Document:

Exhibit
10.1

SENIOR MEZZANINE LOAN AGREEMENT

This
SENIOR MEZZANINE LOAN AGREEMENT (this “Agreement”) is
made and entered into as of this 29th day of September, 2006, by and between SW 109
Wagon Wheel SM LLC, a Delaware limited liability company, whose address is 2001
Bryan Street, Suite 3700, Dallas, Texas, 75201 (“Borrower”),
and Behringer Harvard Alexan Nevada, LLC, a Delaware limited liability company,
whose address is 15601 Dallas Parkway, Suite 600, Addison, Texas, 75001 (“Lender”).

R E C I T A L S:

This
Agreement is made with reference to the following facts:

A.            Concurrently herewith, Comerica Bank, a Michigan banking
corporation (“Senior Lender”) is making a
mortgage loan in the amount of Twenty Nine Million Dollars ($29,000,000.00)
(the “Senior Loan”) to SW 106 Wagon Wheel
Holdings LLC, a Delaware limited liability company (“Mortgagor”)
evidenced by a Promissory Note of even date herewith (the “Senior Note”).

B.            Mortgagor, concurrently herewith, is the owner of that
certain land located in Clark County, Nevada and more particularly described on
Exhibit ”A” attached hereto (together with all improvements,
fixtures and other appurtenances, the “Property”), and
Mortgagor will construct on the Property a 213-unit apartment project (the “Project”). The Senior Note is secured by a deed of trust,
mortgage, or deed to secure debt, of even date herewith (together with any and
all extensions, renewals, substitutions, replacements, amendment, modifications
and/or restatements thereof (the “Security Instrument”)
in favor of Senior Lender encumbering the Project.

C.            Borrower is the legal and beneficial owner of 100% of the
Equity Interests in Mortgagor.

D.            Borrower has requested that Lender, as senior mezzanine
lender, make a loan to Borrower (the “Loan”) in the
amount of Six Million Nine Hundred Thousand Dollars ($6,900,000) (the “Loan Amount”) subject to the term and provisions of this
Agreement, which Loan is to be advanced as hereinafter provided and is to be
evidenced by the Note. The Note is to be secured by the Pledge and Security
Agreement and the other collateral referred to in Section 5 below.

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

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

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

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

(a)                                  “Accounting Records”: shall mean such records used to prepare
financial statements including but not limited to: (i) supporting documentation
for cash disbursements (including check copies and invoices); (ii) supporting
documentation for cash receipts (including deposit slips); (iii) contracts;
(iv) check registers; (v) monthly bank account reconciliations and (vi) such
other documentation in the possession of Borrower or its Affiliates or which
Borrower will use its best efforts to acquire, as Lender shall reasonably
require for the preparation of financial statements for the Project, Mortgagor
or Borrower.

(b)                                 “Affiliate”: of any specified person or entity shall mean any
other person or entity, directly or indirectly, controlling or controlled by or
under direct or indirect common control with such specified person or entity.
For purposes of this definition, “control” shall mean the ability, whether by
the ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to make management
decisions on behalf of, or independently to select the managing partner of, a
partnership, or otherwise to have the power independently to remove and then
select a majority of those individuals exercising managerial authority over an
entity. Control of an entity shall be conclusively presumed in the case of the
ownership of more than 50% of the equity interests in the entity.

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

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

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(e)                                  “Borrower”: means the entity identified as “Borrower” in the
first paragraph of this Agreement, together with its successors and assigns.

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

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

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

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

(j)                                     “Completion Guaranty”: means that certain Senior Mezzanine
Completion Guaranty of even date herewith, executed by the Guarantors, jointly
and severally, in favor of Lender.

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

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

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

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

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

(p)                                 “Guarantors”: shall mean CFP Residential, L.P., Kenneth
Valach, J. Ronald Terwilliger and Bruce Hart.

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

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

(s)                                  “Junior Mezzanine Loan”: shall mean that certain Junior
Mezzanine Loan dated of even date herewith made to Principal, as borrower, by
Lender, as junior mezzanine lender.

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

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

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

(w)                               “Loan Commitment Fee”: means the amount of Two Hundred Seven
Thousand Dollars ($207,000), being 3% of the Loan Amount, paid by Borrower upon
the closing of the Property.

(x)                                   “Management Agreement”: shall mean that certain Management
Agreement dated September 29, 2006, entered into by and between Mortgagor and
Manager, pursuant to which Manager has agreed to manage the operations of the
Project, as the same may be amended from time to time, or any other management
agreement approved by Lender pursuant to Section 13(h) hereof.

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(y)                                 “Manager”: shall mean Riverstone Residential SW LLC or any
other property management company approved by Lender pursuant to Section
13(h) hereof.

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

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

(bb)                          “Option Agreement”: shall mean that certain Option Agreement
dated of even date herewith, among Lender and Principal, giving Lender the
option to purchase either the Equity Interests in Mortgagor and Borrower or the
Project on the terms and conditions set forth therein.

(cc)                            “Option Guaranty”: shall mean that certain Limited Guaranty
dated of even date herewith, executed by Guarantors for the benefit of
Principal guaranteeing certain obligations in connection with the Option Agreement.

(dd)                          “Permitted Exceptions”: shall mean (1) the title exceptions
included in the Policy required to be delivered to Lender pursuant to Section
7(a) hereof, as the same may be endorsed from time to time with the consent
of the Lender, (2) liens and security interests securing the Loan or the Senior
Loan, (3) liens for taxes, assessments or other governmental charges or levies
that are not then due or that are being contested in good faith and in
accordance with applicable statutory procedures, (4) mechanic’s liens against
the Project which are bonded off, released of record or otherwise remedied to
Lender’s reasonable satisfaction within 30 days of the date of creation, (5)
Leases entered into on terms allowed by this Agreement and (6) other matters approved
in writing by Lender.

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

(ff)                                “Pledge Agreement”: shall mean that certain Senior Mezzanine
Pledge and Security Agreement, dated of even date herewith, from the Borrower
to Lender, as the same may be amended, modified and

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restated from time to
time, pursuant to which the Borrower has pledged all of the Equity Interests in
the Mortgagor.

(gg)                          “Principal”: shall mean SW 108 Wagon Wheel JM LLC, a Delaware
limited liability company, the sole member of Borrower and the holder of all
Equity Interests in Borrower, and any person or entity who becomes the owner of
any Equity Interest in Borrower after the date of this Agreement and is
identified as such in an amendment or supplement to this Agreement.

(hh)                          “Sale”: shall mean any sale, assignment, transfer, conveyance
or other disposition, whether voluntary or involuntary, and whether or not
consented to by Lender of (i) all or any portion of, or interest in, the
Property or the Project, (ii) all or any portion of the Equity Interests in
Mortgagor, or (iii) all or any portion of the Principal’s Equity Interests in
Borrower.

(ii)                                  “Senior Loan Agreement: shall mean that certain Loan
Agreement dated of even date herewith between Senior Lender and Mortgagor.

(jj)                                  “Senior Loan Documents”: shall mean the Senior Note, the
Security Instrument, the Senior Loan Agreement and all other documents executed
by Mortgagor or Guarantor in favor of Senior Lender to evidence or secure the
Senior Loan, as they each may be amended, modified or restated with the consent
of Senior Lender.

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

(ll)                                  “Title Insurer”: shall mean Lawyer’s Title Insurance
Corporation.

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

3.             THE LOAN; DISBURSEMENT OF
LOAN.

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

(b)                                 Loan
Disbursements. Upon satisfaction of all the conditions set forth in Section
6 hereof, Borrower hereby directs and authorizes

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Lender to disburse the
principal balance of the Loan to Borrower to be used, as applicable, to acquire
the Property and/or to pay for or reimburse Borrower for payment of costs as
described in the Budget. The Loan is not revolving. In no event shall the
aggregate amount disbursed hereunder exceed the original principal amount of
the Loan.

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

(a)                                  Interest.
Interest on the principal balance of the Loan shall accrue and shall be payable
in the amounts and at the times set forth in the Note. Borrower agrees to pay,
on the Maturity Date, the unpaid principal balance of the Loan, together with
all accrued but unpaid interest thereon.

(b)                                 No
Usury. The provisions of this Agreement, the Note, the Option Agreement and
of all other agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, including, but not limited to,
the Loan Documents, are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of demand or acceleration of the maturity
of this Note or otherwise, shall the amount contracted for, charged, taken,
reserved, paid, or agreed to be paid to Lender for the use, forbearance,
retention or detention of the money loaned under this Note and related
indebtedness exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever, performance or fulfillment of any provision
hereof or of any agreement between Borrower and Lender shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit; and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the
payment of interest. All interest (including any amounts or payments judicially
or otherwise under the law deemed to be interest) contracted for, charged,
taken, reserved, paid or agreed to be paid to Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the Note, including any extensions or renewals
thereof, until payment in full of the Indebtedness so that the interest thereof
for such full period will not exceed at any time the maximum amount

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permitted by applicable
law. This paragraph 4(b) will control all agreements (including the Option
Agreement) between Borrower and Lender.

(c)                                  Loan
Commitment Fee. Concurrently with the closing of the Loan, and as a
condition precedent thereto, Lender shall receive the Loan Commitment Fee,
which shall be deemed to have been earned in full by Lender, and is
non-refundable, upon the disbursement of all or any portion of the Loan.

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

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

5.             SECURITY FOR LOAN;
GUARANTY.

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

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

(c)                                  Completion
Guaranty. As additional security for the Loan, the Guarantors shall execute
and deliver to Lender the Completion Guaranty.

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

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

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(i)                                     this
Agreement

(ii)                                  the
Note;

(iii)                               the
Pledge Agreement;

(iv)                              the
Completion Guaranty;

(v)                                 the
Environmental Indemnity;

(vi)                              the
Subordination of Management Agreement;

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

(viii)                        Certification
of Organizational Documents;

(ix)                                the
Option Agreement;

(x)                                   the
Option Guaranty; and

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

(b)                                 Third Party Agreements.

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

(ii)                                  Purchase
Agreement. Borrower shall have provided to Lender a copy of the
fully-executed purchase agreement for the Property, together with all documents
relating thereto, as the same may be assigned, amended or modified, which
agreement and documents shall be satisfactory to Lender in form and substance.

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

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

1)     consents to the termination of the
Management Agreement without fee or penalty upon foreclosure against the
Collateral,

2)     consents to the removal and replacement of
Manager upon foreclosure against the Collateral, and

3)     if Manager is an Affiliate of Borrower or
Mortgagor, subordinates its right to receive its management fee to the payment
of amounts due Lender under the Loan Documents, subject to the prior rights of
Senior Lender.

(c)                                  Certification
Borrower shall have provided to Lender a certification by Borrower as of the
date of this Agreement (which is the date that the commitment of Lender to make
the Loan to Borrower becomes binding on Lender) of the Budget attached hereto
as Exhibit ”B”, including certification of the purchase price of
the Property, and the reasonably estimated costs of the improvements that would
be capitalized by Mortgagor as real property for federal income tax purposes
consistent with past practices of the affiliates of Mortgagor.

(d)                                 Financial
Statements. Borrower shall have provided to Lender (i) with respect to the
Borrower, the Project and the Mortgagor, financial statements and other
financial information, certified by the Borrower and Mortgagor as being true,
correct and complete in all material respects, and in the form and containing
the detail and supporting information as required by Lender for the
underwriting for the Loan and (ii) with respect to Guarantors, the Estimated
Collateral Value Statement, dated as of June 20, 2005 of each Guarantor.

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

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

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

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

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

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

(k)                                  UCC
Policy. Lender shall have received the UCC Policy referred to in Section 7(b)
hereof.

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

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

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

(o)                                 Appraisal.
Lender shall have received an appraisal of the Property prepared by a licensed
appraiser acceptable to Lender, in form and

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substance required by
Senior Lender, but also addressed to Lender and its successors and assigns, in
the amount of $40,500,000.

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

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

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

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

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

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

(v)                                 Environmental
Disclosure. In accordance with all applicable laws, including the laws of
the jurisdiction of the Property, Borrower shall provide a true, correct and
complete copy of any disclosure

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document or other
instrument required by any such law relating to environmental matters.

(w)                               Senior
Lender Funding. Senior Lender shall have disbursed to or for the account of
Mortgagor the disbursement of the initial draw of the Senior Loan for the purchase
of the Property.

(x)                                   No
Default. The representations and warranties of Borrower contained in this
Agreement shall be true, correct and complete in all material respects except
the representation in 16(c) which need be accurate only as of the date of this
Agreement, and no Event of Default, as defined below, or circumstance or event
which upon the lapse of time, the giving of notice or both, could become an
Event of Default shall have occurred; and

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

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

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

(i)                                     with
coverage amount not less than the purchase price of the Property, if the
Property is being acquired by the Mortgagor concurrently with the closing of
the Loan;

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

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

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

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

(b)                                 UCC
Policy. Borrower shall deliver or cause to be delivered to Lender an Eagle
9 UCC Insurance Policy issued by First American Title Insurance Company (or a
similar policy), which policy shall (i) insure Lender’s first priority
security interest in all of the Equity Interests covered by the Pledge
Agreement, (ii) be dated not earlier than the date of the disbursement of
the Loan, (iii) be subject only to

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matters which would
customarily appear on such a policy, and (iv) be in form and substance
reasonably satisfactory to Lender (such policy, the “UCC Policy”).

8.             INSURANCE.

(a)                                  Insurance
Requirements. Borrower, at its sole cost (or at Mortgagor’s sole cost), for
the mutual benefit of Borrower, Mortgagor and Lender, shall cause Mortgagor or
Manager to obtain and maintain policies of insurance with respect to the
Project as required by the Senior Loan Documents, as those requirements may
from time to time be amended; provided that Lender shall be named as an
additional insured under such liability coverage. Borrower agrees that it will
cause Mortgagor to maintain coverage under its products/completed liability
insurance for the period of the statute of repose in the state where the
Project is located, but no less than ten years after Completion. If commercial
general liability insurance as required in the Senior Loan Documents is
unavailable for residential construction in the state where the Project is
located, Owner shall or shall cause Manager or the contractor to purchase
wrap-up construction insurance covering Mortgagor, contractor and all
subcontractors for general liability and products/completed operations for the
period of the statute of repose but no less than 10 years with limits no less
than $5,000,000, naming Lender as additional insured.

(b)                                 Insurance
Premiums; Evidence of Renewal. All premiums on insurance policies required
under this Section 8 shall be paid in the manner required by the
Senior Loan Documents, provided, however, that if Senior Lender waives the
requirement for impound of insurance premiums, Borrower agrees to provide
evidence of payment of all insurance premiums. Borrower shall use its best
efforts to deliver originals of all policies and renewals (or certificates
evidencing the same), marked “paid” (or other evidence satisfactory to Lender
of the continuing coverage) to Lender at least fifteen (15) days before the
expiration of existing policies. If Lender has not received satisfactory
evidence of such renewal or substitute insurance in the time frame herein
specified, Lender shall have the right, but not the obligation, to purchase
such insurance for Lender’s interest only.

(c)                                  Policy
Requirements. All Policies provided for or contemplated by Section
8.1(b) shall name Mortgagor as the insured and, in the case of liability
coverage, Borrower as the insured or additional insured and Lender as the
additional insured, in each case as their interests may appear. All insurance
policies and renewals of insurance policies required by this Section 8
shall (i) be in such amounts and

 14
 

 

 

for such periods as
Senior Loan Documents may from time to time require, (ii) be issued by
insurance companies as required by the Senior Loan Documents, (iii) provide
thirty (30) days’ advance written notice to Lender before any cancellation or
adverse material modification and (iv) to the extent limits are not
otherwise specified herein, contain deductibles which are in amounts acceptable
to Lender. (Lender acknowledges that deductibles not in excess of $250,000 per
occurrence will be acceptable to it.) 
All certificates of insurance and “blanket” insurance policies shall
reference the specific project being covered by name and address.

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

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

(f)                                    Application
of Insurance Proceeds. Any insurance proceeds received by Mortgagor or
Borrower under any of such casualty policies shall, subject to the rights of
the Senior Lender, be applied, at the option of the Lender, toward pre-payment
or reimbursement of the Loan and any other amounts evidenced or secured by the
Loan Documents, or to the rebuilding or repairing of the Project so damaged or
destroyed, as the Lender in its sole and unreviewable

 15
 

 

 

discretion may elect;
provided, however, that Lender will allow insurance proceeds to be used for
restoration of the Project if the conditions for Borrower’s use of insurance
contained in the Senior Loan Documents are satisfied (substituting Lender for
Senior Lender thereunder in making related decisions). Lender’s election to
apply such insurance proceeds to the Loan and other amounts evidenced or
secured by the Loan Documents shall not relieve the Borrower of the duty to
rebuild or repair.

9.             EMINENT DOMAIN.

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

(b)                                 Settlement
of Claim. In case the Project, or any part or interest in any thereof, is
taken by condemnation, then subject to the rights of the Senior Lender, the
Lender is hereby empowered to collect and receive all compensation and awards
of any kind whatsoever (referred to collectively herein as “Condemnation Awards”) which may be paid for any property
taken or for damages to any property not taken (all of which the Borrower
hereby assigns to the Lender, subject to the rights of the Senior Lender in the
same). Borrower covenants to sign upon demand, or Lender may sign or endorse on
Borrower’s behalf, all necessary proofs of loss, receipts, releases and other
papers required by the condemning authority to be signed by Borrower for such
purpose. Borrower hereby irrevocably appoints Lender as its attorney-in-fact
for the purposes set forth in this Section 9. Lender may deduct from any
Condemnation Awards, any expenses reasonably incurred by Lender in the
collection and settlement thereof, including reasonable attorneys’ and
adjusters’ fees and charges.

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

 16
 

 

 

(d)                                 Continuing
Obligation to Repair. No election made by the Lender under this Section
9 shall relieve the Borrower of the duty to repair and restore.

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

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

11.           EXPENSES. Borrower
shall pay, as and when due, all reasonable costs and expenses incurred in the
procuring and making of the Loan by Lender, including without limitation, to
the extent reasonable, Title Insurer’s fees and premiums, charges for
examination of title to the Premises, expenses of surveys, transfer taxes and
recording expenses, appraisal and appraisal review fees, fees of an inspector
and fees and expenses of any attorneys, accountants, engineers, architects,
surveyors, contractors, inspectors or other consultants, professionals or
independent contractors employed, retained or utilized by Lender in connection
with the Loan. Borrower shall cause Mortgagor to pay when due any and all
insurance premiums, taxes, assessments, water, sewer and other utility charges,
impact fees, liens and encumbrances on the Project and any other amounts
payable for the cost of improvements to the Property, provided that Borrower
and/or Mortgagor may in good faith contest any such liens, claims or amounts so
long as it provides, for any filed lien, a bond in accordance with statutory
requirements or other security reasonably satisfactory to Lender. Borrower
shall pay upon demand or reimburse Lender for any and all reasonable fees,
costs and expenses incurred by Lender in collecting the Indebtedness after an
Event of Default including reasonable attorneys’ fees. All such amounts shall
be paid to Lender or at Lender’s direction to such other person to

 17
 

 

 

whom payments are due or
Lender may, at its option, pay such amounts and all sums paid shall be deemed a
portion of the Indebtedness and shall bear interest at the Default Interest
Rate.

