Document:

EX 10.1 Lakewood Flats PSA

Exhibit 10.1
PURCHASE AGREEMENT 
(Lakewood Flats, Dallas, Texas)
THIS PURCHASE AGREEMENT (this “Agreement”) is made as of October 8, 2014 (the “Effective Date”), by and between WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Seller”), and 7425 LA VISTA, LLC, a Texas limited liability company (“Buyer”).
R E C I T A L S
Buyer desires to purchase, and Seller desires to sell, the “Property” (as defined below), on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the respective promises contained in this Agreement, Buyer and Seller agree as follows:
A G R E E M E N T S
1.Purchase and Sale.  Subject to the terms and conditions of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to the following property commonly known as the “Lakewood Flats” (collectively, the “Property”):  (A) the land (the “Land”) located at 7425 La Vista Drive, Dallas, Texas, as more particularly described in Exhibit A and any and all of Seller’s rights, easements, interests, benefits, privileges, and appurtenances pertaining to the Land, any and all public roads and public rights of way bounding such Land, together with all rights of ingress and egress unto such public roads and public rights of way, strips or gores, if any, between the Land and abutting properties not owned by Seller or its affiliates, any water or water rights benefitting the Land and any oil, gas and other minerals in, under and that may be produced from the Land; (B) all buildings, improvements, structures and fixtures located upon the Land (the “Improvements”); (C) all tangible personal property (the “Personal Property”) owned by Seller and located on and used solely in connection with the management, operation or repair of the Improvements, other than that owned by tenants, the property manager and any other third parties, if any; (D) the interest of the landlord in and to all leases of space of all or any portion of the Improvements (the “Tenant Leases”); and (E) to the extent assignable without the need of consents (except to the extent that any such consents have been obtained as of the “Closing Date” (as defined below)), (i) subject to the terms of Section 5C(2), the “Assumed Contracts” (as defined below), (ii) signage, logos, telephone numbers and website names and domains that are dedicated to the Property and not owned by the property manager of the Property; and (iii) the permits, licenses and construction or other warranties, if any, held by or in favor of Seller solely for use in connection with all or any portion of the Improvements or the Personal Property, all such items under subsection (iii) to be transferred by Seller without representation, warranty (express or implied) or recourse of any kind (the foregoing items in this sub-clause (E) being collectively referred to as the “Intangible Property”).  Notwithstanding the foregoing, the Property shall not include the name “Greystar,” “Elan,” and any mark, logo, trade name, or other name utilizing “Greystar” or “Elan.”

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2.    Purchase Price.  The purchase price for the Property shall be Sixty Million Five Hundred Thousand and No/100 U.S. Dollars ($60,500,000.00) (the “Purchase Price”). 
3.    Payment of Purchase Price.  The Purchase Price shall be paid to Seller by Buyer as follows:
A.    Deposit.    
(1)    Deposit.  Within one (1) business day following the Effective Date, Buyer shall deliver to Alamo Title Insurance, as agent for First American Title Insurance Company (“Title Company”), 1800 Bering Drive, Suite 400, Houston, Texas, 77057, Attention: Lucky Long (“Escrow Agent”) (pursuant to wiring instructions provided to Buyer) a wire transfer of immediately available federal funds, in the amount of Five Hundred Thousand and No/100 United States Dollars ($500,000.00) as an earnest money deposit (which amount, together with the interest earned on such amount, is referred to in this Agreement as the “Deposit”).  If Buyer fails to timely deposit the Deposit with Escrow Agent as provided in this Section 3A(1), this Agreement shall automatically terminate, it being expressly agreed by Seller and Buyer that time is of the essence with respect to Buyer’s obligation to deliver the Deposit.  The Deposit shall be invested by Title Company as instructed by Buyer and Seller in the “Escrow Agreement” (as defined below) which shall be executed by Buyer and Seller and delivered to Title Company (along with an executed copy of this Agreement) on the Effective Date.  Upon the successful completion of the “Due Diligence Period” (as defined below in Section 5A) as evidenced by Buyer’s failure to deliver the “Termination Notice” as provided (and defined in Section 5D below), the Deposit shall be non-refundable to Buyer (except as otherwise specifically provided in this Agreement). The Deposit shall be held by Title Company in accordance with the terms of Section 3C below and the terms of a separate escrow agreement in the form of Exhibit C attached hereto and dated as of the date hereof by and among Buyer, Seller and Title Company (the “Escrow Agreement”).
(2)    Independent Consideration.  The sum of One Hundred and No/00 United States Dollars ($100.00) (the “Independent Consideration”) out of the Deposit is independent of any other consideration provided hereunder, shall be fully earned by Seller upon the Effective Date hereof, and is not refundable to Buyer under any circumstances.  Accordingly, if this Agreement is terminated for any reason by either party, the Independent Consideration shall be paid by Title Company to Seller.  
B.    Closing Payment.  The balance of the Purchase Price, as adjusted by the Deposit and by the adjustments, prorations, credits and allocations of income and expenses provided for in this Agreement, shall be delivered by Buyer to Title Company (to be disbursed by Title Company in accordance with Section 6 hereof) by wire transfer of immediately available funds on or before 3:00 p.m. Central Time on the Closing Date.  Such balance of the Purchase Price, as so adjusted, is herein called the “Closing Payment”.  As used herein the “Closing Date” shall mean no later than October 10, 2014.  
C.    REMEDIES; DAMAGES.  

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(1)    BUYER AND SELLER RECOGNIZE THAT THE PROPERTY WILL BE REMOVED FROM THE MARKET DURING THE TERM OF THIS AGREEMENT AND THAT IF THE TRANSACTION IS NOT CONSUMMATED BECAUSE OF BUYER’S DEFAULT THAT OCCURS AFTER THE EXPIRATION OF THE DUE DILIGENCE PERIOD AND THAT IS NOT CURED IN ACCORDANCE WITH SECTION 11O BELOW, SELLER SHOULD BE COMPENSATED FOR SUCH DETRIMENT.  IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE EXTENT OF THE DETRIMENT AND, TO AVOID THIS PROBLEM, BUYER AND SELLER AGREE THAT IF THIS TRANSACTION IS NOT CONSUMMATED BECAUSE OF BUYER’S DEFAULT, SELLER SHALL BE ENTITLED TO RECOVER FROM BUYER AS LIQUIDATED DAMAGES THE AMOUNT OF THE DEPOSIT, AND UPON WRITTEN NOTICE FROM SELLER TO BUYER AND TITLE COMPANY, THIS AGREEMENT SHALL BE TERMINATED AND THE DEPOSIT SHALL BE IMMEDIATELY AND AUTOMATICALLY DELIVERED TO SELLER BY TITLE COMPANY WITHOUT THE NECESSITY OF ANY FURTHER INSTRUCTIONS BY BUYER, PROVIDED, HOWEVER, THAT THE FOREGOING PROVISION SHALL NOT LIMIT SELLER’S RIGHT TO RECEIVE REIMBURSEMENT FOR ATTORNEYS’ FEES PURSUANT TO SECTION 11F OF THIS AGREEMENT, NOR WAIVE OR AFFECT BUYER’S INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT WHICH EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT, NOR WAIVE OR AFFECT SELLER’S RIGHTS UNDER SUCH INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT WHICH EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT, NOR WAIVE OR AFFECT BUYER’S OBLIGATIONS TO DESTROY OR RETURN DOCUMENTS, REPORTS OR OTHER INFORMATION PROVIDED TO BUYER BY SELLER PURSUANT TO THE APPLICABLE PROVISIONS OF THIS AGREEMENT OR BUYER’S OBLIGATIONS TO PROVIDE TO SELLER DOCUMENTS, REPORTS OR OTHER INFORMATION PREPARED BY OR FOR BUYER IF AND TO THE EXTENT REQUIRED PURSUANT TO THE APPLICABLE PROVISIONS OF THIS AGREEMENT, ALL OF WHICH OBLIGATIONS, INDEMNITIES AND RIGHTS SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THIS AGREEMENT.  THIS AMOUNT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ BEST ESTIMATE OF SELLER’S DAMAGES.  THE PARTIES AGREE THAT THE SUM STATED ABOVE AS LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER DAMAGES TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY VIRTUE OF THIS AGREEMENT OR BY OPERATION OF LAW.  UPON PAYMENT OR RELEASE OF SUCH AMOUNT, BUYER SHALL BE RELEASED OF ANY OTHER LIABILITY TO SELLER HEREUNDER, EXCEPT AS TO THOSE OBLIGATIONS, AGREEMENTS, AND INDEMNITIES WHICH EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT, AS PROVIDED IN THIS SECTION OR ELSEWHERE IN THIS AGREEMENT.  THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF APPLICABLE LAW, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.

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Seller’s Initials
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Buyer’s Initials

(2)    IF THE CLOSING DOES NOT OCCUR SOLELY FOR ANY REASON OTHER THAN BUYER’S OR SELLER’S DEFAULT UNDER THIS AGREEMENT, THEN THIS AGREEMENT SHALL TERMINATE AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS TO THE OTHER HEREUNDER, EXCEPT FOR (a) THE RIGHT OF BUYER TO THE RETURN OF THE DEPOSIT (MINUS THE INDEPENDENT CONSIDERATION) AND (b) THOSE PROVISIONS OF THIS AGREEMENT WHICH EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT.
(3)    IF THE CLOSING FAILS TO OCCUR SOLELY BECAUSE OF SELLER’S DEFAULT, WHICH SELLER SHALL FAIL TO CURE  IN ACCORDANCE WITH SECTION 11O (AND THE CLOSING DATE SHALL BE EXTENDED TO ACCOMMODATE SUCH CURE PERIOD), THEN BUYER MAY ELECT AS ITS SOLE AND EXCLUSIVE REMEDY EITHER TO (a) BRING AN ACTION FOR SPECIFIC PERFORMANCE OF THIS AGREEMENT, WHICH MUST BE BROUGHT, IF AT ALL, WITHIN NINETY (90) DAYS OF THE ALLEGED DEFAULT; OR (b) TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO SELLER AND TITLE COMPANY, IN WHICH CASE NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS TO THE OTHER HEREUNDER, EXCEPT FOR (i) THE RIGHT OF BUYER TO THE RETURN OF THE DEPOSIT (MINUS THE INDEPENDENT CONSIDERATION) AND THE RIGHT OF BUYER TO REIMBURSEMENT OF “BUYER’S EXPENSES” (AS DEFINED BELOW) IN THE EVENT THAT BUYER IS REQUIRED TO DELIVER “BUYER REPORTS” (AS DEFINED BELOW) TO SELLER IN ACCORDANCE WITH THE TERMS OF SECTION 5C OF THIS AGREEMENT, AND (ii) THOSE PROVISIONS OF THIS AGREEMENT WHICH EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT.
(4)    IF THE CLOSING OCCURS IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, THE DEPOSIT (MINUS THE INDEPENDENT CONSIDERATION) SHALL BE APPLIED AS A CREDIT TOWARD THE PURCHASE PRICE.  THIS SECTION 3C SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT AND NOTHING IN THIS SECTION 3C IS INTENDED TO LIMIT THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER SECTIONS 5C, 11A AND 11F.
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Seller’s Initials            Buyer’s Initials
4.    Title.
A.    Title Report.  Prior to the Effective Date, Seller has delivered or caused Title Company to deliver to Buyer: (1) a title insurance commitment covering the Property; and (2) copies of the documents evidencing the exceptions to title stated therein (collectively, the “Title Report”).  

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Prior to the Effective Date, Seller has delivered to Buyer a copy of the most recent survey (as may be updated by Buyer, the “Survey”) of the Property in Seller’s possession.
B.    Title Review.  Buyer shall satisfy itself prior to the expiration of the Due Diligence Period that an owner’s policy of title insurance (“Owner’s Policy”) is available on terms and conditions satisfactory to Buyer in its sole discretion.  Prior to the Effective Date, Buyer has delivered written notice to Seller (“Title Disapproval Notice”) of Buyer’s objections to the exceptions to title shown on the Title Report or the matters disclosed by the Survey (each, a “Disapproved Title Matter”).  Seller shall, no later than the expiration of the Due Diligence Period, notify Buyer (being a “Seller Response Notice”) as to each properly Disapproved Title Matter either that:  (i) Seller elects not to cause such Disapproved Title Matter to be removed as of the Closing Date (or otherwise take any action with respect thereto), or (ii) Seller intends to either:  (a) cause such Disapproved Title Matter to be removed or released on the Closing Date; or (b) cause Title Company to bond, insure or endorse over such Disapproved Title Matter.  If Seller has provided a Seller Response Notice to Buyer stating that Seller will not remove, release or otherwise correct any such Disapproved Title Matter or if Seller has not provided a Seller Response Notice to Buyer (which shall be deemed an election by Seller not to take any action with respect to any such Disapproved Title Matter), then Buyer may elect in writing not later than the expiration of the Due Diligence Period, either to waive Buyer’s objection to any such Disapproved Title Matter or to terminate this Agreement (and Buyer’s failure to deliver a Termination Notice prior to the expiration of the Due Diligence Period shall be deemed a waiver of Buyer’s objection to any such Disapproved Title Matter).  If Buyer shall fail to make such election, then Buyer shall be deemed to have waived its objection to any such Disapproved Title Matter.  In the event Buyer shall elect in writing prior to the expiration of the Due Diligence Period to terminate this Agreement pursuant to this Section 4B, the Deposit (minus the Independent Consideration) shall be promptly delivered by Title Company to Buyer, and the parties shall have no further obligations or liabilities hereunder (except for any obligations or liabilities that expressly survive termination of this Agreement).  If Seller has provided a Seller Response Notice to Buyer stating that Seller has elected either choice under subclause (ii) above, and any such Disapproved Title Matter is not removed, released, bonded, insured or endorsed over  as aforesaid as of the Closing Date, Buyer shall have the right to (A) terminate this Agreement in which event the Deposit (minus the Independent Consideration) shall be promptly delivered by Title Company to Buyer and Buyer shall be entitled to reimbursement of Buyer’s Expenses in the event that Buyer is required to deliver Buyer Reports to Seller in accordance with the terms of Section 5C of this Agreement, and the parties shall have no further obligations or liabilities hereunder (except for any obligations or liabilities that expressly survive termination of this Agreement), or (B) waive the foregoing right of termination and all other rights and remedies on account of any such Disapproved Title Matter and to close the transaction contemplated by this Agreement, without any reduction or abatement of the Purchase Price.  If Buyer shall fail to make such election, then Buyer shall be deemed to have made the election set forth in subclause (B) above.  All exceptions in the Title Report and matters on the Survey that are approved or deemed approved by Buyer pursuant to this Section 4B are hereinafter collectively referred to as “Permitted Exceptions.”  Notwithstanding anything to the contrary set forth in this Agreement, Buyer acknowledges that, concurrently with the Closing, Seller will be recording against title to the Property a Declaration of Restrictive Covenants in the form of Exhibit N attached hereto (the “Declaration of Restrictive Covenants”), and Buyer shall be obligated to accept title to the Property 

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subject only to (1) the Permitted Exceptions, (2) the “New Matters” (as defined and approved, or deemed approved, pursuant to Section 4C below), (3) real estate taxes and assessments not yet due and payable subject to the rights and obligations of Seller and Buyer under Section 6D below, and (4) the Declaration of Restrictive Covenants (the foregoing being the “Permitted Encumbrances”) and to accept the Owner’s Policy for the Property subject to the Permitted Encumbrances and the general exceptions which appear in the standard form owner’s policy of title insurance issued by Title Company in the State of Texas that cannot be removed by delivery to Title Company of the “Seller’s Title Certificate” (as defined below).  Notwithstanding anything to the contrary set forth in this Agreement, Seller shall be obligated as a condition to Closing to cause (x) the liens of any mortgage evidencing financing obtained or assumed by Seller to be removed as an exception to title, (y) any mechanics’ liens or materialmens’ liens arising from any work or improvements at the Property ordered or authorized by Seller that encumber the Property on the Closing Date (other than liens or claims arising from Buyer’s due diligence reviews or inspections hereunder) and (z) any judgment liens, federal or state income or sales tax liens, lis pendens and any other liens or encumbrances, in each case only to the extent that such liens or encumbrances are caused by Seller’s actions, in all events that may be satisfied by payment of a liquidated amount (any such lien, a “Monetary Lien”) to be paid off, bonded over or discharged of record, without cost to Buyer.
C.    New Matters.  If an additional exception to title (a “New Matter”) affecting the Property is first disclosed in writing to Buyer after delivery of the Title Report to Buyer, Buyer shall be deemed to have approved any such New Matter on the later of the expiration of the Due Diligence period or five (5) days after Buyer’s receipt of written notice of such New Matter unless Buyer delivers to Seller within such time written notice of its objection thereto (and the Closing Date shall be extended to accommodate such notice period).  Notwithstanding the foregoing, any New Matter that is the result of the activities of Buyer shall be deemed approved by Buyer and Buyer shall have no right to object to such New Matter.  Seller may elect, within five (5) days from the date of receipt of notice of objection from Buyer with respect to the New Matter, to remove or release or cause Title Company to bond, insure or endorse over such New Matter (and the Closing Date shall be extended to accommodate such cure period to allow Seller to attempt to so remove, release, bond, insure or endorse over such New Matter).  In the event that within such five (5) day period Seller (1) does not elect to remove or release or cause Title Company to bond, insure or endorse over such New Matter, or (2) elects but fails to remove or release or cause Title Company to bond, insure or endorse over such New Matter as of the Closing Date, then upon the expiration of such five (5) day period Buyer, as its sole and exclusive remedy hereunder for such failure, shall elect in writing either (a) to terminate this Agreement by written notice to Seller, in which case the Deposit (minus the Independent Consideration) shall be returned to Buyer and Buyer shall be entitled to reimbursement of Buyer’s Expenses in the event that Buyer is required to deliver Buyer Reports to Seller in accordance with the terms of Section 5C of this Agreement, this Agreement shall be null and void and of no further force or effect and the parties hereto shall have no further obligations to each other (except for any obligations or liabilities that expressly survive termination of this Agreement), or (b) to waive the foregoing right of termination and all other rights and remedies on account of such New Matter and to close the transaction contemplated by this Agreement subject to such New Matter, without any reduction or abatement of the Purchase Price.  If Buyer shall fail to make such election, then Buyer shall be deemed to have made the election set forth in sub-clause (b) above.

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D.    Deed Exceptions.  Notwithstanding the foregoing, Seller shall convey the Land to Buyer through the form of special warranty deed attached hereto as Exhibit D (the “Deed”), which will convey the Land to Buyer subject to the Permitted Encumbrances, as well as (i) unrecorded leases disclosed on the “Rent Roll” (as defined below) and (ii) all building, signage and zoning ordinances, laws, regulations and restrictions by municipal and other governmental authorities (together with the Permitted Encumbrances, the “Deed Exceptions”); provided that, in all events, the conveyance shall be free and clear of any Monetary Liens.  After Closing, Seller shall have no liability to Buyer, and Buyer and its successors and assigns shall make no claim against Seller, for the Deed Exceptions, provided that the foregoing shall not limit any right of Buyer to pursue any claims against Seller for the breach of the representation and warranty contained in Section 8A(7) of this Agreement.  The provisions of this Section 4D shall survive the Closing.
E.    Endorsements to Owner’s Policy.  It is understood that Buyer may request a number of endorsements to or extended coverage for its Owner’s Policy at Buyer’s sole cost and expense.  Buyer shall satisfy itself during the Due Diligence Period that Title Company will be willing to issue such endorsements or extended coverage in connection with the Owner’s Policy at Closing, and, accordingly, in no event shall the issuance of such endorsements, extended coverage or the Owner’s Policy constitute a condition to Buyer’s obligations under this Agreement so long as Seller complies with its obligations under this Section 4 and delivers the Seller’s Title Certificate to Title Company.  In no event shall Seller be obligated to provide any indemnity or other document in order to issue the same other than the certificate in the form of Exhibit E (the “Seller’s Title Certificate”).
5.    Due Diligence.
A.    Due Diligence Period.  Except for title and Survey matters (which shall be governed by the provisions of Section 4 above), Buyer shall have until 5:00 p.m. Central time on October 8, 2014 (the “Due Diligence Period”), to perform and complete, at its sole expense, its due diligence review, examination and inspection of all matters pertaining to its acquisition of the Property, including the Tenant Leases, “Contracts” (as defined below), Personal Property, Intangible Property, and all financial, physical, environmental and compliance matters, entitlements and other conditions respecting the Property.  
B.    Access to Property and Property Documents.
(1)    Subject to the provisions of this Section 5, Seller has heretofore provided or shall provide Buyer, during regular business hours on business days and upon receipt of twenty-four (24) hours advance written notice to Seller, with (i) reasonable access to the Property, (ii) reasonable access to on-site Property files of Seller or Seller’s property manager, and (iii) copies of or access to the information and documentation relating to the Property listed on Exhibit O, to the extent in Seller’s possession or control (which may be accomplished through an online data site created on behalf of Seller) (collectively, the “Property Documents”).  Notwithstanding anything to the contrary contained herein, Seller shall have no obligation to deliver to Buyer any property condition reports or any confidential information or proprietary materials (collectively, “Proprietary Materials”), including, without limitation, the following: (1) information contained in Seller’s credit reports, credit authorizations, credit or financial analyses or projections, steering 

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committee sheets, account summaries or other internal documents relating to the Property, including any valuation documents and the book value of the Property; (2) material which is subject to attorney client privilege or which is attorney work product or which may not be disclosed pursuant to any order or agreement in any arbitration, litigation or other proceeding; (3) appraisal reports or letters; (4) financials or tax returns of Seller or any affiliate of Seller; or (5) material which Seller is legally required not to disclose.  Seller makes no representation or warranty as to the accuracy, completeness or contents of the Property Documents or other reports prepared by third parties regarding the Property, except as otherwise set forth in Section 8 of this Agreement.
(2)    Buyer has advised Seller that Buyer must cause to be prepared audited financial statements in respect of the Property for up to three (3) full calendar years prior to the Closing Date plus any incomplete calendar year up to the quarter end immediately preceding the Closing Date in compliance with the policies of Buyer and certain laws and regulations, including, without limitation, Securities and Exchange Commission Regulation S-X and Rule 3-14.  Seller agrees to, upon reasonable advance written notice to Seller, and during the “Survival Period” (as defined below), at no cost to Seller, use commercially reasonable efforts to cooperate with Buyer’s auditors in the preparation of such audited financial statements (it being understood and agreed that the foregoing covenant shall survive the Closing).  Without limiting the generality of the preceding sentence, upon reasonable advance written notice to Seller, and during the Survival Period, at no cost to Seller, (i) Seller shall, during normal business hours, allow Buyer’s auditors reasonable access to such books and records maintained by Seller (and Seller’s property manager of the Property) in respect of the Property as reasonably necessary to prepare such audited financial statements; (ii) Seller shall use commercially reasonable efforts to provide to Buyer reasonable access to such financial information and supporting documentation as are reasonably necessary for Buyer’s auditors to prepare audited financial statements; (iii) if Buyer or its auditors require any information that is in the possession of the party from which Seller purchased the Property, Seller shall use commercially reasonable efforts to contact such prior owner of the Property and use commercially reasonable efforts to obtain from such party the information reasonably requested by Buyer; (iv) Seller will, during normal business hours, make available for interview by Buyer and Buyer’s auditors the property manager of the Property or other agents or representatives of Seller responsible for the day-to-day operation of the Property and the keeping of the books and records in respect of the operation of the Property; and (v) if Seller has audited financial statements with respect to the Property, Seller shall promptly provide Buyer’s auditors with a copy of such audited financial statements.  If during the Survival Period Seller obtains an audited financial statement in respect of the Property for a fiscal period prior to the Closing Date that was not completed as of the Closing Date, then, upon Seller’s receipt of Buyer’s written request, Seller shall promptly provide Buyer with a copy of such audited financial statement, and the foregoing covenant shall survive Closing.  Except to the extent provided in Section 8A(15), Seller makes no representation or warranty as to the accuracy, completeness or contents of any information provided to Buyer pursuant to this Section 5B(2).  Notwithstanding anything to the contrary contained in this Section 5B(2), Buyer shall use commercially reasonable efforts to minimize the number of times that Buyer requests Seller to perform the obligations of Seller set forth in this Section 5B(2).
C.    Conduct of Due Diligence.  Buyer shall at all times conduct such due diligence in compliance with, and subject to, applicable laws and the terms of the Tenant Leases and this 

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Section 5, and in a manner so as not to cause liability, damage, loss, cost or expense to Seller, the Property, or any tenants, subtenants, licensees, concessionaires or other persons using or occupying the Property or any part thereof, and so as not to materially interfere with the operation or use of the Property and so as not to materially interfere with or disturb the occupancy of tenants and subtenants at the Property.  Subject to the terms of the Tenant Leases and this Section 5, Buyer shall conduct its investigations, reviews and examinations of the Property at agreed upon times during normal business hours on business days (unless otherwise approved in writing by Seller) and upon receipt of reasonably advance written notice to Seller.  Buyer’s right to enter hereunder shall terminate upon the termination of this Agreement.  Without limitation on the foregoing, in no event shall Buyer, in each case, without obtaining Seller’s express written consent in its sole and absolute discretion, (a) allow, conduct or make any intrusive physical testing, inspection or investigation (environmental, structural or otherwise) at the Property (such as soil borings, water samplings or the like); (b) disclose the results of any physical testing or investigation (environmental, structural or otherwise) at the Property prior to Buyer’s acquisition of the Property except in compliance with this Agreement; (c) contact any tenant or subtenant of the Property; or (d) contact any governmental or quasi-governmental authority having jurisdiction over the Property (other than contact necessary to obtain a zoning compliance letter or report or confirm a lack of any building code violations).  Notwithstanding the foregoing, to the extent contact with any governmental or quasi-governmental authority having jurisdiction over the Property is necessary in order to obtain a property condition report or a Phase I environmental site assessment, Buyer may contact such governmental or quasi-governmental authority after obtaining Seller’s express written consent, which consent shall not be unreasonably withheld, conditioned or delayed.  Seller shall have the right, at its option, to cause a representative of Seller to be present at all interviews, inspections, reviews and examinations conducted hereunder, and Buyer shall cooperate in good faith with Seller to schedule permitted interviews and inspections at a mutually and reasonably agreeable time to Buyer and Seller.  In the event of any termination of this Agreement, Buyer shall, upon Seller’s written request therefor, deliver to Seller copies of any written reports prepared for or on behalf of Buyer by any third party in connection with Buyer’s due diligence activities (“Buyer Reports”); provided, however, that (a) Buyer shall not be deemed to make any representation to Seller regarding the accuracy, completeness, methodology or current status of such Buyer Reports, (b) Buyer shall not be deemed to assume any liability with respect to any matter or information referred to or contained in such Buyer Reports, and (c) Buyer shall be reimbursed for all reasonable, out-of-pocket costs and/or expenses incurred by Buyer or Buyer’s Representatives in obtaining such Buyer Reports (collectively, “Buyer’s Expenses”).  Notwithstanding anything to the contrary herein, Buyer shall not be required to provide, copy or make available to Seller any internal memoranda, appraisals and valuation reports and similar information or information covered by the attorney-client privilege.  Buyer and “Buyer’s Representatives” (as defined below) shall keep the terms of this Agreement, the transactions contemplated hereby and all data and information discovered, obtained or generated with respect to the purchase, sale, construction, operation and management of the Property, whether discovered, obtained or generated before or after the Effective Date, including, without limitation, all analyses, compilations, forecasts, studies, financial statements, agreements or other documents or materials, as well as all copies of the foregoing, whether prepared by or on behalf of or at the direction of Buyer or Buyer’s Representatives, that contain or otherwise reflect such information or Buyer’s review of, or interest in, the Property or any purchase, sale, construction, operation or management of the Property (collectively, “Internal Documents”), strictly confidential in 

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accordance with this Section 5C and shall not use such terms, data or information for purposes unrelated to this Agreement or disclose the same to others except as expressly permitted hereunder.  The preceding sentence shall not be construed to prevent Buyer from disclosing to Buyer’s Representatives such data and information required to perform their designated tasks in connection with Buyer’s inspection of the Property, provided Buyer advises any such party of the confidential nature of the information disclosed, instructs such party to treat such information as confidential as required by this Section 5C.  Buyer shall be liable for any failure on the part of Buyer or Buyer’s Representatives to comply with Buyer’s obligations under this Section 5C.  However, neither Buyer nor Buyer’s Representatives shall have this obligation concerning information which: (a) is published or becomes publicly available or was independently developed by Buyer or Buyer’s Representatives through no violation of any obligation of confidentiality of either Buyer or Buyer’s Representatives under this Agreement; (b) is received from a third party that Buyer reasonably and in good faith concludes is not prohibited from making such disclosure by any contractual, legal, or fiduciary obligation; (c) is released from confidential treatment by the written consent of Seller; (d) is required to be disclosed in any securities filings with or disclosures to the Securities and Exchange Commission; or (e) is used by Buyer or Buyer’s Representatives in the ownership or operation of the Property after the Closing Date, except that Buyer and Buyer’s Representatives shall maintain the confidentiality of Seller’s Proprietary Materials and Seller’s operating statements after the Closing Date.  If any law, regulation, order, subpoena or governmental authority requests or requires Buyer or any of Buyer’s Representatives to disclose all or any portion of the terms, data or information required to be kept confidential hereunder, Buyer shall, to the extent legally permissible, (i) provide Seller with prompt written notice of any such request or requirement in order to afford Seller time either to seek an appropriate protective order or other reliable remedy or assurance that confidential treatment will be accorded to the requested terms, data or information or to waive compliance with this Section 5C and (ii) prior to the disclosure by Buyer or Buyer’s Representatives of any of the requested terms, data or information, Buyer shall, and shall cause Buyer’s Representatives to, cooperate with Seller in a reasonable manner, and in no event oppose any efforts by Seller, in obtaining such protective order or other reliable remedy or assurance.  If no such protective order or other remedy or assurance is obtained, or if Seller waives compliance with this Section 5C in writing, then Buyer or Buyer’s Representatives, as the case may be, may disclose only that portion of the requested terms, data or information that, in the reasonable opinion of its legal counsel, is legally required to be disclosed, and shall exercise commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the disclosed terms, data or information and will preserve the confidentiality of the remainder of the terms, data or information required to be kept confidential hereunder.  Buyer shall inform Seller of the proposed disclosure and shall consider the suggestions of Seller concerning the nature and scope of the information Buyer proposes to disclose.  In the event this Agreement is terminated, Buyer shall promptly destroy or return to Seller any documents, schedules, exhibits or other written information obtained from Seller or any “Seller Party” (as defined below) in connection with this Agreement or the transactions contemplated hereby and shall destroy all Internal Documents.  In the event of a breach or threatened breach by Buyer or Buyer’s Representatives of this Section 5C, Seller shall be irreparably and immediately harmed and shall be entitled to equitable relief, including an injunction restraining Buyer from disclosing, in whole or in part, such confidential terms, data or information.  Nothing herein shall be construed as prohibiting Seller from pursuing any other available remedy at law or in equity for such breach or threatened breach.  Buyer acknowledges 

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that, except as may otherwise be expressly set forth in this Agreement or in the “Closing Documents” (as defined below), neither Seller nor any Seller Parties make any warranty or representation regarding the any information obtained from Seller or any Seller Party in connection with this Agreement or the transactions contemplated hereby or any other information disclosed by Seller or any Seller Parties.  The provisions of this Section 5C shall survive the Closing or any earlier termination of this Agreement.
(1)    Buyer’s Insurance.  Buyer shall provide Seller with certificates of insurance evidencing insurance policies which shall be maintained by Buyer and, to the extent applicable, those of its principals, direct or indirect owners, directors, employees, partners, representatives, accountants, advisors, consultants, attorneys, lenders, investors, engineers, surveyors, appraisers, consultants and agents (collectively, “Buyer’s Representatives”) under its control maintain in connection with its investigations upon the Property prior to the date of entry upon the Property, (i) Commercial General Liability insurance, in an amount not less than $1,000,000 per occurrence and $2,000,000 general aggregate combined limits for any injuries, deaths or property damage (including loss of use) sustained as a result of any one accident or occurrence and (ii) Worker’s Compensation and Employer’s Liability insurance covering all personnel entering the Property, and such Employer’s Liability insurance shall be in an amount not less than $1,000,000 for each accident, disease per employee and disease policy limit.  Such limits may be achieved through the usage of primary policies or a combination of primary and Umbrella/Excess Liability that extends over the Commercial General Liability and Employer’s Liability insurance.  All required policies should be issued from a licensed insurance company with an A.M. Best Rating of A- VIII, insuring Buyer and Buyer’s Representatives against any liability arising out of any entry or inspections of the Property pursuant to the provisions hereof.  Any representative of Buyer which conducts environmental inspections of the Property shall also provide evidence of environmental liability insurance of not less than $1,000,000.  Any policy maintained by Buyer (and Buyer’s Representatives) shall (i) insure the contractual liability of Buyer covering Seller, (ii) name Seller (and its successors and assigns), its partners, members and agents (including any property manager and lender of Seller) as additional insureds, (iii) contain a cross-liability provision, (iv) contain a provision that the insurance provided by Buyer hereunder shall be primary and noncontributing with any other insurance available to Buyer, and (v) be in form and substance adequate to insure against all liability of Buyer and Buyer’s Representatives arising out of any entry or inspections of the Property pursuant to this Agreement.  In addition, Buyer and Buyer’s Representatives waive any claims against Seller and Seller’s direct and indirect, current and future, partners, members, officers, directors, shareholders, fiduciaries, attorneys, employees, licensees, contractors, agents, counsel, brokers, invitees, tenants, independent contractors, lenders and property managers (individually, each a “Seller Party” and collectively, “Seller Parties”) for any injury to persons or damage to property to the extent arising out of any inspections or physical testing of the Property, including any damage to the tools and equipment of Buyer and Buyer’s Representatives, all of which shall be brought on the Property at the sole risk and responsibility of Buyer and Buyer’s Representatives, unless caused by Seller’s gross negligence or willful misconduct.  Upon the completion of any inspection or test, Buyer shall promptly return the Property to substantially the same condition prior to such inspection or test by Buyer or any of Buyer’s Representatives.  Buyer shall keep the Property free and clear of any liens and shall remove or bond over any such liens caused solely by Buyer or any of Buyer’s Representatives within ten (10) days 

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after Buyer becomes aware of same, and Buyer shall save, indemnify, protect, defend, and hold harmless Seller and the Seller Parties from and against any and all obligations, losses, injuries, damages, claims, liens or encumbrances, costs, expenses, demands, liabilities, penalties and investigation costs, including reasonable attorneys’ fees and costs whether or not legal proceedings are instituted or asserted against Seller, any of the Seller Parties or the Property, incurred in connection with or arising out of or in any way connected with (a) any entry on the Property by Buyer or any of Buyer’s Representatives, (b) its investigations, reviews and examinations of the Property (whether such investigations, reviews and examinations occurred before or after the Effective Date), or (c) the breach of any of the terms of this Section 5; provided, however the foregoing indemnity shall not apply to any claims resulting merely from (i) the gross negligence or willful misconduct of Seller or any Seller Party, or (ii) the existence of a pre-existing condition of or on the Property discovered by Buyer in the course of such entry or the mere discovery of adverse conditions affecting the Property, including, without limitation, adverse environmental conditions.  The indemnity obligations set forth in this Section 5C(1) shall survive the Closing or the earlier termination of this Agreement.
(2)    Contracts.  Prior to the Effective Date, Buyer has notified Seller as to which of the Contracts Buyer shall assume at Closing (the “Assumed Contracts”), and such Assumed Contracts are listed on Exhibit B-1 attached hereto.  On the Closing Date, the Assumed Contracts, to the extent assignable without the need of third party consents, and to the extent that third party consents are required and such consents have been obtained as of the Closing Date, shall be assigned by Seller and assumed by Buyer pursuant to the “Bill of Sale, Assignment and Assumption” (as defined in Section 6A(1)). For avoidance of doubt, Buyer shall have no obligation to assume any Contract for which consent of a third party must be obtained.  If Buyer elects not to assume any Contract pursuant to the first sentence of this Section 5C(2) or such Contract is being retained by Seller, its affiliates or property manager, then Seller shall pay all termination, cancellation, transfer and/or other costs necessary to effect such termination, partial termination or transfer and give the notice, if any, required in connection with such actions under such Contract.  Notwithstanding the foregoing, in the event that Buyer elects not to assume the Contracts with AT&T and Time Warner Cable, then Buyer shall pay all termination, cancellation and/or other costs necessary to effect the termination of the same.  Seller shall use commercially reasonable efforts, prior to the Closing Date, to obtain third party consents to the assignment of those Assumed Contracts which require such third parties’ consent and shall keep Buyer reasonably informed of the results of such efforts, provided that Seller’s obtaining any third consents shall not be a condition to Buyer’s obligation to close the transactions contemplated under this Agreement.  If any fee or other charge may be imposed by a party to any Assumed Contract in connection with a transfer of such Assumed Contract, such fee or other charge shall be paid by Seller.  Notwithstanding anything to the contrary in this Agreement, Seller shall terminate the property management agreement with the onsite property manager or its affiliates on the Closing Date, at its sole cost and expense.
(3)    Buyer’s Election Not to Proceed.  If, based upon such reviews, examinations or inspections of the Property, Buyer determines, in its sole discretion, that Buyer does not intend to acquire the Property for any or no reason and Buyer notifies Seller of such determination in writing prior to the expiration of the Due Diligence Period (the “Termination Notice”), then this Agreement shall be terminated and of no further force or effect, and the parties 

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hereto shall have no further obligations to each other (except for any obligations or liabilities that expressly survive termination of this Agreement) and the Deposit (less the Independent Consideration and less Buyer’s share of escrow cancellation costs, if any) shall be returned to Buyer, Buyer hereby acknowledging and agreeing that time is of the essence with respect to delivery of the Termination Notice.  If Buyer does not deliver the Termination Notice to Seller prior to the expiration of the Due Diligence Period, this Agreement shall continue in full force and effect and, except as otherwise expressly provided in this Agreement, thereafter the Deposit shall be nonrefundable to Buyer and shall be applied by Title Company in accordance with the terms of this Agreement and the Escrow Agreement.  
6.    Closing.  The sale and purchase herein provided shall be consummated (the “Closing”) through escrow with all deliveries required hereunder being made to Title Company on or before 3:00 p.m. Central Time on the Closing Date.
A.    Escrow.  The parties shall deliver to Title Company the following:
(3)    By Seller.  Seller shall deliver (a) a duly executed and acknowledged original Deed; (b) four (4) duly executed counterpart originals of the bill of sale, assignment and assumption covering the Personal Property, the Tenant Leases, the Assumed Contracts (subject to the terms of Section 5C(2)) and the Intangible Property in the form of Exhibit F (the “Bill of Sale, Assignment and Assumption”), together with originals (or copies, if originals are unavailable) of such consents from third parties to the Assumed Contracts as Seller has been able to obtain pursuant to Section 5C(2); (c) four (4) duly executed originals of a certificate of Seller respecting the “non-foreign” status of Seller (the “Certificate of Non-Foreign Status”) in the form of Exhibit G; (d) a duly executed notice to the tenants under the Tenant Leases (the “Tenant Notice Letter”) in the form of Exhibit J, copies of which notice Buyer shall, at Buyer’s sole cost and expense, either mail or hand deliver to each such tenant (in either case, promptly after Closing); (e) Seller’s counterpart of the “Closing Statement” (as defined below), dated as of the Closing Date and duly executed by Seller, setting forth, among other things, all payments to and from the closing escrow in connection with the purchase and sale of the Property; (f) a duly executed counterpart original of a form of notice mutually acceptable to Seller and Buyer to vendors under the Assumed Contracts (the “Vendor Notice Letter”); (g) the Seller’s Title Certificate; (h) four (4) originals of the certificate of Seller (the “Seller Closing Certificate”) in the form of Exhibit H updating the representations and warranties contained in this Agreement to the Closing Date and noting any changes thereto, it being understood that the specifying of such changes shall be deemed to modify the representations and warranties made on the Effective Date subject to Buyer’s rights under Section 10B(2) below; (i) evidence reasonably satisfactory to Title Company that all documents and instruments reasonably necessary for the Monetary Liens to be paid off, bonded over or discharged of record have been obtained by Seller, evidence reasonably satisfactory to Title Company that all necessary authorizations of the transaction provided herein have been obtained by Seller, and such other documents and instruments as may be reasonably requested by Title Company in order to consummate the transaction contemplated hereby and to issue the Owner’s Policy (provided that the same do not materially decrease Seller’s rights or materially increase Seller’s obligations hereunder); (j) to the extent they are then in Seller’s possession, and have not theretofore been delivered to Buyer, originals (or copies, if originals are unavailable) of the Tenant Leases, all 

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Assumed Contracts and originals (or copies if originals are unavailable) of all permits and licenses (which materials under this clause (j) may be either delivered to Title Company or left at the management office at the Property; and (k) a unit availability report indicating all apartment units in the Property that are vacant as of the Closing Date and which of such vacant apartment units are not in rent ready condition.
(4)    By Buyer.  Buyer shall deliver (a) the Closing Payment by wire transfer of immediately available federal funds; (b) four (4) duly executed counterpart originals of the Bill of Sale, Assignment and Assumption; (c) a duly executed counterpart of the Closing Statement; (d) four (4) counterpart originals of the certificate of Buyer (“Buyer Closing Certificate”) in the form of Exhibit I updating the representations and warranties contained in this Agreement to the Closing Date and noting any material changes, it being understood that the specifying of such changes shall be deemed to modify the representations and warranties made on the Effective Date; (e) a duly executed counterpart of the Tenant Notice Letter; and (f) evidence reasonably satisfactory to Title Company that all necessary authorizations of the transaction provided herein have been obtained by Buyer, and such other documents and instruments as may be reasonably requested by Title Company in order to consummate the transaction contemplated hereby and to issue the Owner’s Policy (provided that the same do not materially decrease Buyer’s rights or materially increase Buyer’s obligations hereunder).
B.    Conditions to Closing; Delivery to Parties.  The conditions to the closing of such escrow shall be Title Company’s receipt of funds and documents described in Section 6A above (the “Closing Documents”) and the items to be delivered by third parties all as described in the Escrow Agreement.  Upon the satisfaction of the above conditions, then Title Company shall deliver the Closing Documents in accordance with the Escrow Agreement and take all other actions authorized by the Escrow Agreement.
C.    Closing Costs.  Buyer shall pay (a) the cost of any extended coverage to, and all endorsements for, the Owner’s Policy requested by Buyer, as well as the costs of any lender title policy and endorsements in connection with any financing obtained by Buyer, together with any sales tax thereon; (b) 50% of escrow costs and fees with respect to the Closing; (c) all recording fees in connection with any loan obtained by Buyer; (d) all fees, costs or expenses in connection with Buyer’s due diligence reviews hereunder or any financing obtained by Buyer; and (e) all costs of updating the Survey.  Seller shall pay (a) the cost of any title commitment and any title insurance premium for the standard (TLTA) coverage portion of the Owner’s Policy, together with any sales tax thereon; (b) 50% of escrow costs and fees with respect to the Closing; (c) the recording or other fees for the release of any Monetary Liens or other encumbrances that Seller is required to or elects to cause to be removed, released, bonded, insured or endorsed over; (d) the “Commission” (as defined in Section 11A(2) below); and (e) the recording fees for the recording of the Deed.  Seller and Buyer shall each pay their respective (i) legal fees and expenses (subject to Section 11F of this Agreement), (ii) share of prorations (as provided below), and (iii) the cost of all of its performances under this Agreement.   The obligations of the parties contained in this Section 6C shall survive the termination of this Agreement or the Closing Date, as applicable.  
D.    Prorations.    

