.7.  The Additional Funds shall be deemed part of
the Deposit, for an aggregate Deposit of four-hundred thousand Dollars
($400,000).  If Purchaser fails to
deliver the Additional Funds to Escrow Agent on or before the expiration of the
Investigation Period (provided Purchaser has not terminated this Agreement in
accordance with Section 5.7), such failure shall be a default under
this Agreement.

 

2.1.3                     Balance
of Purchase Price.  Purchaser
shall, at least one (1) day before the Closing (as defined in Section 6.1),
deliver to Escrow Agent, by bank wire transfer of immediately available funds,
a sum equal to the balance of the Purchase Price, it being understood that
Purchaser shall receive a credit against the Purchase Price in the amount of
the outstanding principal balance of the Loan (as described in Section 2.4
below) as of the date of Closing which shall be $24,000,000, and which
Purchaser shall assume subject to the terms thereof at Closing.  The balance of the Purchase Price received by
Seller at Closing shall be adjusted to reflect prorations and other adjustments
pursuant to Article VII.

 

2.2                               Investments.  Following the collection of the Deposit,
Escrow Agent shall, at the direction of Purchaser, invest the Deposit in:

 

(i)                                     obligations
of the United States government, its agencies or independent departments;

 

(ii)                                  certificates
of deposit issued by a banking institution whose principal office is in New
York City or Houston with assets in excess of $1 billion; or

 

3

 

(iii)                               an interest-bearing
account of a banking institution whose principal office is in New York City or
Houston with assets in excess of $1 billion.

 

No investment of the
Deposit shall have a maturity date beyond the Final Closing Date (as defined in
Section 6.1).

 

2.3                               Interest
on the Deposit.  Any interest
earned on the Deposit shall be credited and delivered to the party entitled to
receive the Deposit, provided, however, that if the transaction
closes, at Closing any interest earned on the Deposit shall be credited to
Purchaser by applying the same against the Purchase Price.

 

2.4                               Existing
Loan.  (a)  Seller has
advised Purchaser that, as of the date of this Agreement, the Property is
encumbered by a lien securing certain indebtedness (the “Loan”),
which indebtedness is more particularly described in that certain Deed of Trust
and Security Agreement given by Seller to Charles E. Odom, as trustee for
Deutsche Banc Mortgage Capital, L.L.C., a Delaware limited liability company,
as beneficiary (the “Original Lender”)
dated as of August 11, 2006 and recorded on August 14, 2006 under
Clerk’s File No. Z524614 of the Official Public Records of Harris County,
Texas, as assigned by Original Lender to Wells Fargo Bank, N.A. as trustee for
the Registered Holders of Banc of America Commercial Mortgage Inc., Commercial
Mortgage Pass-Through Certificates, Series 2006-4 (the “Lender”)  pursuant to
that certain Assignment of Deed of Trust and Security Agreement and Assignment
of Assignment of Leases and Rents by Original Lender in favor of Lender dated
as of August 29, 2006 and recorded on December 29, 2006 under Clerk’s
File No. 20060294331 of the Official Public Records of Harris County,
Texas (collectively, the “Mortgage”)
and the Promissory Note in the original principal amount of $24,000,000 dated
as of August 11, 2006 payable to Original Lender (the “Note” and together with the
Mortgage, collectively the “Loan Documents”).  Provided that Seller and Purchaser obtain the
approval of Lender as herein provided, Purchaser shall assume the Loan at
Closing, subject to the terms and provisions of the Loan Documents.

 

(b)                                  Promptly
after the execution of this Agreement and the delivery to Seller of such
information as is currently available to Purchaser to satisfy the requirements
of Lender with respect to a transfer of the Property, Seller shall deliver to
Lender a loan assumption request together with the applicable application fee
set forth in the Loan Documents. 
Purchaser and Seller shall then use commercially reasonable efforts to
pursue the approval of Lender to the assignment and assumption of the Loan.
Purchaser and Seller hereby agree to cooperate with the other in connection
with the foregoing, including, without limitation, promptly furnishing all
financial and other information reasonably required by Lender in connection
with the foregoing, including without limitation any relating both to Purchaser
and its partners or members, and otherwise satisfying Lender’s transfer
requirements.

 

(c)                                   Purchaser shall have the right to contact Lender directly to discuss the
Loan and the terms of any assumption thereof, provided Purchaser shall use
commercially reasonable efforts to advise Seller of all material matters
(excluding confidential financial information) that Purchaser discusses with
Lender with respect to the assignment and assumption of the Loan.

 

4

 

(d)                                  In
connection with the assumption of the Loan, Purchaser shall be solely
responsible for the payment of any and all Lender application fees, $50,000 of
the Loan assumption fee and other Lender fees and expenses (including Lender
attorneys’ fees), including, without limitation, any portion thereof required
to be paid at the time the request for consent is submitted to Lender, and any
rating agency fees, provided however that Seller shall be obligated to pay
$190,000 of the one percent (1%) Loan assumption fee ($240,000) and all of its
expenses in connection with obtaining Lender Consent, including its own attorney
fees.

 

(e)                                   Seller
and Purchaser shall use commercially reasonable efforts to obtain Lender’s
agreement to the form of Loan Assumption and Consent Agreement in a form that
is satisfactory to Purchaser, Lender and Seller (the “Lender
Consent”).  If Purchaser
and Lender are unable to agree upon an acceptable form of assumption agreement
within thirty (30) days after Purchaser is in receipt of draft loan assumption
documents from the Lender, Purchaser shall notify Seller in writing specifying
the issues with respect to which Purchaser and Lender have failed to agree (the
“Lender Consent Notice”).  Thereafter, Seller and/or Purchaser may
terminate this Agreement by written notice to the other delivered within five (5) business
days after receipt of the Lender Consent Notice, in which event, the
obligations of the parties hereunder shall be null and void and of no further
force and effect except those expressly stated to survive termination of this
Agreement and the Deposit shall be returned to Purchaser, within five (5) business
days after receipt of the termination notice by the non-terminating party.

 

2.5                               Option
Consideration.  Seller hereby acknowledges receipt of the sum of ONE
HUNDRED AND NO/100 DOLLARS ($100.00) cash (the “Option
Consideration”) from Purchaser, as consideration for execution
of this Agreement by Seller. If the purchase and sale of the Property is
consummated pursuant to this Agreement, the Option Consideration shall be
applied toward the cash portion of the Purchase Price paid by Purchaser. If
this Agreement is terminated pursuant to a default by Seller hereunder, the
Option Consideration shall be immediately returned by Seller to Purchaser. If
this Agreement is terminated for any reason other than a default by Seller
hereunder, Seller shall be entitled to retain the Option Consideration.

 

ARTICLE III

 

CONDITIONS TO THE PARTIES’
OBLIGATIONS

 

3.1                               Conditions
to Purchaser’s Obligation to Purchase. 
Purchaser’s obligation to purchase is expressly conditioned upon each of
the following:

 

3.1.1                     Performance
by Seller.  Performance in all
material respects of the obligations and covenants of, and deliveries required
of, Seller hereunder.

 

3.1.2                     Delivery
of Title and Possession. 
Delivery at the Closing of (i) all Closing documents as set
forth in Section 4.2 hereof and (ii) possession as
provided in Section 17.1.

 

3.1.3                     Title
Insurance.  Delivery at the
Closing of the standard current form of Texas Land Title Association (TLTA)
owner’s policy of title insurance (the “Title 

 

5

 

Policy”),
or an irrevocable commitment to issue the same,  with
liability in the amount of the Purchase Price issued by Partners Title Company
as agent for Chicago Title Insurance Company (the “Title
Company”), insuring that good and indefeasible fee title to the
Real Property vests in Purchaser subject to the Permitted Exceptions (as
defined in Section 5.3) and the standard printed exceptions.

 

(i)                                     Purchaser
will procure a commitment for title insurance issued by the Title Company (the “Title Commitment, and all
supporting encumbrance documents (the “Underlying Documents”).

 

(ii)                                  Seller
will pay via a closing adjustment the base premium for the basic cost of the
Title Policy not to exceed $91,577.00. 
At its option, Purchaser may direct the Title Company to issue
additional title insurance endorsements if Purchaser pays for the extra cost of
such additional endorsements, provided that the Title Company’s failure to
issue any such additional endorsements shall not affect Purchaser’s obligations
under this Agreement.

 

3.1.4                     Seller’s
Representations.  The
representations and warranties by Seller set forth in Section 11.1
being true and correct in all material respects as of the Closing except as
modified by notice (in accordance with Section 11.1) to which
Purchaser does not object in writing by the later of (i) three
business days after receipt thereof or (ii) the end of the
Investigation Period.

 

3.1.5                     Loan
Assumption.  Lender’s willingness
to execute and deliver Lender’s Consent .

 

3.2                               Conditions
to Seller’s Obligation to Sell. 
Seller’s obligation to sell is expressly conditioned upon each of the
following:

 

3.2.1                     Performance
by Purchaser.  Performance in all
material respects of the obligations and covenants of, and deliveries required
of, Purchaser hereunder.

 

3.2.2                     Receipt
of Purchase Price.  Receipt of
the Purchase Price and any adjustments due Seller under Article VII
at the Closing in the manner herein provided.

 

3.2.3                     Loan
Assumption.  Purchaser’s
assumption of the Loan in accordance with Section 2.4 hereof and
Purchaser’s satisfaction of all conditions required by Lender in connection
therewith.

 

3.2.4                     Release.
Release of all indemnities from Harry Bookey (the “Guarantor”)
and Seller (collectively, the “Indemnitor”)
with respect to that certain Environmental Indemnity Agreement dated August 11,
2006, by Indemnitor in favor of Original Lender, and the release of Guarantor
from obligations and liability under the Guaranty and Indemnity dated as of August 11,
2006, by Guarantor in favor of Original Lender. 
In addition, Seller’s obligation to sell is conditioned upon Seller’s
receipt from Lender of a release of all of Seller’s obligations under the Loan
Documents accruing on and after the Closing.

 

6

 

ARTICLE IV

 

PURCHASER’S DELIVERIES
AND SELLER’S DELIVERIES TO ESCROW AGENT

 

4.1                               Purchaser’s
Deliveries.  Purchaser shall, at
or before the Closing, deliver to Escrow Agent each of the following:

 

4.1.1                     Purchase
Price.  The balance of the
Purchase Price as set forth in Article II.

 

4.1.2                     Assignment
of Leases and Contracts.  Four (4) executed
counterparts of the Assignment and Assumption of Leases, Contracts and Other
Property Interests (the “Assignment of Leases and
Contracts”) in the form of Exhibit C.

 

4.1.3                     Blanket
Conveyance, Bill of Sale and Assignment.  Four (4) executed counterparts of a
blanket conveyance, bill of sale, and assignment (the “Blanket
Conveyance”) in the form of Exhibit D.

 

4.1.4                     Closing
Statement.  An executed
settlement statement reflecting the prorations and adjustments required under Article VII.

 

4.1.5                     Cash
– Prorations.  The amount, if
any, required of Purchaser under Article VII.

 

4.1.6                     Loan
Assumption.  Such documents as
may reasonably be required by Lender to be executed or delivered by Purchaser
in connection with the assumption by Purchaser of the Loan (the “Purchaser Assumption Documents”).

 

4.2                               Seller’s
Deliveries.  Seller shall, at or
before the Closing, deliver to Escrow Agent each of the following:

 

4.2.1                     Deed.  A special warranty deed (the “Deed”) in the form of Exhibit I
with respect to the Real Property, executed and acknowledged by Seller,
pursuant to which Seller shall convey title to the Real Property subject to the
Permitted Exceptions as defined in Section 5.3 hereof.

 

4.2.2                     Assignment
of Leases and Contracts.  Four (4) executed
counterparts of the Assignment of Leases and Contracts in the form of Exhibit C,
and (whether through the closing escrow or through such other method of
delivery as the parties may establish) original executed Leases (or copies if
originals are not in Seller’s possession) and the Service Contracts which are
to be assumed hereunder pursuant to Section 5.6 hereof.

 

4.2.3                     Blanket
Conveyance, Bill of Sale and Assignment.  Four (4) executed counterparts of the
Blanket Conveyance.

 

4.2.4                     Notices
to Tenants.  A notice signed by
Seller (or Seller’s manager for the Improvements) addressed to the tenants
under the Leases in the form of Exhibit G.

 

7

 

4.2.5                     FIRPTA
Affidavit.  Four (4) executed
copies of an affidavit in the form of Exhibit H with respect to the
Foreign Investment in Real Property Tax Act.

 

4.2.6                     Closing
Statement.  An executed
settlement statement reflecting the prorations and adjustments required under Article VII.

 

4.2.7                     Cash
– Prorations.  The amount, if
any, required of Seller under Article VII.

 

4.2.8                     Loan
Assumption.  Such documents as
may reasonably be required by Lender to be executed or delivered by Seller in
connection with the assumption by Purchaser of the Loan (the “Seller Assumption Documents,”
together with the Purchaser Assumption Documents, the “Assumption
Documents”).

 

4.2.9                     Assignment
of Deed of Trust Escrow Accounts. 
Four (4) executed counterparts of the Assignment of Deed of Trust
Escrow Accounts (the “Assignment of Escrow
Accounts”).

 

4.2.10              Owner’s
Affidavit.  A customary owner’s affidavit (the “Owner’s Affidavit”) in a form
reasonably satisfactory to the Title Company certifying to the Title Company
that there are no unpaid bills or claims relating to the Property as of the
date of Closing except as specified, and whatever documentation may be
reasonably requested or required in order to confirm the proper authority of
Seller to consummate this transaction and to issue the Title Policy.

 

4.3                               Failure
to Deliver.  The failure of
Purchaser or Seller to make any delivery required above by and in accordance
with this Article IV which is not waived by the other party shall
constitute a default hereunder by Purchaser or Seller, as applicable.

 

ARTICLE V

 

INVESTIGATION OF PROPERTY

 

5.1                               Survey.  Seller has, in accordance with Section 5.6
below and as one of the Due Diligence Materials (as defined therein), delivered
to Purchaser an existing survey of the Land and Improvements prepared by Terra
Surveying Co., Inc. (the “Existing Survey”).  Within the Title Review Period (hereinafter
defined), Purchaser, using commercially reasonable efforts, and at its sole
expense, shall cause to be delivered to Seller and Title Company a current plat
of an “as-built” “update” of the Existing Survey in form acceptable to
Purchaser (the “Survey”),
and a field note description thereof, prepared and certified as to all matters
shown thereon by a licensed professional engineer or surveyor acceptable to the
Title Company and in such form and substance sufficient to permit deletion from
the Title Policy of the survey exception except for “shortages in area”.