12.           FINANCIAL REPORTS,
PROPERTY REPORTS AND ANNUAL BUDGET.

The parent company
of Lender is a real estate fund that issues securities, maintains U.S. GAAP
audited financial statements and/or is publicly registered with the United
States Securities and Exchange Commission (“SEC”).
As a result, such parent company is subject to GAAP financial statement
requirements and other reporting requirements. These requirements include but
are not limited to quarterly and annual financial reporting (including for
public companies on Form 10-Q and Form 10-K and reporting under Rule 3-14 of
Regulation S-X, which requires the filing of pro forma financial statements of
acquired properties). In addition, certain accounting requirements may dictate
that Lender report Borrower, Mortgagor and/or the Project as a subsidiary of
Lender. Therefore, Borrower agrees to provide Lender with all information that
Borrower or its Affiliates has in their possession and Borrower will use its
best efforts to obtain such information not in its possession as Lender
reasonably requires in order to prepare, audit and/or review financial
statements of the Project, Mortgagor and Borrower for the applicable reporting
periods.

(a)                                  Borrower
agrees that all accounting for the Project will be conducted by the Borrower
and/or the Mortgagor and also by the Lender. Borrower agrees to provide Lender
with copies of all Accounting Records (other than leases, which Borrower and/or
the Mortgagor may make available at the Project rather than copying) on a
monthly basis in order to enable Lender to prepare and maintain financial
statements on the Borrower, Mortgagor and/or the Project in accordance with accounting
principles generally accepted in the United States of America.

(b)                                 Borrower
agrees to provide Accounting Records by the 15th of the month for the preceding
month.

(c)                                  Borrower
agrees to allow Lender and Lender’s external accountants access to original
Accounting Records if needed in the process of their quarterly reviews and
various audit processes.

(d)                                 Borrower
agrees to cooperate with any inquiries or interviews by Lender or its external
independent accountants as may be necessary in relation to Lender’s or its
Affiliates’ compliance with the Sarbanes-Oxley Act of 2002.

(e)                                  In
addition, Borrower shall furnish to Lender:

(i)                                     within
30 days after the end of each fiscal year of Mortgagor, and at any other time
upon Lender’s request, a statement that identifies all

 18
 

 

 

owners of any interest in
Mortgagor and the interest held by each, if Mortgagor is a corporation, all
officers and directors of Mortgagor, and if Mortgagor is a limited liability
company, all members and managers (whether members or not);

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

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

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

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

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

 19
 

 

 

available to Lender for
examination and copying any other books and records upon Lender’s written
demand.

(h)                                 Borrower
authorizes Lender to obtain a credit report on Borrower, Mortgagor and
Guarantors at any time.

13.           GENERAL COVENANTS OF
BORROWER. Until the full and final payment of the Loan, unless
Lender waives compliance in writing, Borrower hereby covenants and agrees as
follows:

(a)                                  Commencement
and Completion of Project. Borrower shall cause Mortgagor to begin
construction and installation of the improvements in connection with the
Project on or before the commencement date set forth in the Senior Loan
Documents and shall cause Mortgagor to prosecute such construction and
installation with diligence so that the construction and Completion (as defined
in the Completion Guaranty) of the Project (other than payment of claims that
are being contested in accordance with the Loan Documents) shall have occurred
by the completion deadline set forth in the Senior Loan Documents.

(b)                                 Lender
Approval. No changes to the construction budget included in the Senior Loan
Documents or the Budget attached hereto or the completion date required by the
Senior Loan Documents shall be permitted without Lender’s written consent, with
the exception of (i) completion date extensions due to force majeure and (ii)
reallocation of amounts among the line items of the budgets; provided that
Borrower shall provide Lender with notice of any changes in connection with (i)
and (ii) above. Lender shall have the right to approve all contractors (except
Vanguard, Inc.) and all construction contracts between Mortgagor and such
contractors. Lender has approved the plans and specifications for the
improvements to be constructed on the Property described in Exhibit “C”
attached hereto, and no changes to such approved plans and specifications shall
be permitted without Lender’s written consent, with the exception of (i)
changes required by governmental authorities or Senior Lender and (ii) other changes
that, individually, do not increase or decrease Project costs by more than
$100,000 and, in the aggregate, do not increase or decrease Project costs by
more than $300,000. Lender shall have ten (10) business days to provide any
approval required under this Section 13(b) but if Lender does not
provide written notice that it does not approve within the ten (10) business
days, then the action shall be deemed approved.

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

 20

 

 

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

(ii)                                  No
Amendments. Borrower shall not, nor shall it permit Mortgagor to, without
Lender’s prior written consent, enter into any amendments or modifications of
(a) if Borrower or Mortgagor is a corporation, the Borrower’s and Mortgagor’s
by-laws and articles of incorporation, (b) if Borrower or Mortgagor is a
limited liability company, such entity’s operating agreement or articles of
organization, (c) if Borrower or Mortgagor is a limited partnership, such
entity’s partnership agreement or partnership certificate, (d) the construction
contract between Mortgagor and Vanguard, Inc. (except for change orders that,
individually, do not increase or decrease Project costs by more than $100,000
and, in the aggregate, do not increase or decrease Project costs by more than
$300,000), (e) the Management Agreement, or (f) the Senior Loan Documents.

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

(iv)                              Maintenance
and Repair of Project. After completion of the Project, Borrower shall
cause Mortgagor to (a) maintain the Project, including the parking and
landscaping portions thereof, in good

 21
 

 

 

condition and repair,
(b) promptly make all necessary structural and non-structural repairs to
the Project, (c) not demolish, alter, remove or add to any improvements on
the Property, excepting (i) the repair and restoration of improvements
following damage thereto as required by this Agreement, and (ii) as
otherwise required by any applicable law, rule or regulations, and (d) not
erect any new buildings, structures or building additions on the Project other
than in accordance with the plans for the Project, without the prior written
consent of Lender. Borrower shall pay when due all claims for labor performed
and materials furnished therefor in connection with any improvements or construction
activities on the Property; provided that Borrower may in good faith contest
any liens, claims or amounts so long as it provides, for any filed lien, a bond
in accordance with statutory requirements or other security reasonably
satisfactory to Lender.

(d)                                 Restricted
Sale and Encumbrance of Project and of Borrower Interests; Other Indebtedness.
Neither Borrower nor Principal shall engage in any Sale or Encumbrance without
the prior written consent of Lender (which may be withheld by Lender in Lender’s
sole and absolute discretion). Borrower will not issue any additional Equity
Interests in Borrower. In addition, Borrower shall not permit Mortgagor to
issue any additional Equity Interests in Mortgagor. In addition, Borrower shall
not, nor shall it permit Mortgagor to, incur any indebtedness, whether secured
or unsecured, other than (i) the Senior Loan and this Loan, (ii) obligations
under interest rate hedging arrangements related to the Senior Loan and (iii)
trade and operational indebtedness incurred in the ordinary course of business
(including construction and operation of the Project) or for its administrative
functions. Notwithstanding the foregoing, Lender’s consent shall not be
required for:

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

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

(iii)                               a
Sale that results from theft, condemnation or other involuntary conversion;

 22
 

 

 

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

(v)                                 the
grant of an easement if, before the grant, Lender determines (which
determination must be made reasonably) that the easement will not materially
affect the operation or value of the Project and Borrower pays to Lender, upon
demand, all reasonable costs and expenses incurred by Lender in connection with
reviewing Borrower’s request; and

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

(e)                                  General
Indemnity. Borrower shall, at Borrower’s expense, protect, defend,
indemnify, save and hold Lender and each of its members and its respective
members, stockholders, directors, officers, employees and agents (collectively
the “Indemnified Parties”) harmless against
any and all claims, demands, losses, expenses (including court costs and
reasonable attorney’s fees and expenses), damages and causes of action (whether
legal or equitable in nature) asserted by any person or entity arising out of,
caused by or relating to the Project and the Lender’s exercise of its rights
under the Loan Documents upon an Event of Default, except to the extent the
same arises out of, is caused by or results from the gross negligence or
willful misconduct of an Indemnified Party. Borrower shall pay to Lender upon
demand all claims, judgments, damages, losses and expenses (including court
costs and reasonable attorneys’ fees and expenses) incurred by Lender as a
result of any legal or other action arising out of the aforesaid matters.
Borrower acknowledges that the Indemnified Parties may defend any matter
covered by the above indemnification by counsel of the relevant Indemnified
Party’s choice, and the costs of such defense (including reasonable attorney’s
fees) are part of the costs covered by the indemnity. The foregoing
indemnification shall survive repayment of the Loan.

(f)                                    Leases.

(i)                                     Residential
Lease Requirements. Mortgagor shall have the right, and Borrower may permit
Mortgagor, to enter into residential Leases without Lender’s prior written consent,
so long as:  (A) all Leases for
residential dwelling units are on forms approved by Lender, and shall not
include options to purchase and (B) all Leases shall be for

 23
 

 

 

initial terms of at least
six months and not more than two years (with the exception of Leases for up to
3% of the units in the Project, which may have terms of less than six months).

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

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

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

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

(vi)                              Defense;
Pursuit of Remedies. Borrower shall, or shall cause Mortgagor to, at its
sole cost and expense, appear in and defend any action or proceeding arising
from or connected with any of the Leases or any obligation or liability of
Mortgagor as landlord thereunder. Borrower shall, or shall cause Mortgagor to,
use commercially reasonable efforts to pursue all remedies, including claims
for damages available at law or in equity, against any tenant under a Lease who
defaults in the performance of its obligations under the Lease.

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

 24
 

 

 

Mortgagor’s ability to
timely perform any of its obligations under any of the Senior Loan Documents,
or (iii) the physical condition or operation of the Project.

(h)                                 Development.
If after the date of this Agreement, Borrower or Mortgagor intends to engage a
developer of the Project, Lender shall have the right to approve such new
developer and the written development agreement for the Project.

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

(j)                                     Senior
Loan. The Borrower shall, or shall cause Mortgagor to, fully and timely pay
all amounts owing under the Senior Loan Documents and timely and fully perform
all of the Mortgagor’s covenants and agreements contained therein. Borrower
shall provide Lender with copies of all notices (except routine notices which
would not include any notice related to any failure to comply with any terms of
the Senior Loan Documents or regarding any event of default under the Senior
Loan Documents) given or received by Mortgagor under or pursuant to the Senior
Loan Documents, promptly upon delivery or receipt as the case may be. Without
limiting the Lender’s right to declare an Event of Default on account of a
failure to comply with the terms and provisions of the Senior Loan Documents,
if Borrower or Mortgagor fail to so pay or perform such obligations, and if
such failure either (i) becomes an Event of Default hereunder or (ii) prior to
becoming an Event of Default continues for twenty (20) days after Lender gives
written notice to Borrower to cure, the Lender may pay or perform the same
pursuant to Section 18(b) hereof. Notwithstanding the foregoing,
(i) Lender shall have no obligation whatsoever to pay any of the amounts
evidenced or secured by, or to perform any of the covenants or obligations
imposed by, any Senior Loan Documents, and (ii) any such payment by Lender
shall not cure Mortgagor’s default hereunder or under the Senior Loan Documents
but shall only protect Lender’s interest in the Project. Borrower shall not,
nor shall it permit Mortgagor to, amend or modify any of

 25
 

 

 

the Senior Loan Documents
without the prior written consent of Lender.

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

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

(m)                               Developer’s
Fee. Borrower shall cause Mortgagor to refrain from drawing $200,000 from
the Senior Loan allocated toward the developer’s allowance (as set forth in the
budget attached to the Senior Loan) until the payment in full of this Loan.

14.           FURTHER ASSURANCES. Borrower
shall, from time to time, upon Lender’s request, at Borrower’s sole cost and
expense, execute, deliver, record and furnish such

 26
 

 

 

documents and do such
other acts as Lender may reasonably deem necessary or desirable to (i) perfect
and maintain valid liens upon the security contemplated by the Loan Documents,
(ii) correct any errors of a typographical or other manifest nature which may
be contained in any of the Loan Documents, (iii) evidence Borrower’s compliance
with the Loan Documents, and (iv) consummate fully and carry out the intent of
the transactions contemplated under this Agreement or the Loan Documents.

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

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

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

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

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

(iii)                               Not
a Foreign Person. Neither Borrower, nor any entity that is a holder of an
Equity Interest in Borrower, is organized under the laws

 27
 

 

 

of any jurisdiction other
than the United States or one of the states thereof.

(iv)                              No
Defaults Under Existing Agreements. The consummation of the transactions
contemplated hereby and the performance by Borrower of its obligations under
the Loan Documents will not result in any breach of, or constitute a default
under, the Senior Loan Documents, any other material Third Party Agreements or
any mortgage, deed of trust, bank loan or security agreement, or other material
instrument to which Borrower, Mortgagor or Principal are a party or by which
the Property, the Borrower or the Principal are bound.

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

(vi)                              Ownership.
SW 105 Wagon Wheel Limited Partnership, a Delaware limited partnership (“Parent”), owns and will own at all times during the term of
the Loan one hundred percent (100%) of the ownership interests in Principal and
Parent has not transferred, conveyed, pledged or encumbered (and will not
transfer, convey, pledge or encumber) such interests except with the prior
written consent of Lender. Parent is (and at all times during the term of the
Loan will be) treated as a partnership for federal income tax purposes. During
the term of the Loan, neither Parent nor Principal nor Borrower nor Mortgagor
will borrow funds from Lender or an Affiliate of Lender other than the Loan or
the Junior Mezzanine Loan.

(b)                                 Title
to Property; Matters Affecting Property.

(i)                                     Title
to Property. Mortgagor, upon the closing of the acquisition of the
Property, will have good and marketable fee simple title to the Property,
subject only to the Senior Loan Documents and the Permitted Exceptions, and
good, marketable and freely alienable title to all personal property located on
the Property, subject only to the Senior Loan Documents and the Permitted
Exceptions; Borrower will cause Mortgagor to protect or cause to be protected
the title to the Project, and Borrower will forever warrant and defend the same
against any other claims of any persons or parties whomsoever, subject to the
Senior Loan Documents and the Permitted Exceptions.

(ii)                                  Mortgagor’s
Equity Interests. Borrower owns and will own one hundred percent (100%) of
the Equity Interests in Mortgagor, and

 28
 

 

 

Borrower has not
transferred, conveyed, pledged or encumbered (and will not transfer, convey,
pledge or encumber) such interests except to Lender pursuant to the Loan
Documents. Borrower has and will have authority to encumber its Equity
Interests in Mortgagor pursuant to the terms of the Pledge Agreement.

(iii)                               Borrower’s
Equity Interests. Principal owns and will own one hundred percent (100%) of
the ownership interests in Borrower, and Principal has not transferred,
conveyed, pledged or encumbered (and will not transfer, convey, pledge or
encumber) such interests except as expressly permitted pursuant to the Junior
Mezzanine Loan or otherwise with the prior written consent of Lender.

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

(v)                                 No
Contracts Giving Rise to Liens. Neither Borrower nor Mortgagor has made any
contract or arrangement of any kind, that does or could give rise to a lien on
the Project, except for (i) the Senior Loan Documents and the Permitted
Exceptions and (ii) contracts related to design and construction of the Project
which have been provided to Lender. Neither Borrower nor the Principal has made
any contract or arrangement of any kind that does or could give rise to a lien
or encumbrance on any of the Equity Interests in Mortgagor.

(vi)                              No
Construction. Prior to the disbursement of this Loan and the recordation of
the Security Instrument, no construction whatsoever has been performed on the
Property by Borrower or its Affiliates.

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

 29
 

 

 

(viii)                        Leases.
There are no Leases of the Property in effect as of the closing of the Loan.

(ix)                                Tax
Treatment. Principal, Borrower and Mortgagor are (and at all times during
the term of the Loan will be) disregarded as entities separate from Parent
within the meaning of Treasury Regulation §301.7701-3(b)(i)(2). Principal,
Borrower and Mortgagor have not (and at all times during the term of the Loan
will not) elect to be classified as an association taxable as a corporation
within the meaning of Treasury Regulation §301.7701-3(c).

(x)                                   Permits.
All permits required for the operation and construction of the Project are in effect
or Borrower expects them to be available as required for construction of the
Project in accordance with the schedule required by the Senior Loan Documents.
Once issued, all such permits will remain in effect and the Project and its
contemplated use and operation will comply therewith. All discretionary
approvals for the construction of the Project in accordance with the Plans and
Specifications have been obtained.

(c)                                  Financial
Statements. The financial statements heretofore delivered to Lender by Borrower,
Mortgagor, and Principal are true and correct in all material respects, have
been prepared in accordance with sound accounting practices, and fairly present
the financial condition(s) of the person(s) referred to therein as of the
date(s) indicated; no materially adverse change has occurred in the financial
condition(s) reflected in such financial statements since the date(s) shown
thereon and no additional borrowings or liabilities have been made or incurred
by such person(s) since the date(s) thereof other than the borrowing
contemplated hereby, the Senior Loan, the Junior Mezzanine Loan or other
borrowings disclosed in writing to and approved by Lender. The Estimated
Collateral Value Statement, dated as of June 30, 2005, for each Guarantor
accurately lists the Available Assets of the Guarantor (as defined in the
Completion Guaranty) as of such date and the value of such Available Assets
calculated on the basis provided in the notes thereto.

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

(e)                                  No
Loan Broker. Borrower has not dealt with any person, firm or corporation
who is or may be entitled to any finder’s fee, brokerage

 30
 

 

 

commission, loan
commission or other sum in connection with the execution of this Agreement or
the making of the Loan by Lender to Borrower. Borrower does hereby indemnify
and agree to defend and hold Lender harmless from and against any and all loss,
liability or expense, including court costs and reasonable attorneys’ fees and
expenses, which Lender may suffer or sustain should such warranty or
representation prove inaccurate in whole or in part.

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

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

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

 31
 

 

 

from time to time, and
the present and future rules, regulations and guidance documents promulgated
under any of the foregoing.

17.           EVENT OF DEFAULT.

Borrower
shall be in default under this Agreement upon the occurrence of any of the
following events (hereinafter referred to as an “Event of Default”):

(a)                                  Non-Payment.
The failure of Borrower to pay when due any amount required by the Note, this
Agreement or any other Loan Documents which continues, in the case of monthly
interest payments required under the Note, for five (5) days or, in the case of
other sums payable under the Note, this Agreement or the Loan Documents, for 20
days following written demand for payment on Borrower by Lender.

(b)                                 Insurance.
The failure of Borrower to keep in force any insurance policy required
hereunder or to deliver evidence of its renewal to Lender and the continuation
of such failure for 10 days following written demand on Borrower by Lender.

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

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

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

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

(g)                                 Option
Agreement. The failure of Borrower or Principal to comply with the terms of
the Option Agreement with respect to transfer of the Wagon
Wheel Membership Interests (as defined in
the Option Agreement) upon the exercise of the Purchase Option including but
not limited to Borrower’s or Principal’s satisfaction of all of the Conditions
to Closing and Closing Deliveries set forth therein.

