8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 19, 2015

Bluerock Residential Growth REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	001-36369	26-3136483
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

712 Fifth Avenue, 9th Floor

New York, NY 10019

(Address of principal executive offices)

(212) 843-1601

(Registrant’s telephone number, including area code)

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

The information set forth under Item 2.01 of this Current Report on Form 8-K is responsive to this Item 1.01, and is hereby incorporated by reference.

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On August 19, 2015, Bluerock Residential Growth REIT, Inc., a Maryland corporation, or the Company, through subsidiaries of our operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership, or the Operating Partnership, acquired a 100% fee simple interest in 322 units within a Class A apartment community located in Charlotte, North Carolina known as the Ashton Reserve at Northlake Phase I, or Ashton Phase I, from AR I Borrower, LLC, or Ashton Seller, an unaffiliated third-party seller. The acquisition of Ashton Phase I was the first phase in a two-phase acquisition, as further described below. Ashton Phase I and Ashton Phase II (as hereinafter defined) are collectively referred to herein as the Ashton Property. The material features of Ashton Phase I and the Company’s acquisition thereof are described below.

Ashton Phase I

Ashton Phase I features one-, two- and three-bedroom unit layouts averaging 996 square feet. Ashton Phase I, completed in 2013, is in excellent condition, with many high-end in-unit features and property level amenities. All units have nine-foot ceilings, a full stainless steel appliance package that includes a full-sized refrigerator, granite countertops, full-size washer/dryers, and undermount sinks. Ashton Phase I community amenities include lush landscaping, two clubhouses, fitness facilities, a swimming pool with oversized deck and grilling stations, as well as a business center and a private media center. The Northlake submarket in which the Ashton Property is located is approximately eight miles from uptown Charlotte and is anchored by the one million square foot Northlake Mall, a premier retail destination for the affluent communities in the north Charlotte metropolitan area. The Ashton Property is in close proximity to Lake Norman, as well as to regional employers, major travel routes and the Charlotte-Douglas International Airport. As of August 18, 2015, Ashton Phase I was approximately 93.48% occupied.

Acquisition of Ashton Phase I

On August 19, 2015, BRG Ashton NC, LLC, or BRG Ashton, a subsidiary of the Operating Partnership, entered into an Assignment of Purchase and Sale and Escrow Instructions Agreement with BR Ashton I Owner, LLC, or BR Ashton I Owner, a subsidiary of the Operating Partnership, pursuant to which BRG Ashton assigned to BR Ashton I Owner a purchase agreement to acquire Ashton Phase I. On August 19, 2015, BR Ashton I Owner acquired Ashton Phase I for a total purchase price of approximately $44.75 million. The equity portion of the purchase price for the acquisition of Ashton Phase I was funded by an equity investment by the Company of approximately $13.5 million.

Property Management

On August 19, 2015, BR Ashton I Owner entered into a management agreement pursuant to which GREP Southeast, LLC, an unaffiliated third-party, or the Property Manager, will manage Ashton Phase I. The Property Manager will be entitled to a management fee of 3.0% of monthly gross cash revenues, payable monthly.

Future Acquisition of Ashton Phase II

The Company, through BR Ashton II Owner, LLC, or BR Ashton II Owner, a subsidiary of the Operating Partnership, expects to subsequently acquire an additional 151-unit Class A apartment community currently under construction on approximately 9.072 acres of land immediately adjacent to Ashton Phase I, to be known as Ashton Reserve at Northlake Phase II, or Ashton Phase II. On August 19, 2015, BR Ashton II Owner entered into an Assignment and Assumption of Purchase and Sale Agreement with AR Owner, LLC, an unaffiliated third-party, pursuant to which BR Ashton II Owner assumed the obligations of the purchaser under the purchase agreement to acquire Ashton Phase II following completion of construction and stabilization thereof. BR Ashton II Owner expects to close on the acquisition of Ashton Phase II for a purchase price of approximately $20.6 million, subject to customary adjustments and prorations, and subject to final adjustment and pricing based on the then existing financial condition of Ashton Phase II based on a closing rent roll.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF BALANCE SHEET ARRANGEMENT OF REGISTRANT

Loan Financing and Guaranty Obligations related to Ashton Phase I

The acquisition of Ashton Phase I was further funded by the assumption by BR Ashton I Owner of an existing $31.9 million mortgage loan, or the Loan, from Sun Life Assurance Company of Canada, or the Lender, all outstanding obligations of Ashton Seller thereunder, and the release of the original guarantors thereunder, pursuant to that certain Note, Deed of Trust and Related Loan Documents Assignment, Assumption and Modification Agreement dated August 19, 2015, or the Assignment Agreement, and certain other Loan documents assumed and/or entered into by BR Ashton I Owner and the Company thereunder, or the Loan Documents.

The Loan bears interest at a fixed rate of 4.67% per year and matures on December 1, 2025. The Loan amortizes on an interest-only basis through December 1, 2016, and on a principal and interest basis thereafter based upon a thirty (30) year amortization period. The Loan may be prepaid in full at any time with thirty (30) days' prior written notice to Lender, and the payment of a prepayment premium equal to the greater of (i) 1.0% of the unpaid principal balance or (ii) a yield maintenance amount calculated as set forth in the Loan Documents. The Loan Documents provide that the Loan may be accelerated upon the occurrence of defined events of default, including payment defaults, breaches of representations, insolvency events and other customary events.

The Loan Documents include agreements by the Company to provide certain environmental indemnities pursuant to an Environmental Indemnity agreement, and certain non-recourse carveout guaranties, generally standard in scope, of the liabilities of BR Ashton I Owner under the Loan pursuant to a Guaranty Agreement.

Certain statements included in this Current Report on Form 8-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements above include, but are not limited to, matters identified as expectations and matters with respect to the acquisition of Ashton Phase I or the future acquisition of Ashton Phase II. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For more information regarding risks and uncertainties that may affect the Company’s future results, review the Company’s filings with the Securities and Exchange Commission.

The descriptions included in this Current Report on Form 8-K of any of the documents referenced in Item 9.01(d) below and filed as exhibits hereto do not purport to be complete, and are qualified in their entirety by reference to the full text of such document. All of the exhibits hereto have been filed solely to provide information regarding their respective terms. Such exhibits may contain representations and warranties that the parties thereto made solely for the benefit of the other parties. In addition, such representations and warranties (i) may have been qualified by confidential disclosures made to the other party in connection with such document, (ii) may be subject to a materiality standard which may differ from what may be viewed as material by investors, (iii) were made only as of the date of such documents or such other date as is specified therein, and (iv) may have been included in such documents for the purpose of allocating risk between or among the parties thereto rather than establishing matters as facts.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Real Estate Acquired.

Because it is impracticable to provide the required financial statements for the acquired real property described in Item 2.01 at the time of this filing and no financial statements (audited or unaudited) are available at this time, we hereby confirm that we intend to file the required financial statements on or before November 4, 2015, by amendment to this Current Report on Form 8-K.

(b) Pro Forma Financial Information.

See paragraph (a) above.

(d)  Exhibits.

Exhibit No.	Description
10.1	Promissory Note by AR I Borrower, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.2	Deed of Trust and Security Agreement and Fixture Filing by AR I Borrower, LLC, in favor of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.3	Assignment of Leases and Rents by AR I Borrower, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.4	Note, Deed of Trust, and Related Loan Documents Assignment, Assumption and Modification Agreement by and among Sun Life Assurance Company of Canada, BR Ashton I Owner, LLC, Bluerock Residential Growth REIT, Inc., AR I Borrower, LLC, and Rob Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, and Harold Katz, dated as of August 19, 2015
10.5	Environmental Indemnity by Bluerock Residential Growth REIT, Inc. and BR Ashton I Owner, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.6	Guaranty of Non-Recourse Carve-Outs by Bluerock Residential Growth REIT, Inc. in favor of Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.7	Letter of Undertaking by and between BR Ashton I Owner, LLC and Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.8	Management Agreement by and between BR Ashton I Owner, LLC and GREP Southeast, LLC, dated as of August 19, 2015
10.9	Estoppel and Agreement by AR I Borrower, LLC for the benefit of BR Ashton I Owner, LLC, dated as of August 18, 2015
10.10	Assignment of Purchase and Sale Agreement and Escrow Instructions by and between BRG Ashton NC, LLC and BR Ashton I Owner, LLC, dated as of August 19, 2015
10.11	Bill of Sale and Assignment and Assumption of Leases and Service Contracts by and between AR I Borrower, LLC and BR Ashton I Owner, LLC, dated as of August 19, 2015

10.12 Limited Liability Company Agreement of BRG Ashton NC, LLC by and between BRG Ashton NC, LLC and Bluerock Residential Holdings, L.P., dated as of April 15, 2015

10.13 Limited Liability Company Agreement of BR Ashton I Owner, LLC by and between BR Ashton I Owner, LLC and BRG Ashton NC, LLC, dated as of July 7, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BLUEROCK RESIDENTIAL GROWTH REIT, INC.
DATE: August 25, 2015	By:	/s/ R. Ramin Kamfar
		R. Ramin Kamfar
		Chief Executive Officer and President

EXHIBIT INDEX

Exhibit No.	Description
10.1	Promissory Note by AR I Borrower, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.2	Deed of Trust and Security Agreement and Fixture Filing by AR I Borrower, LLC, in favor of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.3	Assignment of Leases and Rents by AR I Borrower, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of November 22, 2013
10.4	Note, Deed of Trust, and Related Loan Documents Assignment, Assumption and Modification Agreement by and among Sun Life Assurance Company of Canada, BR Ashton I Owner, LLC, Bluerock Residential Growth REIT, Inc., AR I Borrower, LLC, and Rob Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, and Harold Katz, dated as of August 19, 2015
10.5	Environmental Indemnity by Bluerock Residential Growth REIT, Inc. and BR Ashton I Owner, LLC for the benefit of Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.6	Guaranty of Non-Recourse Carve-Outs by Bluerock Residential Growth REIT, Inc. in favor of Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.7	Letter of Undertaking by and between BR Ashton I Owner, LLC and Sun Life Assurance Company of Canada, dated as of August 19, 2015
10.8	Management Agreement by and between BR Ashton I Owner, LLC and GREP Southeast, LLC, dated as of August 19, 2015
10.9	Estoppel and Agreement by AR I Borrower, LLC for the benefit of BR Ashton I Owner, LLC, dated as of August 18, 2015
10.10	Assignment of Purchase and Sale Agreement and Escrow Instructions by and between BRG Ashton NC, LLC and BR Ashton I Owner, LLC, dated as of August 19, 2015
10.11	Bill of Sale and Assignment and Assumption of Leases and Service Contracts by and between AR I Borrower, LLC and BR Ashton I Owner, LLC, dated as of August 19, 2015

10.12 Limited Liability Company Agreement of BRG Ashton NC, LLC by and between BRG Ashton NC, LLC and Bluerock Residential Holdings, L.P., dated as of April 15, 2015

10.13 Limited Liability Company Agreement of BR Ashton I Owner, LLC by and between BR Ashton I Owner, LLC and BRG Ashton NC, LLC, dated as of July 7, 2015

EX-10.1

Exhibit 10.1

PROMISSORY NOTE

1. DEFINED TERMS. As used in this Promissory Note, the following terms shall have the following meanings:

1.1 Borrower: AR I Borrower, LLC, a Delaware limited liability company, its successors and assigns.

1.2 Lender: Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of this Note.

1.3. Guarantor(s): Robert G. Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, Harold Katz

1.4 Principal Sum: $31,900,000.00

1.5 Interest Only Monthly Payment: $124,144.17.

1.6 Monthly Payment: $164,870.74

1.7 Date of Disbursement: November 22, 2013

1.8 Interest Rate: 4.67% per annum.

1.9 Default Rate: the Interest Rate plus five percent (5%) per annum.

1.10 Maturity Date: December 1, 2025

1.11 Amortization Period: three (3) years not amortizing with payments of interest only, followed by an amortization period of thirty (30) years.

1.12 Interim Interest Only Payment Date: December 1, 2013.

1.13 Initial Interest Only Payment Date: January 1, 2014.

1.14 First Interest and Principal Payment Date: January 1, 2017

1.15 Monthly Payment Date: January 1, 2014, and the first day of every month thereafter until the Maturity Date.

1.16	Lender's Payment Address:	c/o Sun Life Assurance Company of Canada
		One Sun Life Executive Park
		Wellesley Hills, Massachusetts 02481
		Attention: Mortgage Investments Group

1.17 Permitted Prepayment Period: the period commencing on the Date of Disbursement and ending on the Maturity Date, subject to and in accordance with the provisions of Paragraphs 9 and 10 of this Note.

1.18 Mortgage: a Deed of Trust and Security Agreement of even date with this Note from Borrower to, or for the benefit of, Lender, which secures Borrower's obligations hereunder, and which covers property located at 10320 Grobie Way, Charlotte, Mecklenburg County, North Carolina, known as Ashton Reserve at Northlake, and all modifications or amendments thereto or extensions thereof.

1.19 Loan Documents, Insurance Proceeds, Laws, Taking Proceeds, Secured Debt, Property, and Event of Default: shall have the same meanings as in the Mortgage.

2. DEBT. For value received, Borrower promises to pay to the order of Lender, the Principal Sum with interest on unpaid principal from the Date of Disbursement at the Interest Rate. Interest shall be calculated on a 360-day year of twelve 30-day months.

3. PAYMENTS. Commencing on the Initial Interest Only Payment Date and continuing on each Monthly Payment Date until the First Interest and Principal Payment Date, Borrower shall pay the Interest Only Monthly Payment to Lender. Commencing on the First Principal Payment Date and continuing on each Monthly Payment Date until the Maturity Date, Borrower shall pay the Monthly Payment to Lender. If a payment date is a non-business day, the Monthly Payment shall be due on the next business day. On the Interim Interest Only Payment Date, Borrower shall pay the interest then due and accrued from the Date of Disbursement.

On the Maturity Date, Borrower shall pay to Lender the remaining unpaid balance of principal, interest, and any other sums due. Lender shall have no obligation, express or implied, to refinance the "balloon payment" then due.

All payments shall be made in lawful money of the United States of America, in immediately available funds, at Lender's Payment Address, or at such other place as Lender may from time to time designate in writing.

4. LATE CHARGE AND ADDITIONAL INTEREST. Borrower recognizes that if it does not make the Monthly Payments when due, Lender will incur additional administrative expenses in servicing the loan, will lose the use of the money due and will be frustrated in meeting its other financial and loan commitments. Lender and Borrower acknowledge that different methods could be used to calculate Lender's actual damages if the Monthly Payment is not made when due. To avoid disputes over which method shall apply, Borrower agrees that a late charge equal to four percent (4%) of each Monthly Payment which is not made within fifteen (15) days following the date when due is a reasonable method for calculating said damages. Borrower shall pay such late charge to Lender immediately after the fifteen (15) day grace period for each Monthly Payment which is not made within fifteen (15) days when due. The payment of such late charge shall not affect Lender's other rights and remedies under this Note and the other Loan Documents.

The following shall accrue interest at the Default Rate: ((i) Lender expenditures made pursuant to Loan Document provisions unless Lender has been immediately reimbursed by Borrower upon demand; (ii) all amounts remaining due and unpaid after the Maturity Date; and (iii) all amounts outstanding under the Note after an Event of Default (including the outstanding principal balance and late charges) until the Event of Default is cured. Default Rate interest shall be applicable in addition to the late charge described above.

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5. APPLICATION OF PAYMENTS. Unless Lender elects otherwise, all sums received by Lender in payment hereunder shall be applied first to late charges, costs of collection or enforcement, all expenditures made by Lender pursuant to the Loan Documents, and any other similar amounts due, if any, under this Note and the other Loan Documents, then to amounts due pursuant to Paragraph 10 of this Note, then to interest due and payable under this Note, and the remainder to principal due and payable under this Note. If an Event of Default has occurred and is continuing, such payments may be applied to sums due under this Note or under the other Loan Documents in any order and combination that Lender may, in its sole discretion, determine.

6. WAIVERS. Borrower waives presentment for payment, demand, notice of nonpayment, notice of intention to accelerate the maturity of this Note, diligence in collection, commencement of suit against any obligor, notice of protest, and protest of this Note and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, before or after maturity of this Note, with or without notice to Borrower, and agrees that Borrower's liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Lender. Borrower consents to any and all extensions of time, renewals, waivers or modifications that may be granted by Lender with respect to the payment or other provisions of this Note, and to any substitution, exchange or release of the collateral for this Note, or any part thereof, with or without substitution of said collateral, and agrees to the addition or release of any guarantor, all whether primarily or secondarily liable, before or after maturity of this Note, with or without notice to Borrower, and without affecting Borrower's liability under this Note.

7. NO USURY. Lender and Borrower intend to comply at all times with applicable usury laws. If, at any time, such laws would render usurious any amounts called for under this Note or the other Loan Documents, it is Borrower's and Lender's express intention that Borrower shall never be required to pay interest on this Note at a rate in excess of the maximum lawful rate then allowed. The provisions of this Paragraph 7 shall control over all other provisions of this Note and the other Loan Documents which may be in apparent conflict hereunder. Any excess amount shall be immediately credited on the principal balance of this Note (or, if this Note has been fully paid, refunded by Lender to Borrower), and the provisions hereof shall be immediately reformed, and the amounts thereafter collectible under this Note shall be reduced, without the necessity of the execution of any further documents, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for under this Note. Any such crediting or refund shall not cure or waive any default by Borrower under this Note or the other Loan Documents. Borrower agrees that in determining whether or not any interest payable under this Note or the other Loan Documents exceeds the highest rate not prohibited by law, any non-principal payment (except payments specifically stated in this Note or in the other Loan Documents to be "interest"), including, without limitation, prepayment indemnification and late charges, shall, to the maximum extent not prohibited by law, be an expense, fee, or indemnification amount rather than interest. The term "applicable law" as used in this Note shall mean the laws of the state in which the Property is located or the laws of the United States, whichever laws allow the greater rate of interest, as such laws now exist or may be changed or amended or come into effect in the future.

8. INTENTIONALLY OMITTED.

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9. PREPAYMENT. Borrower shall have no right to prepay, and Lender shall have no obligation to accept tendered payments of, any portion of the unpaid Principal Sum outstanding under this Note prior to the beginning of the Permitted Prepayment Period. Borrower may prepay the entire unpaid Principal Sum (but not any lesser amount) (the "Amount Prepaid"), with accrued interest thereon to the date of prepayment, on any date on which a Monthly Payment is due after the beginning of the Permitted Prepayment Period, upon thirty (30) days' prior written notice to Lender of its intention to prepay, provided that Borrower pays, at the time of prepayment and in addition thereto, the amounts required to be paid pursuant to Paragraph 10 of this Note and all other sums due under this Note and the other Loan Documents. The date fixed for prepayment in such notice shall become the Maturity Date, except that for the purpose of calculating the amounts payable pursuant to Paragraph 10 of this Note, the Maturity Date shall mean the date set forth in Paragraph 1.10 of this Note.

10. PREPAYMENT INDEMNIFICATION. Borrower shall indemnify Lender against any loss, damage and expense Lender incurs if the unpaid Principal Sum is paid prior to the Maturity Date for any reason except (i) a payment of the entire unpaid Principal Sum, with accrued and unpaid interest, made within ninety (90) days of the Maturity Date or (ii) any application by Lender of Insurance Proceeds or Taking Proceeds to reduction of the Secured Debt pursuant to the other Loan Documents. Lender and Borrower acknowledge that different methods could be used to calculate Lender's actual damages if the unpaid Principal Sum is paid prior to the Maturity Date. To avoid disputes over which method shall apply, Borrower agrees that the following is a reasonable method to calculate damages in such case, and Borrower shall pay to Lender a prepayment premium in an amount equal to the greater of:

(a) one percent (1%) of the then unpaid Principal Sum; or

(b) the Discounted Yield Maintenance Prepayment Fee, as hereinafter defined. For purposes of this Paragraph 10, the term "Treasury Security" shall mean the non-callable U.S. Treasury bill, note or bond having a maturity date most closely equivalent to the Maturity Date. If more than one such non-callable bill, note or bond matures in the same month as the Maturity Date, the bill, note or bond with a coupon interest rate closest to the Interest Rate shall be the Treasury Security. For purposes of this Paragraph 10 the term "Treasury Yield" shall mean the per annum yield to maturity of the Treasury Security, as published in the Wall Street Journal on the fifth (5th) business day prior to the date of prepayment.

If the Interest Rate is greater than the Treasury Yield, the difference between the Interest Rate and the Treasury Yield shall be divided by twelve (12) and multiplied by the then unpaid Principal Sum to determine the monthly payment differential. The present value of the series of monthly payment differentials for the number of whole and partial months from the date of prepayment to the Maturity Date shall be calculated using the Treasury Yield as the discount rate, compounded monthly. The resulting sum of all the discounted monthly payment differentials shall be the Discounted Yield Maintenance Prepayment Fee.

If the Interest Rate is equal to or less than the Treasury Yield, the prepayment premium shall be one percent (1%) of the then unpaid Principal Sum.

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11. ACCELERATION INDEMNIFICATION. If the Maturity Date is accelerated by Lender because of the occurrence of an Event of Default, Lender will sustain damages due to the loss of its investment. Borrower therefore agrees to pay, at the time of acceleration, in addition to all other sums due under this Note and the other Loan Documents, as liquidated damages, an acceleration premium in an amount equal to the greater of:

(a) three percent (3%) of the then unpaid Principal Sum; or

(b) the Discounted Yield Maintenance Prepayment Fee, as defined in Paragraph 10 of this Note.

12. NONRECOURSE DEBT. Borrower shall be liable upon the indebtedness evidenced by this Note, for all sums to accrue or to become payable thereon and for performance of all covenants contained in this Note or in any of the other Loan Documents, to the extent, but only to the extent, of Lender's security for the same, including, without limitation, all properties, rights, estates and interests covered by the Mortgage and the other Loan Documents. No attachment, execution or other writ or process shall be sought, issued or levied upon any assets, properties or funds of Borrower other than the properties, rights, estates and interests described in the Mortgage and the other Loan Documents. In the event of foreclosure of such liens, mortgages or security interests, by private power of sale or otherwise, no judgment for any deficiency upon such indebtedness, sums and amounts shall be sought or obtained by Lender against Borrower. Subject to the foregoing, nothing herein contained shall be construed to prevent Lender from exercising and enforcing any other remedy relating to the Property allowed at law or in equity or by any statute or by the terms of any of the Loan Documents.

Notwithstanding the foregoing, Borrower shall be personally liable to Lender for:

(a) any damages, losses, liabilities, costs or expenses (including, without limitation, attorneys' fees) incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not previously applied to remedy tenant defaults) which have not been paid over to Lender; (ii) any rents prepaid by any tenant of the Property more than one (1) month in advance; (iii) any insurance proceeds or condemnation awards received by Borrower and not applied according to the terms of the Mortgage; provided, however, Borrower will not be personally liable for any failure described in this Section 12(a)(iii) if Borrower is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting from a casualty not reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents; (v) fraud, material misrepresentation or bad faith on the part of Borrower; (vi) any event or circumstance for which Borrower is obligated to indemnify Lender under the provisions of the Mortgage respecting Hazardous Substances, Contamination or Clean-Up; (vii) waste of the Property by Borrower, except for ordinary wear and tear, casualty and condemnation; (viii) Borrower's failure to pay real estate taxes or other assessments against the Property (but subject to the provisions of Section 4.1(c) of the Mortgage regarding Lender’s failure to pay the same, in which event, Borrower shall have no liability hereunder); or (ix) Borrower's failure to comply with the Americans with Disabilities Act of 1990, as amended, or any other Laws; and

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(b) all rents, issues and profits from the Property collected by Borrower after an Event of Default has occurred and is continuing or after an event or circumstance has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute an Event of Default, unless such rents, issues and profits are applied to the normal operating expenses of the Property or to the Secured Debt; provided, however, Borrower will not be personally liable for any failure described in this Section 12(b) if Borrower is unable to apply rents and security deposits as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding;

(c) default of either landlord or tenant under any Master Lease (as defined elsewhere in the Loan Documents) that may be applicable to the Property; ;

(d) the cost to repair any Casualty (as defined in the Mortgage) having a repair estimate as determined by the Lender equal to or less Three Hundred Thousand Dollars ($300,000.00); provided, however, the Borrower’s liability for the cost to repair any such Casualty will be released by Lender upon the Borrower’s satisfactory lien-free completion of such repair, as determined by the Lender in the Lender’s sole discretion.

Additionally, notwithstanding other provisions of this paragraph 12, the loan evidenced by this Promissory Note and the other Loan Documents shall become fully recourse debt to Borrower and Guarantor(s) if any of the following occur:

(a) Borrower secures either junior financing secured by the Property or mezzanine financing secured by interests in Borrower (collectively, “Junior Loan”) without written authorization from Lender; or

(b) Borrower pays any amount toward a Junior Loan at a time when there is an Event of Default under Lender’s loan, regardless of whether the Junior Loan was authorized or unauthorized by Lender; or

(c) Borrower files a petition under Chapter 11 of the United States Bankruptcy Code or under any other form of insolvency law, or any petition seeking any liquidation, dissolution, or similar relief under any present or future federal or state bankruptcy, insolvency or debtor relief acts or laws (collectively “Insolvency Petition”); or

(d) any such Insolvency Petition is filed against Borrower and Borrower cooperates with or acquiesces to such filing, fails to take commercially reasonable efforts to have the same dismissed (provided, however, commercially reasonable efforts shall not require the members of Borrower to make any capital contributions in connection with such efforts) or otherwise resists or opposes the lifting of the automatic stay by the bankruptcy court to permit Lender to foreclose the Mortgage.