 

5.2                               Intentionally
Deleted.

 

5.3                               Review
of Survey and Title.  Purchaser shall have a period (the “Title Review  Period”) ending at 5 p.m. Central Standard Time
fifteen (15) days after the Effective Date within 

 

8

 

which
to review the Survey, the Title Commitment, and the Underlying Documents
(collectively, “Title Documents”)
and give Seller written notice of its objection to the condition of title
reflected by the Title Documents (the “Title Objections”).
With regard to any objection so made by Purchaser, Seller shall reasonably
cooperate with Purchaser to remedy such objection, but Seller shall not be
obligated to pay any sum of money or to incur any obligation or liability to
any third party as any inducement to remove an objection to title other than (i) a
voluntary lien against the Property recorded subsequent to the date of the
Title Commitment and consented to by Seller, or (ii) any mechanic’s or
materialman’s lien arising from work contracted for by Seller.  If Seller does not cure such objections or
agree in writing to cure such objections within ten (10) days after
receipt of Purchaser’s written objections (the “Title
Cure Period”), Purchaser may, at its option, (i) waive such
uncured objections and accept such title as Seller can deliver, or (ii) terminate
this Agreement by notice in writing delivered to Seller within five (5) business
days after the end of the Title Cure Period and receive back the Deposit.  In such event, if no termination notice is
given under (ii) above, Purchaser shall be deemed to have waived such
uncured objections and shall accept such title as Seller can deliver.  In the event of such termination, neither
party shall have any further rights or obligations under this Agreement except
for those that expressly survive the termination hereof.  In the event Purchaser fails to furnish
Seller, on or before the end of the Title Review Period, either written notice
that the Survey, the Title Report, and the Underlying Documents are
satisfactory, or written notice of Purchaser objections to the Survey, the
Title Report, and/or the Underlying Documents, Purchaser shall be deemed to
have waived any objection to the Survey, Title Report, and the Underlying
Documents and shall accept such title as Seller can deliver.  In any event, any title matters that Seller does not
expressly agree in writing to cure by written notice to Purchaser or that
Seller is not expressly obligated to cure as provided above and that the Title
Company does not agree to remove shall be “Permitted Exceptions” and deemed
waived by Purchaser if Purchaser does not elect to terminate this Agreement
prior to the expiration of the Title Cure Period.  The term “Permitted
Exceptions” shall mean: the specific exceptions in the Title
Report that the Title Company has not agreed to remove from the Title Report as
of the end of the Title Cure Period and that Seller is not required to remove
as provided above; any other lien, encumbrance, easement or other exception or
matter voluntarily imposed or consented to by Purchaser prior to or as of the
Closing or matters created by, through or under Purchaser; items shown on the
Survey which have not been removed as of the end of the Title Cure Period; real
estate taxes not yet due and payable; rights of tenants under the Leases and
any other leases executed in accordance with this Agreement after the date
hereof, and the rights of tenants thereunder; rights of tenants or licensees
under Service Contracts not terminated as of Closing; all exceptions (including
printed exceptions) to title contained or disclosed in the Title Commitment other
than Title Objections identified and not thereafter waived by Purchaser; all
matters, rights and interests that would be discovered by an inspection or
survey of the Property; and the deed of trust and any other security
instruments securing or evidencing the Loan.

 

5.4                               Inspection
of Property.  Seller, at its
expense, shall deliver or make available to Purchaser copies of all material
documents on the attached list attached hereto as Exhibit K, in
addition to materials and documents previously delivered to Purchaser (together, the “Due
Diligence Materials”) Purchaser and its agents and duly
authorized representatives shall have the right to inspect the condition of the
Land, Improvements and Personal Property and the books and records of Seller
pertaining thereto during reasonable business hours.  Seller hereby agrees 

 

9

 

to
give Purchaser its reasonable cooperation in connection with such inspections,
provided that (i) Purchaser must give Seller twenty-four (24) hours’
prior telephone or written notice of any such inspection or test, and with
respect to any intrusive inspection or test (i.e.,
core sampling) must obtain Seller’s prior written consent (which consent may be
given, withheld or conditioned in Seller’s sole discretion), (ii) prior to
performing any inspection or test, Purchaser must deliver a certificate of
insurance to Seller evidencing that Purchaser and its contractors, agents and
representatives have in place not less than $1,000,000 of comprehensive general
liability insurance (including a contractual liability endorsement insuring
Purchaser’s indemnity obligation under this Agreement) covering any accident or
damage arising in connection with the presence of Purchaser, its contractors,
agents and representatives on the Property, which insurance shall name Seller
and BlackRock Realty Advisors, Inc. (“Advisor”)
as additional insureds thereunder, issued by a licensed company qualified to do
business in the State in which the Property is located, and (iii) all such
tests shall be conducted by Purchaser in compliance with Purchaser’s
responsibilities set forth in Section 5.9 below.  Purchaser shall bear the cost of all such
inspections or tests.

 

5.5                               Operational
Information.  In addition, Seller agrees specifically to
provide upon request of Purchaser or make available to Purchaser (in Seller’s
offices or at the management office of Seller’s local property manager or at
the Property), to the extent in Seller’s possession or control and to the extent
not previously delivered under Section 5.4 above or made available
to Purchaser under Section 5.4 above, the following:

 

5.5.1                     Leases
and Contracts.  Copies of the
Leases and the Contracts.

 

5.5.2                     Plans
and Specifications.  To the
extent in Seller’s possession, copies of all plans and specifications for the
Improvements.

 

5.5.3                     Reports.  To the extent in Seller’s possession, copies
of all environmental reports prepared by third parties.

 

5.5.4                     Permits.  To the extent in Seller’s possession, copies
of all governmental permits, certificates of occupancy and approvals, in each
case regarding the Property.

 

5.5.5                     Loan
Documents.  Copies of the Loan
Documents.

 

5.5.6                     Other.  Such additional customary documentation and
instruments as Purchaser may reasonably request.

 

  If Purchaser terminates this Agreement as set
forth in Section 5.6 below, then the Due Diligence Materials and
all other information, documents and materials furnished by Seller to Purchaser
shall be returned promptly to Seller (which obligation shall survive the
termination of this Agreement).  Purchaser
agrees that, in the exercise of the right of access granted hereby, it will not
unreasonably interfere with or permit unreasonable interference with any person
occupying or providing service at the Property. 
Purchaser agrees that it or its agents will not communicate with any
tenants without the consent of Seller.

 

10

 

5.6                               No
Obligation to Cure.  Nothing contained in this Agreement or
otherwise shall require Seller to render its title marketable or to remove or
correct any exception or matter disapproved by Purchaser or to spend any money
or incur any expense in order to do so except as set forth in Section 5.3
hereof.

 

5.7                               Inspection
Period.  Purchaser shall have until 5 p.m.
Central Standard Time on February 20, 2009 (“Inspection
Period”) within which to review, examine, inspect, test and
satisfy itself as to the condition of the Land, Improvements and Personal
Property and the operational information relating thereto. In the event that
such inspection indicates that the Property is not satisfactory to Purchaser,
in Purchaser’s sole and absolute discretion, Purchaser may terminate this
Agreement by notice in writing delivered to Seller prior to the expiration of
the Inspection Period, in which event the Deposit will be returned to
Purchaser, and neither party shall have any further right or obligation
hereunder other than as set forth herein with respect to rights or obligations
which survive termination.  If this
Agreement is not terminated by written notice to Seller in the manner and
within the time provided in this Section 5.7, Purchaser’s right to
terminate this Agreement pursuant to this Section 5.7 and any and
all objections with respect to the Inspection Period will be deemed to have
been waived by Purchaser for all purposes. 
Except as provided below, Seller shall cause all Service Contracts to be
terminated effective as of or prior to the date of Closing, provided that (i) Seller
shall have no obligation to assign or terminate, and Purchaser shall be
obligated to assume, any Service Contracts which by their terms cannot be
assigned or  terminated without penalty or
payment of a fee and (ii) Seller shall not terminate any Service Contracts
which Purchaser notifies Seller in writing prior to the expiration of the
Inspection Period that it desires to assume. 
At Closing Seller shall assign and Purchaser must assume the obligations
arising from and after the Closing Date under those Service Contracts that
Purchaser is obligated or desires to assume pursuant to this Section 5.7.

 

5.8                               Right
to Audit.  At
Purchaser’s request, at any time before Closing or within one (1) year
after Closing, and without material cost or expense to Seller, Seller shall
provide to Purchaser’s designated independent auditor reasonable access to the
books and records of the Property to the extent in Seller’s possession, and all
related information in Seller’s possession regarding the period for which
Purchaser is required to have the Property audited under the regulations of the
Securities and Exchange Commission,  Purchaser
agrees to indemnify and hold harmless Seller from any claim, damage, loss, or
liability to which Seller is at any time subjected by any person who is not a
party to this Agreement as a result of Seller’s compliance with this paragraph,
except to the extent any such claim, damage, loss or liability arises from
Seller’s fraud or intentional misrepresentation, which indemnification shall
survive the Closing or earlier termination of this Agreement.

 

5.9                               Proprietary
Documents; Confidentiality.  Purchaser acknowledges that the documents and
information provided or made available to Purchaser pursuant to this Agreement,
including without limitation the documents and information described in Sections
5.4 and 5.5 above (collectively, the “Property Documents”)
are proprietary and confidential and will be delivered to Purchaser solely to
assist Purchaser in determining the feasibility of purchasing the
Property.  Purchaser shall not use the
Property Documents for any purpose other than as set forth in the preceding
sentence.  Purchaser shall not disclose
the contents to any person other than to those persons who are responsible for
determining the feasibility of Purchaser’s acquisition of the Property and who
have agreed to preserve the confidentiality of such information as required 

 

11

 

hereby
(collectively, “Permitted Outside Parties”);
provided, however, Purchaser shall disclose only such information to a
particular Permitted Outside Party as is reasonably necessary for that
Permitted Outside Party to perform its role in assisting Purchaser to determine
the feasibility of its acquisition of the Property, and nothing more. Purchaser
shall not divulge the contents of the Property Documents and other information
except in strict accordance with the confidentiality standards set forth in this
Section 5.9.  In permitting
Purchaser to review the Property Documents or any other information, Seller has
not waived any privilege or claim of confidentiality with respect thereto, and
no third party benefits or relationships of any kind, either express or
implied, have been offered, intended or created.  Purchaser shall not at any time issue a press
release or otherwise communicate with media representatives regarding this sale
and purchase unless such release or communication occurs after the Closing, but
in no event shall such press release or media communication include information
regarding the Purchase Price.  Purchaser
shall promptly deliver all Property Documents to Seller in the event that the  Closing does not occur.  This Section 5.9 shall survive
the Closing or termination of this Agreement.

 

5.10                        Purchaser’s
Responsibilities.  In conducting any inspections, investigations
or tests of the Property and/or Property Documents, Purchaser and its agents
and representatives shall:  (i) not
disturb the tenants or interfere with their use of the Property pursuant to
their respective Leases; (ii) not interfere with the operation and
maintenance of the Property; (iii) not damage any part of the Property or
any personal property owned or held by any tenant or any third party; (iv) not
injure or otherwise cause bodily harm to Seller or its agents, guests,
invitees, contractors and employees or any tenants or their guests or invitees;
(v) comply with all applicable laws; (vi) promptly pay when due the
costs of all tests, investigations, and examinations done with regard to the
Property; (vii) allow Seller to have a representative present during any
such inspection or test; (viii) cooperate with any reasonable request by
Seller in connection with the timing of any such inspection or test; (ix) provide
Seller, upon Seller’s request, with a copy of any written inspection or test
report or summary prepared by any third party; (x) not permit any liens to
attach to the Property by reason of the exercise of its rights hereunder;
(xi) not reveal or disclose prior to Closing any information obtained
during the Inspection Period concerning the Property and the Property Documents
to anyone other than the Permitted Outside Parties, in accordance with the
confidentiality standards set forth in Section 5.9 above, or except
as may be otherwise required by law. 
Purchaser agrees at its own expense to promptly repair or restore the
Property, if any inspection or test requires or results in any damage to or
alteration of the condition of the Property, and that the obligations set forth
in this sentence shall survive the Closing or any termination of this
Agreement.

 

5.11                        Purchaser’s
Agreement to Indemnify.  Purchaser hereby agrees to indemnify, defend
and hold harmless Seller, Advisor, and their affiliates, members, partners,
subsidiaries, shareholders, officers, directors and agents from and against any
and all liens, claims, causes of action, damages, liabilities, losses,
injuries, costs, and expenses (including reasonable attorneys’ fees and costs)
arising out of inspections or tests by Purchaser or its employees, consultants,
agents or representatives permitted under this Agreement ; provided, however,
the indemnity shall not extend to protect Seller from any pre-existing liabilities
for matters merely discovered by Purchaser (i.e.,
latent environmental contamination) so long as Purchaser’s actions do not
aggravate any pre-existing liability of Seller. 
Furthermore, Purchaser shall be liable only for direct damages, and not
incidental, consequential or punitive damages (except to the extent 

 

12

 

Seller is liable to third
parties for such incidental, consequential or punitive damages for which
Purchaser shall provide indemnity) and Purchaser shall not be liable for claims
to the extent arising in whole or in part from the negligence of Seller, its
agents, independent contractors, servants and/or employees.  Purchaser’s obligations under this Section 5.11
shall survive the termination of this Agreement and shall survive the Closing.

 

ARTICLE VI

 

THE CLOSING

 

6.1                               Date
and Manner of Closing.  Escrow Agent shall close the escrow (the “Closing”) as soon as all conditions
to closing contained in this Agreement have been satisfied (or deemed satisfied)
or waived in writing which shall in any event be not later than 12:00 noon
Central Standard Time on the date that is ten (10) days after the later of
(i) the expiration of the Investigation Period or (ii) Lender’s
confirmation of its willingness to immediately execute and deliver the Lender
Consent (the “Final Closing Date”), and
thereafter recording and delivering all documents and funds as set forth in Article VIII.  Notwithstanding anything herein to the
contrary, the Final Closing Date shall occur on or before May 1, 2009,
after which date either party shall have the right to terminate this Agreement
by written notice to the other, in which event the Deposit shall be returned to
the Purchaser.

 

ARTICLE VII

 

PRORATION, FEES, COSTS
AND ADJUSTMENTS

 

7.1                               Prorations.  Prior to
the Closing, Seller and Purchaser shall determine the amounts of the prorations
in accordance with this Agreement within no less than two (2) days prior
to Closing.  Purchaser shall review and
approve such determination promptly and prior to the Closing, such approval not
to be unreasonably withheld or delayed. 
Thereafter, Purchaser and Seller shall each inform Escrow Agent of such
amounts.

 

7.1.1                     Certain
Items Prorated.  In accordance
with the notifications, Escrow Agent shall prorate between the parties (and the
parties shall deposit funds therefor with Escrow Agent or shall instruct Escrow
Agent to debit against sums held by Escrow Agent owing to such party), as of
11:59 p.m. the day prior to the Closing, all income and operating expenses
with respect to the Property and payable to or by the owner of the Property,
including, without limitation:  (i) all
real property and personal property taxes and assessments on the basis of the
fiscal period for which assessed (if the Closing shall occur before the tax
rate is fixed, the apportionment of taxes shall be based on the tax rate for
the preceding period applied to the latest assessed valuation  and after the Closing, when the actual real property and
personal property taxes are finally fixed, Seller and Purchaser shall promptly
make a recalculation of such proration, and the appropriate party shall make
the applicable payment reflecting the recalculation to the other party); (ii) rents
and other tenant payments and tenant reimbursements, if any (collectively, “Tenant Payments”), received and
collected under the Leases; (iii) charges for water, sewer,
electricity, gas, fuel and other utility charges, all of which shall be read
promptly 

 

13

 

before
Closing, unless Seller elects to close its own applicable account, in which
event Purchaser shall open its own account and the respective charges shall not
be prorated; (iv) amounts prepaid and amounts accrued but unpaid on
Service Contracts which are to be assumed by Purchaser under the terms hereof;
and (v) periodic fees for licenses, permits or other
authorizations, if any, with respect to the Property.  If such charges, expenses and income are
unavailable at the Closing, a readjustment shall be made within thirty (30)
days after the Closing of these items.