 32

 

 

(h)                                 Other
Breaches under this Agreement. The failure by Borrower to perform any of
its obligations under this Agreement, as and when required, except as
specifically set forth otherwise herein, which continues for a period of 30
days after notice of such failure by Lender to Borrower, if such failure is not
reasonably susceptible of cure within such 30 day period and if Borrower
promptly commences such cure within such 30 day period and diligently
prosecutes the same to completion, then the cure period shall be extended for
such period of time as may be reasonably necessary to effect a cure but in no
event shall such period exceed 90 days;

(i)                                     Other
Breaches Under Other Loan Documents. The failure of Borrower, Principal or
any Guarantor, indemnitor or obligor to perform and observe any covenant,
obligation, agreement or undertaking under any Loan Document other than this
Agreement following such notice and/or grace period, if any, as may be provided
therein for curing such failure;

(j)                                     Senior
Loan Documents. The failure of Borrower or Mortgagor or any Guarantor to
perform and observe any covenant, obligation, agreement or undertaking under
any Senior Loan Documents following any notice or cure period, if any, as may
be provided therein for curing such failure; or

(k)                                  Bankruptcy
Proceedings.

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

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

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

(4)                                  If
the Borrower or Mortgagor shall have a petition filed against it commencing an
involuntary case under any present or future Federal or state bankruptcy or
similar law and such petition is not

 33
 

 

 

dismissed or discharged within ninety (90) days after
the filing thereof; or

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

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

18.           REMEDIES.

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

(b)                                 Lender’s
Right to Perform. If Borrower fails to perform any covenant or obligation
contained herein or in the other Loan Documents and such failure continues for
a period of 30 days after written notice of such failure by Lender to Borrower,
or if such failure is not reasonably susceptible of cure within such 30 day
period and if Borrower promptly commences such cure within such 30 day period
and diligently prosecutes the same to completion, then the cure period shall be
extended for such period of time as may be reasonably necessary to effect a
cure but in no event shall such period exceed 90 days, without in any way
limiting Lender’s right to exercise any of its rights, powers or remedies as
provided hereunder, or under any of the other Loan Documents, Lender may, but
shall have no obligation to, perform, or cause performance of, such covenant or
obligation, and all costs, expenses, liabilities, penalties and fines of Lender
reasonably incurred or paid in connection therewith shall be payable by
Borrower to Lender upon demand and if not paid shall be added to the
Indebtedness (and to the extent permitted under applicable laws, secured by the
Pledge Agreement

 34
 

 

 

and other Loan Documents)
and shall bear interest from the date expended at the Default Interest Rate.
Notwithstanding the foregoing, Lender shall have no obligation to send notice
to any Borrower of any such failure.

(c)                                  Appointment
of Lender as Attorney-in-Fact. Borrower hereby irrevocably, unconditionally
and presently constitutes Lender as Borrower’s attorney-in-fact, with full
power of substitution, to be exercised by Lender only upon the occurrence and
during the continuation of an Event of Default, to exercise its rights under
the Pledge Agreement (in its own name or the name of a designee) for purposes
of preserving and protecting the Project or the collateral pledged under the
Pledge Agreement and, as Lender in its sole discretion deems necessary or
proper, to execute, acknowledge (when appropriate) and deliver all instruments
and documents in the name of Borrower which may be necessary or desirable in
order to do any and every act which Borrower might do on its own behalf in the
performance of its obligations hereunder. This power of attorney is a power
coupled with an interest and is irrevocable.

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

(e)                                  Recourse
Limitations. Borrower’s liability in connection with this Agreement, the
Note and the other Loan Documents (including Borrower’s liability for all
amounts due hereunder or thereunder) is collectible only from the Collateral
against which a security interest is created by the Pledge Agreement. In no
case will any person who holds a direct or indirect ownership interest in
Borrower, or any officer, director, manager, trustee, employee, agent or
affiliate of Borrower or any such direct or indirect owner, have any
responsibility for Borrower’s obligations in connection with this Agreement,
the Note and the other Loan Documents (including

 35
 

 

 

Borrower’s liability for
any amounts due hereunder or thereunder); provided, however, that nothing in
this Section 18(e) limits the liability of any person under a guaranty or other
agreement executed by such person.

19.           TRANSFER OF LOAN; LOAN
SERVICER.

(a)                                  Lender’s
Right to Transfer Borrower hereby acknowledges that Lender shall have the
right to transfer, assign or sell the Loan Documents, or grant participation
interests in all or any portion of the Loan, in such manner and to such
entities as Lender in its sole and absolute discretion shall select.

(b)                                 Loan
Servicer. At the option of Lender, the Loan may be serviced by a servicer
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer pursuant to a servicing agreement between Lender and such servicer. A
sale may result in a change of the Loan servicer. There also may be one or more
changes of Loan servicer unrelated to a sale of the Note. If there is a change
of Loan servicer, Borrower will be given notice of the change.

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

20.           LENDER’S EXPENSES; RIGHTS
OF LENDER. Borrower shall promptly pay to Lender, upon demand, with
interest thereon from the date of demand at the Default Interest Rate,
reasonable attorneys’ fees and all other reasonable costs and expenses paid or
incurred by Lender in enforcing or exercising its rights or remedies created
by, connected with or provided for in this Agreement or any of the other Loan
Documents following an Event of Default, and payment thereof shall be secured
by the Pledge Agreement.

21.           MISCELLANEOUS.

(a)                      Notices.
All notices, demands and other communications (“Notice”)
under or concerning this Agreement shall be in writing. Each Notice shall be
addressed to the intended recipient at its address set forth below, and a
Notice shall be deemed given on the earliest to occur of

 36
 

 

 

(1) the date when the
Notice is received by the addressee; (2) the first Business Day after the
Notice is delivered to a recognized overnight courier service, with
arrangements made for payment of charges for next Business Day delivery; or (3)
the third Business Day after the Notice is deposited in the United States mail
with postage prepaid, certified mail, return receipt requested.

	
  If to Lender:

  	
   

  	
  Behringer Harvard Alexan Nevada, LLC

  
	
   

  	
   

  	
  15601 Dallas
  Parkway, Suite 600

  
	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
  Attention: Chief
  Legal Officer

  
	
   

  	
   

  	
  Facsimile: (214)
  655-1610

  

 

	
  with copy to:

  	
   

  	
  Powell & Coleman, L.L.P.

  
	
   

  	
   

  	
  8080 North
  Central Expressway, Suite 1380

  
	
   

  	
   

  	
  Dallas, Texas
  75206

  
	
   

  	
   

  	
  Attention: Carol
  D. Satterfield

  
	
   

  	
   

  	
  Facsimile: (214)
  373-8768

  

 

	
  If to Borrower:

  	
   

  	
  SW 109 Wagon Wheel SM LLC

  
	
   

  	
   

  	
  Attention:
  Timothy J. Hogan

  
	
   

  	
   

  	
  2001 Bryan
  Street, Suite 3700

  
	
   

  	
   

  	
  Dallas, Texas
  75201

  
	
   

  	
   

  	
  Facsimile: (214)
  922-8553

  

 

	
  with copy to:

  	
   

  	
  Michael K. Ording

  
	
   

  	
   

  	
  Jones Day

  
	
   

  	
   

  	
  325 John H.
  McConnell Blvd., Suite 600

  
	
   

  	
   

  	
  Columbus, Ohio
  43215

  
	
   

  	
   

  	
  Facsimile: (614)
  461-4198

  

 

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

 37
 

 

 

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

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

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

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

 38
 

 

 

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

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

(h)                                 SUBMISSION
TO JURISDICTION/SERVICE OF PROCESS. BORROWER AND LENDER EACH HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF
NEVADA SITTING IN CLARK COUNTY, NEVADA FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT
MATTER HEREOF, ANY OTHER LOAN DOCUMENT AND THE SUBJECT MATTER THEREOF, OR THE
LOAN. EACH OF BORROWER AND LENDER TO THE EXTENT PERMITTED BY APPLICABLE LAW (A)
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE
ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
ATTACHMENT OR EXECUTION BY ANY SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT, THE SUBJECT MATTER HEREOF, THE
OTHER LOAN DOCUMENTS, THE SUBJECT MATTER THEREOF, OR THE LOAN (AS APPLICABLE)
MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED IN STATE COURT TO FEDERAL COURT,
OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT AND (C)
HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE
ARISE FROM THE SAME SUBJECT MATTER. BORROWER AND LENDER EACH HEREBY CONSENTS TO

 39
 

 

 

SERVICE OF PROCESS BY
MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT TO SECTION
21(a) HEREOF, BUT ANY SUCH SERVICE WILL BE EFFECTIVE ONLY WHEN RECEIVED AT SUCH
ADDRESS. BORROWER AND LENDER EACH AGREES THAT ITS SUBMISSION TO JURISDICTION
AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF
THE OTHER PARTY. FINAL JUDGMENT AGAINST A PARTY IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X)
BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF
WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF
INDEBTEDNESS OR LIABILITY OF THE PARTY THEREIN DESCRIBED, OR (Y) IN ANY OTHER
MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.

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

(j)                                     Entire
Agreement. This Agreement and all of the other Loan Documents constitute
the entire understanding between the parties hereto with respect to the subject
matter hereof, superseding all prior written or oral understandings, and may
not be modified, amended or terminated except by a written agreement signed by
each of the parties hereto or thereto that is to be bound by the modification,
amendment or termination. Notwithstanding the foregoing, the provisions of this
Agreement are not intended to supersede the

 40
 

 

 

provisions of the Pledge
Agreement, but shall be construed as supplemental thereto. Borrower and Lender
each hereby acknowledges that this Agreement and the other Loan Documents
accurately reflect the agreements and understandings of the parties hereto with
respect to the subject matter hereof and hereby waives any claims against the
other which it may now have or may hereafter acquire to the effect that the actual
agreements and understandings of the parties hereto with respect to the subject
matter hereof may not be accurately set forth in this Agreement or such other
Loan Documents.

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

(l)                                     Severability.
Each provision of this Agreement shall be interpreted so as to be effective and
valid under applicable law, but if any such provision shall in any respect be
ineffective or invalid under such law, such ineffectiveness or invalidity shall
not affect the remainder of such provision or the remaining provisions of this
Agreement.

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

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

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

 41
 

 

 

(p)                                 Straight
Debt Harbor. It is the intent of Borrower and Lender that the Loan shall be
treated as a security that satisfies the requirements of Section 856(m)(1)(A)
and Section 856(m)(2) of the Code (the “Straight Debt Safe Harbor”).
Accordingly, notwithstanding any indication herein to the contrary, the parties
hereto agree that the terms of the Loan shall be interpreted in such a manner
that the Loan satisfies the Straight Debt Safe Harbor for so long as it is
owned by Lender; and the terms of the Note shall be applied such that the Note
has a constant effective yield to maturity, as determined under Section 1272 of
the Code, at a fixed rate over the entire term of the Note equal to the
Interest Rate (as defined in the Note); provided, however, that such
contraction shall not alter the dates of the principal or interest payments
(described in Section 1.1 of the Note) or the amounts of the principal or
interest payments required to be paid on an interest payment date (described in
Section 1.1. of the Note) prior to the Maturity Date or earlier prepayment
date.

22.           SPECIAL REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BORROWER. Borrower shall do all things
necessary to preserve the existence of Borrower and Mortgagor each as a
separate Special Purpose Bankruptcy Remote Entity unless Lender otherwise
consents, in its sole discretion, in writing. Borrower covenants and agrees
that with respect to Borrower and Mortgagor, until payment in full of the
Indebtedness, it will not do or permit Mortgagor to do, directly or indirectly,
any of the following unless Lender consents thereto, in its sole discretion, in
writing. A “Special Purpose Bankruptcy Remote Entity”
means a corporation, limited partnership or limited liability company which
shall not:

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

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

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

(d)                                 fail
to preserve its existence as a person duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, or amend, modify, or terminate the provisions of its
organizational documents if such amendment, modification, or termination would
adversely affect the

 42
 

 

 

ability of such Person to
perform its obligations hereunder or under the other Loan Documents or would
affect any other clause of this Section 22;

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

(f)                                    commingle
its assets with the assets of any of its general partners, members,
shareholders, affiliates, principals or of any other Person in such a manner
that it will be costly or difficult segregate, ascertain or identify its
individual assets from those of any general partner, member, shareholder,
principal or Affiliate of Borrower or Mortgagor or any other Person;

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

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

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

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

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

(l)                                     hold
itself out to be responsible for the debts of another person, except through
endorsement of negotiable instruments in the ordinary course of collection;

 43
 

 

 

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

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

(o)                                 fail
either to hold itself out to the public as a legal person separate and distinct
from any other person or to conduct its business solely in its own name if the
result is (a) to mislead others as to the identity of the person with which
such other party is transacting business; or (b) to suggest that it is
responsible for the debts of any third party (including any general partner,
principal or Affiliate of Borrower or Mortgagor, provided, however, Mortgagor
and Borrower may hold itself out as doing business under the “Trammell Crow
Residential” name.

In addition to the
foregoing, Borrower shall have at least one independent manager who is provided
by a nationally recognized company that provides professional independent
directors and who shall not be at the time of initial appointment, and may not
have been during the preceding five years (i) a stockholder, director, officer,
employee, partner, member, attorney or counsel of Mortgagor or an Affiliate of
Mortgagor or Borrower, (ii) a customer, supplier (other than a supplier of
registered agent or registered office service) or other Person who derives any
of its purchases or revenues from its activities with Mortgagor or Borrower,
(iii) a Person or other entity controlling or under common control with any
such stockholder, director, officer employee, partner, customer, supplier
(other than a supplier of registered agent or registered office service) or
other Person or (iv) a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other Person (the “Independent Director”). At any time that the Senior Loan,
this Loan or the Junior Mezzanine Loan is outstanding, the consent of the
Independent Director should be required to : (i) file, consent to the filing
of, or join in any filing of, a bankruptcy or insolvency petition; (ii)
dissolve, liquidate, merge or consolidate; (iii) engage in any other business
activity; and (iv) amend the articles of organization or limited liability
agreement.

[Signatures Follow on Next Page]

 44
 

 

 

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

	
  

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SW 109 WAGON WHEEL SM LLC, a Delaware limited

  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SW 108 Wagon Wheel JM LLC, a Delaware limited

  liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 105 Wagon Wheel Limited Partnership, a

  Delaware limited partnership, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP LLC, a

  Delaware limited liability company, its

  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  

 

 

	
  

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEHRINGER HARVARD ALEXAN NEVADA, LLC, 

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Gerald J. Reihsen, III

  Title:   Secretary

  

 

 45
 

 

 

JOINDER

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

	
  

  	
   

  	
  MORTGAGOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SW 106 WAGON WHEEL HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  SW 109 Wagon Wheel SM LLC, a Delaware limited

  liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 108 Wagon Wheel JM LLC, a Delaware

  limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 105 Wagon Wheel Limited Partnership,

  a Delaware limited partnership, its sole

  member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP LLC, a

  Delaware limited liability company, its

  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  

 

 46

 

 

EXHIBIT A

LEGAL
DESCRIPTION

PARCEL 1:

A PORTION OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 34, AND THE
NORTHEAST QUARTER (NE 1⁄4) OF SECTION 33, TOWNSHIP 22 SOUTH, RANGE 63 EAST,
M.D.M., CLARK COUNTY, NEVADA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL 3, AS SHOWN BY MAP THEREOF ON FILE IN FILE 65, OF PARCEL MAPS,
PAGE 89, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.

PARCEL 2:

A PORTION OF THE EAST HALF (E 1⁄2) OF THE NORTHWEST QUARTER (NW 1⁄4) OF
SECTION 34, TOWNSHIP 22 SOUTH, RANGE 63 EAST, M.D.M., AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS, TO WIT:

BEGINNING AT A POINT ON THE LEFT OR SOUTHWESTERLY RIGHT-OF-WAY LINE OF
US-95 FREEWAY, 452.14 FEET LEFT OF AND AT RIGHT ANGLES TO HIGHWAY ENGINEER’S
STATION “ESI” 311+53.29 P.O.T.; SAID POINT OF BEGINNING FURTHER DESCRIBED AS
BEARING SOUTH 33°05’47” WEST A DISTANCE OF 1,665.04 FEET FROM THE NORTH QUARTER
CORNER OF SECTION 34, TOWNSHIP 22 SOUTH, RANGE 63 EAST, M.D.M.; THENCE ALONG
THE FORMER LEFT OR SOUTHWESTERLY RIGHT-OF-WAY LINE OF US-95 FREEWAY THE
FOLLOWING SIX (6) COURSES AND DISTANCES:

1)  NORTH 59°12’25” WEST 179.53
FEET;

2)  FROM A TANGENT WHICH BEARS
SOUTH 25°02’05” WEST, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET, THROUGH AN
ANGLE OF 82°00’10”, AN ARC DISTANCE OF 71.56 FEET;

3)  NORTH 56°58’05” WEST 285.01
FEET;

4)  FROM A TANGENT WHICH BEARS
SOUTH 56°58’05” EAST, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET, THROUGH AN
ANGLE OF 75°47’09”, AN ARC DISTANCE OF 66.14 FEET;

5)  NORTH 47°14’46” EAST 75.10
FEET;

 

 

6)  FROM A TANGENT WHICH BEARS
THE LAST DESCRIBED COURSE, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET,
THROUGH AN ANGLE OF 85°40’37”, AN ARC DISTANCE OF 74.77 FEET TO A POINT ON THE
SOUTHWESTERLY RIGHT-OF-WAY LINE OF US-95 FREEWAY;

THENCE SOUTH 39°26’45” EAST, ALONG SAID LEFT OR SOUTHWESTERLY
RIGHT-OF-WAY LINE, A DISTANCE OF 399.07 FEET TO THE POINT OF BEGINNING.

NOTE: THE ABOVE METES AND BOUNDS LEGAL DESCRIPTION APPEARED PREVIOUSLY
IN THAT CERTAIN DOCUMENT RECORDED OCTOBER 8, 2004 IN BOOK 20041008 OF OFFICIAL
RECORDS AS INSTRUMENT NO. 03637, CLARK COUNTY, NEVADA.