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Lender shall not be limited in any way in enforcing the personal liability and obligations of Borrower under the Loan Documents against Borrower, nor shall Lender be limited in any way in enforcing the personal liability and obligations of any guarantor and indemnitor according to the terms of the instruments creating such liabilities and obligations. To that end, Borrower hereby expressly waives any right to require Lender to bring any action against any other person or to require that resort be had to any security and, without limiting the generality of the foregoing, Borrower herewith expressly waives any right Borrower otherwise might have or might have had under the provisions of Section 26-7 of the North Carolina General Statutes, et. seq. and/or other North Carolina laws.

13. SECURITY. This Note is secured by the other Loan Documents and all amendments, modifications, supplements, substitutions, additions, renewals, replacements and extensions thereof.

14. COLLECTION. Although the above paragraph 3 requires payment of the Secured Debt by immediately available funds (such as wire transfer), Lender may choose to accept a check, draft, money order or other instrument. However, payment by such instrument shall neither be applied to the Secured Debt nor diminish rights of Lender until actual cash proceeds of the instrument are unconditionally received by Lender and applied to the Secured Debt. Acceptance by Lender of actual cash proceeds of less than the total amount of the Secured Debt shall not constitute acceptance of such partial payment in satisfaction of the total amount of the Secured Debt, including, without limitation, the amounts payable to Lender pursuant to Paragraph 10 of this Note.

After an Event of Default under any of the Loan Documents, Lender may demand that Borrower make all future payments (i) by wire transfer, (ii) to a lock box, or (iii) as otherwise demanded by Lender.

15. ATTORNEYS' FEES. Upon any Event of Default, Borrower shall pay all costs incurred by Lender in the course of collection of sums due under this Note or in enforcing any of Borrower's other obligations under the Loan Documents, including, without limitation, reasonable attorneys' fees and expenses, at standard hourly rates, without regard to any statutory presumption, whether or not suit is filed by Lender.

16. ACCELERATION AND OTHER REMEDIES. The rights and remedies of Lender are set forth in the other Loan Documents and include, without limitation, the right to declare the Secured Debt, including the principal balance of this Note and accrued interest, immediately due and payable in case of an Event of Default.

17. JOINT AND SEVERAL LIABILITY. If there is more than one Borrower and/or Guarantor, the obligations and covenants of each Borrower and/or Guarantor shall be joint and several.

18. AMENDMENTS. This Note may not be changed or amended orally, but only by an agreement in writing, signed by the party against whom enforcement is sought.

19. GOVERNING LAW. This Note shall be governed by and construed in accordance with the laws of the state in which the Property is located.

20. WAIVER OF JURY TRIAL. To the fullest extent permitted by applicable law, Borrower and Lender hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other, on or in respect of any matter whatsoever arising out of, or in any way connected with, this Note or any of the other Loan Documents, or the relationship of Borrower and Lender hereunder or thereunder.

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21. CAPTIONS. All paragraph and subparagraph captions are for convenience of reference only and shall not affect the construction of any provision herein.

22. REGISTRATION. This Note shall be deemed to be in registered form at Lender's sole election. Such election may be made at any time without endorsement of this Note or any other action by Borrower. Borrower shall recognize any such election and, upon request by Lender, shall cooperate with Lender at Lender’s expense to facilitate the consummation of such election.

[The remainder of this page is intentionally blank. Signature pages to follow.]

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[Signature Page of Promissory Note]

IN WITNESS WHEREOF, this Note has been executed and delivered under seal this 22^nd  day of  November, 2013.

WITNESS:		BORROWER:
		AR I BORROWER, LLC
/s/ Benjamin Field		By:	/s/ Rob Meyer
Name:	Benjamin Field		Name:	Rob Meyer
			Title:	President
/s/ Patricia Mason
Name:	Patricia Mason

EX-10.2

Exhibit 10.2

Prepared by and after recording return to:

Diana R. Palecek, Esq.

Smith Moore Leatherwood LLP

101 North Tryon Street, Suite 1300

Charlotte, NC 28246

DEED OF TRUST AND SECURITY AGREEMENT

AND FIXTURE FILING

(Collateral is or includes fixtures.)

Cover Sheet

Date:	November 22, 2013
Borrower:	AR I BORROWER, LLC, a Delaware limited liability company
Borrower's Notice Address:	880 Glenwood Avenue, S.E., Suite H
	Atlanta, Georgia 30307
	With a copy to:
	David Katz
	H Katz Capital Group, Inc.
	928 Jaymor Road
	Suite A100
	Southampton, PA 18966
Trustee:	Chicago Title Insurance Company, a Nebraska corporation, and all successors and assigns for the benefit of Lender (as determined below).
Trustee's Notice Address:	200 South Tryon Street, Suite 800
	Charlotte, NC 28202
Lender:	Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of the Note (as herein defined).

Lender's Notice Address:	c/o Sun Life Assurance Company of Canada
	One Sun Life Executive Park
	Wellesley Hills, Massachusetts 02481
	Attention:  Mortgage Investments Group
Note Amount:	$31,900,000.00
State:	North Carolina

Record Owner of the Land (as defined herein):   AR I Borrower, LLC, a Delaware limited liability company

Exhibit A hereto is incorporated herein by reference.

(ii)

Table of Contents

1.	DEFINITION OF TERMS	1
2.	GRANTING CLAUSES	4
3.	REPRESENTATIONS AND WARRANTIES	5
3.1	Due Organization; Authority	5
3.2	Execution, Delivery and Effect of Loan Documents	5
3.3	Other Obligations	5
3.4	Construction and Completion of Improvements	6
3.5	Legal Actions	6
3.6	Financial Statements	6
3.7	Adverse Change to Property	7
3.8	Title to Property	7
3.9	Compliance with Laws and Private Covenants	7
3.10	Independence of the Property	7
3.11	Contamination	7
3.12	Anti-Terrorism Laws	7
3.13	Related Parties	8
4.	COVENANTS	9
4.1	Payments	9
	(a) Secured Debt	9
	(b) Property Taxes and Charges	9
	(c) Escrow	9
	(d) Taxes on Trustee or Lender	9
	(e) Liabilities	9
	(f) Right to Contest	10
	(g) Expenses	10
4.2	Operation of the Property	10
	(a) Maintenance; Alterations	10
	(b) Liens	11
	(c) Compliance with Laws and Private Covenants	11
	(d) Use	11
	(e) Inspection	11
	(f) Notification of Contamination; Clean-Up	11
4.3	Insurance	12
4.4	Sales and Encumbrances	13
4.5	Financial Records and Statements	16
4.6	Indemnity	16
4.7	Notices	17
4.8	Estoppel Certificates	17
4.9	Legal Existence	17
4.10	Defense and Notice of Actions	17
4.11	Lost Note	17
4.12	Personalty	17
4.13	Further Assurances	17

(iii)

5 .	CASUALTIES AND TAKINGS	18
5.1	Notice to Lender	18
5.2	Repair and Replacement	19
5.3	Insurance and Taking Proceeds	19
	(a) Collection	19
	(b) Assignment to Lender	19
5.4	Disbursement of Insurance Proceeds to Borrower	20
6.	CONCERNING TRUSTEE	22
6.1	Trustee's Covenants	22
6.2	Resignation of Trustee	22
6.3	Substitution of Trustee	22
6.4	Reconveyance and Agreements	22
6.5	Release of Lien	23
6.6	Exculpation and Indemnification of Trustee	23
7.	LEGAL PROCEEDINGS	23
8 .	DEFAULTS; REMEDIES OF LENDER	23
8.1	Events of Default	23
	(a) Breach of Named Covenants	23
	(b) Breach of Other Covenants	24
	(c) Misrepresentations	24
	(d) Bankruptcy	24
	(e) Adverse Court Action	25
8.2	Remedies	25
	(a) Acceleration	25
	(b) Foreclosure	25
	(c) Offset Rights	26
	(d) Cure Rights	26
	(e) Possession of Property	27
	(f) Receiver	27
	(g) Uniform Commercial Code Remedies	27
	(h) Judicial Actions	28
	(i) Subrogation	28
	(j) Sale	28
	(k) Other	28
8.3	Holding Over	29
8.4	General Provisions	29
	(a) Multiple Sales	29
	(b) Cumulative Remedies	29
	(c) Right to Purchase	29
	(d) Right to Terminate Proceedings	29
	(e) No Waiver or Release	29
	(f) Waivers and Agreements Regarding Remedies	30
	(g) Waiver of Jury Trial	31

(iv)

	(h) Lender's Discretion	31
	(i) Sales	31
9.	POSSESSION AND DEFEASANCE	31
9.1	Possession	31
9.2	Defeasance	31
10.	GENERAL	32
10.1	Lender's Right to Waive, Consent or Release	32
10.2	No Impairment	32
10.3	Amendments	32
10.4	No Usury	32
10.5	Notices	33
10.6	Successors and Assigns	33
10.7	Severability	33
10.8	Gender and Construction	33
10 9	Joint and Several Liability	34
10.10	Modifications	34
10.11	Governing Law	34
10.12	Captions	34
10.13	Nonrecourse	34
10.14	Sale, Assignment or Conversion of Secured Debt	34
10.15	Acknowledgment of Receipt	35
10.16	Time of the Essence	35
10.17	Exhibits	35
EXHIBIT A - Property Description

(v)

1. DEFlNlTlON OF TERMS. As used herein, the terms defined on the cover sheet hereof shall have the meanings given on such sheet, and the following terms shall have the following meanings:

1.1 Commitment: a certain mortgage loan commitment issued by Lender and accepted by Borrower for the loan secured by this Deed of Trust.

1.2 Casualty: as defined in Paragraph 5.1.

1.3 Clean-Up: removal and/or remediation of Contamination in accordance with Laws and good commercial practice.

1.4 Contamination: the presence of, use, generation, manufacture, storage, treatment, disposal, discharge or release on, from or to the Property of Hazardous Substances.

1.5 Contested Sum: as defined in clause (f) of Paragraph 4.1.

1.6 Deed of Trust: this Deed of Trust and Security Agreement and Fixture Filing and all modifications or amendments thereto or extensions thereof.

1.7 Environmental Actions or Claims: any claim, action or proceeding brought by a governmental authority in connection with Contamination or any claim or action brought by a third party relating to Contamination.

1.8 Event of Default: as defined in Paragraph 8.1.

1.9 Guaranty: a certain Guaranty of Non-Recourse Carve-Outs of even date herewith, made by the Guarantor(s) named in the Note.

1.10 Hazardous Substances: all substances and compounds prohibited or regulated under any Laws; materials containing asbestos or urea formaldehyde; gasoline and other petroleum products; flammable explosives; radon and other natural gases; radioactive materials; and polychlorinated biphenyls and similar solvents.

1.11 Improvements: all buildings, structures and other improvements now or hereafter existing, erected or placed on or under the Land, or in any way used in connection with the use, enjoyment, occupancy or operation of the Land or any portion thereof; all fixtures of every kind and nature whatsoever now or hereafter owned by Borrower and used or procured for use in connection with the Realty.

1.12 In its sole unfettered discretion: as defined in Paragraph 10.8.

1.13 Insurance Premiums: as defined in Paragraph 4.3.

1.14 Insurance Proceeds: as defined in clause (a) of Paragraph 5.3.

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1.15 Land: the land described in Exhibit A attached hereto, together with all estate, title, interests, title reversion rights, rents, increases, issues, profits, rights of way or uses, additions, accretions, servitudes, gaps, gores, liberties, privileges, water rights, water courses, alleys, streets, passages, ways, vaults, adjoining strips of ground, licenses, tenements, franchises, hereditaments, rights, appurtenances and easements, declarant’s rights, now or hereafter owned by Borrower and existing, belonging or appertaining to the Land, all claims or demands whatsoever of Borrower therein or thereto, either at law or in equity, in possession or in expectancy and all estate, right, title and interest of Borrower in and to all streets, roads and public places, opened or proposed, now or hereafter used in connection with, existing, belonging or appertaining to the Land.

1.16 Laws: any and all Federal, regional, state or local laws, ordinances, rules, regulations, statutes, decisions, orders, judgments, directives or decrees of any governmental or regulatory authority, court or arbitrator whether now in force or as amended or enacted in the future, including, without limitation, the Americans with Disabilities Act of 1990, the Water Pollution Control Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 as amended by the Superfund Amendment and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976, and all regulations thereunder.

1.17 Leases: all leases, license agreements and other occupancy or use agreements (whether oral or written), now or hereafter existing, which cover or relate to all or any portion of the Property, together with all options therefor, amendments thereto and renewals, modifications and guarantees thereof, and all rents, royalties, issues, profits, revenues, income and other benefits of the Property arising at any time (including, without limitation, after the filing of any petition under any present or future Federal or state bankruptcy or similar law) from the use or enjoyment thereof, including, without limitation, cash or securities deposited thereunder to secure performance by the tenants of their obligations thereunder, whether said cash or securities are to be held until the expiration of the terms of the Leases or applied to one or more of the installments of rent coming due, additional, percentage, participation and other rentals, fees and deposits.

1.18 Lease Assignment: a certain Assignment of Leases and Rents of even date herewith from Borrower to Lender and all replacements, substitutions, modifications or amendments thereto or extensions thereof .

1.19 Loan Documents: this Deed of Trust, the Note, the Lease Assignment, the Guaranty, and any and all other documents or instruments related thereto or to the Secured Debt now or hereafter given by or on behalf of Borrower and the Guarantor(s) to or for the benefit of Lender.

1.20 Net Proceeds: as defined in Paragraph 5.3.

1.21 Note: a certain Promissory Note of even date herewith made by Borrower in favor of Lender in the Note Amount and all replacements, substitutions, modifications, renewals and extensions thereof, which Note is payable in Monthly Payments, until the Maturity Date (as each term is defined in the Note).

1.22 Parties in Interest: as defined in clause (d) of Paragraph 8.1.

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1.23 Permitted Encumbrances: matters set forth or referred to in Schedule B Part 1 of Lender's title insurance policy issued in connection with the execution and recording of this Deed of Trust.

1.24 Personalty: all of Borrower's interest in personal property of any kind or nature whatsoever, whether tangible or intangible, which is used or will be used in the construction of, or is or will be placed upon, or is derived from or used in connection with, the maintenance, use, occupancy, or enjoyment of the Realty, including, without limitation, all accounts, documents, instruments, chattel paper, furniture, appliances, equipment, general intangibles and inventory (as those terms are defined in the Uniform Commercial Code of the State), all plans and specifications, contracts and subcontracts for the construction, reconstruction or repair of the Improvements, bonds, permits, licenses, guarantees, warranties, causes of action, judgments, claims, profits, security deposits, utility deposits, refunds of fees, Insurance Premiums, deposits paid to any governmental authority, letters of credit, insurance policies, Insurance Proceeds, Taking Proceeds, and escrowed funds together with all present and future attachments, accretions, accessions, replacements, and additions thereto and products and proceeds thereof.

1.25 Property: the Realty and Personalty or any portion thereof or interest therein, except as the context otherwise requires.

1.26 Property Liabilities: as defined in clause (e) of Paragraph 4.1.

1.27 Property Taxes and Charges: all real estate taxes, personal property taxes, betterments, assessments (general and special), imposts, levies, water, utility and sewage charges, any and all income, franchise, withholding, profits and gross receipts taxes, all other taxes and public charges, imposed upon or assessed against Borrower or the Property or upon the revenues, rents, issues, income and profits of use or possession thereof, and any stamp or other taxes which may be required to be paid with respect to any of the Loan Documents, any of which might, if unpaid, result in a lien on the Property, regardless to whom paid or assessed.

The term "real estate taxes" in the foregoing sentence shall include any form of assessment, license fee, license tax, business license fee or tax, commercial rental tax, levy, charge, penalty, tax or similar imposition, imposed by any authority having the direct power to tax, including any city, county, state or Federal government, or any school, architectural, lighting, drainage or other improvement or special assessment district thereof, against any legal or equitable interest in the Property, except general business taxes imposed on Lender other than taxes or other amounts referred to in Paragraph 4.1(d).

1.28 Realty: the Land and Improvements or any portion thereof or interest therein, as the context requires.

1.29 Restoration: as defined in clause (b)(i) of Paragraph 5.4.

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1.30 Secured Debt: to the extent not prohibited by Laws, all principal, interest, late charges and other sums, charges, premiums, prepayment and other indemnification amounts or other amounts due or to become due under the Loan Documents, together with any other sums expended or advanced by or on behalf of Lender under the Loan Documents or otherwise with respect to the care, maintenance or preservation of the Property or the enforcement of the Loan Documents to the extent permitted under the Loan Documents.

1.31 Taking: as defined in Paragraph 5.1.

1.32 Taking Proceeds: as defined in clause (a) of Paragraph 5.3.

1.33 Trustee: as defined on the cover sheet hereof.

2. GRANTING CLAUSES. For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower has executed and delivered the Loan Documents and hereby irrevocably and absolutely grants, transfers, assigns, mortgages, bargains, sells and conveys to Trustee and Trustee’s successors and assigns in trust for the benefit of Lender with all POWERS OF SALE AND STATUTORY RIGHTS AND COVENANTS in the State, all of Borrower's estate, right, title and interest in, to and under the Realty, and grants to Lender a first and prior security interest in the Personalty and any and all of the following, whether now owned or held or hereafter acquired or owned by Borrower:

(a) all Leases;

(b) all profits and sales proceeds including, without limitation, earnest money and other deposits, now or hereafter becoming due by virtue of any contract or contracts for the sale of Borrower's interest in the Property; and

(c) all proceeds (including claims thereto or demands therefore) of the conversion, voluntary or involuntary, permitted or otherwise, of any of the foregoing into cash or liquidated claims.

TO HAVE AND TO HOLD the Realty, together with all privileges, hereditaments, easements, rights of way and appurtenances thereunto belonging and the rents, issues, royalties and profits thereof to said Trustee, and the Trustee’s successors and assigns forever, upon the trusts, terms and conditions, and for the uses, hereinafter set forth.

FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS OF BORROWER TO LENDER, in such order of priority as Lender may elect:

(1) payment of the Secured Debt;

(2) payment of such additional sums with interest thereon which may hereafter be loaned to Borrower by Lender pursuant to the Loan Documents, even if the sum of the amounts outstanding at any time exceeds the Note Amount;

(3) due, prompt and complete observance, performance, fulfillment and discharge of each and every obligation, covenant, condition, warranty, agreement and representation contained in the Loan Documents; and

4

(4) any additional loans as well as any and all present or future advances, readvances and other future obligations incurred under the Loan Documents made by Lender to or for the benefit of Borrower or the Property, to the fullest extent permitted by applicable law, including, without limitation: (a) principal, interest, late charges, fees and other amounts due under the Note or this Deed of Trust; (b) all advances by Lender to Borrower or any other person to pay costs of erection, construction, alteration, repair, restoration, maintenance and completion of any improvements on the Property; (c) all advances made or costs incurred by Lender for the payment of real estate taxes, assessments or other governmental charges, maintenance charges, insurance premiums, appraisal charges, environmental inspection, audit, testing or compliance costs, and costs incurred by Lender for the enforcement and protection of the Property or the lien of this Deed of Trust; (d) all legal fees, costs and other expenses incurred by Lender by reason of any default or otherwise in connection with the Loan; and (e) as otherwise permitted pursuant to Article 7 of Chapter 45 of the North Carolina General Statutes. The maximum principal amount, including present and future loans, which may be secured hereby at any one time shall not exceed FORTY MILLION AND 00/100 Dollars ($40,000,000.00). The time period within which such future Loan may be incurred and such future advances may be made shall not extend for more than thirty (30) years from the date of this Deed of Trust. Borrower and Lender agree that such future advances or loans shall be secured by this Deed of Trust regardless of whether such future advances or loans are evidenced by a written instrument stipulating that such obligation is secured hereby.

This Deed of Trust is also intended to be a security agreement under the Uniform Commercial Code as in force from time to time in the State.

3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to Lender that the following are true, correct and complete as of the date of this Deed of Trust.

3.1 Due Organization; Authority. Borrower is duly organized and validly existing and in good standing under the laws of the State and has power adequate to carry on its business as presently conducted, to own the Property, to make and enter into the Loan Documents and to carry out the transactions contemplated therein.

3.2 Execution, Delivery and Effect of Loan Documents. The Loan Documents have each been duly authorized, executed and delivered by Borrower, and each is a legal, valid and binding obligation of Borrower, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally and subject to the exercise of judicial discretion in accordance with general principles of equity.

3.3 Other Obligations. Borrower is not in violation of any material term or provision of any document governing its organization or existence or in to the best of Borrower’s knowledge, in default under any material instruments or obligations relating to Borrower's business, Borrower's assets or the Property. No party has asserted any material claim or default relating to any of Borrower's assets or the Property. The execution and performance of the Loan Documents and the consummation of the transactions contemplated thereby will not materially violate or contravene or constitute a material default under any charter, certificate, by-laws, partnership agreement, trust declaration, contract, agreement, document or other instrument to which Borrower is a party or by which Borrower may be bound or affected, and do not and will not violate or contravene any Laws to which Borrower is subject; nor do any such instruments impose or contemplate any obligations which are or will be materially inconsistent with the Loan Documents. Borrower has filed all Federal, state, county and municipal income tax returns required to have been filed by Borrower and has paid all taxes which have become due pursuant to such returns or pursuant to any assessments received by Borrower. Borrower does not know of any basis for additional assessment with regard to any such tax. No approval by, authorization of, or filing with any Federal, state or municipal or other governmental authority is necessary in connection with the authorization, execution and delivery of the Loan Documents.

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3.4 Construction and Completion of Improvements. The presently existing Improvements have been completed and installed in a good and workmanlike manner, and to the best of Borrower’s knowledge in compliance with Laws and any plans and specifications previously delivered to Lender. To the best of Borrower’s knowledge, the Improvements do not contain any urea formaldehyde or asbestos. The Improvements are served by electric, gas, sewer, water, telephone and other utilities required for the present and contemplated uses and operation thereof. Any and all streets, utility lines and off-site improvements, which provide access to the Property or are necessary for its present and contemplated uses, have been completed, are serviceable and have been accepted or approved by appropriate governmental bodies.

3.5 Legal Actions. There are no material actions suits or proceedings including, without limitation, any Environmental Actions or Claims (whether or not material), condemnation, insolvency or bankruptcy proceedings, pending or, to the best of Borrower's knowledge and belief, threatened against or affecting Borrower, its business or the Property; or investigations, at law or in equity before or by any court or governmental authority pending or, to the best of Borrower's knowledge and belief, threatened against or affecting Borrower, Borrower's business or the Property, except actions, suits and proceedings fully covered by insurance and heretofore fully disclosed in writing to Lender or, which if resolved adversely to Borrower, would not have a material, adverse effect on Borrower or the Property. Borrower is not in default with respect to any order, writ, injunction, decree or demand of any court or any governmental authority affecting Borrower or the Property. Furthermore, to the best knowledge and belief of Borrower, except as disclosed to Lender in writing, there is no basis for any unfavorable decision, ruling or finding by any court or governmental authority which would in any material respect adversely affect the validity or enforceability of the Loan Documents, or the condition of Borrower (financial or otherwise) or the ability of Borrower to meet Borrower's obligations under the Loan Documents.

3.6 Financial Statements. All statements, financial or otherwise, submitted to Lender in connection with the Commitment are true, correct and complete in all material respects, and such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied (or other basis of accounting practices permitted by Lender) and fairly present the financial condition of the parties or entities covered by such statements as of the date thereof. Since the date thereof, neither Borrower nor any such party or entity has experienced any material adverse change in its finances, business, operations, affairs or prospects.

6

3.7 Adverse Change to Property. No event or series of events has occurred since the date of the Commitment which would, either individually or collectively, materially and adversely affect the Property.

3.8 Title to Property. Borrower has good and clear record and marketable title to the Realty and good and merchantable title to the Personalty, free of all liens, claims, encumbrances or restrictions other than the Permitted Encumbrances.

3.9 Compliance with Laws and Private Covenants. The Property complies in all material respects with all Laws. Borrower has examined and is familiar with all private covenants affecting the Property, including, without limitation, private covenants contained in the Permitted Encumbrances and there now exists, to the best of Borrower’s knowledge, no material violation thereof. Borrower has no notice that any of the Improvements encroach upon any easement over the Land or encroach upon adjacent property or that buildings or other structures on adjacent property encroach upon the Land.

3.10 Independence of the Property. The Land is a separate and distinct parcel for tax purposes and is not subject to Property Taxes and Charges against any other land. Borrower has not by act or omission permitted any building or other improvements on property not covered by this Deed of Trust to rely on the Property or any part thereof or any interest therein to fulfill any municipal or governmental requirement for the existence of such property, building or improvement, and no Improvement on the Property relies on any property not covered by this Deed of Trust or any interest therein to fulfill any governmental or municipal requirement. Borrower has not by act or omission impaired the integrity of the Property as a single, separate, subdivided zoning lot separate and apart from all other property.

3.11 Contamination. To the best of Borrower's knowledge and belief, after due investigation and inquiry, except as disclosed by that certain Phase I Environmental Site Assessment Report prepared by Partner Engineering North Carolina, PLLC, and dated October 25, 2013, a copy of which has been delivered by Borrower to Lender (the “Phase I Report”), no Contamination has occurred at the Property.

3.12 Anti-Terrorism Laws. Borrower (in section 3.12, “Borrower” includes Borrower’s officers, directors, shareholders, partners, indirect equity interest holders, members, and affiliates) has complied and will comply with Anti-Terrorism Laws.

Borrower is not and shall not be a Prohibited Person.

Borrower: (a) shall not conduct business, transactions, or dealings with a Prohibited Person; and (b) shall not engage in or conspire to engage in transactions violative of prohibitions of EO13224.

Upon Lender’s request, Borrower shall promptly deliver to Lender certification or evidence confirming that Borrower: (a) is not a Prohibited Person; and (b) has not engaged in business, transactions, or dealings with a Prohibited Person, including contributing or receiving funds, goods, or services, to or for the benefit of a Prohibited Person.