 

7.1.2                     Leasing
Commissions.  At the Closing,
Purchaser and Seller shall prorate, based on the portion of the term of the
applicable Lease occurring before and after the Closing, all leasing
commissions entered into after the end of the Investigation Period, any renewal
or extension of an existing Lease after such date and any new lease referred to
in Section 13.4.

 

7.1.3                     Taxes.

 

(a)                                  Real
property tax refunds and credits received after the Closing which are
attributable to a fiscal tax year prior to the year of Closing shall belong to
Seller.  Any such refunds and credits
attributable to the fiscal tax year during which the Closing occurs shall be
apportioned between Seller and Purchaser after deducting the reasonable
out-of-pocket expenses of collection thereof. 
This apportionment obligation shall survive the Closing.

 

(b)                                 If
any tax appeal or certiorari proceedings shall not have been finally resolved
or settled prior to the Closing and shall relate to the year 2008 or a prior
year, Seller, at its sole cost and expense, shall be entitled to control the
disposition of any such tax appeal or certiorari proceeding and shall be
entitled to any refunds received therefrom. 
With respect to the 2009 tax year, Purchaser shall be entitled to
control any tax protest and any refunds received therefrom, net of any expenses
incurred by Purchaser in connection therewith, shall be prorated between the
parties on the basis of the portions accruing to periods before and after the
Closing.

 

(c)                                  Payment
of rollback taxes that are the result of the change of Purchaser’s use of the
property after Closing that result in the assessment of additional taxes,
penalties or interest (assessment) for periods before Closing shall be the
responsibility of Purchaser

 

7.1.4                     Security
and Other Deposits.  At the
Closing, Seller shall deliver to Purchaser all unapplied refundable security
and pet deposits (plus interest accrued thereon to the extent required to be
paid by the applicable Leases or applicable laws) required to be held by Seller
under the Leases and Purchaser shall pay Seller an amount equal to all utility
and contract deposits then held by third parties with respect to the Property
and transferred to Purchaser hereunder.

 

14

 

7.1.5                     Adjustments.

 

(a)                                  With respect to delinquent rentals and any
other rentals not collected as of the Closing (and thus not prorated as of
Closing), Purchaser shall make a commercially reasonable and customary attempt
to collect the same for Seller’s benefit after the Closing and such collection,
if any, shall be remitted to Seller promptly upon receipt by Purchaser. Nothing
contained herein shall operate to require Purchaser to institute any lawsuit or
other legal collection procedure to collect such delinquent rentals. Purchaser
and Seller agree that any sums received by Purchaser from any tenants after
Closing shall be applied (i) first to rentals due for the month
during which the Closing occurs (and said rentals shall be allocated between
Seller and Purchaser as if same had been prorated at Closing, with the amount
due Seller to be paid to Seller promptly upon receipt by Purchaser), (ii) second,
to current rentals due after the month
in which the Closing occurs, (iii) third, to delinquent rentals owed with
respect to the period after the month in which the Closing occurs, and (iv) fourth,
to delinquent rentals owed with respect to the period prior to Closing,
regardless of the designation of such sums by the tenant. In addition to
Purchaser’s agreement set forth above to pursue delinquent rents for the
benefit of Seller, Seller shall have the right to pursue collection of
delinquent rents, but Seller agrees that it will initiate no suit or legal proceeding
to collect delinquent rents from a tenant so long as they remain a tenant of
the Property.

 

(b)                                 Seller
shall receive a credit for the amount of all reserve escrow accounts under the
Loan to be assigned to Purchaser at the Closing.

 

(c)                                  Purchaser
shall not receive a credit at the Closing for its prorated portion of any bonus
or other up front payment previously made and received by Seller under or in
connection with any Service Contract, including, without limitation, laundry
room leases, security system, internet, satellite and cable TV leases or
contracts entered into prior to Closing.

 

7.1.6                     Insurance.  Seller’s existing liability and property
insurance pertaining to the Property shall be canceled as of the Closing, and
Seller shall receive any premium refund due thereon.

 

7.1.7                     Loan
Escrows and Interest.  In the
event Lender retains any tax, insurance or other escrow amount (including any
amounts which have been funded but held back) and are assigned to Purchaser
pursuant to the Assignment of Escrow Account, the amounts thereof shall be paid
to Seller at Closing.  Any accrued and
unpaid interest on the Loan shall be credited against the Purchase Price.  Seller shall notify Purchaser of such
amounts, if any, no later than five (5) days prior to the Closing.

 

7.1.8                     Survival.  The provisions of this Article VII
shall survive the Closing of this transaction and the payment of any
consideration and the delivery of all closing instruments.

 

15

 

7.2                               Seller’s
Closing Costs.   Seller shall pay (i) 
one-half of Escrow Agent’s escrow fee or escrow termination charge, (ii) the
cost of any update to the Existing Survey of the Property, (iii) $91,577 towards the cost of the base Title
Policy, (iv) all brokerage fees, (v) $190,000 of
the one percent (1%) loan assumption fee of $240,000 (the “Loan
Assumption Fee”), and (vi) Seller’s own attorneys’
fees.  In addition, Seller shall be
responsible for any sales or use taxes imposed, if any, resulting from this
transaction.

 

7.3                               Purchaser’s
Closing Costs.   Purchaser shall pay (i) any
documentary stamp or transfer tax, (ii) one-half of Escrow Agent’s
escrow fee or escrow termination charge, (iii) the cost of any
other title insurance endorsements ordered by Purchaser and any difference in
price between the base title premium for the base Title Policy and $91,577, (iv) any
costs incurred in recording the Deed or any other instruments, (v) any
costs incurred in connection with Purchaser’s investigation of the Property
pursuant to Article V, including the cost of any new environmental
assessment commissioned by Purchaser, (vi) all costs and expenses
of Lender in connection with obtaining Lender Consent as described in Section 2.4(d) hereof,
any rating agency fees and $50,000 of the Loan Assumption Fee, and (vii) Purchaser’s
own attorneys’ fees.

 

ARTICLE VIII

 

DISTRIBUTION OF FUNDS AND
DOCUMENTS

 

8.1                               Delivery
of the Purchase Price.  At the Closing, Escrow Agent shall deliver
the Purchase Price to Seller, and the transaction shall not be considered
closed until such delivery occurs.

 

8.2                               Other
Monetary Disbursements.  Escrow Agent shall, at the Closing, hold for
personal pickup or arrange for wire transfer, (i) to Seller, or
order, as instructed by Seller, all sums and any proration or other credits to
which Seller is entitled and less any appropriate proration or other charges
and (ii) to Purchaser, or order, any excess funds therefore
delivered to Escrow Agent by Purchaser and all sums and any proration or other
credits to which Purchaser is entitled and less any appropriate proration or
other charges.

 

8.3                               Recorded
Documents.  Escrow Agent shall cause the Deed and any
other documents that Seller or Purchaser desires to record to be recorded with
the appropriate county recorder and, after recording, returned to the grantee,
beneficiary or person acquiring rights under said document or for whose benefit
said document was required.

 

8.4                               Documents
to Purchaser.  Escrow Agent shall at the Closing deliver by
overnight express delivery to Purchaser the following:

 

(1)                                  one
conformed copy of the Deed showing all recording data;

(2)                                  two
originals of the Assignment of Leases and Contracts;

(3)                                  two
originals of the Blanket Conveyance;

(4)                                  two
originals of the Assignment of Escrow Accounts;

(5)                                  one
original of the Notice to Tenants;

(6)                                  two
originals of the FIRPTA Affidavit;

(7)                                  one
original of the Closing Statement;

 

16

 

(8)                                  one
original of all Assumption Documents;

(9)                                  one
original of the Title Policy; and

(10)                            one
original of any Owner Affidavit.

 

8.5                               Documents
to Seller.  Escrow Agent shall at the Closing deliver by
overnight express delivery to Seller, the following:

 

(1)                                  one
conformed copy of the Deed showing all recording data;

(2)                                  two
originals of the Assignment of Leases and Contracts;

(3)                                  two
originals of the Blanket Conveyance;

(4)                                  two
originals of the Assignment of Escrow Accounts;

(5)                                  one
copy of the Notice to Tenants;

(6)                                  two
originals of the FIRPTA Affidavit;

(7)                                  one
original of the Closing Statement;

(8)                                  one
copy of all Assumption Documents;

(9)                                  one
copy of the Title Policy; and

(10)                            one
copy of any Owner Affidavit.

 

8.6                               All
Other Documents.  Escrow Agent shall at the Closing deliver by
overnight express delivery, each other document received hereunder by Escrow
Agent to the person acquiring rights under said document or for whose benefit
said document was required.

 

ARTICLE IX

 

RETURN OF DOCUMENTS AND
FUNDS UPON TERMINATION

 

9.1                               Return
of Seller’s Documents.  If escrow or this Agreement is terminated by
Purchaser for any reason, Purchaser shall, within five (5) days
following such termination, deliver to Seller all documents and materials
relating to the Property previously delivered to Purchaser by Seller and copies
of all reports and studies obtained by Purchaser from third parties in
connection with the Property and Purchaser’s investigation thereof.  Such items shall be delivered without
representation or warranty as to accuracy or completeness and with no right of
Seller to rely thereon without the consent of the third party.  Escrow Agent shall deliver all documents and
materials deposited by Seller and then in Escrow Agent’s possession to Seller
and shall destroy any documents executed by both Purchaser and Seller.  Upon delivery by Escrow Agent to Seller (or
such destruction, as applicable) of such documents and materials, Escrow Agent’s
obligations with regard to such documents and materials under this Agreement
shall be deemed fulfilled and Escrow Agent shall have no further liability with
regard to such documents and materials to either Seller or Purchaser.

 

9.2                               Return
of Purchaser’s Documents.  If escrow or this Agreement is terminated by
Seller for any reason, Escrow Agent shall deliver all documents and materials
deposited by Purchaser and then in Escrow Agent’s possession to Purchaser and
shall destroy any documents executed by both Purchaser and Seller. Upon
delivery by Escrow Agent to Purchaser (or such destruction, as applicable) of
such documents and materials, Escrow Agent’s obligations with regard to such
documents and materials under this Agreement shall be deemed fulfilled and 

 

17

 

Escrow Agent shall
have no further liability with regard to such documents and materials to either
Seller or Purchaser.

 

9.3                               Deposit.  If
escrow or this Agreement is terminated (i) pursuant to Section 2.4(e),
Section 5.7, Section 10.2,  Article XII, or Article XIV,
or (ii) due to the failure of a condition set forth in Section 3.1,
then Purchaser shall be entitled to obtain the return of the Deposit pursuant
to Section 9.4 below.  If the
Closing does not take place and escrow or this Agreement is terminated for any
other reason, Seller shall be entitled to the Deposit by retaining or causing
Escrow Agent to deliver the Deposit to Seller pursuant to Section 9.4
below.

 

9.4                               Disbursement
of Deposit.  If Escrow Agent receives a notice from either
party instructing Escrow Agent to deliver the Deposit to such party, Escrow
Agent shall deliver a copy of the notice to the other party within three (3) days
after receipt of the notice.  If the
other party does not object to the delivery of the Deposit as set forth in the
notice within three (3) business days after receipt of the copy of the
notice, Escrow Agent shall, and is hereby authorized to, deliver the Deposit to
the party requesting it pursuant to the notice. 
Any objection hereunder shall be by notice setting forth the nature and
grounds for the objection and shall be sent to Escrow Agent and to the party
requesting the Deposit.

 

9.5                               No
Effect on Rights of Parties; Survival.  The return of documents and monies as set
forth above shall not affect the right of either party to seek such legal or
equitable remedies as such party may have under Article X with respect
to the enforcement of this Agreement. 
The obligations under this Article IX shall survive
termination of this Agreement.

 

ARTICLE X

 

DEFAULT

 

10.1                        Seller’s
Remedies.  If, for any reason whatsoever (other than the
failure of a condition set forth in Section 3.1 and other than a
termination of this Agreement pursuant to Section 2.4(e), Section 5.7,
Section 10.2, Article XII, or Article XIV),
Purchaser fails to complete the acquisition as herein provided, Purchaser shall
be in breach of its obligations hereunder and Seller shall be released from any
further obligations hereunder.  BY
INITIALING BELOW, PURCHASER AND SELLER HEREBY ACKNOWLEDGE AND AGREE THAT SELLER’S
ACTUAL DAMAGES IN THE EVENT OF SUCH A BREACH OF THIS AGREEMENT BY PURCHASER
WOULD BE EXTREMELY DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF THE
DEPOSIT IS THE PARTIES’ BEST AND MOST ACCURATE ESTIMATE OF THE DAMAGES SELLER
WOULD SUFFER IN THE EVENT THE TRANSACTION PROVIDED FOR IN THIS AGREEMENT FAILS
TO CLOSE, AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING
ON THE DATE OF THIS AGREEMENT.  PURCHASER
AND SELLER AGREE THAT SELLER’S RIGHT TO RETAIN THE DEPOSIT SHALL BE THE SOLE
AND EXCLUSIVE REMEDY OF SELLER AT LAW IN THE EVENT OF SUCH A BREACH OF THIS
AGREEMENT BY PURCHASER. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN
THIS SECTION 10.1, IF PURCHASER BRINGS AN ACTION AGAINST SELLER FOR
AN ALLEGED BREACH OR DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER THIS AGREEMENT,
RECORDS A LIS PENDENS OR 

 

18

 

OTHERWISE ENJOINS
OR RESTRICTS SELLER’S ABILITY TO SELL AND TRANSFER THE PROPERTY OR REFUSES TO
CONSENT TO OR INSTRUCT RELEASE OF THE DEPOSIT TO SELLER IF REQUIRED BY ESCROW
AGENT AND SELLER IS ENTITLED THERETO UNDER THE TERMS HEREOF (EACH A “PURCHASER’S ACTION”), SELLER SHALL
NOT BE RESTRICTED BY THE PROVISIONS OF THIS SECTION 10.1 FROM
BRINGING AN ACTION AGAINST PURCHASER SEEKING EXPUNGEMENT OR RELIEF FROM ANY
IMPROPERLY FILED LIS PENDENS, INJUNCTION OR OTHER RESTRAINT, AND/OR RECOVERING
FEES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) WHICH SELLER MAY SUFFER
OR INCUR AS A RESULT OF ANY PURCHASER’S ACTION BUT ONLY TO THE EXTENT THAT
SELLER IS THE PREVAILING PARTY; AND THE AMOUNT OF ANY SUCH FEES, COSTS AND
EXPENSES AWARDED TO SELLER SHALL BE IN ADDITION TO THE LIQUIDATED DAMAGES SET
FORTH HEREIN.  NOTHING IN THIS AGREEMENT
SHALL, HOWEVER, BE DEEMED TO LIMIT PURCHASER’S LIABILITY TO SELLER FOR DAMAGES
OR INJUNCTIVE RELIEF FOR BREACH OF PURCHASER’S INDEMNITY OBLIGATIONS UNDER SECTION 5.11
ABOVE OR FOR ATTORNEYS’ FEES AND COSTS AS PROVIDED IN SECTION 16.5
BELOW.