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(1)    Items to be Prorated.  The following shall be prorated between Seller and Buyer as of the Closing Date:
(a)    Taxes and Assessments.
(i)    All real estate taxes and assessments on the Property for the tax year (the “Current Tax Year”) in which the Closing occurs shall be initially prorated at Closing through the Closing Date based upon the latest available tax information for the Current Tax Year (with Seller and Buyer each being responsible for a pro rata share of such taxes and assessments based upon the number of days in the Current Tax Year occurring before the Closing Date, in the case of Seller, and on and after the Closing Date, in the case of Buyer).  Buyer shall receive a credit against the Purchase Price for the amount of Seller’s pro rata share of the real estate taxes and assessments based upon the number of days in the Current Tax Year occurring before the Closing Date.  Upon and after the Closing Date and subject to the credit provided to Buyer as reflected in the prior sentence, Buyer shall be responsible for real estate taxes and assessments on the Property due and payable on and following the Closing Date, including, without limitation, any unpaid real estate taxes and assessments for the Current Tax Year.
(ii)    In no event shall Seller be charged with or be responsible for any increase in the real estate taxes or assessments on the Property resulting from the sale of the Property.  All tax refunds and credits attributable to any period prior to the Closing Date which Seller has paid or for which Seller has given a credit to Buyer shall belong to and be the property of Seller regardless of when received by Seller or Buyer, and Buyer shall promptly pay the same to Seller if received by Buyer.  All tax refunds and credits attributable to any period on or after the Closing Date shall belong to and be the property of Buyer regardless of when received by Seller or Buyer, and Seller shall promptly pay the same to Buyer if received by Seller.  Buyer and Seller agree to cooperate with each other in connection with the prosecution of any such proceedings and to take all steps, whether before or after the Closing Date, as may be reasonably necessary to carry out the intention of this subsection, including the delivery to each other, upon demand, of any relevant books and records, including receipted tax bills and cancelled checks used in payment of such taxes, the execution of any and all consent or other documents, and the undertaking of any acts reasonably necessary for the collection of such refund.
(b)    Rents.  All rents and utility reimbursements under the Tenant Leases (except as hereinafter provided) shall be prorated between Buyer and Seller.  Seller shall be entitled to retain all paid rent, utility reimbursements and other items allocable to the period prior to the Closing, and Buyer shall be entitled to retain all rent, utility reimbursements and other items allocable to the period from and after the Closing Date.  Seller shall deliver or provide a credit against the Purchase Price in an amount equal to all prepaid rentals for periods from and after the Closing Date and all refundable security or pet deposits (to the extent the foregoing were made by tenants under the Tenant Leases and are not applied or forfeited prior to the Closing Date) to Buyer on the Closing Date.  Rents and utility reimbursements which are delinquent as of the Closing Date shall not be prorated on the Closing Date.  Buyer shall include such delinquencies in its normal billing and shall diligently pursue the collection thereof in good faith after the Closing Date for a period of three (3) months following the Closing (but Buyer shall not be required to litigate or 

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declare a default under any Tenant Lease).  To the extent Buyer receives rents or utility reimbursements on or after the Closing Date, such payments shall be applied first toward the rent and utility reimbursements for the month in which the Closing occurs, then to the rent and utility reimbursements owed to Buyer in connection with the Tenant Leases for which such payments are received, and then to any delinquent rents and utility reimbursements owed to Seller, with Seller’s share thereof being promptly delivered to Seller.  For a period of three (3) months following the Closing, Buyer may not waive any delinquent rents nor modify the Tenant Leases so as to reduce or otherwise affect amounts owed thereunder for any period in which Seller is entitled to receive a share of such amounts without first obtaining Seller’s written consent.  Buyer shall include Seller’s delinquent billings in its statements for a period of three (3) months following the Closing.  Seller shall not have and hereby waives any right to pursue any remedy against any existing tenant owing delinquent rents, utility reimbursements and any other amounts owing to Seller, and Seller shall not be entitled to terminate any such Tenant Lease or such tenant’s right to possession.  Buyer shall reasonably cooperate with Seller in any collection efforts hereunder (but shall not be required to litigate or declare a default under any Tenant Lease).  With respect to delinquent rents and any other amounts or other rights of any kind respecting tenants who are no longer tenants of the Property as of the Closing Date, Seller shall retain all rights relating thereto.  
(c)    Operating Expenses; Utilities.  All amounts payable under any Assumed Contracts (subject to the terms of Section 5C(2) hereof) and, subject to Section 6D(3), any other expenses of the operation and maintenance of the Property, shall be prorated between Buyer and Seller, Seller being charged and credited for all of the same allocable to the period up to the Closing Date and Buyer being charged and credited for all of the same allocable to the period from and after the Closing Date.
(2)    Calculation; Reproration.  The prorations and payments shall be made on the basis of a written statement submitted to Buyer and Seller by Title Company (based on information provided to Title Company by Buyer and Seller) at least three (3) business days prior to the Closing and approved by Buyer and Seller.  Any item which cannot be finally prorated because of the unavailability of information shall be tentatively prorated on the basis of the best data then available and adjusted when the information is available in accordance with this subsection.  The estimated closing statement as described in §1.6045‐4(e)(3)(ii) of the U.S. Treasury Regulations (the “Regulations”), prepared by Title Company and adjusted as aforesaid and approved in writing by the parties (which approval shall not be withheld if prepared in accordance with this Agreement) shall be referred to herein as the “Closing Statement”.  If the prorations and credits made under the Closing Statement shall prove to be incorrect or incomplete for any reason, then either party shall be entitled to an adjustment to correct the same; provided, however, that any adjustment shall be made, if at all, within sixty (60) days after the Closing Date (except with respect to real estate taxes and assessments and amounts prorated pursuant to Section 6D(1)(c)), in which case such adjustment shall be made within sixty (60) days after the receipt of the final tax bill and any other information necessary to perform such adjustment is available), and if a party fails to request an adjustment to the Closing Statement by a written notice delivered to the other party within the applicable period set forth above (such notice to specify in reasonable detail the items within the Closing Statement that such party desires to adjust and the reasons for such adjustment), then the 

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prorations and credits set forth in the Closing Statement shall be binding and conclusive against such party.
(3)    Items Not Prorated.  Seller and Buyer agree that (a) none of the insurance policies relating to the Property will be assigned to Buyer and Buyer shall be responsible for arranging for its own insurance as of the Closing Date; (b) to the extent the same are in the name of Seller, utilities, including telephone, electricity, water and gas, shall be read on the Closing Date and Buyer shall be responsible for all the necessary actions needed to arrange for utilities in the name of Seller to be transferred to the name of Buyer on the Closing Date, including the posting of any required deposits; (c) there will be no amortization, proration or adjustment between Seller and Buyer for decorating fees or up-front pet fees (excluding refundable pet deposits), all of which Buyer agrees shall belong solely to Seller.  Accordingly, there will be no prorations for insurance, utilities, decorating or up-front pet fees (excluding refundable pet deposits).  Notwithstanding the foregoing, in the event a meter reading is unavailable for any particular utility, such utility shall be prorated in the manner provided in Section 6D(1)(c) above.
(4)    Survival.  The provisions of this Section 6D shall survive the Closing Date.
7.    Destruction/Condemnation of Property .  In the event that, after the Effective Date but prior to the Closing Date, all or any portion of the Land or Improvements is damaged or destroyed by any casualty which would cost in excess of five percent (5%) of the Purchase Price to repair, as determined by a contractor mutually acceptable to Seller and Buyer in their reasonable discretion, or there is a taking or condemnation of all or any portion of the Land or Improvements under the provisions of eminent domain law after the Effective Date but prior to the Closing Date where the condemnation award would be in excess of five percent (5%) of the Purchase Price, that results in a loss of the primary access to the Property, or that would materially interfere with the present use of such property (as determined by Seller in its reasonable discretion) (a “Casualty/Condemnation Event”), Seller shall give Buyer prompt written notice of the same (“Casualty/Condemnation Notice”), but Seller shall have no obligation to repair or replace any damage or destruction caused by the foregoing.  In such event, Buyer shall have the right to terminate this Agreement by written notice thereof delivered to Seller within ten (10) days after Buyer has received such Casualty/Condemnation Notice from Seller, and if such termination right is exercised, the Deposit (less the Independent Consideration) shall be returned to Buyer by Title Company, Buyer shall be entitled to reimbursement of Buyer’s Expenses in the event that Buyer is required to deliver Buyer Reports to Seller in accordance with the terms of Section 5C of this Agreement and this Agreement shall terminate and be of no further force or effect, except for the provisions hereof which survive the termination of this Agreement expressly as set forth herein.  If Buyer does not so timely elect to so terminate this Agreement or the casualty or condemnation is not a Casualty/Condemnation Event because it does not in fact meet or exceed the thresholds described above, Seller shall have no obligation to repair the Land or Improvements or portion thereof so damaged, the Closing shall take place as provided herein, and Seller shall, upon consummation of the transaction herein provided, assign to Buyer all claims of Seller under or pursuant to any casualty insurance coverage, or under the provisions of eminent domain law, as applicable, and all proceeds from any such casualty insurance (including all rent loss insurance applicable to any period from and after (but not before) 

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the Closing) or condemnation awards received by Seller on account of any such casualty or condemnation, as the case may be (“Proceeds”) (but only to the extent the same have not been applied by Seller prior to the Closing Date to repair the resulting damage), and Buyer shall be credited with the remaining cost to repair the damage or destruction caused by such casualty, provided, however, if such casualty is insured and Seller is able to assign to Buyer all Proceeds in connection therewith, then the credit shall not exceed the amount of the deductible under Seller’s casualty insurance policy (less any amount of the deductible expended by Seller to repair the resulting damage in a manner reasonably approved by Buyer).   
8.    Representations and Warranties; Certain Covenants.
A.    Representations and Warranties of Seller.  Seller hereby represents and warrants to Buyer as of the Effective Date as follows (for purposes of this Agreement, “Seller’s knowledge” (or any similar phrase) meaning the present actual knowledge, without taking into account any constructive or imputed knowledge and without duty of investigation or inquiry, of Douglas Welker, Julie Krueger or Laird Sparks, but such individuals shall not have any liability under or in connection with this Agreement):
(1)    Authority.  Seller is a limited partnership, duly formed and validly existing and in good standing under the laws of the State of Delaware.  Seller has all requisite limited partnership power and authority to execute and deliver, and to perform all of its obligations under, this Agreement.
(2)    Due Execution.  The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of Seller and does not and will not (a) require any consent or approval that has not been obtained, or (b) violate any provision of Seller’s organizational documents.
(3)    Enforceability.  This Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting the enforcement of creditors’ rights and general equitable principles.  
(4)    No Bankruptcy or Dissolution.  No “Bankruptcy/Dissolution Event” (as defined below) has occurred with respect to Seller or, if Seller is a partnership, any of the general partners in Seller.  As used herein, a “Bankruptcy/Dissolution Event” means any of the following:  (a)the commencement of a case under Title 11 of the U.S. Code, as now constituted or hereafter amended, or under any other applicable federal or state bankruptcy law or other similar law; (b) the appointment of a trustee or receiver of any property interest; (c) an assignment for the benefit of creditors; (d) an attachment, execution or other judicial seizure of a substantial property interest; (e) the taking of, failure to take, or submission to any action indicating an inability to meet its financial obligations as they accrue; or (f) a dissolution or liquidation, death or incapacity.
(5)    Litigation.  Except as set forth in Exhibit K, to Seller’s knowledge, there is no pending or threatened action, litigation, condemnation or other proceeding not covered by insurance filed against Seller with respect to the Property.

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(6)    Compliance.  Except as set forth in Exhibit L, to Seller’s knowledge, Seller has received no written notice from any governmental authority having jurisdiction over the Property to the effect that the Property is currently not in compliance with applicable laws and ordinances.  
(7)    Rent Roll.  Exhibit M contains a true and correct copy of the following reports used by Seller in connection with its operation of the Property:  (i) the rent roll (the “Rent Roll”), which, to Seller’s knowledge, sets forth all tenants (“Tenants”) of the Property under the Tenant Leases as of the date thereof; (ii) a delinquency report; (iii) a concession report, which, to Seller’s knowledge, sets forth all concessions granted to Tenants under the Tenant Leases; and (iv) a list of any security or pet deposits made by Tenants under the Tenant Leases that, to Seller’s knowledge, have not been applied or forfeited prior to the Closing Date.  To Seller’s knowledge, true, correct and complete copies of the Tenant Leases have been provided to Buyer.  To Seller’s knowledge, each Tenant Lease is in full force and effect, and, except as noted on the Rent Roll, the term of the same and the obligation to pay rent thereunder has commenced and the Tenant thereunder is in full possession and actual occupancy thereof.  To Seller’s knowledge, Seller is not in material default under any Tenant Lease and, except as otherwise disclosed in the Rent Roll or the delinquency report, no Tenant is in default under any Tenant Lease.  Notwithstanding anything to the contrary contained in this Agreement, Seller does not represent or warrant that any particular Tenant Lease will be in force or effect at Closing or that the Tenants under the Tenant Leases will have performed their obligations thereunder.  The termination of any Tenant Lease prior to Closing by reason of a Tenant’s default or for any other reason not constituting a default by Seller under this Agreement shall not constitute a breach of this representation and warranty by Seller and shall not affect the obligations of Buyer under this Agreement in any manner or entitle Buyer to an abatement of or credit against the Purchase Price or give rise to any other claim on the part of Buyer.
(8)    Contracts.  To Seller’s knowledge, Exhibit B attached hereto lists all of the service contracts and equipment leases related to the Property (the “Contracts”) entered into by or on behalf Seller, its affiliates or the property manager for the Property that affect the Property and the service provider under each Contract.  To Seller’s knowledge, neither Seller nor any other party to the Contracts is in material default under any term of any Contract.
(9)    OFAC.  Neither Seller nor any of its affiliates, nor, to Seller’s knowledge, any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement, is or will be (a) conducting any business or engaging in any transaction or dealing with any person appearing on the U.S. Treasury Department’s OFAC list of prohibited countries, territories, “specifically designated nationals” (“SDNs”) or “blocked person” (each a “Prohibited Person”) (which lists can be accessed at the following web address:  http://www.ustreas.gov/offices/enforcement/ofac/), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any such Prohibited Person; (b) engaging in certain dealings with countries and organizations designated under Section 311 of the USA PATRIOT Act as warranting special measures due to money laundering concerns; (c) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support 

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Terrorism”; (d) a foreign shell bank or any person that a financial institution would be prohibited from transacting with under the USA PATRIOT Act; or (e) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in (i) any U.S. anti-money laundering law, (ii) the Foreign Corrupt Practices Act, (iii) the U.S. mail and wire fraud statutes, (iv) the Travel Act, (v) any similar or successor statutes or (vi) any regulations promulgated under the foregoing statutes.  For purposes of this Agreement, an “affiliate” of, or a person “affiliated with, a specified person, is a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
(10)    Hazardous Materials.  Except as set forth in the Phase I environmental site assessment of the Property obtained by Seller when it acquired the Property (the “Environmental Report”), to Seller’s knowledge, there is not any, and has been no, release of any material known to Seller to be a “Hazardous Material” at or upon the Property, in an amount which would, as of the Effective Date, give rise to an “Environmental Compliance Cost.”  For purposes of this Agreement, the term “Hazardous Material” means (i) mold, fungi, bacteria and/or biological growth or biological growth factors, and (ii) asbestos, petroleum products, inflammable explosives, radioactive materials, polychlorinated biphenyls, lead, lead-based paint, under and/or above ground tanks, oil or related materials and any other hazardous waste or substance which has, as of the Effective Date, been determined to be hazardous or a pollutant by the U.S. Environmental Protection Agency, the U.S. Department of Transportation, or any instrumentality authorized to regulate substances in the environment which has jurisdiction over the Property (“Environmental Agency”) which substance causes the Property (or any part thereof) to be in material violation of any applicable environmental laws; provided, however, that the term “Hazardous Material” shall not include (x) motor oil and gasoline contained in or discharged from vehicles not used primarily for the transport of motor oil or gasoline, or (y) materials which are stored or used in the ordinary course of a tenant’s occupancy at, Seller’s operation of the Property, and which are stored, used, held, or disposed of or in material compliance with all applicable environmental laws.  The term “Environmental Compliance Cost” means any material out-of-pocket cost, fee or expense reasonably incurred directly to satisfy any requirement imposed by an Environmental Agency to bring the Property into compliance with applicable Federal, State and local laws and regulations directly relating to the existence on the Property of any Hazardous Material.
(11)    ERISA.  Seller is not (and, throughout the period in which transactions contemplated by this Agreement are occurring, will not be) and is not acting on behalf of (and, throughout the period in which transactions contemplated by this Agreement are occurring, will not be acting on behalf of) (i) an “employee benefit plan” as defined in Section 3(3) of “ERISA” (as defined below), (ii) a “plan” as defined in and subject to Section 4975 of the “Internal Revenue Code” (as defined below), or (iii) an entity deemed to hold “plan asset” of any of the foregoing within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.
(12)    No Pension Code Violation.  The transactions contemplated by this Agreement are not in violation of any laws applicable to Seller regulating investments of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

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(13)    Employees.  Seller has no employees which Buyer shall be obligated to employ following the Closing.
(14)    Property Rights.  To Seller’s knowledge, no person or entity has any interest, option, right of first refusal, right of first offer or similar purchase right with respect to the Property, and Seller has good and valid title to the Personal Property and the Intangible Property.
(15)    Operating Statements.  To Seller’s knowledge, the operating statements for the Property delivered or made available to Buyer as part of the Property Documents were prepared by or on behalf of Seller, and are the true and correct copies that were used and relied upon by Seller, in the ordinary course of Seller’s business and operation of the Property.
(16)    Defect Notices.  To Seller’s knowledge, neither Seller, any of its affiliates nor the property manager of the Property has received any written notice of the existence of material structural or mechanical defects in the Improvements or Personal Property.
B.    Representations and Warranties of Buyer.  Buyer hereby represents and warrants the following to Seller as of the Effective Date:
(5)    Authority.  Buyer is a limited liability company, duly formed and validly existing and in good standing under the laws of the State of Texas.  Buyer has all requisite power and authority to execute and deliver, and to perform all its obligations under, this Agreement.
(6)    Due Execution.  The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of Buyer and does not and will not (a) require any consent or approval that has not been obtained or (b) violate any provision of Buyer’s organizational documents.
(7)    Enforceability.  This Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting the enforcement of creditors’ rights and general equitable principles.
(8)    No Bankruptcy/Dissolution Event.  No Bankruptcy/Dissolution Event has occurred with respect to Buyer or, if Buyer is a partnership, any of the general partners in Buyer.  
(9)    ERISA.  Buyer is not (and, throughout the period in which transactions contemplated by this Agreement are occurring, will not be) and is not acting on behalf of (and, throughout the period in which transactions contemplated by this Agreement are occurring, will not be acting on behalf of) (i) an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is subject to Title I of ERISA, (ii) a “plan” as defined in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), or (iii) an entity deemed to hold “plan asset” of any of the foregoing within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.

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(10)    No Pension Code Violation.  The transactions contemplated by this Agreement are not in violation of any laws applicable to Buyer regulating investments of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
(11)    OFAC.  Neither Buyer nor any of its affiliates, nor, to Buyer’s knowledge, any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement, is or will be (a) conducting any business or engaging in any transaction or dealing with any person appearing on the U.S. Treasury Department’s OFAC list of prohibited countries, territories, SDNs or any Prohibited Person (which lists can be accessed at the web address: for the us treasury  including the making or receiving of any contribution of funds, goods or services to or for the benefit of any such Prohibited Person; (b) engaging in certain dealings with countries and organizations designated under Section 311 of the USA PATRIOT Act as warranting special measures due to money laundering concerns; (c) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; (d) a foreign shell bank or any person that a financial institution would be prohibited from transacting with under the USA PATRIOT Act; or (e) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in (i) any U.S. anti-money laundering law, (ii) the Foreign Corrupt Practices Act, (iii) the U.S. mail and wire fraud statutes, (iv) the Travel Act, (v) any similar or successor statutes or (vi) any regulations promulgated under the foregoing statutes.  
C.    Survival.  Notwithstanding anything to the contrary herein, the representations and warranties set forth in Section 8A and any cause of action with respect to a breach of the representations and warranties set forth in Section 8A shall survive for a period of nine (9) months from the Closing Date (the “Survival Period”), at which time such representations and warranties (and any cause of action resulting from a breach thereof not then in litigation or subject to a pending written claim) shall terminate.  Notwithstanding the foregoing, Seller shall have no liability, and Buyer shall make no claim against Seller for (and Buyer shall be deemed to have waived any failure of a condition hereunder by reason of), a breach of any representation or warranty, covenant or other obligation of Seller under this Agreement or any Closing Document if the breach in question constitutes or results from a condition, state of facts or other matter that was known to Buyer prior to Closing because such condition, state of facts or other matter was disclosed in any of the Property Documents delivered to or made available for review by Buyer, or otherwise disclosed by Seller to Buyer, and Buyer still proceeds to Closing.
D.    Certain Limitations.  Notwithstanding anything to the contrary in this Agreement or any Closing Document executed in connection with this Agreement and without limitation upon the limitations elsewhere in this Agreement and subject to Section 11K(12):  (1) neither Seller nor Buyer shall have any liability (and neither Seller nor Buyer shall make any claim against the other) for a breach of any representation or warranty or any other obligation of Seller or Buyer, as applicable, under this Agreement or any Closing Document executed in connection with this Agreement unless the valid claims for all such breaches collectively aggregate to more 

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than Fifty Thousand and No/100 U.S. Dollars ($50,000.00); (2) the liability of Seller or Buyer under this Agreement and such Closing Documents shall not exceed, in the aggregate, the amount equal to Nine Hundred Fifty-Five Thousand and No/100 U.S. Dollars ($955,000.00) (the “Cap”) (it being understood that, notwithstanding anything to the contrary in this Agreement or any other document, the liability of Seller and/or Buyer under this Agreement and the Closing Documents executed in connection herewith shall in no event exceed, in the aggregate, the amount of the Cap); and (3) in no event shall either Seller or Buyer be liable for any consequential or punitive damages.  Seller hereby covenants and agrees to maintain a tangible net worth consisting of liquid assets in an amount at least equal to the Cap until the later of (i) the expiration of the Survival Period or (ii) the date upon which any litigation or claim filed against Seller based upon a breach of this Agreement is finally resolved or settled by the parties or adjudicated by a court of law.
E.    Certain Interim Covenants of Seller.  Until the Closing Date or the sooner termination of this Agreement, except as otherwise expressly provided below:
(1)    Property Maintenance.  Seller shall use commercially reasonable efforts to maintain the Property in the same manner as prior hereto pursuant to its normal course of business (such maintenance obligation not including capital expenditures or expenditures not incurred in such normal course of business), subject to reasonable wear and tear and further subject to destruction by casualty or eminent domain or other force majeure events beyond the control of Seller, including changes in laws, rules, ordinances and regulations.
(2)    Contracts and Agreements.  After the Effective Date, Seller shall not enter into any new service contracts or other similar agreements affecting the Property that will be binding on Buyer without the prior consent of Buyer (not to be unreasonably withheld, conditioned or delayed); provided, however, that Seller may, without the prior consent of Buyer, enter into new service contracts and similar agreements which are cancelable on thirty (30) days’ notice without penalty or renew any service contracts or similar agreements affecting the Property in existence as of the Effective Date if such renewal(s) are made in accordance with the terms of such existing service contracts or similar agreements.  Buyer’s failure to approve or disapprove such service contracts within three (3) business days after Buyer’s receipt of Seller’s written request for such approval shall be deemed approval of the same.  Prior to the expiration of the Due Diligence Period, Seller shall promptly provide Buyer with a copy of any new contract or agreement entered into by Seller during the Due Diligence Period.  
(3)    Tenant Leases.  Seller shall continue to offer the Property for lease in the same manner as prior hereto pursuant to its normal course of business and shall keep Buyer reasonably informed as to the status of leasing prior to the Closing Date, but Buyer shall have no right to consent to any such leases so long as Seller complies with the provisions of this Section 8E(3) and the terms of any new leases shall not exceed fifteen (15) months.  
(4)    Preparation of Vacant Units for Lease.  At the time of Closing, Seller shall cause all apartment units in the Property which have been vacant for five (5) days or more to be in a market rent-ready condition according to Seller’s past practice.  With respect to each apartment unit that has been vacant for five (5) days or more prior to Closing that is not in such a rent-ready 

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condition at the Closing, Buyer shall receive a credit against the Purchase Price in an amount equal to up to Five Hundred and No/100 U.S. Dollars ($500.00).
F.    Covenants of Buyer.  
(1)    Condominium Conversion Restriction.  Buyer, for itself and on behalf of its successors and assigns, hereby covenants and agrees not to convert the Property or any portion thereof to a condominium, cooperative, or planned community subject to a declaration pursuant to which a person, by virtue of the person’s ownership of a unit therein is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or other expenses related to common elements, other units or other real estate described in such declaration (a “Planned Community”) or file a condominium map or establish a condominium regime (collectively, the “Condominium Conversion Restriction”) for a period equal to that date which is ten (10) years after the completion of the initial construction of the Improvements as evidenced by the issuance of a certificate of occupancy (the “Restrictive Period”).  As a material inducement to Seller entering into this Agreement, Buyer covenants and agrees to accept the Deed at Closing subject to the terms and conditions set forth in the Declaration of Restrictive Covenants.  For purposes of this Agreement, the occurrence of any one or more of the following conditions during the Restrictive Period shall constitute a “Triggering Event”: (i) the conversion of the Property or any portion thereof to a condominium, cooperative, or Planned Community; (ii) the filing of a condominium map or establishment of a condominium regime; or (iii) the delivery of a deed of any separate interest (as defined by applicable law) in any residential dwelling unit constructed on the Land (other than leases of such units in the regular course of business) in connection with the conversion of all or any portion of the Property into condominiums, cooperatives, or Planned Communities.
(2)    Indemnification.  In the event a Triggering Event occurs during the Restrictive Period,  whether by Buyer or any subsequent owner of the Property, Buyer hereby agrees to indemnify, defend and hold Seller and all “Seller Related Parties” (as defined below) harmless from and against:  (i) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE VIOLATION OF THE CONDOMINIUM CONVERSION RESTRICTION; (ii) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE DESIGN, PROCESSING, BONDING, DEVELOPMENT, CONSTRUCTION, IMPROVEMENT, COMPLETION, REPAIR, REMEDIATION, OWNERSHIP, USE, MAINTENANCE, MANAGEMENT OR OPERATION OF THE PROPERTY, OR ANY PORTION OR PORTIONS THEREOF, INCLUDING, WITHOUT LIMITATION, ANY DESIGN OR 

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CONSTRUCTION DEFECTS, ERRORS OR OMISSIONS OR OTHER CONDITIONS AFFECTING THE PROPERTY, WHETHER THE FOREGOING CLAIMS DESCRIBED IN SUBSECTIONS (i) AND (ii) ABOVE RESULT FROM THE ACTION, INACTION, NEGLIGENCE, OR STRICT LIABILITY OF SELLER OR ANY OF THE SELLER RELATED PARTIES.  THE INDEMNITIES HEREIN SHALL BE EFFECTIVE WHETHER OR NOT THE CLAIM IS CAUSED BY THE SOLE, CONCURRENT OR PARTIAL NEGLIGENCE, FAULT OR STRICT LIABILITY OF SELLER OR ANY OF THE SELLER RELATED PARTIES.  Buyer, at its sole cost and expense, shall promptly dispose of all such Claims, defend all Claims filed or asserted against Seller and/or any of the Seller Related Parties with counsel reasonably satisfactory to Buyer and Seller, pay all judgments rendered against Seller or any of the Seller Related Parties related to such Claims and reimburse Seller and any of the Seller Related Parties upon demand for their reasonable attorneys’ fees and costs incurred in defense of any Claims, all in accordance with Section 11N of this Agreement. 
(3)    Assignment.  Seller may assign any and all of its right, title and interest (including any related Claims against Buyer) under this Section 8F to any of its affiliates or without Buyer’s prior consent. 
(4)    Survival.  All terms and provisions of this Section 8F shall survive the Closing and delivery of the Deed.
9.    DISCLAIMER, RELEASE AND ASSUMPTION.  AS AN ESSENTIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, AND AS PART OF THE DETERMINATION OF THE PURCHASE PRICE, BUYER ACKNOWLEDGES, UNDERSTANDS AND AGREES AS OF THE EFFECTIVE DATE AND AS OF THE CLOSING DATE AS FOLLOWS:
A.    DISCLAIMER.
(12)    AS-IS, WHERE IS.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS, THE SALE OF THE PROPERTY HEREUNDER IS AND WILL BE MADE ON AN “AS IS, WHERE IS” BASIS.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS, 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 OR FUTURE OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTY OR ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION:  (i) THE QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION AND ASPECTS OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE STRUCTURAL ELEMENTS, SEISMIC ASPECTS OF THE PROPERTY, FOUNDATION, ROOF, 

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APPURTENANCES, ACCESS, SIGNAGE, LANDSCAPING, PARKING FACILITIES AND THE ELECTRICAL, MECHANICAL, HVAC, PLUMBING, SEWAGE, AND UTILITY SYSTEMS, FACILITIES AND APPLIANCES, THE SQUARE FOOTAGE WITHIN THE IMPROVEMENTS ON THE PROPERTY AND THE IMPROVEMENTS AND WITHIN EACH TENANT SPACE THEREIN, (ii) THE QUALITY, NATURE, ADEQUACY, AND PHYSICAL CONDITION OF SOILS, GEOLOGY AND ANY GROUNDWATER, (iii) THE EXISTENCE, QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE PROPERTY, (iv) THE DEVELOPMENT POTENTIAL OF THE PROPERTY, AND THE PROPERTY’S USE, HABITABILITY, MERCHANTABILITY, OR FITNESS, SUITABILITY, VALUE OR ADEQUACY OF THE PROPERTY FOR ANY PARTICULAR PURPOSE, (v) THE ZONING AND OTHER LEGAL STATUS OF THE PROPERTY, THE IMPROVEMENTS AND ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS ON USE OF THE PROPERTY, (vi) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES, LAWS, REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR ENTITY, (vii) THE ENVIRONMENTAL CONDITION OF THE PROPERTY (INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF ANY HAZARDOUS MATERIAL ON, UNDER OR ABOUT THE PROPERTY OR THE ADJOINING OR NEIGHBORING PROPERTY, (viii) THE QUALITY OF ANY LABOR AND MATERIALS USED IN ANY IMPROVEMENTS ON THE PROPERTY, (ix) THE CONDITION OF TITLE TO THE PROPERTY, (x) THE TENANT LEASES, CONTRACTS OR OTHER AGREEMENTS AFFECTING THE PROPERTY AND THE IMPROVEMENTS, AND (xi) ECONOMICS OF THE OPERATION OF THE PROPERTY AND THE IMPROVEMENTS OR THE FINANCIAL CONDITION OF ANY TENANT OF THE PROPERTY.
(13)    SOPHISTICATION OF BUYER.  BUYER ACKNOWLEDGES AND AGREES THAT IT IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THE OWNERSHIP AND OPERATION OF REAL ESTATE PROJECTS SIMILAR TO THE PROPERTY, AND (SUBJECT TO THE LIMITATIONS ON SUCH ACTIVITIES IMPOSED BY THE TENANT LEASES OR BY SELLER PURSUANT TO THE OTHER PROVISIONS HEREOF) THAT BUYER HAS BEEN GIVEN OR WILL BE GIVEN BEFORE THE END OF THE DUE DILIGENCE PERIOD, A FULL OPPORTUNITY TO INSPECT AND INVESTIGATE EACH AND EVERY ASPECT OF THE PROPERTY AND ANY AND ALL MATTERS RELATING THERETO, EITHER INDEPENDENTLY OR THROUGH AGENTS OF BUYER’S CHOOSING, INCLUDING, WITHOUT LIMITATION:
(a)    ALL MATTERS RELATING TO TITLE, TOGETHER WITH ALL GOVERNMENTAL AND OTHER LEGAL REQUIREMENTS SUCH AS TAXES, ASSESSMENTS, ZONING, USE PERMIT REQUIREMENTS AND BUILDING CODES.
(b)    THE PHYSICAL CONDITION AND ASPECTS OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE INTERIOR, THE 

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EXTERIOR, THE SQUARE FOOTAGE WITHIN THE IMPROVEMENTS AND WITHIN EACH TENANT SPACE THEREIN, THE STRUCTURE, SEISMIC ASPECTS OF THE PROPERTY, THE PAVING, THE UTILITIES, AND ALL OTHER PHYSICAL AND FUNCTIONAL ASPECTS OF THE PROPERTY.  SUCH EXAMINATION OF THE PHYSICAL CONDITION OF THE PROPERTY SHALL INCLUDE AN EXAMINATION FOR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIAL, WHICH SHALL BE PERFORMED OR ARRANGED BY BUYER AT BUYER’S SOLE EXPENSE.
(c)    ANY EASEMENTS AND/OR SIGNAGE OR ACCESS RIGHTS AFFECTING THE PROPERTY.
(d)    THE TENANT LEASES AND ALL MATTERS IN CONNECTION THEREWITH, INCLUDING, WITHOUT LIMITATION, THE ABILITY OF THE TENANTS TO PAY THE RENT AND THE ECONOMIC VIABILITY OF THE TENANTS.
(e)    ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY TO THE CONTRACTS AND ANY OTHER DOCUMENTS OR AGREEMENTS OF SIGNIFICANCE AFFECTING THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY RECIPROCAL EASEMENT AGREEMENTS, LICENSE AGREEMENTS OR ANY OPERATING AGREEMENTS AFFECTING THE PROPERTY.
(f)    ALL FINANCIAL EXAMINATIONS AND OTHER MATTERS OF SIGNIFICANCE AFFECTING THE PROPERTY, THE TENANTS OF THE PROPERTY, OR OTHERWISE RELATING TO THE ACQUISITION BY BUYER OF THE PROPERTY.
BUYER WILL ACQUIRE THE PROPERTY SOLELY ON THE BASIS OF AND IN RELIANCE UPON SUCH EXAMINATIONS AND THE TITLE INSURANCE PROTECTION AFFORDED BY THE OWNER’S POLICY AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER (OTHER THAN THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS).
(14)    PASSIVE OWNER.  SELLER HAS DELEGATED THE DAY-TO-DAY MANAGEMENT AND OPERATION OF THE PROPERTY TO A THIRD PARTY MANAGER OF THE PROPERTY.
(15)    DUE DILIGENCE MATERIALS/PROPERTY DOCUMENTS.  ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL REPORT, ANY PROPERTY CONDITION REPORT AND ANY OTHER PROPERTY DOCUMENTS, IS SOLELY FOR BUYER’S CONVENIENCE AND WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES AND SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO (AND EXPRESSLY DISCLAIMS ALL) REPRESENTATIONS AS TO THE 