7

Borrower has established policies and procedures to prevent and detect money laundering, including processes to meet all applicable anti-money laundering requirements of the USA Patriot Act.

“Anti-Terrorism Laws” are laws and regulations related to terrorism or money laundering, including Executive Order 13224 and the USA Patriot Act.

“Executive Order 13224” is Executive Order Number 13224 on Terrorism Financing, effective September 24, 2001.

“Prohibited Person” is any person (a) listed in the Annex to or subject to the provisions of Executive Order 13224; (b) whose name appears on the United States Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) current list of “Specifically Designated National and Blocked Persons” (published in various media, including on the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (c) who commits, threatens, or supports “terrorism,” as defined in EO 13224; (iv) who violates laws and regulations related to terrorism or money laundering, including EO 13224 and the USA Patriot Act; or (d) who affiliates with any entity or person described above.

“USA Patriot Act” is the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56.

3.13 Related Parties. Neither Borrower nor any beneficial owner of the Property securing the Loan is a Related Party of Lender. “Related Party” means an officer, director, employee, significant shareholder, or such person’s spouse or minor child.

3.14 Investment Activities in Iran Energy Sector. Borrower (in Section 3.14 "Borrower" includes any successor, subunit, parent, subsidiary, or entity under common ownership or control with Borrower) shall not use any proceeds of the loan from Lender to provide goods or services in the Energy Sector in Iran. Upon Lender’s request, Borrower shall deliver to Lender within five (5) business days certification or evidence confirming that Borrower: (a) is not providing goods or services in the Energy Section in Iran; and (b) has not been placed on a list (or notified that it may be placed on a list) by any state or governmental authority as providing goods or services in the Energy Sector in Iran.

Borrower has established policies and procedures to prevent it from providing goods or services in the Energy Sector in Iran,

"Energy Sector" shall mean activities to develop petroleum or natural gas resources or nuclear power in Iran, including, but not limited to, providing oil or liquefied natural gas tankers or products used to construct or maintain pipelines used to transport oil or liquefied natural gas for the energy sector in Iran.

"Iran" means the Government of Iran and any agency or instrumentality of the Government of Iran.

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4. COVENANTS.

4.1 Payments.

(a) Secured Debt. Borrower shall pay to Lender the Secured Debt at the times and in the manner provided in the Note and the other Loan Documents.

(b) Property Taxes and Charges. Except as provided in Paragraph 4.1(f), Borrower shall pay, prior to delinquency, all Property Taxes and Charges. Upon Lender's written request, Borrower shall furnish to Lender, within 30 days after the date on which any such Property Taxes and Charges are due and payable, official receipts from the appropriate taxing authority, or other proof satisfactory to Lender, evidencing the payment thereof.

(c) Escrow. Borrower shall pay to Lender monthly, on each date on which a Monthly Payment (as defined in the Note) is due, 1/12 of such amount as Lender from time to time estimates will be required to pay all Property Taxes and Charges when due. If the Property Taxes and Charges are due in less than twelve months from the First Payment Date (as defined in the Note), Borrower shall make equal monthly payments in amounts sufficient to pay the Property Taxes and Charges when due. Borrower shall also pay to Lender monthly, on each date on which a Monthly Payment is due under the Note, 1/12 of such amount as Lender from time to time estimates will be required to pay Insurance Premiums. If the Insurance Premiums are due in less than twelve months from the date of the first Monthly Payment, Borrower shall make equal monthly payments in amounts sufficient to pay the Insurance Premiums when due. Lender's estimates shall be based on the amounts actually payable or, if unknown, on the amounts actually paid for the year preceding that for which such payments are being made. Borrower shall transmit to Lender bills for the Property Taxes and Charges and Insurance Premiums as soon as received. When Lender has received funds sufficient to pay the same, Lender shall, except as provided in Paragraph 8.2, pay such bills in a timely fashion so as to avoid penalty or delinquency. (Borrower shall have no liability for Lender’s failure to timely pay Property Taxes and Charges to the extent Borrower has paid Lender the amounts set forth in this Section 4.1). If the amount paid by Borrower in any year exceeds the aggregate required, such excess shall be applied to escrow payments for the succeeding year. Any deficiencies shall be paid by Borrower to Lender on demand. Payments for such purposes may be made by Lender at its discretion even though subsequent owners of the Property may benefit thereby. Lender shall not be a trustee of such funds and may commingle them with its general assets without any obligation to pay interest thereon or account for any earnings, income or interest on such funds.

(d) Taxes on Trustee or Lender. If any Law imposes upon Trustee or Lender the obligation to pay the whole or any part of the Property Taxes and Charges or changes in any way Laws for the taxation of deeds of trust or debts secured by mortgages or the manner of collection of any such taxes, so as to affect adversely this Deed of Trust or the Secured Debt, then Borrower shall pay such Property Taxes and Charges or reimburse Trustee and Lender immediately therefor, unless in the opinion of counsel to either Trustee or Lender, it might be unlawful to require Borrower to pay the same or such payment might result in the imposition of interest prohibited by Laws. In such case, an Event of Default shall exist, but if Lender accelerates the Secured Debt solely because of such Event of Default, the Secured Debt shall not include the prepayment indemnification provided for in Paragraph 10 of the Note.

(e) Liabilities. Except as provided in Paragraph 4.1(f), Borrower shall pay, prior to delinquency, all debts and liabilities incurred in the construction, operation, development, use, enjoyment, repair, maintenance, replacement, restoration, management and Clean-Up of the Property ("Property Liabilities") including without limitation, utility charges, sums due to mechanics and materialmen and other sums secured or which might be secured by liens on the Property.

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(f) Right to Contest. Borrower may, in good faith and by appropriate proceedings, contest the validity, applicability or amount of any asserted Property Taxes and Charges, Property Liabilities or liens, charges, attachments or lis pendens under Paragraph 4.2(b) ("Contested Sum") after written notice of the same to Lender. During such contest, Borrower shall not be deemed in default hereunder if: (i) prior to delinquency of the Contested Sum, Borrower deposits with Lender or Lender's nominee cash or other security, in form reasonably satisfactory to Lender, adequate to cover the payment of such Contested Sum and any obligation, whether matured or contingent, of Borrower, Trustee or Lender therefor, together with interest, costs and penalties thereon; and (ii) Borrower promptly pays any amounts adjudged to be due, together with all costs, penalties and interest thereon, on or before such judgment becomes final. Each such contest shall be concluded and the Contested Sum, interest, costs and penalties thereon shall be paid prior to the date such judgment becomes final and before any writ or order is issued under which the Property could be sold pursuant to such judgment.

(g) Expenses. To the extent allowed by Laws, Borrower shall pay, on demand, but without counterclaim, setoff, deduction, defense, abatement, suspension, deferment, discrimination or reduction all fees (including, without limitation, reasonable attorneys' fees and disbursements) taxes, recording fees, commissions and other liabilities, costs and expenses incurred by Lender or Trustee in connection with: (i) the making or enforcement of the Loan Documents; (ii) Trustee's or Lender's exercise and enforcement of its rights and remedies under Paragraphs 7 and 8; (iii) Trustee's or Lender's protection of the Property and its interest therein in accordance with the Loan Documents; and (iv) any amendments, consents, releases, or waivers if granted by Lender under the Loan Documents

Borrower shall not be entitled to any credit on the Secured Debt by reason of its payment of any sums required to be paid under Paragraph 4.1(b) through (f) unless such sums are paid to reimburse Lender for amounts paid by Lender and added by Lender to the Secured Debt.

4.2 Operation of the Property.

(a) Maintenance; Alterations. Borrower shall maintain and preserve the Property in good repair and condition (normal wear and tear, casualty and condemnation excepted) and shall correct any defects or faults in the Property. Borrower shall not commit, permit or suffer any demolition or waste of the Property or any use or occupancy which constitutes a public or private nuisance. Borrower shall not do, permit or suffer to be done any act whereby the value of the Property may be materially decreased. Borrower shall not make any material alterations, improvements, additions, utility installments or the like to the Property without the prior written consent of Lender in each instance; provided, however, Borrower may make replacements or substitutions of any item of the Personalty if the replacement or substitution is of a quality, utility, value, condition and character similar to or better than the replaced or substituted item and is free and clear of any lien, charge, security interest or encumbrance, except as created or permitted by this Deed of Trust. For avoidance of doubt, this Section 4.2 shall not operate to preclude non-structural routine maintenance and repair of the Property so long a such maintenance or repair does not reduce the value of the Property or change the use of the Property.

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(b) Liens. Except as provided in Paragraph 4.1(f) Borrower shall promptly discharge any mechanics, laborers', materialmens' or similar lien or any other lien, charge, attachment, or lis pendens filed or recorded against the Property which relates to Borrower, the Property or any Contamination.

(c) Compliance with Laws and Private Covenants. Borrower shall keep, observe, and satisfy, and not suffer violations of, Laws and private covenants (whether or not listed as Permitted Encumbrances) materially affecting the Property.

(d) Use. Borrower shall not permit the use or occupancy of the Property other than for multi-family for rental apartment uses pursuant to Leases which shall have been approved in advance and in writing by Lender pursuant to the Lease Assignment or which require no approval thereunder. Borrower shall not use or permit the use or occupancy of the Property in a manner which will result in Contamination and Borrower shall take all steps reasonably necessary under the circumstances including, without limitation, periodic inspections and assessments of the Property, to determine whether Contamination has occurred.

(e) Inspection. Whether or not an Event of Default (as defined in Paragraph 8.1) has occurred and exists, Lender and its agents and contractors, shall have the right, but not the duty or obligation, to enter upon the Property at reasonable times without delay, hindrance or restriction, in order to conduct appraisals and inspections of the Property, including, but not limited to environmental inspections. If, in the reasonable belief of Lender, Contamination has occurred or is likely to occur Lender shall have the right, but not the duty or obligation to conduct, or cause to be conducted, testing, including, but not limited to, soil, air and groundwater sampling, regarding such Contamination. Any environmental inspections or testing shall be paid for by Borrower. Lender shall have the right, but not the duty or obligation, to disclose the results of such inspections and testing as required by Laws or as deemed appropriate by Lender.

(f) Notification of Contamination; Clean-Up. Borrower shall notify Lender immediately upon discovery of any Contamination. Borrower shall not, without Lender's prior consent, initiate Clean-Up of any Contamination, or enter into any settlement agreement, consent decree or other compromise with respect to any violation or alleged violation of any Laws concerning Hazardous Substances, if such Clean-up, settlement agreement, consent decree or other compromise might, in Lender's judgment, impair the value of Lender's security hereunder; provided, however, that Lender's prior consent shall not be required in the event the Contamination either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary, such that it is impossible to obtain Lender's consent before taking such remedial action; provided further, however, that in such event, Borrower shall notify Lender as soon as practicable of any remedial action so taken.

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4.3 Insurance. Borrower shall obtain and keep in force, with one or more insurers with a Best's Rating of A-/VII or higher, such insurance as Lender may from time to time specify by notice to Borrower, including, as a minimum insurance providing: (i) commercial general liability and property damage coverage with a broad form coverage endorsement, with limits of liability determined to be acceptable by Lender from time to time; (ii) protection against fire, "extended coverage" and other "All Risk" perils, including, if specifically required by Lender, earthquake, to the full replacement cost of the Improvements and Personalty; (iii) rent loss insurance in an amount of not less than a sum equal to 12 months of rental income from all Leases; and (iv) flood insurance if the Property is located in an area identified by FEMA or any successor as an area having special flood hazards or in which flood insurance has been made available under applicable Laws. All property insurance policies shall include the standard mortgagee clause in the State naming Lender as the first mortgagee with all losses payable to Lender, and shall also include an agreed-amount endorsement sufficient to prevent Borrower from becoming a co-insurer. All liability policies shall name Lender as an additional insured. All insurance policies shall provide that the policy may not be cancelled without 30 days prior written notice to Lender or otherwise modified without 10 days prior written notice to Lender, and that no act or thing done by Borrower shall invalidate the policy as against Lender, and that the deductible for any single Casualty shall not be more than $25,000. At least 30 days prior to the expiration date of any policy required hereunder, Borrower shall provide Lender or Lender's designee with evidence of compliance with this Paragraph 4.3, in such form as required from time to time by Lender. Such form shall bear notations evidencing the prior payment of premiums ("Insurance Premiums") or shall be accompanied by other evidence satisfactory to Lender that such payment has been made.

All property insurers shall agree not to acquire any rights of recovery against Lender by subrogation. Borrower, to the full extent permitted by Laws and to the full extent permitted without invalidating the insurance policies required above, shall obtain endorsements by all insurers waiving any right of subrogation against tenants under any Leases and shall require the same of such tenants. Lender shall not because of accepting, rejecting, approving or obtaining insurance, incur any liability for the existence, nonexistence, continuation, form or legal sufficiency of any insurance, the solvency of any insurer, or the payment of losses.

Borrower shall furnish to Lender or Lender's designee an original of all policies of insurance required under this Deed of Trust, provided, however, that if Lender consents to Borrower providing any of the insurance required under this Deed of Trust through blanket policies carried by Borrower and covering more than one location, Borrower shall furnish Lender or Lender's designee with a certificate of insurance for each such policy, setting forth the coverage, the limits of liability as to the Property, the name of the insurer, the policy number and the expiration date, or with a certified true copy of the original of each such policy.

Borrower shall keep, observe and satisfy, and not suffer violations of the requirements, including those requirements pertaining to acts committed or conditions existing on the Property, of insurance companies and any bureau or agency which establishes standards of insurability affecting the Property. Borrower shall not carry separate or additional insurance concurrent in form or contributing in the event of loss with that required by this Deed of Trust.

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Upon foreclosure of this Deed of Trust or other transfer of title or assignment of the Property in discharge, in whole or part, of the Secured Debt, all right, title and interest of Borrower in and to all policies of insurance required by this Paragraph 4.3 shall inure to the benefit of and pass to Lender.

4.4 Sales and Encumbrances.

A. Except as herein expressly provided, Borrower shall not, without the prior written consent of Lender, which consent, if given in Lender's sole unfettered discretion, may be conditioned upon a change in the interest rate under the Note, payment of a fee or change in the term of the Note, adjustment of the Maturity Date (as defined in the Note) or amortization period or one or more of the foregoing or other requirements of Lender:

(a) convey, assign, sell, mortgage, encumber, pledge, dispose of, hypothecate, grant a security interest in, grant options with respect to, or otherwise dispose of (directly or indirectly or by operation of law or otherwise, of record or not) all or any part of any legal or beneficial interest in any part or all of the Property or the Leases, or any interest therein; or

(b) directly or indirectly sell, assign or otherwise dispose of (whether or not of record or for consideration), or permit the sale, assignment or other disposition of; (i) any legal or beneficial interest in the stock of any corporation which is either Borrower or is a beneficial owner of all or part of Borrower or the Property; or (ii) any legal or beneficial interest in Borrower (or any trust of which Borrower is a trustee) if Borrower is a limited or general partnership, limited liability company, joint venture, trust, nominee trust, tenancy in common or other unincorporated form of business association or form of ownership, except limited partnership interests if Borrower is a limited partnership.

B. Permitted Property Transfers. Notwithstanding the foregoing, the Borrower shall have the right to sell the Property in its entirety in an arms-length transaction to a third party independent of the Borrower, provided that the following conditions are satisfied: (i) the proposed buyer is acceptable to the Lender as measured and judged by normal and ordinary standards of financial strength, credit history, real estate management ability and experience and professional character, as determined by the Lender in its sole discretion, and (ii) such buyer agrees to assume all of the obligations of the Borrower under the Loan Documents and the Secured Debt, and (iii) in the case of the first transfer of the Property, Borrower shall pay Lender a fee equal to 1% of the then outstanding principal balance of the Note and shall pay all costs of Lender in connection with such transfer, including legal fees, and (iv) in the case of the second transfer of the Property, Borrower shall pay Lender a fee equal to 2% of the then outstanding principal balance of the Note and shall pay all costs of Lender in connection with such transfer, including legal fees. No more than two sales of the Property shall be permitted during the term of the Secured Debt. Borrower shall give Lender no less than thirty (30) days notice of any proposed transfer of the Property, such notice to be accompanied by documentation suitable to show the financial strength, credit history, real estate management ability and experience and professional character of the proposed buyer. Additionally, the Borrower shall furnish to the Lender upon request additional information concerning the proposed buyer as determined by Lender as necessary or helpful to measure and judge the financial strength, credit history, real estate management ability and experience and professional character of the proposed buyer.

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Upon the transfer of the Property by AR Borrower I, LLC (“Original Borrower”) pursuant to the foregoing with the consent of the Lender and provided that the Original Borrower has provided to Lender a “Phase I” environmental assessment report which is satisfactory to Lender in Lender’s sole discretion, then upon the foregoing, the Lender will agree to release the Original Borrower, Robert G. Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, and Harold Katz (collectively, the “Original Obligors”) from any further obligations or liabilities under the Loan Documents as of the date of the assumption of the Loan Documents by the buyer of the Property (the “Assumption Date”), except as expressly set forth in the remaining section of this Paragraph. Notwithstanding the foregoing, Original Obligors will not be released from any obligations under the Loan Documents relating to (a) Hazardous Substances, or any Contamination or Clean-Up of Hazardous Substances on, at or under the Property during the period up to the Assumption Date, notwithstanding when any such obligation may be learned of, discovered or made evident, or (b) any obligation arising under the Loan Documents for periods prior to the Assumption Date, but which obligation may be learned of, discovered or made evident on or after the Assumption Date (collectively, the “Continuing Obligations”). In the event of any default by Original Obligors in the performance of any Continuing Obligations, which continues after written notice thereof from Lender to Original Obligors, Lender may exercise all remedies against Original Obligors available to it under the terms of the Loan Documents or this Agreement or applicable law as if the release of the Original Obligors had not been entered into by Lender.

C. Right of First Refusal. In the event that Borrower desires to obtain permanent financing for Phase II of the Property (“Phase II”), then the Borrower agrees to notify Lender in writing prior to Borrower seeking financing from any other lender. Borrower agrees to provide Lender with a reasonable time and opportunity review Borrower’s notice of intent to finance, but no more than ten (10) business days, prior to submitting a mortgage loan application to another institutional lender. Lender shall have the option during the ten (10) business day period to notify Borrower either that Lender would entertain a loan application for such financing or that Lender is not interested receiving an application for the financing of Phase II. Borrower acknowledges that Lender has no obligation to offer to Borrower a loan for Phase II, to respond to Borrower within the time period set forth above, or to offer to Borrower any particular loan terms. In the event that Lender does not respond to Borrower’s notice of intent, then Borrower shall have the unfettered right to seek permanent financing for Phase II from any source whatsoever.

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D. Family Transfers. Notwithstanding the foregoing restrictions, transfers of ownership interests among Family Members (as hereafter defined) for, or to entities created for Family Members for, estate planning purposes will be permitted without a transfer fee, provided Borrower receives Lender’s prior written approval and subject to Lender’s then current standard requirements for such transfers. Additionally, in connection with any of the transfers contemplated in this paragraph, the following conditions shall be satisfied: (i) Borrower shall give Lender no less than thirty (30) days notice prior to any such transfer, such notice to be accompanied by evidence reasonably satisfactory to Lender in its sole discretion that the proposed transferee is a permitted transferee under this paragraph, and (ii) Borrower shall pay all costs of Lender in connection with such transfer, including legal fees. As used herein, the “Family Member” shall mean for each of Robert Meyer, Jorge Sardinas, Mark Mechlowitz, Robert Fishel and Harold Katz, the spouse, parents, children and grandchildren of said person.

E. Internal Transfers. As of the date hereof, the Borrower is a single member Delaware limited liability company, with its sole member being AR Owner, LLC, a Delaware limited liability company comprised of multiple members (the “Venture Entity”). Notwithstanding the foregoing restrictions, the following transfers shall be permitted subject to Borrower’s compliance with the conditions set forth below:

(1) Transfers of ownership interests in the Venture Entity among the members of the Venture Entity pursuant to the buy/sell provisions set forth in the Venture Entity operating agreement in the form approved by Lender as of the date hereof;

(2) Provided that the Venture Entity is managed directly or indirectly by all of Rob Meyer, Jorge Sardinas, Mark Mechlowitz and Robert Fischel, then direct and indirect interests in Borrower may be transferred among the members of the Venture Entity; and

(3) Transfer of all or a portion of HKCG Realty Associates Limited’s interest in the Venture Entity to an affiliated entity (an entity owned or controlled, in whole or in part, by Harold Katz), provided that Harold Katz continues to maintain at least a 25% direct or indirect interest in the Borrower following such transfer.

Additionally, in connection with any of the transfers contemplated in this paragraph, the following conditions shall be satisfied: (i) Borrower shall give Lender no less than thirty (30) days notice prior to any such transfer, such notice to be accompanied by evidence reasonably satisfactory to Lender in its sole discretion that the proposed transferee is a permitted transferee under this paragraph, and (ii) Borrower shall pay all costs of Lender in connection with such transfer, including legal fees.

F. Roadway Dedication. By plat recorded in Map Book 53 at Page 886 the prior owner of the Property dedicated for public use the areas labeled on said plat as Prosser Way and Skinner Lane (collectively, the “Public Roads”). As of the date hereof, the acceptance of the Public Roads by the North Carolina Department of Transportation is in process but not completed. The final acceptance of the Public Roads by the North Carolina Department of Transportation, and any deed of conveyance required thereby (if any), shall not constitute a transfer of the Property in violation of this Section 4.4.

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4.5 Financial Records and Statements. Borrower shall keep accurate books and records in accordance with generally accepted accounting principles consistently applied (or other basis of accounting practices prescribed or permitted by Lender) in which full, true and correct entries shall be promptly made as to all operations of the Property and shall permit all such books and records to be inspected and copied by Lender, its designees or its representatives during customary business hours. Borrower shall deliver to Lender within 90 days after the close of its financial year, and upon request by Lender at any time during the term of the loan secured by the Loan Documents, a statement of condition or balance sheet of Borrower relating solely to the Property as of the end of such year and an annual operating statement showing in reasonable detail all income and expenses of Borrower with respect to the Property, both certified as to accuracy by either an independent certified public accountant acceptable to Lender (if requested by Lender) or the senior financial officer or partner of Borrower. Borrower shall also deliver to Lender simultaneously with its delivery of the financial statements required above and upon request by Lender at any time during the year a current list of all persons then occupying portions of the Property under Leases, the rentals payable by such tenants and the unexpired terms of their Leases, certified to the best of Borrower’s knowledge, as to their accuracy by a representative of Borrower acceptable to Lender, and in form and substance reasonably satisfactory to Lender.

4.6 Indemnity. Borrower shall indemnify, defend and hold harmless Trustee and Lender, its agents, employees and contractors from and against, and upon demand, reimburse Trustee and Lender for all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including, without limitation, reasonable attorneys' fees and disbursements, which may be imposed upon, asserted against or incurred or paid by either Trustee or Lender by reason of, on account of or in connection with:

(a) any violation of Laws;

(b) any bodily injury or death or property damage occurring in, upon or in the vicinity of the Property through any cause whatsoever;

(c) any Contamination, any Clean-Up, any Environmental Actions or Claims, or the imposition or recording of a lien against the Property due to any Contamination;

(d) any act performed or omitted to be performed under the Loan Documents or on account of any transaction arising out of or in any way connected with the Property or the Loan Documents;

(e) any expenditures or amounts advanced (other than advances of principal under the Note) by Lender at any time under the Loan Documents; and

(f) any act or omission of Lender under any Lease or under the Loan Documents as a result of Lender's exercise of rights or remedies under Paragraph 8.2 or under any of the other Loan Documents.

The foregoing indemnification shall apply in all instances, unless the claim was directly caused by the gross negligence or intentional misconduct of Lender.

Borrower shall have the right to control any action for which an indemnity is required pursuant to this Paragraph 4.6 through counsel of its choice, subject to Lender's consent; however, at Lender's option, Lender may participate in such action through its own counsel at Borrower's expense. If Borrower does not notify Lender of its intent to control such action within the earlier of 30 days of notice of such claim or 5 days prior to the time required by Law to respond to such claims, Lender may control and settle such action, including a settlement for non-monetary relief such as Clean-Up, without Borrower's consent and at Borrower's expense.

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If Borrower is a general or limited partnership, Borrower waives any rights it may have to require Lender to proceed against the assets of the partnership before proceeding against the assets of individual general partners in the exercise of its rights under this Paragraph 4.6.

4.7 Notices. Borrower shall deliver to Lender at Lender's Notice Address promptly upon receipt of the same, copies of all notices, certificates, documents and instruments received by Borrower which materially and adversely affect Borrower, the Property or the Leases, including, without limitation, those given in connection with Contamination or Environmental Actions or Claims.

4.8 Estoppel Certificates. Borrower shall promptly furnish to Lender from time to time, on the request of Lender, written certifications signed and, if so requested, acknowledged setting forth the then unpaid principal and interest under the Note and specifying any claims, offsets or defenses which Borrower asserts against the Secured Debt or any obligations to be paid or performed by Borrower under the Loan Documents, together with any other information reasonably requested by Lender.

4.9 Subordination, Non-Disturbance and Attornment Agreements. Should a Tenant, under any present or future Lease at the Property, require Borrower to secure a Subordination, Non-Disturbance and Attornment Agreement from Lender, the document shall be satisfactory to Lender in its sole discretion.

4.10 Legal Existence. Borrower shall continuously maintain its existence as a legal entity and its right to own the Property and to do business in the State.

4.11 Defense and Notice of Actions. Borrower shall, without liability, cost or expense to Trustee or Lender protect, preserve and defend title to the Property, the security hereof and the rights or powers of Trustee or Lender, against all adverse claimants to title or any possessory or non-possessory interests therein, whether or not such claimants or encumbrancers assert title paramount to that of Borrower, Trustee or Lender or claim their interest on the basis of events or conditions arising subsequent to the date hereof.