 

ACCEPTED AND
AGREED TO:

 

	
  /s/ HB

  	
   

  	
  /s/ MA

  
	
  Seller

  	
   

  	
  Purchaser

  

 

10.2                        Purchaser’s
Remedies.  If the sale is not completed as herein
provided solely by reason of any material default of Seller, Purchaser shall be
entitled, as its sole and exclusive remedy, to either (i) (a) terminate
this Agreement (by delivering notice to Seller which includes a waiver of any
right, title or interest of Purchaser in the Property) and (b) if
Purchaser so elects, pursue an action at law for recovery of Purchaser’s actual
out-of-pocket third-party costs incurred as part of Purchaser’s due diligence
efforts and attorney’s fees incurred in connection with the negotiation and
preparation of this Agreement and representation of Purchaser hereunder, up to
but not to exceed $150,000, which action must be commenced, if at all, within
the sixty (60) day period following the occurrence of such material default of
Seller  (the “Limitation
Period”); provided, however, that if, within the
Limitation Period,  Purchaser
gives Seller written notice of such a breach and Seller commences to cure and
thereafter terminates such cure effort, Purchaser shall have an additional
thirty (30) days from the date of such termination within which to commence an
action at law for third-party costs, as aforesaid, as a consequence of Seller’s
failure to cure or (ii) treat this Agreement as being in full force
and effect and pursue only the specific performance of this Agreement, provided
that Purchaser must commence any action for specific performance within sixty
(60) days after the scheduled Final Closing Date.  Purchaser waives any right to pursue any
other remedy at law or equity for such default of Seller, including, without
limitation, any right to seek, claim or obtain damages  (other than for costs under (i)(b) and
(ii) above), punitive damages or consequential damages.  Except as set forth herein and in this
Agreement, in no case shall Seller ever be liable to Purchaser under any
statutory, common law, equitable or other theory of law, either prior to or
following the Closing, for any lost rents, profits, “benefit of the bargain,”
business opportunities or any form of consequential damage in connection with
any claim, liability, demand or cause of action in any 

 

19

 

way or manner
relating to the Property, the condition of the Property, this Agreement, or any
transaction or matter between the parties contemplated hereunder.  Purchaser’s remedies hereunder are in
addition to the right to receive the return of the Deposit, subject to Section 9.4,
to the extent it is not applied to the Purchase Price in connection with
Purchaser’s action for specific performance.

 

ARTICLE XI

 

REPRESENTATIONS
AND WARRANTIES

 

11.1                        Seller’s
Warranties and Representations.  The matters set forth in this Section 11.1
constitute representations and warranties by Seller which are now and (subject
to matters contained in any notice given pursuant to the next succeeding
sentence) shall, in all material respects, at the Closing be true and
correct.  If Seller has actual knowledge
that any of the representations and warranties contained in this Article XI
may cease to be true, Seller shall give prompt notice to Purchaser (which
notice shall include copies of the instrument, correspondence, or document, if
any, upon which Seller’s notice is based). 
As set forth in Section 3.1.4 hereof, the obligation of Purchaser to consummate this
transaction shall be contingent upon the lack of any material variance with
respect to the truth and accuracy of all such representations and warranties to
the extent of Seller’s actual knowledge as of the date scheduled for
Closing.  Otherwise, Purchaser shall have
the right to terminate this Agreement in accordance with Section 3.1.4
hereof.  As used in this Section 11.1,
the phrase “to the extent of Seller’s actual knowledge” shall mean the actual
knowledge of Joe Tortorello, the asset manager of Advisor responsible for the
Property.  There shall be no duty imposed
or implied to investigate, inquire, inspect, or audit any such matters, and
there shall be no personal liability on the part of such asset manager.  To the extent Purchaser has or acquires
actual knowledge or is deemed to know prior to the expiration of the
Investigation Period that these representations and warranties are inaccurate,
untrue or incorrect in any way, such representations and warranties shall be
deemed modified to reflect Purchaser’s knowledge or deemed knowledge.  Purchaser shall be deemed to know a
representation or warranty is untrue, inaccurate or incorrect if this Agreement
or any files, documents, materials, analyses, studies, tests, or reports
disclosed or made available to Purchaser at the office of Seller’s property
manager prior to the expiration of the Investigation Period contains
information which is inconsistent with such representation or warranty.

 

11.1.1              No
Broker.  Seller has not engaged or dealt with any
broker or finder in connection with the sale contemplated by this Agreement,
except Apartment Realty Advisors (the “Seller’s Broker”).  Seller shall pay a brokerage commissions to
the Seller’s Broker in accordance with a separate agreement.  Seller shall indemnify and hold harmless
Purchaser from any claims, costs, damages or liabilities (including attorneys’
fees) arising from any breach of the representation contained in this Section 11.1.1
or if the same shall be based on any statement, representation or agreement by
Seller with respect to the payment of any brokerage commissions or finder’s
fees.

 

11.1.2              Organization. 
Seller has been duly formed, validly exists and is in good standing in
the jurisdiction of its formation and in the state in which the Property is
located.

 

20

 

11.1.3              Power
and Authority.  Seller has the
legal power, right and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.

 

11.1.4              Proceedings.
Seller has not received any written notice of any pending or threatened condemnation
or similar proceeding affecting any part of the Property.

 

11.1.5              Contravention.  Seller is not prohibited from consummating
the transactions contemplated by this Agreement by any law, regulation,
agreement, instrument, restriction, order or judgment.

 

11.1.6              Service
Contracts.  The Service Contracts
listed on Exhibit F comprise all of the material service contracts
which currently affect the Property as of the date hereof.

 

11.1.7              Compliance.  Seller has not received written notice from
any governmental authority that the Property is not in material compliance with
all applicable laws, except for such failures to comply, if any, which have
been remedied.

 

11.1.8              Employees.  Seller has no employees on-site at the
Property providing on-site services to the Property and all such services are
performed by Seller’s third party manager of the Property.

 

11.1.9              Litigation.  To
the extent of Seller’s actual knowledge, there is no legal action, suit,
proceeding or claim affecting Seller or the Land, Improvements or Personal
Property or any portion thereof relating to or arising out of the ownership,
operation, use or occupancy of the Property being prosecuted in any court or by
or before any federal, state, county or municipal department, commission, board,
bureau or agency or other governmental instrumentality.

 

11.1.10       Special
Assessments.  Seller has received
no written notice of any pending improvement liens or special assessments to be
made against the Property by any governmental authority.

 

11.1.11       Leases.  Based on information provided by Seller’s
property manager and to Seller’s actual knowledge, the Rent Roll lists all Leases affecting the Land and Improvements other
than those Leases entered into by Seller subsequent to the Effective Date, and
is the rent roll used in the ordinary course of business, and is true and
correct.

 

11.1.12       No
Contracts.  There are no options,
contracts or other obligations outstanding for the sale, exchange or transfer
of the Property or any portion thereof or the business operated thereon.

 

11.1.13       Environmental
Issues.  Seller has not received any written notice of and has no actual
knowledge that any governmental authority or any employee or agent thereof has
determined, or threatens to determine, that there is a presence, release,
threat of release, placement on or in the Property, of any Pollutants. Seller
has not entered into any agreements with any governmental authority or agency
(federal, state or local) or any tenant or prior owner of the Property or any
owner of any property located near the

 

21

 

Property, relating in any
way to the presence, release, threat of release, placement on or in the
Property, or the generation, transportation, storage, treatment, or disposal at
the Property, of any Pollutants.  For
purposes hereof, “Pollutants” shall mean asbestos, PCB and any substance
that is defined or listed as a hazardous, toxic or dangerous substance under
any existing statute, including, without limitation, any substance that is a “hazardous
substance” under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as the same be further amended, petroleum, natural
gas, natural gas liquids, liquefied natural gas, and synthetic gas usable for
fuel, and any materials regulated by Texas law.

 

11.1.14       PATRIOT
Act.

 

(1)                                  Seller
is in compliance with the requirements of Executive Order No. 133224, 66 Fed. Reg. 49079 (Sept. 25, 2001)
(the “Order”)  and other similar requirements contained in the rules and
regulations of the Office of Foreign Assets Control, Department of the Treasury
(“OFAC”)  and in any enabling legislation or other Executive Orders or
regulations in respect thereof (the Order and such other rules, regulations,
legislation, or orders are collectively called the “Orders”).  Further,
Seller covenants and agrees to make its policies, procedures and practices
regarding compliance with the Orders, if any, available to Purchaser for its
review and inspection during normal business hours and upon reasonable prior
notice.

 

(2)                                  Neither
Seller nor any beneficial owner of Seller:

 

(a)                                  is
listed on the Specially Designated Nationals and Blocked Persons List
maintained by OFAC pursuant to the Order and/or on any other list of terrorists
or terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable Orders (such lists are
collectively referred to as the “Lists”);

 

(b)                                 is
a person or entity who has been determined by competent authority to be subject
to the prohibitions contained in the Orders; or

 

(c)                                  is
owned or controlled by, or acts for or on behalf of, any person or entity on
the Lists or any other person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders.

 

Notwithstanding anything
contained herein to the contrary, for the purposes of this provision, the
phrase “any beneficial owner of Seller” shall not include (x) any holder
of a direct or indirect interest in a publicly traded company whose shares are
listed and traded on a United States national stock exchange, or (y) any
limited partner, unit holder or shareholder owning an interest of five percent (5%)
or less in Seller or in the holder of any direct or indirect interest in
Seller.

 

22

 

11.2                        Purchaser’s
Warranties and Representations. 
The matters set forth in this Section 11.2 constitute
representations, warranties and covenants by Purchaser which are now and shall,
at the Closing, be true and correct.

 

11.2.1              No
Broker.  Except for Seller’s
Broker, Purchaser has not engaged or dealt with any broker or finder in
connection with the sale contemplated by this Agreement.  Purchaser shall indemnify and hold harmless
Seller and Advisor from any claims, costs, damages or liabilities (including
attorneys’ fees) arising from any breach of the representation contained in
this Section 11.2.1 or if the same shall be based on any statement,
representation or agreement by Purchaser with respect to the payment of any
brokerage commissions or finder’s fees.

 

11.2.2              Power
and Authority.  Purchaser has the
legal power, right and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.

 

11.2.3              Independent
Investigation.  The consummation
of this transaction shall constitute Purchaser’s acknowledgment that it has
independently inspected and investigated the Property and, together with the
terms and conditions of this Agreement including Seller’s representations and
warranties under Section 11.1 hereof, has made and entered into
this Agreement based upon such inspection and investigation and its own
examination of the condition of the Property.

 

11.2.4              Purchaser
Reliance.  Purchaser is
experienced in and knowledgeable about the ownership and management of real
estate, and it has relied and will rely exclusively on its own consultants,
advisors, counsel, employees, agents, principals and/or studies, investigations
and/or inspections with respect to the Property, its condition, value and
potential.  Purchaser agrees that,
notwithstanding the fact that it has received certain information from Seller
or its agents or consultants, Purchaser has relied solely upon and will
continue to rely solely upon its own analysis and will not rely on any
information provided by Seller or its agents or consultants, except as
expressly set forth in Section 11.1.

 

11.2.5              ERISA.  Purchaser represents, warrants and covenants
that it is not using the assets of any (i) “employee benefit plan” (within
the meaning of Section 3(3) of 
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) “plan” (within
the meaning of Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended (the “Code”)) or (iii) entity
whose underlying assets include “plan assets” by reason of a plan’s investment
in such entity, to fund its purchase of the Property under this Agreement.

 

11.2.6              PATRIOT
Act.

 

(1)                                  Purchaser
is in compliance with the requirements of the Orders.  Further, Purchaser
covenants and agrees to make its policies, procedures and practices regarding
compliance with the Orders, if any, available to Seller for its review and
inspection during normal business hours and upon reasonable prior notice.

 

23

 

(2)                                  Neither
Purchaser nor any beneficial owner of Purchaser:

 

(a)                                  is
listed on the Lists;

 

(b)                                 is
a person or entity who has been determined by competent authority to be subject
to the prohibitions contained in the Orders; or

 

(c)                                  is
owned or controlled by, or acts for or on behalf of, any person or entity on
the Lists or any other person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Orders.

 

11.2.7              PATRIOT
Act Notice.  Purchaser hereby
covenants and agrees that if Purchaser obtains knowledge that Purchaser or any
of its beneficial owners becomes listed on the Lists or is indicted, arraigned,
or custodially detained on charges involving money laundering or predicate
crimes to money laundering, Purchaser shall immediately notify Seller in
writing, and in such event, Seller shall have the right to terminate this
Agreement without penalty or liability to Purchaser immediately upon delivery
of written notice thereof to Purchaser.

 

11.3                        No
Other Warranties and Representations. 
Except as specifically set forth in this Article XI, neither
Seller nor Advisor has made, makes or has authorized anyone to make, any
warranty or representation as to the Leases, the Service Contracts, any written
materials delivered to Purchaser, the persons preparing such materials, the
truth, accuracy or completeness of such materials, the present or future
physical condition, development potential, zoning, building or land use law or
compliance therewith, the operation, income generated by, or any other matter
or thing affecting or relating to the Property or any matter or thing
pertaining to this Agreement.  Purchaser
expressly acknowledges that no such warranty or representation has been made
and that Purchaser is not relying on any warranty or representation whatsoever
other than as is expressly set forth in this Article XI.  Purchaser shall accept the Property “as is”
and in its condition on the date of Closing subject only to the express
provisions of this Agreement and hereby acknowledges and agrees that EXCEPT AS SET FORTH IN SECTION 11.1 OF THIS AGREEMENT,
SELLER HAS NOT MADE, DOES NOT MAKE AND
SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES OR
GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED,
ORAL OR WRITTEN, PAST, PRESENT, FUTURE OR OTHERWISE, OF, AS TO, CONCERNING OR
WITH RESPECT TO, THE PROPERTY.

 

11.3.1              No
Environmental Representations. 
Except as set forth in Section 11.1.13 hereof, Seller makes
no representations or warranties as to whether the Property contains asbestos,
radon or any hazardous materials or harmful or toxic substances, or pertaining
to the extent, location or nature of same, if any.  Further, to the extent that Seller has
provided to Purchaser information from any inspection, engineering or
environmental reports concerning asbestos, radon or any hazardous materials or
harmful or toxic substances, Seller makes no representations or warranties with
respect to the 

 

24

 

accuracy
or completeness, methodology of preparation or otherwise concerning the
contents of such reports.

 

11.3.2              Release
of Claims.  Subject to the
express provisions hereof and except for the representations and warranties
under Sections 11.1.13 hereof, Purchaser acknowledges and agrees that
Seller makes no representation or warranty as to, and Purchaser, for itself,
its successors and assigns, hereby waives and releases Seller from any present
or future claims, at law or in equity, whether known or unknown, foreseeable or
otherwise, arising from or relating to the presence or alleged presence of
asbestos, radon or any hazardous materials or harmful or toxic substances in,
on, under or about the Property, including without limitation any claims under
or on account of (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as the same may have been or may be
amended from time to time, and similar state statutes, and any regulations
promulgated thereunder, (ii) any other federal, state or local law,
ordinance, rule or regulation, now or hereafter in effect, that deals with
or otherwise in any manner relates to, environmental matters of any kind, (iii) this
Agreement, or (iv) the common law. 
Purchaser hereby specifically acknowledges that Purchaser has carefully
reviewed this Section 11.3.2 and has discussed its import with
legal counsel and that the provisions of this Section 11.3.2 are a
material part of this Agreement.

 

This Section 11.3.2
shall survive the Closing forever.