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ACCURACY OR COMPLETENESS OF SUCH INFORMATION (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS).  SELLER SHALL NOT BE LIABLE FOR ANY MISTAKES, OMISSIONS, MISREPRESENTATION OR ANY FAILURE TO INVESTIGATE THE PROPERTY, NOR SHALL SELLER BE BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS (EXCEPT FOR THE REPRESENTATIONS EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS), APPRAISALS, ENVIRONMENTAL ASSESSMENT REPORTS, OR OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE OPERATION THEREOF, FURNISHED BY SELLER OR BY ANY MANAGER, LEASING AGENT, ATTORNEY, REAL ESTATE BROKER, AGENT, REPRESENTATIVE, AFFILIATE, DIRECTOR, OFFICER, SHAREHOLDER, EMPLOYEE, SERVANT, CONSTITUENT PARTNER OR MEMBER OF SELLER, CONTROLLING PERSON, AFFILIATE OF SELLER, OR OTHER PERSON OR ENTITY ACTING ON SELLER’S BEHALF.
(16)    CONSPICUOUS DISCLAIMERS.  TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED HEREIN ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.
B.    RELEASE.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS, BUYER, ON BEHALF OF ITSELF, ITS AFFILIATES, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, HEREBY WAIVES ITS RIGHT TO RECOVER FROM, AND FOREVER RELEASES AND DISCHARGES, SELLER AND ALL SELLER RELATED PARTIES FROM ANY AND ALL DEMANDS, CLAIMS, LEGAL OR ADMINISTRATIVE PROCEEDINGS, LOSSES, LIABILITIES, DAMAGES, PENALTIES, FINES, LIENS, JUDGMENTS, COSTS OR EXPENSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND COSTS), WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN (“CLAIMS”), WHICH ANY BUYER OR ANY PARTY RELATED TO OR AFFILIATED WITH BUYER (A “BUYER RELATED PARTY”) HAS OR MAY HAVE ARISING FROM OR RELATED TO ANY MATTER OR THING RELATED TO OR IN CONNECTION WITH THE PROPERTY INCLUDING THE ENVIRONMENTAL REPORT, ANY PROPERTY CONDITION REPORT, AND ANY OTHER PROPERTY DOCUMENTS, AND ANY OTHER DOCUMENTS AND INFORMATION REFERRED TO HEREIN, ANY TENANT LEASES AND THE TENANTS THEREUNDER, SIGNAGE AND OTHER USAGE RIGHTS, ENTITLEMENTS, ZONING, PARKING, TITLE DOCUMENTS OR DEFECTS, ANY CONSTRUCTION DEFECTS, ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION AND ANY ENVIRONMENTAL CONDITIONS, AND BUYER SHALL NOT LOOK TO ANY SELLER RELATED PARTIES IN CONNECTION WITH THE FOREGOING FOR ANY REDRESS OR RELIEF.  AS USED HEREIN, “SELLER RELATED PARTIES” SHALL MEAN SELLER AND SELLER’S AFFILIATES, EITHER DIRECTLY OR INDIRECTLY AS CONSTITUENT OWNERS OR AFFILIATES OF SELLER, AND THEIR RESPECTIVE CONSTITUENT PARTNERS, MEMBERS, SHAREHOLDERS, OWNERS, OFFICERS 

2890904.5     28

AND DIRECTORS, AND ALL OF THE FOREGOING’S RESPECTIVE AGENTS, REPRESENTATIVES, ATTORNEYS, EMPLOYEES, SERVANTS, BROKERS AND CONTROLLING PERSONS, AND ANY OTHER PERSON OR ENTITY ACTING ON SELLER’S BEHALF.  THIS RELEASE SHALL BE GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH OF ITS EXPRESSED TERMS AND PROVISIONS, INCLUDING THOSE RELATING TO UNKNOWN AND UNSUSPECTED CLAIMS, DAMAGES AND CAUSES OF ACTION.  THE FOREGOING PROVISIONS OF THIS SECTION 9 SHALL NOT LIMIT, HOWEVER, SELLER’S EXPRESS OBLIGATIONS UNDER THIS AGREEMENT AND THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
____________________    ____________________
 
INITIALS OF SELLER    INITIALS OF BUYER
C.    CERTAIN PROPERTY DISCLOSURES.  WITH RESPECT TO ALL OF THE FOLLOWING MATTERS IN THIS SECTION 9C AND WITHOUT LIMITATION ON ANY OTHER PROVISIONS OF THIS AGREEMENT, BUYER SHALL EVALUATE SUCH MATTERS DURING THE DUE DILIGENCE PERIOD IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.  BUYER SHALL ASSUME ALL RESPONSIBILITY FOR SUCH MATTERS AND SHALL NOT SEEK ANY PAYMENT OR OTHER ACTION FROM SELLER (AND SELLER SHALL HAVE NO OBLIGATION TO BUYER) WITH RESPECT TO SUCH MATTERS EXCEPT TO THE EXTENT OTHERWISE PROVIDED IN THIS AGREEMENT OR IN THE CLOSING DOCUMENTS; SUCH MATTERS HAVE ALREADY BEEN TAKEN INTO ACCOUNT IN CALCULATION OF THE PURCHASE PRICE OF THE PROPERTY; AND SUCH MATTERS SHALL NOT BE DEEMED TO EXPAND IN ANY MANNER THE LIMITED REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED HEREIN OR IN THE CLOSING DOCUMENTS.  WITHOUT LIMITATION ON THE GENERALITY OF THE FOREGOING:
(1)    ENVIRONMENTAL MATTERS.  SELLER HAS DELIVERED TO BUYER (AND BUYER ACKNOWLEDGES RECEIPT OF) THE ENVIRONMENTAL REPORT.  SELLER SHALL HAVE NO OBLIGATION TO BUYER IN CONNECTION WITH THE MATTERS SET FORTH IN THE ENVIRONMENTAL REPORT OR OTHERWISE WITH RESPECT TO ANY ENVIRONMENTAL MATTERS.  BUYER HEREBY ACKNOWLEDGES THAT IT HAS RECEIVED THE ENVIRONMENTAL REPORT AND SHALL REVIEW THE SAME PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD.
(2)    LAND USE, ZONING, ENTITLEMENT AND DEVELOPMENT ISSUES.  BUYER SHALL DETERMINE DURING THE DUE DILIGENCE PERIOD WHETHER IT IS SATISFIED WITH THE STATUS AND COMPLIANCE OF THE PROPERTY WITH RESPECT TO ANY AND ALL LAND USE, ZONING, ENTITLEMENT AND DEVELOPMENT LAWS, RULES, ORDINANCES, REGULATIONS, RESTRICTIONS, STANDARDS, AGREEMENTS AND SIMILAR ITEMS AFFECTING THE PROPERTY.

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(3)    FINANCING.  BUYER ACKNOWLEDGES AND AGREES THAT THE FINANCING CURRENTLY IN PLACE WITH RESPECT TO THE PROPERTY WILL NOT BE ASSUMED BY BUYER.  THE OBTAINING OF ANY FINANCING BY BUYER SHALL NOT BE A CONDITION TO CLOSING UNDER THIS AGREEMENT.
(4)    WATER ODOR MATTERS.  BUYER ACKNOWLEDGES RECEIPT OF (X) THE MEMORANDUM DATED JULY 15, 2014 FROM SELLER REGARDING ODOR DETECTED IN THE WATER COMING FROM KITCHEN AND BATHROOM FAUCETS AT THE PROPERTY (THE “WATER ODOR ISSUE”) AND (Y) THE LETTER DATED SEPTEMBER 20, 2013 FROM THE CITY OF DALLAS (THE “CITY”) REGARDING THE RESULTS OF THE CITY’S TESTS RELATING TO THE WATER ODOR ISSUE (COLLECTIVELY, THE “WATER ODOR DOCUMENTS”).  SELLER SHALL HAVE NO OBLIGATION TO BUYER IN CONNECTION WITH THE MATTERS SET FORTH IN THE WATER ODOR DOCUMENTS, THE WATER ODOR ISSUE OR ANY UNDERLYING CAUSE OF ODOR DETECTED IN WATER AT THE PROPERTY.  BUYER HEREBY ACKNOWLEDGES THAT IT HAS RECEIVED THE WATER ODOR DOCUMENTS AND SHALL REVIEW THE SAME PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD.
D.    SURVIVAL.  THIS SECTION 9 SHALL SURVIVE THE CLOSING DATE OR THE EARLIER TERMINATION OF THIS AGREEMENT AND SHALL NOT BE DEEMED TO HAVE MERGED INTO ANY OF THE DOCUMENTS EXECUTED OR DELIVERED AT CLOSING.
____________________ 
INITIALS OF BUYER
10.    Conditions to Closing.
A.    Seller’s Conditions to Closing.  In addition to the conditions provided in other provisions of this Agreement, Seller’s obligations to perform its undertakings provided in this Agreement (including its obligation to sell the Property) are conditioned on the following (any of which may be waived in writing by Seller):
(1)    Performance by Buyer.  The due performance by Buyer of each and every undertaking and agreement to be performed by it hereunder (including the delivery to Seller or Escrow Agent, as applicable) of the items specified to be delivered by Buyer in Section 6 hereof).
(2)    Representations and Warranties.  The truth of each representation and warranty made by Buyer in this Agreement in all material respects as of the Closing Date as if made on and as of the Closing Date.
B.    Buyer’s Conditions to Closing.  In addition to the conditions provided in other provisions of this Agreement, Buyer’s obligations to perform its undertakings provided in this Agreement (including its obligation to purchase the Property) are conditioned on the following (any of which may be waived in writing by Buyer):

2890904.5     30

(5)    Performance by Seller.  The due performance by Seller of each and every undertaking and agreement to be performed by it hereunder (including the delivery to Buyer or Escrow Agent, as applicable, of the items specified to be delivered by Seller in Section 6 hereof).
(6)    Accuracy of Representations and Warranties.  The representations and warranties of Seller are true and correct in all material respects as of the Closing Date as if made on and as of such Closing Date.  Notwithstanding the foregoing, in the event a material change of circumstances not otherwise contemplated by this Agreement and which was not caused by Seller’s intentional breach of any of its obligations hereunder occurs on or prior to the Closing Date which causes any of Seller’s representations or warranties set forth in Section 8A above to become materially untrue or in the event of an unintentional breach or unintentional default by Seller which causes any of Seller’s covenants to be materially untrue (a “Change of Circumstances”), and, in either case, in the event that Buyer is not willing to waive its objection thereto, Seller shall have a period of five (5) business days from the date of the discovery by Seller of such Change of Circumstances to elect, at its sole option, to cure or otherwise compensate Buyer to Buyer’s reasonable satisfaction (including, without limitation, the right to bond over or indemnify Buyer with respect to the subject matter) for such untrue fact, condition or covenant and an additional five (5) business days to effect such cure (and the Closing Date shall be extended to accommodate such cure period).  In the event that Seller does not cure such Change of Circumstances within such ten (10) business day period, Buyer shall have the right, as Buyer’s sole and exclusive remedy hereunder for such failure, either (a) to terminate this Agreement by written notice to Seller, in which case this Agreement shall be null and void and of no further force or effect and the parties hereto shall have no further obligations to each other (except for any obligations or liabilities that expressly survive termination of this Agreement) and the Deposit (minus the Independent Consideration) shall be refunded to Buyer by Title Company and Buyer shall be entitled to reimbursement of Buyer’s Expenses in the event that Buyer is required to deliver Buyer Reports to Seller in accordance with the terms of Section 5C of this Agreement, or (b) to waive the foregoing right of termination and all other rights and remedies on account of such breach or default and to close the transaction contemplated by this Agreement, without any reduction in the Purchase Price.  Notwithstanding anything in this Section 10B(2) to the contrary, the foregoing procedure with respect to a Change of Circumstances shall not be applicable to the intentional breach by Seller of any of its obligations hereunder, it being understood that the remedy for such a breach by Seller shall be in accordance with Section 3C hereof.
11.    Miscellaneous.
A.    Brokerage Issues.
(7)    Generally.  Except as provided in Section 11A(2) below, Seller represents and warrants to Buyer, and Buyer represents and warrants to Seller, that no broker or finder has been engaged by it, respectively, in connection with any of the transactions contemplated by this Agreement or to its knowledge is in any way connected with any of such transactions.  In the event of a claim for broker’s or finder’s fee or commissions in connection herewith, then Seller shall indemnify, protect, defend and hold Buyer harmless from and against the same if it shall be based upon any statement or agreement alleged to have been made by Seller, and Buyer shall 

2890904.5     31

indemnify, protect, defend and hold Seller harmless from and against the same if it shall be based upon any statement or agreement alleged to have been made by Buyer.  The provisions of this Section 11A shall survive the Closing Date or any termination of this Agreement, as applicable.
(8)    Broker’s Commission.  O’Boyle Properties, Inc. dba Apartment Realty Advisors - Central Region (“Broker”) has been engaged in connection with the transaction contemplated by this Agreement, and without limitation on the foregoing provisions of this Section, if and only if the transaction contemplated hereby shall close in accordance with the terms of this Agreement, Seller shall pay Broker the commission (the “Commission”) pursuant to a separate agreement between Seller and Broker.  
B.    Limitation of Liability.  No constituent partner or member in or agent of Seller, nor any present or future partner, member, manager, trustee, beneficiary, director, officer, shareholder, employee, advisor, affiliate or agent of any partnership, limited liability company, corporation, trust or other entity that has or acquires a direct or indirect interest in Seller or any affiliate of Seller shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Buyer, its affiliates and their respective successors and assigns and, without limitation, all other persons and entities, shall look solely to Seller’s interest in the Property and proceeds from the sale of the Property (including, any proceeds required to be retained by Seller pursuant to and in accordance with Section 8E above) for the payment of any claim or for any performance, and Buyer on behalf of itself and its successors and assigns hereby waives any and all such personal liability.  For purposes of this Section 11B, no negative capital account or any contribution or payment obligation of any direct or indirect partner, member or other owner in Seller shall constitute an asset of Seller.  The limitations of liability contained in this Section shall survive the termination of this Agreement or the Closing Date, as applicable, and are in addition to, and not in limitation of, any limitation on liability applicable to Seller provided elsewhere in this Agreement or by law or by any other contract, agreement or instrument.
C.    Additional Limitation on Remedies.  Without limitation on the other limitations on remedies contained herein, in the event of any dispute between the parties respecting this Agreement or the transactions herein contemplated, Buyer hereby waives (i) any right to record or file a lis pendens or other similar notice of suit, and (ii) any right to assert any claim affecting the right of possession or title to the Property; provided, however, the foregoing shall not limit Buyer’s rights with respect to an action for specific performance permitted in accordance with the terms of this Agreement.  
D.    Successors and Assigns.  Buyer may not assign or transfer its rights or obligations under this Agreement (or make an offer or enter into negotiations to do so) without the prior written consent of Seller; provided, however, Buyer may assign all of its interest in this Agreement on or before the Closing Date to a transferee in which Buyer, directly or indirectly, through one or more subsidiaries, has management responsibility and has more than a 50% ownership interest so long as Buyer gives Seller five (5) business days’ advance written notice thereof (including the name, vesting and signature block of the transferee) (but in any event such 

2890904.5     32

transferee shall assume in writing all of the transferor’s obligations hereunder, but such transferor shall not be released from its obligations hereunder).  Any change in control or majority ownership of Buyer (except for any transfers amongst controlled affiliates of Buyer or affiliates of Buyer that are under common control with Buyer) on or before the Closing Date constitutes an assignment for purposes of this Section 11D.  No consent given by Seller to any transfer or assignment of Buyer’s rights or obligations hereunder shall be construed as a consent to any other transfer or assignment of Buyer’s rights or obligations hereunder.  In addition, Buyer shall not re-sell the Property or assign its rights or obligations under this Agreement (or make an offer or enter into negotiations to do so) within thirty (30) days after Closing without Seller’s prior written consent.  No transfer or assignment in violation of the provisions hereof shall be valid or enforceable.  Subject to the foregoing, this Agreement and the terms and provisions hereof shall inure to the benefit of and shall be binding upon the successors and assigns of the parties.
E.    Notices.  Unless otherwise agreed to by the parties, all notices, consents or approvals required or permitted to be given hereunder shall be in writing.  Such notices, consents or approvals shall be effective upon receipt or refusal of receipt following deposit into the United States mail, registered or certified, return receipt requested, postage prepaid, or if hand delivered or if sent by nationally recognized overnight courier providing evidence of delivery or when sent by e-mail, telecopy or similar facsimile transmission (with a copy by mail delivered on the next business day if sent by facsimile transmission), addressed as follows:
To Buyer: 
 
7425 LA VISTA, LLC 
c/o Behringer Harvard Opportunity REIT II, Inc. 
15601 Dallas Parkway, Suite 600 
Addison, Texas  75001  
Attention:    Matt Ozee 
Telephone:    (972) 387-5452 
Facsimile:    (214) 655-1610 
Email:        mozee@behringermail.com
With Copy To: 
 
Jones Day 
2727 N. Harwood Street 
Dallas, Texas 75201 
Attention:    Michelle Brown 
Telephone:    (214) 969-3673 
Facsimile:    (214) 969-5100 
Email:        mbrown@jonesday.com

To Seller: 
 
WGS LAKEWOOD MF VI, L.P. 
c/o Walton Street Capital, L.L.C. 

2890904.5     33

900 North Michigan Avenue, Suite 1900 
Chicago, Illinois 60611 
Attention:    Angela Lang, Douglas Welker and Julie Krueger
Telephone:    (312) 915-2800 
Facsimile:    (312) 915-2881
Email:         lang@waltonst.com, welker@waltonst.com,                             kruegerj@waltonst.com
            
With Copy To: 
             
            WGS LAKEWOOD MF VI, L.P. 
            c/o Greystar Real Estate Partners, LLC 
            600 E. Las Colinas Blvd., Suite 2100 
            Irving, Texas 75039 
            Attention:    Laird Sparks 
            Telephone:    (469) 417-6507 
            Facsimile:    (469) 955-0074
Email:        lsparks@greystar.com 

And, With Copy To: 
 
Pircher, Nichols & Meeks 
900 North Michigan Avenue, Suite 1000 
Chicago, Illinois 60611 
Attention:    Real Estate Notices (PLP/SVK/4.1798) 
Telephone:    (312) 915-3112 
Facsimile:    (312) 915-3348
Email:        realestatenotices@pircher.com (Subject Line:  PLP/SVK File         4.1798)

And, With Copy To: 
 
Winstead PC 
2728 N. Harwood Street 
500 Winstead Building 
Dallas, Texas 75201 
Attention:    John M. Nolan 
Telephone:    214-745-5251 
Facsimile:    214-745-5390
Email:         jnolan@winstead.com

To Title Company: 
 
Alamo Title Insurance  
1800 Bering Drive, Suite 400 

2890904.5     34

Houston, Texas 
Attention:     Lucky Long  
Telephone:      (713) 966-4040 
Facsimile:      (713) 966-4061
Email:         llong@alamotitle.com        

or at such other place as a party may designate in a written notice given in accordance herewith.  Facsimile or e-mail transmissions received during business hours during a business day at the receiving location shall be deemed made on such business day if received prior to 5:00 P.M. Central Time.  Facsimile or e-mail transmissions received at any other time shall be deemed received on the next business day.  Any such notice so given by facsimile shall be deemed given upon receipt by the sending party of confirmation of successful transmission (provided that if any notice to be delivered by facsimile is unable to be transmitted because of a problem affecting the receiving party’s facsimile machine, the deadline for receiving such notice shall be extended to the next business day).  The attorneys for any party hereto shall be entitled to provide any notice that a party desires to give or is required to give hereunder.
F.    Legal Costs.  In the event any action be instituted by a party to enforce this Agreement, the prevailing party in such action (as determined by the court, agency or other authority before which such suit or proceeding is commenced), shall be entitled to such reasonable attorneys’ fees, costs and expenses as may be fixed by the decision maker.  The foregoing includes, but is not limited to, reasonable attorneys’ fees, expenses and costs of investigation incurred in (1) appellate proceedings; (2) in any post-judgment proceedings to collect or enforce the judgment; (3) establishing the right to indemnification; and (4) any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections 101 et seq.), or any successor statutes.  This provision is separate and several and shall survive the consummation of the transaction contemplated by Agreement or the earlier termination of this Agreement.
G.    Jurisdiction; Venue.  Each party consents to the jurisdiction of any state or federal court located within Dallas County, Texas, waives personal service of any and all process upon it, consents to the service of process by registered mail directed to it at the address stated in Section 11E, and acknowledges that service so made shall be deemed to be completed upon actual delivery thereof (whether accepted or refused).  In addition, each party consents and agrees that venue of any action instituted under this Agreement or any agreement executed in connection herewith shall be proper in Dallas County, Texas, and each party waives any objection to venue.  
H.    Waiver of Trial by Jury.  THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.  This waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement or any document executed pursuant thereto.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

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I.    Confidentiality.  The terms of this Agreement, the transactions contemplated hereby and all data and information discovered, obtained or generated with respect to the purchase, sale, construction, operation and management of the Property shall be kept confidential in accordance with the provisions of Section 5C of this Agreement.  The provisions of this Section 11I shall survive the Closing Date or any termination of this Agreement, as applicable.
J.    Further Instruments.  Each party will, whenever and as often as it shall be requested so to do by the other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement.
K.    Matters of Construction.
(1)    Incorporation of Exhibits.  All exhibits attached and referred to in this Agreement are hereby incorporated herein as fully set forth in (and shall be deemed to be a part of) this Agreement.
(2)    Entire Agreement.  This Agreement, together with the Escrow Agreement, contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters except the Escrow Agreement. 
(3)    Time of the Essence.  Subject to Section 11K(4) below, time is of the essence of this Agreement.
(4)    Non-Business Days.  Whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day.  As used herein, “business day” means any day other than a Saturday, Sunday, federal holiday or holiday in the state where the Property is located.
(5)    Severability.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.
(6)    Interpretation.  Words used in the singular shall include the plural, and vice-versa, and any gender shall be deemed to include the other.  Whenever the words “including”, “include” or “includes” are used in this Agreement, they should be interpreted in a non-exclusive manner.  The captions and headings of the Sections of this Agreement are for convenience of reference only, and shall not be deemed to define or limit the provisions hereof.  Except as otherwise indicated, all Exhibit and Section references in this Agreement shall be deemed to refer to the Exhibits and Sections in this Agreement.  Each party acknowledges that it has had 

2890904.5     36

counsel of its own choosing in connection with the negotiation of this Agreement, and further acknowledges and agrees that this Agreement (a) has been reviewed by it and its counsel; (b) is the product of negotiations between the parties, and (c) shall not be deemed prepared or drafted by any one party.  In the event of any dispute between the parties concerning this Agreement, the parties agree that any ambiguity in the language of the Agreement is not to be resolved against Seller or Buyer, but shall be given a reasonable interpretation in accordance with the plain meaning of the terms of this Agreement and the intent of the parties as manifested hereby.
(7)    No Waiver.  Waiver by one party of the performance of any covenant, condition or promise of the other party shall not invalidate this Agreement, nor shall it be deemed to be a waiver by such party of any other breach by such other party (whether preceding or succeeding and whether or not of the same or similar nature).  No failure or delay by one party to exercise any right it may have by reason of the default of the other party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by such party while the other party continues to be so in default.
(8)    Consents and Approvals.  Except as otherwise expressly provided herein, any approval or consent provided to be given by a party hereunder may be given or withheld in the absolute discretion of such party.
(9)    Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAW).
(10)    Third Party Beneficiaries.  Except as otherwise expressly provided in this Agreement, Seller and Buyer do not intend by any provision of this Agreement to confer any right, remedy or benefit upon any third party (express or implied), and no third party shall be entitled to enforce or otherwise shall acquire any right, remedy or benefit by reason of any provision of this Agreement.
(11)    Amendments.  This Agreement may be amended by written agreement of amendment executed by all parties hereto, but not otherwise.
(12)    Survival.  Unless otherwise expressly provided for in this Agreement, the representations, warranties, covenants, agreements and conditions of the parties set forth in this Agreement shall not survive the consummation of the transaction contemplated by this Agreement and the delivery and recordation of the Deed.  Notwithstanding the foregoing, (a) all indemnification obligations in this Agreement shall survive the closing of the transaction on the Closing Date; and (b) the indemnification obligations set forth in Sections 5, 11A and 11I shall survive the termination of this Agreement.
L.    Press Releases.  The parties agree that following Closing either party may issue a press release regarding this Agreement or the transaction contemplated, provided that such press release does not disclose the economic terms of the transaction contemplated by this Agreement, and further provided that at least one (1) business day prior to the issuance of any press release, the disclosing party has given the other party a draft of such release and the opportunity to 

2890904.5     37

reasonably comment thereon, and in the event that the non-disclosing party has comments on such press release, such press release shall not be issued unless the parties have mutually agreed upon the terms of the same, provided that the non-disclosing party’s consent to the same shall not be unreasonable withheld, conditioned or delayed.  Notwithstanding anything to the contrary herein, nothing in this Agreement shall prohibit or restrict Buyer from filing a copy of this Agreement with any governmental authority having jurisdiction over Buyer if required by law or if required to be disclosed in any securities filings with or disclosures to the Securities and Exchange Commission.
M.    Post Closing Access.  Buyer shall cooperate with reasonable requests by Seller to provide access to Seller and its employees, agents and representatives during business hours to all documents, books and records given to Buyer by Seller at the Closing for tax and audit purposes, regulatory compliance, and cooperation with governmental investigations upon reasonable prior notice to Buyer, and shall have the right to make copies of such documents, books and records at Seller’s expense.  This Section 11M shall survive the Closing.
N.    Indemnification Obligations.  The indemnification obligations under this Agreement shall be subject to the following provisions:
(1)    The party seeking indemnification (“Indemnitee”) shall notify the other party (“Indemnitor”) of any Claim against Indemnitee within forty‐five (45) days after it has notice of such Claim, but failure to notify Indemnitor shall in no case prejudice the rights of Indemnitee under this Agreement unless Indemnitor shall be prejudiced by such failure and then only to the extent of such prejudice.  Should Indemnitor fail to discharge or undertake to defend Indemnitee against such liability (with counsel reasonably satisfactory to Indemnitee), within thirty (30) days after Indemnitee gives Indemnitor written notice of the same, then Indemnitee may defend and settle such Claim, and Indemnitor’s liability to Indemnitee shall be conclusively established by such settlement, the amount of such liability to include both the settlement consideration and the reasonable costs and expenses, including attorneys’ fees, incurred by Indemnitee in effecting such settlement.  Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless: (a) the employment of such counsel shall have been authorized in writing by Indemnitor in connection with the defense of such action, (b) Indemnitor shall not have employed counsel to direct the defense of such action or any such counsel employed by Indemnitor shall have failed to commence or pursue such defense, or (c) Indemnitee shall have reasonably concluded that there may be defenses available to it which are different from or additional to those available to Indemnitor (in which case Indemnitor shall not have the right to direct the defense of such action or of Indemnitee), in any of which events such fees and expenses shall be borne by Indemnitor.
(2)    The indemnification obligations under this Agreement shall cover the costs and expenses of Indemnitee, including reasonable attorneys’ fees, related to any actions, suits or judgments incident to any of the matters covered by such indemnities.
(3)    The indemnification obligations of Indemnitor under this Agreement shall also benefit any present or future advisor, trustee, director, officer, partner, member, manager, employee, beneficiary, shareholder, participant and agent of or in Indemnitee or any entity now or hereafter having a direct or indirect ownership interest in Indemnitee.

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O.    Cure Rights.  In the event that either party is in default of any of its obligations hereunder (the “Defaulting Party”), the other party shall give the Defaulting Party written notice of such default (the “Notice of Default”).  Except as otherwise expressly provided herein, the Defaulting Party shall thereafter have two (2) business days after receipt of such written Notice of Default to cure such default and the Closing Date shall be extended, if necessary, by no more than two (2) business days to cure such default.  The foregoing notice obligation and cure right shall not apply to the delivery by Buyer of the Deposit or the Closing Payment to Title Company, or to the obligations of the parties to deliver any document to be delivered by a party pursuant to Section 6A of this Agreement.
P.    No Recordation.  In no event shall this Agreement (or any short form or memorandum thereof) be recorded, including, without limitation, in real estate records of Dallas County, Texas; provided, however, nothing in this Agreement shall prohibit or restrict Buyer from filing a copy of this Agreement with any governmental authority having jurisdiction over Buyer if required by law or if required to be disclosed in any securities filings with or disclosures to the Securities and Exchange Commission. 
Q.    Section 1031 Exchange.  Seller and/or Buyer may, for the purpose of treating all or part of its sale or acquisition of the Property as a like-kind exchange of property under Section 1031 of the Internal Revenue Code, assign certain rights that it has under this Agreement, including its right to sell or acquire the Property pursuant to this Agreement, to one or more qualified intermediaries, and to provide notice of such assignment to the other party, provided that no such assignment shall release the assigning party from its obligations hereunder and no such assignment shall delay the Closing hereunder.  The non-assigning party shall not incur any costs in connection with such exchange.  The assigning party agrees to save, indemnify, protect and defend the other party (with counsel reasonably satisfactory to such other party) from and against and hold the other party harmless from any and all expenses and/or liabilities arising from such assignment and exchange and the other party shall not be required to take title to any other property.  The provisions of this Section 11Q shall survive the Closing.
R.    Counterparts/Facsimiles.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original, but all of which, when taken together, shall constitute one and the same instrument, with the same effect as if all of the parties to this Agreement had executed the same counterpart.  Signatures to this Agreement transmitted by facsimile or e-mail of a PDF copy shall be valid and effective to bind the party so signing, provided that each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own facsimile or e-mailed PDF signature and shall accept the facsimile or e-mailed PDF signature of the other party to this Agreement.

THE SUBMISSION OF THIS AGREEMENT FOR EXAMINATION IS NOT INTENDED TO NOR SHALL IT CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF, OR OPTION OR PROPOSAL OF ANY KIND FOR THE PURCHASE OF THE PROPERTY.  

2890904.5     39

EITHER PARTY MAY TERMINATE DISCUSSIONS OR NEGOTIATIONS AT ANY TIME FOR ANY REASON.  THE DELIVERY OF ANY DRAFT DOCUMENTS AND THE PROVISION OF ANY COMMENTS IN RESPONSE THERETO BY THE PARTIES’ COUNSEL WILL NOT PRECLUDE THE PARTIES FROM RAISING COMMENTS OR RESPONDING TO PROVISIONS, EVEN IF THOSE PROVISIONS WERE SET FORTH IN PRIOR DRAFTS OR COMMENTARY.  IN NO EVENT SHALL ANY DRAFT OF THIS AGREEMENT CREATE ANY OBLIGATION OR LIABILITY, IT BEING UNDERSTOOD THAT THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING ONLY WHEN A COUNTERPART HEREOF HAS BEEN EXECUTED AND DELIVERED BY EACH PARTY HERETO AND THE DEPOSIT IS DELIVERED TO TITLE COMPANY.
[Remainder of page intentionally left blank.]

2890904.5     40

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
SELLER:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member 

By:                     
Name:                    
Title:                    

BUYER: 
 
7425 LA VISTA, LLC,  
a Texas limited liability company 
 
By:    /s/ Michael J. O'Hanlon
Name:    Michael J. O’Hanlon
Title:    Chief Executive Officer and President

2890904.5     S-1

PURCHASE AGREEMENT 
 
EXHIBIT LIST
Exhibit A    -    Legal Description of Land
Exhibit B    -    List of Contracts
Exhibit B-1    -    List of Assumed Contracts
Exhibit C    -    Form of Escrow Agreement
Exhibit D    -    Form of Deed
Exhibit E    -    Form of Seller’s Title Certificate
Exhibit F    -    Form of Bill of Sale, Assignment and Assumption
Exhibit G    -    Form of Certificate of “Non-Foreign” Status
Exhibit H    -    Form of Seller Closing Certificate
Exhibit I    -    Form of Buyer Closing Certificate
Exhibit J    -    Form of Tenant Notice Letter
Exhibit K    -    List of Litigation
Exhibit L    -    List of Non-Compliance Notices
Exhibit M    -    Rent Roll, Delinquency Report and Concessions Report
Exhibit N    -    Form of Declaration of Restrictive Covenants
Exhibit O    -    Due Diligence Materials

EXHIBIT A 
 
LEGAL DESCRIPTION OF LAND
TRACT 1:
 

 
Lot 5B, Block A/2698, Lakewood Apartments, an addition to the City of Dallas, Dallas County, Texas according to the plat thereof recorded under Clerk’s File No. 201200164159, Map Records, Dallas County, Texas.
 

 
TRACT 2:
 

 
Lot 3A, Block A/2698, Urban Trail Addition, an addition to the City of Dallas, Dallas County, Texas, according to the plat thereof recorded under Clerk’s File No. 200900010046, Real Property Records, Dallas County, Texas.
EXHIBIT B 
 
LIST OF CONTRACTS
[Attached.] 
 

EXHIBIT B-1 
 
LIST OF ASSUMED CONTRACTS
[Attached.] 
 

2890904.5     Exhibits    

EXHIBIT C 
 
[FORM OF] 
 
ESCROW AGREEMENT
As of September ___, 2014

 
                 
                 
Attention:                 
(also referred to as “Escrow Agent” herein) 

		
	Re:
	Lakewood Flats, 7425 La Vista Drive, Dallas, Texas

Ladies and Gentlemen:
Please refer to that certain agreement captioned “PURCHASE AGREEMENT”, dated as of September ___, 2014, by and between WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Seller”), and 7425 LA VISTA, LLC, a Texas limited liability company (“Buyer”) (which agreement, together with all amendments or modifications thereto, is herein called the “Purchase Agreement”).  Except as otherwise indicated, each capitalized term used herein shall have the meaning set forth for the same in the Purchase Agreement.
This letter (this “Agreement”) will constitute your instructions with respect to the “Funds” and “Documents” described below.
A.    Delivery of Funds.  Within one (1) business day of the execution of this Agreement, you will receive the Deposit from Buyer.  On or before the Closing Date, Buyer will be wire-transferring to your escrow account sufficient funds (the “Closing Payment”) to enable you to make all payments noted on the Closing Statement, including, without limitation, the “Seller Amount” (as hereinafter defined), pursuant to wiring instructions which you will provide us.  As used herein, the Deposit and the Closing Payment are herein collectively called the “Funds”.
B.    Delivery of Documents.
(1)    Recordation Document.  On or before the Closing Date, Seller shall deliver to you an original of the Deed, executed and acknowledged by Seller.  The foregoing document shall be referred to herein as the “Recordation Document”.
(2)    Non-Recordation Documents.  On or before the Closing Date, Buyer or Seller or both, as applicable, shall deliver to you executed originals (which may be in counterpart) of the following documents in the number required under the Purchase Agreement (the “Non-Recordation Documents”):

2890904.5     Exhibit C-1    

(a)    The Bill of Sale, Assignment and Assumption, together with those third party consents described in Section 6A(1) of the Purchase Agreement that have been obtained by Seller;
(b)    The Certificate of Non-Foreign Status;
(c)    The Tenant Notice Letter;
(d)    The Vendor Notice Letter;
(e)    The Closing Statement;
(f)    The Seller’s Title Certificate;
(g)    The Seller Closing Certificate; and
(h)    The Buyer Closing Certificate.
Seller shall also deliver to you those documents required by Section 6A(1)(i) of the Purchase Agreement, and Buyer shall also deliver to you those documents required by Section 6A(2)(f) of the Purchase Agreement.
C.    Conditions to Close of Escrow.  The Funds shall not be disbursed and none of the documents delivered hereunder shall be recorded (or filed) or delivered to any person or entity until each of the following conditions is satisfied:
(1)    You have received all of the Funds (and have determined that you have received funds sufficient to pay all amounts noted on the Closing Statement) and you are unconditionally and irrevocably prepared to wire or otherwise disburse the same in accordance with paragraph D below.
(2)    You have received the Recordation Document, the Non-Recordation Documents (collectively, the “Documents”) and you are unconditionally and irrevocably prepared to record the Recordation Document in accordance with paragraph D below.
(3)    You are unconditionally and irrevocably prepared to issue an Owner’s Policy on the terms required by the Purchase Agreement and in the form of the final marked Title Report or proforma Owner’s Policy approved in writing by Buyer and/or its counsel.
(4)    You have received all information necessary for filing the forms (the “Information Returns”) then required to be filed pursuant to Section 6045 of the Internal Revenue Code with respect to the transactions contemplated by the Purchase Agreement .  In order to assure compliance with the requirements of Section 6045 of the Internal Revenue Code of 1986, as amended (the “Code”), and any related reporting requirements of the Code, the parties hereto agree as follows:
(a)    Seller and Buyer hereby designate the Escrow Agent as the person to be responsible for all information reporting under Section 6045(e) of the Code (the “Reporting 

2890904.5     Exhibit C-2
    

Person”).  Escrow Agent agrees to act as the Reporting Person and hereby assumes all responsibilities for information reporting required under Section 6045(e) of the Code.
(b)    Seller and Buyer hereby agree:
(i)    to provide to the Reporting Person all information and certifications regarding such Party, as reasonably requested by the Reporting Person or otherwise required to be provided by a Party to the transaction described herein under Section 6045 of the Code; and
(ii)    to provide to the Reporting Person such Party’s taxpayer identification number and a statement (on Internal Revenue Service Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Reporting Person), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Reporting Person is correct.
(c)    Each party hereto agrees to retain this Agreement for not less than four years from the end of the calendar year in which the Closing occurs, and to produce it to the Internal Revenue Service upon a valid request therefor.
(5)    You have received written authorization in the form of Exhibit ”A” attached hereto to close the transaction from each of the following:
(a)    Seller or a “Seller Closing Representative”.  “Seller Closing Representative” means Julie Krueger of Seller, or Pablo L. Petrozzi, Esq. or Susan V. Kai, Esq. of Pircher, Nichols & Meeks; and
(b)    Buyer or a “Buyer Closing Representative”.  Buyer Closing Representative means Matt Ozee of Buyer or Michelle Brown, Esq. or Erin Marino, Esq. of Jones Day.
Without limitation on paragraph J below, Buyer and Seller agree, as between themselves, that the delivery of the foregoing authorizations is not an additional condition to the obligation of Buyer or Seller to close the sale contemplated by the Purchase Agreement (the conditions to Closing being set forth in the Purchase Agreement).  The purpose of the foregoing authorizations is simply to enable you to close this escrow (after satisfaction of the other requirements in this paragraph C) without having to determine whether the conditions to Closing set forth in the Purchase Agreement have been satisfied.
D.    Close of Escrow.  If the conditions specified in paragraph C above are satisfied on the Closing Date, then you shall immediately deliver to Seller and Buyer a written confirmation of such satisfaction in the form of Exhibit “B” hereto (which confirmation shall evidence your agreement to immediately take or cause to be taken the actions hereinafter specified and shall be deemed given by your taking any of the following actions), and thereafter you shall immediately:

2890904.5     Exhibit C-3
    

(1)    Wire the amount due Seller (the “Seller Amount”) under the Closing Statement in accordance with wiring instructions delivered to you by Seller (“Seller Wiring Instructions”).
PLEASE NOTE THAT the Seller Wiring Instructions may not be revised except in accordance with written instructions from Seller.  
(2)    Deliver any other amounts due to other third parties under the Closing Statement in accordance with the respective instructions from such third parties.
(3)    Record, or caused to be recorded, the Recordation Document with the appropriate recorder’s office.
(4)    If after paying or delivering the amounts specified in the clauses above (and after paying all Closing costs as specified herein), any portion of the Funds remain, then you are to deliver such remaining balance of the Funds (“Remaining Funds”), pursuant to separate instructions to be delivered by Buyer to you.
(5)    File all Information Returns and take all other actions described in paragraph C(4) of this Agreement.
(6)    Issue the Owner’s Policy and deliver the same to Buyer in accordance with instructions from Buyer or its counsel.
(7)    Deliver the Documents as required by paragraph E below.
E.    Delivery of Documents.  As soon as available, please deliver the Documents as follows:
(1)    to Pircher, Nichols & Meeks at 900 North Michigan Avenue, Suite 1000, Chicago, Illinois 60611, Attention: Susan V. Kai, Esq., the following:
(a)    A copy of the Recordation Document.
(b)    One original (or copy if original is unavailable) of the other Documents.
(2)    to Jones Day at 2727 N. Harwood Street, Dallas, Texas 75201, Attention: Michelle Brown, Esq., the following: 
(a)    The original Recordation Document.
(b)    The original Owner’s Policy.
(c)    One original (or copy if original unavailable) of each of the other Documents.