 

 

EXHIBIT B

BUDGET

	
  CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land & Improvements

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  33

  	
  %

  	
  307,545

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land

  	
   

  	
   

  	
   

  	
  8,951,250

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal and Fees

  	
   

  	
   

  	
   

  	
  535,635

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard Site Development

  	
   

  	
   

  	
   

  	
  2,556,357

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  12,350,787

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Real Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All other Hard Costs & Contingency

  	
   

  	
   

  	
   

  	
  20,561,666

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal

  	
   

  	
   

  	
   

  	
  70,458

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Closing Costs

  	
   

  	
   

  	
   

  	
  55,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Municipal Fees

  	
   

  	
   

  	
   

  	
  832,688

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Arch & Engineering

  	
   

  	
   

  	
   

  	
  122,918

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  64

  	
  %

  	
  615,841

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
   

  	
   

  	
  680,632

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financing Fees

  	
   

  	
   

  	
   

  	
  450,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soft Costs & Contingency

  	
   

  	
   

  	
   

  	
  200,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
  70

  	
  %

  	
  70,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  23,659,203

  	
   

  	
   

  	
   

  
	
  Total Capitalized to Real Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  36,009,990

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Personal Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  2.51

  	
  %

  	
  23,082

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Appliances

  	
   

  	
   

  	
   

  	
  543,677

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal and Fees

  	
   

  	
   

  	
   

  	
  40,201

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing

  	
   

  	
   

  	
   

  	
  320,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  926,960

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  36,936,950

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
  30

  	
  %

  	
  30,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Developer Allowance

  	
   

  	
   

  	
   

  	
  1,599,614

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
   

  	
   

  	
  114,417

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing Brochures

  	
   

  	
   

  	
   

  	
  30,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pre-Leasing

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Op Deficits

  	
   

  	
   

  	
   

  	
  14,891

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  NON-CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,938,922

  	
   

  	
  1,938,922

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  38,875,872

  	
   

  	
  38,875,872

  	
   

  

 

 

 

EXHIBIT C

PROPERTY IMPROVEMENTS

[see attached]

 

 

EXHIBIT D

WAGON WHEEL OWNERSHIP CHART

 

 

SENIOR MEZZANINE LOAN
AGREEMENT

BY

AND BETWEEN

 

SW 109 WAGON WHEEL SM LLC

(“Borrower”)

 

AND

 

BEHRINGER HARVARD ALEXAN
NEVADA, LLC

(“Lender”)

 

 

TABLE OF CONTENTS

	
  1.

  	
  RECITALS

  	
   

  	
  2

  
	
  2.

  	
  DEFINITIONS

  	
   

  	
  2

  
	
  3.

  	
  THE LOAN; DISBURSEMENT OF LOAN

  	
   

  	
  6

  
	
   

  	
  (a)

  	
  Loan

  	
   

  	
  6

  
	
   

  	
  (b)

  	
  Loan Disbursements

  	
   

  	
  6

  
	
  4.

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

  	
   

  	
  7

  
	
   

  	
  (a)

  	
  Interest

  	
   

  	
  7

  
	
   

  	
  (b)

  	
  No Usury

  	
   

  	
  7

  
	
   

  	
  (c)

  	
  Loan Commitment Fee

  	
   

  	
  8

  
	
   

  	
  (d)

  	
  Prepayment

  	
   

  	
  8

  
	
   

  	
  (e)

  	
  Maturity Date

  	
   

  	
  8

  
	
  5.

  	
  SECURITY FOR LOAN; GUARANTY

  	
   

  	
  8

  
	
   

  	
  (a)

  	
  Pledge Agreement

  	
   

  	
  8

  
	
   

  	
  (b)

  	
  Other Loan Documents

  	
   

  	
  8

  
	
   

  	
  (c)

  	
  Completion Guaranty

  	
   

  	
  8

  
	
  6.

  	
  CONDITIONS PRECEDENT TO CLOSING OF THE LOAN

  	
   

  	
  8

  
	
   

  	
  (a)

  	
  Loan Documents

  	
   

  	
  8

  
	
   

  	
  (b)

  	
  Third Party Agreements

  	
   

  	
  9

  
	
   

  	
  (c)

  	
  Certification

  	
   

  	
  10

  
	
   

  	
  (d)

  	
  Financial Statements

  	
   

  	
  10

  
	
   

  	
  (e)

  	
  Insurance Policies

  	
   

  	
  10

  
	
   

  	
  (f)

  	
  Contracts

  	
   

  	
  10

  
	
   

  	
  (g)

  	
  Plans

  	
   

  	
  11

  
	
   

  	
  (h)

  	
  Budget and Cost Review

  	
   

  	
  11

  
	
   

  	
  (i)

  	
  Leases

  	
   

  	
  11

  
	
   

  	
  (j)

  	
  Title Insurance Policy

  	
   

  	
  11

  
	
   

  	
  (k)

  	
  UCC Policy

  	
   

  	
  11

  
	
   

  	
  (l)

  	
  ALTA Survey

  	
   

  	
  11

  
	
   

  	
  (m)

  	
  Conditional Use Permits and Government Approvals

  	
   

  	
  11

  
	
   

  	
  (n)

  	
  Flood Plain Certification

  	
   

  	
  11

  
	
   

  	
  (o)

  	
  Appraisal

  	
   

  	
  11

  
	
   

  	
  (p)

  	
  Environmental Report

  	
   

  	
  12

  
	
   

  	
  (q)

  	
  Certification of Organizational Documents

  	
   

  	
  12

  
	
   

  	
  (r)

  	
  Legal Opinion

  	
   

  	
  12

  
	
   

  	
  (s)

  	
  UCC Searches

  	
   

  	
  12

  
	
   

  	
  (t)

  	
  Access and Utility Easements

  	
   

  	
  12

  
	
   

  	
  (u)

  	
  Utilities

  	
   

  	
  12

  
	
   

  	
  (v)

  	
  Environmental Disclosure

  	
   

  	
  12

  
	
   

  	
  (w)

  	
  Senior Lender Funding

  	
   

  	
  13

  
	
   

  	
  (y)

  	
  No Default

  	
   

  	
  13

  
	
   

  	
  (z)

  	
  Additional Matters

  	
   

  	
  13

  

 

 i
 

 

 

	
  7.

  	
  TITLE INSURANCE

  	
   

  	
  13

  
	
  

  	
  (a)

  	
  Owner’s Policy of Title Insurance

  	
   

  	
  13

  
	
   

  	
  (b)

  	
  UCC Policy

  	
   

  	
  13

  
	
  8.

  	
  INSURANCE

  	
   

  	
  14

  
	
   

  	
  (a)

  	
  Insurance Requirements

  	
   

  	
  14

  
	
   

  	
  (b)

  	
  Insurance Premiums; Evidence of Renewal

  	
   

  	
  14

  
	
   

  	
  (c)

  	
  Policy Requirements

  	
   

  	
  14

  
	
   

  	
  (d)

  	
  Notice of Casualty

  	
   

  	
  15

  
	
   

  	
  (e)

  	
  Settlement of Claim

  	
   

  	
  15

  
	
   

  	
  (f)

  	
  Application of Insurance Proceeds

  	
   

  	
  15

  
	
  9.

  	
  EMINENT DOMAIN

  	
   

  	
  16

  
	
   

  	
  (a)

  	
  Notice of Condemnation

  	
   

  	
  16

  
	
   

  	
  (b)

  	
  Settlement of Claim

  	
   

  	
  16

  
	
   

  	
  (c)

  	
  Application of Condemnation Awards

  	
   

  	
  16

  
	
   

  	
  (d)

  	
  Continuing Obligation to Repair

  	
   

  	
  17

  
	
   

  	
  (e)

  	
  Lender Not Required to Act

  	
   

  	
  17

  
	
  10.

  	
  RIGHTS OF ACCESS AND INSPECTION

  	
   

  	
  17

  
	
  11.

  	
  EXPENSES

  	
   

  	
  17

  
	
  12.

  	
  FINANCIAL REPORTS, PROPERTY REPORTS AND ANNUAL
  BUDGET

  	
   

  	
  18

  
	
  13.

  	
  GENERAL COVENANTS OF BORROWER

  	
   

  	
  20

  
	
   

  	
  (a)

  	
  Commencement and Completion of Project

  	
   

  	
  20

  
	
   

  	
  (b)

  	
  Lender Approval

  	
   

  	
  20

  
	
   

  	
  (c)

  	
  Operation and Maintenance of Project

  	
   

  	
  20

  
	
   

  	
  (d)

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

  	
   

  	
  22

  
	
   

  	
  (e)

  	
  General Indemnity

  	
   

  	
  23

  
	
   

  	
  (f)

  	
  Leases

  	
   

  	
  23

  
	
   

  	
  (g)

  	
  Notices

  	
   

  	
  24

  
	
   

  	
  (h)

  	
  Development

  	
   

  	
  25

  
	
   

  	
  (i)

  	
  Management

  	
   

  	
  25

  
	
   

  	
  (j)

  	
  Senior Loan

  	
   

  	
  25

  
	
   

  	
  (k)

  	
  Principal Place of Business; Choice of Law

  	
   

  	
  26

  
	
   

  	
  (l)

  	
  Compliance with Governmental Prohibitions

  	
   

  	
  26

  
	
  14.

  	
  FURTHER ASSURANCES

  	
   

  	
  26

  
	
  15.

  	
  APPRAISALS

  	
   

  	
  27

  
	
  16.

  	
  GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWER

  	
   

  	
  27

  
	
   

  	
  (a)

  	
  Organization; Corporate Powers; Authorization of
  Borrowing

  	
   

  	
  27

  
	
   

  	
  (b)

  	
  Title to Property; Matters Affecting Property

  	
   

  	
  28

  
	
   

  	
  (c)

  	
  Financial Statements

  	
   

  	
  30

  
	
   

  	
  (d)

  	
  Budget Projections

  	
   

  	
  30

  
	
   

  	
  (e)

  	
  No Loan Broker

  	
   

  	
  30

  
	
   

  	
  (f)

  	
  No Default

  	
   

  	
  31

  
	
   

  	
  (g)

  	
  Solvency

  	
   

  	
  31

  
	
   

  	
  (h)

  	
  Violations of Governmental Prohibitions

  	
   

  	
  31

  
	
  17.

  	
  EVENT OF DEFAULT

  	
   

  	
  32

  
	
   

  	
  (a)

  	
  Non-Payment

  	
   

  	
  32

  
	
   

  	
  (b)

  	
  Insurance

  	
   

  	
  32

  

 

 ii
 

 

 

	
  

  	
  (c)

  	
  Special Purpose Entity Covenants

  	
   

  	
  32

  
	
   

  	
  (d)

  	
  Fraud or Material Misrepresentation

  	
   

  	
  32

  
	
   

  	
  (e)

  	
  Sale, Encumbrance or Other Indebtedness

  	
   

  	
  32

  
	
   

  	
  (f)

  	
  Reports and Documents

  	
   

  	
  32

  
	
   

  	
  (g)

  	
  Option Agreement

  	
   

  	
  32

  
	
   

  	
  (h)

  	
  Other Breaches under this Agreement

  	
   

  	
  33

  
	
   

  	
  (i)

  	
  Other Breaches Under Other Loan Documents

  	
   

  	
  33

  
	
   

  	
  (j)

  	
  Senior Loan Documents

  	
   

  	
  33

  
	
   

  	
  (k)

  	
  Bankruptcy Proceedings

  	
   

  	
  33

  
	
  18.

  	
  REMEDIES

  	
   

  	
  34

  
	
   

  	
  (a)

  	
  Actions upon Event of Default

  	
   

  	
  34

  
	
   

  	
  (b)

  	
  Lender’s Right to Perform

  	
   

  	
  34

  
	
   

  	
  (c)

  	
  Appointment of Lender as Attorney-in-Fact

  	
   

  	
  35

  
	
   

  	
  (d)

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

  	
   

  	
  35

  
	
   

  	
  (e)

  	
  Recourse Limitations

  	
   

  	
  35

  
	
  19.

  	
  TRANSFER OF LOAN; LOAN SERVICER

  	
   

  	
  36

  
	
   

  	
  (a)

  	
  Lender’s Right to Transfer

  	
   

  	
  36

  
	
   

  	
  (b)

  	
  Loan Servicer

  	
   

  	
  36

  
	
   

  	
  (c)

  	
  Dissemination of Information

  	
   

  	
  36

  
	
  20.

  	
  LENDER’S EXPENSES; RIGHTS OF LENDER

  	
   

  	
  36

  
	
  21.

  	
  MISCELLANEOUS

  	
   

  	
  36

  
	
   

  	
  (a)

  	
  Notices

  	
   

  	
  36

  
	
   

  	
  (b)

  	
  Waivers

  	
   

  	
  38

  
	
   

  	
  (c)

  	
  Lender Not Partner of Borrower; Borrower in Control

  	
   

  	
  38

  
	
   

  	
  (d)

  	
  No Third Party

  	
   

  	
  38

  
	
   

  	
  (e)

  	
  Time of Essence; Context

  	
   

  	
  38

  
	
   

  	
  (f)

  	
  Successors and Assigns

  	
   

  	
  39

  
	
   

  	
  (g)

  	
  Governing Jurisdiction

  	
   

  	
  39

  
	
   

  	
  (h)

  	
  SUBMISSION TO JURISDICTION/SERVICE OF PROCESS

  	
   

  	
  39

  
	
   

  	
  (i)

  	
  WAIVER WITH RESPECT TO DAMAGES

  	
   

  	
  40

  
	
   

  	
  (j)

  	
  Entire Agreement

  	
   

  	
  40

  
	
   

  	
  (k)

  	
  Headings

  	
   

  	
  41

  
	
   

  	
  (l)

  	
  Severability

  	
   

  	
  41

  
	
   

  	
  (m)

  	
  Counterparts

  	
   

  	
  41

  
	
   

  	
  (n)

  	
  Waiver of Jury Trial

  	
   

  	
  41

  
	
   

  	
  (o)

  	
  Sole and Absolute Discretion

  	
   

  	
  41

  
	
   

  	
  (p)

  	
  Straight Debt Harbor

  	
   

  	
  42

  
	
  22.

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF
  BORROWER

  	
   

  	
  42

  

 

 iiiExhibit 10.2

JUNIOR MEZZANINE LOAN AGREEMENT

This
JUNIOR MEZZANINE LOAN AGREEMENT (this “Agreement”) is
made and entered into as of this 29th day of September, 2006, by and between SW 108
Wagon Wheel JM LLC, a Delaware limited liability company, whose address is 2001
Bryan Street, Suite 3700, Dallas, Texas, 75201 (“Borrower”),
and Behringer Harvard Alexan Nevada, LLC, a Delaware limited liability company,
whose address is 15601 Dallas Parkway, Suite 600, Addison, Texas, 75001 (“Lender”).

R E C I T A L S:

This
Agreement is made with reference to the following facts:

A.                                   Concurrently
herewith, Comerica Bank, a Michigan banking corporation (“Senior
Lender”) is making a mortgage loan in the amount of Twenty Nine
Million Dollars ($29,000,000.00) (the “Senior Loan”)
to SW 106 Wagon Wheel Holdings LLC, a Delaware limited liability company (“Mortgagor”) evidenced by a Promissory Note of even date
herewith (the “Senior Note”).

B.                                     Mortgagor,
concurrently herewith, is the owner of that certain land located in Clark County,
Nevada and more particularly described on Exhibit ”A” attached
hereto (together with all improvements, fixtures and other appurtenances, the “Property”). Mortgagor will construct on the Property a 213
unit apartment project (the “Project”). The
Senior Note is secured by a deed of trust, mortgage, or deed to secure debt, of
even date herewith (together with any and all extensions, renewals,
substitutions, replacements, amendment, modifications and/or restatements
thereof (the “Security Instrument”) in favor of
Senior Lender encumbering the Project.

C.                                     Concurrently
herewith, Lender is making a senior mezzanine loan in the amount of Six Million
Nine Hundred Thousand Dollars ($6,900,000) (the “Senior Mezz
Loan”) to SW 109 Wagon Wheel SM LLC, a Delaware limited liability
company (“Senior Mezz Borrower”) evidenced by a
Senior Mezzanine Promissory Note of even date herewith (the “Senior Mezz Note”).

D.                                    Borrower
is the legal and beneficial owner of 100% of the Equity Interests in Senior
Mezz Borrower.

E.                                      Borrower
has requested that Lender, as junior mezzanine lender, make a loan to Borrower
(the “Loan”) in the amount of Two Million
Seven Hundred Seventy-Five Thousand Eight Hundred Seventy-Two Dollars
($2,775,872) (the “Loan Amount”)
subject to the term and

 1
 

 

provisions of this Agreement, which Loan is to be
advanced as hereinafter provided and is to be evidenced by the Note. The Note
is to be secured by the Pledge and Security Agreement and the other collateral
referred to in Section 5 below.

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

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

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

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

(a)                                  “Accounting Records”: 
shall mean such records used to prepare financial statements including
but not limited to:  (i) supporting
documentation for cash disbursements (including check copies and invoices);
(ii) supporting documentation for cash receipts (including deposit slips);
(iii) contracts; (iv) check registers; (v) monthly bank account reconciliations
and (vi) such other documentation in the possession of Borrower or its
Affiliates or which Borrower will use its best efforts to acquire, as Lender
shall reasonably require for the preparation of financial statements for the
Project, Mortgagor, Senior Mezz Borrower or Borrower.

(b)                                 “Affiliate”:  of any
specified person or entity shall mean any other person or entity, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified person or entity. For purposes of this definition, “control”
shall mean the ability, whether by the ownership of shares or other equity
interests, by contract or otherwise, to elect a majority of the directors of a
corporation, to make management decisions on behalf of, or independently to
select the managing partner of, a partnership, or otherwise to have the power
independently to remove and then select a majority of those individuals
exercising managerial authority over an entity. Control of an entity shall be
conclusively presumed in the case of the ownership of more than 50% of the
equity interests in the entity.

 2
 

 

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

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

(e)                                  “Borrower”:  means the
entity identified as “Borrower” in the first paragraph of this Agreement,
together with its successors and assigns.

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

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

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

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

(j)                                     “Completion Guaranty”: 
means that certain Junior Mezzanine Completion Guaranty of even date
herewith, executed by the Guarantors, jointly and severally, in favor of Lender.

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

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

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

 3
 

 

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

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

(p)                                 “Guarantors”:  shall
mean CFP Residential, L.P., Kenneth Valach, J. Ronald Terwilliger and Bruce
Hart.

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

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

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

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

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

(v)                                 “Loan Commitment Fee”: 
means the amount of Eighty-Three Thousand Two Hundred Seventy-Six and
16/100 Dollars ($83,276.16), being 3% of the Loan
Amount, paid by Borrower upon the closing of the Property.

(w)                               “Management Agreement”: 
shall mean that certain Management Agreement dated September 29, 2006,
entered into by and between Mortgagor and Manager, pursuant to which Manager
has agreed to manage the operations of the Project as the same may be amended

 4
 

 

from time to time, or any
other management agreement approved by Lender pursuant to Section 13(h)
hereof.

(x)                                   “Manager”:  shall mean
Riverstone Residential SW LLC or any other property management company approved
by Lender pursuant to Section 13(h) hereof.

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

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

(aa)                            “Option Agreement”: 
shall mean that certain Option Agreement dated of even date herewith,
among Lender and Borrower, giving Lender the option to purchase either the
Equity Interests in Mortgagor and Senior Mezz Borrower or the Project on the
terms and conditions set forth therein.

(bb)                          “Option Guaranty”: 
shall mean that certain Limited Guaranty dated of even date herewith, executed
by Guarantors for the benefit of Borrower guaranteeing certain obligations in
connection with the Option Agreement.