 

ARTICLE XII

 

CASUALTY AND
CONDEMNATION

 

Promptly upon learning thereof, Seller shall give
Purchaser written notice of any condemnation, damage or destruction of the
Property occurring prior to the Closing. 
If prior to the Closing any portion of the Property is condemned such
that there is a material and adverse effect on use of the Property, or is
materially damaged or destroyed by an insured casualty, Purchaser shall have
the option of either (i) applying the proceeds of any condemnation
award or payment under any insurance policies (other than business interruption
or rental loss insurance applicable to the period prior to Closing) toward the
payment of the Purchase Price to the extent such condemnation awards or
insurance payments have been received by Seller, receiving from Seller an
amount equal to any applicable deductible under any such insurance policy and
receiving an assignment from Seller of Seller’s right, title and interest in
any such awards or payments not theretofore received by Seller (including
business interruption or rental loss insurance of Seller which would be
applicable to any period subsequent to Closing), or (ii) terminating
this Agreement by delivering written notice of such termination to Seller and
Escrow Agent within ten (10) days after Purchaser has received written
notice from Seller of such condemnation or material damage or destruction.  If, prior to the Closing, a portion of the
Property is damaged or destroyed and such portion is not a material portion of
the Property, the proceeds of any condemnation award or payment and any
applicable deductible under any insurance policies shall be applied toward the
payment of the Purchase Price to the extent such condemnation awards or
insurance payments have been received by Seller and Seller shall assign to
Purchaser all of Seller’s right, title and interest in any unpaid awards or
payments.  With respect to option (i) described
above and the preceding sentence as it relates to the requirement 

 

25

 

of Seller to assign to
Purchaser the right to receive insurance awards and payments to be due Seller,
Seller agrees that in the event that Seller’s insurance carrier(s) do not
permit assignment thereof Seller agrees to request from the insurance carrier(s) a
“policy endorsement” whereby Purchaser shall be added as a “loss payee” under
the Purchaser’s policies effective as of the Closing Date.  For purposes of this Article XII,
in defining a casualty, the terms “Material” and “Materially” shall mean damage
valued at greater than $1,000,000.  If
the damage or destruction arises out of an uninsured risk, Seller shall elect,
by written notice within ten (10) days of the occurrence of such damage or
destruction either to terminate this Agreement or to close the transaction
contemplated hereby with a reduction of the Purchase Price equal to the costs
of repairing the Property, as reasonably estimated by an engineer engaged by
Seller and reasonably acceptable to Purchaser.

 

12.1                        Uniform
Vendor and Purchaser Act Not Applicable: It is the express intent of
the parties hereto that the provisions of this Article XII govern
the rights of the parties in the event of damage to or condemnation of the
property and that the Uniform Vendor and Purchaser Act (Section 5.007 of
the Texas Property Code) not apply to this agreement.

 

ARTICLE
XIII

 

CONDUCT
PRIOR TO CLOSING

 

13.1                        Conduct.  From and after the date hereof and through
Closing, Seller covenants and agrees to operate the Property as follows:

 

13.1.1                  Seller will cause the Property to be
maintained and operated in a good and workmanlike manner in accordance with the
manner as is being conducted by Seller at the time of execution hereof, and
will keep the Improvements and Personal Property in good order and operating
condition (reasonable wear and tear and casualty accepted), causing all
necessary repairs, renewals and replacements to be promptly made. Seller will
not knowingly use or occupy the Property in a manner that constitutes waste or
a public or private nuisance or that makes void, voidable or cancelable, or
increases the premium of, any insurance then in force with respect thereto.
Seller will not do any act whereby the value of any part of the Property may be
materially lessened.

 

13.1.2                  Seller will advise Purchaser promptly of any
change in any applicable laws, regulations, restrictions, rulings, or orders
that might affect the value or use of the Property by Purchaser of which Seller
obtains written notice after the Effective Date. Seller will also advise
Purchaser promptly of any litigation, arbitration or administrative hearing
concerning or affecting the Property of which Seller obtains written notice
after the Effective Date.

 

13.1.3                  Without obtaining Purchaser’s prior consent,
which consent will not be unreasonably withheld, Seller will enter into no
lease with respect to any portion of the Property unless such lease is on a
standard form customarily utilized at the Property and is in conformity with
the Seller’s Lease Guidelines; which are attached hereto as Exhibit L.

 

26

 

13.1.4                  Subject to the prorations prescribed herein,
Seller will cause to be paid all trade accounts, costs and expenses of
operation and maintenance of the Property incurred and accruing or due prior to
Closing.

 

13.1.5                  Seller will not knowingly take any action,
which action would have the effect of materially violating any of the Representations
and Warranties of Seller set forth in Section 11.1 of the
Agreement.

 

13.1.6                  Seller will not, without the prior written
consent of Purchaser, remove any equipment forming a part of the Property
except such as is replaced by Seller by an article of substantially equal
suitability and value, free and clear of any lien or security interest.

 

13.1.7                  Intentionally Omitted

 

13.1.8                  Seller will not, without Purchaser’s prior
written consent, enter into any contracts of a continuing nature (or any optional
renewal of Service Contracts) for services, supplies, or materials affecting
the Property that cannot be canceled on thirty (30) days’ notice.

 

13.1.9                  If any apartment unit is vacated more than five (5) business
days prior to Closing, then prior to Closing Seller shall return such unit to
rentable condition in accordance with Seller’s customary cleaning, painting,
and repair standards for vacant units (the condition of such an apartment unit
after cleaning is referred to herein as a “Rent Ready Condition”);
provided if Seller fails to return any such vacated unit to a Rent Ready
Condition prior to Closing, or a unit is vacated within five (5) business
days of Closing and Seller fails to return such unit to rent ready condition by
Closing, then at Closing Seller shall credit Purchaser an amount equal to the
reasonably estimated cost to return such unit to a Rent Ready Condition, up to,
but not to exceed, $500.

 

13.2                        Actions
Prohibited.  Seller shall not,
without the prior written approval of Purchaser:

 

(i)                                     make
any material structural alterations or additions to the Property except as (a) in
the ordinary course of operating the Property, (b) required for
maintenance and repair, (c) required by any of the Leases or the Service
Contracts or (d) required by this Agreement;

 

(ii)                                  sell,
transfer, encumber or change the status of title of all or any portion of the
Property;

 

(iii)                               change
or attempt to change, directly or indirectly, the current zoning of the Real
Property in a manner materially adverse to it; or

 

(iv)                              cancel,
amend or modify, in a manner materially adverse to the Property, any license or
permit held by Seller with respect to the Property or any part thereof which
would be binding upon Purchaser after the Closing.

 

27

 

13.3                        Modification
of Existing Leases and Service Contracts.  Prior to the expiration of the Investigation
Period, Seller may cancel, amend and modify any of the Leases and any of the
Contracts, provided such action is in the ordinary course of business
and notice is given to Purchaser within five (5) business days after such
action and in any event at least two (2) business days prior to the
expiration of the Investigation Period. 
After the expiration of the Investigation Period, Seller may not cancel,
amend, or modify any material Service Contracts (except those Purchaser has
elected to terminate under Section 5.6) or Leases, in a manner
binding upon Purchaser after the Closing, unless such action is in the ordinary
course of business, the Service Contract is cancelable on thirty (30) days or
less notice without penalty or premium, and unless Seller obtains prior written
consent thereof from Purchaser, which consent shall not be unreasonably
withheld.

 

13.4                        New
Leases and Contracts.  Prior to
the expiration of the Investigation Period (and up and until the Closing Date
with respect to new leases), Seller may enter into any new lease or service
contract affecting the Property, or any part thereof, provided such new
lease is in conformity with Seller’s Lease Guidelines or otherwise consented to
in writing by Purchaser and, with respect to service contracts, notice is given
to Purchaser within five (5) business days after such action and in any
event at least two (2) business days prior to the expiration of the
Investigation Period and the service contract is cancelable on thirty (30) days
notice, or less without penalty or premium. 
After the expiration of the Investigation Period, Seller may not enter
into any service contract without Purchaser’s consent, which consent will not
be unreasonably withheld or delayed. 
Notwithstanding the preceding sentence, after the expiration of the
Investigation Period, Seller may enter into any new service contracts without
Purchaser’s consent if doing so is in the ordinary course of operating the
Property and the contract (i) will not be binding on Purchaser
after Closing unless Purchaser elects prior to Closing to assume such service
contract or (ii) is cancelable on thirty (30) days or less notice
without penalty or premium.

 

If Seller shall request Purchaser’s approval to any of
the foregoing matters, Purchaser shall have five (5) days from its receipt
of such request to give Seller notice of its approval or disapproval of such
matter.  If Purchaser does not give such
notice, such matter shall be deemed approved by Purchaser.

 

13.5                        Right
to Cure.  If any title defect or
other  matter which would entitle
Purchaser to terminate this Agreement shall first arise after Purchaser
notifies Seller of its Title Objections pursuant to Section 5.3 and
prior to the Closing or if Seller shall have breached any representation or
warranty hereunder, Seller may elect, by written notice to Purchaser, to cure
such title defect or other matter by causing it to be removed, insured over or
bonded to cure such breach and Seller may adjourn the Closing for up to thirty
(30) days to do so.  Nothing contained in
this Section 13.5 shall require Seller to cure any such title
defect or other matter or to incur any liability or expense to do so.

 

ARTICLE XIV

 

OCCUPANCY CONTINGENCY

 

Anything in this
Agreement to the contrary notwithstanding, it shall be condition 

 

28

 

precedent to Purchaser’s
obligation to close that as of the Closing Date, Actual Occupancy (as defined
below) shall be at least 85.0% (the “Occupancy
Condition”).  If as of the
Closing Date the above Occupancy Condition has not been achieved or exceeded,
then Seller may, at its option by written notice to Purchaser, elect to extend
the Closing Date by thirty (30) days in order to provide more time to achieve
or exceed the Occupancy Condition. If Seller does not elect to extend the
Closing Date, or if Seller extends the Closing Date but the Occupancy Condition
still has not been achieved or exceeded as of the extended Closing Date, then
Purchaser may, at its option, elect either to (i) terminate this
Agreement, whereupon the Deposit will be returned to Purchaser, and
neither party shall have any further right or obligation hereunder other than
as set forth herein with respect to rights or obligations which survive
termination, or (ii) waive the Occupancy Condition and close.  If the Occupancy Condition has not been
achieved or exceeded and Purchaser does not advise Seller in writing of its
election to terminate this Agreement on or before the scheduled Closing Date,
then Purchaser shall be deemed to have elected to waive the Occupancy Condition
and close, whereupon the Closing shall occur on the scheduled Closing Date.

 

In determining whether
the Occupancy Condition has been “exceeded” or “achieved,”  the specific percentage occupancy numbers
shall be rounded up to the nearest whole number if the fractional portion of
said number is equal to or greater than .5 but shall not be rounded down to the
nearest whole number if the fractional portion of said number is less than
..5.  By way of illustration, 84.5% would
be rounded up to 85.0%, but 84.4% would not be rounded down to 84.0%.

 

As used herein, the term “Actual Occupancy” shall mean, with
respect to all apartment units on the Property (except for the model unit), the
percentage of said units for which a leasehold tenancy exists pursuant to a
lease signed by both landlord and tenant (regardless of whether the tenant has
taken physical occupancy or commenced payment of rent) but shall be reduced  based on move-out notices received
by Seller as of the Closing Date.

 

ARTICLE XV

 

NOTICES

 

All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly delivered (i) upon
the delivery (or refusal to accept delivery) by messenger or overnight express
delivery service (or, if such date is not on a business day, on the business
day next following such date), or (ii) on the third (3rd) business
day next following the date of its mailing by certified mail, postage prepaid,
at a post office maintained by the United States Postal Service, or (iii) upon
the receipt by facsimile transmission as evidenced by a receipt transmission
report (followed by next day delivery by one of the other means identified in (i)-(ii)),
addressed as follows:

 

29

 

If to
Purchaser, to:

 

Harvard
Property Trust, LLC

Attn: Mark T. Alfieri, Senior Vice President

15601 Dallas Parkway, #600

Addison, Texas 75001

Facsimile:  (214) 655-1610

 

with a
copy to:

 

Robert L. Abbott, P.C.

Attn:  Robert L. Abbott

2828 Routh Street, Suite 500

Dallas, Texas 75201

Facsimile:  (214) 848-9823

 

If to
Seller, to:

 

Verandah
Owner Limited Partnership

c/o BH Equities, L.L.C.

400 Locust Street, Suite 790

Des Moines, Iowa 50309

Attention: Nicholas Roby, Esq.

Facsimile: (515) 244-2742

 

with a
copy to:

 

c/o BlackRock Realty
Advisors, Inc.

300 Campus Drive, 3rd Floor,

Florham Park, New Jersey 07932

Attention: Mario Mirabelli, Vice President

Facsimile: (646) 521-4990

 

and

 

Diamond Verandah LLC

c/o BlackRock Realty Advisors, Inc.

300 Campus Drive, 3rd Floor,

Florham Park, New Jersey 07932

Attention: Jeremy Litt, Esq.

Facsimile: (646)
521-4998

 

and

 

30

 

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts  02109

Attention:  Lawrence R. Cahill, Esq.

Facsimile:  (617) 227-8591

 

If to Escrow Agent, to:

 

Partners Title Company

712 Main Street, Suite 2000E

Houston, Texas 77002-3218

Attention:  Reno Hartfiel,
Executive VP / General Counsel

Facsimile: (713) 238-9199

 

Either party may, by
notice given as aforesaid, change the address or addresses, or designate an
additional address or additional addresses, for its notices, provided, however,
that no notice of a change of address shall be effective until actual receipt
of such notice.

 

ARTICLE XVI

 

TRANSFER OF POSSESSION

 

16.1                        Transfer
of Possession.  Possession of the
Property shall be transferred to Purchaser at the time of Closing subject to
the Permitted Exceptions.

 

16.2                        Delivery
of Documents at Closing.  At the
time of Closing, Seller shall deliver to Purchaser originals or copies of any
additional documents, instruments or records in the possession of Seller or its
agents which are necessary for the ownership and operation of the Property.

 

ARTICLE
XVII

 

GENERAL
PROVISIONS

 

17.1                        Captions.  Captions in this Agreement are inserted for
convenience of reference only and do not define, describe or limit the scope or
the intent of this Agreement or any of the terms hereof.

 

17.2                        Exhibits.  All exhibits referred to herein and attached
hereto are a part hereof.

 

17.3                        Entire
Agreement.  This Agreement
contains the entire agreement between the parties relating to the transaction
contemplated hereby and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged
herein.

 

31

 

17.4                        Modification.  No modification, waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and
signed by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is or may be sought.

 

17.5                        Attorneys’
Fees.  Should any party hereto
employ an attorney for the purpose of enforcing or construing this Agreement,
or any judgment based on this Agreement, in any legal proceeding whatsoever,
including insolvency, bankruptcy, arbitration, declaratory relief or other
litigation, the prevailing party shall be entitled to receive from the other
party or parties thereto reimbursement for all reasonable attorneys’ fees and
all costs, whether incurred at the trial or appellate level, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees and the cost of any bonds, whether
taxable or not, and such reimbursement shall be included in any judgment,
decree or final order issued in that proceeding.  The “prevailing party” means the party in
whose favor a judgment, decree, or final order is rendered.

 

17.6                        Governing
Law.  This Agreement shall be
construed and enforced in accordance with the laws of the State in which the
Property is located.