2890904.5     Exhibit C-4
    

F.    Closing Costs.  All closing costs incurred in carrying out your duties under this Agreement are to be paid in accordance with the Closing Statement.
G.    Investment of Funds.  As soon as you receive any portion of the Funds you should immediately notify Seller and Buyer of such fact.  No investment of the Funds shall be made that will cause you to fail to comply with the provisions of paragraph C above.  If the transactions contemplated herein shall close but on the same day you are unable to deliver the Seller Amount or any other portion of the Funds which represent amounts due Seller but which are, at Seller’s direction pursuant to the Closing Statement, used to pay third parties or other obligations of Seller (the Seller Amount and the other amounts due Seller as aforesaid being herein collectively called the “Seller Funds”), you shall promptly notify Seller of such fact.  If Seller gives you oral or written instructions to do so, you shall invest such Seller Funds in treasury bills or treasury backed repurchase agreements (or such other short-term investment as may be authorized by Seller).  Any investment of the Remaining Funds and any other portion of the Funds which represent additional amounts which are Buyer’s obligations but which, pursuant to the Closing Statement, are to be used to pay third parties or other obligations of Buyer (the Remaining Funds and the other amounts payable by Buyer as aforesaid being herein collectively called the “Buyer Funds”), shall be as directed by Buyer.  All interest accrued on the Buyer Funds after the Closing, shall belong to Buyer and shall be delivered to Buyer in accordance with its separate instructions.  All interest accrued on the Seller Funds after the Closing of the transactions hereunder shall belong to Seller and shall be wire-transferred to Seller in accordance with the Seller Wiring Instructions.  Without limitation on the foregoing, the Funds held by you hereunder shall only be deposited at a major money center bank approved by Buyer and Seller.  Each of Buyer and Seller agrees to execute and deliver to you a form W-9 Request for Taxpayer Identification Number and Certification for any investment made hereunder on its behalf.
H.    Disposition of Deposit.  Escrow Agent shall hold and dispose of the Deposit in accordance with the terms of this Agreement and the Purchase Agreement, or in accordance with any instruction or instructions which shall be signed jointly by both Seller and Buyer, or in accordance with separate instructions of like tenor signed by Seller and Buyer.  Once Escrow Agent has received its completed and signed directions to invest and form W-9, Seller and Buyer hereby instruct and authorize Escrow Agent to invest the Deposit in any of the following:  (i) the investment described in Exhibit “C” hereto; or (ii) such other investments as may be reasonably acceptable to Seller and Buyer.  Without limitation on the foregoing, if Escrow Agent shall receive an instruction (hereinafter the “Instruction”) with respect to the Deposit, or any part thereof, from Seller but not from Buyer, or from Buyer but not from Seller (the party giving the Instruction being hereinafter referred to as the “Instructing Party” and the party which shall not have given the Instruction being hereinafter referred to as the “Non-Instructing Party”), Escrow Agent shall promptly transmit a copy of the Instruction received from the Instructing Party to the Non-Instructing Party.  The Instruction shall specify in detail the pertinent provisions of the Purchase Agreement that govern the Instructing Party’s instruction as to the Deposit, and if a default under the Purchase Agreement is alleged, the Instructing Party shall specify in detail the nature of such default.  Escrow Agent shall act in accordance with the Instruction unless within three (3) business days from receipt by Escrow Agent of the Instruction the Non-Instructing Party shall notify Escrow Agent in writing that Escrow Agent is not to comply with the Instruction and specifying in detail the reasons for not 

2890904.5     Exhibit C-5
    

complying with the Instruction, and if a default under the Purchase Agreement is alleged.  If the Non-Instructing Party shall advise Escrow Agent not to comply with the Instruction and specifies in detail the reason for such noncompliance as aforesaid, Escrow Agent shall not act in accordance with the Instruction, but may thereafter either:
(a)    act solely in accordance with any of the following:
(i)    a new Instruction signed jointly by Seller and Buyer;
(ii)    separate Instructions of like tenor from each of Seller and Buyer; or
(iii)     a certified copy of a final court order from a court of competent jurisdiction ordering the disposition of the Deposit; or
(b)    deposit the Deposit with a court selected by Escrow Agent after giving Seller and Buyer ten (10) days prior written notice that Escrow Agent intends to do the same, and in such event all liability and responsibility of Escrow Agent shall terminate upon such deposit having been made.  Seller and Buyer hereby agree to be severally (and not jointly and severally) responsible for the reasonable costs incurred by Escrow Agent in connection with such deposit with a court.
I.    Cancellation of Instructions.  Notwithstanding anything to the contrary herein, if the conditions specified in paragraph C hereof are not satisfied on or before the Closing Date, then, if you receive written instructions to cancel this escrow from Seller or Buyer, the instructions set forth in paragraphs A through E above shall be deemed canceled, you shall immediately (1) return the Closing Payment (and any interest thereon) to or as directed by Buyer, in accordance with separate written instructions of Buyer, (2) return the Documents to the party depositing the same with you on the next business day thereafter, and (3) and dispose of the Deposit in accordance with the Purchase Agreement, as applicable, and the terms of Paragraph H above.
J.    Limitation of Liability.  You are acting solely as escrow agent hereunder, and you shall be liable solely for your failure to comply with the terms of this Agreement.
K.    Conflict with Purchase Agreement.  In the event of a conflict between this Agreement and the Purchase Agreement, the Purchase Agreement shall control.  Without limitation on the foregoing, nothing contained herein shall limit the obligations of Seller, Buyer or Escrow Agent set forth in the Purchase Agreement.
L    Execution by Counterparts.  This Agreement  may be executed in counterparts, each of which shall be an original, but all of which shall constitute one and the same document.  Delivery by facsimile, or e-mail of a PDF copy, of a counterpart of this Agreement executed by a party shall constitute delivery by such party of such party’s executed counterpart of this Agreement.
[Remainder of Page Left Intentionally Blank]

2890904.5     Exhibit C-6
    

Very truly yours, 
 
SELLER:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member 

By:                     
Name:                    
Title:                    

BUYER: 
 
7425 LA VISTA, LLC,
a Texas limited liability company 
 
By:                    
Name:    Michael J. O’Hanlon
Title:    Chief Executive Officer and President

ACCEPTED AND AGREED TO 
as of the date first above written:

ESCROW AGENT: 
 
ALAMO TITLE INSURANCE
 
By:                    
Name:                    
Title:                    

2890904.5     Exhibit C-7
    

EXHIBIT “A” TO ESCROW AGREEMENT
AUTHORIZATION LETTER

__________, 2014

 
                 
                 
Attention:                 

		
	Re:
	Lakewood Flats, 7425 La Vista Drive, Dallas, Texas

Ladies and Gentlemen:
Please refer to that certain letter (the “Letter of Instructions”) captioned “ESCROW AGREEMENT”, dated as of September ___, 2014 to you from WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership, and 7425 LA VISTA, LLC, a Texas limited liability company, regarding the referenced property.  Except as otherwise indicated, each capitalized term used herein shall have the meaning set forth for the same in the Letter of Instructions.
This letter will constitute the authorization required under clause (5) of paragraph C of the Letter of Instructions, but shall not limit your obligation to satisfy the other conditions under such paragraph C prior to disbursing the Funds.
Thank you for your cooperation.
Very truly yours, 
 
 
______________________________

2890904.5     Exhibit C-8
    

EXHIBIT “B” TO ESCROW AGREEMENT
CONFIRMATION BY TITLE COMPANY 
 
 
____________, 2014

	
		
	VIA E-MAIL
Jones Day
 
2727 North Harwood Street
 
Dallas, Texas 75201
 
Attention:  Michelle Brown
 

	VIA E-MAIL
Pircher, Nichols & Meeks 
900 North Michigan Avenue, Suite 1000 
Chicago, Illinois 60611 
Attention:  Real Estate Notices (PLP/SVK)

		
	Re:
	Lakewood Flats, 7425 La Vista Drive, Dallas, Texas

Ladies and Gentlemen:
Please refer to that certain letter (the “Letter of Instructions”) captioned “ESCROW AGREEMENT”, dated as of September ___, 2014, to us from WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership, and 7425 LA VISTA, LLC, a Texas limited liability company.
Pursuant to paragraph D of the Letter of Instructions, we hereby confirm that each of the conditions to disbursement and recordation set forth in paragraph C of the Letter of Instructions has been satisfied.
Very truly yours, 
 

__________ 
 
By:    __________________________________ 
Name:    __________________________________ 
Title:    __________________________________

2890904.5     Exhibit C-9
    

2890904.5     Exhibit C-10
    

EXHIBIT “C” TO ESCROW AGREEMENT
INVESTMENT INSTRUCTIONS
[To be provided.]

EXHIBIT D 
 
[FORM OF DEED] 

Tax Parcel # _____________________

SPECIAL WARRANTY DEED

STATE OF TEXAS        § 
                §    KNOW ALL MEN BY THESE PRESENTS: 
COUNTY OF DALLAS    §
THAT WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Grantor”), for and in consideration of the sum of Ten and No/100 Dollars ($10.00) cash and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, paid by 7425 LA VISTA, LLC, a Texas limited liability company (“Grantee”), subject to the provisions set forth herein, HAS GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents DOES GRANT, BARGAIN, SELL and CONVEY unto Grantee all of that certain tract or tracts of land (the “Land”) described on Exhibit A which is attached hereto and incorporated herein by reference for all purposes, together with all of Grantor's right, title and interest, if any, in and to (i) all buildings, improvements, structures and fixtures currently located thereon; (ii) all of the rights, easements, interests, benefits, privileges, and appurtenances pertaining to the Land; (iii) any and all public roads and public rights-of-way bounding such land, together with all rights of ingress and egress unto such public roads and public right-of-way; (iv) strips or gores, if any, between the land and abutting properties not owned by Grantor or its affiliates; and (v) any water or water rights benefiting the Land and any oil, gas and other minerals in, under and that may be produced from the Land (said Land, improvements, easements, interests, benefits, privileges, rights and appurtenances being herein collectively referred to as the “Property”).
This conveyance is made subject to the matters set forth on Exhibit B attached hereto (the “Permitted Encumbrances”).
TO HAVE AND TO HOLD the Property 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 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, and subject, however, to the provisions contained herein.
Ad valorem taxes for the year 2014 having been prorated, Grantee, by its acceptance of this Special Warranty Deed, assumes payment thereof.
    
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, Grantor has caused this instrument to be signed to be effective as of ___________ ___, 2014.

GRANTOR:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member 

By:                     
Name:                    
Title:                    

STATE OF TEXAS        § 
                § 
COUNTY OF DALLAS    §
This instrument was acknowledged before me on the ______ day of _____________, 2014, by ________________________, as __________________ of _________________________ on behalf of such ____________.

                                            
Notary Public in and for the State of Texas

GRANTEE'S ADDRESS FOR TAX NOTICES:

7425 LA VISTA, LLC
c/o Behringer Harvard Opportunity REIT II, Inc.
15601 Dallas Parkway, Suite 600
Addison, Texas  75001
Attention:  ________________

This instrument prepared by:
Pablo L. Petrozzi, Esq. (with assistance of Texas counsel) 
Pircher, Nichols & Meeks
900 North Michigan Avenue
Suite 1000
Chicago, Illinois 60611

Exhibit A – Legal Description (attach at Closing)
Exhibit B – Permitted Exceptions: 
(i)    unrecorded leases to the extent disclosed on the rent roll delivered by Grantor to Grantee as of the date hereof.
(ii)    all building, signage and zoning ordinances, laws, regulations and restrictions by municipal and other governmental authorities.
(iii)    Permitted Encumbrances (attach at Closing)

EXHIBIT E 
 
[FORM OF SELLER TITLE CERTIFICATE]
(Lakewood Flats, 7425 La Vista Drive, Dallas, Texas)
The undersigned (“Owner”) hereby certifies to             , a              (“Title Company”) that, to Owner’s knowledge:
1.    Owner is the owner of that certain property described on Attachment ”A” (the “Subject Property”).  However, the foregoing statement as to Owner’s ownership of the Subject Property is based solely upon             Owner’s Policy No. __________, effective __________ at __________ a.m., and the fact that the Owner has not transferred fee title to the Subject Property.  
2.    Except for routine repairs or maintenance, or both, which have been or will be duly paid in the ordinary course of business, there are no past due bills for the performance of labor at, or the provision of materials or supplies for, the Subject Property performed or provided at the written request, or with the written approval, of the undersigned.
3.    The improvements constructed on the Subject Property have been previously completed, as evidenced by the certificate of occupancy issued on March 29, 2013.
4.    The undersigned has not entered into any mortgages encumbering the Subject Property or improvements thereon that have not been fully performed or satisfied or released, except as set forth in that certain title commitment (the “Title Commitment”) dated ____________, 2014, issued by Title Company and identified as no. ____________.
5.    The only permitted occupants of the Property are residential tenants under leases or other occupancy agreements (and their subtenants) with rights of possession only.  The undersigned has not entered into any options to purchase the Subject Property or rights of first refusal regarding the Subject Property with any occupants either pursuant to written leases or by separate agreements.
The undersigned makes these statements for the purpose of inducing Title Company to issue the endorsements to one or more of the owner’s policies issued pursuant to the Title Commitment.
This Seller Title Certificate (“Certificate”) is not intended to give any benefits, rights, privileges, actions or remedies to any person, partnership, firm, corporation or other entity, other than Title Company, as a third party beneficiary or otherwise under any theory of law.  Further, this Certificate shall not be disclosed, released or quoted to or relied upon by any other person.
Any statement “to Owner’s knowledge” (or similar phrase) shall mean that the undersigned has no knowledge that such statement is untrue (and, for this purpose, the undersigned’s knowledge shall mean the present actual knowledge (excluding constructive or imputed knowledge) of Julie Krueger of Owner, but such individual shall not have any personal liability in connection therewith).  Notwithstanding anything to the contrary herein, (1) any cause of action for a breach of this Certificate shall survive until 90 days after the date hereof, at which time the provisions hereof (and any obligation or liability of or claims against Owner under this Certificate other than a cause of action resulting from any breach by Owner of this Certificate then in litigation in Dallas, Dallas County, Texas) shall terminate; and (2) to the extent Title Company shall have knowledge as of the date hereof that any of the statements contained herein is false or inaccurate, then the undersigned shall have no liability with respect to the same.  Without limitation on item (2) above, Title Company shall be deemed to have knowledge of any matters of record.
Neither the undersigned nor any present or future direct or indirect partner, member, advisor, trustee, director, officer, employee, beneficiary, shareholder, participant or agent of the undersigned, shall have any personal liability, directly or indirectly, under or in connection with this Certificate; and Title Company and its successors and assigns, and, without limitation, all other persons and entities, shall look solely to the Subject Property for the payment of any claim or for any performance; and Title Company hereby waives any and all such personal liability.  The limitations of liability provided in this Section are in addition to, and not in limitation of, any limitation on liability applicable provided by law or by any other contract, agreement or instrument.
This Certificate is executed as of the _____ day of __________, 2014.
[Remainder of page intentionally left blank]

OWNER:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

EXHIBIT F 
 
[FORM OF] 
 
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR VALUABLE CONSIDERATION, receipt and adequacy of which is hereby acknowledged, as of the date hereof (the “Effective Date”), the undersigned, WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Assignor”), hereby sells, transfers, assigns and conveys to 7425 LA VISTA, LLC, a Texas limited liability company (“Assignee”), all right, title and interest of Assignor in and to the “Personal Property” as described on Schedule 1 attached hereto, the interest of the landlord in the “Tenant Leases” as described on Schedule 2 attached hereto, the “Assumed Contracts” as described on Schedule 3 attached hereto, and the “Intangible Property”, as each of the foregoing is defined in that certain agreement (“Purchase Agreement”) captioned “PURCHASE AGREEMENT”, dated as of September___, 2014, by and between Assignor and Assignee, providing for, among other things, the conveyance of the Personal Property, the Tenant Leases, the Assumed Contracts and the Intangible Property.  Unless otherwise defined herein, all terms used in a capitalized manner herein shall have the meaning set forth in the Purchase Agreement.
The covenants, agreements, representations, warranties, indemnities and limitations provided in the Purchase Agreement with respect to the property conveyed hereunder (including, without limitation, the limitations provided in Sections 8, 9 and 11B of the Purchase Agreement), are hereby incorporated herein by this reference as if herein set out in full and shall inure to the benefit of and shall be binding upon Assignee and Assignor and their respective successors and assigns.
Assignee hereby accepts the foregoing Bill of Sale, Assignment and Assumption and hereby agrees to assume and discharge, in accordance with the terms thereof, (1) all of the burdens and obligations of Assignor under or relating to the Personal Property, the Tenant Leases, the Assumed Contracts and the Intangible Property first arising and accruing on and after the Effective Date, and (2) the obligation to pay all unpaid payments that are credited to Assignee under the proration provisions of the Purchase Agreement.
The provisions of this instrument shall be binding upon and inure to the benefit of Assignor and Assignee and their respective successors and assigns.
Said property is conveyed “as is” without warranty or representation, except as expressly provided in (and subject to the limitations of) the Purchase Agreement.
[Signatures on following page]
IN WITNESS WHEREOF, Assignor and Assignee have executed this Bill of Sale, Assignment and Assumption as of __________, 2014.
ASSIGNOR:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

ASSIGNEE: 
 
7425 LA VISTA, LLC,  
a Texas limited liability company

By:                    
Name:    Michael J. O’Hanlon
Title:    Chief Executive Officer and President

SCHEDULE 1
PERSONAL PROPERTY
SCHEDULE 2
TENANT LEASES

SCHEDULE 3
ASSUMED CONTRACTS

EXHIBIT G 
 
[FORM OF] 
 
CERTIFICATE OF NON-FOREIGN STATUS
(Lakewood Flats, 7425 La Vista Drive, Dallas, Texas)
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity.  To inform 7425 LA VISTA, LLC, a Texas limited liability company (“Transferee”), that withholding of tax is not required upon the disposition of a U.S. real property interest by [●] (“Transferor”), the undersigned hereby certifies to 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 Internal Revenue Code and Income Tax Regulations);
2.  Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations;
3.  Transferor’s U. S. employer identification number is [●]; and
4.  Transferor’s office address is:
c/o Walton Street Capital, L.L.C.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois  60611
Attention:  Julie Krueger            
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 penalties 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.
Executed as of the ____ day of ______, 2014, at ___________, ____.
TRANSFEROR:
WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

EXHIBIT H 
 
[FORM OF] 
 
SELLER’S CLOSING CERTIFICATE
THIS SELLER’S CLOSING CERTIFICATE is made as of the _____ day of __________, 2014, by WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Seller”), to 7425 LA VISTA, LLC, a Texas limited liability company (“Buyer”).
R E C I T A L S :
A.    Pursuant to that certain Purchase Agreement dated as of September ___, 2014 between Seller and Buyer (together with all amendments and addenda thereto, the “Agreement”), Seller has agreed to sell to Buyer the Property (as defined in the Agreement).
B.    The Agreement requires the delivery of this Seller’s Closing Certificate.
NOW THEREFORE, pursuant to the Agreement, Seller does hereby represent and warrant to Buyer that:
1.    Except as specifically set forth below, each and all of the representations and warranties of Seller contained in the Agreement are correct, in all material respects, as of the date hereof as if made on and as of the date hereof.
2.    Exceptions:  See Exhibit “A” attached hereto and made a part hereof.
This Seller’s Closing Certificate is subject to the terms and conditions of the Agreement (including all limitations on liability and survival limitations contained therein).
[Signature on following page]

IN WITNESS WHEREOF, the undersigned has executed this Seller’s Closing Certificate as of the day and year first above written.
SELLER:
 
WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

EXHIBIT “A” TO SELLER’S CLOSING CERTIFICATE
Exceptions to Seller’s Representations and Warranties
[To be provided.]

EXHIBIT I 
 
[FORM OF] 
 
BUYER’S CLOSING CERTIFICATE
THIS BUYER’S CLOSING CERTIFICATE is made as of the _____ day of __________, 2014, by 7425 LA VISTA, LLC, a Texas limited liability company (“Buyer”), to WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Seller”).
R E C I T A L S :
A.    Pursuant to that certain Purchase Agreement dated as of September ___, 2014 between Seller and Buyer (together with all amendments and addenda thereto, the “Agreement”), Seller has agreed to sell to Buyer the Property (as defined in the Agreement).
B.    The Agreement requires the delivery of this Buyer’s Closing Certificate.
NOW THEREFORE, pursuant to the Agreement, Buyer does hereby represent and warrant to Seller that:
1.    Except as specifically set forth below, each and all of the representations and warranties of Buyer contained in the Agreement are correct, in all material respects, as of the date hereof as if made on and as of the date hereof.
2.    Exceptions:  See Exhibit “A” attached hereto and made a part hereof.
This Buyer’s Closing Certificate is subject to the terms and conditions of the Agreement (including all limitations on liability and survival limitations contained therein).
[Signature on following page]
IN WITNESS WHEREOF, the undersigned has executed this Buyer’s Closing Certificate as of the day and year first above written.
BUYER: 
 
7425 LA VISTA, LLC,
a Texas limited liability company

By:                    
Name:    Michael J. O’Hanlon
Title:    Chief Executive Officer and President

EXHIBIT “A” TO BUYER’S CLOSING CERTIFICATE
Exceptions to Buyer’s Representations and Warranties
[To be provided.]

EXHIBIT J 
 
[FORM OF] 
 
TENANT NOTICE

__________, 2014

_____________________
 
_____________________
 
_____________________
Re:    Sale of Lakewood Flats
Dear Sir or Madam:

Effective as of the date of this letter, WGS LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Seller”), has sold Lakewood Flats located at 7425 La Vista Drive, Dallas, Texas (the “Project”), to 7425 LA VISTA, LLC, a Texas limited liability company (“Buyer”).

In connection with such purchase and sale, Buyer has assumed the landlord's obligations under your lease covering your leasehold premises at the Project. You are hereby notified that Buyer has received and is responsible for your security deposit in the amount of $_________.
  
You should make your future rent payments payable to “_____________________,” and deliver your future rent payments to the following address:

___________________
___________________
 
Unless and until you are otherwise notified in writing by Buyer, the address of Buyer for all purposes under your lease, including the recoupment of any security deposits and the giving of any notices provided for in your lease, but excluding the payments of rentals, is:
            
___________________
___________________
                
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
Very truly yours,
SELLER:

WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

BUYER: 
 
7425 LA VISTA, LLC,
a Texas limited liability company

By:                    
Name:    Michael J. O’Hanlon
Title:    Chief Executive Officer and President

EXHIBIT K 
 
LIST OF LITIGATION
None.

EXHIBIT L 
 
LIST OF NON-COMPLIANCE NOTICES
None.

EXHIBIT M 
 
RENT ROLL, DELINQUENCY REPORT & CONCESSIONS REPORT
[Attached.]

2890904.5     Exhibit C-11
    

EXHIBIT N 
 
[FORM OF DECLARATION OF RESTRICTIVE COVENANTS] 

	
		
	AFTER RECORDING RETURN TO:
Winstead PC 
2728 N. Harwood Street
500 Winstead Building
Dallas, Texas 75201 
Attention:  John M. Nolan
	 

DECLARATION OF RESTRICTIVE COVENANTS
THIS DECLARATION OF RESTRICTIVE COVENANTS (this “Declaration”), dated as of _____________, 2014, is made by WSG LAKEWOOD MF VI, L.P., a Delaware limited partnership (“Declarant”).
A.    Background.  Declarant owns the land described on Exhibit “A” to this Declaration (the “Property”).  Simultaneously with or after executing this Declaration, Declarant will be selling the Property to 7425 La Vista, LLC, a Texas limited liability company (“Purchaser”).  Declarant and Purchaser have agreed to impose certain restrictions on the Property.  But for creation of such restrictions, Declarant would not convey the Property to Purchaser.
B.    Condominium Conversion Restriction.  Purchaser and any subsequent owner of all or any portion of the Property, hereby covenant and agree not to convert the Property or any portion thereof to a condominium development, or file a condominium map or establish a condominium regime (collectively, the “Condominium Conversion Restriction”) for a period equal to  (10) years commencing after completion of the initial construction of the improvements on the Property, which completion is evidenced by the issuance of the certificate of occupancy for the Property on March 29, 2013 (the “Restrictive Period”).  For purposes of this Declaration, the occurrence of any one or more of the following conditions during the Restrictive Period shall constitute a “Triggering Event”:
1.    the conversion of the Property or any portion thereof to a condominium, cooperative, or planned community subject to a declaration pursuant to which a person, by virtue of the person’s ownership of a unit therein is obligated to pay for a share of real estate taxes, insurance premiums, maintenance, or improvement of, or other expenses related to common elements, other units or other real estate described in such declaration (a “Planned Community”); or
2.    the filing of a condominium map or establishment of a condominium regime; or
3.    the delivery of a deed of any separate interest (as defined by Law) in any residential dwelling unit constructed on the Property (other than leases of such units in the regular course of business) in connection with the conversion of all or any portion of the Property into condominiums, cooperatives, or Planned Communities.

2890904.5     Exhibit N-1

C.    Indemnification of Declarant.  In the event a Triggering Event occurs during the Restrictive Period,  whether by Purchaser or any Third Party Indemnitor (as hereinafter defined), Purchaser hereby agrees by its acceptance of the deed conveying the Property to Purchaser to indemnify, defend and hold Declarant, Declarant’s Affiliates and Declarant’s Agents harmless from and against:  (i) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE VIOLATION OF THE CONDOMINIUM CONVERSION RESTRICTION; (ii) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE DESIGN, PROCESSING, BONDING, DEVELOPMENT, CONSTRUCTION, IMPROVEMENT, COMPLETION, REPAIR, REMEDIATION, OWNERSHIP, USE, MAINTENANCE, MANAGEMENT OR OPERATION OF THE PROPERTY, OR ANY PORTION OR PORTIONS THEREOF, INCLUDING, WITHOUT LIMITATION, ANY DESIGN OR CONSTRUCTION DEFECTS, ERRORS OR OMISSIONS OR OTHER CONDITIONS AFFECTING THE PROPERTY, WHETHER THE FOREGOING CLAIMS DESCRIBED IN SUBSECTIONS (i) AND (ii) ABOVE RESULT FROM THE ACTION, INACTION, NEGLIGENCE, OR STRICT LIABILITY OF DECLARANT, DECLARANT’S AFFILIATES OR OTHERWISE.  THE INDEMNITIES HEREIN SHALL BE EFFECTIVE WHETHER OR NOT THE CLAIM IS CAUSED BY THE SOLE, CONCURRENT OR PARTIAL NEGLIGENCE, FAULT OR STRICT LIABILITY OF DECLARANT OR ANY OF DECLARANT’S AFFILIATES AND/OR ANY OF DECLARANT’S AGENTS.  Purchaser, at its sole cost and expense, shall promptly dispose of all such Claims, defend all Claims filed or asserted against Declarant or any of Declarant’s Affiliates and/or any of Declarant’s Agents with counsel satisfactory to Purchaser and Declarant, pay all judgments rendered against Declarant or any of Declarant’s Affiliates and/or any of Declarant’s Agents related to such Claims, including, without limitation, reimbursement to Declarant or any of Declarant’s Affiliates and/or any of Declarant’s Agents upon demand for their reasonable attorneys’ fees and costs incurred in defense of any Claims.
D.    Indemnification of Purchaser.  In the event a Triggering Event occurs during the Restrictive Period by any subsequent owner or transferee of all or any portion of the Property after Purchaser (each, a “Third Party Indemnitor”), each Third Party Indemnitor hereby agrees by its acceptance of the deed conveying the Property to such Third Party Indemnitor to indemnify, defend and hold Purchaser, Purchaser’s Affiliates and Purchaser’s Agents harmless from and against:  (i) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE VIOLATION OF THE CONDOMINIUM CONVERSION RESTRICTION; (ii) ANY AND ALL CLAIMS ARISING OUT OF OR RELATED TO, DIRECTLY OR INDIRECTLY, THE DESIGN, PROCESSING, BONDING, DEVELOPMENT, CONSTRUCTION, IMPROVEMENT, COMPLETION, REPAIR, REMEDIATION, OWNERSHIP, USE, MAINTENANCE, MANAGEMENT OR OPERATION OF THE PROPERTY, OR ANY PORTION OR PORTIONS THEREOF, INCLUDING, WITHOUT LIMITATION, ANY DESIGN OR CONSTRUCTION DEFECTS, ERRORS OR OMISSIONS OR OTHER CONDITIONS AFFECTING THE PROPERTY, WHETHER THE FOREGOING CLAIMS DESCRIBED IN SUBSECTIONS (i) AND (ii) ABOVE RESULT FROM THE ACTION, INACTION, NEGLIGENCE, OR STRICT LIABILITY OF PURCHASER, PURCHASER’S AFFILIATES OR OTHERWISE.  THE INDEMNITIES HEREIN SHALL BE EFFECTIVE WHETHER OR NOT THE CLAIM IS CAUSED BY THE SOLE, CONCURRENT OR PARTIAL NEGLIGENCE, FAULT OR STRICT LIABILITY OF PURCHASER OR ANY OF PURCHASER’S AFFILIATES AND/OR ANY OF PURCHASER’S AGENTS.  Each Third Party Indemnitor, at its sole cost and expense, shall promptly dispose of all such Claims, defend all Claims filed or asserted against Purchaser or any of Purchaser’s Affiliates and/or any of Purchaser’s Agents with counsel satisfactory to Purchaser and such Third Party Indemnitor, pay all judgments rendered against Purchaser or any of Purchaser’s Affiliates and/or any of Purchaser’s Agents related to such Claims, including, without limitation, reimbursement to Purchaser or any of Purchaser’s Affiliates and/or any of Purchaser’s Agents upon demand for their reasonable attorneys’ fees and costs incurred in defense of any Claims.

2890904.5     Exhibit N-2

E.    Subsequent Transfers.  Any Third Party Indemnitor shall by its acceptance of the deed conveying the Property to such Third Party Indemnitor be deemed to have agreed to accept title to the Property or any portion thereof subject to this Declaration and will be deemed to have agreed to be bound by the terms hereof as if such party was the original Purchaser defined herein.  The liability of any Third Party Indemnitor shall be joint and several.
F.    Assignment.  Declarant may assign any and all of its right, title and interest (including any related Claims against Purchaser) under this Section to any Declarant Affiliate without Purchaser’s prior consent.
G.    Covenant Running With the Land.  This Declaration shall be a covenant that runs with the land and shall survive the conveyance of the Property or any portion thereof by Purchaser to any Third Party Indemnitor.
H.    Definitions.  For purposes of this Declaration, and unless otherwise defined in this Declaration, any capitalized term used herein shall have the following meaning:
1.    “Affiliate(s)” means, (a) with respect to any person, any other person controlled by, controlling or under common control with the such person, and (b) any person which is a direct or indirect owner, partner, manager, member, or shareholder to one or more tenant-in-common entities that owns or controls, whether directly or indirectly, any right, title or interest in or to all or any portion of the Property.  The term “person” as used throughout this document will be interpreted broadly to include, without limitation, any individual, trust, corporation, company, partnership, limited liability company, professional association, governmental or quasi-governmental authority or any political subdivision thereof or any other type of entity.  The term “control” (including all inflected forms thereof) as used throughout this document means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any person, whether through ownership of voting securities or otherwise.
2.    “Claim(s)” shall mean any and all obligations, losses, injuries, damages, claims, liens or encumbrances, costs, expenses, demands, liabilities, penalties and investigation costs, including reasonable attorneys’ fees and costs whether or not legal proceedings are instituted or asserted.
3.    “Declarant’s Affiliates” shall mean Affiliates of Declarant, including, without limitation,  WGS Lakewood MF GP VI, L.L.C., WGS Lakewood Holdings VI, L.L.C., Greystar Development and Construction, L.P. – Lakewood Contractor Series, a separate series of Greystar Development & Construction, L.P., Walton Street Real Estate Fund VI-Q, L.P., and any other person (as defined herein) controlling, controlled by or under common control with Declarant.
4.    “Declarant’s Agents” shall mean any of Declarant’s Affiliates, or any partners, members, managers, parents, shareholders, owners directors, officers, employees, agents, affiliates, representatives, attorneys, architects, engineers, contractors, subcontractors, brokers or other consultants or other persons or entities acting on behalf of Declarant or Declarant’s Affiliates.
5.    “Law” means all applicable federal, state, local and other laws, statutes, regulations, codes, orders, ordinances, rules, conditions and requirements, including, without limitation, those relating to fire, safety, building, construction (including, without limitation, permits, approvals and entitlements), land use, subdivision, health, labor, environmental protection, seismic design, conservation, parking, handicapped access, zoning and building and all restrictive covenants (if any), other title encumbrances and other obligations affecting the Property, all environmental laws, all applicable provisions of the Fair Housing Act of 1968 and the Americans with Disabilities Act of 1990 and all amendments to any of the foregoing.

2890904.5     Exhibit N-3

6.    “Purchaser’s Affiliates” shall mean Affiliates of Purchaser, including, without limitation,  and any other person (as defined herein) controlling, controlled by or under common control with Purchaser.
7.    “Purchaser’s Agents” shall mean any of Purchaser’s Affiliates, or any partners, members, managers, parents, shareholders, owners directors, officers, employees, agents, affiliates, representatives, attorneys, architects, engineers, contractors, subcontractors, brokers or other consultants or other persons or entities acting on behalf of Purchaser or Purchaser’s Affiliates.
I.    Mortgagee Protection.  If any “Lender” (as defined herein) succeeds to the interest of Purchaser or any Third Party Indemnitor during the Restrictive Period, (1) Lender’s liability under this Declaration shall be limited solely to the period during which Lender (or its Affiliates, which includes any special servicer or receiver acting for or on behalf of Lender or its Affiliates) has ownership of, or exercises management or control over the leasing, use and/or operation of, the Property; (2) Lender shall not have any liability for any condominium conversion or cooperative conversion that occurs (a) during the period that Purchaser (or any of its Affiliates) or any Third Party Indemnitor (or any Affiliates thereof) owns and has the right to continue to exercise exclusive management and control over the Property, or (b) after Lender sells the Property to a bona fide third party transferee; and (3) Lender’s liability under this Declaration shall be limited solely to Lender’s interest, if any, in the Property, and the proceeds from any fees earned by Lender during its ownership, leasing, management, operation and sale of the Property by Lender (collectively, “Lender’s Interest”). For the purposes of this Declaration, “Lender” shall be defined to mean any first mortgagee holding a first mortgage or deed of trust on the Property, any of its Affiliates, and any special servicer or receiver acting for or on behalf of Lender or its Affiliates (as applicable); provided, however, that the term “Lender” shall not include any bona fide third party transferee of such Lender or any prior or subsequent owner of all or any portion of the Property. For purposes of this Declaration, the liability of Lender and its Affiliates, which includes any special servicer or receiver acting for or on behalf of Lender or its Affiliates, is joint and several.
J.    Other Provisions.
1.    Any violation of the provisions herein contained will be deemed to be a continuing violation and no delay in the delivery of any notice of any violation hereof or in the enforcement of any rights or the seeking of any remedies provided hereunder will constitute, or be deemed to constitute, a waiver of the right to give such notice, enforce such right or seek such remedy at any time after the occurrence of such violation.
2.    This Declaration may only be amended, supplemented or modified by a written agreement signed by Declarant (notwithstanding the subsequent transfer of the Property or any portion thereof) and the owner(s) of the Property and properly filed of public record.
3.    If any attorney is engaged by Declarant, Declarant’s Affiliates and/or Declarant’s Agents or by Purchaser, Purchaser’s Affiliates and/or Purchaser’s Agents to enforce or defend any provision of this Declaration, with or without the filing of any legal action or proceeding, Purchaser and each Third Party Indemnitor, as applicable, shall immediately pay to the indemnified party or parties hereunder, as applicable, upon demand, the amount of all attorneys’ and consultants’ fees and expenses and all costs incurred by such indemnified party or parties, as applicable, in connection therewith.
4.    This Declaration shall automatically terminate at the end of the Restrictive Period at which point the Condominium Conversion Restriction shall become null and void and of no further effect without any action being required or any document needing to be recorded.  Notwithstanding the foregoing, Declarant shall, at the request of Purchaser, any Third Party Indemnitor or any of their respective successors, assigns, and lenders execute such documents as may be reasonably necessary to confirm any termination.

2890904.5     Exhibit N-4

5.    Purchaser and each Third Party Indemnitor shall, at the request of Declarant, execute and deliver such documents as may be reasonably necessary to ratify and confirm the terms of this Declaration and its respective duties, obligations and liability hereunder.
[Remainder of page intentionally left blank.]

2890904.5     Exhibit N-5

IN WITNESS WHEREOF, this instrument has been executed by Declarant as of the date set forth above.
DECLARANT:
WGS LAKEWOOD MF VI, L.P., 
a Delaware limited partnership

By:     WGS Lakewood MF GP VI, L.L.C.,
a Delaware limited liability company,
its General Partner

By:    WGS Lakewood Holdings VI, L.L.C.,
a Delaware limited liability company,
its Sole Member

By:    Lakewood Manager, LLC, 
            a Delaware limited liability company, 
            its Administrative Member

By:                     
Name:                    
Title:                    

STATE OF TEXAS        § 
                § 
COUNTY OF DALLAS    §
This instrument was acknowledged before me on the ______ day of _____________, 2014, by ________________________, as __________________ of _________________________ on behalf of such ____________.

                                            
Notary Public in and for the State of Texas

2890904.5     Exhibit N-6

EXHIBIT “A” 
TO FORM OF DECLARATION OF RESTRICTIVE COVENANTS 
 
LEGAL DESCRIPTION OF LAND

EXHIBIT O 
 
DUE DILIGENCE MATERIALS
[Attached.]