4.12 Lost Note. Borrower shall, if the Note is mutilated, destroyed, lost, or stolen, deliver to Lender a new promissory note containing the same terms and conditions as the Note with a notation thereon of the unpaid principal and accrued and unpaid interest, whereupon the prior note shall be void and of no further force and effect. Any such new note shall be secured hereby and shall be deemed to be the "Note" referred to herein.

4.13 Personalty. Borrower shall use the Personalty primarily for business purposes and keep it at the Land, subject to Borrower’s right to replace the same in the due course of business. Borrower shall immediately notify Lender in writing of any change in its place of business and, as of the execution hereof and hereafter from time to time when requested by Lender, upon any acquisition of items of property constituting Personalty, Borrower shall provide Lender with a current, accurate inventory of the Personalty.

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4.14 Further Assurances. Borrower shall promptly upon request of Lender or Trustee: (a) correct any defect, error or omission which may be discovered in the contents of any Loan Document or in the execution or acknowledgement thereof; (b) execute, acknowledge, deliver and record or file such further instruments (including, without limitation, mortgages, deeds of trust, security agreements, financing statements and specific assignments of rents or leases); and (c) do such further acts as may be necessary, desirable or proper in Trustee's or Lender's reasonable opinion to: (i) protect and preserve the first and valid lien, title and security interest of this Deed of Trust on the Property or subject thereto any property intended by the terms thereof to be covered thereby, including, without limitation, any renewals, additions, substitutions or replacements thereto; or (ii) protect the interest and security interest of Trustee or Lender in the Property against the rights or interests of third parties. Notwithstanding the foregoing, Borrower shall not be required to do any further act that has the effect of changing the economic terms of the Loan initially set forth in the Loan Documents or in the commitment letter for the Loan, or imposing on Borrower greater personal liability under the Loan Documents than that initially set forth in the Loan Documents or in the commitment letter for the Loan, except to correct computational errors and omissions to the extent discernible from the Loan Documents or the commitment letter for the Loan.

Borrower hereby appoints each of Trustee and Lender as its attorney-in-fact, coupled with an interest, to take the above actions and to perform such obligations on behalf of Borrower, at Borrower's sole expense, if Borrower fails to comply with this Paragraph 4.14.

4.15. Replacement Guarantor. For so long as the Borrower is the Original Borrower, within ninety (90) days after the death of either Harold Katz or Robert Fishel, Borrower shall secure a replacement guarantor or indemnitor, satisfactory to Lender in its sole discretion, who, within the 90 day period, shall sign all documents required by lender to effectuate this intent. In the event that the Original Borrower has transferred the Property pursuant to Section 4.4(B) hereof, then within ninety (90) days after the death of any guarantor or any indemnitor of the Borrower’s obligations under the Loan Documents, Borrower shall secure a replacement guarantor or indemnitor, satisfactory to Lender in its sole discretion, who, within the ninety (90) day period, shall sign all documents required by Lender to effectuate this intent.

4.16. Investment Activities in Iran Energy Sector. Borrower (i) shall not provide goods or services in the Energy Section in Iran and (ii) shall promptly notify Lender if it has been placed on a list (or has been notified that it may be placed on a list) by any state or governmental authority as a party providing goods or services in the Energy Sector in Iran.

5. CASUALTIES AND TAKINGS.

5.1 Notice to Lender. In the case of any act or occurrence of any kind or nature which results in damage, loss or destruction to the Property ("Casualty"), or commencement of any proceedings or actions which might result in a condemnation or other taking for public or private use of the Property or which relates to injury, damage, benefit or betterment thereto ("Taking"), Borrower shall immediately notify Lender describing the nature and the extent of the Taking or the Casualty, as the case may be. Borrower shall promptly furnish to Lender copies of all notices, pleadings, determinations and other papers in any such proceedings or negotiations.

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5.2 Repair and Replacement. In case of a Casualty or Taking, Borrower shall promptly (at Borrower's sole cost and expense and regardless of whether the Insurance Proceeds or the Taking Proceeds, if any, shall be sufficient or made available by Lender for the purpose) restore, repair, replace and rebuild the Property as nearly as possible to its quality, utility, value, condition, and character immediately prior to the Casualty or the Taking, as the case may be. However, upon a Casualty or Taking resulting in a restoration cost that exceeds 25% of the then replacement value of the Improvements or a Taking of more than 25% of the area of the Land, and application by Lender of the Insurance Proceeds or the Taking Proceeds to reduction of the Secured Debt in accordance with this Deed of Trust, Borrower shall be obligated only to remove any debris from the Property and take such actions as are necessary to make the undamaged or non-taken portion of the Property into a functional economic unit insofar as it is possible under the circumstances.

5.3 Insurance Proceeds and Taking Proceeds.

(a) Collection. Borrower shall use its best commercially reasonable efforts to collect the maximum amount of insurance proceeds payable on account of any Casualty ("Insurance Proceeds"), and the maximum award, payment or compensation payable on account of any Taking ("Taking Proceeds"). In the case of a Casualty, Lender may, in its sole unfettered discretion, make proof of loss to the insurer, if not made promptly by Borrower. Borrower shall not settle or otherwise compromise any claim for Insurance Proceeds or Taking Proceeds without Lender's prior written consent.

(b) Assignment to Lender. Borrower hereby assigns, sets over and transfers to Lender all Insurance Proceeds and Taking Proceeds and authorizes payment of such Insurance Proceeds and Taking Proceeds to be made directly to Lender. Lender shall apply the Insurance Proceeds and Taking Proceeds first to pay all expenses incurred by Lender in connection with the Casualty or Taking, including, without limitation, attorney's fees and title fees.

(c) Application of Proceeds. Unless the conditions set forth in Paragraph 5.4 for the application of Insurance Proceeds to Restoration are satisfied, Lender may, in its sole unfettered discretion, apply the balance of the Insurance Proceeds or Taking Proceeds ("Net Proceeds") to either of the following, or any combination thereof:

(i) to the payment of the Secured Debt, either in whole or in part, in any order determined by Lender in its sole unfettered discretion; or

(ii) to repair or replacement, either partly or entirely, of any part of the Property so destroyed, damaged or taken, in which case Lender may impose such terms, conditions and requirements for the disbursement of the Insurance Proceeds or Taking Proceeds as it, in its sole unfettered discretion, deems advisable. Lender shall not be a trustee with respect to any Insurance Proceeds or Taking Proceeds, and may commingle Insurance Proceeds or Taking Proceeds with its funds without obligation to pay interest thereon.

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If any portion of the Secured Debt shall thereafter be unpaid, Borrower shall not be excused from the payment thereof in accordance with the terms of the Loan Documents. Lender shall not, in any event or circumstance, be liable or responsible for failure to collect or exercise diligence in the collection of any Insurance Proceeds or Taking Proceeds.

5.4 Disbursement of Insurance Proceeds to Borrower. Lender will disburse the Insurance Proceeds to Borrower, subject to and in accordance with the terms and conditions of this Paragraph 5.4, provided that: (1) there exists no Event of Default or occurrence or facts which with the passage of time, the giving of notice, or both, will be an Event of Default which remains uncured at any time before or during the Restoration; (2) the Casualty does not occur within nine months of the Maturity Date (as defined in the Note); (3) Lender estimates that the loss or damage can be repaired for less than 75% of the then-existing Secured Debt; and (4) Borrower has submitted evidence satisfactory to Lender that Restoration can be completed within 270 days after the Casualty, subject to delay beyond Borrower's control, other than lack of funds.

(a) As to any loss or damage which Lender estimates can be repaired for less than Three Hundred Thousand Dollars ($300,000.00), Lender shall disburse to Borrower from the Net Proceeds the amount which it determines is necessary to repair the damage, which amounts shall be used by Borrower to restore the damage to the Property caused by the Casualty.

(b) As to all other Casualties, Lender shall disburse the Net Proceeds related thereto to Borrower on the following terms and conditions:

(i) Prior to the first and each subsequent disbursement, Borrower shall give proof satisfactory to Lender that:

(1) Lender is holding a fund comprised of the Net Proceeds and, if necessary, additional deposits made by Borrower or tenants of the Property, sufficient to restore the Property to its condition and use immediately prior to such loss or damage ("Restoration"), together with a fund comprised of Net Proceeds or funds deposited by Borrower, sufficient to pay operating expenses, Property Taxes and Charges, the Monthly Payments (as defined in the Note) and other so-called "carrying costs" of the Property during the period of Restoration;

(2)       there are no Laws preventing Restoration of the Property;

(3) immediately after Restoration, the Leases on the Property will produce sufficient income to provide a debt coverage ratio of at least 1.1 : 1. The debt coverage ratio shall be calculated by dividing the operating income (less operating expenses [but excluding therefrom, extraordinary non-recurring operating expenses] and Property Taxes and Charges) obtained from the Leases during the twelve month period immediately after the Restoration by the total principal and interest payments due on all indebtedness secured by the Property during the same period;

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(4) the Restoration will be conducted under the supervision of an architect, engineer and/or a general contractor selected by and paid by Borrower and approved by Lender;

(5) the Restoration will be performed pursuant to plans and specifications approved by Lender and by a contractor or contractors approved by Lender; and

(6) the Property, after such Restoration, shall be in compliance with Laws.

(ii) With respect to each disbursement and accompanying each request therefor, there shall be delivered to Lender:

(1) a certificate addressed to Lender and executed by Borrower and by the architect, engineer or general contractor supervising the Restoration that such disbursement is to pay for costs of the Restoration not paid previously by any other prior disbursement, that the amount of such disbursement does not exceed the aggregate of such costs incurred or paid on account of work, labor or services performed and materials installed in or stored upon the Property at the date of such certificate and that the disbursement requested, together with the disbursements made prior thereto, collectively, as a percentage of the total Net Proceeds, do not exceed the percentage of completion of the Restoration; and

(2) a report of title through the date of disbursement showing no new matters of title including no notices of mechanics liens.

(iii) Each disbursement shall be in the amount not greater than 90% of the costs described in the certificate referred to in Paragraph 5.4(b)(i). Disbursement of the final balance of the Net Proceeds, constituting not less than ten percent (10%) thereof, shall be disbursed only upon delivery to Lender of the following, in addition to the foregoing:

(1) evidence satisfactory to Lender that all claims then existing for labor, services and materials enforceable by lien upon the Property have been paid in full or provision acceptable to Lender has been made therefor;

(2) a certificate of such architect, engineer or general contractor that the Restoration of the Property has been completed in a good workmanlike manner and in accordance with all Laws;

(3) an estoppel affidavit in form satisfactory to Lender from each tenant occupying or leasing space in the Property affected by the Casualty; and

(4) an as-built survey of the Improvements certified to Lender and in form satisfactory to Lender.

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(iv) If the quality of the Restoration is at least equal to the quality of the Improvements before the Casualty, any Net Proceeds in excess of the amount used in payment of the Restoration shall be distributed to Borrower.

Lender shall not be a trustee with respect to any Insurance Proceeds, and may mingle Insurance Proceeds with its funds without obligation to pay interest thereon. Lender shall in no event be liable for the performance or observance of any covenant or condition arising under any Lease in connection with the Property nor obligated to take any action to restore the Property.

6. CONCERNING TRUSTEE.

6.1 Trustee's Covenants. Trustee, by its acceptance hereof, covenants faithfully to perform and fulfill the trusts herein created, being liable, however, only for gross negligence or willful misconduct, and hereby waives any statutory fee and agrees to accept reasonable compensation, in lieu thereof, for any services rendered by it in accordance with the terms hereof.

6.2 Resignation of Trustee. Trustee may resign at any time upon giving 30 days notice in writing to Borrower and to Lender.

6.3 Substitution of Trustee. In the event of the death, removal, resignation, refusal to act, or the inability to act of Trustee, or in Lender's sole unfettered discretion for any reason whatsoever, Lender may, at any time or from time to time without notice and without specifying any reason therefor and without applying to any court, select and appoint a successor trustee, and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such successor without conveyance from the predecessor trustee. Such substitute trustee shall not be required to give bond for the faithful performance of its duties unless required by Lender. Such substitute trustee shall be appointed by written instrument duly recorded in the county where the Realty is located, which appointment may be executed by an authorized agent of Lender, and such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Board of Directors and any superior officer of Lender. Borrower hereby ratifies and confirms any and all acts which the herein-named Trustee or its successors or assigns in this trust shall do in accordance with the Loan Documents, relevant North Carolina General Statutes, and lawfully by virtue hereof. Borrower hereby agrees, on behalf of itself and its heirs, executors, administrators, legal representatives and assigns, that the recitals contained in any deed or deeds executed in due form by Trustee or any substitute trustee, acting under the provisions of this Deed of Trust, shall be prima facie evidence of the facts recited therein, and that it should not be necessary to prove in any court, otherwise than by such recitals, the existence of the facts essential to authorize the execution and delivery of such deed or deeds and the passing of title thereby.

6.4 Reconveyance and Agreements. At any time, or from time to time, without liability therefor and without notice, upon written request of Lender and presentation of this Deed of Trust and the Note or notes secured hereby for endorsement, and without affecting the personal liability of any person for the payment of the Secured Debt or the effect of this Deed of Trust upon the remainder of the Property, Trustee may reconvey any part of the Property, consent in writing to the making of any map or plat thereof, join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.

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6.5 Release of Lien. Upon written request of Lender stating that the Secured Debt has been paid and upon surrender to Trustee of this Deed of Trust and the Note or notes secured hereby for cancellation and retention and payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto."

6.6 Exculpation and Indemnification of Trustee. Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence or willful misconduct. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by Trustee in good faith to be genuine. All monies received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by it hereunder (except to the extent required by Law). Borrower will reimburse Trustee for, and indemnify, save harmless and defend Trustee against, any and all liability and expenses (including, without limitation, reasonable attorneys' fees and expenses) which Trustee may incur in the performance of its duties under the Loan Documents.

7. LEGAL PROCEEDINGS. Whether or not an Event of Default (as defined in Paragraph 8.1) has occurred and exists, Lender shall have the right, but not the duty or obligation, to intervene or otherwise participate in, prosecute or defend at any time any legal or equitable proceedings including, without limitation, any eminent domain proceedings which affect the Property, the Leases or any of the rights created by the Loan Documents, but only after notice to Borrower and if permitted by Laws.

8. DEFAULTS; REMEDIES OF LENDER.

8.1 Events of Default. Any of the following shall constitute an "Event of Default" hereunder:

(a) Breach of Named Covenants. Any breach by Borrower of the covenants in Paragraph 4.1(a) (Secured Debt), Paragraph 4.1(b) (Property Taxes and Charges), Paragraph 4.2(f) (Clean-Up) or Paragraph 4.3 (Insurance); provided, however, that a breach of the covenant in Paragraph 4.1(a) to pay the Secured Debt as and when due under the Note and the other Loan Documents shall not constitute an Event of Default unless it shall continue for 5 days after the date such payment is due; provided further, however, that such 5-day grace period shall not apply more than twice in any one period of 12 consecutive months, the third such breach in such 12-month period constituting an Event of Default without expiration of any grace period. With regard to breaches under Section 4.1(b), Lender’s failure to pay Property Taxes and Charges prior to delinquency, to the extent Lender has received funds sufficient to pay the same pursuant to Section 4.1(c), shall not constitute a default hereunder.

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(b) Breach of Other Covenants. Any breach by Borrower of any other covenant, agreement, condition, term or provision of any of the Loan Documents or any certificate or side letter delivered in connection with the Loan Documents, which continues for 30 days after written notice thereof by Lender to Borrower; provided, however, that if the nature of Borrower's breach is such that more than 30 days is reasonably required to cure the same, then Borrower shall not be deemed to be in default if Borrower commences such cure as promptly as reasonably possible within such 30-day period, diligently prosecutes such cure to completion, and completes such cure within 90 days from the date of Lender's aforesaid notice to Borrower.

(c) Misrepresentations. Any representation or warranty made by Borrower in the Loan Documents or any certificate or side letter delivered in connection with the Loan Documents proves to be untrue, misleading or is not fulfilled, in any material way; provided, however, in the event that the nature of the representation or warranty is such that Borrower can take actions to make the representation or warranty true and correct as and when made, then Borrower shall not be deemed to be in default hereunder if Borrower takes such action and cures said misrepresentation or warranty within ten (10) days of receiving notice of the same from Lender. Notwithstanding anything that may be interpreted to the contrary, the Borrower’s ability to cure said default, and the cure of said default, shall not operate to release Borrower from any liability to Lender arising from said misrepresentation or warranty arising under Section 12 of the Note.

(d) Bankruptcy. Immediately upon the occurrence of any of the following: (i) any one or more of the then legal or beneficial owners of the Property, or any individual or entity then personally liable on the Secured Debt (including, without limitation, any guarantor or indemnitor pursuant to any guaranty or indemnity) or, if Borrower is a partnership, any general partner or joint venturer (collectively "Parties in Interest") becomes insolvent, makes a transfer in fraud of, or an assignment for the benefit of, creditors, or admits in writing its inability, or is unable, to pay debts as they become due; or (ii) a receiver, custodian, liquidator or trustee is appointed for all or substantially all of the assets of a Party in Interest or for the Property in any proceeding brought by a Party in Interest, or any such receiver or trustee is appointed in any proceeding brought against a Party in Interest or the Property and such appointment is not promptly contested or is not dismissed or discharged within 120 days after such appointment, or a Party in Interest consents or acquiesces in such appointment, or (iii) a Party in Interest files a petition under the Bankruptcy Code, as amended, or under any similar law or statute of the United States or any state thereof; or (iv) a petition against a Party in Interest is filed commencing an involuntary case under any present or future Federal or state bankruptcy or similar law and a Party in Interest consents to or otherwise acquiesces to the same; or (v) any composition, rearrangement, liquidation, extension, reorganization or other relief of debtors now or hereafter existing is requested by a Party in Interest.

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(e) Adverse Court Action. A court of competent jurisdiction enters a stay order with respect to, assumes custody of or sequesters all or a substantial part of the Property or the Property is taken on execution or by other process of law.

8.2 Remedies. In case of an Event of Default, Lender and, to the extent authorized by Lender, Trustee may, at any time thereafter, at its option, without notice, and without bringing any legal action or proceeding unless expressly required by law, exercise any or all of the following remedies:

(a) Acceleration. Declare the entire Secured Debt due and payable, and it shall thereupon be immediately due and payable.

(b) Foreclosure. Foreclose the lien of this Deed of Trust pursuant to the power of sale hereby granted or by judicial proceeding. It shall be lawful for, and the duty of, Trustee to sell all or any portion of the Property at public auction for cash after having first given such notice as to commencement of foreclosure proceedings and having obtained such findings and leave of court as may then be required by law and having given such notice and having advertised the time and place of such sale in such manner as may then be required by law, and upon such sale and any resale to convey title to the purchaser. Trustee shall have the right to designate the place of sale in compliance with applicable law and the sale shall be held at the place designated by the notice of sale. Trustee may require the successful bidder at any sale to deposit immediately with Trustee cash or certified check or cashier’s check in an amount up to five percent (5%) of the bid provided notice of such deposit requirement is published as required by law. The bid may be rejected if the deposit is not immediately made. Such deposit shall be refunded in case of a sale to another purchaser pursuant to an upset bid or if Trustee is unable to convey the portion of the Property so sold to the bidder because the power of sale has been terminated in accordance with applicable law. If the purchaser fails to comply with its bid, the deposit may, at the option of Trustee, be retained and applied to the expenses of the sale and any resales and to any damages and expenses incurred by reason of such default (including the amount that such bid exceeds the final sales price), or may be deposited with the Clerk of Superior Court. In all other cases, the deposit shall be applied to the purchase price. Pursuant to Section 25-9-604 of the North Carolina General Statutes (or any amendment thereto), Trustee is expressly authorized and empowered to expose to sale and sell, together with the real estate, any portion of the Property which constitutes Personalty. If Personalty is sold hereunder, it need not be at the place of sale.

Trustee, having retained a commercially reasonable sum (but in no event more than five percent (5%)) from the gross proceeds of such sale (“Commission”) as compensation for the Trustee’s services and having retained also all advertising and other expenses incurred by Trustee, including a reasonable attorneys’ fee for legal services actually performed by an attorney employed by Trustee, shall apply the residue first to the payment of any taxes or assessments which may be a lien against the Property, unless Trustee advertised and sold the same subject to such taxes or assessments; and apply the remainder to the sums secured by this Deed of Trust with the balance to the account of Borrower or other party entitled thereto, as their interests may appear. Lender shall have the absolute right to determine the order in which the property will be sold and the order in which the indebtedness secured hereby will be satisfied from any proceeds of sale.

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In case foreclosure is commenced, but not completed, Borrower shall pay to Trustee all expenses incurred by Trustee and a partial commission in accordance with the following schedule: one percent (1%) of the principal balance of the Note if foreclosure is terminated before Trustee issues a notice of hearing on the right to foreclose; two percent (2%) of the principal balance of the Note if foreclosure is terminated after issuance of said notice; three percent (3%) if foreclosure is terminated after such hearing; and the full commission after the initial sale.

At such sale Lender may bid for and acquire any part of the Property and in lieu of paying cash therefor may take settlement of the purchase price by a credit upon the sums due and payable under and secured by this Deed of Trust the net sales price which shall be the proceeds of sale after deducting therefrom the expenses referred to above. If there be any sale of the Property herein conveyed, Borrower or any person in possession of the Property, as tenant or otherwise, shall become a tenant at will of the purchaser at such sale and may be removed by writ of ejectment, summary ejectment, writ of possession or other lawful statutory or common law remedy. If at the time of sale Trustee deems it best for any reason to postpone or continue the same from time to time, Trustee may do so, and no failure or failures of Lender or Trustee to exercise the rights hereinabove granted, nor any acts or omission, nor any lapse of time shall be construed to be a waiver of any right hereunder, if the rights shall have once accrued. The power of sale above granted may be exercised at different times as to different portions of the Property. Any recital of fact by Trustee in its deed relative to default of Borrower or to notice, advertisement and sale in accordance with law shall be received as prima facie evidence of such fact.

(c) Offset Rights. Apply in satisfaction of the Secured Debt or any amount at any time to become due or payable in connection with the ownership occupancy, use, restoration or repair of the Property, any deposits or other sums credited by or due from Lender to Borrower, including without limitation, Insurance Proceeds, Taking Proceeds and funds held in the escrow account referred to in Paragraph 4.1(c).

(d) Cure Rights. Whether or not an Event of Default has occurred and without releasing Borrower from any obligation hereunder or under the Loan Documents, Lender may perform any of Borrower's obligations. In connection therewith, Lender may enter upon the Property and do such acts and things as Lender deems necessary or desirable to protect the Property or the Leases, including, without limitation: (i) paying, purchasing, contesting or compromising any encumbrance (including, without limitation, any junior debt outstanding), charge, lien, claim of lien, Property Taxes and Charges or Property Liabilities; (ii) paying any Insurance Premiums; (iii) employing counsel, accountants, contractors and other persons to assist Lender in the foregoing; and (iv) undertaking the Clean-Up of any Contamination.

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(e) Possession of Property. Take physical possession of the Property and of all books, records, and documents and accounts relating thereto and exercise, without interference from Borrower, any and all rights which Borrower has with respect to the Property, including, without limitation, the right at Borrower's expense to rent and lease the Property, to collect rents, issues and profits, to hire a professional property manager for the Property, to Clean-Up any Contamination and to make from time to time all alterations, renovations, repairs and replacements to the Property as may seem proper to Lender. Nothing in this Paragraph 8.2 shall impose any duty, obligation or responsibility upon Lender for the control, care, management, repair or Clean-Up of the Property. If necessary to obtain possession as provided for above, Lender may, without exposure to liability from Borrower or other persons, invoke any and all legal remedies to dispossess Borrower, including, without limitation, one or more actions for forcible entry and detainer, trespass and restitution. Lender shall not be deemed a mortgagee in possession unless and until Lender enters into actual possession of the Property.

(f) Receiver. Secure the appointment of a receiver or receivers, as a matter of right for the Property whether such receivership be incident to a proposed sale of such Property or otherwise, and without regard to the value of the Property or the solvency of Borrower. Borrower hereby consents to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by Lender. The appointment of such receiver, trustee or other appointee by virtue of any court order or Laws shall not impair or in any manner prejudice the rights of Lender to receive payment of the rents and income pursuant to the Lease Assignment.

(g) Uniform Commercial Code Remedies. Exercise any and all rights of a secured party with respect to the Personalty under the Uniform Commercial Code of the State and in conjunction with, in addition to or in substitution for, those rights and remedies:

(i) take possession of, assemble and collect the Personalty or render it unusable by Borrower; and

(ii) require Borrower to assemble the Personalty and make it available at any place Lender may designate so as to allow Lender to take possession of or dispose of the Personalty.

Written notice mailed to Borrower, as provided herein, 15 days prior to the date of public sale of the Personalty or prior to the date after which private sale of the Personalty will be made, shall constitute reasonable notice. Any sale made pursuant to the provisions of this Paragraph 8.2(g) shall be deemed to have been a public sale conducted in a commercially reasonable manner, if held contemporaneously with the sale of the Property as provided in Paragraph 8.2(j) of this Deed of Trust. In the event of a foreclosure sale, whether made by Lender under the terms hereof, or under judgment of a court, the Personalty and the other parts of the Property may, at the option of Lender, be sold in parts or as a whole. It shall not be necessary that Lender take possession of the Personalty prior to the time that any sale pursuant to the provisions of this Paragraph 8.2(g) is conducted and it shall not be necessary that the Personalty be present at the location of such sale.