(cc)                            “Permitted Exceptions”: 
shall mean (1) the title exceptions included in the Policy required to
be delivered to Lender pursuant to Section 7(a) hereof, as the same may
be endorsed from time to time with the consent of the Lender, (2) liens and
security interests securing the Loan, the Senior Mezz Loan or the Senior Loan,
(3) liens for taxes, assessments or other governmental charges or levies that
are not then due or that are being contested in good faith and in accordance
with applicable statutory procedures, (4) mechanic’s liens against the Project
which are bonded off, released of record or otherwise remedied to Lender’s
reasonable satisfaction within 30 days of the date of creation, (5) Leases
entered into on terms allowed by this Agreement and (6) other matters approved
in writing by Lender.

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

 5
 

 

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

(ff)                                “Principal”:  shall
mean SW 105 Wagon Wheel Limited Partnership, a Delaware limited partnership,
the sole member of Borrower and the holder of all Equity Interests in Borrower
and any person or entity who becomes the owner of any Equity Interest in
Borrower after the date of this Agreement and is identified as such in an
amendment or supplement to this Agreement.

(gg)                          “Sale”:  shall mean any
sale, assignment, transfer, conveyance or other disposition, whether voluntary
or involuntary, and whether or not consented to by Lender of (i) all or any
portion of, or interest in, the Property or the Project, (ii) all or any
portion of the Equity Interests in Mortgagor or Senior Mezz Borrower, or (iii)
all or any portion of the Principal’s Equity Interests in Borrower.

(hh)                          “Senior Loan Agreement: 
shall mean that certain Loan Agreement dated of even date herewith
between Senior Lender and Mortgagor.

(ii)                                  “Senior Loan Documents”: 
shall mean the Senior Note, the Security Instrument, the Senior Loan
Agreement and all other documents executed by Mortgagor or Guarantor in favor
of Senior Lender to evidence or secure the Senior Loan, as they each may be
amended, modified or restated with the consent of Senior Lender.

(jj)                                  “Senior Mezz Borrower”: 
means the entity identified as “Senior Mezz Borrower” in the Recitals to
this Agreement, together with its successors and assigns.

(kk)                            “Senior Mezz Loan”: shall mean that certain Senior Mezzanine
Loan dated of even date herewith made to Senior Mezz Borrower, as borrower, by
Lender, as senior mezzanine lender.

(ll)                                  “Senior Mezz Loan Agreement”: 
shall mean that certain Senior Mezzanine Loan Agreement between Lender
and Senior Mezz Borrower dated of even date herewith.

(mm)                      “Senior Mezz Loan Documents”:  shall mean the Senior Mezz Note, the Senior
Mezzanine Loan Agreement, the Senior Mezzanine Pledge and Security Agreement
(as defined in the Senior Mezz Loan Agreement), the Senior Mezzanine Completion
Guaranty (as defined in the Senior Mezz Loan Agreement), the Senior Mezzanine
Environmental Indemnity (as defined in the Senior Mezz Loan Agreement), the
Senior Mezzanine Manager’s Subordination

 6
 

 

Agreement(as defined in
the Senior Mezz Loan Agreement) and all other documents executed by Senior Mezz
Borrower or Guarantors to evidence, secure or set out the terms of the Senior
Mezz Loan, each as the same may hereafter be amended, modified and restated
from time to time.

(nn)                          “Senior Mezz Note”: 
shall mean the Senior Mezzanine Promissory Note described in the
Recitals to this Agreement, and all schedules, riders, allonges and addenda, as
such Senior Mezzanine Promissory Note may be amended from time to time with the
consent of Lender.

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

(pp)                          “Title Insurer”:  shall
mean Lawyer’s Title Insurance Corporation.

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

3.                                       THE LOAN; DISBURSEMENT OF LOAN.

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

(b)                                 Loan
Disbursements. Upon satisfaction of all the conditions set forth in Section
6 hereof, Borrower hereby directs and authorizes Lender to disburse the
principal balance of the Loan to Borrower to be used, as applicable, to acquire
the Property and/or to pay for or reimburse Borrower for payment of costs as
described in the Budget. In no event shall the aggregate amount disbursed hereunder
exceed the original principal amount of the Loan.

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

(a)                                  Interest.
Interest on the principal balance of the Loan shall accrue and shall be payable
in the amounts and at the times set forth in the Note. Borrower agrees to pay,
on the Maturity Date, the unpaid principal balance of the Loan, together with
all accrued but unpaid interest thereon.

 7
 

 

(b)                                 No
Usury. The provisions of this Agreement, the Note, the Option Agreement and
of all other agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, including, but not limited to,
the Loan Documents, are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of demand or acceleration of the maturity
of this Note or otherwise, shall the amount contracted for, charged, taken,
reserved, paid, or agreed to be paid to Lender for the use, forbearance,
retention or detention of the money loaned under this Note and related
indebtedness exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever, performance or fulfillment of any provision
hereof or of any agreement between Borrower and Lender shall, at the time
performance or fulfillment of such provision shall be due, exceed the limit for
interest prescribed by law or otherwise transcend the limit of validity
prescribed by applicable law, then ipso facto the obligation to be performed or
fulfilled shall be reduced to such limit; and if, from any circumstance
whatsoever, Lender shall ever receive anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any
excessive interest shall be applied to the reduction of the principal balance
owing under this Note in the inverse order of its maturity (whether or not then
due) or at the option of Lender be paid over to Borrower, and not to the
payment of interest. All interest (including any amounts or payments judicially
or otherwise under the law deemed to be interest) contracted for, charged,
taken, reserved, paid or agreed to be paid to Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of the Note, including any extensions or renewals
thereof, until payment in full of the Indebtedness so that the interest thereof
for such full period will not exceed at any time the maximum amount permitted
by applicable law. This paragraph 4(b) will control all agreements (including
the Option Agreement) between Borrower and Lender.

(c)                                  Loan
Commitment Fee. Concurrently with the closing of the Loan, and as a
condition precedent thereto, Lender shall receive the Loan Commitment Fee,
which shall be deemed to have been earned in full by Lender, and is
non-refundable, upon the disbursement of all or any portion of the Loan.

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

(e)                                  Maturity
Date . The outstanding principal balance of the Note and all accrued and
unpaid interest thereon shall become due and payable

 8
 

 

on the Maturity Date
unless the same is otherwise accelerated in accordance with the provisions
hereof or the other Loan Documents. Subject to the provisions of Section 13(d)
hereof, in the event that the Senior Note and the Senior Mezz Note are paid in
full at any time prior to the Maturity Date of the Loan, the Indebtedness shall
then be immediately due and payable regardless of the then stated maturity date
of the Loan.

5.                                       SECURITY FOR LOAN; GUARANTY.

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

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

(c)                                  Completion
Guaranty. As additional security for the Loan, the Guarantors shall execute
and deliver to Lender the Completion Guaranty.

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

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

(i)                                     this
Agreement

(ii)                                  the
Note;

(iii)                               the
Pledge Agreement;

(iv)                              the
Completion Guaranty;

(v)                                 the
Environmental Indemnity;

(vi)                              the
Junior Mezzanine Manager’s Subordination Agreement;

(vii)                           UCC
Financing Statements, both state and local, as appropriate, with respect to
items which are, or may be, personal property or other

 9
 

 

collateral including the
Collateral as described in the Pledge Agreement;

(viii)                        Certification
of Organizational Documents;

(ix)                                the
Option Agreement;

(x)                                   the
Option Guaranty; and

(xi)                                such
other agreements by Borrower, Senior Mezz Borrower or Mortgagor as may be
required by other provisions of this Agreement or as Lender may reasonably require
in order to evidence or secure the Loan.

(b)                                 Third Party Agreements.

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

(ii)                                  Purchase
Agreement. Borrower shall have provided to Lender a copy of the
fully-executed purchase agreement for the Property, together with all documents
relating thereto, as the same may be assigned, amended or modified, which
agreement and documents shall be satisfactory to Lender in form and substance.

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

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

1)              consents
to the termination of the Management Agreement without fee or penalty upon
foreclosure against the Collateral,

2)              consents
to the removal and replacement of Manager upon foreclosure against the
Collateral, and

3)              if
Manager is an Affiliate of Borrower, Senior Mezz Borrower or Mortgagor,
subordinates its right to receive its management fee to the payment of amounts
due Lender under the Loan Documents, subject to the prior rights of Senior
Lender and the holder of the Senior Mezz Loan.

 10
 

 

(c)                                  Certification  Borrower shall have provided to Lender a
certification by Borrower as of the date of this Agreement (which is the date
that the commitment of Lender to make the Loan to Borrower becomes binding on
Lender) of the Budget attached hereto as Exhibit ”B”, including
certification of the purchase price of the Property, and the reasonably
estimated costs of the improvements that would be capitalized by Mortgagor as
real property for federal income tax purposes consistent with past practices of
the affiliates of Mortgagor.

(d)                                 Financial
Statements. Borrower shall have provided to Lender (i) with respect to
Borrower, Senior Mezz Borrower, the Project and Mortgagor, financial statements
and other financial information, certified by Borrower, Senior Mezz Borrower
and Mortgagor as being true, correct and complete in all material respects, and
in the form and containing the detail and supporting information as required by
Lender for the underwriting for the Loan and (ii) with respect to the
Guarantors, the Estimated Collateral Value Statement dated as of June 20, 2005
of each Guarantor.

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

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

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

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

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

 11

 

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

(k)                                  UCC
Policy. Lender shall have received the UCC Policy referred to in Section 7(b)
hereof.

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

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

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

(o)                                 Appraisal.
Lender shall have received an appraisal of the Property prepared by a licensed
appraiser acceptable to Lender, in form and substance required by Senior
Lender, but also addressed to Lender and its successors and assigns, in the
amount of $40,500,000.

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

(q)                                 Certification
of Organizational Documents. Lender shall have received a written
certification attaching the required documents with respect to Mortgagor,
Senior Mezz Borrower and to Borrower, confirming (i) that true, complete
and correct copies of the

 12
 

 

organizational documents
have been attached to the certification, (ii) that no modifications of such
documents exist which have not been provided to Lender, and (iii) that the
provisions of Section 22 hereof have been incorporated into the organizational
documents.

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

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

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

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

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

(w)                               Senior
Lender Funding. Senior Lender shall have disbursed to or for the account of
Mortgagor the disbursement of the initial draw under the Senior Loan for the
purchase of the Property.

(x)                                   No
Default. The representations and warranties of Borrower contained in this
Agreement shall be true, correct and complete in all material respects except
the representation in 16(c) which need be accurate only as of the date of this
Agreement, and no Event of Default, as defined below, or circumstance or event
which upon the

 13
 

 

lapse of time, the giving
of notice or both, could become an Event of Default shall have occurred; and

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

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

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

(i)                                     with
coverage amount not less than the purchase price of the Property, if the
Property is being acquired by the Mortgagor concurrently with the closing of
the Loan;

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

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

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

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

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

8.                                       INSURANCE.

(a)                                  Insurance
Requirements. Borrower, at its sole cost (or at Mortgagor’s sole cost), for
the mutual benefit of Borrower, Mortgagor, Senior Mezz Borrower and Lender,
shall cause Mortgagor or Manager to obtain and maintain policies of insurance
with respect to the Project as required by the Senior Loan Documents, as those
requirements may from time to time be

 14
 

 

amended; provided that
Lender shall be named as an additional insured under such liability coverage.
Borrower agrees that it will cause Mortgagor to maintain coverage under its
products/completed liability insurance for the period of the statute of repose
in the state where the Project is located, but no less than ten years after
Completion. If commercial general liability insurance as required in the Senior
Loan Documents is unavailable for residential construction in the state where
the Project is located, Owner shall or shall cause Manager or the contractor to
purchase wrap-up construction insurance covering Mortgagor, contractor and all
subcontractors for general liability and products/completed operations for the
period of the statute of repose but no less than 10 years with limits no less
than $5,000,000, naming Lender as additional insured.

(b)                                 Insurance
Premiums; Evidence of Renewal. All premiums on insurance policies required
under this Section 8 shall be paid in the manner required by the
Senior Loan Documents, provided, however, that if Senior Lender waives the
requirement for impound of insurance premiums, Borrower agrees to provide
evidence of payment of all insurance premiums. Borrower shall use its best
efforts to deliver originals of all policies and renewals (or certificates
evidencing the same), marked “paid” (or other evidence satisfactory to Lender
of the continuing coverage) to Lender at least fifteen (15) days before the
expiration of existing policies. If Lender has not received satisfactory
evidence of such renewal or substitute insurance in the time frame herein
specified, Lender shall have the right, but not the obligation, to purchase
such insurance for Lender’s interest only.

(c)                                  Policy
Requirements. All Policies provided for or contemplated by Section
8.1(b) shall name Mortgagor as the insured and, in the case of liability
coverage, Borrower as the insured or additional insured and Lender as the
additional insured, in each case as their interests may appear. All insurance policies
and renewals of insurance policies required by this Section 8 shall
(i) be in such amounts and for such periods as Senior Loan Documents may
from time to time require, (ii) be issued by insurance companies as
required by the Senior Loan Documents, (iii) provide thirty (30) days’
advance written notice to Lender before any cancellation or adverse material
modification and (iv) to the extent limits are not otherwise specified
herein, contain deductibles which are in amounts acceptable to Lender. (Lender
acknowledges that deductibles not in excess of $250,000 per occurrence will be
acceptable to it.)  All certificates of
insurance and “blanket” insurance policies shall reference the specific project
being covered by name and address.

 15
 

 

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

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

(f)                                    Application
of Insurance Proceeds. Any insurance proceeds received by Mortgagor or
Borrower under any of such policies shall, subject to the rights of the Senior
Lender or the holder of the Senior Mezz Loan, be applied, at the option of the
Lender, toward pre-payment or reimbursement of the Loan and any other amounts
evidenced or secured by the Loan Documents, or to the rebuilding or repairing
of the Project so damaged or destroyed, as the Lender in its sole and
unreviewable discretion may elect; provided, however, that Lender will allow
insurance proceeds to be used for restoration of the Project if the conditions
for Borrower’s use of insurance contained in the Senior Loan Documents are
satisfied (substituting Lender for Senior Lender thereunder in making related
decisions). Lender’s election to apply such insurance proceeds to the Loan and
other amounts evidenced or secured by the Loan Documents shall not relieve
Borrower of the duty to rebuild or repair.

 16
 

 

9.                                       EMINENT DOMAIN.

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

(b)                                 Settlement
of Claim. In case the Project, or any part or interest in any thereof, is
taken by condemnation, then subject to the rights of the Senior Lender or the
holder of the Senior Mezz Loan, the Lender is hereby empowered to collect and
receive all compensation and awards of any kind whatsoever (referred to
collectively herein as “Condemnation Awards”)
which may be paid for any property taken or for damages to any property not
taken (all of which Borrower hereby assigns to the Lender, subject to the
rights of the Senior Lender or the holder of the Senior Mezz Loan in the same).
Borrower covenants to sign upon demand, or Lender may sign or endorse on Borrower’s
behalf, all necessary proofs of loss, receipts, releases and other papers
required by the condemning authority to be signed by Borrower for such purpose.
Borrower hereby irrevocably appoints Lender as its attorney-in-fact for the
purposes set forth in this Section 9. Lender may deduct from any
Condemnation Awards, any expenses reasonably incurred by Lender in the
collection and settlement thereof, including reasonable attorneys’ and
adjusters’ fees and charges.

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

(d)                                 Continuing
Obligation to Repair. No election made by the Lender under this Section
9 shall relieve Borrower of the duty to repair and restore.

(e)                                  Lender
Not Required to Act. Nothing contained in this Agreement shall create a
responsibility or obligation of Lender to collect any amounts owing on account
of any such condemnation or proceedings

 17
 

 

relating to the Project,
to rebuild or replace any damaged or destroyed property or to perform any other
related act.

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

11.                                 EXPENSES. Borrower shall pay, as and when due, all
reasonable costs and expenses incurred in the procuring and making of the Loan
by Lender, including without limitation, to the extent reasonable, Title
Insurer’s fees and premiums, charges for examination of title to the Premises,
expenses of surveys, transfer taxes and recording expenses, appraisal and
appraisal review fees, fees of an inspector and fees and expenses of any
attorneys, accountants, engineers, architects, surveyors, contractors,
inspectors or other consultants, professionals or independent contractors
employed, retained or utilized by Lender in connection with the Loan. Borrower
shall cause Mortgagor to pay when due any and all insurance premiums, taxes,
assessments, water, sewer and other utility charges, impact fees, liens and
encumbrances on the Project and any other amounts payable for the cost of
improvements to the Property, provided that Borrower and/or Mortgagor may in good
faith contest any such liens, claims or amounts so long as it provides, for any
filed lien, a bond in accordance with statutory requirements or other security
reasonably satisfactory to Lender. Borrower shall pay upon demand or reimburse
Lender for any and all reasonable fees, costs and expenses incurred by Lender
in collecting the Indebtedness after an Event of Default including reasonable
attorneys’ fees. All such amounts shall be paid to Lender or at Lender’s
direction to such other person to whom payments are due or Lender may, at its
option, pay such amounts and all sums paid shall be deemed a portion of the
Indebtedness and shall bear interest at the Default Interest Rate.

 18
 

 

12.                                 FINANCIAL REPORTS, PROPERTY REPORTS AND ANNUAL BUDGET.

The parent company
of Lender is a real estate fund that issues securities, maintains U.S. GAAP
audited financial statements and/or is publicly registered with the United
States Securities and Exchange Commission (“SEC”).
As a result, such parent company is subject to GAAP financial statement
requirements and other reporting requirements. These requirements include but
are not limited to quarterly and annual financial reporting (including for
public companies on Form 10-Q and Form 10-K and reporting under Rule 3-14 of Regulation
S-X, which requires the filing of pro forma financial statements of acquired
properties). In addition, certain accounting requirements may dictate that
Lender report Borrower, Senior Mezz Borrower, Mortgagor and/or the Project as a
subsidiary of Lender. Therefore, Borrower agrees to provide Lender with all
information that Borrower or its Affiliates has in their possession and
Borrower will use its best efforts to obtain such information not in its
possession as Lender reasonably requires in order to prepare, audit and/or
review financial statements of the Project, Mortgagor, Senior Mezz Borrower and
Borrower for the applicable reporting periods.

(a)                                  Borrower
agrees that all accounting for the Project will be conducted by Borrower and/or
Mortgagor and/or Senior Mezz Borrower and also by Lender. Borrower agrees to
provide Lender with copies of all Accounting Records (other than leases, which
Borrower and/or the Mortgagor and/or Senior Mezz Borrower may make available at
the Project rather than copying) on a monthly basis in order to enable Lender
to prepare and maintain financial statements on Borrower, Senior Mezz Borrower,
Mortgagor and/or the Project in accordance with accounting principles generally
accepted in the United States of America.

(b)                                 Borrower
agrees to provide Accounting Records by the 15th of the month for the preceding
month.

(c)                                  Borrower
agrees to allow Lender and Lender’s external accountants access to original
Accounting Records if needed in the process of their quarterly reviews and various
audit processes.