2890904.5     Exhibit N-7EX 10.2  Loan Agreement Lakewood Flats

Exhibit 10.2
_________________________________
LOAN AGREEMENT
_________________________________
 
 
Dated as of October 10, 2014 
 
 
between 
 
 
7425 LA VISTA, LLC 
as Borrower 
 
 
and 
 
 
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, 
as Lender

Deal Name: Lakewood Flats
Loan Number: 706109689

Prudential Loan No. 706109689
Lakewood Flats 
Loan Agreement
18092735v.5

TABLE OF CONTENTS
Page
		
	ARTICLE I - OBLIGATIONS AND PAYMENTS
	1

		
	Section 1.01
	Obligations    1

		
	Section 1.02
	Documents    2

		
	Section 1.03
	Loan Payments    2

		
	Section 1.04
	Late Payment and Default Interest    6

		
	Section 1.05
	Application of Payments    7

		
	Section 1.06
	Prepayment    7

		
	Section 1.07
	Treatment of Payments    8

		
	Section 1.08
	Unconditional Payment    8

		
	Section 1.09
	Certain Waivers    9

		
	ARTICLE II - REPRESENTATIONS AND WARRANTIES
	9

		
	Section 2.01
	Title, Legal Status and Authority    9

		
	Section 2.02
	Validity of Documents    9

		
	Section 2.03
	Litigation    9

		
	Section 2.04
	Status of Property    9

		
	Section 2.05
	Tax Status of Borrower    11

		
	Section 2.06
	Bankruptcy and Equivalent Value    11

		
	Section 2.07
	Disclosure    11

		
	Section 2.08
	Illegal Activity    11

		
	Section 2.09
	OFAC Lists    12

		
	Section 2.10
	Property as Single Asset    12

		
	Section 2.11
	Representations and Warranties Relating to Leases, Rents and Other Matters    12

		
	ARTICLE III - COVENANTS AND AGREEMENTS
	13

		
	Section 3.01
	Payment and Performance of Obligations    13

		
	Section 3.02
	Continuation of Existence    13

		
	Section 3.03
	Taxes and Other Charges    13

		
	Section 3.04
	Defense of Title, Litigation, and Rights under Documents    14

		
	Section 3.05
	Compliance with Laws and Operation and Maintenance of Property    14

		
	Section 3.06
	Insurance    16

		
	Section 3.07
	Damage and Destruction of Property    19

		
	Section 3.08
	Condemnation    20

		
	Section 3.09
	Liens and Liabilities    22

		
	Section 3.10
	Tax and Insurance Deposits; Other Deposits    22

		
	Section 3.11
	ERISA    23

		
	Section 3.12
	Environmental Representations, Warranties, and Covenants    24

		
	Section 3.13
	Electronic Payments    25

		
	Section 3.14
	Inspection    26

		
	Section 3.15
	Records, Reports, and Audits    26

		
	Section 3.16
	Borrower’s Certificates    27

		
	Section 3.17
	Full Performance Required; Survival of Warranties    27

		
	Section 3.18
	Additional Security    27

		
	Section 3.19
	Further Acts    28

		
	Section 3.20
	Compliance with Anti-Terrorism Regulations    28

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	Section 3.21
	Compliance with Property as Single Asset    29

		
	Section 3.22
	Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of Borrower    29

		
	Section 3.23
	Leasing Restrictions    31

		
	Section 3.24
	Covenants Relating to Leases and Rents    32

		
	Section 3.25
	Tenant Recovery    32

		
	Section 3.26
	Tax Status of Borrower    32

		
	Section 3.27
	Disclosure    33

		
	Section 3.28
	Illegal Activity    33

		
	ARTICLE IV - ADDITIONAL ADVANCES; EXPENSES; SUBROGATION
	33

		
	Section 4.01
	Expenses and Advances    33

		
	Section 4.02
	Subrogation    33

		
	ARTICLE V - SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY
	33

		
	Section 5.01
	Due-on-Sale or Encumbrance    33

		
	ARTICLE VI - DEFAULTS AND REMEDIES
	35

		
	Section 6.01
	Events of Default    35

		
	Section 6.02
	Remedies    37

		
	Section 6.03
	Expenses    37

		
	ARTICLE VII - SECURITY AGREEMENT
	38

		
	Section 7.01
	Security Agreement    38

		
	ARTICLE VIII - LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES
	38

		
	Section 8.01
	Limited Recourse Liability    38

		
	Section 8.02
	Full Recourse Liability    39

		
	Section 8.03
	General Indemnity    39

		
	Section 8.04
	Transaction Taxes Indemnity    40

		
	Section 8.05
	ERISA Indemnity    40

		
	Section 8.06
	Environmental Indemnity    40

		
	Section 8.07
	Duty to Defend, Costs and Expenses    40

		
	Section 8.08
	Recourse Obligation and Survival    40

		
	ARTICLE IX - ADDITIONAL PROVISIONS
	41

		
	Section 9.01
	Usury Savings Clause    41

		
	Section 9.02
	Notices    41

		
	Section 9.03
	Sole Discretion of Lender    41

		
	Section 9.04
	Applicable Law and Submission to Jurisdiction    42

		
	Section 9.05
	Construction of Provisions    42

		
	Section 9.06
	Transfer of Loan    42

		
	Section 9.07
	Miscellaneous    43

		
	Section 9.08
	Entire Agreement    44

		
	Section 9.09
	WAIVER OF TRIAL BY JURY    44

		
	Section 9.10
	Advertisement    44

		
	ARTICLE X - ADDITIONAL SPECIAL PROVISIONS
	44

		
	Section 10.01
	Cash Management    44

		
	Section 10.02
	Post-Closing Obligations    44

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	Section 10.03
	Reserve Funds    45

		
	Section 10.04
	Texas State-Specific Provisions    45

		
	Section 10.05
	Provisions Concerning Trustees Under Deeds of Trust    48

EXHIBITS
Exhibit A – Legal Description of Land
Exhibit B – Description of Personal Property
Exhibit B-1 - Specific List of Personal Property
Exhibit C – Permitted Encumbrances
Exhibit D – List of Major Tenants
Exhibit E - List of Post-Closing Obligations

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DEFINITIONS

The terms set forth below are defined in the following sections of this Loan Agreement:

	
		
	Action
	Section 9.04

	Additional Funds
	Section 3.07(c)

	Affecting the Property
	Section 3.12(a)

	Affiliate
	Section 3.22

	Agreement
	Preamble

	Alternate Base Rate
	Section 1.03(a)(i)

	Anti-Terrorism Regulations
	Section 3.20(b)

	Applicable Margin
	Section 1.03(a)(ii)

	Assessments
	Section 3.03(a)

	Assignment
	Recitals, Section 4

	Award
	Section 3.08(b)

	Balance
	Section 1.03(b)

	BHOOP
	Section 2.05

	BHOR
	Section 3.15(a)

	Borrower
	Preamble

	Borrower Control Group
	Section 5.01

	Breakage Fee
	Section 1.03(a)(iii)

	Business Day
	Section 1.03(a)(iv)

	Closing Certification
	Section 2.04(b)

	Control, Controlled or Controlling
	Section 3.22

	Costs
	Section 4.01

	Daily Charge
	Section 1.03(a)(v)

	Damage
	Section 3.07(a)

	Default Rate
	Section 1.03(a)(vi)

	Deposits
	Section 3.10(a)

	Determination Date
	Section 1.03(a)(vii)

	Documents
	Section 1.02

	Due Date
	Section 1.03(a)(viii)

	Environmental Indemnity
	Section 8.06

	Environmental Law
	Section 3.12(a)

	Environmental Liens
	Section 3.12(b)

	Environmental Report
	Section 3.12(a)

	ERISA
	Section 3.11(a)

	Eurodollar Rate
	Section 1.03(a)(ix)

	Event of Default
	Section 6.01

	Executive Order 13224
	Section 2.09

	Federal Funds Rate
	Section 1.03(a)(x)

	FHA Act
	Section 2.04(i)

	First Due Date
	Section 1.03(a)(xi)

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	First Notice
	Section 3.15(b)

	Flood Acts
	Section 2.04(a)

	Full Replacement Cost
	Section 3.06(a)

	Funding Date
	Section 1.03(a)(xii)

	Grace Period
	Section 6.01(c)

	Hazardous Materials
	Section 3.12(a)

	Instrument
	Recitals, Section 3

	Impositions
	Section 3.10(a)

	Indemnified Parties
	Section 8.03

	Indemnify
	Section 8.03

	Individual Beneficiaries
	Section 2.09

	Individual Shareholders
	Section 2.09

	Insurance Premiums
	Section 3.10(a)

	Interest Compensation Sum
	Section 1.03(a)(xiv)

	Interest Period
	Section 1.03(a)(xv)

	Investors
	Section 9.06

	Late Charge
	Section 1.03(a)(xvi)

	Laws
	Section 3.05(c)

	Lender
	Preamble

	Lender Affiliates
	Section 9.10

	Libor Rate
	Section 1.03(a)(xvii)

	Loan
	Recitals, Section 1

	Losses
	Section 8.03

	Major Tenants
	Section 3.08(d)

	Maturity
	Section 1.03(a)(xviii)

	Maturity Date
	Section 1.03(a)(xix)

	MBA Form
	Section 3.06(d)

	Microbial Matter
	Section 3.12(a)

	Monthly Payment Amount
	Section 1.03(a)(xx)

	Net Proceeds
	Section 3.07(d)

	Note
	Recitals, Section 1

	Note Rate
	Section 1.03(a)(xxi)

	Notice
	Section 9.02

	O&M Plan
	Section 3.12(b)

	Obligations
	Section 1.01

	OFAC
	Section 2.09

	OFAC Lists
	Section 2.09

	OFAC Violation
	Section 3.20(c)

	Organization State
	Section 2.01

	PCBs
	Section 3.12(a)

	Permitted Encumbrances
	Section 2.01

	Property Payables
	Section 3.09

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	Property State
	Section 2.01

	PTE
	Section 3.11(a)

	Rating Agency
	Section 9.06

	Release
	Section 3.12(a)

	Rent Loss Proceeds
	Section 3.07(c)

	Rent Roll
	Section 2.11

	Restoration
	Section 3.07(a)

	Revenue Code
	Section 2.05

	Second Notice
	Section 3.15(b)

	Securities
	Section 9.06

	Security Agreement
	Section 7.01

	Spread Maintenance
	Section 1.03(a)(xxii)

	Spread Maintenance Period
	Section 1.03(a)(xxiii)

	Taking
	Section 3.08(a)

	Transaction Taxes
	Section 3.03(c)

	U.C.C.
	Section 2.02

	Violation
	Section 3.11(c)

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LOAN AGREEMENT
THIS LOAN AGREEMENT (this “Agreement”) is made as of the 10 day of October, 2014, by and between 7425 LA VISTA, LLC, a Texas limited liability company having its principal office and place of business at 15601 Dallas Parkway, Suite 600, Addison, Texas 75001, as borrower (“Borrower”), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an office at c/o Prudential Asset Resources, Inc., 2100 Ross Avenue, Suite 2500, Dallas, Texas  75201, Attention: Asset Management Department; Reference Loan No. 706109689, as lender (“Lender”).
RECITALS:
1.Borrower, by the terms of its Promissory Note dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”) and in connection with the commercial mortgage loan (the “Loan”) from Lender to Borrower, is indebted to Lender in the principal sum of THIRTY-THREE MILLION FIVE HUNDRED THOUSAND AND NO/100 U.S. DOLLARS ($33,500,000.00).
2.    Borrower desires to secure the payment of and the performance of all of its obligations under the Note and certain additional Obligations (as defined in Section 1.01 herein).
3.    Borrower has, pursuant to the terms of that certain Deed of Trust, Security Agreement and Financing Statement, dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Instrument”), irrevocably granted and conveyed to Kelley H. Butler, Esq., as trustee (“Trustee”), for the benefit of Lender a mortgage lien on and a security interest in, (a) the real property described in the Instrument and in Exhibit A attached hereto and by this reference made a part hereof and (b) the personal property described in the Instrument and in Exhibit B and Exhibit B-1 attached hereto.
4.    Pursuant to the terms of the Instrument and the Assignment (defined below), Borrower has collaterally assigned, set over, and transferred to Lender all of Borrower’s right, title, interest and estates in and to the Leases (as defined in the Instrument) and the Rents (as defined in the Instrument), subject to the terms and license granted to Borrower under that certain Assignment of Leases and Rents made by Borrower to Lender dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Assignment”), which document shall govern and control the provisions of said assignment.
NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:
		
	ARTICLE I -
	OBLIGATIONS AND PAYMENTS

Section 1.01    Obligations.  This Agreement is executed, acknowledged, and delivered by Borrower to secure and enforce the following obligations (collectively, the “Obligations”):
(a)    Payment of all obligations, indebtedness and liabilities under the Documents (defined below) including (i) Spread Maintenance (defined below) and/or Breakage Fee (defined below), (ii) interest at both the Note Rate (defined below) and at the Default Rate (defined below), if applicable and to the extent permitted by Laws (defined below), and (iii) renewals, extensions, and amendments of the Documents;

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(b)    Performance of every obligation, covenant, and agreement under the Documents, including renewals, extensions and amendments of the Documents; and
(c)    Payment of all sums advanced, allocated or accrued (including fees, costs and expenses) by Lender pursuant to the Documents, including renewals, extensions and amendments of the Documents.
Section 1.02    Documents.  The “Documents” shall mean this Agreement, the Note, the Instrument, the Assignment, the Environmental Indemnity (defined below) and any other written agreement executed in connection with the Loan (but excluding the Loan application and Loan commitment), including those given to evidence or further secure the payment and performance of any of the Obligations, and any written renewals, extensions, and amendments of the foregoing, executed by the party against whom enforcement is sought.  All of the provisions of the Documents are incorporated into this Agreement as if fully set forth in this Agreement.
Section 1.03    Loan Payments.  
(a)    Definitions.  The following terms, as used in this Agreement, shall have the following meanings, which meanings shall be applicable equally to the singular and the plural of the terms defined:
(i)    “Alternate Base Rate” shall mean such fluctuating rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the sum of (A) the Applicable Margin and (B) the greater of (1) the Federal Funds Rate, plus one half (1/2) of one percent (0.50%), and (2) the prime rate (for corporate loans at large United States money center commercial banks) published in The Wall Street Journal.
(ii)    “Applicable Margin” shall mean one hundred fifty (150) basis points (1.50%).
(iii)    “Breakage Fee” shall have the meaning attributed to such term in Section 1.06(a)(iv) hereof.
(iv)    “Business Day” with respect to establishing a date relating to an Interest Period, Libor Rate, Eurodollar Rate or Determination Date, shall mean a day of the year on which dealings in United States dollars are carried on in the London interbank market and banks are not required or authorized to close in London or in New York, New York and with respect to any other date, shall mean each Monday through Friday except for days on which no commercial national banking associations are open for business in the United States.  All references in this Agreement to a “day” or “date” shall be to a calendar day unless specifically referred as a Business Day.
(v)    “Daily Charge” shall have the meaning attributed to such term in Section 1.04(a) hereof.
(vi)    “Default Rate” shall have the meaning attributed to such terms in Section 1.04(b) hereof.
(vii)    “Determination Date” shall mean, with respect to each Interest Period subsequent to the first Interest Period, a date on which the Eurodollar Rate shall be selected by Lender as the applicable interest rate in respect of the Loan, which date shall be the day that is two (2) Business Days prior to the first day of such Interest Period.
(viii)    “Due Date” shall have the meaning attributed to such term in Section 1.03(b) hereof.

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(ix)    “Eurodollar Rate” shall mean an interest rate per annum equal at all times to the Libor Rate plus the Applicable Margin.  
(x)    “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided, that (A) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (B) if such rate is not so published for any Business Day, the Federal Funds Rate for such Business Day shall be the average rate charged by Lender, directly or indirectly, on such Business Day on such transactions as reasonably determined by Lender.
(xi)    “First Due Date” shall have the meaning attributed to such term in Section 1.03(b) hereof.
(xii)    “Funding Date” shall mean the date of this Agreement.
(xiii)    “Interest Compensation Sum” shall mean an amount equal to (1) the amount of the Loan being prepaid, multiplied by (2) the Libor Rate, multiplied by (3) a fraction, the numerator of which is the number of days from and including the date of prepayment to and including the last day of the then current Interest Period and the denominator of which is 360. 
(xiv)    “Interest Period” shall mean (A) the period commencing on the date on which the proceeds of the Loan are advanced to Borrower and ending on the fourth (4th) day of the calendar month in which the proceeds are advanced (or the fourth (4th) day of the next succeeding calendar month, if the proceeds are advanced after the fourth (4th) day of a calendar month) and (B) thereafter, the period commencing on the fifth (5th) day of a calendar month and ending on the fourth (4th) day of the next succeeding calendar month, provided that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and provided further that in no event shall any Interest Period extend beyond the Maturity Date.
(xv)    “Late Charge” shall have the meaning ascribed to such term in Section 1.04(a) hereof.
(xvi)    “Libor Rate” shall mean for any day, as determined by Lender, the interest rate per annum offered for one (1) month deposits in U.S. Dollars for the Interest Period in the London interbank market.  If the Interest Period is of a duration falling between the interest periods for which such rate appears on the Libor source, as determined by Lender, whose determination shall be conclusive in the absence of manifest error, the Libor Rate shall be the rate determined by interpolation between the rates for the next shorter and the next longer interest periods for which such rate appears on the Libor source, as determined by Lender, whose determination shall be conclusive in the absence of manifest error.  
(xvii)     “Maturity” shall mean the Maturity Date or earlier date that the Obligations may be due and payable by acceleration by Lender as provided in the Documents.

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(xviii)    “Maturity Date” shall mean October 9, 2019 or such earlier date that the Obligations may be due and payable by acceleration by Lender as provided in the Documents.
(xix)    “Monthly Payment Amount” shall mean a monthly installment of the interest accrued and unpaid under the Note and this Agreement.
(xx)    “Note Rate” shall mean the Eurodollar Rate, unless at any time the Loan must bear interest at the Alternate Base Rate, during which time the Note Rate shall mean the Alternate Base Rate.
(xxi)    “Spread Maintenance” shall have the meaning attributed to such term in Section 1.06(a)(iii) hereof. 
(xxii)    “Spread Maintenance Period” shall have the meaning attributed to such term in Section 1.06(a)(iii) hereof.
(b)    Payments.  Principal and interest under the Note shall be due and payable as follows:
(i)    Interest on the unpaid balance of the Loan (the “Balance”) and, to the extent required hereunder, principal, shall be paid in an amount equal to the Monthly Payment Amount, which shall be payable in monthly installments commencing as of the fifth (5th) day of the first (1st) full calendar month following the Funding Date (or if the Funding Date is after the fifth (5th) day of a calendar month, on the fifth (5th) day of the second (2nd) full calendar month following the Funding Date) (the “First Due Date”) and continuing on the fifth (5th) day of each and every calendar month thereafter (“Due Date”) until the Maturity Date (or on such earlier date that the Note is prepaid in full in accordance with the provisions hereof), at which time all accrued but unpaid interest, together with the principal sum evidenced by the Note, shall be payable in full.  If the fifth (5th) day of a calendar month is not a Business Day, then the Due Date for such month shall be the first Business Day occurring after such fifth (5th) day of the month.
(ii)    If the Funding Date is on a date other than the fifth (5th) day of a calendar month, then Borrower shall pay to Lender contemporaneously with the execution hereof, interest at the Note Rate for a period from the date hereof through and including the fourth (4th) day of the next succeeding month (unless the Funding Date is prior to the fifth (5th) day of a calendar month, in which event such interest shall be paid through and including the fourth (4th) day of this calendar month).
(iii)    The entire Obligations of Borrower shall be due and payable on the Maturity Date, or when sooner accelerated pursuant to the terms of the Note, this Agreement or the Instrument.  All amounts due under the Note and this Agreement shall be payable without set off, counterclaim or any other deduction whatsoever. 
(c)    Computation of Interest.  
(i)    Except as otherwise provided herein, the entire Balance shall bear interest at the Eurodollar Rate.  Borrower shall be deemed to have selected the Alternate Base Rate under this Agreement (A) for the entire Balance if for any reason the Libor Rate shall not be in effect or available to Lender, and interest shall accrue at the Alternate Base Rate until the Libor Rate is next available and (B) for sums advanced subsequent to the initial advance of the Loan and other than on the first day of an Interest Period, until the commencement of the next Interest Period.  To the extent that the Alternate Base Rate is applicable to the Loan, the rate of interest computed in accordance with 

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Section 1.03(a)(i) shall change effective as of the opening of business on the day on which each such change in such fluctuating rate shall occur.  With respect to each Interest Period, interest shall accrue from the first day of such Interest Period through and including the last day of such Interest Period.
(ii)    Provided that no Event of Default has occurred under any of the Documents, and provided further that the Libor Rate is available to Lender, on any Determination Date, except as provided in Section 1.03(c)(i), above, the Eurodollar Rate shall automatically be the applicable rate for the entire Balance in respect of the immediately succeeding Interest Period.  If requested by Lender, Borrower shall immediately confirm the Eurodollar Rate and the duration of the applicable Interest Period by acknowledging receipt of a written confirmation of the Eurodollar Rate and Interest Period delivered by Lender to Borrower.  Only one Interest Period may be in effect at any given time.
(iii)    In addition to the payment of interest and fees as aforesaid, Borrower shall, from time to time, upon demand by Lender pay to Lender amounts as shall be sufficient to compensate Lender for (x) any actual out-of-pocket loss, cost, fee, breakage or other expense incurred or sustained directly or indirectly by reason of the liquidation or reemployment of deposits or other funds acquired by Lender to fund or maintain the Loan during any Interest Period as a result of any prepayment of the Loan or any portion thereof or any attempt by Borrower to rescind the selection of the Eurodollar Rate as the applicable interest rate for the Loan  and (y) any actual out-of-pocket increased costs incurred by Lender, by reason of:
		
	1.
	taxes (or the withholding of amounts for taxes) of any nature whatsoever, including, without limitation, income, excise and interest equalization taxes (other than United States or state income taxes) as well as all levies, imports, duties, or fees whether now in existence or as the result of a change in, or promulgation of, any treaty, statute or regulation or interpretation thereof, or any directive, guideline or otherwise, by a central bank or fiscal authority or any other entity (whether or not having the force of law) or a change in the basis of, or time of payment of, such taxes and other amounts resulting therefrom;

		
	2.
	any reserve or special deposit requirements against or with respect to assets or liabilities or deposits outstanding under a Libor Rate (including, without limitation, those imposed under the Monetary Control Act of 1978 or, if applicable, the “Eurocurrency Liabilities” under Federal Reserve Regulation D (as at any time amended)) currently required by, or resulting from a change in, or the promulgation of, such requirements by treaty, statute, regulation, interpretation thereof, or any directive, guidelines, or otherwise by a central bank or fiscal authority (whether or not having the force of law); and

		
	3.
	compliance with treaties, statutes, regulations, interpretations or any directives or guidelines or otherwise, promulgated by or of a central bank or fiscal authority or other entity (whether or not having the force of law).

A certificate as to the amount of any such costs prepared by Lender, signed by an authorized officer of Lender and submitted to Borrower shall be conclusive as to the matters therein set forth.  Neither the Note, the Instrument nor this Agreement shall be deemed to have been paid and/or satisfied in 

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full until all such additional costs, in addition to the Balance hereof and all interest thereon and all other sums due and payable under the Documents, shall have been paid.

(iv)    The selection at any time of an interest rate based upon the Libor Rate shall be expressly conditioned upon the existence of an adequate and fair means of determining the Libor Rate and the absence of any legal prohibition against the charging of interest based on the Libor Rate.
(v)    Interest shall be computed hereunder based on a 360-day year and based on the actual number of days elapsed for which interest is being calculated.  In computing the number of days during which interest accrues, the day on which funds are initially advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless repayment is credited prior to 2:00 p.m. Eastern Time as provided in Section 1.07 below. 
Section 1.04    Late Payment and Default Interest. 
(a)    Late Charge.  If any scheduled payment due under the Documents is not fully paid by its Due Date (other than the principal payment due on the Maturity Date), then a charge of $130.00 per day (the “Daily Charge”) shall be assessed for each day that elapses from and after the Due Date until such payment is made in full (including the date payment is made); provided, however, that if any such payment, together with all accrued Daily Charges, is not fully paid by the fourteenth (14th) day following the applicable Due Date, then a late charge equal to the lesser of (i) four percent (4%) of such payment or (ii) the maximum amount allowed by law (the “Late Charge”) shall be assessed and be immediately due and payable.  The Late Charge shall be payable in lieu of Daily Charges that shall have accrued.  The Late Charge may be assessed only once on each overdue payment.  These charges shall be paid to defray the expenses incurred by Lender in handling and processing such delinquent payment(s) and to compensate Lender for the loss of the use of such funds.  The Daily Charge and Late Charge shall be secured by the Documents.  The imposition of the Daily Charge, Late Charge, and/or requirement that interest be paid at the Default Rate (defined below) shall not be construed in any way to (A) excuse Borrower from its obligation to make each payment under the Note promptly when due or (B) preclude Lender from exercising any rights or remedies available under the Documents upon an Event of Default (as defined below).
(b)    Default Rate.  Upon an Event of Default or at Maturity, whether by acceleration (due to a voluntary or involuntary default) or otherwise, the entire Obligations (excluding accrued but unpaid interest if prohibited by law) shall bear interest at the Default Rate.  The “Default Rate” shall be the lesser of (i) the maximum rate allowed by law or (ii) five percent (5%) plus the greater of (A) the Note Rate or (B) the prime rate (for corporate loans at large United States money center commercial banks) published in The Wall Street Journal on the first Business Day (defined below) of the month in which the Event of Default or Maturity occurs and on the first Business Day of every month thereafter. The term “Business Day” shall mean each Monday through Friday except for days on which no commercial national banking associations are open for business in the United States.
Section 1.05    Application of Payments.  Until an Event of Default occurs, all payments received under the Note shall be applied in the following order: (a) to unpaid fees, costs, and expenses due Lender pursuant to the Documents; (b) to unpaid Daily Charges, Late Charges and costs of collection; (c) to any Spread Maintenance (defined below) and/or Breakage Fee (defined below) due; (d) to interest due on the Balance; and (e) then to the Balance.  After an Event of Default, all payments shall be applied in any order determined by Lender.

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Section 1.06    Prepayment.  
(a)    The Loan may not be prepaid in whole or in part except as expressly set forth below. The Loan may be prepaid in whole or in part without any Spread Maintenance (except, as otherwise specifically provided herein), provided:
(i)    Written notice of such prepayment is received by Lender not less than thirty (30) days, or more than sixty (60) days, prior to the date of such prepayment;
(ii)    Such prepayment is accompanied by all interest accrued hereunder and all other sums due hereunder and under the Note and the other Documents; and
(iii)    In the event that the prepayment occurs on or before the date that is twenty-four (24) calendar months after the First Due Date (the “Spread Maintenance Period”) for any reason, whether voluntarily or involuntarily, but excluding any prepayment from casualty or condemnation proceeds in accordance with the Documents, then such prepayment shall include Spread Maintenance (as defined below).  “Spread Maintenance” means the product of (a) (1) if the Loan is being prepaid in full, the full amount of the Loan or (2) if the Loan is being prepaid in part, an amount equal to the product of the percentage of the amount of the Loan that is being prepaid multiplied by the full amount of the Loan multiplied by (b) the Applicable Margin, multiplied by (c) the quotient of (1) the number of full months remaining to the end of the Spread Maintenance Period as of the date on which prepayment will be made divided by (2) 12; and 
(iv)    if and to the extent that the Eurodollar Rate is then applicable in respect of the Loan, prepayment of the Loan shall not be made prior to the expiration of the then-applicable Interest Period unless such prepayment is accompanied by the payment of a prepayment fee in an amount (the “Breakage Fee”) equal to the applicable Interest Compensation Sum, plus the sum of (x) all the amounts referred to in Section 1.03(c)(iii), and (y) any and all other losses, costs, fees and expenses of Lender, incurred or sustained directly or indirectly as a result of such prepayment of the Loan; provided, however, that Lender shall not have any obligation to cancel any Eurodollar contract which Lender or the Treasury Department of Lender may have entered into in order to obtain the Eurodollar Rate prior to the maturity of such contract.  
All sums payable pursuant to this Section 1.06 shall also be due and payable by Borrower upon demand in the event of any involuntary prepayments or any acceleration of the Obligations, unless the prepayment results from condemnation or casualty losses. In the event that any Spread Maintenance and/or Breakage Fee is due hereunder, Lender shall deliver to Borrower a statement setting forth the amount and determination of the Spread Maintenance and/or Breakage Fee, and, provided that Lender shall have in good faith applied the formula described above, Borrower shall not have the right to challenge the calculation or the method of calculation set forth in any such statement in the absence of manifest error.  Lender shall not be obligated or required to have actually reinvested the prepaid principal balance as a condition to receiving the Spread Maintenance and/or Breakage Fee. 
(b)    Except as otherwise expressly provided in Section 1.06(a) or Section 1.06(b) above, the Spread Maintenance and/or Breakage Fee provided above shall be due, to the extent permitted by applicable law, under any and all circumstances where all or any portion of the Note is paid prior to the Maturity Date, whether such prepayment is voluntary or involuntary, even if such prepayment results from Lender’s exercise of its rights upon Borrower’s default and acceleration of the Maturity of the Note (irrespective of whether foreclosure proceedings have been commenced), and shall be in addition to any other sums due hereunder or under any of the other Documents.  No tender of a prepayment of the Loan with respect to which Spread 

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Maintenance and/or Breakage Fee is due shall be effective unless such prepayment is accompanied by the applicable Spread Maintenance and/or Breakage Fee.
(c)    No principal amount repaid may be re-borrowed.  Partial payments of principal shall be applied to the unpaid principal balance evidenced hereby.  Partial prepayments of principal hereunder shall not entitle Borrower to have the installments of principal and interest payable under the Note reduced by reamortizing the remaining unpaid principal balance due under the Note or by applying such prepayment to the next maturing installment of principal and interest under the Note.
(d)    Borrower waives any right to prepay the Loan except under the terms and conditions as set forth in this Section 1.06 and agrees that if the Loan is prepaid, Borrower will pay the prepayment charges set forth above and all costs and losses incurred by Lender as a result of such prepayment.  Borrower hereby acknowledges that the inclusion of this waiver of prepayment rights and agreement to pay the prepayment charge for the right to prepay the Loan was separately negotiated with Lender, that the economic value of the various elements of this waiver and agreement was discussed, that the consideration given by Borrower for the Loan was adjusted to reflect the specific waiver and agreement negotiated between Borrower and Lender and contained herein
Section 1.07    Treatment of Payments.  All payments under the Note and the Documents shall be made, without offset or deduction, (a) in lawful money of the United States of America at the office of Lender or at such other place (and in the manner) Lender may specify by written notice to Borrower, (b) in immediately available federal funds, and (c) if received by Lender prior to 2:00 p.m. Eastern Time at such place, shall be credited on that day, or, if received by Lender at or after 2:00 p.m. Eastern Time at such place, shall, at Lender’s option, be credited on the next Business Day.  Initially (unless waived by Lender), and until Lender shall direct Borrower otherwise, Borrower shall make all payments due under the Note in the manner set forth in Section 3.13 of this Agreement.  If any Due Date falls on a day which is not a Business Day, then the Due Date shall be deemed to have fallen on the next succeeding Business Day.
Section 1.08    Unconditional Payment.  Borrower is and shall be obligated to pay principal, interest and any and all other amounts which became payable under the Note or under the other Documents absolutely and unconditionally and without abatement, postponement, diminution or deduction and without any reduction for counterclaim or setoff.  In the event that at any time any payment received by Lender under the Documents shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of the Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of the Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.
Section 1.09    Certain Waivers.  Borrower and all others who may become liable for the payment of all or any part of the Obligations do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest, notice of non-payment and notice of intent to accelerate the maturity hereof (and of such acceleration).  No release of any security for the Obligations or extension of time for payment of the Note or any installment thereof, and no alteration, amendment or waiver of any provision of the Note, the Instrument, this Agreement or the other Documents shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other who may become liable for the payment of all or any part of the Obligations, under the Note, the Instrument, this Agreement and the other Documents, except as expressly provided in such release, alteration, amendment and/or waiver.

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	ARTICLE II -
	REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Lender, as of the date hereof, as follows:
Section 2.01    Title, Legal Status and Authority.  Borrower (a) is seised of the Land (as defined in the Instrument) and the Improvements (as defined in the Instrument) in fee simple and has good and indefeasible title to the Property (as defined in the Instrument), free and clear of all liens, charges, encumbrances and security interests, except the matters listed in Exhibit C (the “Permitted Encumbrances”); (b) will forever warrant and defend its title to the Property and the validity, enforceability, and priority of the lien and security interest created by the Instrument and the other Documents against the claims of all persons; (c) is a limited liability company duly organized, validly existing, and in good standing and qualified to transact business under the laws of its state of organization or incorporation (the “Organization State”) and the state where the Property is located (the “Property State”); and (d) has all necessary approvals, governmental and otherwise, and full power and authority to own its properties (including the Property) and carry on its business.
Section 2.02    Validity of Documents.  The execution, delivery and performance of the Documents and the borrowing evidenced by the Note and this Agreement (a) are within the power of Borrower; (b) have been authorized by all requisite action; (c) have received all necessary approvals and consents; (d) will not violate, conflict with, breach, or constitute (with notice or lapse of time, or both) a default under (i) any law, order or judgment of any court, governmental authority, or the governing instrument of Borrower or (ii) any indenture, agreement, or other instrument to which Borrower is a party or by which it or any of its property is bound or affected; (e) will not result in the creation or imposition of any lien, charge, or encumbrance upon any of its properties or assets except for those in the Instrument and the other Documents; and (f) will not require any authorization or license from, or any filing with, any governmental or other body (except for the recordation of the Instrument, the Assignment and Uniform Commercial Code (the “U.C.C.”) filings).  The Documents constitute legal, valid, and binding obligations of Borrower.
Section 2.03    Litigation.  There is no action, suit, or proceeding, judicial, administrative, or otherwise (including any condemnation or similar proceeding), pending or, to the best knowledge of Borrower, threatened or contemplated against, or affecting, Borrower or the Property which would have a material adverse effect on either the Property or Borrower’s ability to perform the Obligations.
Section 2.04    Status of Property. 
(a)    The Land and Improvements are not located in an area identified by the Secretary of Housing and Urban Development, or any successor, as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, or the National Flood Insurance Reform Act of 1994, as each have been or may be amended, or any successor law (collectively, the “Flood Acts”) or, if located within any such area, Borrower has and will maintain the insurance prescribed in Section 3.06 below.  
(b)    Borrower has all necessary (i) certificates, licenses, and other approvals, governmental and otherwise, for the operation of the Property and the conduct of its business and (ii) zoning, building code, land use, environmental and other similar permits or approvals, all of which are currently in full force and effect and not subject to revocation, suspension, forfeiture, or modification.  Except as disclosed in the Closing Certification, dated even date herewith, delivered by Borrower to Lender (the “Closing Certification”), the Property and its use and occupancy are in compliance with all Laws in all material respects, and Borrower has received no notice of any violation or potential violation of the Laws which has not been remedied or satisfied, and the zoning classification of the Property permits the use of the Property as intended.

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(c)    The Property is served by all utilities (including water and sewer) required for its use.
(d)    All public roads and streets necessary to serve the Property for its use have been completed, are serviceable, are legally open, and have been dedicated to and accepted by the appropriate governmental entities.
(e)    The Property is free from damage caused by fire or other casualty.
(f)    All costs and expenses for labor, materials, supplies, and equipment used in the construction of the Improvements have been paid in full except for the Permitted Encumbrances.
(g)    Borrower owns and has paid in full for all furnishings, fixtures, and equipment (other than the property of Tenants [as defined in the Instrument] and property previously identified in writing to Lender as having been leased by Borrower or leased under equipment leases permitted by the Documents) used in connection with the operation of the Property, free of all security interests, liens, or encumbrances except the Permitted Encumbrances and those created by the Documents.
(h)    The Property is assessed for real estate tax purposes as one or more wholly independent tax lot(s), separate from any adjoining land or improvements and no other land or improvements are assessed and taxed together with the Property.
(i)    Except as disclosed in the Closing Certification, to the best knowledge of Borrower, the Property and Improvements are either (i) in compliance with the provisions of the Fair Housing Amendments Act of 1988, as amended, which relate to accessibility design and construction requirements, and all rules, regulations, and guidelines issued thereunder, all as are in effect as of the date hereof (collectively, the “FHA Act”), or (ii) exempt from the FHA Act.
(j)    Except as disclosed in the Closing Certification, to the best knowledge of Borrower, the Property is in compliance with the provisions of the Americans with Disabilities Act of 1990, and any amendments in effect as of the date hereof, which relate to accessibility design and construction requirements, and all rules, regulations, and guidelines issued thereunder, all as are in force as of the date hereof.
Section 2.05    Tax Status of Borrower.  Borrower’s office address is 15601 Dallas Parkway, Suite 600, Addison, Texas 75001. Borrower is not a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate” within the meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Revenue Code”).  Borrower further represents and warrants to Lender that Borrower is a “disregarded entity” as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations issued under the Revenue Code.  Behringer Harvard Opportunity OP II LP (“BHOOP”), the sole member of Borrower, is not a “disregarded entity” as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations issued under the Revenue Code.  These statements are made by Borrower in compliance with Sections 1445 and 7701 of the Internal Revenue Code to exempt any transferee of the Property from withholding the tax required upon a foreign transferor’s disposition of a U.S. real property interest.
Section 2.06    Bankruptcy and Equivalent Value.  
(a)    No bankruptcy, reorganization, insolvency, liquidation, or other proceeding for the relief of debtors has been instituted by or, to Borrower’s knowledge, against Borrower, any general partner of Borrower (if Borrower is a partnership), or any manager or managing member of Borrower (if Borrower is a limited liability company).