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A CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS DEED OF TRUST OR ANY FINANCING STATEMENT RELATING TO THIS DEED OF TRUST SHALL BE SUFFICIENT AS A FINANCING STATEMENT. THIS DEED OF TRUST IS EFFECTIVE AND SHALL BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A FIXTURE FILING WITH RESPECT TO ALL GOODS WHICH ARE OR ARE TO BECOME FIXTURES INCLUDED WITHIN THE PROPERTY AND IS TO BE FILED FOR RECORD IN THE REAL ESTATE RECORDS OF THE LOCATION IN THE STATE WHERE THE PROPERTY IS SITUATED. THE MAILING ADDRESS OF LENDER AND THE ADDRESS OF BORROWER FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE OBTAINED, ARE SET FORTH ON THE COVER SHEET HEREOF.

(h) Judicial Actions. Commence and maintain an action or actions in any court of competent jurisdiction to foreclose this Deed of Trust pursuant to the Laws of the State or to obtain specific enforcement of the covenants of Borrower hereunder. Borrower agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy.

(i) Subrogation. Have and exercise all rights and remedies of any person, entity or body politic to whom Lender renders payment or performance in connection with the exercise of its rights and remedies under the Loan Documents, including, without limitation, any rights or remedies under any mechanic's or vendor's lien or liens, superior titles, mortgages, deeds of trust liens encumbrances, rights, equities and charges of all kinds heretofore or hereafter existing on the Property to the extent that the same are paid or discharged from the proceeds of the Note whether or not released of record.

(j) Sale. Sell the Property in accordance with Laws.

(k) Other. Take such other actions or commence such other proceedings as Lender deems necessary or advisable to protect its interest in the Property and its ability to collect the Secured Debt as are available under Laws.

Any sums advanced by Lender under this Paragraph 8.2 shall bear interest at the lesser of (i) the Default Rate specified in the Note or (ii) the maximum nonusurious interest rate permitted by applicable law, and shall be payable by Borrower on demand. Such sums together with such interest shall constitute a part of the Secured Debt.

All sums realized by Lender under this Paragraph 8.2, less all costs and expenses incurred by Lender under this Paragraph 8.2, including, without limitation, reasonable attorneys fees and disbursements, property management fees, costs of title commitments, inspections, environmental site assessments and testing, engineering reports, alterations, renovations, repairs and replacements made or authorized by Lender and all expenses incident to Lender taking possession of the Property, and such sums as Lender deems appropriate as a reserve to meet future expenses of the Property, shall be applied to the Secured Debt in such order as Lender shall determine. Thereafter, any balance shall be paid to the person or persons legally entitled thereto. In all instances under the Loan Documents, all references to attorney’s fees and costs shall mean reasonable and actual attorney’s fees, at standard hourly rates and without regard for any statutory presumption of attorney’s fee, including, without limitation, the provisions of N.C. Gen. Stat. Section 6-21.2.

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8.3 Holding Over. Should Borrower, after Lender has obtained title to the Property, continue in possession of any part of the Property, either lawfully or unlawfully, Borrower shall be a tenant from day to day, terminable at the will of either Borrower or Lender, at a reasonable rental per diem, such rental to be due and payable daily to Lender.

8.4 General Provisions.

(a) Multiple Sales. Several sales may be made pursuant to Paragraph 8.2 without exhausting Lender's right to such remedy for any unsatisfied part of the Secured Debt and without exhausting the power to exercise such remedy for any other part of the Secured Debt, whether matured at the time or subsequently maturing. If a part of the Property is sold pursuant to Paragraph 8.2, and the proceeds thereof do not fully pay and satisfy the Secured Debt, such sale, if so made, shall not in any manner affect the unpaid and unsatisfied part of the Secured Debt, but as to such unpaid and unsatisfied part, the Loan Documents shall remain in full force and effect as though no such sale had been made.

(b) Cumulative Remedies. All of the rights, remedies and options set forth in Paragraph 8.2 or otherwise available at law or in equity, are cumulative and may be exercised without regard to the adequacy of or exclusion of any other right, remedy, option or security held by Lender.

(c) Right to Purchase. At any sale of the Property pursuant to Paragraph 8.2, Lender shall have the right to purchase the Property being sold, and in such case the right to credit against the amount of the bid made therefor (to the extent necessary) all or any of the Secured Debt then due.

(d) Right to Terminate Proceedings. Lender may, in its sole unfettered discretion, at any time before conclusion of any proceeding or other action brought in connection with its exercise of the remedies provided for in Paragraph 8.2, terminate, without prejudice to Lender, such proceedings or actions.

(e) No Waiver or Release. Lender may resort to any remedies and the security given by the Loan Documents in whole or in part, and in such portions and in such order as may seem best to Lender in its sole unfettered discretion, and any such action shall not in any way be considered as a waiver of any of the rights, benefits or remedies evidenced by the Loan Documents. The failure of Lender to exercise any right, remedy or option provided for in the Loan Documents shall not be deemed to be a waiver of any of the covenants or obligations secured by the Loan Documents. No sale of all or any of the Property, no forbearance on the part of Lender and no extension of the time for the payment of the whole or any part of the Secured Debt or any other indulgence given by Lender to Borrower or any other person or entity, shall operate to release or in any manner affect Lender's interest in the Property, or the liability of Borrower to pay the Secured Debt, except to the extent that such liability shall be reduced by proceeds of sale of all or any of the Property received by Lender.

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(f) Waivers and Agreements Regarding Remedies. To the full extent Borrower may do so and with respect to Lender's exercise of its remedies hereunder, Borrower hereby:

(i) agrees that Borrower will not at any time insist upon, plead, claim or take the benefit or advantage of any Laws now or hereafter in force providing for any appraisal or appraisement, valuation, stay, extension or redemption, and waives and releases all rights of redemption, valuation, appraisal or appraisement, stay of execution, extension and notice of election to mature or declare due the whole of the Secured Debt;

(ii) waives all rights to marshalling of the assets of Borrower, Borrower's partners, members and shareholders, and others with interests in Borrower, including the Property, or to a sale in inverse order of alienation in the event of foreclosure of the interests hereby created, and agrees not to assert any right under any Laws pertaining to the marshalling of assets, the sale in inverse order of alienation, the exemption of homestead, the administration of estates of decedents, or other matters whatsoever to defeat, reduce or affect the right of Lender under the terms of the Loan Documents to sale of the Property for the collection of the Secured Debt without any prior or different resort for collection, or the right of Lender to the payment of the Secured Debt out of the proceeds of sale of the Property in preference to every other claimant whatsoever;

(iii) waives any right to bring or utilize any defense, counterclaim or setoff, other than one in good faith which denies the existence or sufficiency of the facts upon which the foreclosure action is grounded or which is based on Lender's wrongful actions. If any defense, counterclaim or setoff (other than one permitted by the preceding sentence) is timely raised in such foreclosure action, such defense, counterclaim or setoff shall be dismissed. If such defense, counterclaim or setoff is based on a claim which could be tried in an action for money damages, the foregoing waiver shall not bar a separate action for such damages (unless such claim is required by Laws or applicable rules of procedure to be pleaded in or consolidated with the action initiated by Lender) but such separate action shall not thereafter be consolidated with Lender's foreclosure action. The bringing of such separate action for money damages shall not be deemed to afford any grounds for staying Lender's foreclosure action;

(iv) waives and relinquishes any and all rights and remedies which Borrower may have or be able to assert by reason of the provisions of any Laws pertaining to the rights and remedies of sureties;

(v) waives the defense of laches and any applicable statutes of limitation; and

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(vi) waives any rights or remedies on account of any extensions of time, releases granted or other dealings between Lender and any subsequent owner of the Realty as said activities are contemplated or otherwise addressed in North Carolina General Statute, Section 45-45.1 or similar or subsequent law.

(g) Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, Borrower and Lender hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other, on or in respect of any matter whatsoever arising out of, or in any way connected with, this Deed of Trust or any of the other Loan Documents, or the relationship of Borrower and Lender hereunder or thereunder.

(h) Lender's Discretion. Unless specifically stated otherwise, Lender may exercise its options and remedies under any of the Loan Documents in its sole unfettered discretion.

(i) Sales. In the event of the sale or other disposition of the Property pursuant to Paragraph 8.2 and the execution of a deed or other conveyance pursuant thereto, the recitals therein of facts (such as default, the giving of notice of default and notice of sale, demand that such sale should be made, postponement of sale, terms of sale, sale, purchase, payment of purchase price and other facts affecting the regularity or validity of such sale or disposition) shall be conclusive proof of the truth of such facts. Any such deed or conveyance shall be conclusive against all persons as to such facts recited therein.

The acknowledgment of the receipt of the purchase money, contained in any deed or conveyance executed as aforesaid, shall be sufficient to discharge the grantee of all obligations to see to the proper application of the consideration therefor as herein provided. The purchaser at any trustee's or foreclosure sale hereunder may disaffirm any easement granted or rental agreement or Lease made in violation of any provision of the Loan Documents, and may take immediate possession of the Property free from, and despite the terms of, such grant of easement, rental agreement or Lease.

9. POSSESSION AND DEFEASANCE.

9.1 Possession. Until the occurrence of an Event of Default and except as otherwise expressly provided to the contrary in any of the Loan Documents, Borrower shall retain full possession of the Property with full right to use the Property and to collect the rents, issues and profits therefrom, subject, however, to all of the terms and provisions of the Loan Documents.

9.2 Defeasance. If the Secured Debt is paid in full, then, in that event only, all rights under the Loan Documents shall terminate and the Property shall become wholly clear of the liens, grants, security interests, conveyances and assignments evidenced hereby, and Lender shall release or cause to be released, such liens, grants, assignments, conveyances and security interests in due form at Borrower's cost, and this Deed of Trust shall be void.

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To the extent permitted by Laws such an instrument may describe the grantee as "the person or persons legally entitled thereto." Lender shall not have any duty to determine the rights of persons claiming to be rightful grantees of any of the Property. When the Property has been fully released, such release shall operate as a reassignment of all future rents, issues and profits of the Property to the person or persons legally entitled thereto, unless such release expressly provides to the contrary.

Notwithstanding the foregoing, Borrower's obligation under Paragraph 4.6(c) (environmental indemnity) shall not terminate and shall survive the discharge of the Loan Documents, whether through full payment of the Secured Debt, foreclosure, deed in lieu of foreclosure or otherwise, for the benefit of Lender and its successors and assigns, including without limitation, any purchaser at a foreclosure sale.

10. GENERAL.

10.1 Lender's Right to Waive, Consent or Release. Lender may at any time and from time to time, in writing: (a) waive compliance by Borrower with any covenant herein made by Borrower to the extent and in the manner specified in such writing; (b) consent to Borrower doing any act which Borrower is prohibited hereunder from doing, or consent to Borrower's failing to do any act which Borrower is required hereunder to do, to the extent and in the manner specified in such writing; or (c) release any part of the Property, or any interest therein from this Deed of Trust and the lien of the Loan Documents. No such act shall in any way impair the rights hereunder of Lender except to the extent specifically agreed to by Lender in such writing.

10.2 No Impairment. The interests and rights of Lender under the Loan Documents shall not be impaired by any indulgence, including, without limitation: (a) any renewal, extension or modification which Lender may grant with respect to any of the Secured Debt; (b) any surrender, compromise, release, renewal, extension, exchange or substitution which Lender may grant in respect of the Property or any interest therein; or (c) any release or indulgence granted to any maker, endorser, guarantor, indemnitor or surety of any of the Secured Debt.

10.3 Amendments. The Loan Documents may not be waived, changed or discharged orally, but only by an agreement in writing and signed by Lender in Canada, based on prior approval by the Canadian Mortgages Senior Managing Director or his/her designee. Any oral waiver, change or discharge of any provision of the Loan Documents shall be without authority and of no force and effect. Any waiver, change or discharge shall be effective only in the specific instances and for the purposes for which given and to the extent therein specified.

10.4 No Usury. Any provision contained in any of the Loan Documents notwithstanding, Lender shall not be entitled to receive or collect, nor shall Borrower be obligated to pay interest on any of the Secured Debt in excess of the maximum rate of interest permitted by Laws, and if any provisions of the Loan Documents shall ever be construed or held to permit the collection or to require the payment of any amount of interest in excess of that permitted by such Laws, the provisions of this Paragraph 10.4 shall control unless contrary or inconsistent with any provisions of the Note, in which case the provisions of the Note shall control. Borrower and Lender intend to conform strictly to the usury Laws now in force, and the Loan Documents evidencing or relating to any of the Secured Debt shall be held subject to modification to conform to said Laws as now or hereafter construed.

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10.5 Notices. Any notice, request, demand or other communication required or permitted under the Loan Documents (unless otherwise expressly provided therein) shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail postage prepaid sent to the intended addressee at the applicable Notice Address or to such different address as either Borrower or Lender shall have designated by written notice to the other sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified United States Mail, 2 days after deposit therein. No notice to or demand on Borrower in any case shall of itself entitle Borrower to any other or further notice or demand in similar or other circumstances.

10.6 Successors and Assigns. The terms, provisions, covenants and conditions hereof shall be binding upon Borrower, and any permitted successors and assigns of Borrower, and shall inure to the benefit of Lender and its successors, substitutes and assigns, and shall constitute covenants running with the Land. All references in this Deed of Trust to Borrower, Lender or Trustee shall be deemed to include all such successors, substitutes and assigns.

If in contravention of the provisions of this Deed of Trust or otherwise, ownership of the Property or any portion thereof becomes vested in a person other than Borrower, Lender may, without notice to Borrower, whether or not Lender has given written consent to such change in ownership, deal with such successor or successors in interest with reference to the Loan Documents and the Secured Debt in the same manner as with Borrower, without in any way vitiating or discharging Lender's remedies or Borrower's liability under the Loan Documents or on the Secured Debt.

10.7 Severability. A determination that any provision of the Loan Documents is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of the Loan Documents to any person or circumstances is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

10.8 Gender and Construction. Within this Deed of Trust, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires. References in this Deed of Trust to "herein", "hereunder" or "hereby" shall refer to this entire Deed of Trust, unless the context otherwise requires. When the phrase "in its sole unfettered discretion" is used in the Loan Documents with respect to Lender, it shall permit Lender to evaluate such criteria (without allowance for reasonableness) as it chooses in approving or disapproving the requested or pending action.

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10.9 Joint and Several Liability. If Borrower is composed of more than one party, the obligations, covenants, agreements, representations and warranties contained in the Loan Documents, as well as the obligations arising thereunder, are and shall be joint and several as to each such party.

10.10 Modifications. References to any of the Loan Documents in this Deed of Trust shall include all amendments, modifications, extensions and renewals thereof.

10.11 Governing Law. This Deed of Trust shall be construed according to and governed by the laws of the State.

10.12 Captions. All paragraph and subparagraph captions are for convenience of reference only and shall not affect the construction of any provision herein.

10.13 Nonrecourse. Borrower shall be liable upon the indebtedness evidenced by the Note, for all sums to accrue or to become payable thereon and for performance of all covenants contained in the Note or in any of the other Loan Documents, to the extent, but only to the extent, of Lender's security for the same, including, without limitation, all properties, rights, estates and interests covered by this Deed of Trust and the other Loan Documents. No attachment, execution or other writ or process shall be sought, issued or levied upon any assets, properties or funds of Borrower other than the properties, rights, estates and interests described in this Deed of Trust and the other Loan Documents. In the event of foreclosure of such liens, mortgages or security interests, by private power of sale or otherwise, no judgment for any deficiency upon such indebtedness, sums and amounts shall be sought or obtained by Lender against Borrower. Subject to the foregoing, nothing herein contained shall be construed to prevent Lender from exercising and enforcing any other remedy relating to the Property allowed at law or in equity or by any statute or by the terms of any of the Loan Documents.

Notwithstanding the foregoing, Borrower shall be personally liable to Lender as set forth in Paragraph 12 of the Note.

10.14 Sale, Assignment or Conversion of Secured Debt. Borrower hereby agrees that Lender may (i) sell all or any portion of the Secured Debt or securitize all or a portion of the Secured Debt in one or more transactions through the issuance of pass-through certificates or other securities evidencing ownership of a portion of the Secured Debt or beneficial interest therein, in one or more rated or unrated public or private transactions; (ii) assign servicing rights with respect to the Secured Debt; or (iii) convert the Note and this Deed of Trust to registered form (each such transaction as described in the preceding clauses (i), (ii) and (iii) being referred to as a "Covered Transaction"), without the consent of or notice to Borrower. Borrower hereby agrees that, if requested, it will, at Lender's expense, reasonably cooperate with Lender and use its best efforts to facilitate the consummation of a Covered Transaction, including, without limitation, by: (a) delivering estoppels, opinions, tax certificates or any other documents, each in form and substance reasonably acceptable to Lender or any rating agency; (b) providing such additional information as may reasonably be required by Lender, or granting reasonable access to Lender in order to obtain such information, including, without limitation, updated environmental information and appraisals; and (c) appointing as its agent a registrar and transfer agent, which agent shall maintain, subject to such reasonable regulations as such agent shall provide, such books and records as may be necessary for the registration and transfer of the Note and this Deed of Trust, all in a manner acceptable to Lender in its sole unfettered discretion. Borrower hereby agrees that Lender may forward to each potential purchaser, transferee, assignee, service, trustee, participant or investor in any Covered Transaction, or to any rating agency, all documents and information which Lender now has or may hereafter acquire relating to the Secured Debt, the Property, Borrower or any guarantor or indemnitor of the Secured Debt that has been furnished by Borrower or any other party in connection with the Secured Debt, as Lender may, in its sole unfettered discretion, determine is necessary or desirable. Nothing in this Section 10.14 shall require Borrower to do any further act that has the effect of changing the economic terms of the Note or the Loan Documents or imposing on Borrower any greater personal liability under than Loan Documents than is set forth herein or in the Other Loan Documents.

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10.15 Acknowledgment of Receipt. Borrower hereby acknowledges receipt, without charge, of a true and complete copy of this Deed of Trust.

10.16. Time of the Essence. Time is of the essence of each and every payment and/or performance obligation of Borrower and the Guarantor(s) under this Deed of Trust or any of the other Loan Documents.

10.17 Exhibits. The following are the Exhibits referred to in this Deed of Trust, which are hereby incorporated by reference herein:

Exhibit A - Property Description

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IN WITNESS WHEREOF, this Deed of Trust has been executed and delivered under seal as of the date first above written.

BORROWER:
AR I Borrower, LLC
By:	/s/ Rob Meyer
	Name:   Rob Meyer
	Title:     President

STATE OF GEORGIA – COUNTY OF COBB

I certify that the following person personally appeared before me this day acknowledging to me that he signed the foregoing document: Rob Meyer.

Today's Date: 11.15, 2013	Sheronda Davis
	[Notary's signature as name appears on seal]
	Sheronda Davis
	[Notary's printed name as name appears on seal]
	My commission expires: 8.21, 2015

[Affix Notary Stamp/Seal in Space Above]

EXHIBIT A

Property Description

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public right-of-way (“Prosser Way”) and the fifty (50) foot public right of way (“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg County Register of Deeds, reference to which is hereby made for a more particular description.

TOGETHER WITH the rights and easements conferred by that Sewer Easement Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732, at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book 22541, at page 189.

TOGETHER WITH easements contained in that Declaration of Easements, Covenants and Restrictions recorded in Book 28849, at page 615, Mecklenburg County Register of Deeds.

EX-10.3

Exhibit 10.3

Prepared by and after recording return to:

Diana R. Palecek, Esq.

Smith Moore Leatherwood LLP

101 North Tryon Street, Suite 1300

Charlotte, NC 28246

ASSIGNMENT OF LEASES AND RENTS

Cover Sheet

Date:   November  22 , 2013

Borrower: AR Borrower I, LLC, a Delaware limited liability company

Borrower's Notice Address:	880 Glenwood Avenue, S.E., Suite H
	Atlanta, Georgia 30307

Lender: Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of the Note (as herein defined).

Lender’s Notice Address:	c/o Sun Life Assurance Company of Canada
	One Sun Life Executive Park
	Wellesley Hills, Massachusetts 02481
	Attention:  Mortgage Investments Group

Note: a Promissory Note from Borrower to Lender in the Note Amount, of even date herewith, and all replacements, substitutions, modifications, renewals and extensions thereof.

Note Amount:    $31,900,000.00

Mortgage:   a Deed of Trust and Security Agreement, encumbering the Property, of even date herewith, and all modifications or amendments thereto or extensions thereof.

Permitted Leasing Guidelines:   Residential apartment leases that are in compliance with the provisions of Paragraph 4.5 hereof

State North Carolina

Exhibit A (Property Description) is incorporated herein by reference.

Table of Contents

1.	DEFINITION OF TERMS	1
2.	GRANTING CLAUSES	1
3.	REPRESENTATIONS AND WARRANTIES	1
3.1	Ownership of Leases	2
3.2	Status of Leases	2
3.3	Status of Major Tenants	2
3.4	Contamination	2
4.	COVENANTS	2
4.1	Leases	2
4.2	Contamination	4
4.3	Estoppel Certificates	4
4.4	Further Assurances	4
5.	DEFAULTS; REMEDIES OF LENDER	4
5.1	Events of Default	4
	(a) Mortgage	4
	(b) Breach of Covenant	4
5.2	Remedies	5
	(a) Possession of Property	5
	(b) Collection of Rents	5
	(c) Payments	5
	(d) Other	5
5.3	Application of Proceeds	5
5.4	General Provisions	6
	(a) Multiple Exercise of Remedies	6
	(b) Cumulative Remedies	6
	(c) Right to Terminate Proceedings	6
	(d) No Waiver or Release	6
	(e) Waiver of Jury Trial	6
5.5	Limitation on Lender’s Liability	6
5.6	Indemnification	7
6.	COLLECTION OF RENTS AND RELEASE	7
6.1	Borrower’s Right to Collect Rents	7
6.2	Release of Assignment	7

7.	GENERAL	8
7.1	Lender’s Right to Waive, Consent or Release	8
7.2	No Impairment	8
7.3	Amendments	8
7.4	Notices	8
7.5	Successors and Assigns	8
7.6	Severability	8
7.7	Gender and Construction	9
7.8	Joint and Several Liability	9
7.9	Modifications	9
7.10	Governing Laws	9
7.11	Captions	9
7.12	Other Security	9
7.13	Direction to Tenants	9
7.14	Nonrecourse	9
7.15	Time of the Essence	10

1. DEFINITION OF TERMS. As used herein, the terms defined on page i hereof and in the Mortgage shall have the meanings given on page i and in the Mortgage, respectively, and the following terms shall have the following meanings:

1.1 Event of Default: as defined in Paragraph 5.1.

1.2 In its sole unfettered discretion: as defined in Paragraph 7.7.

1.3 Lease Assignment: this Assignment of Leases and Rents and all modifications or amendments thereto and extensions thereof.

1.4 Leases: all leases, license agreements and other occupancy or use agreements (whether oral or written), now or hereafter existing, which cover or relate to all or any portion of the Property in which Borrower holds the landlord’s or lessor’s interest therein, together with all options therefor, amendments thereto and renewals, modifications and guarantees thereof, and all Rents.

1.5 Permitted Leases: any Leases now existing or hereafter entered into on a form approved by Lender for leasable space in the Property which comply with the Permitted Leasing Guidelines.

1.6 Rents: all rents, royalties, issues, profits, revenues, income and other benefits of the Property arising at any time (including, without limitation, after the filing of any petition under any present or future Federal or State bankruptcy or similar law) from the use or enjoyment thereof or from the Leases, including, without limitation, cash, letters of credit or securities deposited thereunder to secure performance by the tenants of their obligations thereunder, whether said cash, letters of credit or securities are to be held until the expiration of the terms of the Leases or applied to one or more of the installments of rent coming due, additional, percentage, participation and other rentals, fees and deposits.

2. GRANTING CLAUSES. For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower hereby irrevocably and absolutely grants, transfers, assigns, mortgages, bargains, sells and conveys to Lender all of Borrower’s estate, right, title and interest in, to and under, and grants a first and prior security interest in, the Leases, whether now owned or held or hereafter acquired or owned by Borrower, FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS OF BORROWER TO LENDER, in such order of priority as Lender may elect:

(a) payment of the Secured Debt;

(b) payment of such additional sums with interest thereon which may hereafter be loaned to Borrower by Lender, even if the sum of the amounts outstanding at any time exceeds the Note Amount; and

(c) due, prompt and complete observance, performance, fulfillment and discharge of each and every obligation, covenant, condition, warranty, agreement and representation contained in the Loan Documents.

3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants to Lender that the following are true, correct and complete as of the date of this Lease Assignment.

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3.1 Ownership of Leases. Borrower is the sole owner of the entire landlord’s interest in all of the presently existing Leases. Neither the Leases nor any interest therein have been assigned to any person or entity (other than Lender). No Lease or option or commitment to lease affecting the Property presently exists.

3.2 Status of Leases.

(a) each of the Leases is valid and enforceable and has not been altered, modified, amended, or extended;

(b) to the best of Borrower’s knowledge, there exist no uncured defaults by Borrower under any of the Leases and to the best knowledge and belief of Borrower, after due investigation and inquiry, there exist no uncured defaults by any tenant under any of the Leases and no tenant has any claim, offset or defense to payment of rent under the Leases;

(c) none of the Rents have been assigned;

(d) none of the Rents have been collected more than 30 days in advance; and

(e) except as disclosed to Lender in writing or in a rent roll, no rental concession or period of rent-free occupancy has been given any tenant under any Lease for any period subsequent to the effective date of this Lease Assignment.

3.3 Status of Major Tenants. To the best of Borrower’s knowledge and belief, except as disclosed to Lender in writing or in a rent roll, no tenant leasing more than 15% of the total rentable space in the Improvements has suffered or incurred any material, adverse change in its finances, business, operations, affairs or prospects since the date of the Commitment.