(d)                                 Borrower
agrees to cooperate with any inquiries or interviews by Lender or its external
independent accountants as may be necessary in relation to Lender’s or its
Affiliates’ compliance with the Sarbanes-Oxley Act of 2002.

(e)                                  In
addition, Borrower shall furnish to Lender:

(i)                                     within
30 days after the end of each fiscal year of Mortgagor, and at any other time
upon Lender’s request, a statement that identifies all owners of any interest
in Mortgagor and Senior Mezz Borrower and the interest held by each, if
Mortgagor or Senior Mezz Borrower is a corporation, all officers and directors
of Mortgagor or Senior Mezz Borrower, and if Mortgagor or Senior Mezz Borrower
is a limited

 19
 

 

liability company, all
members and managers (whether members or not);

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

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

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

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

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

 20
 

 

(h)                                 Borrower
authorizes Lender to obtain a credit report on Borrower, Senior Mezz Borrower,
Mortgagor and Guarantors at any time.

13.                                 GENERAL COVENANTS OF BORROWER. Until the full and final
payment of the Loan, unless Lender waives compliance in writing, Borrower
hereby covenants and agrees as follows:

(a)                                  Commencement
and Completion of Project. Borrower shall cause Mortgagor to begin
construction and installation of the improvements in connection with the
Project on or before the commencement date set forth in the Senior Loan
Documents and shall cause Mortgagor to prosecute such construction and
installation with diligence so that the construction and Completion (as defined
in the Completion Guaranty) of the Project (other than payment of claims that
are being contested in accordance with the Loan Documents) shall have occurred
by the completion deadline set forth in the Senior Loan Documents.

(b)                                 Lender
Approval. No changes to the construction budget included in the Senior Loan
Documents or the Budget attached hereto or the completion date required by the
Senior Loan Documents shall be permitted without Lender’s written consent, with
the exception of (i) completion date extensions due to force majeure and (ii)
reallocation of amounts among the line items of the budgets; provided that
Borrower shall provide Lender with notice of any changes in connection with (i)
and (ii) above. Lender shall have the right to approve all contractors (except
Vanguard, Inc.) and all construction contracts between Mortgagor and such
contractors. Lender has approved the plans and specifications for the
improvements to be constructed on the Property described in Exhibit “C”
attached hereto, and no changes to such approved plans and specifications shall
be permitted without Lender’s written consent, with the exception of (i)
changes required by governmental authorities or Senior Lender and (ii) other
changes that, individually, do not increase or decrease Project costs by more
than $100,000 and, in the aggregate, do not increase or decrease Project costs
by more than $300,000. Lender shall have ten (10) business days to provide any
approval required under this Section 13(b) but if Lender does not
provide written notice that it does not approve within the ten (10) business
days, then the action shall be deemed approved.

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

(i)                                     Payment
of Lawful Claims. Borrower shall pay or discharge all lawful claims,
including taxes, assessments and governmental

 21
 

 

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

(ii)                                  No
Amendments. Borrower shall not, nor shall it permit Mortgagor and/or Senior
Mezz Borrower to, without Lender’s prior written consent, enter into any
amendments or modifications of (a) if Borrower or Mortgagor or Senior Mezz
Borrower is a corporation, Borrower’s, Mortgagor’s and Senior Mezz Borrower’s
by-laws and articles of incorporation, (b) if Borrower, Senior Mezz Borrower or
Mortgagor is a limited liability company, such entity’s operating agreement or
articles of organization, (c) if Borrower, Senior Mezz Borrower or Mortgagor is
a limited partnership, such entity’s partnership agreement or partnership
certificate, (d) the construction contract between Mortgagor and Vanguard, Inc.
(except for change orders that, individually, do not increase or decrease
Project costs by more than $100,000 and, in the aggregate, do not increase or
decrease Project costs by more than $300,000), (e) the Management Agreement,
(f) the Senior Loan Documents, or (g) the Senior Mezz Loan Documents.

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

(iv)                              Maintenance
and Repair of Project. After completion of the Project, Borrower shall
cause Mortgagor to (a) maintain the Project,

 22
 

 

including the parking and
landscaping portions thereof, in good condition and repair, (b) promptly
make all necessary structural and non-structural repairs to the Project,
(c) not demolish, alter, remove or add to any improvements on the Property,
excepting (i) the repair and restoration of improvements following damage
thereto as required by this Agreement, and (ii) as otherwise required by
any applicable law, rule or regulations, and (d) not erect any new buildings,
structures or building additions on the Project other than in accordance with
the plans for the Project, without the prior written consent of Lender.
Borrower shall pay when due all claims for labor performed and materials
furnished therefor in connection with any improvements or construction
activities on the Property; provided that Borrower may in good faith contest
any liens, claims or amounts so long as it provides, for any filed lien, a bond
in accordance with statutory requirements or other security reasonably
satisfactory to Lender.

(d)                                 Restricted
Sale and Encumbrance of Project and of Borrower Interests; Other Indebtedness.
Neither Borrower nor Principal nor Senior Mezz Borrower shall engage in any
Sale or Encumbrance without the prior written consent of Lender (which may be
withheld by Lender in Lender’s sole and absolute discretion). Borrower will not
issue any additional Equity Interests in Borrower. In addition, Borrower shall
not permit Mortgagor or Senior Mezz Borrower to issue any additional Equity
Interests in Mortgagor or Senior Mezz Borrower. In addition, Borrower shall
not, nor shall it permit Mortgagor or Senior Mezz Borrower to, incur any
indebtedness, whether secured or unsecured, other than (i) the Senior Loan,
Senior Mezz Loan and this Loan, (ii) obligations under interest rate hedging
arrangements related to the Senior Loan and (iii) trade and operational
indebtedness incurred in the ordinary course of business (including
construction and operation of the Project) or for its administrative functions.
Notwithstanding the foregoing, Lender’s consent shall not be required for:

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

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

 23

 

(iii)                               a
Sale that results from theft, condemnation or other involuntary conversion;

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

(v)                                 the
grant of an easement if, before the grant, Lender determines (which
determination must be made reasonably) that the easement will not materially
affect the operation or value of the Project and Borrower pays to Lender, upon
demand, all reasonable costs and expenses incurred by Lender in connection with
reviewing Borrower’s request; and

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

(e)                                  General
Indemnity. Borrower shall, at Borrower’s expense, protect, defend,
indemnify, save and hold Lender and each of its members and its respective
members, stockholders, directors, officers, employees and agents (collectively
the “Indemnified Parties”) harmless against
any and all claims, demands, losses, expenses (including court costs and
reasonable attorney’s fees and expenses), damages and causes of action (whether
legal or equitable in nature) asserted by any person or entity arising out of,
caused by or relating to the Project and the Lender’s exercise of its rights
under the Loan Documents upon an Event of Default, except to the extent the
same arises out of, is caused by or results from the gross negligence or
willful misconduct of an Indemnified Party. Borrower shall pay to Lender upon
demand all claims, judgments, damages, losses and expenses (including court
costs and reasonable attorneys’ fees and expenses) incurred by Lender as a
result of any legal or other action arising out of the aforesaid matters.
Borrower acknowledges that the Indemnified Parties may defend any matter
covered by the above indemnification by counsel of the relevant Indemnified
Party’s choice, and the costs of such defense (including reasonable attorney’s
fees) are part of the costs covered by the indemnity. The foregoing
indemnification shall survive repayment of the Loan.

(f)                                    Leases.

(i)                                     Residential
Lease Requirements. Mortgagor shall have the right, and Borrower may permit
Mortgagor, to enter into residential Leases

 24
 

 

without Lender’s prior
written consent, so long as: 
(A) all Leases for residential dwelling units are on forms approved
by Lender, and shall not include options to purchase and (B) all Leases
shall be for initial terms of at least six months and not more than two years
(with the exception of Leases for up to 3% of the units in the Project, which
may have terms of less than six months).

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

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

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

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

(vi)                              Defense;
Pursuit of Remedies. Borrower shall, or shall cause Mortgagor to, at its
sole cost and expense, appear in and defend any action or proceeding arising
from or connected with any of the Leases or any obligation or liability of
Mortgagor as landlord thereunder. Borrower shall, or shall cause Mortgagor to,
use commercially reasonable efforts to pursue all remedies, including claims
for damages available at law or in equity, against any tenant under a Lease who
defaults in the performance of its obligations under the Lease.

(g)                                 Notices.
Borrower shall promptly notify Lender in writing of any litigation affecting
(a) Borrower, Mortgagor or Senior Mezz Borrower and any general partner,
managing member or controlling shareholder of Borrower, Mortgagor or Senior
Mezz Borrower (excluding a Principal, general partner, managing member or
controlling shareholder which is a natural person or trust), or (b) the

 25
 

 

Project, to the extent
the same may result in a material adverse change in (i) the financial condition
of any of the foregoing parties, (ii) Borrower’s ability to timely perform
any of its obligations under any of the Loan Documents or Mortgagor’s ability
to timely perform any of its obligations under any of the Senior Loan Documents
or Senior Mezz Borrower’s ability to timely perform any of its obligations
under the Senior Mezz Loan Documents, or (iii) the physical condition or
operation of the Project.

(h)                                 Development.
If after the date of this Agreement, Borrower, Senior Mezz Borrower or
Mortgagor intends to engage a developer of the Project, Lender shall have the
right to approve such new developer and the written development agreement for
the Project.

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

(j)                                     Senior
Loan. Borrower shall, or shall cause Mortgagor, to fully and timely pay all
amounts owing under the Senior Loan Documents and timely and fully perform all
of Mortgagor’s covenants and agreements contained therein. Borrower shall
provide Lender with copies of all notices (except routine notices which would not
include any notice related to any failure to comply with any terms of the
Senior Loan Documents or regarding any event of default under the Senior Loan
Documents) given or received by Mortgagor under or pursuant to the Senior Loan
Documents, promptly upon delivery or receipt as the case may be. Without
limiting the Lender’s right to declare an Event of Default on account of a
failure to comply with the terms and provisions of the Senior Loan Documents,
if Borrower or Mortgagor fail to so pay or perform such obligations, and if
such failure either (i) becomes an Event of Default hereunder or (ii) prior to
becoming an Event of Default continues for twenty (20) days after Lender gives
written notice to Borrower to cure, the Lender may pay or perform the same
pursuant to Section 18(b) hereof. Notwithstanding the foregoing,
(i) Lender shall have no obligation whatsoever to pay any of the amounts
evidenced or secured by, or to perform any of the covenants or obligations
imposed by, any Senior

 26
 

 

Loan Documents, and
(ii) any such payment by Lender shall not cure Mortgagor’s default
hereunder or under the Senior Loan Documents but shall only protect Lender’s
interest in the Project. Borrower shall not, nor shall it permit Mortgagor to,
amend or modify any of the Senior Loan Documents without the prior written
consent of Lender.

(k)                                  Senior
Mezz Loan. Borrower shall, or shall cause Senior Mezz Borrower, to fully
and timely pay all amounts owing under the Senior Mezz Loan Documents and
timely and fully perform all of Senior Mezz Borrower’s covenants and agreements
contained therein. Borrower shall provide Lender with copies of all notices
(except routine notices which would not include any notice related to any
failure to comply with any terms of the Senior Mezz Loan Documents or regarding
any event of default under the Senior Mezz Loan Documents) given or received by
Senior Mezz Borrower under or pursuant to the Senior Mezz Loan Documents,
promptly upon delivery or receipt as the case may be. Without limiting the
Lender’s right to declare an Event of Default on account of a failure to comply
with the terms and provisions of the Senior Mezz Loan Documents, if Borrower or
Senior Mezz Borrower fail to so pay or perform such obligations, and if such
failure either (i) becomes an Event of Default hereunder or (ii) prior to
becoming an Event of Default continues for twenty (20) days after Lender gives
written notice to Borrower to cure, the Lender may pay or perform the same
pursuant to Section 18(b) hereof. Notwithstanding the foregoing,
(i) Lender shall have no obligation whatsoever to pay any of the amounts
evidenced or secured by, or to perform any of the covenants or obligations
imposed by, any Senior Mezz Loan Documents, and (ii) any such payment by
Lender shall not cure Senior Mezz Borrower’s default hereunder or under the
Senior Mezz Loan Documents but shall only protect Lender’s interest in the
Project. Borrower shall not, nor shall it permit Senior Mezz Borrower to, amend
or modify any of the Senior Mezz Loan Documents without the prior written
consent of Lender.

(l)                                     Principal
Place of Business; Choice of Law 
Borrower shall not change its principal place of business or, if
Borrower has more than one place of business, its chief executive office, from
its address set forth in the first paragraph of this Agreement. In addition,
Borrower shall not make an election under the Uniform Commercial Code to treat,
as the governing law for perfection of uncertificated securities, the law of
any jurisdiction other than the jurisdiction of its formation. Lender agrees
not to unreasonably withhold its consent to any change in Borrower’s principal
place of business or the governing law with respect to uncertificated
securities so long as (1) Borrower and any other party reasonably requested by
Lender

 27
 

 

executes all documents
and instruments reasonably deemed necessary by Lender to perfect the security
interests granted pursuant to the Loan Documents, (2) Borrower pays all of the
Lender’s reasonable costs and expenses of perfecting such security interests
and (3) if requested by Lender, Borrower delivers to Lender an opinion from
counsel reasonably satisfactory to Lender opining as to the continued
perfection of such security interest.

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

(n)                                 Developer’s
Fee. Borrower shall cause Mortgagor to refrain from drawing $200,000 from
the Senior Loan allocated toward the developer’s allowance (as set forth in the
budget attached to the Senior Loan) until the payment in full of this Loan.

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

15.           APPRAISALS.  Lender has the right to obtain a new
appraisal or update an existing appraisal of the Project at any time while the
Loan or any portion thereof remains outstanding (a) when, in Lender’s
reasonable judgment, such an appraisal is warranted as a result of Lender’s
internal evaluation of the Loan, and/or (b) to comply with statutes, rules,
regulations or directives of governmental agencies having jurisdiction over
Lender. Borrower shall pay, upon demand, all reasonable appraisers’ fees and
related expenses incurred by Lender from time to time in obtaining such
appraisal reports; provided, however, that Borrower shall

 28
 

 

not be required to pay
for a re-appraisal more than once every three years unless an Event of Default
has occurred and is continuing.

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

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

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

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

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

(iv)                              No
Defaults Under Existing Agreements. The consummation of the transactions
contemplated hereby and the performance by Borrower of its obligations under
the Loan Documents will not result in any breach of, or constitute a default
under, the Senior Loan Documents, Senior Mezz Loan Documents, any other
material Third Party Agreements or any mortgage, deed of trust, bank loan or
security agreement, or other material instrument to which Borrower, Senior Mezz
Borrower, Mortgagor or Principal, are a party or by which the Property,
Borrower or the Principal are bound.

 29
 

 

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

(vi)                              Ownership.
SW 104 Development GP LLC, a Delaware limited liability company (the “GP”), owns and will own at all times during the term of the
Loan one hundred percent (100%) of the general partner interest in Principal, and
GP has not transferred, conveyed, pledged or encumbered (and will not transfer,
convey, pledge or encumber) such general partner interest except with the prior
written consent of Lender. GP is (and at all times during the term of the Loan
will be) treated as a disregarded entity for federal income tax purposes that
is not separate from its owner, Southwest 101 GP LLC, for federal income tax
purposes. During the term of the Loan, neither GP nor Principal nor Borrower
nor Senior Mezz Borrower nor Mortgagor will borrow funds from Lender or an
Affiliate of Lender other than the Loan or the Senior Mezzanine Loan.

(b)                                 Title
to Property; Matters Affecting Property.

(i)                                     Title
to Property. Mortgagor, upon the closing of the acquisition of the
Property, will have good and marketable fee simple title to the Property,
subject only to the Senior Loan Documents and the Permitted Exceptions, and
good, marketable and freely alienable title to all personal property located on
the Property, subject only to the Senior Loan Documents and the Permitted
Exceptions; Borrower will cause Mortgagor to protect or cause to be protected
the title to the Project, and Borrower will forever warrant and defend the same
against any other claims of any persons or parties whomsoever, subject to the
Senior Loan Documents and the Permitted Exceptions.

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

(iii)                               Borrower’s
Equity Interests. Principal owns and will own one hundred percent (100%) of
the ownership interests in Borrower, and Principal has not transferred,
conveyed, pledged or encumbered (and will not transfer, convey, pledge or
encumber) such interests except

 30
 

 

as expressly permitted
pursuant to the Junior Mezzanine Loan or otherwise with the prior written
consent of Lender.

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

(v)                                 No
Contracts Giving Rise to Liens. Neither Borrower, Senior Mezz Borrower nor
Mortgagor have made any contract or arrangement of any kind, that does or could
give rise to a lien on the Project, except for (i) the Senior Loan Documents
and the Permitted Exceptions and (ii) contracts related to design and
construction of the Project which have been provided to Lender. Neither
Borrower nor the Principal have made any contract or arrangement of any kind
that does or could give rise to a lien or encumbrance on any of the Equity
Interests in Mortgagor or Senior Mezz Borrower.

(vi)                              No
Construction. Prior to the disbursement of this Loan and the recordation of
the Security Instrument, no construction whatsoever has been performed on the
Property by Borrower or its Affiliates.

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

(viii)                        Leases.
There are no Leases of the Property in effect as of the closing of the Loan.

(ix)                                Tax
Treatment. Borrower, Senior Mezz Borrower and Mortgagor are (and at all
times during the term of the Loan will be) disregarded as entities separate
from Principal within the meaning of Treasury Regulation §301.7701-3(b)(i)(2).
Borrower, Senior Mezz Borrower and Mortgagor have not (and at all times during
the term of the Loan

 31
 

 

will not) elect to be
classified as an association taxable as a corporation within the meaning of
Treasury Regulation §301.7701-3(c).

(x)                                   Permits.
All permits required for the operation and construction of the Project are in
effect or Borrower expects them to be available as required for construction of
the Project in accordance with the schedule required by the Senior Loan
Documents. Once issued, all such permits will remain in effect and the Project
and its contemplated use and operation will comply therewith. All discretionary
approvals for the construction of the Project in accordance with the Plans and
Specifications have been obtained.

(c)                                  Financial
Statements. The financial statements heretofore delivered to Lender by
Borrower, Senior Mezz Borrower, Mortgagor, and Principal are true and correct
in all material respects, have been prepared in accordance with sound
accounting practices, and fairly present the financial condition(s) of the
person(s) referred to therein as of the date(s) indicated; no materially
adverse change has occurred in the financial condition(s) reflected in such
financial statements since the date(s) shown thereon and no additional
borrowings or liabilities have been made or incurred by such person(s) since
the date(s) thereof other than the borrowing contemplated hereby, the Senior
Loan, the Loan or other borrowings disclosed in writing to and approved by
Lender. The Estimated Collateral Value Statement, dated as of June 30, 2005, for
each Guarantor accurately lists the Available Assets of the Guarantor (as
defined in the Completion Guaranty) as of such date and the value of such
Available Assets calculated on the basis provided in the notes thereto.