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(b)    The Obligations incurred by Borrower under the Documents and the mortgaging of the Property pursuant to this Instrument are not made or incurred with the intent to hinder, delay, or defraud any present or future creditor of Borrower;
(c)    Borrower has not received less than reasonably equivalent value in exchange for incurring the Obligations and/or the mortgaging of the Property in connection with the Loan;
(d)    Borrower is solvent as of the date hereof, and Borrower will not become insolvent as a result of incurring the Obligations and/or the mortgaging of the Property pursuant to the Documents;
(e)    Borrower is not engaged, and Borrower is not about to engage, in business or a transaction for which any property remaining with Borrower is an unreasonably small capital;
(f)    Borrower has not incurred and does not intend to incur, and Borrower does not believe that it will incur, debts that would be beyond Borrower’s ability to pay as such debts mature; and
(g)    Borrower is not mortgaging the Property and/or incurring the Obligations to or for the benefit of an insider (as defined in 11 U.S.C. § 101(31)), under an employment contract and not in the ordinary course of business.
Section 2.07    Disclosure.  Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially misleading.  There has been no adverse change in any condition, fact, circumstance, or event since the date of such disclosure that would make any such information materially inaccurate, incomplete or otherwise misleading.
Section 2.08    Illegal Activity.  No portion of the Property has been purchased, improved, fixtured, equipped or furnished with proceeds of any illegal activity and, to the best of Borrower’s knowledge, there are no illegal activities at or on the Property.
Section 2.09    OFAC Lists.  That (a) neither Borrower, nor any persons or entities holding any legal or beneficial interest whatsoever in Borrower (whether directly or indirectly), are named on any list of persons, entities, and governments issued by the Office of Foreign Assets Control of the United States Department of the Treasury (“OFAC”) pursuant to Executive Order 13224 – Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism (“Executive Order 13224”), as in effect on the date hereof, or any similar list issued by OFAC or any other department or agency of the United States of America (collectively, the “OFAC Lists”); provided, however, that (i) with respect to individual beneficiaries of any governmental plans or employee benefit plans holding interests in Borrower (collectively, the “Individual Beneficiaries”), the foregoing representations and warranties are limited to Borrower’s actual knowledge, and (ii) with respect to individual shareholders of any public company holding an interest in Borrower (collectively, the “Individual Shareholders”), the foregoing representations and warranties are limited to Borrower’s actual knowledge; (b) neither Borrower, nor any persons or entities holding any legal or beneficial interest whatsoever in Borrower (whether directly or indirectly), are included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists; provided, however, that (i) with respect to any Individual Beneficiaries holding interests in Borrower, the foregoing representations and warranties are limited to Borrower’s actual knowledge, and (ii) with respect to any Individual Shareholders holding interests in Borrower, the foregoing representations and warranties are limited to Borrower’s actual knowledge; and (c) neither Borrower nor any guarantor has knowingly conducted business with or engaged in any transaction with any person or entity named on any of the OFAC Lists or any person or entity included in, owned by, controlled by, acting for or on behalf of, 

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providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists.
Section 2.10    Property as Single Asset.  That (a) Borrower’s only asset is the Property, and (b) the Property generates substantially all of the gross income of Borrower and there is no substantial business being conducted by Borrower other than the business of operating the Property and the activities incidental thereto.
Section 2.11    Representations and Warranties Relating to Leases, Rents and Other Matters.  That (a) Borrower is the absolute owner of the landlord’s interest in the Leases; (b) Borrower has the right, power and authority to assign, transfer, and set over all of its right, title and interest in, to and under the Leases and Rents and no other person has any right, title or interest therein; (c) the Leases are valid and in full force and effect and have not been modified, amended or terminated, nor have any of the terms and conditions of the Leases been waived, except as expressly stated in the Leases; (d) there are no outstanding assignments or pledges of the Leases or Rents; (e) except as disclosed on the rent roll, delinquency report and concessions report delivered to Lender in connection with the funding of the Loan (collectively, the “Rent Roll”) and which is attached as Exhibit C to the Closing Certification, there are no outstanding leasing commissions due under the Leases for the initial term or for any extensions, renewals or expansions; (f) except as disclosed on the Rent Roll, to Borrower’s knowledge, there are no existing defaults or any state of facts which, with the giving of notice and/or passage of time, would constitute a default under the Leases by any party thereto; (g) except as disclosed on the Rent Roll, to Borrower’s knowledge, no Tenant has any defense, set-off or counterclaim against Borrower; (h) each Tenant is in possession of its leased premises and paying Rent and other charges as provided in its Lease, except as disclosed on the Rent Roll; (i) no Rents have been or will later be anticipated, discounted, released, waived, compromised or otherwise discharged, except as may be expressly permitted by the applicable Lease; provided that Borrower may take such actions so long as they represent prudent business practices for the benefit of the Property and are on market terms and rents and are bona fide and binding contracts duly authorized and executed with third party tenants unrelated to Borrower or any of its affiliates; (j) except as specified in the Leases and shown on the Rent Roll, there are no (i) unextinguished rent concessions, abatements or other inducements relating to the Leases, (ii) options or other rights to acquire any interest in the Property in favor of any Tenant, or (iii) options or other rights (whether in the form of expansion rights, purchase rights, rights of first refusal to lease or purchase, or otherwise) relating to property which is not part of the Property and/or would require Borrower and/or Lender to possess or control any property (other than the Property) to honor such rights; (k) to Borrower’s knowledge, the Rent Roll discloses all currently existing Leases and is true, complete and accurate in all material respects; and (l) all warranties and representations made herein, in the Instrument or in any other Document are true in all material respects and do not omit to state any material facts necessary to prevent the same from being misleading as of the date hereof.
		
	ARTICLE III -
	COVENANTS AND AGREEMENTS

Borrower covenants and agrees with Lender as follows:
Section 3.01    Payment and Performance of Obligations.  Borrower shall timely pay and cause to be performed the Obligations.
Section 3.02    Continuation of Existence.  Borrower shall not (a) dissolve, terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (b) reorganize or change its legal structure without Lender’s prior written consent, except as otherwise expressly permitted under Article V below; (c) change its name, address, or the name under which Borrower conducts its business without promptly notifying Lender; or (d) do anything to cause the representations in Section 2.02 to become 

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untrue.  Borrower shall (i) maintain its existence as a limited liability company duly organized, validly existing, and in good standing and qualified to transact business under the laws of its Organization State and the Property State and (ii) shall maintain all necessary approvals, governmental and otherwise, and full power and authority to own its properties (including the Property) and carry on its business.
Section 3.03    Taxes and Other Charges.  
(k)    Payment of Assessments.  Borrower shall pay when due all taxes, liens, assessments, utility charges (public or private and including sewer fees), ground rents, maintenance charges, dues, fines, impositions, and public and other charges of any character (including penalties and interest) assessed against, or which could become a lien against, the Property (the “Assessments”) and in all events prior to the date any fine, penalty, interest or charge for nonpayment may be imposed.  Unless Borrower is making deposits per Section 3.10 herein, Borrower shall provide Lender with receipts or canceled checks evidencing such payments (except for income taxes, franchise taxes, ground rents, maintenance charges, and utility charges) within twenty (20) days after their respective due dates.
(l)    Right to Contest.  So long as no Event of Default (defined below) has occurred, Borrower may, prior to delinquency and at its sole expense, contest any Assessment, but this shall not change or extend Borrower’s obligation to pay the Assessment as required above unless (i) Borrower gives Lender prior written notice of its intent to contest an Assessment; (ii) Borrower demonstrates to Lender’s reasonable satisfaction that (A) the Property will not be sold to satisfy the Assessment prior to the final determination of the legal proceedings, (B) Borrower has taken such actions as are required or permitted to accomplish a stay of any such sale, and (C) Borrower has either (1) furnished a bond or surety (satisfactory to Lender in form and amount) sufficient to prevent a sale of the Property or (2) at Lender’s option, deposited one hundred fifty percent (150%) of the full amount necessary to pay any unpaid portion of the Assessments with Lender; and (iii) such proceeding shall be permitted under any other instrument to which Borrower or the Property is subject (whether superior or inferior to the Instrument); provided, however, that the foregoing shall not restrict the contesting of any income taxes, franchise taxes, ground rents, maintenance charges, and utility charges.
(m)    Documentary Stamps and Other Charges.  Borrower shall pay all taxes, assessments, charges, expenses, costs and fees (including registration and recording fees and revenue, transfer, mortgage, recordation, stamp, intangible, and any similar taxes)(collectively, the “Transaction Taxes”) required in connection with the making and/or recording of the Documents.  If Borrower fails to pay the Transaction Taxes after demand, then Lender may (but is not obligated to) pay these, and Borrower shall reimburse Lender on demand for any amount so paid with interest at the applicable interest rate specified in Article I, which shall be the Default Rate unless prohibited by Laws.
(n)    Changes in Laws Regarding Taxation.  If any law (i) deducts from the value of real property for the purpose of taxation any lien or encumbrance thereon, (ii) taxes mortgages, deeds of trust, deeds to secure debt or debts secured by mortgages, deeds of trust or deeds to secure debt for federal, state or local purposes or changes the manner of the collection of any such existing taxes, and/or (iii) imposes a tax, either directly or indirectly, on any of the Documents or the Obligations, then Borrower shall, if permitted by law, pay such tax within the statutory period or within twenty (20) days after demand by Lender, whichever is less; provided, however, that if, in the opinion of Lender, Borrower is not permitted by law to pay such taxes, then Lender shall have the option to declare the Obligations immediately due and payable (without any Spread Maintenance and/or Breakage Fee) upon sixty (60) days’ notice to Borrower.

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Section 3.04    Defense of Title, Litigation, and Rights under Documents.  Borrower shall forever warrant, defend and preserve Borrower’s title to the Property, the validity, enforceability and priority of the Instrument and the other Documents and the lien or security interest created thereby, and any rights of Lender under the Documents against the claims of all persons, and shall promptly notify Lender of any such claims.  Lender (whether or not named as a party to such proceedings) is authorized and empowered (but shall not be obligated) to take such additional steps as it may deem necessary or proper for the defense of any such proceeding or the protection of the lien, security interest, validity, enforceability, or priority of the Documents, title to the Property, or any rights of Lender under the Documents, including the employment of counsel, the prosecution and/or defense of litigation, the compromise, release, or discharge of such adverse claims, the purchase of any tax title, the removal of any such liens and security interests, and any other actions Lender deems necessary to protect its interests.  Borrower authorizes Lender to take any actions required to be taken by Borrower if Borrower fails to take action timely, or permitted to be taken by Lender, in the Documents in the name and on behalf of Borrower.  Borrower shall reimburse Lender on demand for all expenses (including attorneys’ fees) incurred by it in connection with the foregoing and Lender’s exercise of its rights under the Documents.  All such expenses of Lender, until reimbursed by Borrower, shall be part of the Obligations, bear interest from the date of demand at the Default Rate, and shall be secured by the Documents.
Section 3.05    Compliance with Laws and Operation and Maintenance of Property. 
(h)    Repair and Maintenance.  Borrower will operate and maintain the Property in good order, repair, and operating condition.  Borrower will promptly make all necessary repairs, replacements, additions, and improvements necessary to ensure that the Property shall not in any way be diminished or impaired.  Borrower will not cause or allow any of the Property to be misused, wasted, or to deteriorate, and Borrower will not abandon the Property.  No new building, structure, or other improvement shall be constructed on the Land nor shall any material part of the Improvements be removed, demolished, or structurally or materially altered (unless the cost of such alterations is less than $300,000), without Lender’s prior written consent (which shall not be unreasonably withheld), except for improvements or alterations made pursuant to approved Leases or otherwise specifically contemplated by the Documents.  Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower fails to maintain or repair the Property in compliance with the requirements of this Section 3.05(a), then Lender may impose additional requirements upon Borrower including monetary reserves or financial equivalents, until such time as Lender receives proof satisfactory to Lender of such compliance. 
(i)    Replacement of Property.  Borrower will keep the Property fully equipped and will replace all worn out or obsolete Personal Property (as defined in the Instrument) in a commercially reasonable manner with comparable fixtures or Personal Property.  Borrower will not, without Lender’s prior written consent (which shall not be unreasonably withheld), remove any Personal Property covered by this Agreement or the Instrument unless the same is replaced by Borrower in a commercially reasonable manner with a comparable article (i) owned by Borrower free and clear of any lien or security interest (other than the Permitted Encumbrances and those created by the Documents) or (ii) leased by Borrower (A) with Lender’s prior written consent (which shall not be unreasonably withheld) or (B) if the replaced Personal Property was leased at the time of execution of this Agreement, or (C) if such Personal Property consists of de minimis amounts of office equipment.  Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower fails to maintain the Property in compliance with the requirements of this Section 3.05(b), then Lender may impose additional requirements upon Borrower including monetary reserves or financial equivalents, until such time as Lender receives proof satisfactory to Lender of such compliance.

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(j)    Compliance with Laws. Borrower shall comply with and shall cause the Property to be maintained, used, and operated in compliance with all (i) present and future laws, Environmental Laws (defined below), ordinances, regulations, rules, orders and requirements (including zoning and building codes) of any governmental or quasi-governmental authority or agency applicable to Borrower or the Property (collectively, the “Laws”); (ii) orders, rules, and regulations of any regulatory, licensing, accrediting, insurance underwriting or rating organization, or other body exercising similar functions; (iii) duties or obligations of any kind imposed under any Permitted Encumbrance or by law, covenant, condition, agreement, or easement, public or private; and (iv) policies of insurance at any time in force with respect to the Property.  If proceedings are initiated or Borrower receives notice that Borrower or the Property is not in compliance in all material respects with any of the foregoing, then Borrower will promptly send Lender notice and a copy of the proceeding or violation notice.  Borrower shall maintain all necessary (A) certificates, licenses, and other approvals, governmental and otherwise, for the operation of the Property and the conduct of its business and (B) zoning, building code, land use, environmental and other similar permits or approvals, in full force and effect.  Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower or the Property is not in compliance with all Laws, then Lender may impose additional requirements upon Borrower including monetary reserves or financial equivalents, until such time as Lender receives proof satisfactory to Lender of such compliance.
(k)    Zoning and Title Matters.  Borrower shall not, without Lender’s prior written consent (which shall not be unreasonably withheld), (i) initiate or support any zoning reclassification of the Property or variance under existing zoning ordinances; (ii) modify or supplement any of the Permitted Encumbrances; (iii) impose any restrictive covenants or encumbrances upon the Property; (iv) execute or file any subdivision plat affecting the Property; (v) consent to the annexation of the Property to any municipality; (vi) permit the Property to be used by the public or any person in a way that might make a claim of adverse possession or any implied dedication or easement possible; (vii) cause or permit the Property to become a non-conforming use under zoning ordinances or any present or future non-conforming use of the Property to be discontinued; or (viii) fail to comply with the terms of the Permitted Encumbrances.
(l)    Utility Service.  The Property shall be served by all utilities (including water and sewer) required for its use.
(m)    Roads and Streets.  All public roads and streets necessary to serve the Property for its use shall be completed, serviceable, legally open, and dedicated to and accepted by the appropriate governmental entities.
(n)    Ownership of FF&E.  Borrower shall own and shall have paid in full for all furnishings, fixtures, and equipment (other than Tenants’ property) or property leased by Borrower pursuant to equipment leases in compliance with the terms of the Documents used in connection with the operation of the Property, free of all security interests, liens, or encumbrances except the Permitted Encumbrances and those created by the Documents.
(o)    Separate Tax Lot.  The Property shall be assessed for real estate tax purposes as one or more wholly independent tax lot(s), separate from any adjoining land or improvements and no other land or improvements shall be assessed and taxed together with the Property.
Section 3.06    Insurance. 
(a)    Property and Time Element Insurance.  Borrower shall keep the Property insured for the benefit of Borrower and Lender (with Lender named as mortgagee) by (i) a special form property insurance policy with an agreed amount endorsement for Full Replacement Cost (defined below) without any 

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coinsurance provisions or penalties, or the broadest form of coverage available, in an amount sufficient to prevent Lender from ever becoming a coinsurer under the policy or Laws; (ii) a policy or endorsement insuring against acts of terrorism; (iii) a policy or endorsement insuring against claims applicable to the presence of Microbial Matter (as defined in Section 3.12(a) hereof); (iv) a policy or endorsement providing business income insurance (including business interruption insurance and extra expense insurance and/or rent insurance) on an actual loss sustained basis in an amount equal to at least one year’s total income from the Property including all Rents plus all other pro forma annual income such as percentage rent and tenant reimbursements of fixed and operating expenses, which business interruption insurance shall also provide coverage as aforesaid for any additional hazards as may be required pursuant to the terms of this Agreement, provided that Borrower shall be required to maintain the aforesaid insurance for the entire Restoration period or shall deliver to Lender cash in the amount of any difference between the actual insurance coverage and the amount of Rent Loss Proceeds actually available; (v) a policy or endorsement insuring against damage by flood if the Property is located in a Special Flood Hazard Area identified by the Federal Emergency Management Agency or any successor or related government agency as a 100 year flood plain currently classified as Flood Insurance Rate Map Zones “A”, “AO”, “AH”, “A1-A30”, “AE”, “A99”, “V”, “V1-V30”, and “VE” in an amount equal to the original amount of the Note; (vi) a policy or endorsement covering against damage or loss from (A) sprinkler system leakage and (B) boilers, boiler tanks, HVAC systems, heating and air-conditioning equipment, pressure vessels, auxiliary piping, and similar apparatus, in the amount reasonably required by Lender; (vii) during the period of any construction, repair, restoration, or replacement of the Property, a standard builder’s risk policy with extended coverage reasonably acceptable to Lender, and worker’s compensation, in statutory amounts; and (viii) a policy or endorsement covering against damage or loss by earthquake and other natural phenomenon in the amounts reasonably required by Lender.  “Full Replacement Cost” shall mean the full replacement cost of the Property, without allowance for depreciation and exclusive of the cost of excavations, foundations, footings, and value of land, and shall be subject to verification by Lender.  Full Replacement Cost will be determined, at Borrower’s expense, periodically upon policy expiration or renewal by the insurance company or an appraiser, engineer, architect, or contractor approved by said company and Lender.
(b)    Liability and Other Insurance.  Borrower shall maintain commercial general liability insurance with per occurrence limits of $1,000,000, a products/completed operations limit of $2,000,000, and a general aggregate limit of $2,000,000, with an excess/umbrella liability policy of not less than $10,000,000 per occurrence and annual aggregate covering Borrower, with Lender named as an additional insured, against claims for bodily injury or death or property damage occurring in, upon, or about the Property or any street, drive, sidewalk, curb, or passageway adjacent thereto.  In addition to any other requirements, such commercial general liability and excess/umbrella liability insurance shall provide insurance against acts of terrorism (provided, however, Borrower shall only be required to maintain such terrorism coverage to the extent and at the level obtainable and at an annual premium not to exceed fifty percent (50%) of the then current annual premium for the property and casualty insurance for the Property as required by the terms hereof) and against claims applicable to the presence of Microbial Matter, or such coverages shall be provided by separate policies or endorsements.  The insurance policies shall also include operations and blanket contractual liability coverage which insures contractual liability under the indemnifications set forth in Section 8.03 below (but such coverage or the amount thereof shall in no way limit such indemnifications).  Upon request, Borrower shall also carry additional insurance or additional amounts of insurance covering Borrower or the Property as Lender shall reasonably require.
(c)    Form of Policy.  All insurance required under this Section 3.06 shall be fully paid for, non-assessable, with a deductible not to exceed Fifty Thousand Dollars ($50,000.00), and the policies shall contain such provisions, endorsements, and expiration dates as Lender shall reasonably require.  The policies shall be issued by insurance companies authorized to do business in the Property State, approved by Lender, and 

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must have and maintain a current financial strength rating of “A-, VIII” (or higher) from A.M. Best or equivalent (or, if a rating by A.M. Best is no longer available, then a similar rating from a similar or successor service); provided that, notwithstanding the foregoing, insurance companies providing up to ten (10%) of the insurance required under this Section 3.06 may have a current financial strength rating of “A-,VII” from A.M. Best or equivalent (or, if a rating by A.M. Best is no longer available, then a similar rating from a similar or successor service).  If, because of adverse changes in the insurance market, Borrower requests that Lender approve insurance companies that are otherwise in compliance with the foregoing, but have financial strength ratings lower than the foregoing, Lender will consider such request in good faith and in a manner consistent with its underwriting and servicing standards for blanket insurance policies of similarly situated borrowers with similar property portfolios, taking into account, among other things, geographic factors and the loan to value ratio (as calculated by Lender).  In addition, all policies shall (i) include a standard mortgagee clause, without contribution, in the name of Lender, (ii) provide that they shall not be canceled, amended, or materially altered (including reduction in the scope or limits of coverage) without at least thirty (30) days’ prior written notice to Lender except in the event of cancellation for non-payment of premium, in which case only ten (10) days’ prior written notice will be given to Lender, and (iii) include a waiver of subrogation clause substantially equivalent to the following: “The Company may require from the Insured an assignment of all rights of recovery against any party for loss to the extent that payment therefor is made by the Company, but the Company shall not acquire any rights of recovery which the Insured has expressly waived prior to loss, nor shall such waiver affect the Insured’s rights under this policy.”
(d)    Original Policies.  Borrower shall deliver to Lender (i) original or certified copies of all policies (and renewals) required under this Section 3.06 and (ii) receipts evidencing payment of all premiums on such policies at least within fifteen (15) days of their expiration.  If original and renewal policies are unavailable or if coverage is under a blanket policy, then Borrower shall deliver duplicate originals or, if duplicate originals are unavailable or Lender determines that duplicate originals are not necessary, (1) an MBA Evidence of Insurance - Commercial Property form certificate (the “MBA Form”) (or, until such time as the MBA Form is available in the Property State, an original certificate in form substantially similar to the ACORD 28 (2006) certificate) with respect to all insurance coverage required under Section 3.06(a) above (or equivalent certificates acceptable to Lender; provided, however, that any certificate containing language to the effect that the certificate is provided “for information only” shall not qualify as adequate evidence, in which case Borrower shall also provide a binder issued by a licensed insurance broker or insurance carrier), and (2) an original ACORD 25 certificate with respect to all insurance coverage required under Section 3.06(b) above (or equivalent certificates acceptable to Lender; provided, however, that any certificate containing language to the effect that the certificate is provided “for information only” shall not qualify as adequate evidence) evidencing that such policies are in full force and effect, together with certified copies of the original policies.  Without limiting Lender’s other rights with respect to the foregoing obligations, if, within ten (10) days after the expiration of the current applicable policy, Lender has not received the foregoing items in form and substance acceptable to Lender (as being in compliance with the terms of this Agreement), then Lender may retain a commercial property insurance consultant to assist Lender in obtaining adequate evidence that the required insurance coverage is in effect, in which event Borrower shall (i) cooperate with such consultant in confirming that adequate evidence that the required insurance coverage is in effect, and (ii) pay all of the costs and expenses of such consultant.
(e)    General Provisions.  Borrower shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required under this Section 3.06 unless endorsed in favor of Lender as per this Section 3.06 and approved by Lender in all respects.  In the event of foreclosure of the Instrument or other transfer of title or assignment of the Property in extinguishment, in whole or in part, of the Obligations, all right, title, and interest of Borrower in and to all policies of insurance then in force regarding the Property and all proceeds payable thereunder and unearned premiums thereon shall 

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immediately vest in the purchaser or other transferee of the Property.  No approval by Lender of any insurer shall be construed to be a representation, certification, or warranty of its solvency.  No approval by Lender as to the amount, type, or form of any insurance shall be construed to be a representation, certification, or warranty of its sufficiency.  Borrower shall comply with all insurance requirements and shall not cause or permit any condition to exist which would be prohibited by any insurance requirement or would invalidate the insurance coverage on the Property.  Borrower shall not be exempt from any of the requirements set forth in this Section 3.06 to the extent that a Tenant has agreed to provide the required insurance or a portion thereof pursuant to the terms and provisions of its respective Lease.  If any insurance being carried by a Tenant (rather than Borrower) is being utilized to satisfy the requirements of this Section 3.06 on the Property, then (i) such insurance must fully comply with this Section 3.06, and (ii) Borrower shall obtain from any such Tenant(s) and provide to Lender documentation sufficient to satisfy the requirements of Section 3.06(d) above. Lender has no duty or obligation to contact any Tenant(s) regarding proof of insurance for the Property.
(f)    Waiver of Subrogation.  A waiver of subrogation shall be obtained by Borrower from its insurers and, consequently, Borrower for itself, and on behalf of its insurers, hereby waives and releases any and all right to claim or recover against Lender, its officers, employees, agents and representatives, for any loss of or damage to Borrower, other Persons, the Property, Borrower’s property or the property of other Persons from any cause required to be insured against by the provisions of this Agreement or otherwise insured against by Borrower.
Section 3.07    Damage and Destruction of Property. 
(a)    Borrower’s Obligations.  If any damage to, loss, or destruction of the Property occurs (any “Damage”), then (i) Borrower shall notify Lender within ten (10) days after the occurrence of such Damage if the cost to restore or repair such Damage exceeds $150,000 and shall take all necessary steps to preserve any undamaged part of the Property and (ii) if the insurance proceeds are made available for Restoration (defined below) (but regardless of whether any proceeds are sufficient for Restoration), Borrower shall promptly commence and diligently pursue to completion the restoration, replacement, and rebuilding of the Property as nearly as possible to its value and condition immediately prior to the Damage or a Taking (defined below) in accordance with plans and specifications approved by Lender (the “Restoration”).  Borrower shall comply with other reasonable requirements established by Lender to preserve the security under the Documents.
(b)    Lender’s Rights.  If any Damage occurs and some or all of it is covered by insurance, then (i) Lender may, but is not obligated to, make proof of loss if not made promptly by Borrower, and Lender is authorized and empowered by Borrower to settle, adjust, or compromise any claims for the Damage; (ii) each insurance company concerned is authorized and directed to make payment directly to Lender for the Damage; and (iii) Lender may apply the insurance proceeds in any order it determines (A) to reimburse Lender for all Costs (defined below) related to collection of the proceeds and (B) subject to Section 3.07(c) and at Lender’s option, to (1) payment (without any Spread Maintenance and/or Breakage Fee) of all or part of the Obligations, whether or not then due and payable, in the order determined by Lender (provided that if any Obligations remain outstanding after this payment, then the unpaid Obligations shall continue in full force and effect, and Borrower shall not be excused in the payment thereof), (2) the cure of any default under the Documents, or (3) the Restoration.  Notwithstanding the foregoing, if no Event of Default has occurred (and if there shall then be no event which with the passage of time and/or giving of notice would constitute an Event of Default), then Borrower shall have the right to settle, adjust or compromise any claim for Damage if the total amount of such claim is less than $370,000.00, provided that Borrower promptly uses the full amount of such insurance proceeds for Restoration of the Damage and provides evidence thereof to Lender 

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in a manner acceptable to Lender.  If Borrower receives any insurance proceeds for the Damage in excess of $370,000, then Borrower shall promptly deliver the proceeds to Lender.  Borrower expressly assumes all risk of loss from any Damage, whether or not insurable or insured against.
(c)    Application of Proceeds to Restoration.  Lender shall make the Net Proceeds (defined below) available to Borrower for Restoration if: (i) there shall then be no Event of Default; (ii) Lender shall be satisfied that Restoration can and will be completed within eighteen (18) months after the Damage occurs and at least nine (9) months prior to the maturity of the Note, and (iii) if the cost of Restoration exceeds $370,000, Borrower shall have entered into a general construction contract reasonably acceptable in all respects to Lender for Restoration, which contract must include commercially reasonable retainage provisions; and (iv) in Lender’s reasonable judgment, after Restoration has been completed, the net cash flow of the Property will be sufficient to cover all costs and operating expenses of the Property, including payments due and reserves required under the Documents.  Notwithstanding any provision of this Agreement to the contrary, Lender shall not be obligated to make any portion of the Net Proceeds available for Restoration (whether as a result of Damage or a Taking) unless, at the time of the disbursement request, Lender has determined in its reasonable discretion that (y) Restoration can be completed at a cost which does not exceed the aggregate of the remaining Net Proceeds and any funds deposited with Lender by Borrower (the “Additional Funds”) and (z) the aggregate of any loss of rental income insurance proceeds which the carrier has acknowledged to be payable (the “Rent Loss Proceeds”) and any funds deposited with Lender by Borrower are sufficient to cover all costs and operating expenses of the Property, including payments due and reserves required under the Documents.
Notwithstanding the foregoing, if Lender determines that Restoration cannot be completed within eighteen (18) months after the Damage occurs, but (A) Lender is satisfied that Restoration can and will be completed at least twelve (12) months prior to the maturity of the Note, and (B) Borrower maintains the insurance required in Section 3.06(a)(iv) of this Agreement for the entire Restoration period (or delivers to Lender cash in the amount of any shortfall between the required insurance coverage and the amount of Rent Loss Proceeds actually available), then Lender may make the Net Proceeds available to Borrower for Restoration in accordance with the provisions of this Section 3.07.  The determination of the time required for Restoration will be made by a licensed and qualified architect selected by Borrower and approved by Lender.  If all of the requirements set forth in the foregoing sentence of this Section 3.07 are satisfied with respect to any Restoration that cannot  be completed within eighteen (18) months after the Damage, then Lender, in its sole discretion (exercised in good faith), may still elect to apply the Net Proceeds in accordance with Section 3.07(b)(iii)(B)(1) above, in which case, Borrower shall be required to pay all remaining Obligations (without any Spread Maintenance and/or Breakage Fee) within ninety (90) days after Lender notifies Borrower that it has elected to apply the Net Proceeds to partial repayment of the Obligations.
(d)    Disbursement of Proceeds.  If Lender elects or is required to make insurance proceeds or the Award (defined below), as the case may be, available for Restoration, then Lender shall through a disbursement procedure established by Lender on a monthly basis make available to Borrower in installments the net amount of all insurance proceeds or the Award, as the case may be, received by Lender after deduction of all reasonable costs and expenses incurred by Lender in connection with the collection and disbursement of such proceeds (the “Net Proceeds”) and, if any, the Additional Funds.  The amounts periodically disbursed to Borrower shall be based upon the amounts currently due under the construction contract for Restoration and Lender’s receipt of (i) appropriate lien waivers, copies of all invoices and proof of compliance with Laws, (ii) a certification of the percentage of Restoration completed by an architect or engineer acceptable to Lender, and (iii) title insurance protection against materialmen’s and mechanics’ liens.  At Lender’s election, a disbursing agent selected by Lender shall disburse such funds, and Borrower shall pay such agent’s reasonable fees and expenses. The Net Proceeds, Rent Loss Proceeds, and any Additional Funds shall 

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constitute additional security for the Loan, and Borrower shall execute, deliver, file and/or record, at its expense, such instruments as Lender requires to grant to Lender a perfected, first-priority security interest in these funds.  If the Net Proceeds are made available for Restoration and (x) Borrower refuses or fails to complete the Restoration, (y) an Event of Default occurs, or (z) the Net Proceeds or Additional Funds are not applied to Restoration, then any undisbursed portion may, at Lender’s option, be applied to the Obligations in any order of priority, and any such application to principal shall be deemed a voluntary prepayment subject to Spread Maintenance and/or Breakage Fee.
Section 3.08    Condemnation. 
(a)    Borrower’s Obligations.  Borrower will promptly notify Lender of any threatened or instituted proceedings for the condemnation or taking by eminent domain of the Property, including any change in any street (whether as to grade, access, or otherwise)(a “Taking”).  Borrower shall, at its expense, (i) diligently prosecute these proceedings, (ii) deliver to Lender copies of all papers served in connection therewith, and (iii) consult and cooperate with Lender in the handling of these proceedings.  No settlement of these proceedings shall be made by Borrower without Lender’s prior written consent.  Lender may participate in these proceedings (but shall not be obligated to do so), and Borrower will sign and deliver all instruments requested by Lender to permit this participation.
(b)    Lender’s Rights to Proceeds.  All condemnation awards, judgments, decrees, or proceeds of sale in lieu of condemnation (the “Award”) are assigned, and shall be paid, to Lender.  Borrower authorizes Lender to collect and receive them, to give receipts for them, to accept them in the amount received without question or appeal, and/or to appeal any judgment, decree, or award.  Borrower will sign and deliver all instruments requested by Lender to permit these actions.
(c)    Application of Award.  Lender may apply any Award in any order it determines (i) to reimburse Lender for all Costs related to collection of the Award and (ii) subject to Section 3.08(d) and at Lender’s option, to (A) payment (without any Spread Maintenance and/or Breakage Fee) of all or part of the Obligations, whether or not then due and payable, in the order determined by Lender (provided that if any Obligations remain outstanding after this payment, then the unpaid Obligations shall continue in full force and effect and Borrower shall not be excused in the payment thereof), (B) the cure of any default under the Documents, or (C) the Restoration.  If Borrower receives any Award, then Borrower shall promptly deliver such Award to Lender.
(d)    Application of Award to Restoration.  Lender shall permit the application of the Award to Restoration if:  (i) no more than (A) twenty percent (20%) of the gross area of the Improvements or (B) ten percent (10%) of the parking spaces is affected by the Taking; (ii) the amount of the loss does not exceed twenty percent (20%) of the original amount of the Note; (iii) the Taking does not affect access to the Property from any public right-of-way; (iv) there is no Event of Default at the time of the Taking or the application of the Award; (v) after Restoration, the Property and its use will be in compliance with all Laws; (vi) in Lender’s reasonable judgment, Restoration is practical and can be completed within one (1) year after the Taking and at least one (1) year prior to the maturity of the Note; (vii) the Tenants listed in Exhibit D (the “Major Tenants”) agree in writing to continue their Leases without abatement of rent; (viii) Borrower shall have entered into a general construction contract acceptable in all respects to Lender for Restoration, which contract must include commercially reasonable retainage provisions; and (ix) in Lender’s reasonable judgment, after Restoration has been completed the net cash flow of the Property will be sufficient to cover all costs and operating expenses of the Property, including payments due and reserves required under the Documents.  Any portion of the Award that is in excess of the cost of any Restoration permitted above, may, at Lender’s option, be applied against the Obligations (without any Spread Maintenance and/or Breakage 

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Fee) or paid to Borrower.  If the Award is disbursed to Borrower under the provisions of this Section 3.08(d), then such Award shall be disbursed to Borrower in accordance with the terms and conditions of Section 3.07(d).
(e)    Effect on the Obligations.  Notwithstanding any Taking, Borrower shall continue to pay and perform the Obligations as provided in the Documents.  Any reduction in the Obligations due to application of the Award shall take effect only upon Lender’s actual receipt and application of the Award to the Obligations.  If the Property shall have been foreclosed, sold pursuant to any power of sale granted pursuant to the Documents, or transferred by deed-in-lieu of foreclosure prior to Lender’s actual receipt of the Award, then Lender may apply the Award received to the extent of any deficiency upon such sale and Costs incurred by Lender in connection with such sale.
Section 3.09    Liens and Liabilities.  Borrower shall pay when due all claims and demands of mechanics, materialmen, laborers and others for any work performed or materials delivered for the Property or the Improvements (collectively, “Property Payables”); provided, however, that Borrower shall have the right to contest in good faith any such Property Payables, so long as it does so diligently, by appropriate proceedings and without prejudice to Lender and provided that neither the Property nor any interest therein would be in any danger of sale, loss or forfeiture as a result of such proceeding or contest.  In the event that Borrower shall contest any such Property Payables, Borrower shall promptly notify Lender of such contest and thereafter shall, upon Lender’s request, promptly provide a bond, cash deposit or other security satisfactory to Lender to protect Lender’s interest and security should the contest be unsuccessful.  If Borrower shall fail to immediately discharge or provide security against any such Property Payables as aforesaid, then Lender may do so, and any and all expenses incurred by Lender, together with interest thereon at the Default Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on demand and shall be secured by the Instrument and by all other Documents securing all or any part of the Obligations.  Borrower shall, at its sole expense, do everything necessary to preserve the lien and security interest created by the Instrument and the other Documents and their priority. Nothing in the Documents shall be deemed or construed as constituting the consent or request by Lender, express or implied, to any contractor, subcontractor, laborer, mechanic or materialman for the performance of any labor or the furnishing of any material for any improvement, construction, alteration, or repair of the Property.  Borrower further agrees that Lender does not stand in any fiduciary relationship to Borrower.  Any contributions made, directly or indirectly, to Borrower by or on behalf of any of its partners, members, principals or any party related to such parties shall be treated as equity and shall be subordinate and inferior to the rights of Lender under the Documents.  Without limiting Lender’s rights and remedies under Article VI of this Agreement, Article III of the Instrument or otherwise, if Borrower or the Property fails to comply with the requirements of this Section 3.09, then Lender may impose additional requirements upon Borrower including monetary reserves or financial equivalents, until such time as Lender receives proof reasonably satisfactory to Lender of such compliance.
Section 3.10    Tax and Insurance Deposits; Other Deposits
(a)    At Lender’s option (i) following an Event of Default or (ii) in the event that Borrower fails to timely deliver to Lender evidence of payment of Assessments or insurance premiums as required by Sections 3.03(a) and 3.06(d), respectively, Borrower shall make monthly deposits (the “Deposits”) with Lender equal to one-twelfth (1/12th) of the annual Assessments (except for income taxes, franchise taxes, ground rents, maintenance charges and utility charges) and the premiums for insurance required under Section 3.06 (the “Insurance Premiums”) together with amounts sufficient to pay these items thirty (30) days before they are due (collectively, the “Impositions”).  Lender shall estimate the amount of the Deposits until ascertainable.  Borrower shall deposit any deficiency within ten (10) days after Lender notifies Borrower of 

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the final amount of the required Deposits (or such earlier date specified by Lender if necessary to cause the Impositions to be paid by any applicable due date).  Borrower shall promptly notify Lender of any changes to the amounts, schedules and instructions for payment of the Impositions.  Borrower authorizes Lender or its agent to obtain the bills for Assessments directly from the appropriate tax or governmental authority.  All Deposits are pledged to Lender and shall constitute additional security for the Obligations.  If (A) there is no Event of Default at the time of payment, (B) Borrower has delivered bills or invoices to Lender for the Impositions in sufficient time to pay them when due, and (C) the Deposits are sufficient to pay the Impositions or Borrower has deposited the necessary additional amount, then Lender shall pay the Impositions prior to their due date.  Any Deposits remaining after payment of the Impositions shall, at Lender’s option, be credited against the Deposits required for the following year or paid to Borrower.  If an Event of Default occurs, then the Deposits may, at Lender’s option, be applied to the Obligations in any order of priority.  Any application to principal shall be deemed a voluntary prepayment subject to Spread Maintenance and/or Breakage Fee.  Borrower shall not claim any credit against the principal and interest due under the Note for the Deposits.  Subject to Article V, a transfer of title to the Land shall automatically transfer to the new owner the beneficial interest in the Deposits.  Upon full payment and satisfaction of the Obligations or, at Lender’s option, at any prior time, the balance of the Deposits in Lender’s possession shall be paid over to the record owner of the Land, and no other party shall have any right or claim to the Deposits.  Lender may transfer all its duties under this Section 3.10 to such servicer or financial institution as Lender may periodically designate, and Borrower thereupon agrees to make the Deposits to such servicer or institution.
(b)    Any insurance proceeds, Awards, Deposits, or similar funds paid to, and to be held by, Lender (or such servicer or financial institution as Lender may periodically designate) in connection with the Loan shall be held without payment of interest to Borrower (except to the extent required under Laws) and may be commingled with other funds of Lender (or such servicer or financial institution as Lender may periodically designate).  Notwithstanding anything in this Agreement or at law or in equity to the contrary, any such insurance proceeds, Awards, Deposits, or similar funds held by Lender (or such servicer or financial institution as Lender may periodically designate) shall not be deemed to be trust funds, and Lender may dispose of such monies in the manner provided in this Agreement.
Section 3.11    ERISA.  
(a)    Borrower understands and acknowledges that, as of the date hereof, the source of funds from which Lender is extending the Loan will include one or more of the following accounts: (i) an “insurance company general account,” as that term is defined in Prohibited Transaction Class Exemption (“PTE”) 95-60 (60 Fed. Reg. 35925 (Jul. 12, 1995)), as to which Lender meets the conditions for relief in Sections I and IV of PTE 95-60; (ii) accounts, the assets of which are subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); and (iii) one or more insurance company separate accounts maintained solely in connection with fixed contractual obligations of the insurance company, under which the amounts payable or credited to the plan are not affected in any manner by the investment performance of the separate account.
(b)    Borrower represents and warrants to Lender that (i) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans, or, if subject to such statutes, is not in violation thereof in the execution of the Documents and the making of the Loan thereunder; (iii) the assets of Borrower do not constitute “plan assets” of one or more plans within the meaning of 29 C.F.R. Section 2510.3-101; and (iv) one or more of the following circumstances is true:  (A) equity interests in Borrower are publicly offered securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2); (B) less than twenty-five percent (25%) of all equity 