3.4 Contamination. To the best of Borrower’s knowledge and belief, after due investigation and inquiry:

(a) none of the tenants under any of the Leases nor any prior tenants use or operate or have used or operated the Property in a manner which resulted or will result in Contamination;

(b) each tenant’s use and operation of the Property is in compliance with all Laws including without limitation all Federal, state and municipal laws pertaining to health or the environment; and

(c) there are no Environmental Actions or Claims pending or threatened against any tenant, or the Property.

4. COVENANTS.

4.1 Leases. Borrower shall:

(a) observe and perform all the obligations imposed upon the landlord under the Leases;

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(b) not do or permit to be done anything to impair the security of Lender under this Lease Assignment or its interest as landlord under the Leases;

(c) not collect any of the Rents more than 30 days in advance of the time when the same become due;

(d) not execute, without Lender’s prior written consent: (i) any other assignment of the landlord’s interest in the Leases, or (ii) any Leases (other than Permitted Leases);

(e) deliver to Lender a true and complete copy of any Lease, including Permitted Leases, promptly after execution by Borrower;

(f) not subordinate the Leases to any mortgage or other encumbrance or permit, consent or agree to any such subordination without Lender’s prior written consent;

(g) not alter, modify or change the terms of any of the Leases (other than alterations, modifications or changes to any Permitted Lease which do not, individually or collectively, result in such Permitted Lease no longer fulfilling the criteria for Permitted Leases);

(h) not give any consent or exercise any option required or permitted by the Leases (other than options contained in the original Lease to extend the term) without Lender’s prior written consent;

(i) not agree to early termination or cancellation of any of the Leases without Lender’s prior written consent, which consent may be conditioned on, among other things, payment to Lender of any termination fee or other sums received by Borrower in connection with such termination or cancellation;

(j) not otherwise cancel or terminate any of the Leases or accept a surrender thereof or convey, transfer, suffer or permit a conveyance or transfer of, the premises demised thereby or of any interest therein so as to effect directly or indirectly, proximately or remotely, a merger of the estates and rights of, or a termination or diminution of, the obligations of the tenant thereunder;

(k) not alter, modify or change the terms of any guarantee of any of the Leases or cancel or terminate any such guarantee without Lender’s prior written consent; and

(l) not consent to any assignment of any Lease (other than Permitted Leases), whether or not in accordance with its terms, without Lender’s prior written consent, unless the tenant thereunder remains liable thereafter for all obligations under such Lease;

(m) set up an escrow for security deposits upon request of Lender; and

(n) send copies of all current leases to Lender within five (5) business days after Lender’s written request at any time during the life of the loan.

Any exercise by Lender of its discretion in connection with a request for its consent under this Paragraph 4.1 shall be based on its reasonable evaluation of the requested matter. Lender shall respond to a request for its consent within a reasonable time.

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4.2 Contamination. Borrower shall not permit any tenant to use or operate the Property in a manner which will result in Contamination and Borrower shall take all steps reasonably necessary under the circumstances including, without limitation, periodic inspections and assessments of the premises demised under the Leases to determine whether any tenant’s use or operation of the Property has resulted in Contamination.

4.3 Estoppel Certificates. Whenever reasonably requested by Lender, Borrower shall execute and deliver and shall cause any tenant under a non-residential lease (if any) to execute and deliver to or at the direction of Lender, and without charge to Lender, written certifications to confirm the current status of the Lease, use and occupancy of the premises demised to the tenant, condition of the tenant and of the premises, the tenant’s right to extend the Lease or purchase the premises and any other information Lender may reasonably require.

4.4 Further Assurances. Borrower shall:

(a) cause Lender’s name to be noted on all Leases as the assignee of the landlord’s interest thereunder or otherwise notify tenants under existing and future Leases of Lender’s interest as assignee of the landlord’s interest thereunder; and

(b) at Lender’s request, specifically assign and transfer to Lender any particular Lease and execute and deliver such further instruments to accomplish the purposes of this Lease Assignment as Lender shall from time to time reasonably require.

4.5 Residential Leases. Notwithstanding the foregoing, Borrower shall have the right, without seeking the consent of Lender, to enter into residential Leases with individuals for single apartment units on the Property and to modify and terminate said residential leases entered into with individuals for single apartment units, provided that any such action is taken by Borrower in the ordinary course of business by operating the Property and its consistent with the action that would be taken by a prudent landlord managing a comparable residential apartment property and provided further that each such Lease entered into or modified by Borrower shall: (i) provide for rental payment at a rate consistent with prevailing rates then being obtained by prudent landlords leasing comparable properties in the local market where the Property is located; (ii) be for a term of not less than six (6) months; (iii) not contain any terms which would materially adversely affect Lender’s rights under the Loan Documents; and (iv) be on the form of lease approved by Lender.

5. DEFAULTS; REMEDIES OF LENDER.

5.1 Events of Default. Any of the following shall constitute an “Event of Default” hereunder:

(a) Mortgage. The occurrence of an Event of Default under the Mortgage; and

(b) Breach of Covenant. Any breach by Borrower of any covenant, agreement, condition, term or provision in this Lease Assignment, which continues for 30 days after written notice thereof by Lender to Borrower; provided, however, that if the nature of Borrower’s breach is such that more than 30 days is reasonably required to cure the same, then Borrower shall not be deemed to be in default if Borrower commences such cure as promptly as reasonably possible within such 30-day period, diligently prosecutes such cure to completion, and completes such cure within 60 days from the date of Lender’s aforesaid notice to Borrower.

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5.2 Remedies. In case of an Event of Default, Lender may, at any time thereafter, at its option, without notice, and without bringing any legal action or proceeding unless expressly required by law, exercise any or all of the following remedies:

(a) Possession of Property. Take physical possession of the Property and of all books, records, documents and accounts relating thereto and exercise, without interference from Borrower, any and all rights which Borrower has with respect to the Property, including, without limitation, the right, at Borrower’s expense, to rent and lease the Property, to hire a professional property manager for the Property, to Clean-Up any Contamination and to make from time to time all alterations, renovations, repairs and replacements to the Property as may seem proper to Lender. If necessary to obtain possession as provided for above, Lender may, without liability to Borrower or other persons, invoke any and all legal remedies to dispossess Borrower, including, without limitation, one or more actions for forcible entry and detainer, trespass and restitution.

(b) Collection of Rents. Either with or without taking possession of the Property, through a receiver or otherwise, in its own name or otherwise, collect the Rents (including, without limitation, those past due and unpaid).

(c) Payments. Without releasing Borrower from any obligation hereunder or under the Loan Documents, cure any Event of Default. In connection therewith, Lender may enter upon the Property and do such acts and things as Lender deems necessary or desirable to protect the Property or Leases, including, without limitation: (i) prosecuting or defending any legal action affecting any Lease; (ii) making, enforcing, modifying and accepting surrender of any Lease; (iii) obtaining and evicting tenants; (iv) fixing or modifying Rents; (v) making alterations, renovations, repairs and replacements to the Property; and (vi) otherwise doing any act which Lender deems proper to protect the Property and/or its interest under this Lease Assignment.

(d) Other. Take such other actions or commence such other proceedings as Lender deems necessary or advisable to protect its interest in the Property and the Leases and its ability to collect the Secured Debt as are available under Laws.

Any sums advanced by Lender under this Paragraph 5.2 shall bear interest at the lesser of (a) the Default Rate specified in the Note or (b) the maximum nonusurious interest rate permitted by applicable law and shall be payable by Borrower on demand. Such sums, together with such interest, shall constitute a part of the Secured Debt.

5.3 Application of Proceeds. All sums realized by Lender under Paragraph 5, less all costs and expenses incurred by Lender under Paragraph 5, including, without limitation, reasonable attorneys’ fees and disbursements, property management fees, costs of title commitments, inspections, environmental site assessments and testing, engineering reports, alterations, renovations, repairs and replacements made or authorized by Lender and all expenses incident to Lender taking possession of the Property, and such sums as Lender deems appropriate as a reserve to meet future expenses of the Property, shall be applied to the Secured Debt in such order as Lender shall determine. Thereafter, any balance shall be paid to the person or persons legally entitled thereto.

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5.4 General Provisions.

(a) Multiple Exercise of Remedies. Lender may exercise its remedies under Paragraph 5 several times (in case of several Events of Default) without exhausting Lender’s right to such remedies for any unsatisfied part of the Secured Debt and without exhausting the power to exercise such remedy for any other part of the Secured Debt, whether matured at the time or subsequently maturing.

(b) Cumulative Remedies. All of the rights, remedies and options set forth in Paragraph 5 or otherwise available at law or in equity are cumulative and may be exercised without regard to the adequacy of, or exclusion of, any other right, remedy, option or security held by Lender.

(c) Right to Terminate Proceedings. Lender may, at any time before conclusion of any proceeding or other action brought in connection with its exercise of the remedies provided for in Paragraph 5, terminate, without prejudice to Lender, such proceedings or actions.

(d) No Waiver or Release. Lender may resort to any remedies and the security given by the Loan Documents in whole or in part, and in such portions and in such order as may seem best to Lender in its sole unfettered discretion, and any such action shall not in any way be considered as a waiver of any of the rights, benefits or remedies evidenced by the Loan Documents. The failure of Lender to exercise any right, remedy or option provided for in the Loan Documents shall not be deemed to be a waiver of any of the covenants or obligations secured by the Loan Documents. No sale of all or any of the Property, no forbearance on the part of Lender and no extension of the time for the payment of the whole or any part of the Secured Debt or any other indulgence given by Lender to Borrower or any other person or entity, shall operate to release or in any manner affect Lender’s interest in the Property or the liability of Borrower to pay the Secured Debt.

(e) WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER, ON OR IN RESPECT OF ANY MATTER WHATSOEVER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH, THIS LEASE ASSIGNMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR THE RELATIONSHIP OF BORROWER AND LENDER HEREUNDER OR THEREUNDER.

5.5 Limitation on Lender’s Liability. Lender shall not be liable for any loss sustained by Borrower resulting from Lender’s failure to lease the Property after an Event of Default or from any other act or omission of Lender in managing the Property after an Event of Default unless such loss is caused by the willful misconduct or bad faith of Lender. Lender shall not be obligated to perform or discharge nor does Lender hereby undertake to perform or discharge, any obligation, duty or liability under the Leases.

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This Lease Assignment shall not operate to make Lender a mortgagee in possession or to place responsibility for the control, care, management, repair or Clean-Up of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other parties, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death of any tenant, licensee, employee or stranger.

5.6 Indemnification. If any claim against Lender is made in connection with any Lease, the Property or this Lease Assignment, Borrower shall indemnify, defend and hold harmless Lender, its agents, employees and contractors, from and against, and upon demand, reimburse Lender for all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, which may be imposed upon, asserted against or incurred or paid by Lender by reason of, on account of or in connection with any Lease, the Property or this Lease Assignment, unless the claim was directly caused by the gross negligence or intentional misconduct of Lender. If Lender commences litigation against Borrower to enforce any of its rights hereunder or to recover any of the Secured Debt, Lender may employ an attorney or attorneys and, in such event, Borrower shall pay Lender in connection therewith, whether or not litigation is actually filed or prosecuted to judgment, all reasonable fees and expenses of such attorneys at standard hourly rates and without regard for any statutory presumption. Borrower shall timely appear in and vigorously contest any action or proceeding purporting to affect the security hereof or the rights or powers of Lender hereunder, and Borrower shall pay all costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses, in any similar action or proceeding in which Lender may appear. At Borrower’s sole cost and expense, Borrower shall timely appear in and vigorously defend or prosecute, as the case may be, any litigation arising from or in connection with any Lease.

6. COLLECTION OF RENTS AND RELEASE.

6.1 Borrower’s Right to Collect Rents. Until the occurrence of an Event of Default and except as otherwise expressly provided to the contrary, Borrower shall have a license to:

(a) collect the Rents, but not more than 30 days prior to accrual;

(b) retain and use all Rents so collected as a trust fund, for application to payment of such of the Secured Debt as is due, and payment and performance of Borrower’s other obligations under the Loan Documents, retaining the balance, if any, for its own account; and

(c) exercise, except as otherwise specifically provided herein, all the rights of the landlord under each Lease.

6.2 Release of Assignment. Upon payment in full of the Secured Debt and performance of all obligations secured hereby, this Lease Assignment shall become and be void.

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7. GENERAL.

7.1 Lender’s Right to Waive, Consent or Release. Lender may at any time and from time to time, in writing: (a) waive compliance by Borrower with any covenant herein made by Borrower to the extent and in the manner specified in such writing; or (b) consent to Borrower doing any act which Borrower is prohibited hereunder from doing, or consent to Borrower’s failing to do any act which Borrower is required hereunder to do, to the extent and in the manner specified in such writing. No such act shall in any way impair the rights hereunder of Lender, except to the extent specifically agreed to by Lender in such writing.

7.2 No Impairment. The interests and rights of Lender under this Lease Assignment shall not be impaired by any indulgence, including, without limitation: (a) any renewal, extension or modification which Lender may grant with respect to any of the Secured Debt; (b) any surrender, compromise, release, renewal, extension, exchange or substitution which Lender may grant in respect of the Property or any interest therein; or (c) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Secured Debt.

7.3 Amendments. This Lease Assignment may not be waived, changed or discharged orally, but only by an agreement in writing signed by Lender, and any oral waiver, change or discharge of any provision of this Lease Assignment shall be without authority and of no force and effect. Any waiver, change or discharge shall be effective only in the specific instances and for the purposes for which given and to the extent therein specified.

7.4 Notices. Any notice, request, demand or other communication required or permitted under this Lease Assignment (unless otherwise expressly provided therein) shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail, postage prepaid sent to the intended addressee at the applicable Notice Address or to such different address as either Borrower or Lender shall have designated by written notice to the other sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or in the case of delivery by certified United States Mail, two days after deposit therein. No notice to or demand on Borrower in any case shall of itself entitle Borrower to any other or further notice of demand in similar or other circumstances.

7.5 Successors and Assigns. The terms, provisions, covenants and conditions of this Lease Assignment shall be binding upon Borrower, and any permitted successors and assigns of Borrower, and shall inure to the benefit of Lender and its successors, substitutes and assigns and shall constitute covenants running with the Land. All references in this Lease Assignment to Borrower or Lender shall be deemed to include all such successors, substitutes and assigns.

If ownership of the Property or any portion thereof becomes vested in a person other than Borrower, Lender may, without notice to Borrower, whether or not Lender has given written consent to such change in ownership, deal with such successor or successors in interest with reference to this Lease Assignment in the same manner as with Borrower, without in any way vitiating or discharging Lender’s remedies under or Borrower’s liability under this Lease Assignment.

7.6 Severability. A determination that any provision of this Lease Assignment is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Lease Assignment to any person or circumstances is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

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7.7 Gender and Construction. Within this Lease Assignment, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires. References in this Lease Assignment to “herein”, “hereunder” or “hereby” shall refer to this entire Lease Assignment, unless the context otherwise requires. When the phrase “in its sole unfettered discretion” is used in this Lease Assignment with respect to Lender, it shall permit Lender to evaluate such criteria (without allowance for reasonableness) as it chooses in approving or disapproving the requested or pending action. To the extent the terms of this Lease Assignment and the other Loan Documents are inconsistent or conflict, the terms of this Lease Assignment shall control and such documents shall be read together in order to provide Lender the broadest range of remedies available to it.

7.8 Joint and Several Liability. If Borrower is composed of more than one party, the obligations, covenants, agreements, representations and warranties contained in this Lease Assignment, as well as the obligations arising hereunder, are and shall be joint and several as to each such party.

7.9 Modifications. References to any of the Loan Documents in this Lease Assignment shall be deemed to include all amendments, modifications, extensions and renewals thereof.

7.10 Governing Law. This Lease Assignment shall be construed according to and governed by the laws of the State.

7.11 Captions. All paragraph and subparagraph captions are for convenience of reference only and shall not affect the construction of any provision herein.

7.12 Other Security. Lender may take or release other security for payment of the Secured Debt and may release any party primarily or secondarily liable therefor and may apply any other security held by it to the satisfaction of the Secured Debt without prejudice to any of its rights under this Lease Assignment.

7.13 Direction to Tenants. BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS EACH TENANT NAMED IN THE LEASES, UPON RECEIPT FROM LENDER OF A WRITTEN NOTICE TO THE EFFECT THAT AN EVENT OF DEFAULT EXISTS UNDER THIS LEASE ASSIGNMENT, TO PAY ALL RENTS ARISING OR ACCRUING UNDER SAID TENANT’S LEASE TO LENDER AND TO CONTINUE SO TO DO UNTIL OTHERWISE NOTIFIED BY LENDER.

7.14 Nonrecourse. Borrower shall be liable upon the indebtedness evidenced by the Note, for all sums to accrue or to become payable thereon and for performance of all covenants contained in the Note or in any of the other Loan Documents, to the extent, but only to the extent, of Lender’s security for the same, including, without limitation, all properties, rights, estates and interests covered by the Mortgage and the other Loan Documents. No attachment, execution or other writ or process shall be sought, issued or levied upon any assets, properties or funds of Borrower other than the properties, rights, estates and interests described in the Mortgage and the other Loan Documents. In the event of foreclosure of such liens, mortgages or security interests, by private power of sale or otherwise, no judgment for any deficiency upon such indebtedness, sums and amounts shall be sought or obtained by Lender against Borrower. Subject to the foregoing, nothing herein contained shall be construed to prevent Lender from exercising and enforcing any other remedy relating to the Property allowed at law or in equity or by any statute or by the terms of any of the Loan Documents.

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Notwithstanding the foregoing, Borrower shall be personally liable to Lender as set forth in Paragraph 12 of the Note.

Lender shall not be limited in any way in enforcing the personal liability and obligations of Borrower under the Loan Documents against Borrower, nor shall Lender be limited in any way in enforcing the personal liability and obligations of any guarantor or indemnitor in accordance with the terms of the instruments creating such liabilities and obligations. To that end, Borrower hereby expressly waives any right to require Lender to bring any action against any other person or to require that resort be had to any security and, without limiting the generality of the foregoing, Borrower herewith expressly waives any right Borrower otherwise might have or might have had under the provisions of Section 26-7 of the North Carolina General Statutes, et. seq. and/or other North Carolina laws.

7.15 Time of the Essence: Time is of the essence of each and every performance obligation of Borrower under this Lease Assignment or any of the other Loan Documents.

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[Signature Page of Assignment of Leases and Rents]

IN WITNESS WHEREOF, this Lease Assignment has been executed and delivered under seal as of the date first above written.

BORROWER:
AR I Borrower, LLC
By:	/s/ Rob Meyer
	Name: Rob Meyer
	Title: President

STATE OF GEORGIA – COUNTY OF COBB

I certify that the following person personally appeared before me this day acknowledging to me that he signed the foregoing document: Rob Meyer.

Today's Date: 11.15  , 2013	Sheronda Davis
	[Notary's signature as name appears on seal]
	Sheronda Davis
	[Notary's printed name as name appears on seal]

My commission expires: 8.21 , 2015

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EXHIBIT A

Property Description

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public right-of-way (“Prosser Way”) and the fifty (50) foot public right of way (“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg County Register of Deeds, reference to which is hereby made for a more particular description.

TOGETHER WITH the rights and easements conferred by that Sewer Easement Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732, at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book 22541, at page 189.

TOGETHER WITH easements contained in that Declaration of Easements, Covenants and Restrictions recorded in Book 28849, at page 615, Mecklenburg County Register of Deeds.

EX-10.4

Exhibit 10.4

Prepared by and after recording return to:

Diana R. Palecek

Smith Moore Leatherwood LLP

101 N. Tryon Street, Suite 1300

Charlotte, NC 28246

NOTE, DEED OF TRUST AND RELATED LOAN DOCUMENTS

ASSIGNMENT, ASSUMPTION AND MODIFICATION AGREEMENT

THIS NOTE, DEED OF TRUST AND RELATED LOAN DOCUMENTS ASSIGNMENT, ASSUMPTION AND MODIFICATION AGREEMENT (this “Agreement”) is made this 19 day of August, 2015 between AR I BORROWER, LLC, a Delaware limited liability company (the “Original Borrower”) whose address is c/o Catalyst Development Partners, 808 Glenwood Avenue, SE, Suite H, Atlanta, GA 30316, BR ASHTON I OWNER, LLC, a Delaware limited liability company (the “New Borrower”) whose address is c/o Bluerock Real Estate, L.L.C., 712 Fifth Avenue – 9^th Floor, New York, NY 10019, and SUN LIFE ASSURANCE COMPANY OF CANADA, a Canadian corporation (“Lender”) whose address is c/o Sun Life of Canada, One Sun Life Executive Park, Wellesley Hills, MA 02481, Attention: Mortgage Investments Group, in order to document the assignment and assumption of the $31,900,000.00 original principal amount loan from Lender to Original Borrower dated November 22, 2013 (the "Loan"), including the assignment by Original Borrower and assumption by New Borrower of the loan documents described in Exhibit “A” attached hereto (collectively, the “Loan Documents”). This Agreement is joined in by Rob Meyer, Mark Mechlowitz, Jorge Sardinas, Robert Fishel, and Harold Katz (collectively, “Original Guarantor”) and by Bluerock Residential Growth REIT, Inc., a Maryland corporation (“Replacement Guarantor”).

BACKGROUND:

Original Borrower is indebted to Lender under the Loan Documents. Original Borrower desires to sell, and New Borrower desires to purchase, the real property encumbered by the Deed of Trust (term is defined in Exhibit “A”) and more fully described on Exhibit “B” attached hereto (the “Property”) and New Borrower desires to assume all outstanding obligations of the Original Borrower under the Loan Documents, including paying Lender the unpaid principal balance of the Note (term is defined in Exhibit “A”) owing to Lender. The Deed of Trust requires the written consent of Lender prior to any sale or transfer of all or any part of the encumbered property, and the sale or transfer without the consent of Lender would constitute a default under the Deed of Trust. Original Borrower and New Borrower wish to obtain the consent of the Lender to such sale of the Property and to obtain from Lender a limited release of Original Borrower from certain of its obligations under the Loan Documents as set forth herein.

ASSIGNMENT AND ASSUMPTION

NOW, THEREFORE, for and in consideration of the granting of the consents by Lender, for the benefits following to each of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree:

1.          Recitals. The above recitals arc true and correct.

2.          Definitions. Any capitalized terms used herein without definition shall have the meanings ascribed to them in the Deed of Trust.

3.          Status of Loan. Without waiving any of its rights under the Loan Documents, Lender hereby confirms that as of the date hereof: the principal balance outstanding under the Note is Thirty-One Million Nine Hundred Thousand and 00/100 Dollars ($31,900,000.00); the current balance of escrow deposits held by Lender for Property Taxes and Charges is Two Hundred Seventy-Three Thousand Five Hundred Eighty-Two and 53/100 Dollars ($273,582.53); the current balance of escrow deposits held by Lender for Insurance Premiums is Zero and 00/100 Dollars ($0.00); Lender has not issued any written notices of default to Original Borrower or Original Guarantor which have not been cured; and there are no known existing uncured defaults by Original Borrower or Original Guarantor under the Loan Documents; and Lender is the current holder of the Note.

4.          Reaffirmation of Terms. The provisions of the Loan Documents, as modified herein, are expressly reaffirmed hereby and remain in full force and effect; provided, however, that New Borrower shall not be deemed to have reaffirmed any representations or warranties made by Original Borrower under the Loan Documents to the extent such representations or warranties do not relate to the Property but instead relate to Original Borrower’s financial status or entity/organizational specific matters. Similarly, Replacement Guarantor shall not be deemed to have reaffirmed any representations or warranties made by Original Guarantor under the Loan Documents to the extent such representations or warranties do not relate to the Property but instead relate to Original Guarantor’s financial status or entity/organizational specific matters.

5.          Assignment and Assumption. Original Borrower hereby assigns to New Borrower, and New Borrower hereby assumes, the outstanding indebtedness evidenced by the Note and all the rights and outstanding obligations of Original Borrower under the Loan Documents. New Borrower hereby agrees that it shall hereafter make all payments required to be made by the borrower under the Note and other Loan Documents and perform all outstanding obligations of the borrower contained in the Loan Documents. New Borrower agrees to abide by all provisions of the Loan Documents. In the event of any default by New Borrower under the terms of any Loan Document, Lender may exercise all remedies available to it under the terms of the Loan Documents.

6.           Modifications to the Note. The Note is hereby amended as follows:

a. The first Section 12(a) is hereby deleted in its entirety and replaced with the following:

“(a) any damages, losses, liabilities, costs or expenses (including, without limitation, attorneys' fees) incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not previously applied to remedy tenant defaults) which have not been paid over to Lender after an Event of Default; (ii) any rents prepaid by any tenant of the Property more than one (1) month in advance and not paid to Lender within fifteen (15) days of receipt thereof; (iii) any insurance proceeds or condemnation awards received by Borrower and not applied according to the terms of the Mortgage; provided, however, Borrower will not be personally liable for any failure described in this Section 12(a)(iii) if Borrower is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting from a casualty not reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents; (v) fraud, material misrepresentation or bad faith on the part of Borrower or Guarantor in connection with the loan evidenced by this Note; (vi) any event or circumstance for which Borrower is obligated to indemnify Lender under the provisions of the Mortgage respecting Hazardous Substances, Contamination or Clean-Up; (vii) waste of the Property by Borrower, except for ordinary wear and tear, casualty and condemnation; (viii) Borrower's failure to pay real estate taxes or other assessments against the Property (but subject to the provisions of Section 4.1(c) of the Mortgage regarding Lender’s failure to pay the same, in which event, Borrower shall have no liability hereunder); or (ix) Borrower’s failure to comply with the Americans with Disabilities Act of 1990, as amended (“ADA”) (provided that BR Ashton I Owner, LLC shall not be liable hereunder for ADA violations relating to the original construction of the Improvements); and”

7.           Modifications to the Deed of Trust. The Deed of Trust is hereby amended as follows:

a. The following are hereby added as new paragraphs after Section 1.33:

“ADDITIONAL DEFINITIONS.