 

17.7                        Time of
Essence.  Time is of the essence
to this Agreement and to all dates and time periods set forth herein.

 

17.8                        Survival
of Warranties.  Only those warranties
and representations contained in Sections 11.1 and 11.2 and
the provisions of Section 11.3 shall survive the Closing, the
delivery of the Deed and the payment of the Purchase Price, provided
that (i) such representations and warranties (but not such provisions)
shall cease and terminate nine (9) months after the date of Closing,
except in respect of any representation or warranty as to which Purchaser or
Seller, as the case may be, shall have commenced, on or before such nine (9) month
anniversary, a legal proceeding based on the breach thereof as of the date of
Closing, and then only for so long as such proceeding shall continue and
limited to the breach therein claimed, (ii) Seller shall have no
liability to Purchaser with respect thereto unless and until the damages
suffered by Purchaser as a result thereof shall equal or exceed $25,000 in the
aggregate, and (iii) the maximum total liability for which Seller
shall be responsible with respect to all representations and warranties shall
not exceed the Maximum Liability Cap in the aggregate.  Unless otherwise expressly herein stated to
survive, all other representations, covenants, indemnities, conditions and
agreements contained herein shall merge into and be superseded by the various
documents executed and delivered at Closing and shall not survive the
Closing.  Seller shall have no liability
to Purchaser after Closing for any matter disclosed by Seller pursuant to the
terms of this Agreement or disclosed to Purchaser prior to Closing.

 

17.9                        Assignment
by Purchaser.  Purchaser may not
assign its rights under this Agreement.  Notwithstanding the foregoing,
Purchaser may upon written notice to Seller assign its rights under this
Agreement to (a) any affiliate of Purchaser, or (b) any entity in
which Purchaser, or the principals thereof, have control as defined herein, provided that  in each instance’ Purchaser
remains liable for Purchasers obligations hereunder.  For purposes
of this Section 16.9, an “affiliate” means (i) any entity that
controls, is controlled by, or is under common control, with the entity in
question, or (ii) any investment program or any of its affiliates,
sponsored by Behringer Harvard Holdings, LLC, the general partner of
Purchaser.  The 

 

32

 

term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of an entity, whether through the
ownership of voting securities or otherwise

 

17.10                 Severability.  If any term, covenant, condition, provision
or agreement herein contained is held to be invalid, void or otherwise
unenforceable by any court of competent jurisdiction, the fact that such term,
covenant, condition, provision or agreement is invalid, void or otherwise unenforceable
shall in no way affect the validity or enforceability of any other term,
covenant, condition, provision or agreement herein contained.

 

17.11                 Successors and
Assigns.  All terms of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by,
the parties hereto and their respective legal representatives, successors and
assigns (subject to Section 16.9).

 

17.12                 Interpretation.  Seller and Purchaser acknowledge each to the
other that both they and their counsel have reviewed and revised this Agreement
and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or exhibits hereto.

 

17.13                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed an original; such
counterparts shall together constitute but one agreement.

 

17.14                 Recordation.  This Agreement may not be recorded and any
attempt to do so shall be of no effect whatsoever.

 

17.15                 Limitation on
Liability.  In any action brought
to enforce the obligations of Seller under this Agreement or any other document
delivered in connection herewith, the judgment or decree shall be subject to
the provisions of Section 16.8 and shall, otherwise in any event,
be enforceable against Seller only up to an amount not to exceed 2.5% of the
Purchase Price (“Maximum Liability Cap”).  In connection with this Agreement, Advisor is
acting as the investment adviser to Seller and shall not have any individual
liability hereunder. No shareholder, officer, employee or agent of or
consultant to Advisor or of or to Seller shall be held to any personal
liability hereunder, and no resort shall be had to their property or assets, or
the property or assets of Advisor for the satisfaction of any claims hereunder
or in connection with the affairs of Advisor. 
Furthermore, Seller’s liability under this Agreement is explicitly
limited to Seller’s interest in the Property, including any proceeds
thereof.  Purchaser shall have no
recourse against any other property or assets of Seller, if any, any assets of
the Advisor, or to any of the past, present or future, direct or indirect,
shareholders, partners, members, managers, principals, directors, officers,
agents, incorporators, affiliates or representatives of Seller or the Advisor
(collectively, “Seller Parties”)
or of any of the assets or property of any of the Seller Parties for the
payment or collection of any amount, judgment, judicial process, arbitral
award, fee or cost or for any other obligation or claim arising out of or based
upon this Agreement and requiring the payment of money by Seller.  Except as otherwise expressly set forth in
this Agreement, neither Seller nor any Seller Party shall be subject to levy,
lien, execution, attachment or other enforcement procedure for the satisfaction
of any of Purchaser’s rights or remedies under or with respect to this
Agreement, at law, in equity or otherwise. 
Purchaser shall 

 

33

 

not seek
enforcement of any judgment, award, right or remedy against any property or
asset of Seller or any Seller Parties other than Seller’s interest in the
Property or any proceeds thereof.  The
provisions of this Section shall survive the termination of this
Agreement.

 

17.16                 Possession of
Advisor.  As used in this
Agreement, the “possession” or “receipt” of a document, notice or similar
writing by Seller shall be deemed to be only the possession, receipt or notice
of such document by Advisor.

 

17.17                 Business Day.  As used in this Agreement, “business day”
shall be deemed to be any day other than a day on which banks in the state of
Texas shall be permitted or required to close.

 

17.18                 Waiver of Jury
Trial.  PURCHASER AND SELLER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR
RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT
LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT OR ANY CLAIMS OR
DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE
VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO ENTER
INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS TO BE DELIVERED BY PURCHASER
AT CLOSING, AND SHALL SURVIVE THE CLOSING OR TERMINATION OF THIS
AGREEMENT.  Each party hereby authorizes
and empowers the other to file this Section 16.18 and this
Agreement with the clerk or judge of any court of competent jurisdiction as a
written consent to waiver of jury trial.

 

ARTICLE XVIII

 

ESCROW AGENT DUTIES AND
DISPUTES

 

18.1                        Other
Duties of Escrow Agent.  Escrow
Agent shall not be bound in any way by any other agreement or contract between
Seller and Purchaser, whether or not Escrow Agent has knowledge thereof.  Escrow Agent’s only duties and
responsibilities with respect to the Deposit shall be to hold the Deposit and
other documents delivered to it as agent and to dispose of the Deposit and such
documents in accordance with the terms of this Agreement.  Without limiting the generality of the
foregoing, Escrow Agent shall have no responsibility to protect the Deposit and
shall not be responsible for any failure to demand, collect or enforce any
obligation with respect to the Deposit or for any diminution in value of the
Deposit from any cause, other than Escrow Agent’s gross negligence or willful
misconduct.  In the event of any dispute
hereunder, Escrow Agent may, at the expense of Seller and Purchaser, consult
with counsel and accountants in connection with its duties under this
Agreement.  Escrow Agent shall not be
liable to the parties hereto for any act taken, suffered or permitted by it in
good faith in accordance with the advice of counsel and accountants.  Escrow Agent shall not be obligated to take
any action hereunder that may, in its reasonable judgment, result in any
liability to it unless Escrow Agent 

 

34

 

shall have been
furnished with reasonable indemnity satisfactory in amount, form and substance
to Escrow Agent.

 

18.2                        Disputes.  Escrow Agent is acting as a stakeholder only
with respect to the Deposit.  If there is
any dispute as to whether Escrow Agent is obligated to deliver the Deposit or
as to whom the Deposit is to be delivered, Escrow Agent shall not make any
delivery, but shall hold the Deposit until receipt by Escrow Agent of an
authorization in writing, signed by all the parties having an interest in the
dispute, directing the disposition of the Deposit, or, in the absence of
authorization, Escrow Agent shall hold the Deposit until the final
determination of the rights of the parties in an appropriate proceeding.  Escrow Agent shall have no responsibility to
determine the authenticity or validity of any notice, instruction, instrument,
document or other item delivered to it, and it shall be fully protected in
acting in accordance with any written notice, direction or instruction given to
it under this Agreement and believed by it to be authentic.  If written authorization is not given, or
proceedings for a determination are not begun, within thirty (30) days after
the date scheduled for the closing of title and diligently continued, Escrow
Agent may, but is not required to, bring an appropriate action or proceeding
for leave to deposit the Deposit with a court of the State of Texas pending a
determination.  Escrow Agent shall be
reimbursed for all costs and expenses of any action or proceeding, including,
without limitation, attorneys’ fees and disbursements incurred in its capacity
as Escrow Agent, by the party determined not to be entitled to the
Deposit.  Upon making delivery of the
Deposit in the manner provided in this Agreement, Escrow Agent shall have no
further liability hereunder.  In no event
shall Escrow Agent be under any duty to institute, defend or participate in any
proceeding that may arise between Seller and Purchaser in connection with the
Deposit.

 

18.3                        Reports.  Escrow Agent shall be responsible for the
timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of
the Internal Revenue Code of 1986 (and any similar reports or returns required
under any state or local laws) in connection with the closing of the
transaction contemplated by this Agreement.

 

[Remainder of Page Intentionally
Left Blank]

 

35

 

IN WITNESS WHEREOF,
this Agreement has been executed as of the date first set forth above.

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  VERANDAH OWNER LIMITED
  PARTNERSHIP,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability
  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Harry Bookey

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  HARVARD PROPERTY TRUST, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
   

  	
   

  	
  Mark T. Alfieri, Senior Vice President

  

 

36

 

CONSENT
AND AGREEMENT OF ESCROW AGENT

 

The undersigned Escrow Agent hereby agrees to (i) accept
the foregoing Agreement, (ii) be escrow agent under said Agreement,
and (iii) be bound by said Agreement in the performance of its
duties as escrow agent.

 

	
   

  	
  PARTNERS TITLE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Reno Hartfiel

  
	
   

  	
   

  	
  Name: Reno Hartfiel

  
	
   

  	
   

  	
  Title:   Executive Vice
  President & General Counsel

  

 

1

 

EXHIBIT A

 

Description
of Land

 

Being a tract or parcel containing 5.313 acres
(231,427 square feet) of land situated in the James D. Owen Survey, Abstract
Number 612; being out of and a part of Unrestricted Block 7, of MEYER PARK, SECTION 2,
a subdivision plat of record in Volume 142, Page 30, Harris County Map
Records; and being out of and a part of that certain tract of land (Tract One)
conveyed to Aramco Services Company as described in deed recorded under Harris
County Clerk’s File (H.C.C.F.) Number H104446, Harris County, Texas; and being
that certain called 5.313 acre tract conveyed to Verandah IH-610, L.P. as
described in deed recorded under H.C.C.F. number W636306; and said 5.313 acre
tract being more particularly described by metes and bounds as follows
(bearings are oriented to said record plat):

 

BEGINNING at 1-inch iron rod found in the north
right-of-way (R.O.W.) line of Braeswood Boulevard (100 feet wide) and marking
the most southerly southwest corner of the aforesaid Block 7 and the herein
described tract;

 

THENCE, North 06°18’24” West, along a southwest line
of said Block 7, a distance of 150.00 feet to an interior corner of said Block
and the herein described tract, from which a found 1-inch iron rod bears South
60°43’ West, 0.26 feet;

 

THENCE, South 71°35’50” West, along a southwest line
of said Block 7, a distance of 150.00 feet to the curved east R.O.W. line of
Interstate Highway 610 (West Loop South) (Width Varies) for the most westerly
southwest corner of said Block 7 and the herein described tract and for a point
of tangency of a non-tangent curve to the right, from which a found 1-inch iron
rod bears North 66°35’ West, 0.36 feet;

 

THENCE, Northerly, an arc distance of 288.32 feet
along said east R.O.W. line and the west line of said Block 7 and along said
curve to the right, having a central angle of 01°26’45”, a radius of 11,425.80
feet and a chord which bears North 05°14’26” West, 288.31 feet to a 5/8-inch
iron rod with plastic cap stamped “Terra Surveying” set marking the northwest
corner of the herein described tract;

 

THENCE, departing said east R.O.W. line and over and
across the aforesaid Aramco Services Company tract, the following courses and
distances:

 

North 89°49’01” East, a distance of 86.98 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

South 45°41’49” East, a distance of 14.27 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 89°49’01” East, a distance of 34.78 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 44°49’01” East, a distance of 14.14 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

1

 

North 89°49’01” East, a distance of 215.65 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 44°49’01” East, a distance of 52.57 feet to an “X” set in
concrete for an interior corner of the herein described tract;

 

North 89°49’01” East, a distance of 396.89 feet to “X” set in concrete
set in the curved west R.O.W. line of Meyer Park Drive (60 feet wide) and the
east line of the aforesaid Block 7 and marking a point of curvature of a
non-tangent curve to the left and the northeast corner of the herein described
tract;

 

THENCE, Southerly, an arc distance of 170.01 feet
along said west R.O.W. line and the east line of said Block 7 and along said
curve to the left, having a central angle of 10°49’14”, a radius of 900.22 feet
and a chord which bears South 16°02’49” East, 169.76 feet to the most northerly
end of a cutback-line for the most easterly southeast corner of said Block 7
and the herein described tract, from which a found 5/8-inch iron rod bears
South 05°53’ East, 0.17 feet;

 

THENCE, South 23°32’34” West, along said cutback-line,
a distance of 14.16 feet to the aforesaid north R.O.W. line of Braeswood
Boulevard for the most southerly southeast corner of said Block 7 and the
herein described tract, from which a found 5/8-inch iron rod bears South 16°31’
East, 0.65 feet;

 

THENCE, South 68°32’34” West, along the common line of
said north R.O.W. line and the south line of said Block 7, a distance of 435.95
feet to a point of curvature of a tangent curve to the right, from which a
found 5/8-inch iron rod bears South 19°40’ West, 0.22 feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the right, having a central
angle of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of reverse curvature for a tangent curve
to the left, from which a found 5/8-inch iron rod bears South 62°55’ West, 0.20
feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the left, having a central
angle, of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of tangency, from which a found 5/8-inch
iron rod bears South 09°03’ East, 0.55 feet;

 

THENCE, South 68°32’34” West, continuing along said
common line, a distance of 45.05 feet to the POINT OF BEGINNING and containing
5.313 acres (231,427 square feet) of land. 
This description is based on the Land Title Survey and plat made by
Terra Surveying Company, Inc., dated July 1, 2002, latest revision
dated April 27, 2005.  TSC Project
Number 0038-0101-S.

 

2

 

EXHIBIT B

 

Rent Roll

 

 

EXHIBIT C

 

ASSIGNMENT OF TENANT LEASES AND ASSUMPTION AGREEMENT

(The Verandah at Meyerland Apartments, Houston,
Texas)

 

THIS
ASSIGNMENT OF TENANT LEASES AND ASSUMPTION AGREEMENT is made as of the
           day
of               ,
2009, by and between VERANDAH OWNER LIMITED
PARTNERSHIP, a Delaware limited partnership (“Assignor”), and
                                                      ,
a
                  
limited partnership (“Assignee”).