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

(e)                                  No
Loan Broker. Borrower has not dealt with any person, firm or corporation
who is or may be entitled to any finder’s fee, brokerage commission, loan
commission or other sum in connection with the execution of this Agreement or
the making of the Loan by Lender to Borrower. Borrower does hereby indemnify
and agree to defend and hold Lender harmless from and against any and all loss,
liability or expense, including court costs and reasonable attorneys’ fees and

 32
 

 

expenses, which Lender
may suffer or sustain should such warranty or representation prove inaccurate
in whole or in part.

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

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

(h)                                 Violations
of Governmental Prohibitions. Neither the making of the Loan, nor the
receipt of Loan proceeds by Borrower, violates any federal, state, county,
municipal and other governmental and quasi-governmental statutes, laws, rules,
orders, regulations, ordinances, judgments or decrees (collectively, “Law”) applicable to Borrower, including, without limitation,
any of the Terrorism Laws. Neither the making of the Loan, nor the receipt of
Loan proceeds by Borrower or Senior Mezz Borrower or Mortgagor or Principal,
violates any of the Terrorism Laws applicable thereto. To Borrower’s best
knowledge, no holder of any direct or indirect equitable, legal or beneficial
interest in Borrower or Principal is the subject of any of the Terrorism Laws.
No portion of the Loan proceeds will be used, disbursed or distributed by
Borrower for any purpose, or to any person, directly or indirectly, in
violation of any Law including, without limitation, any of the Terrorism Laws. “Terrorism Laws” means Executive Order 13224 issued by the
President of the United States of America, the Terrorism Sanctions Regulations
(Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List
Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of
Federal Regulations), and the Foreign Terrorist Organizations Sanctions
Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), and
all other present and future federal, state and local laws, ordinances,
regulations, policies and any other requirements of any governmental agency
(including, without limitation, the United States Department of the Treasury
Office of Foreign Assets Control) addressing, relating to, or attempting to
eliminate, terrorist acts and acts of war, each as hereafter supplemented,
amended or modified from time to time, and the present and future rules,
regulations and guidance documents promulgated under any of the foregoing.

 33

 

17.                                 EVENT OF DEFAULT.

Borrower
shall be in default under this Agreement upon the occurrence of any of the
following events (hereinafter referred to as an “Event of Default”):

(a)                                  Non-Payment.
The failure of Borrower to pay when due any amount required by the Note, this
Agreement or any other Loan Documents which continues, in the case of monthly
interest payments required under the Note, for five (5) days or, in the case of
other sums payable under the Note, this Agreement or the Loan Documents, for 20
days following written demand for payment on Borrower by Lender.

(b)                                 Insurance.
The failure of Borrower to keep in force any insurance policy required
hereunder or to deliver evidence of its renewal to Lender and the continuation
of such failure for 10 days following written demand on Borrower by Lender.

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

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

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

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

(g)                                 Option
Agreement. The failure of Borrower or Senior Mezz Borrower to comply with
the terms of the Option Agreement with respect to transfer of the Wagon Wheel Membership
Interests (as defined in the Option Agreement) upon the exercise of the
Purchase Option including but not limited to Borrower’s or Senior Mezz Borrower’s
satisfaction of all of the Conditions to Closing and Closing Deliveries set
forth therein.

 34
 

 

(h)                                 Other
Breaches under this Agreement. The failure by Borrower to perform any of
its obligations under this Agreement, as and when required, except as
specifically set forth otherwise herein, which continues for a period of 30
days after notice of such failure by Lender to Borrower, if such failure is not
reasonably susceptible of cure within such 30 day period and if Borrower
promptly commences such cure within such 30 day period and diligently
prosecutes the same to completion, then the cure period shall be extended for
such period of time as may be reasonably necessary to effect a cure but in no
event shall such period exceed 90 days;

(i)                                     Other
Breaches Under Other Loan Documents. The failure of Borrower, Principal or
any Guarantor, indemnitor or obligor to perform and observe any covenant,
obligation, agreement or undertaking under any Loan Document other than this
Agreement following such notice and/or grace period, if any, as may be provided
therein for curing such failure;

(j)                                     Senior
Loan Documents. The failure of Borrower or Senior Mezz Borrower or
Mortgagor or any Guarantor to perform and observe any covenant, obligation,
agreement or undertaking under any Senior Loan Documents following any notice
or cure period, if any, as may be provided therein for curing such failure; or

(k)                                  Bankruptcy
Proceedings.

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

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

(3)                                  If
Borrower, Senior Mezz Borrower or Mortgagor shall file a petition under Title
11 of the United States Code as amended or under any similar Federal or state
law or statute; or

(4)                                  If
Borrower, Senior Mezz Borrower or Mortgagor shall have a petition filed against
it commencing an involuntary case under any

 35
 

 

present or future Federal or state bankruptcy or
similar law and such petition is not dismissed or discharged within ninety (90)
days after the filing thereof; or

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

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

18.                                 REMEDIES.

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

(b)                                 Lender’s
Right to Perform. If Borrower fails to perform any covenant or obligation
contained herein or in the other Loan Documents and such failure continues for
a period of 30 days after written notice of such failure by Lender to Borrower,
or if such failure is not reasonably susceptible of cure within such 30 day
period and if Borrower promptly commences such cure within such 30 day period
and diligently prosecutes the same to completion, then the cure period shall be
extended for such period of time as may be reasonably necessary to effect a
cure but in no event shall such period exceed 90 days, without in any way
limiting Lender’s right to exercise any of its rights, powers or remedies as
provided hereunder, or under any of the other Loan Documents, Lender may, but
shall have no obligation to, perform, or cause performance of, such covenant or
obligation, and all costs, expenses, liabilities, penalties and fines of Lender
reasonably incurred or paid in connection therewith shall be payable by
Borrower to Lender upon demand and if not paid shall be added to the
Indebtedness (and to the extent

 36
 

 

permitted under
applicable laws, secured by the Pledge Agreement and other Loan Documents) and
shall bear interest from the date expended at the Default Interest Rate.
Notwithstanding the foregoing, Lender shall have no obligation to send notice
to any Borrower of any such failure.

(c)                                  Appointment
of Lender as Attorney-in-Fact. Borrower hereby irrevocably, unconditionally
and presently constitutes Lender as Borrower’s attorney-in-fact, with full
power of substitution, to be exercised by Lender only upon the occurrence and
during the continuation of an Event of Default, to exercise its rights under
the Pledge Agreement (in its own name or the name of a designee) for purposes
of preserving and protecting the Project or the collateral pledged under the
Pledge Agreement and, as Lender in its sole discretion deems necessary or
proper, to execute, acknowledge (when appropriate) and deliver all instruments
and documents in the name of Borrower which may be necessary or desirable in
order to do any and every act which Borrower might do on its own behalf in the
performance of its obligations hereunder. This power of attorney is a power
coupled with an interest and is irrevocable.

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

(e)                                  Recourse
Limitations. Borrower’s liability in connection with this Agreement, the
Note and the other Loan Documents (including Borrower’s liability for all
amounts due hereunder or thereunder) is collectible only from the Collateral
against which a security interest is created by the Pledge Agreement. In no
case will any person who holds a direct or indirect ownership interest in
Borrower, or any officer, director, manager, trustee, employee, agent or
affiliate of Borrower or any such direct or indirect owner, have any
responsibility for Borrower’s obligations in connection with this

 37
 

 

Agreement, the Note and
the other Loan Documents (including Borrower’s liability for any amounts due
hereunder or thereunder); provided, however, that nothing in this Section 18(e)
limits the liability of any person under a guaranty or other agreement executed
by such person.

19.                                 TRANSFER OF LOAN; LOAN SERVICER.

(a)                                  Lender’s
Right to Transfer  Borrower hereby
acknowledges that Lender shall have the right to transfer, assign or sell the
Loan Documents, or grant participation interests in all or any portion of the
Loan, in such manner and to such entities as Lender in its sole and absolute
discretion shall select.

(b)                                 Loan
Servicer. At the option of Lender, the Loan may be serviced by a servicer
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer pursuant to a servicing agreement between Lender and such servicer. A
sale may result in a change of the Loan servicer. There also may be one or more
changes of Loan servicer unrelated to a sale of the Note. If there is a change
of Loan servicer, Borrower will be given notice of the change.

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

20.                                 LENDER’S EXPENSES; RIGHTS OF LENDER. Borrower shall promptly
pay to Lender, upon demand, with interest thereon from the date of demand at
the Default Interest Rate, reasonable attorneys’ fees and all other reasonable
costs and expenses paid or incurred by Lender in enforcing or exercising its
rights or remedies created by, connected with or provided for in this Agreement
or any of the other Loan Documents following an Event of Default, and payment
thereof shall be secured by the Pledge Agreement.

21.                                 MISCELLANEOUS.

(a)                                  Notices.
All notices, demands and other communications (“Notice”)
under or concerning this Agreement shall be in writing. Each Notice

 38
 

 

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

If to Lender:                               Behringer
Harvard Alexan Nevada, LLC

15601 Dallas Parkway, Suite 600

Addison, Texas  75001

Attention:  Chief Legal Officer

Facsimile:  (214) 655-1610

with copy to:                          Powell
& Coleman, L.L.P.

8080 North Central Expressway, Suite 1380

Dallas, Texas  75206

Attention:  Carol D. Satterfield

Facsimile:  (214) 373-8768

If to Borrower:                   SW
108 Wagon Wheel JM LLC

Attention:  Timothy J. Hogan

2001 Bryan Street, Suite 3700

Dallas, Texas  75201

Facsimile:  (214) 922-8553

with copy to:                          Michael
K. Ording

Jones Day

325 John H. McConnell Blvd., Suite 600

Columbus, Ohio  43215

Facsimile: (614) 461-4198

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

 39
 

 

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

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

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

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

 40
 

 

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

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

(h)                                 SUBMISSION
TO JURISDICTION/SERVICE OF PROCESS. BORROWER AND LENDER EACH HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE OF
NEVADA SITTING IN CLARK COUNTY, NEVADA FOR THE PURPOSES OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT MATTER
HEREOF, ANY OTHER LOAN DOCUMENT AND THE SUBJECT MATTER THEREOF, OR THE LOAN.
EACH OF BORROWER AND LENDER TO THE EXTENT PERMITTED BY APPLICABLE LAW (A)
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE
ABOVE-NAMED COURTS ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE
JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
ATTACHMENT OR EXECUTION BY ANY SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT, THE SUBJECT MATTER HEREOF, THE
OTHER LOAN DOCUMENTS, THE SUBJECT MATTER THEREOF, OR THE LOAN (AS APPLICABLE)
MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE
ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED IN STATE COURT TO FEDERAL COURT,
OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT AND (C)
HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE
ARISE FROM THE SAME SUBJECT MATTER. BORROWER AND LENDER EACH HEREBY CONSENTS TO

 41
 

 

SERVICE OF PROCESS BY
MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT TO SECTION
21(a) HEREOF, BUT ANY SUCH SERVICE WILL BE EFFECTIVE ONLY WHEN RECEIVED AT SUCH
ADDRESS. BORROWER AND LENDER EACH AGREES THAT ITS SUBMISSION TO JURISDICTION
AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF
THE OTHER PARTY. FINAL JUDGMENT AGAINST A PARTY IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION
(X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF
WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF
INDEBTEDNESS OR LIABILITY OF THE PARTY THEREIN DESCRIBED, OR (Y) IN ANY OTHER
MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.

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

(j)                                     Entire
Agreement. This Agreement and all of the other Loan Documents constitute
the entire understanding between the parties hereto with respect to the subject
matter hereof, superseding all prior written or oral understandings, and may
not be modified, amended or terminated except by a written agreement signed by
each of the parties hereto or thereto that is to be bound by the modification,
amendment or termination. Notwithstanding the foregoing, the provisions of this
Agreement are not intended to supersede the

 42
 

 

provisions of the Pledge
Agreement, but shall be construed as supplemental thereto. Borrower and Lender
each hereby acknowledges that this Agreement and the other Loan Documents
accurately reflect the agreements and understandings of the parties hereto with
respect to the subject matter hereof and hereby waives any claims against the
other which it may now have or may hereafter acquire to the effect that the
actual agreements and understandings of the parties hereto with respect to the
subject matter hereof may not be accurately set forth in this Agreement or such
other Loan Documents.

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

(l)                                     Severability.
Each provision of this Agreement shall be interpreted so as to be effective and
valid under applicable law, but if any such provision shall in any respect be
ineffective or invalid under such law, such ineffectiveness or invalidity shall
not affect the remainder of such provision or the remaining provisions of this
Agreement.

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

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

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

 43
 

 

(p)                                 Straight
Debt Harbor. It is the intent of Borrower and Lender that the Loan shall be
treated as a security that satisfies the requirements of Section 856(m)(1)(A)
and Section 856(m)(2) of the Code (the “Straight Debt Safe Harbor”).
Accordingly, notwithstanding any indication herein to the contrary, the parties
hereto agree that the terms of the Loan shall be interpreted in such a manner
that the Loan satisfies the Straight Debt Safe Harbor for so long as it is
owned by Lender; and the terms of the Note shall be applied such that the Note
has a constant effective yield to maturity, as determined under Section 1272 of
the Code, at a fixed rate over the entire term of the Note equal to the
Interest Rate (as defined in the Note); provided, however, that such
contraction shall not alter the dates of the principal or interest payments
(described in Section 1.1 of the Note) or the amounts of the principal or
interest payments required to be paid on an interest payment date (described in
Section 1.1. of the Note) prior to the Maturity Date or earlier prepayment
date.

22.                                 SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
Borrower shall do all things necessary to preserve the existence of Borrower,
Senior Mezz Borrower and Mortgagor each as a separate Special Purpose
Bankruptcy Remote Entity unless Lender otherwise consents, in its sole
discretion, in writing. Borrower covenants and agrees that with respect to
Borrower, Senior Mezz Borrower and Mortgagor, until payment in full of the
Indebtedness, it will not do or permit Mortgagor or Senior Mezz Borrower to do,
directly or indirectly, any of the following unless Lender consents thereto, in
its sole discretion, in writing. A “Special Purpose Bankruptcy
Remote Entity” means a corporation, limited partnership or limited
liability company which shall not:

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

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

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

(d)                                 fail
to preserve its existence as a person duly organized, validly existing and in
good standing (if applicable) under the laws of the jurisdiction of its
organization or formation, or amend, modify, or

 44
 

 

terminate the provisions
of its organizational documents if such amendment, modification, or termination
would adversely affect the ability of such Person to perform its obligations
hereunder or under the other Loan Documents or would affect any other clause of
this Section 22;

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

(f)                                    commingle
its assets with the assets of any of its general partners, members,
shareholders, affiliates, principals or of any other Person in such a manner
that it will be costly or difficult segregate, ascertain or identify its
individual assets from those of any general partner, member, shareholder,
principal or Affiliate of Borrower, Senior Mezz Borrower or Mortgagor or any
other Person;

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

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

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

(j)                                     seek
the dissolution or winding up of Borrower, Senior Mezz Borrower or Mortgagor;

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

 45
 

 

(l)                                     hold
itself out to be responsible for the debts of another person, except through endorsement
of negotiable instruments in the ordinary course of collection;

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

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

(o)                                 fail
either to hold itself out to the public as a legal person separate and distinct
from any other person or to conduct its business solely in its own name if the
result is (a) to mislead others as to the identity of the person with which
such other party is transacting business; or (b) to suggest that it is
responsible for the debts of any third party (including any general partner,
principal or Affiliate of Borrower, Senior Mezz Borrower or Mortgagor,
provided, however, Borrower, Senior Mezz Borrower or Mortgagor may hold itself
out as doing business under the “Trammell Crow Residential” name.

In addition to the
foregoing, Borrower shall have at least one independent manager who is provided
by a nationally recognized company that provides professional independent
directors and who shall not be at the time of initial appointment, and may not
have been during the preceding five years (i) a stockholder, director, officer,
employee, partner, member, attorney or counsel of Mortgagor or an Affiliate of
Mortgagor, Borrower or Senior Mezz Borrower, (ii) a customer, supplier (other
than a supplier of registered agent or registered office service) or other
Person who derives any of its purchases or revenues from its activities with
Mortgagor or Borrower or Senior Mezz Borrower, (iii) a Person or other entity
controlling or under common control with any such stockholder, director,
officer employee, partner, customer, supplier (other than a supplier of
registered agent or registered office service) or other Person or (iv) a member
of the immediate family of any such stockholder, director, officer, employee,
partner, customer, supplier or other Person (the “Independent
Director”). At any time that the Senior Loan, the Senior Mezz Loan
or this Loan is outstanding, the consent of the Independent Director should be
required to: (i) file, consent to the filing of, or join in any filing of, a
bankruptcy or insolvency petition; (ii) dissolve, liquidate, merge or
consolidate; (iii) engage in any other business activity; and (iv) amend the
articles of organization or limited liability agreement.

[Signatures Follow on Next Page]

 46

 

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

	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SW 108 WAGON WHEEL JM LLC,

  a Delaware limited liability company,

  
	
   

  	
  By:

  	
  SW 105 Wagon Wheel
  Limited Partnership,

  a Delaware limited partnership,

  its sole member

  
	
   

  	
   

  	
  By:

  	
  SW 104 Development GP
  LLC,

  a Delaware limited liability company,

  its general partner

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  
	
   

  	
  LENDER:

  
	
   

  	
  BEHRINGER HARVARD
  ALEXAN NEVADA,

  LLC, a Delaware limited liability company

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  
	
   

  	
  Title:

  	
  Secretary

  
									

 

 

JOINDER

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

	
   

  	
   

  
	
   

  	
  MORTGAGOR:

  
	
   

  	
  SW 106 WAGON WHEEL
  HOLDINGS LLC

  
	
   

  	
  By:

  	
  SW 109 Wagon wheel SM
  LLC,

  a Delaware limited liability company,

  its sole member

  
	
   

  	
   

  	
  By:

  	
  SW 108 Wagon Wheel JM
  LLC,

  a Delaware limited liability company,

  its sole member

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 105 Wagon Wheel
  Limited Partnership,

  a Delaware limited partnership,

  its sole member

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP
  LLC, a

  Delaware limited liability company, its

  general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  

 

 

 

	
  

  	
  SENIOR MEZZ BORROWER

  
	
   

  	
  SW 109 WAGON WHEEL SM
  LLC,

  a Delaware limited liability company

  
	
   

  	
  By:

  	
  SW 108 Wagon Wheel JM
  LLC,

  a Delaware limited liability company,

  its sole member

  
	
   

  	
   

  	
  By:

  	
  SW 105 Wagon Wheel
  Limited Partnership,

  a Delaware limited partnership,

  its sole member

  
	
   

  	
   

  	
   

  	
  By:

  	
  SW 104 Development GP
  LLC,

  a Delaware limited liability company,

  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Timothy J. Hogan, Vice President

  

 

 

EXHIBIT A

LEGAL
DESCRIPTION

PARCEL 1:

A PORTION OF THE NORTHWEST QUARTER (NW 1⁄4) OF SECTION 34, AND THE
NORTHEAST QUARTER (NE 1⁄4) OF SECTION 33, TOWNSHIP 22 SOUTH, RANGE 63 EAST,
M.D.M., CLARK COUNTY, NEVADA, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

PARCEL 3, AS SHOWN BY MAP THEREOF ON FILE IN FILE 65, OF PARCEL MAPS,
PAGE 89, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA.