“Affiliate” means any person directly or indirectly through one or more intermediaries controlling, controlled by, or under direct or indirect common control with, such person. A person shall be deemed to be “controlled by” any other person if such other person possesses, directly or indirectly, power (a) to vote a majority of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners or the equivalent; or (b) to direct or cause the direction of the management and policies of such person whether by contract or otherwise.

“Bluerock Operating Partnership” means Bluerock Residential Holdings, LP, a Delaware limited partnership and operating partnership subsidiary of Bluerock REIT.

“Bluerock REIT” means Bluerock Residential Growth REIT, Inc., a Maryland corporation.

“BR Owner” means BR Ashton I Owner, LLC, a Delaware limited liability company.

“BRE” means Bluerock Real Estate, L.L.C., a Delaware limited liability company.

“BRG” means BRG Ashton NC, LLC, a Delaware limited liability company.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private).

“Transfer” means any sale, installment sale, exchange, issuance, mortgage, pledge, hypothecation, assignment, encumbrance or other transfer, conveyance or disposition, whether voluntarily, involuntarily or by operation of law or otherwise.”

b. Section 3.11 is hereby deleted in its entirety and replaced with the following:

“3.11 Contamination. To the best of Borrower's knowledge and belief, after due investigation and inquiry, except as disclosed by that certain Phase I Environmental Site Assessment Report prepared by Blackstone Consulting, LLC, and dated March 26, 2015 (the “Phase I Report”), no Contamination has occurred at the Property.”

c. Section 4.4A is hereby amended as follows:

In the first line of Section 4.4A., the word “herein” is deleted and the phrase “in Subparagraphs 4.4B through 4.4F below” is added after the word “provided”.

d. Section 4.4B is hereby deleted in its entirety and replaced with the following:

“B. Permitted Property Transfers. Notwithstanding the foregoing in Subparagraph 4.4A above (and further provided that the rights of Lender set forth in such Subparagraph 4.4A above to condition its consent on changes in the interest rate under the Note, etc. shall not apply to Permitted Property Transfers under this Subparagraph 4.4B), the Borrower shall have the right to (i) sell the Property in its entirety or (ii) sell or transfer all of the ownership interests in the Borrower (if Borrower is an entity) (in one single transaction or in a series of installment sales), in an arms-length transaction to a third party independent of the Borrower (each a “Permitted Property Transfer”), provided that the following conditions are satisfied: (i) the proposed buyer/transferee is acceptable to the Lender as measured and judged by normal and ordinary standards of financial strength, credit history, real estate management ability and experience and professional character, as determined by the Lender in its sole discretion, and (ii) such buyer/transferee agrees to assume all of the obligations of the Borrower under the Loan Documents and the Secured Debt, and (iii) in the case of the first Permitted Property Transfer, Borrower shall pay Lender a fee equal to 1% of the then outstanding principal balance of the Note and shall pay all actual costs of Lender in connection with such transfer, including legal fees, and (iv) in the case of any subsequent Permitted Property Transfer, Borrower shall pay Lender a fee equal to 2% of the then outstanding principal balance of the Note and shall pay all actual costs of Lender in connection with such transfer, including legal fees. Borrower shall give Lender no less than thirty (30) days’ notice of any proposed Permitted Property Transfer, such notice to be accompanied by documentation suitable to show the financial strength, credit history, real estate management ability and experience and professional character of the proposed buyer/transferee. Additionally, the Borrower shall furnish to the Lender upon request additional information concerning the proposed buyer/transferee as determined by Lender as necessary or helpful to measure and judge the financial strength, credit history, real estate management ability and experience and professional character of the proposed buyer/transferee.

Upon the completion of any Permitted Property Transfer by Borrower (“Original Borrower” for purposes hereof) pursuant to the foregoing with the consent of the Lender and provided that the Borrower has provided to Lender a “Phase I” environmental assessment report which is satisfactory to Lender in Lender’s sole discretion, then upon the foregoing, the Lender will agree to release the Original Borrower and the then-current guarantors or indemnitors of the Secured Debt (collectively, the “Original Obligors”) from any further obligations or liabilities under the Loan Documents as of the date of the assumption of the Loan Documents by the Permitted Property Transfer buyer/transferee (the “Assumption Date”), except as expressly set forth in the remaining section of this Paragraph. Notwithstanding the foregoing, Original Obligors will not be released from any obligations under the Loan Documents relating to (a) Hazardous Substances, or any Contamination or Clean-Up of Hazardous Substances on, at or under the Property during the period up to the Assumption Date, notwithstanding when any such obligation may be learned of, discovered or made evident, or (b) any obligation arising under the Loan Documents for periods prior to the Assumption Date, but which obligation may be learned of, discovered or made evident on or after the Assumption Date (collectively, the “Continuing Obligations”). In the event of any default by Original Obligors in the performance of any Continuing Obligations, which continues after ten (10) days’ prior written notice thereof from Lender to Original Obligors, Lender may exercise all remedies against Original Obligors available to it under the terms of the Loan Documents or this Agreement or applicable law as if the release of the Original Obligors had not been entered into by Lender.”

e. Section 4.4.C. is hereby amended as follows:

In the ninth line of Section 4.4C, the word “in” is inserted after the word “interested”.

f. Section 4.4D is hereby deleted in its entirety and replaced with the following:

“D. Family Transfers. Notwithstanding the foregoing restrictions, transfers of ownership interests among Family Members (as hereafter defined) for, or to entities created for Family Members for, estate planning purposes will be permitted without payment of a transfer fee, provided Borrower receives Lender’s prior written approval and subject to Lender’s then current standard requirements for such transfers. Additionally, in connection with any of the transfers contemplated in this Subparagraph 4.4D, the following conditions shall be satisfied: (i) Borrower shall give Lender no less than thirty (30) days’ notice prior to any such transfer, such notice to be accompanied by evidence reasonably satisfactory to Lender in its sole discretion that the proposed transferee is a permitted transferee under this paragraph, and (ii) Borrower shall pay all costs of Lender in connection with such transfer, including legal fees. As used herein, the term “Family Member” shall mean any person who holds a direct ownership (i.e., membership or partnership interests) in Borrower or the Property or any person who is a guarantor or indemnitor of the Secured Debt and the spouse, parents, children and grandchildren of any said person.”

g. Section 4.4E is hereby deleted in its entirety and replaced with the following:

“E. Internal Transfers. Notwithstanding the foregoing restrictions in this Section 4.4 or elsewhere in this Deed of Trust, the following Transfers shall be permitted subject to Borrower’s compliance with the conditions set forth below (each a “Permitted Transfer”):

(a)          So long as Control of BR Owner, BRE and Bluerock REIT does not change as a result thereof, a Transfer of direct or indirect membership interests in BR Owner or BRG (or an owner of a direct or indirect interest in BR Owner or BRG) to BRE, Bluerock REIT, Bluerock Operating Partnership or any of their Affiliates; so long as, after any such Transfer, BR Owner and BRG are Controlled, directly or indirectly, by BRE and/or Bluerock REIT;

(b)          a Transfer (including any issuance or redemption) of non-controlling membership interests, corporate stock, partnership interests or other ownership interests in any direct or indirect owner of BR Owner, BRG, Bluerock REIT and/or Bluerock Operating Partnership (or an Affiliate directly or indirectly owned or controlled by Bluerock REIT or Bluerock Operating Partnership) (the “Affected Entity”), provided that after such Transfer (i) the Affected Entity continues to be Controlled by the same Person or Persons that Controlled the Affected Entity prior to such Transfers; and (ii) the parties exercising Control of Borrower after such Transfer, continue to Control, directly or indirectly, Borrower in substantially the same manner in which they did on the date of this Agreement or, if applicable, the most recent Permitted Transfer;

(c)          a Transfer by devise or descent or by operation of law upon the death of an individual that holds an indirect legal or beneficial ownership interest in Borrower;

(d)          any residential lease entered into after the date hereof in accordance with the terms of the Loan Documents; and/or

(e)          a one time Transfer of interests in BR Owner or BRG by virtue of (i) a sale of a majority (or all) of the outstanding shares (or partnership interests) of Bluerock REIT or Bluerock Operating Partnership or (ii) a merger, combination or “roll-up” of Bluerock REIT or Bluerock Operating Partnership into a partnership, limited liability company or other entity or participation in an UPREIT, DOWNREIT or similar transaction with a real estate investment trust or other entity (any of the foregoing hereinafter referred to as a “REIT Sale”), where the purchaser or surviving entity (“Purchaser”) by virtue of such REIT Sale has a net worth and liquidity no less than that of Bluerock REIT and Bluerock Operating Partnership on a consolidated basis as of the date hereof, subject to the satisfaction of all of the following conditions as determined by Lender in its reasonable discretion:

(1) Purchaser either (i) continues to be a real estate investment trust or (ii) has had its applicable organizational documents reviewed by Lender to confirm no legal issues;

(2) No more than 20% of the ownership interests in Purchaser can be vested directly or indirectly in a single individual or individuals;

(3) Purchaser shall satisfy the following conditions with respect to its real estate portfolio (the “Purchaser’s Portfolio”): (i) Purchaser’s Portfolio shall have a minimum combined net operating income of 1.25 times the total debt service on the loans secured by the properties in the Purchaser’s Portfolio (“DSCR”) and (ii) the ratio of the then combined outstanding principal balances of the loans secured by the properties in the Purchaser’s Portfolio to the then fair market value of the properties in the Purchaser’s Portfolio as determined by the Lender (“LTV”) shall not be greater than 75%, based on a schedule of Purchaser’s Portfolio certified by Purchaser as true and correct (x) reflecting the most recent appraised value for each property in the Purchaser’s Portfolio, (y) meeting the required DSCR of 1.25x for Purchaser’s Portfolio as a whole and (z) meeting the maximum LTV of 75% for Purchaser’s Portfolio as a whole; provided, however, that Lender reserves the right to approve the income (leases) and expenses used to calculate the DSCR;

(4) Credit and legal background checks of Purchaser and parties in control of Purchaser produce no negative credit findings;

(5) Purchaser (including its officers, directors, shareholders, partners, indirect equity interest holders, members and affiliates) is in compliance with Section 3.12 of this Deed of Trust (Anti-Terrorism Laws);

(6) Borrower to certify no default or Event of Default has occurred and remains uncured or is pending with the passage of time;

(7) Borrower to provide written notice along with evidence that conditions 1-6 above have been satisfied 30 days prior to the REIT Sale;

(8) Borrower to provide copies of fully executed transfer documents within 30 days of completion of the REIT Sale; and

(9) Payment of Lender's costs and expenses in reviewing the above, including legal fees.

Additionally, in connection with any of the Permitted Transfers contemplated in this paragraph, the following conditions shall be satisfied: (i) Borrower shall give Lender no less than thirty (30) days’ notice prior to any such Permitted Transfer, such notice to be accompanied by evidence reasonably satisfactory to Lender in its sole discretion that the proposed transferee is a permitted transferee under this paragraph, and (ii) Borrower shall pay all costs of Lender in connection with such transfer, including legal fees.”

h. A new Section 4.4G is hereby added as follows:

“G. Easements for Phase II. To the extent Borrower is required by the terms of any purchase contract entered into with the owner of Phase II (“Phase II Owner”) to grant licenses, easements or other rights to Phase II Owner for the sharing of amenities between Phase II and the Property, the granting of any such licenses, easements or other rights in or over the Property to Phase II Owner (or the modification of any existing reciprocal easement agreement impacting the Property and Phase II) shall not constitute a transfer of the Property in violation of this Section 4.4., provided that the following conditions are satisfied: (i) Borrower shall give Lender no less than thirty (30) days’ written notice of any such proposed licenses, easements or other rights, including copies of all proposed documentation, prior to granting any such licenses, easements or other rights, which shall be subject to Lender’s review in Lender’s reasonable discretion; (ii) in the event that the agreement conveying such licenses, easements or other rights to Phase II Owner is to be recorded, Borrower shall deliver to Lender an endorsement to its existing title insurance policy insuring the lien of this Deed of Trust, acceptable to Lender in its sole discretion, advancing the effective date of such policy and all endorsements thereto to the date and time of the recording of such agreement and, in the case of an appurtenant easement, adding the appurtenant easement as an insured interest under the existing title insurance policy; (iii) in the case of an appurtenant easement, this Deed of Trust shall be modified to add the appurtenant easement to the Land described in Exhibit A attached hereto; (iv) Borrower shall provide Lender with evidence in form and substance satisfactory to Lender that following the granting of easements, licenses or other rights to Phase II Owner, the Property will continue to meet the requirements of all zoning ordinances applicable to the Property; and (v) Borrower shall pay all costs of Lender in connection with the granting of such easements, licenses or other rights, including legal fees.”

i. The first unnumbered paragraph following Section 4.6(f) is hereby deleted in its entirety and replaced with the following:

“The foregoing indemnification shall apply in all instances, unless the claim (i) was directly caused by the gross negligence or intentional misconduct of Lender or (ii) is the result of a matter first occurring from and after the date Lender takes title to the Property by foreclosure or deed in lieu thereof.”

j. Section 4.15 is hereby deleted in its entirety and replaced with the following:

“4.15. Replacement Guarantor. Within ninety (90) days after the death of any guarantor or indemnitor of the Secured Debt that is an individual, Borrower shall secure a replacement guarantor or indemnitor, satisfactory to Lender in its sole discretion, who, within the 90 day period, shall sign all documents required by Lender to effectuate this intent.”

8.           Funds for Property Taxes and Charges and Insurance Premiums. Original Borrower hereby relinquishes and transfers to New Borrower all of Original Borrower’s interest in any monies which may be held by Lender as escrow deposits for the purposes of application to Property Taxes and Charges and Insurance Premiums, or any other purposes for which deposits are being held by Lender, if any. New Borrower assumes the liability for payment of the escrow deposits for Property Taxes and Charges and Insurance Premiums hereafter required by the Deed of Trust and agrees to make the deposits with Lender for such purposes as hereafter required by the Deed of Trust.

9.           Non-Recourse Carve-Outs. As part of, and not in limitation of, the obligations being assumed by New Borrower in this Agreement, New Borrower hereby, as of the date hereof, assumes liability for, hereby agrees to pay, and hereby guarantees payment to Lender of:

a. any damages, losses, liabilities, costs or expenses (including, without limitation, attorneys' fees) incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not previously applied to remedy tenant defaults) which have not been paid over to Lender by New Borrower after an Event of Default; (ii) any rents prepaid to New Borrower by any tenant of the Property more than one (1) month in advance and not paid to Lender within fifteen (15) days of receipt thereof; (iii) any insurance proceeds or condemnation awards received by New Borrower and not applied according to the terms of the Deed of Trust; provided, however, New Borrower will not be personally liable for any failure described herein if New Borrower is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting from a casualty occurring after the date hereof not reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents; (v) fraud, material misrepresentation or bad faith on the part of New Borrower or Replacement Guarantor in connection with the loan evidenced by the Note; (vi) any event or circumstance for which New Borrower is obligated to indemnify Lender under the provisions of the Deed of Trust respecting Hazardous Substances, Contamination or Clean-Up; (vii) waste of the Property by New Borrower, except for ordinary wear and tear, casualty and condemnation; (viii) New Borrower's failure to pay real estate taxes or other assessments against the Property (but subject to the provisions of Section 4.1(c) of the Deed of Trust regarding Lender’s failure to pay the same, in which event, New Borrower shall have no liability hereunder); or (ix) New Borrower’s failure to comply with the Americans with Disabilities Act of 1990, as amended (“ADA”) (provided that New Borrower shall not be liable hereunder for ADA violations relating to the original construction of the Improvements);

b. all rents, issues and profits from the Property collected by New Borrower after an Event of Default has occurred and is continuing or after an event or circumstance has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute an Event of Default, unless such rents, issues and profits are applied to the normal operating expenses of the Property or to the Secured Debt; provided, however, New Borrower will not be personally liable for any failure described herein if New Borrower is unable to apply rents and security deposits as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding;

c. default of either landlord or tenant under any Master Lease (as defined in the Loan Documents) that may be applicable to the Property; and

d. the cost to repair any Casualty (as defined in the Deed of Trust) occurring after the date hereof having a repair estimate as determined by the Lender equal to or less Three Hundred Thousand Dollars ($300,000.00); provided, however, the New Borrower’s liability for the cost to repair any such Casualty will be released by Lender upon the New Borrower’s satisfactory lien-free completion of such repair, as determined by the Lender in the Lender’s sole discretion.

10.         Lender’s Consent. Lender hereby (a) consents to the sale and transfer of the Property to New Borrower (the “Current Transfer”), and (b) consents to New Borrower assuming the outstanding obligations under the Loan Documents and accepts New Borrower as its obligor under the Loan Documents. Upon the full execution and delivery of this Agreement, all references in the Loan Documents to “Borrower” or to “Mortgagor” shall thereafter be references to the New Borrower.

11.         Limited Release of Original Obligors. Upon the full execution and delivery of this Agreement to the Lender, the Original Borrower and Original Guarantor (the Original Borrower and Original Guarantor are referred to herein collectively as the “Original Obligors”) shall be released from any further obligations or liabilities under the Loan Documents as of the date hereof, except as expressly set forth in this paragraph. Notwithstanding the foregoing, Original Obligors are not released from any obligations under the Loan Documents relating to (a) Hazardous Substances, or any Contamination or Clean-Up of Hazardous Substances on, at or under the Property during the period up to the date hereof, notwithstanding when any such obligation may be learned of, discovered or made evident, or (b) any obligation arising under the Loan Documents as the Loan Documents existed immediately prior to giving effect to the terms of this Agreement for periods prior to the date hereof, but which obligation may be learned of, discovered or made evident on or after the date hereof (collectively, the “Continuing Obligations”). In the event of any default by Original Obligors in the performance of any Continuing Obligations, which continues after written notice thereof from Lender to Original Obligors, Lender may exercise all remedies against Original Obligors available to it under the terms of the Loan Documents as the Loan Documents existed immediately prior to giving effect to the terms of this Agreement or this Agreement or applicable law as if this release had not been entered into by Lender.

12.         Guaranty. In connection with the assumption of the Loan Documents by the New Borrower, Replacement Guarantor, a related party to New Borrower, is executing and delivering to the Lender a Guaranty of Non-Recourse Carve-Outs of even date herewith (the “Guaranty”). The New Borrower and Lender hereby agree that any default under the Guaranty, which is not remedied within any applicable notice or cure period contained therein, shall constitute a default under the Loan Documents with the same force and effect as if such default has been expressly set forth in the Loan Documents, and the occurrence of such a default shall entitle the Lender to exercise the remedies in the Loan Documents for any such default. Hereafter, all references in the Loan Documents to “Guaranty” shall mean the Guaranty and all references in the Loan Documents to "Guarantor" shall mean the Replacement Guarantor.

13.         Further Transfers of Property. New Borrower agrees that the granting of the consent of Lender to this Current Transfer shall not constitute a waiver of the restrictions on transfer and encumbrances contained in the Deed of Trust, and such restrictions shall continue in full force and effect (as modified herein); except as may otherwise be provided in the Loan Documents, any future transfer, encumbrance, or sale by New Borrower without the written consent of Lender shall constitute a default of the terms of the Deed of Trust. Except as may otherwise be provided in the Loan Documents, any provisions in the Deed of Trust concerning permitted one-time transfers are no longer effective after the transfer contemplated by this Agreement.

14.         Acknowledgment. Original Obligors acknowledge that, as of the date hereof, they do not have any defenses, claims, counterclaims or rights of set-off, legal or equitable, arising out of or in connection with the Loan Documents. Original Obligors each waive and release, acquit, satisfy and forever discharge Lender and its affiliates, agents, predecessors, and assigns from any and all claims, counterclaims, defenses, action, causes (legal or equitable), promises and demands whatsoever in law or in equity which Original Obligors ever had, now has or which any successor or assign thereof hereafter can, shall or may have against Lender or its affiliates, agents, predecessors or assigns, for, upon or by reason of any manner, or cause or thing whatsoever through the date hereof.

15.         Representation and Warranty. Original Borrower hereby warrants and represents to Lender that from the date of recordation of the Deed of Trust through the recordation of this Agreement, no document or instrument which is or may be a lien prior to the lien of the Deed of Trust has been or will be recorded. Original Borrower and New Borrower hereby further warrant and represent to Lender that the Deed of Trust, as affected by this Agreement, constitutes a good and valid first priority mortgage lien against the Property. Original Borrower and New Borrower acknowledge and agree that Lender is relying upon the warranties and representations set forth this paragraph and that said warranties and representations are a material inducement to Lender to enter into this Agreement.

16.         Ratification. The parties hereto hereby ratify and confirm the terms, conditions and covenants contained in the Loan Documents, as modified herein. In the event of any conflict between the Loan Documents and this Agreement, the terms of this Agreement shall govern. The parties also ratify and confirm that all remedies provided for in the Loan Documents upon default by the Borrower thereunder, shall continue in full force and effect. The execution and delivery of this Agreement shall not constitute a novation or modification of the lien, encumbrance or security of the Deed of Trust, which Deed of Trust shall retain its priority as originally filed for record. The execution and delivery hereof shall not constitute a novation of the Note in any way.

17.         UCC Financing Statements. Original Borrower and New Borrower each authorize Lender to file appropriate financing statements and financing statement amendments in the applicable jurisdictions to provide notice of the obligations being assumed by New Borrower herein.

18.         Binding Agreement. This Agreement shall be binding upon the successors and assigns of the respective parties hereto.

19.         Miscellaneous.

a. Wherever the words Original Borrower or New Borrower are used in this Agreement, they shall represent the plural as well as the singular, the feminine and neuter genders as well as the masculine, and shall include successors or assigns as applicable.

b. This Agreement may be executed in multiple counterparts, which, when taken together, shall constitute one and the same instrument.

20.         Waiver of Jury Trial. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS, THIS AGREEMENT, AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE UNDERSIGNED. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.

[Signatures contained on next page]

IN WITNESS WHEREOF, the parties have executed this Note, Deed of Trust and Related Loan Documents Assignment, Assumption and Modification Agreement as of the day and year first stated above.

		ORIGINAL BORROWER:
		AR I BORROWER, LLC, a Delaware limited liability company
		By:	AR OWNER, LLC, a Delaware limited
			liability company, its Sole Member
			and Sole Manager
			By:	AR DEVELOPER, LLC, a
				Georgia limited liability company,
				its Managing  Member
				By:	CATALYST DEVELOPMENT
					PARTNERS II, LLC,  a Georgia
					limited liability company, its
					Sole Member and Sole Manager
WITNESSES:
/s/ Benjamin Field					By:	/s/ Robert Meyer
Print Name:	Benjamin Field				Name:	Robert Meyer
					Title:	Manager/Officer
/s/ Patricia Mason
Print Name:	Patricia Mason

STATE OF Georgia

COUNTY OF Fulton

The foregoing instrument was acknowledged before me this 14th day of August, 2015, by Robert Meyer, Manager of AR I Borrower, LLC, a Delaware limited liability company (“Original Borrower”), on behalf of said entity. He/She is x personally known to me or ¨ has produced _________________________ as identification.

/s/ Lindsay Schaknowski
Print Name:	Lindsay Schaknowski
Notary Public, State of Georgia
My Commission Expires: 1/26/18
/s/ (SEAL)

[Signature Page for Assignment, Assumption and Modification Agreement]

		WITH JOINDER by ORIGINAL GUARANTOR, individually, for purposes of joining in on paragraphs 11 and 14 hereof:
WITNESSES:
/s/ Benjamin Field		/s/ Robert Meyer
Print Name:	Benjamin Field	Name: Rob Meyer, individually
/s/ Patricia Mason
Print Name:	Patricia Mason
/s/ Benjamin Field		/s/ Mark Mechlowitz
Print Name:	Benjamin Field	Name: Mark Mechlowitz, individually
/s/ Patricia Mason
Print Name:	Patricia Mason
/s/ Katharine M. Lewis		/s/ Jorge Sardinas
Print Name:	Katharine M. Lewis	Name: Jorge Sardinas, individually
/s/ Eric Williams
Print Name:	Eric Williams
/s/ Katharine M. Lewis		/s/ Robert Fishel
Print Name:	Katharine M. Lewis	Name: Robert Fishel, individually
/s/ Eric Williams
Print Name:	Eric Williams
/s/ Brian Sigloc		/s/ Harold Katz
Print Name:	Brian Sigloc	Name: Harold Katz, individually
/s/ Christopher Stabeno
Print Name:	Christopher Stabeno

STATE OF Georgia

COUNTY OF Fulton

The foregoing instrument was acknowledged before me this 14th day of August, 2015, by Rob Meyer (an “Original Guarantor”), individually.

/s/ Lindsay Schaknowski
Print Name:	Lindsay Schaknowski
Notary Public, State of Georgia
My Commission Expires: 1/26/18
/s/ (SEAL)

STATE OF Georgia

COUNTY OF Fulton

The foregoing instrument was acknowledged before me this 14th day of August, 2015, by Mark Mechlowitz (an “Original Guarantor”), individually.

/s/ Lindsay Schaknowski
Print Name:	Lindsay Schaknowski
Notary Public, State of Georgia
My Commission Expires: 1/26/18
/s/ (SEAL)

STATE OF Georgia

COUNTY OF Fulton

The foregoing instrument was acknowledged before me this 14th day of August, 2015, by Jorge Sardinas (an “Original Guarantor”), individually.