 

W I T N E S S E T H:

 

For good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged,
Assignor and Assignee hereby agree as follows:

 

1.                                       Assignor
hereby sells, transfers, assigns and conveys to Assignee all right, title and
interest of Assignor in and to all leases,
rental agreements, licenses, and other similar arrangements permitting
occupancy or use by another of any apartment unit in the Improvements or any
other space or area on the Land or in the Improvements, including, without
limitation, each of the leases
described on the rent roll attached hereto as Exhibit B-1, which
Assignor represents that, based on information provided by Assignor’s property
manager and to Assignor’s knowledge (as defined in that certain Sale, Purchase
and Escrow Agreement dated                       ,
2009 (the “Sale Agreement”), by and between Assignor, as Seller, and
Harvard Property Trust, LLC, as Purchaser, whose rights thereunder have been
assigned to Assignee), that certain Sale, Purchase and Escrow Agreement among
Assignor, Assignee and Partners Title Company) , is true, complete and correct,
along with the leases, agreements and/or licenses identified in Exhibit B-2
attached hereto (collectively, the “Leases”), along with Assignee’s
right, title and interest in and to all
guaranties of Leases, all rents, revenues, income, profits and receipts due
under Leases or otherwise receivable by the owner of the Land and Improvements
for use or occupancy of any of the Land or Improvements, and all security and
other deposits and advance payments under Leases (subject to proration and/or
retention by Assignor as provided in the Purchase Agreement) to the extent
assignable.  As used herein, the term “Land”
shall mean the land situated in Harris County, Texas, more particularly
described in Exhibit A attached hereto (the “Land”), and the
term “Improvements” shall mean the all structures, fixtures, buildings,
and improvements situated on the Land.

 

2.                                       This Assignment of Tenant Leases and
Assumption Agreement shall be construed and enforced in accordance with the
laws of the State of Texas.

 

3.                                       Consistent with the Purchase Agreement, which
is hereby incorporated by reference as if herein set out in full and except as
set forth herein, the Leases conveyed hereunder are conveyed by Assignor and accepted
by Assignee WITHOUT ANY REPRESENTATION OR
WARRANTIES OF WHATSOEVER NATURE, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET
FORTH HEREIN OR IN THE PURCHASE AGREEMENT.

 

4.                                       Assignee hereby accepts the assignment of the
Leases and agrees to assume and discharge, in accordance with the terms
thereof, all of the obligations thereunder from and after the date hereof.

 

5.                                       Assignee agrees to indemnify and hold
harmless Assignor from any cost, liability,

 

 

damage
or expense (including attorneys’ fees) arising out of or relating to Assignee’s
failure to perform any of the foregoing obligations accruing on or after the
date hereof.

 

6.                                       Assignor agrees to indemnify and hold
harmless Assignee from any cost, liability, damage or expense (including
attorneys’ fees) arising out of or relating to Assignor’s failure to perform
any of the obligations of Assignor under the Leases, to the extent accruing
prior to the date hereof.

 

7.                                       This Assignment and Assumption may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.

 

[Signature pages immediately follow.]

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Assignment of Tenant Leases and Assumption
Agreement as of the date first above written.

 

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  VERANDAH OWNER LIMITED PARTNERSHIP, a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability
  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
  Title: Manager

  

 

 

	
  THE STATE OF

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF

  	
   

  	
  §

  
				

 

This
instrument was acknowledged before me on this
           day of                                 ,
2009, by Harry Bookey, the Manager of BH Equities L.L.C., an Iowa limited
liability company, the managing member of BH Verandah, L.L.C., an Iowa limited
liability company, the general partner of Houston Verandah Investor Limited
Partnership, a Delaware limited partnership, the general partner of Verandah
Owner Limited Partnership, a Delaware limited partnership, on behalf of said
limited liability company and limited partnership.

 

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC in and for
  the

  
	
   

  	
  State of 

  	
   

  
	
  My Commission Expires:

  	
  Printed Name of Notary: 

  	
   

  
	
   

  	
   

  
				

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Assignment of Tenant Leases and Assumption
Agreement as of the date first above written.

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
  [PURCHASER ENTITY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE STATE OF

  	
   

  	
  §

  
	
   

  	
  §

  
	
  COUNTY OF

  	
   

  	
  §

  
							

 

This
instrument was acknowledged before me on this
           day of                                ,
2009, by
                                                        ,
                                                  
of                                         
                                          , on behalf of said limited partnership.

 

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC in and for
  the

  
	
   

  	
  State of 

  	
   

  
	
  My Commission Expires:

  	
  Printed Name of Notary: 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Leases

  	
   

  
	
  Exhibit B

  	
  Real Property

  	
   

  
					

 

 

EXHIBIT D

 

Form of
Blanket Conveyance, Bill of Sale and Assignment

(The
Verandah at Meyerland Apartments, Houston, Texas)

 

THIS BLANKET
CONVEYANCE, BILL OF SALE AND ASSIGNMENT is made as of the
           day of                         ,
2009, by and between VERANDAH OWNER LIMITED
PARTNERSHIP, a Delaware limited partnership (“Assignor”), and
                                                                      ,
a
                                             (“Assignee”).

 

W I T N E S S E T H:

 

For good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged Assignor and Assignee hereby  agree
as follows:

 

1.                                       Assignor
hereby sells, transfers, assigns and conveys to Assignee the following:

 

a.                                       All
right, title and interest of Assignor in and to all equipment, fixtures, appliances, inventory, and other personal
property of whatever kind or character owned by Assignor and attached to or
installed or located on or in the Land or the Improvements (defined below),
including, without limitation, furniture, furnishings, drapes and floor
coverings, office equipment and supplies, heating, lighting, refrigeration,
plumbing, ventilating, incinerating, cooking, laundry, communication,
electrical, dishwashing, and air conditioning equipment, disposals, window
screens, storm windows, recreational equipment, pool equipment, patio
furniture, sprinklers, hoses, tools and lawn equipment, and specifically
including, without limitation, the items listed on Exhibit B
attached hereto to the extent attached
to or installed or located on or in the Land or the Improvements (defined
below)  (the “Personal Property”).  As used herein, the term “Land” shall
mean the land situated in Harris County, Texas, more particularly described in Exhibit A
attached hereto (the “Land”), and the term “Improvements” shall
mean the all structures, fixtures, buildings, and improvements situated on the
Land.

 

b.                                      All right, title, and interest of Assignor in
and to those contracts and agreements described on Exhibit C
attached hereto (collectively, the “Service Contracts”).

 

c.                                       All right, title and interest of Assignor in
and to (i) all transferable permits, licenses, approvals, utility rights,
development rights and similar rights related to the Property, if any, whether
granted by governmental authorities or private persons, (ii) all
trademarks, trade names, or symbols under which the Land or the Improvements
(or any part thereof) is operated including, without limitation, the name of “The
Verandah at Meyerland” and the Internet domain name “                                              ,”
(iii) all telephone numbers serving the Apartment Development (as defined
in the Purchase Agreement), and (iv) all of the right, title, and interest
in and to all site plans, surveys, soil and substrata studies, architectural
drawings, plans and specifications, engineering plans and studies, floor plans,
landscape plans and other plans or studies of any kind that relate to the Land,
the Improvements or the Personal Property in the possession of or under the
control of Assignor (collectively, the “Intangibles”), provided that any
cost to assign or transfer any of the Intangibles shall be paid by Assignee.

 

2.                                       This
Blanket Conveyance, Bill of Sale and Assignment is given pursuant to that
certain Sale, Purchase and Escrow Agreement dated                                by
and between Assignor and Assignee (the “Purchase Agreement”), providing
for, among other things, the conveyance of the Personal Property, 

 

 

the Service Contracts,
and the Intangibles.

 

3.                                       Consistent
with the Purchase Agreement, which is hereby incorporated by reference, the
property conveyed hereunder is conveyed by Assignor and accepted by Assignee AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF
WHATSOEVER NATURE, EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY SET FORTH IN THE
PURCHASE AGREEMENT, IT BEING THE INTENTION OF ASSIGNOR AND ASSIGNEE EXPRESSLY
TO NEGATE AND EXCLUDE ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE,
WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION
OF THE PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL THEREOF, AND ALL
OTHER WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE STATE OF TEXAS UNIFORM COMMERCIAL
CODE.

 

4.                                       Assignee
hereby accepts the assignment of the Personal Property, the Service Contracts,
and the Intangibles Personal Property and agrees to assume and discharge, in
accordance with the terms thereof, all of the obligations thereunder accruing
and applicable to the period from and after the date hereof.

 

5.                                       Assignee
agrees to indemnify and hold harmless Assignor from any cost, liability, damage
or expense (including attorneys’ fees) arising out of or relating to Assignee’s
failure to perform any of the foregoing obligations arising from and accruing
on or after the date hereof.

 

6.                                       Assignor
agrees to indemnify and hold harmless Assignee from any cost, liability, damage
or expense (including attorneys’ fees) arising out of or relating to Assignor’s
failure to perform any of the obligations of Assignor under the Service
Contracts or the Intangibles, to the extent accruing prior to the date hereof.

 

7.                                       This
Blanket Conveyance, Bill of Sale and Assignment may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

 

[Signature pages immediately
follow.]

 

 

IN WITNESS
WHEREOF, the parties hereto have executed this Blanket Conveyance, Bill of Sale
and Assignment as of the date first above written.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  VERANDAH OWNER LIMITED
  PARTNERSHIP,

  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability
  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
  Title: Manager

  

 

 

	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT E

 

Intentionally
Deleted

 

 

EXHIBIT F

 

Service
Contracts

 

 

EXHIBIT G

 

Form of
Notice to Tenants

 

	
   

  	
  , 20

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Re:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

Dear Tenant:

 

Please be advised that
effective __________________, 20___, ____________________________ has sold the
above-referenced property to _________________________________. Your security
deposit has been transferred to such entity and such entity shall be
responsible for holding the same in accordance with the terms of your lease. Effective
___________, 20___, all future rental payments should be sent to the following
address:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Any questions regarding
  maintenance and management of the property should be addressed to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VERANDAH OWNER LIMITED PARTNERSHIP, a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability
  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Manager

  

 

 

EXHIBIT H

 

FIRPTA
Affidavit

Transferor’s
Certification of Non-Foreign Status

 

To inform [PURCHASER ENTITY],
a
                                    
(“Transferee”), that withholding of
tax under Section 1445 of the Internal Revenue Code of 1986, as amended
(the “Code”), will not be required upon the
transfer of certain real property to Transferee by Verandah Owner Limited
Partnership, a Delaware limited partnership (“Transferor”),
the undersigned hereby certifies the following on behalf of Transferor:

 

1.                                       Transferor
is not a foreign corporation, foreign partnership, foreign trust or foreign
estate (as those terms are defined in the Code and the Income Tax Regulations
promulgated thereunder);

 

2.                                       Seller
is not a disregarded entity as defined in §1.1445-2(b)(2)(iii);

 

3.                                       Transferor’s
U.S. employer identification number is
                    ;and

 

4.                                       Transferor’s
office address is c/o BH Equities, L.L.C. 400
Locust Street, Suite 790, Des Moines, Iowa 50309, Attn: Nicholas Roby, Esq.

 

Transferor understands that this Certification may be
disclosed to the Internal Revenue Service by Transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.

 

Under penalty of perjury I declare that I have
examined this Certification and to the best of my knowledge and belief it is
true, correct and complete, and I further declare that I have authority to sign
this document on behalf of Transferor.

 

 

Dated:                             ,
20

 

	
   

  	
  VERANDAH OWNER LIMITED PARTNERSHIP, a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability company,
  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Manager

  

 

 

EXHIBIT I

 

Form of
Special Warranty Deed

 

	
  THE STATE OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  	
  KNOW ALL MEN BY THESE
  PRESENTS THAT:

  
	
  COUNTY OF HARRIS

  	
   

  	
  §

  

 

VERANDAH OWNER LIMITED PARTNERSHIP, a Delaware limited partnership
(whether one or more, “Grantor”), for and in consideration of the sum of TEN
AND NO/100 DOLLARS ($10.00), and other good and valuable consideration paid by
                                  ,
a                                 
(the “Grantee”), the receipt and sufficiency of which are hereby acknowledged
and confessed, subject to the exceptions, liens, encumbrances, terms and
provisions hereinafter set forth and described, has GRANTED, BARGAINED, SOLD
and CONVEYED, and by these presents does hereby GRANT, BARGAIN, SELL and
CONVEY, unto Grantee all of that certain lot, tract or parcel of land situated
in Harris County, Texas, and being more particularly described in Exhibit “A”
attached hereto and incorporated herein by reference for all purposes.

 

TOGETHER WITH, all and singular, the rights, benefits, privileges,
easements, tenements, hereditaments, appurtenances and interests thereon or in
anywise appertaining thereto and with all improvements located thereon
belonging to Grantor (said land, rights, benefits, privileges, easements,
tenements, hereditaments, appurtenances, improvements and interests being
hereinafter referred to as the “Property”).

 

For the same consideration recited above, Grantor hereby BARGAINS,
SELLS and TRANSFERS, without warranty, express or implied, all interest, if
any, of Grantor in (i) strips or gores, if any, between the Property and
abutting or immediately adjacent properties, and (ii) any land lying in or
under the bed of any street, alley, road or right-of-way, opened or proposed,
abutting or immediately adjacent to the Property.

 

This conveyance is made subject and subordinate to the encumbrances and
exceptions (“Permitted Exceptions”) described in Exhibit “B”
attached hereto and incorporated herein by reference for all purposes, but only
to the extent they affect or relate to the Property.

 

ALL GRANTS, BARGAINS, SALES AND TRANSFERS ARE MADE
“AS—IS, WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EXCEPT AS SET
FORTH IN THE DEED AND IN ARTICLE XI OF THAT CERTAIN SALE, PURCHASE AND ESCROW
AGREEMENT DATED
                    ,
2009 (THE “SALE AGREEMENT”), BY AND BETWEEN GRANTOR, AS SELLER, AND HARVARD PROPERTY
TRUST, LLC, AS PURCHASER, WHOSE RIGHTS THEREUNDER HAVE BEEN ASSIGNED TO
GRANTEE, WITHOUT WARRANTY OF HABITABILITY, SUITABILITY, MERCHANTIBILITY FOR
FITNESS FOR A PARTICULAR PURPOSE, WITH NO RELIANCE OF ANY BUYER ON ANY
REPRESENATION WITH RESPECT TO PROPERTY CONDITION EXCEPT AS DESCRIBED ABOVE WITH
RESPECT TO THE SALE AGREEMENT, AND WITH KNOWLEDGE THAT

 

 

ANY BUYER IS INSTEAD RELYING ON ITS OWN
EXAMINATION OF THE PROPERTY.

 

At no time prior to January 1, 2015 shall all
or any portion of the Property be established as a condominium regime under the
laws of the State of Texas unless the then current owner of the Property (the “Owner”)
(i) shall have given written notice to Grantor and Verandah IH 610, L.P.
of Owner’s intention to file such condominium declaration and establish all or
any portion of the Property as a condominium regime and (ii) shall have,
at least sixty (60) days prior to the recordation of a condominium declaration
covering the Property, recorded in the Official Public Records of Real Property
of Harris County, Texas an affidavit, in the form attached hereto as Exhibit “C,”
swearing that such notice was properly given. If Owner fails to timely file the
affidavit prior to recording any such condominium declaration as provided
herein, then such condominium declaration shall be null and void ab  initio.
However, if the affidavit is timely filed as provided herein, all subsequent
purchasers may rely on the affidavit as conclusive proof that the notice was
properly given, and the condominium declaration shall be fully effective and
will not be void or voidable for failure to have properly given such notice. The
notice required hereunder shall be delivered to Grantor and Verandah IH 610,
L.P. by United States Mail, as a certified item with postage prepaid and return
receipt requested, addressed as follows:

 

Verandah
Owner Limited Partnership

c/o BlackRock Realty Advisors, Inc.