PARCEL 2:

A PORTION OF THE EAST HALF (E 1⁄2) OF THE NORTHWEST QUARTER (NW 1⁄4) OF
SECTION 34, TOWNSHIP 22 SOUTH, RANGE 63 EAST, M.D.M., AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS, TO WIT:

BEGINNING AT A POINT ON THE LEFT OR SOUTHWESTERLY RIGHT-OF-WAY LINE OF
US-95 FREEWAY, 452.14 FEET LEFT OF AND AT RIGHT ANGLES TO HIGHWAY ENGINEER’S
STATION “ESI” 311+53.29 P.O.T.; SAID POINT OF BEGINNING FURTHER DESCRIBED AS
BEARING SOUTH 33°05’47” WEST A DISTANCE OF 1,665.04 FEET FROM THE NORTH QUARTER
CORNER OF SECTION 34, TOWNSHIP 22 SOUTH, RANGE 63 EAST, M.D.M.; THENCE ALONG
THE FORMER LEFT OR SOUTHWESTERLY RIGHT-OF-WAY LINE OF US-95 FREEWAY THE
FOLLOWING SIX (6) COURSES AND DISTANCES:

1)  NORTH 59°12’25” WEST 179.53
FEET;

2)  FROM A TANGENT WHICH BEARS
SOUTH 25°02’05” WEST, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET, THROUGH AN
ANGLE OF 82°00’10”, AN ARC DISTANCE OF 71.56 FEET;

3)  NORTH 56°58’05” WEST 285.01
FEET;

4)  FROM A TANGENT WHICH BEARS
SOUTH 56°58’05” EAST, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET, THROUGH AN
ANGLE OF 75°47’09”, AN ARC DISTANCE OF 66.14 FEET;

5)  NORTH 47°14’46” EAST 75.10
FEET;

 

6)  FROM A TANGENT WHICH BEARS
THE LAST DESCRIBED COURSE, CURVING TO THE LEFT WITH A RADIUS OF 50 FEET,
THROUGH AN ANGLE OF 85°40’37”, AN ARC DISTANCE OF 74.77 FEET TO A POINT ON THE
SOUTHWESTERLY RIGHT-OF-WAY LINE OF US-95 FREEWAY;

THENCE SOUTH 39°26’45” EAST, ALONG SAID LEFT OR SOUTHWESTERLY
RIGHT-OF-WAY LINE, A DISTANCE OF 399.07 FEET TO THE POINT OF BEGINNING.

NOTE: THE ABOVE METES AND BOUNDS LEGAL DESCRIPTION APPEARED PREVIOUSLY
IN THAT CERTAIN DOCUMENT RECORDED OCTOBER 8, 2004 IN BOOK 20041008 OF OFFICIAL
RECORDS AS INSTRUMENT NO. 03637, CLARK COUNTY, NEVADA.

 

EXHIBIT B

BUDGET

	
  CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land & Improvements

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  33

  	
  %

  	
  307,545

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land

  	
   

  	
   

  	
   

  	
  8,951,250

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal and Fees

  	
   

  	
   

  	
   

  	
  535,635

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard Site Development

  	
   

  	
   

  	
   

  	
  2,556,357

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  12,350,787

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Real Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All other Hard Costs & Contingency

  	
   

  	
   

  	
   

  	
  20,561,666

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal

  	
   

  	
   

  	
   

  	
  70,458

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Closing Costs

  	
   

  	
   

  	
   

  	
  55,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Municipal Fees

  	
   

  	
   

  	
   

  	
  832,688

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Arch & Engineering

  	
   

  	
   

  	
   

  	
  122,918

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  64

  	
  %

  	
  615,841

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
   

  	
   

  	
  680,632

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financing Fees

  	
   

  	
   

  	
   

  	
  450,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Soft Costs & Contingency

  	
   

  	
   

  	
   

  	
  200,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
  70

  	
  %

  	
  70,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  23,659,203

  	
   

  	
   

  	
   

  
	
  Total Capitalized to Real Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  36,009,990

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Personal Property

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GC Fee

  	
   

  	
  2.51

  	
  %

  	
  23,082

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Appliances

  	
   

  	
   

  	
   

  	
  543,677

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Legal and Fees

  	
   

  	
   

  	
   

  	
  40,201

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing

  	
   

  	
   

  	
   

  	
  320,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  926,960

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  36,936,950

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taxes

  	
   

  	
  30

  	
  %

  	
  30,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Developer Allowance

  	
   

  	
   

  	
   

  	
  1,599,614

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
   

  	
   

  	
  114,417

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing Brochures

  	
   

  	
   

  	
   

  	
  30,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pre-Leasing

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Op Deficits

  	
   

  	
   

  	
   

  	
  14,891

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  NON-CAPITALIZED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,938,922

  	
   

  	
  1,938,922

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  38,875,872

  	
   

  	
  38,875,872

  	
   

  

 

 

EXHIBIT C

PROPERTY IMPROVEMENTS

[see attached]

 

EXHIBIT D

WAGON WHEEL OWNERSHIP CHART

 

 

JUNIOR MEZZANINE LOAN
AGREEMENT

BY

AND BETWEEN

 

SW 108 WAGON WHEEL JM LLC

(“Borrower”)

 

AND

 

BEHRINGER HARVARD ALEXAN
NEVADA, LLC

(“Lender”)

 

TABLE OF CONTENTS

	
  1.

  	
   

  	
  RECITALS

  	
   

  	
  2

  
	
  2.

  	
   

  	
  DEFINITIONS

  	
   

  	
  2

  
	
  3.

  	
   

  	
  THE LOAN; DISBURSEMENT OF LOAN

  	
   

  	
  7

  
	
   

  	
   

  	
  (a)

  	
  Loan

  	
   

  	
  7

  
	
   

  	
   

  	
  (b)

  	
  Loan Disbursements

  	
   

  	
  7

  
	
  4.

  	
   

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

  	
   

  	
  7

  
	
   

  	
   

  	
  (a)

  	
  Interest

  	
   

  	
  7

  
	
   

  	
   

  	
  (b)

  	
  No Usury

  	
   

  	
  8

  
	
   

  	
   

  	
  (c)

  	
  Loan Commitment Fee

  	
   

  	
  8

  
	
   

  	
   

  	
  (d)

  	
  Prepayment

  	
   

  	
  8

  
	
   

  	
   

  	
  (e)

  	
  Maturity Date

  	
   

  	
  8

  
	
  5.

  	
   

  	
  SECURITY FOR LOAN; GUARANTY

  	
   

  	
  9

  
	
   

  	
   

  	
  (a)

  	
  Pledge Agreement

  	
   

  	
  9

  
	
   

  	
   

  	
  (b)

  	
  Other Loan Documents

  	
   

  	
  9

  
	
   

  	
   

  	
  (c)

  	
  Completion Guaranty

  	
   

  	
  9

  
	
  6.

  	
   

  	
  CONDITIONS PRECEDENT TO CLOSING OF THE LOAN

  	
   

  	
  9

  
	
   

  	
   

  	
  (a)

  	
  Loan Documents

  	
   

  	
  9

  
	
   

  	
   

  	
  (b)

  	
  Third Party Agreements

  	
   

  	
  10

  
	
   

  	
   

  	
  (c)

  	
  Certification

  	
   

  	
  11

  
	
   

  	
   

  	
  (d)

  	
  Financial Statements

  	
   

  	
  11

  
	
   

  	
   

  	
  (e)

  	
  Insurance Policies

  	
   

  	
  11

  
	
   

  	
   

  	
  (f)

  	
  Contracts

  	
   

  	
  11

  
	
   

  	
   

  	
  (g)

  	
  Plans

  	
   

  	
  11

  
	
   

  	
   

  	
  (h)

  	
  Budget and Cost Review

  	
   

  	
  11

  
	
   

  	
   

  	
  (i)

  	
  Leases

  	
   

  	
  11

  
	
   

  	
   

  	
  (j)

  	
  Title Insurance Policy

  	
   

  	
  12

  
	
   

  	
   

  	
  (k)

  	
  UCC Policy

  	
   

  	
  12

  
	
   

  	
   

  	
  (l)

  	
  ALTA Survey

  	
   

  	
  12

  
	
   

  	
   

  	
  (m)

  	
  Conditional Use Permits and Government Approvals

  	
   

  	
  12

  
	
   

  	
   

  	
  (n)

  	
  Flood Plain Certification

  	
   

  	
  12

  
	
   

  	
   

  	
  (o)

  	
  Appraisal

  	
   

  	
  12

  
	
   

  	
   

  	
  (p)

  	
  Environmental Report

  	
   

  	
  12

  
	
   

  	
   

  	
  (q)

  	
  Certification of Organizational Documents

  	
   

  	
  12

  
	
   

  	
   

  	
  (r)

  	
  Legal Opinion

  	
   

  	
  13

  
	
   

  	
   

  	
  (s)

  	
  UCC Searches

  	
   

  	
  13

  
	
   

  	
   

  	
  (t)

  	
  Access and Utility Easements

  	
   

  	
  13

  
	
   

  	
   

  	
  (u)

  	
  Utilities

  	
   

  	
  13

  
	
   

  	
   

  	
  (v)

  	
  Environmental Disclosure

  	
   

  	
  13

  
	
   

  	
   

  	
  (w)

  	
  Senior Lender Funding

  	
   

  	
  13

  
	
   

  	
   

  	
  (x)

  	
  No Default

  	
   

  	
  13

  
	
   

  	
   

  	
  (y)

  	
  Additional Matters

  	
   

  	
  14

  
	
  7.

  	
   

  	
  TITLE INSURANCE

  	
   

  	
  14

  
	
   

  	
   

  	
  (a)

  	
  Owner’s Policy of Title Insurance

  	
   

  	
  14

  

 

 i
 

 

 

	
  

  	
   

  	
  (b)

  	
  UCC Policy

  	
   

  	
  14

  
	
  8.

  	
   

  	
  INSURANCE

  	
   

  	
  14

  
	
   

  	
   

  	
  (a)

  	
  Insurance Requirements

  	
   

  	
  14

  
	
   

  	
   

  	
  (b)

  	
  Insurance Premiums; Evidence of Renewal

  	
   

  	
  15

  
	
   

  	
   

  	
  (c)

  	
  Policy Requirements

  	
   

  	
  15

  
	
   

  	
   

  	
  (d)

  	
  Notice of Casualty

  	
   

  	
  16

  
	
   

  	
   

  	
  (e)

  	
  Settlement of Claim

  	
   

  	
  16

  
	
   

  	
   

  	
  (f)

  	
  Application of Insurance Proceeds

  	
   

  	
  16

  
	
  9.

  	
   

  	
  EMINENT DOMAIN

  	
   

  	
  17

  
	
   

  	
   

  	
  (a)

  	
  Notice of Condemnation

  	
   

  	
  17

  
	
   

  	
   

  	
  (b)

  	
  Settlement of Claim

  	
   

  	
  17

  
	
   

  	
   

  	
  (c)

  	
  Application of Condemnation Awards

  	
   

  	
  17

  
	
   

  	
   

  	
  (d)

  	
  Continuing Obligation to Repair

  	
   

  	
  17

  
	
   

  	
   

  	
  (e)

  	
  Lender Not Required to Act

  	
   

  	
  17

  
	
  10.

  	
   

  	
  RIGHTS OF ACCESS AND INSPECTION

  	
   

  	
  18

  
	
  11.

  	
   

  	
  EXPENSES

  	
   

  	
  18

  
	
  12.

  	
   

  	
  FINANCIAL REPORTS, PROPERTY REPORTS AND ANNUAL
  BUDGET

  	
   

  	
  19

  
	
  13.

  	
   

  	
  GENERAL COVENANTS OF BORROWER

  	
   

  	
  21

  
	
   

  	
   

  	
  (a)

  	
  Commencement and Completion of Project

  	
   

  	
  21

  
	
   

  	
   

  	
  (b)

  	
  Lender Approval

  	
   

  	
  21

  
	
   

  	
   

  	
  (c)

  	
  Operation and Maintenance of Project

  	
   

  	
  21

  
	
   

  	
   

  	
  (d)

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

  	
   

  	
  23

  
	
   

  	
   

  	
  (e)

  	
  General Indemnity

  	
   

  	
  24

  
	
   

  	
   

  	
  (f)

  	
  Leases

  	
   

  	
  24

  
	
   

  	
   

  	
  (g)

  	
  Notices

  	
   

  	
  25

  
	
   

  	
   

  	
  (h)

  	
  Development

  	
   

  	
  26

  
	
   

  	
   

  	
  (i)

  	
  Management

  	
   

  	
  26

  
	
   

  	
   

  	
  (j)

  	
  Senior Loan

  	
   

  	
  26

  
	
   

  	
   

  	
  (k)

  	
  Senior Loan

  	
   

  	
  27

  
	
   

  	
   

  	
  (l)

  	
  Principal Place of Business; Choice of Law

  	
   

  	
  27

  
	
   

  	
   

  	
  (m)

  	
  Compliance with Governmental Prohibitions

  	
   

  	
  28

  
	
   

  	
   

  	
  (n)

  	
  Developer’s Fee

  	
   

  	
  28

  
	
  14.

  	
   

  	
  FURTHER ASSURANCES

  	
   

  	
  28

  
	
  15.

  	
   

  	
  APPRAISALS

  	
   

  	
  28

  
	
  16.

  	
   

  	
  GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWER

  	
   

  	
  29

  
	
   

  	
   

  	
  (a)

  	
  Organization; Corporate Powers; Authorization of
  Borrowing

  	
   

  	
  29

  
	
   

  	
   

  	
  (b)

  	
  Title to Property; Matters Affecting Property

  	
   

  	
  30

  
	
   

  	
   

  	
  (c)

  	
  Financial Statements

  	
   

  	
  32

  
	
   

  	
   

  	
  (d)

  	
  Budget Projections

  	
   

  	
  32

  
	
   

  	
   

  	
  (e)

  	
  No Loan Broker

  	
   

  	
  32

  
	
   

  	
   

  	
  (f)

  	
  No Default

  	
   

  	
  33

  
	
   

  	
   

  	
  (g)

  	
  Solvency

  	
   

  	
  33

  
	
   

  	
   

  	
  (h)

  	
  Violations of Governmental Prohibitions

  	
   

  	
  33

  
	
  17.

  	
   

  	
  EVENT OF DEFAULT

  	
   

  	
  34

  
	
   

  	
   

  	
  (a)

  	
  Non-Payment

  	
   

  	
  34

  

 

 ii
 

 

 

	
  

  	
   

  	
  (b)

  	
  Insurance

  	
   

  	
  34

  
	
   

  	
   

  	
  (c)

  	
  Special Purpose Entity Covenants

  	
   

  	
  34

  
	
   

  	
   

  	
  (d)

  	
  Fraud or Material Misrepresentation

  	
   

  	
  34

  
	
   

  	
   

  	
  (e)

  	
  Sale, Encumbrance or Other Indebtedness

  	
   

  	
  34

  
	
   

  	
   

  	
  (f)

  	
  Reports and Documents

  	
   

  	
  34

  
	
   

  	
   

  	
  (g)

  	
  Option Agreement

  	
   

  	
  34

  
	
   

  	
   

  	
  (h)

  	
  Other Breaches under this Agreement

  	
   

  	
  35

  
	
   

  	
   

  	
  (i)

  	
  Other Breaches Under Other Loan Documents

  	
   

  	
  35

  
	
   

  	
   

  	
  (j)

  	
  Senior Loan Documents

  	
   

  	
  35

  
	
   

  	
   

  	
  (k)

  	
  Bankruptcy Proceedings

  	
   

  	
  35

  
	
  18.

  	
   

  	
  REMEDIES

  	
   

  	
  36

  
	
   

  	
   

  	
  (a)

  	
  Actions upon Event of Default

  	
   

  	
  36

  
	
   

  	
   

  	
  (b)

  	
  Lender’s Right to Perform

  	
   

  	
  36

  
	
   

  	
   

  	
  (c)

  	
  Appointment of Lender as Attorney-in-Fact

  	
   

  	
  37

  
	
   

  	
   

  	
  (d)

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

  	
   

  	
  37

  
	
   

  	
   

  	
  (e)

  	
  Recourse Limitations

  	
   

  	
  37

  
	
  19.

  	
   

  	
  TRANSFER OF LOAN; LOAN SERVICER

  	
   

  	
  38

  
	
   

  	
   

  	
  (a)

  	
  Lender’s Right to Transfer

  	
   

  	
  38

  
	
   

  	
   

  	
  (b)

  	
  Loan Servicer

  	
   

  	
  38

  
	
   

  	
   

  	
  (c)

  	
  Dissemination of Information

  	
   

  	
  38

  
	
  20.

  	
   

  	
  LENDER’S EXPENSES; RIGHTS OF LENDER

  	
   

  	
  38

  
	
  21.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  38

  
	
   

  	
   

  	
  (a)

  	
  Notices

  	
   

  	
  38

  
	
   

  	
   

  	
  (b)

  	
  Waivers

  	
   

  	
  40

  
	
   

  	
   

  	
  (c)

  	
  Lender Not Partner of Borrower; Borrower in Control

  	
   

  	
  40

  
	
   

  	
   

  	
  (d)

  	
  No Third Party

  	
   

  	
  40

  
	
   

  	
   

  	
  (e)

  	
  Time of Essence; Context

  	
   

  	
  40

  
	
   

  	
   

  	
  (f)

  	
  Successors and Assigns

  	
   

  	
  41

  
	
   

  	
   

  	
  (g)

  	
  Governing Jurisdiction

  	
   

  	
  41

  
	
   

  	
   

  	
  (h)

  	
  SUBMISSION TO JURISDICTION/SERVICE OF PROCESS

  	
   

  	
  41

  
	
   

  	
   

  	
  (i)

  	
  WAIVER WITH RESPECT TO DAMAGES

  	
   

  	
  42

  
	
   

  	
   

  	
  (j)

  	
  Entire Agreement

  	
   

  	
  42

  
	
   

  	
   

  	
  (k)

  	
  Headings

  	
   

  	
  43

  
	
   

  	
   

  	
  (l)

  	
  Severability

  	
   

  	
  43

  
	
   

  	
   

  	
  (m)

  	
  Counterparts

  	
   

  	
  43

  
	
   

  	
   

  	
  (n)

  	
  Waiver of Jury Trial

  	
   

  	
  43

  
	
   

  	
   

  	
  (o)

  	
  Sole and Absolute Discretion

  	
   

  	
  43

  
	
   

  	
   

  	
  (p)

  	
  Straight Debt Harbor

  	
   

  	
  44

  
	
  22.

  	
   

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF
  BORROWER

  	
   

  	
  44

  

 

 iii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]