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interests in Borrower are held by “benefit plan investors” within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or (C) Borrower qualifies as an “operating company,” a “venture capital operating company” or a “real estate operating company” within the meaning of 29 C.F.R. Section 2510.3-101(c), (d) or (e), respectively.
(c)    Borrower shall deliver to Lender such certifications and/or other evidence reasonably requested by Lender (no more often than on an annual basis) to verify the representations and warranties in Section 3.11(b) above.  Failure to deliver these certifications or evidence, breach of these representations and warranties, or consummation of any transaction which would cause the Documents or any exercise of Lender’s rights under the Documents to materially violate ERISA or any state statute regulating governmental plans (collectively, a “Violation”), shall be an Event of Default; provided, however, that (i) if either Lender or Borrower discovers or becomes aware of a Violation, that party shall notify the other within three (3) business days of the discovery; (ii) Borrower will take steps to cure such Violation, and Lender agrees to cooperate as necessary to assist Borrower in effecting a cure of a Violation that would constitute a violation of applicable Laws; and (iii) an Event of Default shall not be deemed to occur until thirty (30) days following the date of the notice described in 3.11(c)(i), unless Borrower and Lender agree by that date that an attempted cure of such Violation was successful, in which case an Event of Default will not be deemed to have occurred as a result of such Violation.  Notwithstanding anything in the Documents to the contrary, no sale, assignment, or transfer of any direct or indirect right, title, or interest in Borrower or the Property (including creation of a junior lien, encumbrance or leasehold interest) shall be permitted which would, in Lender’s reasonable opinion, negate Borrower’s representations in this Section 3.11 or cause a Violation.  
Section 3.12    Environmental Representations, Warranties, and Covenants. 
(a)    Environmental Representations and Warranties.  Borrower represents and warrants, to the best of Borrower’s knowledge (after due inquiry and investigation) and additionally based upon the environmental site assessment report of the Property (the “Environmental Report”), that except as fully disclosed in the Environmental Report delivered to and approved by Lender:  (i) there are no Hazardous Materials (defined below) or underground storage tanks affecting the Property (“affecting the Property” shall mean “in, on, under, stored, used or migrating to or from the Property”) except for (A) routine office, cleaning, janitorial and other materials and supplies necessary to operate the Property for its current use and (B) Hazardous Materials that are (1) in compliance with Environmental Laws (defined below), (2) have all required permits, and (3) are in only the amounts necessary to operate the Property; (ii) there are no past, present or threatened Releases (defined below) of Hazardous Materials in violation of any Environmental Law affecting the Property; (iii) there is no past or present non-compliance with Environmental Laws or with permits issued pursuant thereto except for Releases that have been fully remediated in accordance with Environmental Laws; (iv) Borrower does not know of, and has not received, any written or oral notice or communication from any person alleging any violation of Environmental Laws at the Property or any release of Hazardous Substances affecting the Property; and (v) Borrower has provided to Lender, in writing, all information relating to Hazardous Materials affecting the Property known to Borrower or contained in any environmental reports ordered by Borrower.  “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations, standards, policies and other government directives or requirements, as well as common law, that apply to Borrower or the Property and relate to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act.  “Hazardous Materials” shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives, flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; Microbial Matter, infectious substances, asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground 

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storage tanks, whether empty or containing any substance; any substance the presence of which on the Property is prohibited by any federal, state or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of any Environmental Law.  “Release” of any Hazardous Materials includes any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, pumping, pouring, escaping, dumping, disposing or other movement of Hazardous Materials.  “Microbial Matter” shall mean the presence of fungi or bacterial matter which reproduces through the release of spores or the splitting of cells, including, but not limited to, mold, mildew and viruses, whether or not such Microbial Matter is living, present at the Property at levels that would be reasonably expected to result in harm to human health.
(b)    Environmental Covenants.  Borrower covenants and agrees that:  (i) all use and operation of the Property shall be in compliance with all Environmental Laws and required permits; (ii) there shall be no Releases of Hazardous Materials affecting the Property in violation of Environmental Laws; (iii) there shall be no Hazardous Materials affecting the Property except (A) routine office, cleaning and janitorial supplies and other materials and supplies necessary to operate the Property for its current use, (B) in compliance with all Environmental Laws, (C) in compliance with all required permits, and (D) (1) in only the amounts necessary to operate the Property or (2) as shall have been fully disclosed to and approved by Lender in writing; (iv) Borrower shall keep the Property free and clear of all liens and encumbrances imposed by any Environmental Laws due to any act or omission by Borrower or any person (the “Environmental Liens”); (v) Borrower shall, at its sole expense, fully and expeditiously cooperate in all activities performed under Section 3.12(c) including providing all relevant information and making knowledgeable persons available for interviews; (vi) Borrower shall, at its sole expense, (A) perform any environmental site assessment or other investigation of environmental conditions at the Property upon Lender’s request based on Lender’s reasonable belief that the Property is not in compliance with all Environmental Laws, (B) share with Lender the results and reports, and Lender and the Indemnified Parties (defined below) shall be entitled to rely on such results and reports, and (C) complete any remediation of Hazardous Materials affecting the Property or other actions required by any Environmental Laws; (vii) Borrower shall not allow any Tenant or other user of the Property to violate any Environmental Law; (viii) Borrower shall immediately notify Lender in writing after it becomes aware of (A) the presence, Release, or threatened Release of Hazardous Materials affecting the Property, (B) any non-compliance of the Property with any Environmental Laws, (C) any actual or potential Environmental Lien, (D) any required or proposed remediation of environmental conditions relating to the Property, or (E) any written or oral communication or notice from any person relating to any Release or threatened Release of Hazardous Materials, or any oral communication relating to or alleging any violation or potential violation of Environmental Law, and (ix) if an Asbestos Operation and Maintenance Plan and any other Operation and Maintenance Plan (collectively, the “O&M Plan”) is in effect (or required by Lender to be implemented) at the time of the closing of the Loan, then Borrower shall, at its sole expense, implement and continue the O&M Plan (with any modifications required to comply with applicable Laws) in all material respects, until payment and full satisfaction of the Obligations.  Any failure of Borrower to perform its obligations under this Section 3.12 shall constitute bad faith waste of the Property.
(c)    Lender’s Rights.  Lender and any person designated by Lender may enter the Property to assess the environmental condition of the Property and its use including (i) conducting any environmental assessment or audit (the scope of which shall be determined by Lender) and (ii) taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing at all reasonable times when (A) an Event of Default has occurred under the Documents, (B) Lender reasonably believes that a Release has occurred or the Property is not in compliance with all Environmental Laws, or (C) the Loan is being considered for sale (any out-of-pocket expenses incurred in connection with the entry under clause (C) only shall be at Lender’s expense unless an Event of Default under the Documents has occurred).  Further, 

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any entry by Lender under clause (C) only shall not include invasive testing.  Borrower shall cooperate with and provide access to Lender and such person.
Section 3.13    Electronic Payments.  Unless directed otherwise in writing by Lender, all payments due under the Documents shall be made by electronic funds transfer debit entries to Borrower’s account at an Automated Clearing House member bank satisfactory to Lender or by similar electronic transfer process selected by Lender.  Each payment due under the Documents shall be initiated by Lender through the Automated Clearing House network (or similar electronic process) for settlement on the Due Date for the payment.  Borrower shall, at Borrower’s sole cost and expense, direct its bank in writing to permit such electronic fund transfer debit entries (or similar electronic transfer) to be made by Lender.  Prior to each payment Due Date under the Documents, Borrower shall deposit and/or maintain sufficient funds in Borrower’s account to cover each debit entry.  Any charges or costs, if any, by Borrower’s bank for the foregoing shall be paid by Borrower.
Section 3.14    Inspection.  Borrower shall allow Lender and any person designated by Lender to enter upon the Property and conduct tests or inspect the Property at all reasonable times, provided that Lender will not enter upon the Property more than once per year unless (i) an Event of Default has occurred, (ii) the Loan is being considered for sale, or (iii) Lender has reasonable grounds to believe that the Property is not in compliance with the requirements of the Documents, and any and all costs and expenses relating to such tests and inspections shall constitute Costs under Section 4.01 below, except that any entry by Lender under clause (ii) only shall be at Lender’s expense unless an Event of Default under the Documents has occurred.  Any environmental testing of the Property shall be governed by the provisions of Section 3.12(c) above; in addition, prior to the occurrence of an Event of Default, Lender will not cause other invasive testing to be done unless Lender reasonably believes that the aspect of the Property being subjected to invasive testing is not in compliance with Laws.  Borrower shall assist Lender and such person in effecting said inspection.
Section 3.15    Records, Reports, and Audits. 
(a)    Records and Reports.  Borrower shall maintain complete and accurate books and records with respect to all operations of, or transactions involving, the Property.  Within one hundred twenty (120) days after Borrower’s fiscal year end, Borrower shall furnish Lender annual financial statements for the most current fiscal year (including a schedule of all related Obligations and contingent liabilities) for Borrower and annual financial statements for the most current fiscal year for Behringer Harvard Opportunity REIT II, Inc. (“BHOR”) if Lender requests such financial statements for BHOR and such financial statements are not available from published governmental sources available and accessible to the general public.  Within one hundred twenty (120) days after Borrower’s fiscal year end (or within sixty (60) days after each quarter upon Lender’s request), Borrower shall furnish Lender (i) operating statements showing cash flow and capital expenditures for the Property including income and expenses (before and after Obligations service), and major capital improvements; (ii) copies of paid tax receipts for the Property; (iii) a certified rent roll (and delinquency report or other written report) including security deposits held, the expiration of the terms of the Leases, and identification and explanation of any Tenants in default; (iv) a budget showing projected income and expenses (before and after Obligations service) for the next twelve (12) month budget period; (v) any appraisals of the Property performed during the previous year; and (vi) upon Lender’s request following an Event of Default, (A) a schedule showing Borrower’s tax basis in the Property, (B) the distribution of economic interests in the Property, and (C) copies of any other loan documents affecting the Property other than the Documents.  
(b)    Delivery of Reports.  All of the reports, statements, and items required under this Section 3.15 shall be (i) certified as being true, correct, and accurate by an authorized person, partner, or officer of 

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the delivering party or, at the deliverer’s option, audited by a Certified Public Accountant; (ii) reasonably satisfactory to Lender in form and substance; and (iii) delivered within (A) ninety (90) days after the end of Borrower’s fiscal year for annual reports and (B) forty-five (45) days after the end of each calendar quarter for quarterly reports. If any one report, statement, or item is not received by Lender on its due date, then a late fee of Five Hundred and No/100 Dollars ($500.00) per month shall be due and payable by Borrower.  If any one report, statement, or item is not received after the expiration of (y) thirty (30) days after written notice from Lender (the “First Notice”) and (z) ten (10) days after delivery of a second written notice from Lender (the “Second Notice”), which Second Notice shall not be delivered before the date that is thirty (30) days after delivery of the First Notice, then Lender may immediately declare an Event of Default under the Documents.  Borrower shall (i) provide Lender with such additional financial, management, or other information regarding Borrower, any general partner of Borrower, or the Property, as Lender may reasonably request and (ii) upon Lender’s request, deliver all items required by this Section 3.15 in an electronic format (i.e., on computer disks) or by electronic transmission acceptable to Lender.
(c)    Inspection of Records.  Borrower shall allow Lender or any person designated by Lender to examine, audit, and make copies of all such books and records and all supporting data at the place where these items are located at all reasonable times after reasonable advance notice; provided that no notice shall be required after any Event of Default under the Documents.  Borrower shall assist Lender in effecting such examination.  Upon five (5) days’ prior notice, Lender may inspect and make copies of Borrower’s or any general partner of Borrower’s income tax returns with respect to the Property for the purpose of verifying any items referenced in this Section 3.15.
Section 3.16    Borrower’s Certificates.  Within ten (10) days after Lender’s request, Borrower shall furnish a written certification to Lender and any Investors (defined below) as to (a) the amount of the Obligations outstanding; (b) the interest rate, terms of payment, and maturity date of the Note; (c) the date to which payments have been paid under the Note; (d) whether any offsets or defenses exist against the Obligations and a detailed description of any listed; (e) whether all Leases are in full force and effect and have not been modified (or if modified, setting forth all modifications); (f) the date to which the Rents have been paid; (g) whether, to the best knowledge of Borrower, any defaults exist under the Leases and a detailed description of any listed; (h) the security deposit held by Borrower under each Lease and that such amount is the amount required under such Lease; (i) whether there are any defaults (or events which with the passage of time and/or giving of notice would constitute a default) under the Documents and a detailed description of any listed; (j) whether the Documents are in full force and effect; and (k) any other matters reasonably requested by Lender related to the Leases, the Obligations, the Property, or the Documents.  For all non-residential properties and promptly upon Lender’s request, Borrower shall use its best efforts to deliver a written certification to Lender and Investors from Tenants specified by Lender that:  (a) their Leases are in full force and effect; (b) there are no defaults (or events which with the passage of time and/or notice would constitute a default) under their Leases and a detailed description of any listed; (c) none of the Rents have been paid more than one month in advance; (d) there are no offsets or defenses against the Rents and a detailed description of any listed; and (e) any other matters reasonably requested by Lender related to the Leases; provided, however, that Borrower shall not have to pay money to a Tenant to obtain such certification, but it will deliver a landlord’s certification for any certification it cannot obtain.
Section 3.17    Full Performance Required; Survival of Warranties.  All representations and warranties of Borrower in the Loan application or made in connection with the Loan shall survive the execution and delivery of the Documents, and Borrower shall not perform any action, or permit any action to be performed, which would cause any of the warranties and representations of Borrower to become untrue in any material respect.

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Section 3.18    Additional Security.  No other security now existing or taken later to secure the Obligations shall be affected by the execution of the Documents and all additional security shall be held as cumulative.  The taking of additional security, execution of partial releases, or extension of the time for the payment obligations of Borrower shall not diminish the effect and lien of the Documents and shall not affect the liability or obligations of any maker or guarantor.  Neither the acceptance of the Documents nor their enforcement shall prejudice or affect Lender’s right to realize upon or enforce any other security now or later held by Lender.  Lender may enforce the Documents or any other security in such order and manner as it may determine in its discretion.
Section 3.19    Further Acts.  Borrower shall take all necessary actions to (i) keep valid and effective the lien and rights of Lender under the Documents and (ii) protect the lawful owner of the Documents.  Promptly upon request by Lender, and at Borrower’s expense, Borrower shall execute additional instruments and take such actions as Lender reasonably believes are necessary or desirable to (a) maintain or grant Lender a first-priority, perfected lien on the Property, (b) grant to Lender to the fullest extent permitted by Laws, the right to foreclose on, or transfer title to, the Property non-judicially, (c) correct any error or omission in the Documents, and (d) effect the intent of the Documents, including filing/recording the Documents, additional mortgages, deeds of trust, deeds to secure debt, financing statements, and other instruments.
Section 3.20    Compliance with Anti-Terrorism Regulations. 
(a)    Borrower hereby covenants and agrees that neither Borrower nor any guarantor, nor any persons or entities holding any legal or beneficial interest whatsoever in Borrower or any guarantor (whether directly or indirectly), will knowingly conduct business with or engage in any transaction with any person or entity named on any of the OFAC Lists or any person or entity included in, owned by, controlled by, acting for or on behalf of, providing assistance, support, sponsorship, or services of any kind to, or otherwise associated with any of the persons or entities referred to or described in the OFAC Lists.
(b)    Borrower hereby covenants and agrees that it will comply at all times with the requirements of Executive Order 13224; the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701-06; the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56; the Iraqi Sanctions Act, Pub. L. 101-513, 104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C. Section 219, 18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development Cooperation Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments Sanctions Regulations, 31 C.F.R. Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597 and any similar laws or regulations currently in force or hereafter enacted (collectively, the “Anti-Terrorism Regulations”).
(c)    Borrower hereby covenants and agrees that if it becomes aware or receives any notice that Borrower, any guarantor or the Property, or any person or entity holding any legal or beneficial interest whatsoever (whether directly or indirectly) in Borrower, any guarantor or in the Property, is named on any of the OFAC Lists (such occurrence, an “OFAC Violation”), then Borrower will immediately (i) give notice to Lender of such OFAC Violation, and (ii) comply with all Laws applicable to such OFAC Violation (regardless of whether the party included on any of the OFAC Lists is located within the jurisdiction of the United States of America), including, without limitation, the Anti-Terrorism Regulations, and Borrower hereby authorizes and consents to Lender’s taking any and all steps Lender deems necessary to comply with all Laws applicable to any such OFAC Violation, including, without limitation, the requirements of the Anti-Terrorism Regulations (including the “freezing” and/or “blocking” of assets).

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(d)    Upon Lender’s request from time to time during the term of the Loan, Borrower agrees to deliver a certification confirming that the representations and warranties set forth in Section 2.09 above remain true and correct as of the date of such certificate and confirming Borrower’s compliance with this Section 3.20 (but not more than once per calendar year unless (i) there has been an Event of Default, (ii) the Loan is being considered for sale, or (iii) Lender has reasonable grounds to believe that Borrower is not in compliance with the requirements of this Section 3.20).
Section 3.21    Compliance with Property as Single Asset.  Borrower hereby covenants and agrees that during the term of the Loan, (i) Borrower shall not own any assets in addition to the Property, (ii) the Property shall remain as a single property or project, and (iii) the Property shall generate substantially all of the gross income of Borrower and there shall be no substantial business being conducted, either directly or indirectly, by Borrower other than the business of operating the Property and the activities incidental thereto.
Section 3.22    Separateness Covenants/Covenants with Respect to Indebtedness, Operations and Fundamental Changes of Borrower.  Borrower hereby represents, warrants and covenants, as of the date hereof and until such time as the Obligations are paid in full, that Borrower:
(a)    shall not (i) liquidate or dissolve (or suffer any liquidation or dissolution), terminate, or otherwise dispose of, directly, indirectly or by operation of law, all or substantially all of its assets; (ii) reorganize or change its legal structure without Lender’s prior written consent, except as otherwise expressly permitted under the Documents; (iii) change its name, address, or the name under which Borrower conducts its business without promptly notifying Lender; (iv) enter into or consummate any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of Borrower or any general partner or managing member of Borrower, except as expressly permitted under the Documents; or (v) enter into or consummate any transaction or acquisition, merger or consolidation or otherwise acquire by purchase or otherwise all or any portion of the business or assets of, or any stock or other evidence of beneficial ownership of, any person or entity, except as expressly permitted under the Documents;
(b)    has not incurred and shall not incur any secured or unsecured debt except for customary and reasonable short term trade payables obtained and repaid in the ordinary course of Borrower’s business;
(c)    shall not, nor shall any member, partner (whether limited or general) or shareholder thereof, as applicable, or any other party, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation, by-laws, operating agreement, articles of organization or other formation agreement or document, as applicable, or governing agreement or document, in any material term or manner, or in a manner which adversely affects Borrower’s existence as a single purpose entity or Borrower’s compliance with Sections 3.21 and 3.22 of this Agreement (notwithstanding the foregoing, BHOOP may amend, modify or otherwise change its own formation and governing documents without Lender’s consent, provided that such modifications do not adversely affect Borrower’s existence as a single purpose entity or Borrower’s compliance with Sections 3.21 and 3.22 of this agreement);
(d)    shall allocate fairly and reasonably any rent, overhead and expenses for shared office space;
(e)    shall maintain correct and complete financial statements, books and records and other entity documents separate from those of any Affiliate of same or any other person or entity or, if such financial statements are consolidated or such books or records are maintained by an Affiliate, shall cause such financial statements and such books or records to keep the matters of Borrower easily identified as those of Borrower for accounting purposes;

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(f)    shall maintain its own separate depository bank accounts and correct, complete and separate books of account with respect to Borrower’s separate depository bank accounts;
(g)    shall file or cause to be filed its own separate tax returns; alternatively, if Borrower does not file its own tax returns, its tax information shall be included on a separate schedule on its parent’s tax return;
(h)    shall hold itself out to the public (including any of its Affiliates’ creditors) under Borrower’s own name and as a separate and distinct entity and not as a department or division of any Affiliate;
(i)    shall observe all customary formalities regarding the existence of Borrower, including, if required by Laws, holding meetings and maintaining current and accurate minute books separate from those of any Affiliate of same;
(j)    shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers and agents and any property manager with respect to the Property. No Affiliate of same shall be appointed or act as agent of Borrower, other than, if applicable, a property manager with respect to the Property and Affiliates who may handle tax, audit and IT matters for Borrower;
(k)    shall make investments in the name of Borrower directly by Borrower or on its behalf by brokers engaged and paid by Borrower or its agents;
(l)    except as expressly required by Lender in connection with the Loan and in writing, shall not guarantee or otherwise agree to be liable for (whether conditionally or unconditionally), pledge or assume or hold itself out or permit itself to be held out as having guaranteed, pledged or assumed any liabilities or obligations of any partner (whether limited or general), member, shareholder or any Affiliate of Borrower, as applicable, or any other party, nor shall it make any loan, except as expressly permitted in the Documents;
(m)    is and will be solvent;
(n)    shall separately identify, maintain and segregate its assets.  Borrower’s assets shall at all times be held by or on behalf of Borrower and if held on behalf of Borrower by another entity, shall at all times be easily identified for accounting purposes as assets owned by Borrower. This restriction requires, among other things, that (i) Borrower funds shall be deposited or invested in Borrower’s name, (ii) Borrower funds shall not be commingled with the funds of any Affiliate of same, and (iii) Borrower shall maintain all accounts in its own name and with its own tax identification number, separate from those of any Affiliate of same or any other person or entity;
(o)    shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate of same or other person or entity;
(p)    shall pay or cause to be paid its own liabilities and expenses of any kind, including but not limited to salaries of its employees, only out of its own separate funds and assets to the extent revenue is generated from Borrower’s business at the Property;
(q)    is currently adequately capitalized, and shall not, because of distributions made during the term of the Loan, become inadequately capitalized as of the date of any such distributions (where “adequately capitalized” means, as of the date of determination, that it has sufficient capital based upon what is reasonably foreseeable for a business of its size and character and in light of its contemplated business operations);

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(r)    shall not do any act which would make it impossible to carry on the ordinary business of Borrower;
(s)    shall reflect Borrower’s ownership interest in all data and records (including computer records) used by Borrower or any Affiliate of same;
(t)    shall not invest any of Borrower’s funds in securities issued by, nor shall Borrower acquire the indebtedness or obligation of, any Affiliate of same;
(u)    except as set forth in Subsection (j) above, shall maintain an arm’s length relationship with each of its Affiliates and may enter into contracts or transact business with its Affiliates only on commercially reasonable terms that are no less favorable to Borrower than is obtainable in the market from a person or entity that is not an Affiliate of same;
(v)    shall correct any misunderstanding that is known by Borrower regarding its name or separate identity; and
(w)    shall not, without the prior written vote of one hundred percent (100%) of its partners, members, or shareholders, as applicable, institute proceedings to be adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy or insolvency proceedings against it; or file a petition seeking, or consent to, reorganization or relief under any applicable federal or state law relating to bankruptcy; or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of Borrower or a substantial part of Borrower’s property; or make any assignment for the benefit of creditors; or admit in writing its inability to pay its debts generally as they become due or declare or effectuate a moratorium on payments of its obligation; or take any action in furtherance of any such action.
“Affiliate” for purposes of this Agreement shall mean any person or entity which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a specified person or entity. For purposes of this Agreement, the terms “control,” “controlled,” or “controlling” with respect to a specified person or entity shall include, without limitation, (i) the ownership, control or power to vote ten percent (10%) or more of (A) the outstanding shares of any class of voting securities or (B) beneficial interests, of any such person or entity, as the case may be, directly or indirectly, or acting through one or more persons or entities, (ii) the control in any manner over such person or entity or the election of more than one director or trustee (or persons exercising similar functions) of such person or entity, or (iii) the power to exercise, directly or indirectly, control over the management or policies of such person or entity.
Section 3.23    Leasing Restrictions. 
Borrower shall lease the Property at market rents and on market terms (based on the type, quality and location of the Property) using Borrower’s standard lease form that has been approved by Lender, and Borrower shall not lease any portion of the Property to any party or entity that uses dry cleaning solvents on the Property; provided, however, Borrower shall have the right to lease up to five percent (5%) of the total number of units at the Property to a single user that would allow its employees to utilize such units for short term occupancy as long as all such leases entered into by Borrower are on typical terms and rents as would be found in leases for “corporate apartment units” at properties similar to the Property.  All Leases shall be bona fide, binding contracts, duly authorized and executed with third party tenants unrelated to Borrower or any of its Affiliates.  All free rent and similar concessions shall be given only at the beginning of the term of the Lease or prorated over the term of the Lease, the tenant’s share of operating expenses shall not decrease over the term of the applicable Lease, and there shall be no economic obligations on the landlord under a Lease beyond maintaining the Property.

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Section 3.24    Covenants Relating to Leases and Rents.  Borrower shall not, except with the prior written consent of Lender in each instance, (a) sell, assign, pledge, mortgage or otherwise transfer or encumber (except hereby) any of the Leases, Rents or any right, title or interest of Borrower therein; (b) accept prepayments of any Rents for a period of more than one (1) month in advance of the due dates thereof; (c) in any manner intentionally or materially impair the value of the Property or the benefits to Lender of the Assignment; (d) except as otherwise permitted hereby, waive, excuse, condone, discount, set off, compromise, or in any manner release or discharge any Tenant from any of its obligations under the Leases; (e) except as otherwise permitted hereby, enter into any settlement of any action or proceeding arising under, or in any manner connected with, the Leases or with the obligations of the landlord or the Tenants thereunder; (f) except as otherwise permitted hereby, modify, cancel or terminate any guaranties under any Lease; or (g) lease any portion of the Property to a dry cleaner that uses dry cleaning solvents on the Property.  Borrower shall, at its sole cost and expense, duly and timely keep, observe, perform, comply with and discharge all of the material obligations of the landlord under the Leases, or cause the foregoing to be done, and Borrower shall not take any actions that would, either presently or with the passage of time, cause a default by Borrower under any of the Leases.  Borrower shall give Lender prompt notice of any Lease with a Major Tenant it enters into subsequent to the date hereof, together with a certified copy of such Lease.  At Borrower’s expense, Borrower shall (i) deliver to Lender, within ten (10) days after sending such notice, copies of all notices of default Borrower has sent to any Major Tenant, (ii) enforce the Leases and all remedies available to Borrower upon any Tenant’s default, (iii) upon Lender’s request, deliver to Lender copies of all papers served in connection with any such enforcement proceedings, and (iv) upon Lender’s request, consult with Lender, its agents and attorneys with respect to the conduct thereof.  Except as otherwise set forth herein, Borrower shall not enter into any settlement of any such proceeding without Lender’s prior written consent.  Notwithstanding the foregoing, Borrower may take the actions referenced in Items (d), (e), (f) and (ii) above so long as they represent prudent business practices for the benefit of the Property and are on market terms and rents and are bona fide and binding contracts duly authorized and executed with third party tenants unrelated to Borrower or any of its affiliates.
Section 3.25    Tenant Recovery.  Intentionally Deleted.
Section 3.26    Tax Status of Borrower.  Borrower shall not become a “foreign person,” “foreign partnership,” “foreign trust,” or “foreign estate” within the meaning of Sections 1445 and 7701 of the Revenue Code.  Borrower currently is a “disregarded entity” as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations issued under the Revenue Code, and Borrower shall not change such tax status if such change would violate the provisions of Section 5.01 below.
Section 3.27    Disclosure.  Borrower shall disclose to Lender any material fact that could cause any representation or warranty made in this Agreement to be materially misleading. 
Section 3.28    Illegal Activity.  No portion of the Property will be purchased, improved, fixtured, equipped or furnished by Borrower with proceeds of any illegal activity, and Borrower shall not engage in, and shall make commercially reasonable efforts to prevent others from engaging in, illegal activities at or on the Property.
		
	ARTICLE IV -
	ADDITIONAL ADVANCES; EXPENSES; SUBROGATION

Section 4.01    Expenses and Advances.  Borrower shall pay all Costs (defined below) (a) incurred by Borrower or Lender and reasonable fees charged by Lender in connection with the granting, closing, servicing (other than routine loan servicing performed in the ordinary course of business and for the performance of which Lender is not routinely reimbursed by other borrowers in the ordinary course of Lender’s business), 

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and enforcement of the Loan and the Documents or (b) attributable to Borrower as owner of the Property.  The term “Costs” shall mean any and all reasonable out-of-pocket appraisal, recording, filing, registration, brokerage, abstract, title insurance (including premiums), title searches and examinations, surveys and similar data and assurances with respect to title, U.C.C. search, escrow, attorneys’ (excluding in-house staff), engineers’, environmental engineers’, environmental testing, and architects’ fees, costs (including travel), expenses, and disbursements incurred in connection with (i) any default by Borrower under the Documents, (ii) servicing of the Loan (other than routine loan servicing performed in the ordinary course of business and for the performance of which Lender is not routinely reimbursed by other borrowers in the ordinary course of Lender’s business), including administrative or service fees assessed by Lender pursuant to a Borrower consent request, or (iii) the exercise, enforcement, compromise, defense, litigation, or settlement of any of Lender’s rights or remedies under the Documents or relating to the Loan or the Obligations.  If Borrower fails to pay any amounts or perform any actions required under the Documents, then Lender may (but shall not be obligated to) advance sums to pay such amounts or perform such actions.  Borrower grants Lender the right to enter upon and take possession of the Property to prevent or remedy any such failure and the right to take such actions in Borrower’s name if such failure is not cured within any applicable grace or cure period.  No advance or performance shall be deemed to have cured a default by Borrower.  All (a) sums advanced by or payable to Lender per this Section 4.01 or under applicable Laws, (b) except as expressly provided in the Documents, payments due under the Documents which are not paid in full when due, and (c) Costs, shall:  (i) be deemed demand obligations, (ii) bear interest from the date of demand at the Default Rate, until paid if not paid on demand, (iii) be part of, together with such interest, the Obligations, and (iv) be secured by the Documents.  Lender, upon making any such advance, shall also be subrogated to rights of the person receiving such advance.
Section 4.02    Subrogation.  If any proceeds of the Note were used to extinguish, extend or renew any indebtedness on the Property, then, to the extent of the funds so used, (a) Lender shall be subrogated to all rights, claims, liens, titles and interests existing on the Property held by the holder of such indebtedness and (b) these rights, claims, liens, titles and interests are not waived but rather shall (i) continue in full force and effect in favor of Lender and (ii) are merged with the lien and security interest created by the Documents as cumulative security for the payment and performance of the Obligations.
		
	ARTICLE V -
	SALE, TRANSFER, OR ENCUMBRANCE OF THE PROPERTY

Section 5.01    Due-on-Sale or Encumbrance.  It shall be an Event of Default and, at the sole option of Lender, Lender may accelerate the Obligations, and the entire Obligations (including any Spread Maintenance and/or Breakage Fee) shall become immediately due and payable, if, without Lender’s prior written consent (which consent may be given or withheld for any or for no reason or given conditionally, in Lender’s sole discretion) any of the following shall occur:
(o)    Borrower shall sell, convey, assign, transfer, dispose of or be divested of its title to the Property, convey security title to the Property, or mortgage, encumber or cause to be encumbered the Property or any interest therein, in any manner or way, whether voluntary or involuntary; or
(p)    in the event of any merger, consolidation, sale, transfer, assignment, liquidation, or dissolution involving any or all of the assets of Borrower or any general partner or managing member of Borrower; or
(q)    in the event of the assignment, transfer, pledge, voluntary or involuntary sale, or encumbrance (or any of the foregoing at one time or over any period of time) of:

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(i)    (A) any ownership interests in Borrower, regardless of the type or form of entity of Borrower, (B) the voting stock or ownership interest of any corporation or limited liability company which is, respectively, general partner or managing member of Borrower or any corporation or limited liability company directly or indirectly owning ten percent (10%) or more of any such corporation or limited liability company, or (C) the ownership interests in any owner of ten percent (10%) or more of the beneficial interests of Borrower if Borrower is a trust; or
(ii)    any general partnership, managing member or controlling interest in (A) Borrower, (B) an entity which is in Borrower’s chain of ownership and which is derivatively liable for the obligations of Borrower, or (C) any entity that has the right to participate directly or indirectly in the control of the management or operations of Borrower; or
(r)    in the event of the conversion of any general partnership interest in Borrower to a limited partnership interest if Borrower is a partnership; or
(s)    in the event of any change, removal, or resignation of any general partner of Borrower if Borrower is a partnership; or
(t)    in the event of any change, removal, addition or resignation of a managing member of Borrower (or if no managing member, any member) if Borrower is a limited liability company; or
(u)    Borrower shall (i) obtain any secured or unsecured debt except for customary and reasonable short-term trade payables obtained and repaid in the ordinary course of Borrower’s business or (ii) guarantee, or otherwise agree to be liable for (whether conditionally or unconditionally), any obligation of any person.
The provisions set forth above shall not apply to transfers of direct or indirect ownership interests in Borrower (i) under any will or applicable law of descent or transfers for estate planning purposes to the spouse, child, parent, grandparent, grandchild, niece, nephew, aunt, uncle or any other immediate family member (or the spouse thereof) or to a trust for the benefit of such parties, (ii) among any of the holders of direct or indirect ownership interests in Borrower that were holders of direct or indirect ownership interests in Borrower as of the date hereof, (iii) mergers, transfers or reorganizations among any one or more entities in the Borrower Control Group (defined below), (iv) conversions of the entities in the Borrower Control Group from one form of ownership to another form of ownership, (v) transfers of general and limited partnership interests in BHOOP among the Borrower Control Group, or (vi) representing up to forty-nine percent (49%) of the direct or indirect ownership interests in the Borrower to any person or entity, as long as no Event of Default exists at the time of any transfer described in (ii), (iii), (iv), (v) or (vi) of this sentence and following any transfer described in (ii), (iii), (iv), (v) or (vi) of this sentence (1) BHOR or BHOOP shall individually or collectively own, directly or indirectly, at least fifty-one percent (51%) of the ownership interests in Borrower, (2) BHOR or BHOOP shall individually or collectively control Borrower and the day-to-day operations of Borrower and the Property (which control of the Property may be through a property manager under a property management agreement entered into in accordance with the Documents), and (3) within sixty (60) days following any such transfer, Borrower shall deliver to Lender (a) a statement showing the current ownership of Borrower, (b) a certification from Borrower that Borrower remains in compliance with Section 3.11 of this Agreement, and (c) a certification from Borrower that Borrower remains in compliance with the representations, warranties and covenants in Section 2.09 and 3.20 of this Agreement.  Without limiting the provisions of the preceding sentence, Borrower and the transferee of the ownership interests in Borrower being transferred shall be deemed to have made the certification, as of the date of the applicable transfer, described in subsections (b) and (c) above in favor of Lender, as a result of the transfer, and the acceptance thereof, of the applicable ownership interests in Borrower.  For purposes hereof, a person shall “control” 

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Borrower only if that person (i) shall have the power and authority, either directly or indirectly, to direct the day-to-day management of the operations and management of Borrower, (ii) shall own, directly or indirectly, at least fifty-one percent (51%) of the equity and voting interests in that entity, and (iii) may not be removed from such position by any other party absent negligence or willful misconduct.  “Borrower Control Group” shall mean BHOR, BHO II, Inc., BHO Business Trust II and BHOOP, but only as such entities are constituted as of the date of this Agreement except for any transfers permitted hereunder.
Notwithstanding anything to the contrary contained in this Section 5.01, the transfer restrictions in this Section 5.01 shall not apply to, and Lender’s prior consent shall not be required for, the following: (i) registration of BHOR as a Publicly-Held Corporation (defined below) and transfers of stock, preferred stock or other beneficial or ownership interests or other forms of securities in a Publicly-Held Corporation, and the issuance of all varieties of debt, equity and other similar securities of BHOR and the subsequent transfer of such securities, or (ii) unless BHOR is a Publicly-Held Corporation, transfers of shares of common stock, preferred stock or other beneficial or ownership interests or other forms of securities in BHOR and the issuance of all varieties of debt, equity and other similar securities of BHOR and the subsequent transfer of such securities, provided that such issuance or transfer does not result in a concentration of ownership of greater than or equal to forty-nine percent (49%) in any single beneficial owner of BHOR, or (iii) the conversion or reorganization of BHOR which results in the formation of a new entity whose equity interests are owned by the same shareholders that own the equity interests in BHOR acquiring the assets and liabilities of BHOR provided that Lender receives ten (10) days’ prior written notice and such converted or reorganized entity shall execute all documentation reasonably required by Lender at such time to replace any existing documentation to which BHOR was a party thereto.  For purposes of this Section, “Publicly-Held Corporation” shall mean a corporation the outstanding voting stock of which is registered under Section 12(b) or 12(g) of the Securities and Exchange Act of 1934, as amended. 
Notwithstanding anything to the contrary contained in this Section 5.01, in no event shall ownership interests in the Borrower be pledged or encumbered in any manner.
		
	ARTICLE VI -
	DEFAULTS AND REMEDIES

Section 6.01    Events of Default.  The following shall be an “Event of Default”:
(e)    if Borrower fails to make any payment required under the Documents when due and such failure continues for five (5) days after written notice; provided, however, that if Lender gives a notice of such a default, then Borrower shall have no further right to any notice of such a default during the following twelve (12) month period; provided, further, however, that Borrower shall have no right to any such notice upon the Maturity Date;
(f)    except for defaults listed in the other subsections of this Section 6.01, if Borrower fails to perform or comply with any other provision contained in the Documents that is capable of cure by the payment of money and the default is not cured within fifteen (15) days after Lender’s providing written notice thereof; provided, however, that if Lender gives one (1) notice of such a default, then Borrower shall have no further right to any notice of such a default during the following twelve (12) month period;
(g)    except for defaults listed in the other subsections of this Section 6.01, if Borrower fails to perform or comply with any other provision contained in the Documents and the default is not cured within thirty (30) days after Lender’s providing written notice thereof (the “Grace Period”); provided, however, that Lender may extend the Grace Period up to an additional sixty (60) days (for a total of ninety (90) days from the date of default) if (i) Borrower immediately commences and diligently pursues the cure of such default and delivers (within the Grace Period) to Lender a written request for more time and (ii) Lender 

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determines in good faith that (A) such default cannot be cured within the Grace Period but can be cured within ninety (90) days after the default, (B) no lien or security interest created by the Documents will be impaired prior to completion of such cure, and (C) Lender’s immediate exercise of any remedies provided under the Documents or by law is not necessary for the protection or preservation of the Property or Lender’s security interest;
(h)    if any representation made (i) in connection with the Loan or the Obligations or (ii) in the Loan application or Documents shall be false or misleading in any material respect;
(i)    if any default under Article V occurs;
(j)    if Borrower shall (i) become insolvent, (ii) make a transfer in fraud of creditors, (iii) make an assignment for the benefit of its creditors, (iv) not be able to pay its debts as such debts become due, or (v) admit in writing its inability to pay its debts as they become due;
(k)    if any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding, or any other proceedings for the relief of debtors, is instituted by or against Borrower, and, if instituted against Borrower, is allowed, consented to, or not dismissed within the earlier to occur of (i) ninety (90) days after such institution or (ii) the filing of an order for relief;
(l)    if any of the events in Section 6.01(f) or Section 6.01(g) shall occur with respect to any (i) managing member of Borrower (if Borrower is a limited liability company), (ii) general partner of Borrower (if Borrower is a partnership), or (iii) guarantor of payment and/or performance of any of the Obligations;
(m)    if the Property shall be taken, attached, or sequestered on execution or other process of law in any action against Borrower;
(n)    if any default occurs under the Environmental Indemnity (defined below) and such default is not cured within the applicable time period set forth in Section 6.01(b) or Section 6.01(c) above;
(o)    if Borrower shall fail at any time to obtain, maintain, renew, or keep in force the insurance policies required by Section 3.06 within ten (10) days after written notice;
(p)    if Borrower shall be in default under any other mortgage, deed of trust, deed to secure debt or security agreement covering any part of the Property, whether it be superior or junior in lien to the Instrument;
(q)    if any claim of priority (except based upon a Permitted Encumbrance) to the Documents by title, lien, or otherwise shall be upheld by any court of competent jurisdiction or shall be consented to by Borrower;
(r)     (i) the consummation by Borrower of any transaction which would cause (A) the Loan or any exercise of Lender’s rights under the Documents to constitute a non-exempt prohibited transaction under ERISA or (B) a violation of a state statute regulating governmental plans; (ii) the failure of any representation in Section 3.11 to be true and correct in all respects; or (iii) the failure of Borrower to provide Lender with the written certifications required by Section 3.11; 
(s)     (i) the consummation by Borrower of any transaction which would cause an OFAC Violation; (ii) the failure of any representation in Section 2.09 to be true and correct in all respects; or (iii) the failure of Borrower to comply with the provisions of Section 3.20, unless such default is cured within the lesser of 

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(A) fifteen (15) days after written notice of such default to Borrower or (B) the shortest cure period, if any, provided for under any Laws applicable to such matters (including, without limitation, the Anti-Terrorism Regulations); or
(t)    if Borrower shall not allow access to the Property in accordance with the provisions of Section 3.12(c) and/or Section 3.14, as applicable, within ten (10) days after written notice.
Section 6.02    Remedies.  If an Event of Default occurs, then Lender or any person designated by Lender may (but shall not be obligated to) take any action (separately, concurrently, cumulatively, and at any time and in any order) permitted under any Laws, without notice, demand, presentment, or protest (all of which are hereby waived), to protect and enforce Lender’s rights under the Documents or Laws including the actions set forth in Section 3.02 of the Instrument.
Section 6.03    Expenses.  All Costs, expenses, allocated or accrued fees, or other amounts paid or incurred by Lender in the exercise of its rights under the Documents, together with interest thereon at the applicable interest rate specified in Article I, which shall be the Default Rate unless prohibited by Laws, shall be (a) part of the Obligations, (b) secured by the Documents, and (c) allowed and included as part of the Obligations in any foreclosure, decree for sale, power of sale, or other judgment or decree enforcing Lender’s rights under the Documents.
		