300 Campus Drive, 3rd Floor, Florham
Park, New Jersey 07932

Attention: Jeremy Litt, Esq.

 

with a copy to

 

Goodwin
Procter LLP

Exchange Place

Boston, Massachusetts 02109

Attention: Lawrence R. Cahill, Esq.

 

and

 

Verandah
IH 610, L.P.

c/o
Verandah Development, Inc.

8588 Katy
Freeway, Suite 230

Houston,
Texas 77024

 

with a
copy to

 

J. Robert
Fisher

Winstead
Sechrest & Minick P.C.

910
Travis Street, Suite 2400

Houston,
Texas 77002

 

 

TO HAVE AND TO HOLD the
Property, subject to the Permitted Exceptions as aforesaid, unto Grantee, and
Grantee’s successors and assigns, forever; and Grantor does hereby bind
Grantor, and Grantor’s successors and assigns, to WARRANT and FOREVER DEFEND,
all and singular, the Property, subject to the Permitted Exceptions, unto
Grantee, and Grantee’s successors and assigns, against every person whomsoever
lawfully claiming or to claim the same or any part thereof, by, through or
under Grantor, but not otherwise.

 

Grantee, by its acceptance hereof, does hereby assume and agree to pay
any and all ad valorem taxes and special assessments pertaining to the Property
for calendar year 2009 and subsequent years, there having been a proper
proration of ad valorem taxes for the current calendar year between Grantor and
Grantee.

 

[Remainder of page left intentionally blank]

 

 

EXECUTED as of the
             day of
                                  ,
200

 

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  VERANDAH OWNER LIMITED PARTNERSHIP, a Delaware
  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Houston Verandah Investor Limited Partnership, a
  Delaware limited partnership, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BH Verandah, L.L.C., an Iowa limited liability
  company, its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BH Equities L.L.C., an Iowa limited liability
  company, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name: Harry Bookey

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Manager

  

 

 

	
  THE STATE OF

  	
   

  	
   

  	
  §

  
	
   

  	
   

  	
   

  	
  §

  
	
  COUNTY OF

  	
   

  	
   

  	
  §

  
					

 

This
instrument was acknowledged before me on this
           day of                              ,
2009, by Harry Bookey, the Manager of BH Equities L.L.C., an Iowa limited
liability company, the managing member of BH Verandah, L.L.C., an Iowa limited
liability company, the general partner of Houston Verandah Investor Limited
Partnership, a Delaware limited partnership, the general partner of Verandah
Owner Limited Partnership, a Delaware limited partnership, on behalf of said
limited liability company and limited partnership.

 

 

	
   

  	
   

  
	
   

  	
  NOTARY PUBLIC in and for
  the

  
	
   

  	
  State of

  	
   

  
	
  My Commission Expires:

  	
  Printed Name of Notary:

  	
   

  
				

 

 

GRANTEE’S ADDRESS FOR TAX
NOTICES:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  When recorded, return
  to:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  List of
  Exhibits:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Property
  Description

  
	
  Exhibit B

  	
  —

  	
  Permitted
  Exceptions

  
	
  Exhibit C

  	
  —

  	
  Affidavit

  

 

 

EXHIBIT “A” TO SPECIAL WARRANTY DEED

 

PROPERTY DESCRIPTION

 

Being a tract or parcel containing 5.313 acres
(231,427 square feet) of land situated in the James D. Owen Survey, Abstract
Number 612; being out of and a part of Unrestricted Block 7, of MEYER PARK, SECTION 2,
a subdivision plat of record in Volume 142, Page 30, Harris County Map
Records; and being out of and a part of that certain tract of land (Tract One)
conveyed to Aramco Services Company as described in deed recorded under Harris
County Clerk’s File (H.C.C.F.) Number H104446, Harris County, Texas; and being
that certain called 5.313 acre tract conveyed to Verandah IH-610, L.P. as
described in deed recorded under H.C.C.F. number W636306; and said 5.313 acre
tract being more particularly described by metes and bounds as follows
(bearings are oriented to said record plat):

 

BEGINNING at 1-inch iron rod found in the north
right-of-way (R.O.W.) line of Braeswood Boulevard (100 feet wide) and marking
the most southerly southwest corner of the aforesaid Block 7 and the herein
described tract;

 

THENCE, North 06°18’24” West, along a southwest line
of said Block 7, a distance of 150.00 feet to an interior corner of said Block
and the herein described tract, from which a found 1-inch iron rod bears South 60°43’
West, 0.26 feet;

 

THENCE, South 71°35’50” West, along a southwest line
of said Block 7, a distance of 150.00 feet to the curved east R.O.W. line of
Interstate Highway 610 (West Loop South) (Width Varies) for the most westerly
southwest corner of said Block 7 and the herein described tract and for a point
of tangency of a non-tangent curve to the right, from which a found 1-inch iron
rod bears North 66°35’ West, 0.36 feet;

 

THENCE, Northerly, an arc distance of 288.32 feet
along said east R.O.W. line and the west line of said Block 7 and along said
curve to the right, having a central angle of 01°26’45”, a radius of 11,425.80
feet and a chord which bears North 05°14’26” West, 288.31 feet to a 5/8-inch
iron rod with plastic cap stamped “Terra Surveying” set marking the northwest
corner of the herein described tract;

 

THENCE, departing said east R.O.W. line and over and
across the aforesaid Aramco Services Company tract, the following courses and
distances:

 

North 89°49’01” East, a distance of 86.98 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

South 45°41’49” East, a distance of 14.27 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 89°49’01” East, a distance of 34.78 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

 

North 44°49’01” East, a distance of 14.14 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 89°49’01” East, a distance of 215.65 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 44°49’01” East, a distance of 52.57 feet to an “X” set in
concrete for an interior corner of the herein described tract;

 

North 89°49’01” East, a distance of 396.89 feet to “X” set in concrete
set in the curved west R.O.W. line of Meyer Park Drive (60 feet wide) and the
east line of the aforesaid Block 7 and marking a point of curvature of a
non-tangent curve to the left and the northeast corner of the herein described
tract;

 

THENCE, Southerly, an arc distance of 170.01 feet
along said west R.O.W. line and the east line of said Block 7 and along said
curve to the left, having a central angle of 10°49’14”, a radius of 900.22 feet
and a chord which bears South 16°02’49” East, 169.76 feet to the most northerly
end of a cutback-line for the most easterly southeast corner of said Block 7
and the herein described tract, from which a found 5/8-inch iron rod bears
South 05°53’ East, 0.17 feet;

 

THENCE, South 23°32’34” West, along said cutback-line,
a distance of 14.16 feet to the aforesaid north R.O.W. line of Braeswood
Boulevard for the most southerly southeast corner of said Block 7 and the
herein described tract, from which a found 5/8-inch iron rod bears South 16°31’
East, 0.65 feet;

 

THENCE, South 68°32’34” West, along the common line of
said north R.O.W. line and the south line of said Block 7, a distance of 435.95
feet to a point of curvature of a tangent curve to the right, from which a
found 5/8-inch iron rod bears South 19°40’ West, 0.22 feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the right, having a central
angle of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of reverse curvature for a tangent curve
to the left, from which a found 5/8-inch iron rod bears South 62°55’ West, 0.20
feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the left, having a central
angle, of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of tangency, from which a found 5/8-inch
iron rod bears South 09°03’ East, 0.55 feet;

 

THENCE, South 68°32’34” West, continuing along said
common line, a distance of 45.05 feet to the POINT OF BEGINNING and containing
5.313 acres (231,427 square feet) of land. 
This description is based on the Land Title Survey and plat made by
Terra Surveying Company, Inc., dated July 1, 2002, latest revision
dated April 27, 2005.  TSC Project
Number 0038-0101-S.

 

 

EXHIBIT “B” TO SPECIAL WARRANTY DEED

 

PERMITTED EXCEPTIONS

 

 

EXHIBIT “C” TO SPECIAL WARRANTY DEED

 

AFFIDAVIT

 

	
  STATE OF TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF HARRIS

  	
   

  	
  §

  

 

AFFIDAVIT

 

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

 

This Affidavit is executed as of the
         day of
                              ,
20       
by
                                              ,
who, after being duly sworn by the undersigned notary public, upon (his/her)
oath did depose and say as follows:

 

My name is
                                                                        ,
I am over the age of 21 years, have personal knowledge of the facts set forth
in this Affidavit and am in all things competent to give this Affidavit.

 

I am the
                                      
of                                           
(“Owner”), the owner of the real property located in Houston, Harris County,
Texas (the “Property”).  This Affidavit
is given pursuant to the requirements set forth in that certain Special
Warranty Deed dated                     ,
200    ecorded under Clerk’s File No.                                     
in the Official Public Records of Real Property of Harris County, Texas (the “Deed”).

 

Owner intends, not sooner that sixty (60) days from the date of the
recordation of this Affidavit in the Official Public Records of Real Property
of Harris County, Texas, to subject all or a part of the Property to a
declaration for the purposes of establishing a condominium regime over all or a
part of the Property.

 

Prior to the recordation of this Affidavit Owner, fully in accordance
with the terms of the Deed, gave written notice of its intent to subject all or
a part of the Property to a declaration for the purposes of establishing a
condominium regime over all or a part of the Property to the grantor under the
Deed.  Such written notice was delivered
to such grantor by United States certified mail, as a certified item with
postage paid and return receipt requested, addressed as follows:

 

Verandah
Owner Limited Partnership

c/o BlackRock Realty Advisors, Inc.

300
Campus Drive, 3rd Floor, Florham Park, New Jersey 07932

Attention:
Jeremy Litt, Esq.

 

 

with a copy to

 

Goodwin Procter LLP

Exchange Place

Boston,
Massachusetts  02109

Attention:  Lawrence R. Cahill, Esq.

 

End of Affidavit

 

	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  (typed or printed)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

 

SUBSCRIBED, SWORN TO AND ACKNOWLEDGED by
                                            
before me this          day of
                            ,
20      .

 

	
   

  	
   

  
	
   

  	
  Notary
  Public in and for the State of

  	
   

  

 

 

EXHIBIT “A” TO AFFIDAVIT

 

PROPERTY DESCRIPTION

 

Being a tract or parcel containing 5.313 acres
(231,427 square feet) of land situated in the James D. Owen Survey, Abstract
Number 612; being out of and a part of Unrestricted Block 7, of MEYER PARK, SECTION 2,
a subdivision plat of record in Volume 142, Page 30, Harris County Map
Records; and being out of and a part of that certain tract of land (Tract One)
conveyed to Aramco Services Company as described in deed recorded under Harris
County Clerk’s File (H.C.C.F.) Number H104446, Harris County, Texas; and being
that certain called 5.313 acre tract conveyed to Verandah IH-610, L.P. as
described in deed recorded under H.C.C.F. number W636306; and said 5.313 acre
tract being more particularly described by metes and bounds as follows
(bearings are oriented to said record plat):

 

BEGINNING at 1-inch iron rod found in the north
right-of-way (R.O.W.) line of Braeswood Boulevard (100 feet wide) and marking
the most southerly southwest corner of the aforesaid Block 7 and the herein
described tract;

 

THENCE, North 06°18’24” West, along a southwest line
of said Block 7, a distance of 150.00 feet to an interior corner of said Block
and the herein described tract, from which a found 1-inch iron rod bears South
60°43’ West, 0.26 feet;

 

THENCE, South 71°35’50” West, along a southwest line
of said Block 7, a distance of 150.00 feet to the curved east R.O.W. line of
Interstate Highway 610 (West Loop South) (Width Varies) for the most westerly
southwest corner of said Block 7 and the herein described tract and for a point
of tangency of a non-tangent curve to the right, from which a found 1-inch iron
rod bears North 66°35’ West, 0.36 feet;

 

THENCE, Northerly, an arc distance of 288.32 feet
along said east R.O.W. line and the west line of said Block 7 and along said
curve to the right, having a central angle of 01°26’45”, a radius of 11,425.80
feet and a chord which bears North 05°14’26” West, 288.31 feet to a 5/8-inch
iron rod with plastic cap stamped “Terra Surveying” set marking the northwest
corner of the herein described tract;

 

THENCE, departing said east R.O.W. line and over and
across the aforesaid Aramco Services Company tract, the following courses and
distances:

 

North 89°49’01” East, a distance of 86.98 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

South 45°41’49” East, a distance of 14.27 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 89°49’01” East, a distance of 34.78 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 44°49’01” East, a distance of 14.14 feet to a 5/8-inch iron rod
with plastic cap stamped 

 

 

“Terra Surveying” set for an interior corner of the herein described
tract;

 

North 89°49’01” East, a distance of 215.65 feet to a 5/8-inch iron rod
with plastic cap stamped “Terra Surveying” set for an interior corner of the
herein described tract;

 

North 44°49’01” East, a distance of 52.57 feet to an “X” set in
concrete for an interior corner of the herein described tract;

 

North 89°49’01” East, a distance of 396.89 feet to “X” set in concrete
set in the curved west R.O.W. line of Meyer Park Drive (60 feet wide) and the
east line of the aforesaid Block 7 and marking a point of curvature of a
non-tangent curve to the left and the northeast corner of the herein described
tract;

 

THENCE, Southerly, an arc distance of 170.01 feet
along said west R.O.W. line and the east line of said Block 7 and along said
curve to the left, having a central angle of 10°49’14”, a radius of 900.22 feet
and a chord which bears South 16°02’49” East, 169.76 feet to the most northerly
end of a cutback-line for the most easterly southeast corner of said Block 7
and the herein described tract, from which a found 5/8-inch iron rod bears
South 05°53’ East, 0.17 feet;

 

THENCE, South 23°32’34” West, along said cutback-line,
a distance of 14.16 feet to the aforesaid north R.O.W. line of Braeswood
Boulevard for the most southerly southeast corner of said Block 7 and the
herein described tract, from which a found 5/8-inch iron rod bears South 16°31’
East, 0.65 feet;

 

THENCE, South 68°32’34” West, along the common line of
said north R.O.W. line and the south line of said Block 7, a distance of 435.95
feet to a point of curvature of a tangent curve to the right, from which a
found 5/8-inch iron rod bears South 19°40’ West, 0.22 feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the right, having a central
angle of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of reverse curvature for a tangent curve
to the left, from which a found 5/8-inch iron rod bears South 62°55’ West, 0.20
feet;

 

THENCE, Southwesterly, an arc distance of 107.06 feet
continuing along said common line and said curve to the left, having a central
angle, of 01°04’14”, a radius of 5,730.00 feet and a chord which bears South
69°04’41” West, 107.06 feet to a point of tangency, from which a found 5/8-inch
iron rod bears South 09°03’ East, 0.55 feet;

 

THENCE, South 68°32’34” West, continuing along said
common line, a distance of 45.05 feet to the POINT OF BEGINNING and containing
5.313 acres (231,427 square feet) of land. 
This description is based on the Land Title Survey and plat made by
Terra Surveying Company, Inc., dated July 1, 2002, latest revision
dated April 27, 2005.  TSC Project
Number 0038-0101-S.]

 

 

EXHIBIT J

 

Personal Property

 

 

EXHIBIT K

 

Due Diligence Materials

 

 

EXHIBIT L

 

Seller’s Lease Guidelines

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