	ARTICLE VII -
	SECURITY AGREEMENT

Section 7.01    Security Agreement.  This Agreement constitutes a “security agreement” within the meaning of the U.C.C.  The Property includes real and personal property and all tangible and intangible rights and interest of Borrower in the Property. Borrower grants to Lender, as security for the Obligations, a security interest in all Personal Property to the fullest extent that the Personal Property may be subject to the U.C.C.  Borrower authorizes Lender to file any financing or continuation statements and amendments thereto relating to the Personal Property without the signature of Borrower if permitted by Laws.
		
	ARTICLE VIII -
	LIMITATION ON PERSONAL LIABILITY AND INDEMNITIES

Section 8.01    Limited Recourse Liability.  Except to the extent set forth in this Agreement, Borrower shall not have any personal liability for the Obligations.  Notwithstanding the preceding sentence, Lender may bring a foreclosure action or other appropriate action to enforce the Documents or realize upon and protect the Property (including, without limitation, naming Borrower and any other necessary parties in the actions) and IN ADDITION BORROWER SHALL HAVE PERSONAL LIABILITY FOR ALL LOSSES, COST AND EXPENSES INCURRED BY LENDER FOR:
(g)    any amounts accrued and/or payable under any indemnities, guaranties, master leases or similar instruments furnished in connection with the Loan (including, without limitation, the provisions of Sections 8.04, 8.05, 8.06, 8.07 and 8.08 of this Agreement and the Environmental Indemnity);
(h)    the amount of any assessments and taxes that are due and/or payable with respect to the Property that accrue prior to the date Lender acquires actual possession or control of the Property;
(i)    the amount of any security deposits, prepaid rents, or prepaid expenses of Tenants (i) not turned over to Lender upon foreclosure, sale (pursuant to power of sale), or conveyance in lieu thereof, or (ii) not turned over to a receiver or trustee for the Property after appointment;

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(j)    the amount of any insurance proceeds or condemnation awards neither turned over to Lender nor used in compliance with Sections 3.07 and 3.08 of this Agreement;
(k)    damages suffered or incurred by Lender as a result of Borrower’s (i) entering into a new Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement, (ii) entering into an amendment or termination of an existing Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement, or (iii) accepting a termination, cancellation or surrender of an existing Lease in breach of the leasing restrictions set forth in Section 3.23 of this Agreement;
(l)    damages suffered or incurred by Lender by reason of any waste of the Property due to the negligence of willful misconduct of Borrower;
(m)    the amount of any rents or other income from the Property received by Borrower after an Event of Default under the Documents and not otherwise applied to the indebtedness under the Documents or to the operating expenses of the Property; PROVIDED, HOWEVER, THAT BORROWER SHALL HAVE PERSONAL LIABILITY for amounts paid as expenses to a person or entity related to or affiliated with Borrower except for (x) reasonable salaries for on-site employees, (y) a reasonable allocation of the salaries of off-site employees for accounting and management, and (z) out-of-pocket expenses of Borrower’s management company relating to the Property, but in no event shall such expenses include any profit or be greater than prevailing market rates for any such services;
(n)    the face amount of any letter of credit required under the Documents or otherwise in connection with the Loan that Borrower fails to maintain;
(o)    [INTENTIONALLY OMITTED];
(p)    the amount of (i) any security deposit cashed or applied by, or on behalf of, Borrower following an Event of Default under the Documents, (ii) any termination fee, cancellation fee or any other fee received by, or on behalf of, Borrower in connection with any lease termination, cancellation, surrender or expiration following an Event of Default under the Documents, and (iii) any judgment, settlement or other recovery received by, or on behalf of, Borrower against or from any Tenant under, or any guarantor of, any Lease following an Event of Default under the Documents;
(q)    following an Event of Default under the Documents, all attorneys’ fees, including other expenses incurred by Lender in enforcing the Documents if Borrower contests, delays, or otherwise hinders or opposes (including, without limitation, the filing of a bankruptcy by Borrower) any of Lender’s enforcement actions; provided, however, that if in such action Borrower successfully proves that no default occurred under the Documents, Borrower shall not be required to reimburse Lender for such attorneys’ fees, and other expenses;
(r)    damages suffered or incurred by Lender as a result of Borrower’s failure to pay all insurance premiums and maintain all insurance required under the Documents; and
(s)    damages suffered or incurred by Lender as a result of Borrower’s breach or violation of Sections 2.10, 3.21 and/or 3.22 of this Agreement.
Section 8.02    Full Recourse Liability.  Notwithstanding the provisions of Section 8.01 of this Agreement, BORROWER SHALL HAVE PERSONAL LIABILITY for the Obligations if:
(e)    there shall be any breach or violation of Article V of this Agreement; or

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(f)    there shall be any fraud or material misrepresentation by any of Borrower in connection with the Property, the Documents, the Loan application, or any other aspect of the Loan; or
(g)    the Property or any part thereof shall become an asset in (i) a voluntary bankruptcy or insolvency proceeding or (ii) an involuntary bankruptcy or insolvency proceeding which is not dismissed within ninety (90) days after filing; provided, however, that this Section 8.02(c) shall not apply if (A) an involuntary bankruptcy is filed by Lender or (B) the involuntary filing was initiated by a third-party creditor independent of any collusive action, participation or collusive communication by (1) Borrower, or (2) any partner, shareholder or member of Borrower or Borrower’s general partner; or
(h)    the Instrument or any of the other Documents are deemed fraudulent conveyances or preferences or are otherwise deemed void pursuant to any principles limiting the rights of creditors, whether such claims, demands or assertions are made under the Bankruptcy Code (as defined in the Instrument) (as amended or replaced from time to time), including, without limitation, under Sections 544, 547 or 548 thereof, or under any applicable state fraudulent conveyance statues or similar laws.
Section 8.03    General Indemnity.  Borrower agrees that while Lender has no liability to any person in tort or otherwise as lender and that Lender is not an owner or operator of the Property, Borrower shall, at its sole expense, protect, defend, release, indemnify and hold harmless (“indemnify”) the Indemnified Parties from any Losses (defined below) imposed on, incurred by, or asserted against the Indemnified Parties, directly or indirectly, arising out of or in connection with the Property, Loan, or Documents, including Losses; provided, however, that the foregoing indemnities shall not apply to any Losses caused by the gross negligence or willful misconduct of the Indemnified Parties.  The term “Losses” shall mean any claims, suits, liabilities (including strict liabilities), actions, proceedings, obligations, debts, damages, losses, Costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind including attorneys’ fees (excluding in-house staff) and all other costs of defense.  The term “Indemnified Parties” shall mean (a) Lender, (b) any prior owner or holder of the Note, (c) any existing or prior servicer of the Loan, (d) the officers, directors, shareholders, partners, members, employees and trustees of any of the foregoing, and (e) the heirs, legal representatives, successors and assigns of each of the foregoing.
Section 8.04    Transaction Taxes Indemnity.  Borrower shall, at its sole expense, indemnify the Indemnified Parties from all Losses imposed upon, incurred by, or asserted against the Indemnified Parties or the Documents relating to Transaction Taxes.
Section 8.05    ERISA Indemnity.  Borrower shall, at its sole expense, indemnify the Indemnified Parties against all Losses imposed upon, incurred by, or asserted against the Indemnified Parties (a) as a result of a Violation, (b) in the investigation, defense, and settlement of a Violation, (c) as a result of a breach of the representations in Section 3.11 or default thereunder, (d) in correcting any non-exempt prohibited transaction or the sale of a prohibited loan, and (e) in obtaining any individual prohibited transaction exemption under ERISA that Lender determines may be required.
Section 8.06    Environmental Indemnity.  Borrower has executed and delivered the Environmental Indemnity Agreement dated as of the date hereof to Lender (the “Environmental Indemnity”).
Section 8.07    Duty to Defend, Costs and Expenses.  Upon request, whether Borrower’s obligation to indemnify Lender arises under Article VIII or in the Documents, Borrower shall defend the Indemnified Parties (in Borrower’s or the Indemnified Parties’ names) by attorneys and other professionals approved by the Indemnified Parties.  Notwithstanding the foregoing, the Indemnified Parties may, in their sole discretion, engage their own attorneys and professionals to defend or assist them and, at their option, their attorneys shall control the resolution of any claims or proceedings.  Upon demand, Borrower shall pay or, in the sole 

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discretion of the Indemnified Parties, reimburse and/or indemnify the Indemnified Parties for all Costs imposed on, incurred by, or asserted against the Indemnified Parties by reason of any items set forth in this Article VIII and/or the enforcement or preservation of the Indemnified Parties’ rights under the Documents.  Any amount payable to the Indemnified Parties under this Section 8.07 shall (a) be deemed a demand obligation, (b) be part of the Obligations, (c) bear interest from the date of demand at the Default Rate, until paid if not paid on demand, and (d) be secured by the Documents.
Section 8.08    Recourse Obligation and Survival.  Notwithstanding anything to the contrary in the Documents and in addition to the recourse obligations in Sections 8.01 and 8.02 above, the obligations of Borrower under Sections 8.04, 8.05 and 8.06 shall be a full recourse obligation of Borrower, shall not be subject to any limitation on personal liability in the Documents, and shall survive (a) repayment of the Obligations, (b) any termination, satisfaction, transfer of title by power of sale, assignment or foreclosure of the Instrument, (c) the acceptance by Lender (or any nominee) of a deed in lieu of foreclosure, (d) a plan of reorganization filed under the Bankruptcy Code, or (e) the exercise by Lender of any rights in the Documents.  Borrower’s obligations under this Article VIII shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal by any insurance carrier to perform any obligation under any applicable insurance policy.
		
	ARTICLE IX -
	ADDITIONAL PROVISIONS

Section 9.01    Usury Savings Clause.  All agreements in the Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid under the Documents for the use, forbearance, or detention of money exceed the highest lawful rate permitted by Laws.  If, at the time of performance, fulfillment of any provision of the Documents shall involve transcending the limit of validity prescribed by Laws, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity.  If Lender shall ever receive as interest an amount which would exceed the highest lawful rate, then the receipt of such excess shall be deemed a mistake and (a) shall be canceled automatically or (b) if paid, such excess shall be (i) credited against the principal amount of the Obligations to the extent permitted by Laws or (ii) rebated to Borrower if it cannot be so credited under Laws.  Furthermore, all sums paid or agreed to be paid under the Documents for the use, forbearance, or detention of money shall to the extent permitted by Laws be amortized, prorated, allocated, and spread throughout the full stated term of the Note until payment in full so that the rate or amount of interest on account of the Obligations does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Obligations for so long as the Obligations are outstanding.
Section 9.02    Notices.  Any notice, request, demand, consent, approval, direction, agreement, or other communication (any “notice”) required or permitted under the Documents shall be in writing and shall be validly given if sent by a nationally-recognized courier that obtains receipts, delivered personally by a courier that obtains receipts, or mailed by United States certified mail (with return receipt requested and postage prepaid) addressed to the applicable person as follows:

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	If to Borrower:
7425 LA VISTA, LLC
15601 Dallas Parkway, Suite 600
Addison, Texas 75001
Attention:  Chief Financial Officer 

	With a copy of notices sent to Borrower to:
JONES DAY
2727 N. Harwood
Dallas, Texas 75201
Attention:  Michelle R. Brown, Esq.

	If to Lender:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201
Attention: Asset Management Department
Reference Loan No. 706109689
	With a copy of notices sent to Lender to:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201
Attention: Legal Department
Reference Loan No. 706109689

Each notice shall be effective upon being so sent, delivered, or mailed, but the time period for response or action shall run from the date of receipt as shown on the delivery receipt.  Refusal to accept delivery or the inability to deliver because of a changed address for which no notice was given shall be deemed receipt.  Any party may periodically change its address for notice and specify up to two (2) additional addresses for copies by giving the other party at least ten (10) days’ prior notice.
Section 9.03    Sole Discretion of Lender.  Except as otherwise expressly stated, whenever Lender’s judgment, consent, or approval is required or Lender shall have an option or election under the Documents, such judgment, the decision as to whether or not to consent to or approve the same, or the exercise of such option or election shall be in the sole and absolute discretion of Lender.
Section 9.04    Applicable Law and Submission to Jurisdiction.  The Documents shall be governed by and construed in accordance with the laws of the Property State and the applicable laws of the United States of America.  Without limiting Lender’s right to bring any action or proceeding against Borrower or the Property relating to the Obligations (an “Action”) in the courts of other jurisdictions, Borrower irrevocably (a) submits to the jurisdiction of any state or federal court in the Property State, (b) agrees that any Action may be heard and determined in such court, and (c) waives, to the fullest extent permitted by Laws, the defense of an inconvenient forum to the maintenance of any Action in such jurisdiction.
Section 9.05    Construction of Provisions.  The following rules of construction shall apply for all purposes of the Documents unless the context otherwise requires:  (a) all references to numbered Articles or Sections or to lettered Exhibits are references to the Articles and Sections hereof and the Exhibits annexed to this Agreement and such Exhibits are incorporated into this Agreement as if fully set forth in the body of this Agreement; (b) all Article, Section, and Exhibit captions are used for convenience and reference only and in no way define, limit, or in any way affect this Agreement; (c) words of masculine, feminine, or neuter gender shall mean and include the correlative words of the other genders, and words importing the singular number shall mean and include the plural number, and vice versa; (d) no inference in favor of or against any party shall be drawn from the fact that such party has drafted any portion of this Agreement; (e) all obligations of Borrower under the Documents shall be performed and satisfied by or on behalf of Borrower at Borrower’s sole expense; (f) the terms “include,” “including,” and similar terms shall be construed as if followed by the phrase “without being limited to”; (g) the terms “Property,” “Land,” “Improvements,” and “Personal Property” shall be construed as if followed by the phrase “or any part thereof”; (h) the term “Obligations” shall be construed as if followed by the phrase “or any other sums secured hereby, or any part thereof”; (i) the term “person” shall include natural persons, firms, partnerships, limited liability companies, trusts, 

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corporations, governmental authorities or agencies, and any other public or private legal entities; (j) the term “provisions,” when used with respect hereto or to any other document or instrument, shall be construed as if preceded by the phrase “terms, covenants, agreements, requirements, and/or conditions”; (k) the term “lease” shall mean “tenancy, subtenancy, lease, sublease, or rental agreement,” the term “lessor” shall mean “landlord, sublandlord, lessor, and sublessor,” and the term “Tenants” or “lessee” shall mean “tenant, subtenant, lessee, and sublessee”; (l) the term “owned” shall mean “now owned or later acquired”; (m) the terms “any” and “all” shall mean “any or all”; and (n) the term “on demand” or “upon demand” shall mean “within five (5) business days after written notice”.
Section 9.06    Transfer of Loan. 
(d)    Lender may, at any time, (i) sell, transfer or assign the Documents and any servicing rights with respect thereto or (ii) grant participations therein or issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (collectively, the “Securities”).  Lender may forward to any purchaser, transferee, assignee, servicer, participant, or investor in such Securities (collectively, “Investors”), to any Rating Agency (defined below) rating such Securities and to any prospective Investor, all documents and information which Lender now has or may later acquire relating to the Obligations, Borrower, any guarantor, any indemnitor(s), the Leases, and the Property, whether furnished by Borrower, any guarantor, any indemnitor(s) or otherwise, as Lender determines advisable.  Lender agrees to use good faith, commercially reasonable efforts to cause all third party Investors and potential Investors to sign Lender’s standard confidentiality agreement with respect to such documents and information.  Borrower, any guarantor and any indemnitor agree to cooperate with Lender in connection with any transfer made or any Securities created pursuant to this Section 9.06 including the delivery of an estoppel certificate in accordance with Section 3.16 and such other documents as may be reasonably requested by Lender.  Borrower shall also furnish consent of any borrower, any guarantor and any indemnitor in order to permit Lender to furnish such Investors or such prospective Investors or such Rating Agency with any and all information concerning the Property, the Leases, the financial condition of Borrower, any guarantor and any indemnitor, as may be reasonably requested by Lender, any Investor, any prospective Investor or any Rating Agency and which may be complied with without undue expense.  “Rating Agency” shall mean any one or more credit rating agencies approved by Lender.
(e)    Borrower agrees that upon any assignment or transfer of the Documents by Lender to any third party, Borrower hereby waiving prior notice of any such transfer, Lender shall have no obligations or liabilities under the Documents, such third party shall be substituted as the lender under the Documents for all purposes, and Borrower shall look solely to such third party for the performance of any obligations under the Documents or with respect to the Loan.
(f)    Upon an assignment or other transfer of the Documents, Lender may, at its discretion, pay over the Deposits in its possession and deliver all other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights hereby given to it with respect to any liabilities and the collateral not so transferred to Borrower or to the assignee or transferee of the Documents.  If the Deposits are transferred or assigned to the assignee or transferee, then Borrower shall then look solely to such assignee or transferee with respect thereto.  This provision shall apply to every transfer of the Deposits and any other collateral mortgaged, granted, pledged or assigned pursuant to the Documents, or any part thereof, to a new assignee or transferee.  Subject to the provisions of Section 5.01, a transfer of title to the Land shall automatically transfer to the new owner the beneficial interest in the Deposits.

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Section 9.07    Miscellaneous.  If any provision of the Documents shall be held to be invalid, illegal, or unenforceable in any respect, this shall not affect any other provisions of the Documents and such provision shall be limited and construed as if it were not in the Documents.  If title to the Property becomes vested in any person other than Borrower, then Lender may, without notice to Borrower, deal with such person regarding the Documents or the Obligations in the same manner as with Borrower without in any way vitiating or discharging Borrower’s liability under the Documents or being deemed to have consented to the vesting.  If both the lessor’s and lessee’s interest under any Lease ever becomes vested in any one person, neither the Instrument nor the lien and security interest created by the Documents shall be destroyed or terminated by the application of the doctrine of merger, and Lender shall continue to have and enjoy all its rights and privileges as to each separate estate.  Upon foreclosure (or transfer of title by power of sale) of the Instrument, none of the Leases shall be destroyed or terminated as a result of such foreclosure (or transfer of title by power of sale), by application of the doctrine of merger or as a matter of law, unless Lender takes all actions required by law to terminate the Leases as a result of foreclosure (or transfer of title by power of sale).  All of Borrower’s covenants and agreements under the Documents shall run with the land and time is of the essence.  Borrower appoints Lender as its attorney-in-fact, which appointment is irrevocable and shall be deemed to be coupled with an interest, with respect to the execution, acknowledgment, delivery, filing or recording for and in the name of Borrower of any of the documents listed in Sections 3.04, 3.19, 4.01, and 6.02, provided that Lender will not exercise such power unless Borrower fails to act within the time frames required under the Documents.  The Documents cannot be amended, terminated, or discharged except in a writing signed by the party against whom enforcement is sought.  No waiver, release, or other forbearance by Lender will be effective unless it is in a writing signed by Lender and then only to the extent expressly stated.  The provisions of the Documents shall be binding upon Borrower and its heirs, devisees, representatives, successors, and assigns including successors in interest to the Property and inure to the benefit of Lender and its heirs, successors, substitutes, and assigns.  Where two or more persons have executed the Documents, the obligations of such persons shall be joint and several, except to the extent the context clearly indicates otherwise.  The Documents may be executed in any number of counterparts with the same effect as if all parties had executed the same document.  All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of any Document which is not of public record, and, in the case of any mutilation, upon surrender and cancellation of the Document, Borrower will issue, in lieu thereof, a replacement Document, dated the date of the lost, stolen, destroyed or mutilated Document containing the same provisions.  Any reviews, inspections, reports, approvals or similar items conducted, made or produced by or on behalf of Lender with respect to Borrower, the Property or the Loan are for loan underwriting and servicing purposes only, and shall not constitute an acknowledgment, representation or warranty of the accuracy thereof, or an assumption of liability with respect to Borrower, Borrower’s contractors, architects, engineers, employees, agents or invitees, present or future tenants, occupants or owners of the Property, or any other party.
Section 9.08    Entire Agreement.  Except as provided in Section 3.17, (a) the Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the Loan and supersede all prior written or oral understandings and agreements with respect to the Loan including the Loan application, Loan commitment, and any confidentiality agreements, and (b) Borrower is not relying on any representations or warranties of Lender except as expressly set forth in the Documents.
Section 9.09    WAIVER OF TRIAL BY JURY.  EACH OF BORROWER AND LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE 

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LOAN, THE DOCUMENTS, OR ANY ALLEGED ACTS OR OMISSIONS OF LENDER OR BORROWER IN CONNECTION THEREWITH.
Section 9.10    Advertisement.  Borrower authorizes Lender and any entity controlling, controlled by or under common control with Lender (collectively, the “Lender Affiliates”) to disclose information concerning the Loan, Borrower and the Property subsequent to the date of this Agreement, for advertising purposes with Borrower’s prior written approval.  For construction loans, Borrower authorizes the Lender Affiliates to post an advertisement on the construction site during the construction phase of the Loan.  Further, Borrower agrees that Borrower shall not place or conduct any advertising involving Lender’s involvement with the Loan without Lender’s prior written approval, except as required by Laws or in connection with securities’ filings for any affiliate of Borrower.
		
	ARTICLE X -
	ADDITIONAL SPECIAL PROVISIONS

Section 10.01    Cash Management.   [INTENTIONALLY OMITTED].
Section 10.02    Post-Closing Obligations.  Attached hereto as Exhibit E is a description of certain items to be completed in connection with the Property.  Borrower hereby covenants and agrees to complete such items within the time frames set forth in Exhibit E.
Section 10.03    Reserve Funds.   [INTENTIONALLY OMITTED].
Section 10.04    Texas State-Specific Provisions.  The provisions of this Agreement are amended as follows:
(d)    The following sentences are hereby added immediately prior to the last sentence of Section 1.04(a) of this Agreement:
“The Late Charge shall be in addition to all other rights and remedies available to Lender upon the occurrence of a default under the Documents.  The payment of the Daily Charge and/or the Late Charge shall not be required to the extent that the amount thereof, together with all other interest payable hereunder or under any of the other Documents, results in interest being charged in excess of the Maximum Rate (as such term is defined in each Note), and if such payment has been made, at the time it is determined that such excess exists, Lender shall, at its option, either return such Excess Amount (as such term is defined in each Note) to Borrower or credit such Excess Amount against the Balance, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable.”
(e)    The following sentences are hereby added immediately following the last sentence of Section 1.04(b) of this Agreement:
“The payment of interest at the Default Rate shall not be required to the extent that the amount thereof, when taken together with all other interest payable hereunder or under any of the other Documents, including without limitation any Daily Charge or Late Charge, results in interest being charged in excess of the Maximum Rate, and if such payment has been made, at the time it is determined that such excess exists, Lender shall, at its option, either return the Excess Amount to Borrower or credit such Excess Amount against the Balance, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. Subject to the foregoing, the charging of interest 

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at the Default Rate shall be in addition to all other rights and remedies available to Lender upon the occurrence of a default under the Documents.”
(f)    The following sentence is hereby added immediately following the last sentence of Section 1.06 of this Agreement:
“In the event any Spread Maintenance or Breakage Fee required hereunder is construed to be interest under the laws of the State of Texas in any circumstance, the payment thereof shall not be required to the extent that the amount thereof, together with other interest payable hereunder or under any of the other Documents, results in interest being charged in excess of the Maximum Rate, and if such payment has been made, at the time it is determined that such excess exists, Lender shall, at its option, either return the Excess Amount to Borrower or credit such Excess Amount against the principal balance of the Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable.”
(g)    The following phrase is hereby added immediately after the phrase “Borrower is not permitted by law to pay such taxes” in Section 3.03(d) of this Agreement:
“or any such law would penalize Lender or Trustee in the event of such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by law”
(h)    The following sentences are hereby added to the end of Section 3.24 of this Agreement:
“Notwithstanding anything to the contrary set forth herein, Lender shall be entitled to all rights and remedies of an assignee as set forth in Chapter 64 of the Texas Property Code, the Texas Assignment of Rents Act (“TARA”).  If an Event of Default exists, Lender shall have the ability to exercise its rights related to the Leases and Rents, in Lender’s sole discretion and without prejudice to any other remedy available, as provided in this Agreement, the Instrument, or as otherwise allowed by applicable law, including, without limitation, TARA.”
(i)    The following phrase is hereby added to the end of the last sentence of Section 4.02 of this Agreement (with said sentence being amended by deleting the period at the end):
“; provided, however, that the terms and provisions of this Agreement, the Instrument and the other Documents shall govern the rights and remedies of Lender and shall supersede the terms, provisions, rights, and remedies under and pursuant to the instruments creating the lien or liens to which Lender is subrogated under the Documents.”
(j)    The following sentence is hereby added at the end of Section 8.03 of this Agreement:
“THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY STRICT LIABILITY (BUT NOT TO THE EXTENT CAUSED BY OR ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY).”

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(k)    The following is hereby inserted in substitution for the existing Section 9.01 of this Agreement:
“Section 9.01  Usury Savings Clause.  It is the intent of Borrower and Lender in the making of the Loan to contract in strict compliance with applicable usury law.  In furtherance thereof, Borrower and Lender stipulate and agree that none of the terms and provisions contained herein, or in any of the applicable Documents, or in any other instrument executed in connection herewith, shall ever be construed to create a contract to pay for the use, forbearance, or detention of money, interest at a rate in excess of the maximum interest rate permitted to be charged by applicable law; that neither Borrower nor any guarantor, endorser, or other party now or hereafter becoming liable for payment of the Loan shall ever be required to pay interest on the Loan at a rate in excess of the maximum interest that may be lawfully charged under applicable law, and the provisions of this Section 9.01 shall control over all other provisions of this Agreement, the Note, the Instrument, any Documents, and any other instruments now or hereafter executed in connection herewith which may be in apparent conflict herewith.  Lender expressly disavows any intention to charge or collect excessive or unearned interest or finance charges in the event that maturity of the Loan is accelerated.  If the maturity of the Loan shall be accelerated for any reason or if the principal of the Loan is paid prior to the end of the term of the Loan, and as a result thereof the interest received for the actual period of existence of the Loan exceeds the applicable maximum lawful rate, Lender shall, at its option, either refund to Borrower the amount of such excess or credit the amount of such excess against the Balance (without Spread Maintenance and/or Breakage Fee) and thereby shall render inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest.  In the event that Lender or any other holder of the Loan shall contract for, charge, or receive any amount or amounts which are deemed to constitute interest which would increase the effective interest rate on the Loan to a rate in excess of that permitted to be charged by applicable law, all such amounts deemed to constitute interest in excess of the lawful rate shall, upon such determination, at the option of Lender (or other holder of the Loan), be either immediately returned to Borrower or credited against the Balance (without Spread Maintenance and/or Breakage Fee), in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable.  By execution of this Agreement, Borrower acknowledges that it believes the Loan to be non-usurious, and agree that if, at any time, Borrower should have reason to believe that the Loan is in fact usurious, it will give Lender (or other holder of the Loan) notice of such condition, and Borrower agrees that Lender (or other holder of the Loan) shall have ninety (90) days in which to make appropriate refund or other adjustment in order to correct such condition if in fact such exists.  The term “applicable law” as used in this Section 9.01 shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.”
(l)    The following is hereby added as a new Section 9.11 of this Agreement:
“Section 9.11  Negation of Partnership.  Nothing contained in the Documents is intended to create any partnership, joint venture, or association between Borrower and Lender, or in any way make Lender a co-principal with Borrower with reference to the Property, and any inferences to the contrary are hereby expressly negated.”
(m)    Intentionally Deleted.

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(n)    The following is hereby added as a new Section 9.13 of this Agreement:
“Section 9.13  Wage Claims.  Borrower represents and warrants that (i) no wage claim is currently pending with the Texas Workforce Commission (the “Commission”) against Borrower pursuant to Section 61 of the Texas Labor Code and (ii) no lien exists against the Property pursuant to Section 61 of the Texas Labor Code.  Borrower shall not permit any lien to attach to the Property pursuant to Section 61 of the Texas Labor Code, unless the same has been bonded around in a manner reasonably satisfactory to Lender.  Borrower covenants and agrees to provide Lender with copies of any notices or orders received by Borrower from the Commission or any court in connection with any wage claim under Section 61 of the Texas Labor Code.”
(o)    The following is hereby added as a new Section 9.14 of this Agreement:
“Section 9.14 Elimination of Architectural Barriers.  Borrower represents and warrants to Lender that, to the best of Borrower’s knowledge, after due inquiry, the Property is in compliance with the provisions of the Chapter 469 of the Texas Government Code and any other applicable laws, statutes or ordinances related thereto, and any amendments in effect as of the date hereof, and all rules, regulations, and guidelines issued thereunder, all as are in force as of the date hereof.”
(p)    The following is hereby added as a new Section 9.15 of this Agreement:
“Section 9.15  TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE NOTICE.  (A) BORROWER IS REQUIRED TO:  (i) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT LENDER SPECIFIES; (ii) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER OR AS OTHERWISE PROVIDED HEREIN; AND (iii) NAME LENDER AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS AS PROVIDED HEREIN; (B) BORROWER MUST, IF REQUIRED BY LENDER, DELIVER TO LENDER A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS; AND (C) IF BORROWER FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B), LENDER MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF BORROWER AT BORROWER’S EXPENSE.”
Section 10.05    Provisions Concerning Trustees Under Deeds of Trust.  All references to “Lender” in Sections 3.04, 3.09, 3.19, 4.01, 4.02, 6.01(c), 8.03, and 9.07 of this Agreement shall be deemed modified, where appropriate in such context, to refer to Lender and/or Trustee.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as a sealed instrument as of the day first set forth above.
BORROWER: 
 
7425 LA VISTA, LLC, a Texas limited liability company

By:  /s/ Michael J. O'Hanlon
Name:  Michael J. O'Hanlon
Title:  Chief Executive Officer and President

STATE OF Texas 
COUNTY OF Dallas 
This instrument was acknowledged before me on  October 8, 2014, by Michael J. O'Hanlon, Chief Executive Officer and President of 7425 La Vista, LLC, a Texas limited liability company, on behalf of said entity.
Given under my hand and seal of office this 8 day of October, 2014.
		
	[Notary Seal]
	/s/ Linda Perkins Signature of Notarial Officer

Linda PerkinsPrinted Name of Notary Public
My Commission expires:  2/19/2018

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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[SIGNATURES CONTINUED FROM PREVIOUS PAGE] 
[SIGNATURE PAGE TO LOAN AGREEMENT]
LENDER:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation 
 
By:   /s/ Michael G. Doran 
Name:  Michael G. Doran 
Title:  Vice President
[CORPORATE SEAL]
STATE OF GEORGIA
COUNTY OF FULTON
This instrument was acknowledged before me on October 7, 2014, by Michael G. Doran, a Vice President of The Prudential Insurance Company of America, a New Jersey corporation, on behalf of said entity.
Given under my hand and seal of office this 7 day of October, 2014.
		
	[Notary Seal]
	/s/ Kelly C. Bailey

Signature of Notarial Officer
Kelly C. BaileyPrinted Name of Notary Public
My Commission expires:  2/25/2018

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Exhibit A
LEGAL DESCRIPTION OF LAND

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Exhibit B
DESCRIPTION OF PERSONAL PROPERTY SECURITY
All of Borrower’s right, title and interest in, to and under the following:
1.    All machinery, apparatus, goods, equipment, materials, fittings, fixtures, chattels, and tangible personal property, and all appurtenances and additions thereto and betterments, renewals, substitutions, and replacements thereof, owned by Borrower, wherever situate, and now or hereafter located on, attached to, contained in, or used or usable in connection with the real property described in Exhibit A attached hereto and incorporated herein (the “Land”), and all improvements located thereon (the “Improvements”) or placed on any part thereof, though not attached thereto, including all screens, awnings, shades, blinds, curtains, draperies, carpets, rugs, furniture and furnishings, heating, electrical, lighting, plumbing, ventilating, air-conditioning, refrigerating, incinerating and/or compacting plants, systems, fixtures and equipment, elevators, hoists, stoves, ranges, vacuum and other cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers, stokers, furnaces, pumps, tanks, appliances, equipment, fittings, and fixtures.
2.    All funds, accounts, deposits, instruments, documents, contract rights, general intangibles, notes, and chattel paper arising from or by virtue of any transaction related to the Land, the Improvements, or any of the personal property described in this Exhibit B.
3.    All permits, licenses, franchises, certificates, and other rights and privileges now held or hereafter acquired by Borrower in connection with the Land, the Improvements, or any of the personal property described in this Exhibit B.
4.    All right, title, and interest of Borrower in and to the name and style by which the Land and/or the Improvements is known, including trademarks and trade names relating thereto, excluding any use of the name “Behringer” or “Behringer Harvard”.
5.    All right, title, and interest of Borrower in, to, and under all plans, specifications, maps, surveys, reports, permits, licenses, architectural, engineering and construction contracts, books of account, insurance policies, and other documents of whatever kind or character, relating to the use, construction upon, occupancy, leasing, sale, or operation of the Land and/or the Improvements.
6.    All interests, estates, or other claims or demands, in law and in equity, which Borrower now has or may hereafter acquire in the Land, the Improvements, or the personal property described in this Exhibit B.
7.    All right, title, and interest owned by Borrower in and to all options to purchase or lease the Land, the Improvements, or any other personal property described in this Exhibit B, or any portion thereof or interest therein, and in and to any greater estate in the Land, the Improvements, or any of the personal property described in this Exhibit B.
8.    All of the estate, interest, right, title, other claim or demand, both in law and in equity, including claims or demands with respect to the proceeds of insurance relating thereto, which Borrower now has or may hereafter acquire in the Land, the Improvements, or any of the personal property described in this Exhibit B, or any portion thereof or interest therein, and any and all awards made for the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or any part of such property, 

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including without limitation, any award resulting from a change of any streets (whether as to grade, access, or otherwise) and any award for severance damages.
9.    All right, title, and interest of Borrower in and to all contracts, permits, certificates, licenses, approvals, utility deposits, utility capacity, and utility rights issued, granted, agreed upon, or otherwise provided by any governmental or private authority, person or entity relating to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements, including all of Borrower’s rights and privileges hereto or hereafter otherwise arising in connection with or pertaining to the Land and/or the Improvements, including, without limiting the generality of the foregoing, all water and/or sewer capacity, all water, sewer and/or other utility deposits or prepaid fees, and/or all water and/or sewer and/or other utility tap rights or other utility rights, any right or privilege of Borrower under any loan commitment, lease, contract, declaration of covenants, restrictions and easements or like instrument, developer’s agreement, or other agreement with any third party pertaining to the ownership, development, construction, operation, maintenance, marketing, sale, or use of the Land and/or the Improvements.
AND ALL PROCEEDS AND PRODUCTS OF THE FOREGOING PERSONAL PROPERTY DESCRIBED IN THIS EXHIBIT B.
A PORTION OF THE ABOVE DESCRIBED GOODS ARE OR ARE TO BE AFFIXED TO THE REAL PROPERTY DESCRIBED IN EXHIBIT A.
BORROWER IS THE RECORD TITLE HOLDER AND OWNER OF THE REAL PROPERTY DESCRIBED IN EXHIBIT A.
ALL TERMS USED IN THIS EXHIBIT B (AND NOT OTHERWISE DEFINED IN THIS EXHIBIT B) SHALL HAVE THE MEANING, IF ANY, ASCRIBED TO SUCH TERM UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED AND IN FORCE IN THE JURISDICTION IN WHICH THE FINANCING STATEMENT IN CONNECTION WITH THE LOAN HAS BEEN FILED/RECORDED (THE “U.C.C.”).
WITH RESPECT TO ANY FINANCING STATEMENT TO WHICH THIS EXHIBIT B IS ATTACHED, THE TERM “BORROWER” SHALL MEAN “DEBTOR” AS SUCH TERM IS DEFINED IN THE U.C.C.

B-2
Prudential Loan No. 706109689
Lakewood Flats
Loan Agreement
18092735v.5

Exhibit B-1
SPECIFIC LIST OF PERSONAL PROPERTY

B-1-1
Prudential Loan No. 706109689
Lakewood Flats
Loan Agreement
18092735v.5

Exhibit C
PERMITTED ENCUMBRANCES

C-1
Prudential Loan No. 706109689
Lakewood Flats
Loan Agreement
18092735v.5

Exhibit D
LIST OF MAJOR TENANTS
None

D-1
Prudential Loan No. 706109689
Lakewood Flats
Loan Agreement
18092735v.5

Exhibit E
LIST OF POST-CLOSING OBLIGATIONS
1.    Operations and Maintenance Program for Water Quality. Borrower shall, within sixty (60) days after the date of this Agreement, establish an operations and maintenance program (“ O&M Program “) to address the water quality at the property.  The O&M Program shall at a minimum require: (1) annual water testing, (2) the flushing, prior to move in by a new tenant, of each unit’s piping, water heater, water filter and any other related, and (3) such other measures as are recommended by an environmental consultant which are reasonable under the circumstances to establish and maintain a quality of water for residential usage.   Borrower shall cause its property manager to comply with such O&M Program and shall provide to Lender on an annual basis commencing no later than May 1, 2016 the following: (a) copies of periodic notices or reports received or generated by Borrower relating to such water testing (which testing shall occur, at a minimum, annually), (b) copies of any amendment to such O&M Program received or created by Borrower, and (c) access to the property to review and assess the water quality at the property and Borrower’s and its property manager’s compliance with the O&M Program.”

2.    Following the delivery of the second annual set of required reports on or before May 1, 2017, Borrower may discontinue the testing contemplated above provided:

(i)    The water quality is reasonably satisfactory to Lender; and

(ii)    at such time, net operating income for the Property for the preceding twelve (12) month period (net of $250.00 per unit reserves) is at least $2,700,000.00.

Prudential Loan No. 706109689
Lakewood Flats
Loan Agreement
E-1
18092735v.5

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