/s/ Lindsay Schaknowski
Print Name:	Lindsay Schaknowski
Notary Public, State of Georgia
My Commission Expires: 1/26/18
/s/ (SEAL)

STATE OF Georgia

COUNTY OF Fulton

The foregoing instrument was acknowledged before me this 14th day of August, 2015, by Robert Fishel (an “Original Guarantor”), individually.

/s/ Lindsay Schaknowski
Print Name:	Lindsay Schaknowski
Notary Public, State of Georgia
My Commission Expires: 1/26/18
/s/ (SEAL)

STATE OF Philadelphia

COUNTY OF Bucks

The foregoing instrument was acknowledged before me this 17 day of August, 2015, by Harold Katz (an “Original Guarantor”), individually.

/s/ Loredana Mattia
Print Name:	Loredana Mattia
Notary Public, State of PA
My Commission Expires: 1/23/19
/s/ (SEAL)

[Signature Page for Assignment, Assumption and Modification Agreement]

		NEW BORROWER:
		BR ASHTON I OWNER, LLC, a Delaware limited liability company
WITNESSES:		By:	BRG ASHTON NC, LLC, a Delaware limited liability company, its sole member
/s/ Molly Brown			By:	/s/ Jordan Ruddy
Print Name:	Molly Brown		Name:	Jordan Ruddy
			Title:	Authorized Signatory
/s/ Natalie Murphy
Print Name:	Natalie Murphy

STATE OF New York

COUNTY OF New York

The foregoing instrument was acknowledged before me this 12 day of August, 2015, by Jordan Ruddy, Authorized Signatory of BRG Ashton NC, LLC, a Delaware limited liability company, the sole member of BR Ashton I Owner, LLC, a Delaware limited liability company (“New Borrower”), on behalf of said entity. He/She is x personally known to me or ¨ has produced _________________________ as identification.

/s/ Dale Pozzi
Print Name:	Dale Pozzi
Notary Public, State of New York
My Commission Expires: January 28, 2017
/s/ (SEAL)

[Signature Page for Assignment, Assumption and Modification Agreement]

		REPLACEMENT GUARANTOR:
WITNESSES:		BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation
/s/ Molly Brown		By:	/s/ Michael Konig
Print Name:	Molly Brown	Name:	Michael Konig_
		Title:	Authorized Signatory
/s/ Natalie Murphy
Print Name:	Natalie Murphy

STATE OF New York

COUNTY OF New York

The foregoing instrument was acknowledged before me this 12 day of August, 2015, by Michael Konig, Authorized Signatory of BRG Ashton NC, LLC, a Delaware limited liability company, the sole member of BR Ashton I Owner, LLC, a Delaware limited liability company (“New Borrower”), on behalf of said entity. He/She is x personally known to me or ¨ has produced _________________________ as identification.

/s/ Dale Pozzi
Print Name:	Dale Pozzi
Notary Public, State of New York
My Commission Expires: January 28, 2017
/s/ (SEAL)

	LENDER:
	SUN LIFE ASSURANCE COMPANY OF CANADA
/s/ [Illegible signature]	Per:	/s/ Phillippe Dougherty
Subscribing Witness	Name:	Phillippe Dougherty
	Title:	Director of Canadian Asset Management
/s/ [Illegible signature]	Per:	/s/ Christine A. Iacoucci
Subscribing Witness	Name:	Christine A. Iacoucci, AACI, P.App
	Title:	Managing Director, Real Estate
	I/We have the authority to bind the Corporation

(ACKNOWLEDGMENT PAGE TO FOLLOW)

CANADA
Province of Ontario	)		I, Alec Svoboda  of the
	)   ss.:		City of Toronto, in the Province of
City of Toronto	)		Ontario
		MAKE OATH AND SAY:

On the 17 day of August in the year 2015 before me, the undersigned, a Notary Public in and for the Province of Ontario, personally appeared SUN LIFE ASSURANCE COMPANY OF CANADA, a Canadian corporation with a place of business in Canada being 150 King Street West, Toronto, Ontario M5H 1J9, by Phillippe Dougherty, its Director of Canadian Asset Management, and Christine A. Iacoucci, its Managing Director, Real Estate, personally known to me or proved to me on the basis of satisfactory evidence to be the individuals whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their capacities, and that by their signatures on the instrument, the individuals, or the people upon behalf of which the individuals acted, executed the instrument.

/s/ Alec Svoboda

Alec Svoboda

Notary Public

Province of Ontario

/s/ (SEAL)

My commission does not expire.

EXHIBIT "A"

LIST OF LOAN DOCUMENTS

(all Loan Documents are dated November 22, 2013 unless otherwise indicated)

1. Promissory Note dated November 22, 2013 in the original principal amount of $31,900,000.00 (the “Note”).

2. Deed of Trust and Security Agreement and Fixture Filing recorded on November 22, 2013 in Book 28849, Page 636, Mecklenburg County, North Carolina Register of Deeds (the “Deed of Trust”).

3. Assignment of Leases and Rents recorded on November 22, 2013 in Book 28849, Page 678, Mecklenburg County North Carolina Register of Deeds.

4. UCC-1 Financing Statements

a. Delaware Department of State U.C.C. Filing Section filed on November 25, 2013 Initial Filing #2013 4762192.

b. Register of Deeds, Mecklenburg County, State of North Carolina recorded on November 22, 2013 in Book 28849, Page 693.

5. Environmental Indemnity executed by Original Borrower and Original Guarantor dated November 22, 2013.

6. Escrow Waiver Letter (Insurance Premium).

7. Original Borrower’s Estoppel Certificate Regarding Mortgaged Property.

8. Landlord’s Estoppel Certificate Regarding Leases.

(Loan Documents dated as of the Effective Date)

1. Environmental Indemnity executed by New Borrower and Replacement Guarantor.

2. Guaranty of Non-Recourse Carve-Outs executed by Replacement Guarantor.

3. UCC-1 Financing Statements

a. To be filed with the Delaware Department of State U.C.C. Filing Section bearing New Borrower’s name.

b. To be recorded with the Register of Deeds, Mecklenburg County, State of North Carolina bearing New Borrower’s name.

4. UCC-3 Amendment Financing Statements

a. Delaware Department of State U.C.C. Filing Section amending financing statement filed on November 25, 2013 Initial Filing #2013 4762192.

b. Register of Deeds, Mecklenburg County, State of North Carolina amending financing statement recorded on November 22, 2013 in Book 28849, Page 693.

EXHIBIT "B"

LEGAL DESCRIPTION

Lying and being situate in Mecklenburg County, North Carolina, and being more particularly described as follows:

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public right-of-way (“Prosser Way”) and the fifty (50) foot public right of way (“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg County Register of Deeds, reference to which is hereby made for a more particular description.

TOGETHER WITH the rights and easements conferred by that Sewer Easement Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732, at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book 22541, at page 189.

TOGETHER WITH easements contained in that Declaration of Easements, Covenants and Restrictions recorded in Book 28849, at Page 615, Mecklenburg County Register of Deeds.

EX-10.5

Exhibit 10.5

ENVIRONMENTAL INDEMNITY

Cover Sheet

Date:	August 19, 2015
Borrower:	BRG ASHTON NC, LLC, a Delaware limited liability company
Indemnitor:	BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation

Indemnitor's Notice Address:

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9^th Floor

New York, New York 10019

Attn:Jordan Ruddy & Michael L. Koenig, Esq.

Lender: Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of the Note (as herein defined).

Lender's Notice Address:	c/o Sun Life Assurance Company of Canada
	One Sun Life Executive Park
	Wellesley Hills, Massachusetts 02481
	Attention:  Mortgage Investments Group

State:	North Carolina
Note:	a Promissory Note from AR I Borrower, LLC, a Delaware limited liability company (“Original Borrower’) to Lender dated November 22, 2013 in the original principal amount of $31,900,000 as amended by Borrower by that certain Note, Deed of Trust and Related Loan Documents Assignment Assumption and Modification Agreement dated of even date herewith (the “Assignment Agreement”), and all replacements, substitutions, modifications, renewals and extensions thereof.
Property:	the land, improvements and personal property located at 10320 Grobie Way, Mecklenburg County, North Carolina and being more particularly described in the Mortgage.
Mortgage:	a certain Deed of Trust and Security Agreement and Fixture Filing from  Original Borrower to Lender encumbering the Property, dated November  22, 2013 and recorded in the Mecklenburg County Register of Deeds,  Book 28849, Page 636, as assumed by Borrower by the Assignment  Agreement, and all modifications or amendments thereto or extensions  thereof.

Table of Contents

1.	DEFINITION OF TERMS		1
2.	INDEMNITY		1
3.	REPRESENTATIONS AND WARRANTIES		2
	3.1	Compliance with Laws	2
	3.2	Contamination	2
	3.3	Legal Actions	2
	3.4	Use and Condition of the Property	2
4.	COVENANTS		2
	4.1	Notice	2
	4.2	Use	2
	4.3	Clean-Up	2
	4.4	Liens	3
5.	GENERAL		3
	5.1	Survival	3
	5.2	Release of Indemnification Obligations	3
	5.3	Remedies Cumulative	3
	5.4	Joint and Several Liability	3
	5.5	Notices	3
	5.6	Governing Law	4
	5.7	Successors and Assigns	4
	5.8	Construction	4
	5.9	Severability	4
	5.10	Time of the Essence	4
6.	JOINDER BY BORROWER		4

1. DEFlNlTlON OF TERMS. As used herein, the terms defined on the cover sheet hereof shall have the meanings given on such sheet, and the following terms shall have the following meanings:

1.1 Clean Up: removal and/or remediation of Contamination in accordance with Laws and good commercial practice.

1.2 Contamination: the presence of, use, generation, manufacture, storage, treatment, disposal, discharge or release on, from or to the Property of Hazardous Substances.

1.3 Environmental Actions or Claims: any claim, action or proceeding brought by a governmental authority in connection with Contamination or any claim or action brought by a third party relating to Contamination.

1.4 Hazardous Substances: all substances and compounds prohibited or regulated under any Law; materials containing asbestos or urea formaldehyde; gasoline and other petroleum products; flammable explosives; radon and other natural gases; radioactive materials; and polychlorinated bephenyls and similar solvents.

1.5 Laws: any and all Federal, regional, state or local laws, ordinances, rules, regulations, statutes, decisions, orders, judgments, directives or decrees of any governmental or regulatory authority, court or arbitrator whether now in force or as amended or enacted in the future, relating to health or the environment, including, without limitation, the Water Pollution Control Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 as amended by the Superfund Amendment and Reauthorization Act of 1986, the Resource Conservation and Recovery Act of 1976, and all regulations thereunder.

1.6 Transition Date: means the date which is the tenth (10^th) anniversary of the date that the Secured Debt shall have been paid in full voluntarily, whether at maturity or in connection with a voluntary prepayment.

2. INDEMNITY. Indemnitor acknowledges that because of Indemnitor's relationship to Borrower, Indemnitor will substantially benefit from the assumption of the loan by Borrower evidenced by the Assignment Agreement (as such loan is evidenced by the Note). For this and other valuable consideration, Indemnitor hereby agrees to indemnify, defend with counsel approved by Lender and hold harmless Lender, its agents, employees and contractors from and against, and, upon demand, reimburse Lender for, all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including, without limitation, reasonable attorney's fees and disbursements, which may be imposed upon, asserted against or incurred or paid by Lender on or after the date hereof by reason of, on account of or in connection with (a) any Contamination, (b) any Clean-Up, (c) any Environmental Actions or Claims, (d) the imposition or recording of a lien against the Property due to any Contamination; (e) any breach by Indemnitor of the covenants contained herein or (f) any representation or warranty made by Indemnitor herein which proves to be untrue, misleading or is not fulfilled, in any material way.

The foregoing indemnification shall apply in all instances, unless the claim (i) was directly caused by the gross negligence or intentional misconduct of Lender or (ii) is the result of a matter first occurring from and after the date Lender takes title to the Property by foreclosure or deed in lieu thereof.

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3. REPRESENTATIONS AND WARRANTIES. Indemnitor represents and warrants that, to the best of its knowledge, after due investigation and inquiry, the following are true, correct and complete:

3.1 Compliance with Laws. Except as may be set forth in the Phase I Report [and if applicable, the Phase II Report] (as defined in the Mortgage), the Property and each tenant's use of the Property is in compliance with all Laws.

3.2 Contamination. Except as may be set forth in the Phase I Report, no Contamination has occurred.

3.3 Legal Actions. Except as may be set forth in the Phase I Report, there are no Environmental Actions or Claims pending or threatened against Borrower, the Property, Indemnitor, or any tenant on the Property.

3.4 Use and Condition of the Property. To Borrower’s knowledge, none of the tenants or occupants nor any prior tenants or occupants on the Property use or operate or have used or operated the Property in a manner which resulted or will result in Contamination. Except as may be set forth in the Phase I Report, the buildings and other improvements on the Property do not contain any urea formaldehyde or asbestos.

4. COVENANTS.

4.1 Notice. Indemnitor shall notify Lender immediately, in writing, of any existing, pending or threatened Contamination or Environmental Actions or Claims of which Indemnitor obtains actual knowledge of from Borrower.

4.2 Use. Indemnitor shall cause Borrower not to use or permit the use or occupancy of the Property in a manner which will result in Contamination and Indemnitor shall cause Borrower to take all steps reasonably necessary under the circumstances including, without limitation, periodic inspections and assessments of the Property, to determine whether Contamination has occurred. Notwithstanding the foregoing, Indemnitor may use and permit the use by Borrower (and tenants and occupants of the Property) of minor, insubstantial amounts of petroleum products and other substances customarily used in and about multi-family apartment buildings (e.g., petroleum products used in vehicles parked on the Property, common household cleaning supplies and other similar customary materials used in connection with the use and occupancy of multi-family apartment buildings); provided, however, that (i) all such substances are used in full compliance with all applicable laws, (ii) no such substances are released or disposed of on the Property, and (iii) all indemnities of Indemnitor contained herein extend to such substances and the use thereof, notwithstanding that the use of such substances may be permitted hereby.

4.3 Clean-Up. Subject to obtaining Lender's consent if required under the Mortgage, Indemnitor shall cause Borrower to initiate Clean-Up of any Contamination within 15 days after discovery or after written notice to Borrower from any person or, if the Contamination poses an imminent hazard to the Property, the public or the environment, within 3 days after discovery or after reasonable notice of any kind from any person and Indemnitor shall cause Borrower to diligently pursue such Clean-Up to completion.

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4.4 Liens. Indemnitor shall cause Borrower to discharge promptly any lien filed or recorded against the Property relating to any Contamination.

5. GENERAL.

5.1 Survival. The indemnities and covenants contained herein shall survive the discharge of the Mortgage, whether through full payment of the Note, foreclosure, deed in lieu of foreclosure or otherwise.

5.2 Release of Indemnification Obligations. Notwithstanding anything to the contrary contained herein, the indemnification obligations of the Indemnitor hereunder shall be released as of the Transition Date, subject to the Lender’s written confirmation that each of the following conditions has been satisfied in the Lender’s sole discretion:

(a) Lender shall have received at Indemnitor’s expense all environmental testing and analysis as may be required by Lender in Lender’s sole discretion, including without limitation, a phase one environmental site assessment, a phase two environmental site assessment, soil boring tests, water testing, up-gradient and down-gradient testing, and an asbestos survey.

(b) Based on the environmental reports and analysis required by Lender, Lender shall have determined that the environmental condition of the Property is satisfactory to the Lender in the Lender’s sole discretion.

(c) No Environmental Actions or Claims (as defined above) shall have been commenced, and no notice of any Environmental Actions or Claims shall have been given, prior to the Transition Date.

5.3 Remedies Cumulative. Lender's rights and remedies against Indemnitor hereunder shall be in addition to and not in lieu of all other rights and remedies of Lender at law or in equity.

5.4 Joint and Several Liability. If there is more than one Indemnitor or if Indemnitor is composed of more than one party, the obligations, representations, covenants and agreements contained herein are and shall be joint and several as to each such party.

5.5 Notices. Any notice, request, demand or other communication required or permitted under this Environmental Indemnity (unless otherwise expressly provided herein) shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail postage prepaid sent to the intended addressee at the applicable Notice Address or to such different address as either Indemnitor or Lender shall have designated by written notice to the other sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified United States Mail, 2 days after deposit therein. No notice to or demand on Indemnitor in any case shall itself entitle Indemnitor to any other or further notice or demand in similar or other circumstances.

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5.6 Governing Law. This Agreement shall be construed according to and governed by the laws of the State.

5.7 Successors and Assigns. The terms and conditions of this Agreement shall be binding upon Indemnitor and Indemnitor's successors, assigns and legal representatives.

5.8 Construction. Whenever the word Indemnitor is used in this Agreement in the singular, it shall be held and construed to include all Indemnitors.

5.9 Severability. A determination that any provision of this Environmental Indemnity is unenforceable or invalid shall not affect the enforceability or validity of any other provision, and any determination that the application of any provision of this Environmental Indemnity to any person or circumstances is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to any other persons or circumstances.

5.10 Time of the Essence. Time is of the essence of each and every performance obligation of Indemnitor under this Agreement.

6. JOINDER BY BORROWER. Borrower hereby joins in this Environmental Indemnity for the purpose of agreeing to be bound jointly and severally with Indemnitor under the indemnification provisions of Paragraph 2 and the representations and warranties under Paragraph 3.

[SIGNATURES ON FOLLOWING PAGE]

[Signature Page for Environmental Indemnity]

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above written.

WITNESS:		INDEMNITOR:
		BLUEROCK RESIDENTIAL GROWTH REIT, INC.
/s/ Molly Brown		By:	/s/ Michael Konig
Name:	/s/ Molly Brown	Name:	Michael Konig
		Title:	Authorized Signatory
/s/ Dale Pozzi
Name:	Dale Pozzi
WITNESS:		BORROWER:
		BRG ASHTON NC, LLC
/s/ Molly Brown		By:	/s/ Jordan Ruddy
Name:	/s/ Molly Brown	Name:	Jordan Ruddy
		Title:	Authorized Signatory
/s/ Dale Pozzi
Name:	Dale Pozzi

CHARLOTTE 134011 

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EX-10.6

Exhibit 10.6

GUARANTY OF NON-RECOURSE CARVE-OUTS

Date:	August 19, 2015
Borrower:	BR ASHTON I OWNER, LLC, a Delaware limited liability company
Guarantor:	BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation

Guarantor's Notice Address:

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9^th Floor

New York, New York 10019

Attn: Jordan Ruddy & Michael L. Konig, Esq.

Lender: Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of the Note (as herein defined).

Lender's Notice Address:	c/o Sun Life Assurance Company of Canada
	One Sun Life Executive Park
	Wellesley Hills, Massachusetts 02481
	Attention:  Mortgage Investments Group

State:	North Carolina
Note:	a Promissory Note from AR I Borrower, LLC, a Delaware limited liability company (“Original Borrower”) to Lender dated November 22, 2013 in the original principal amount of $31,900,000, as assumed by Borrower by that certain Note, Deed of Trust and Related Loan Documents Assignment, Assumption and Modification Agreement dated of even date herewith (the “Assignment Agreement”), and all replacements, substitutions, modifications, renewals and extensions thereof.
Property:	the land, improvements and personal property located at 10320 Grobie Way, Mecklenburg County, North Carolina more particularly described in the Mortgage.
Mortgage:	a certain Deed of Trust and Security Agreement and Fixture Filing from Original Borrower to Lender encumbering the Property, dated November 22, 2013, and recorded in the Mecklenburg County Register of Deeds, Book 28849, Page 636, as assumed by Borrower by the Assignment Agreement, and all modifications or amendments thereto or extensions thereof.

Master Lease: Not applicable.

1.          Definition of Terms. As used herein, the terms defined above shall have the meanings given above and any capitalized terms not defined herein shall have the meanings given them in the Mortgage.

2.          Guaranty. Guarantor acknowledges that because of Guarantor’s relationship to Borrower, Guarantor will substantially benefit from the assumption of the loan by Borrower evidenced by the Assignment Agreement (as such loan is evidenced by the Note). For this and other valuable consideration, Guarantor hereby assumes liability for, hereby agrees to pay, and hereby guarantees payment to Lender of, all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including, without limitation, reasonable attorney’s fees and disbursements (collectively, “Damages and Expenses”), which may be imposed upon, asserted against or incurred or paid by Lender by reason of, on account of or in connection with, any of the following:

(a)          all Damages and Expenses incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not previously applied to remedy tenant defaults) which have not been paid over to Lender after an Event of Default; (ii) any rents prepaid by any tenant of the Property more than one (1) month in advance and not paid to Lender within fifteen (15) days of receipt thereof; (iii) any insurance proceeds or condemnation awards received by Borrower and not applied according to the terms of the Mortgage; provided, however, Guarantor will not be personally liable for any failure described in this Section 2(a)(iii) if Borrower is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting from a casualty not reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents; (v) fraud, material misrepresentation or bad faith on the part of Borrower or Guarantor in connection with the loan evidenced by the Note; (vi) any event or circumstance for which Borrower is obligated to indemnify Lender under the provisions of the Mortgage respecting Hazardous Substances, Contamination or Clean-Up; (vii) waste of the Property by Borrower, except for ordinary wear and tear, casualty and condemnation; (viii) Borrower’s failure to pay real estate taxes or other assessments against the Property (but subject to the provisions of Section 4.1(c) of the Mortgage regarding Lender’s failure to pay the same, in which event, Guarantor shall have no liability hereunder); or (ix) Borrower’s failure to comply with the Americans with Disabilities Act of 1990, as amended (“ADA”) (provided that Guarantor shall not be liable hereunder for ADA violations relating to the original construction of the Improvements);

(b)          all rents, issues and profits from the Property collected by Borrower after an Event of Default has occurred and is continuing or after an event or circumstance has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute an Event of Default, unless such rents, issues and profits are applied to the normal operating expenses of the Property or to the Secured Debt; provided, however, Guarantor will not be personally liable for any failure described in this Section 2(b) if Borrower is unable to apply rents and security deposits as required by Lender because of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding;

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(c)          default in timely payment and performance of all obligations of either landlord or tenant under the Master Lease (as defined elsewhere in the Loan Documents) that may be applicable to the Property.

(d)          the cost to repair any Casualty (as defined in the Mortgage) having a repair estimate as determined by the Lender equal to or less Three Hundred Thousand Dollars ($300,000.00); provided, however, Guarantor’s liability for the cost to repair any such Casualty will be released by Lender upon the Borrower’s or Guarantor’s satisfactory lien-free completion of such repair, as determined by the Lender in the Lender’s sole discretion.

Additionally, notwithstanding other provisions of this paragraph 2, the loan evidenced by the Note and other Loan Documents shall become fully recourse debt to Borrower and Guarantor(s) if any of the following occur:

(a)          Borrower secures either junior financing secured by the Property or mezzanine financing secured by interests in Borrower (collectively, “Junior Loan”) without written authorization from Lender; or

(b)          Borrower pays any amount toward a Junior Loan at a time when there is an Event of Default under Lender’s loan, regardless of whether the Junior Loan was authorized or unauthorized by Lender; or

(c)          Borrower files any petition under Chapter 11 of the United States Bankruptcy Code or under any other form of insolvency law, or any petition seeking any liquidation, dissolution, or similar relief under any present or future federal or state bankruptcy, insolvency or debtor relief acts or laws(collectively, “Insolvency Petition”); or

(d)          any such Insolvency Petition is filed against Borrower and Borrower cooperates with or acquiesces to such filing, fails to take commercially reasonable efforts to have the same dismissed (provided, however, commercially reasonable efforts shall not require the members of Borrower to make any capital contributions in connection with such efforts) or otherwise resists or opposes the lifting of the automatic stay by the bankruptcy court to permit Lender to foreclose the Mortgage.

3.          Primary and Continuing Nature of Guaranty. The liability of Guarantor hereunder is present, absolute, unconditional, continuing, primary, direct and independent of the obligations guaranteed hereby. Lender shall not be required to pursue any other remedies before invoking the benefits of this Guaranty, including, without limitation, its remedies under the Note, the Mortgage and the other Loan Documents. The liability of Guarantor shall remain and continue in full force and effect notwithstanding:

(a)          Borrower’s lack of liability, for any reason, for payment and performance of all or any part of the obligations guaranteed hereby;

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(b)          the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property described in the Mortgage and the other Loan Documents, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or any similar proceeding affecting Borrower or any of its assets;

(c)          the release of Borrower from the observance of any of the agreements, covenants, terms or conditions contained in the Note, the Mortgage and the other Loan Documents by operation of law; and

(d)          any defenses or rights of set-off or counter claims which Borrower may have or assert.

4.          Representations and Warranties. Guarantor represents and warrants that the following are true, correct and complete as of the date hereof:

(a)          Each and every warranty and representation made by Borrower in the Note, the Mortgage and the other Loan Documents is, to the best of Guarantor’s knowledge, true, correct and complete.

(b)        This Guaranty constitutes a legal, valid and binding obligation of Guarantor, and is fully enforceable in accordance with its terms.

(c)          Neither the execution nor delivery of this Guaranty nor fulfillment of nor compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in a creation of any lien, charge or encumbrance upon any property or assets of Guarantor under any agreement or instrument to which Guarantor is now a party or by which Guarantor may be bound.

(d)          Neither Guarantor, nor Borrower, nor any beneficial owner of the Property is a Related Party of Lender. “Related Party” means an officer, director, employee, significant shareholder, or such person’s spouse or minor child.

5.          Financial Statements. Immediately upon demand by Lender, Guarantor shall deliver to Lender current, signed, and dated financial statements detailing the income, assets and liabilities of Guarantor, in form and substance satisfactory to Lender.

6.          Waivers by Guarantor. Guarantor hereby waives:

(a)          any right to require Lender to: (i) proceed against Borrower; (ii) proceed against, exhaust or participate in any security held by Lender for the payment and performance of the obligations guaranteed hereby; or (iii) pursue any other remedy Lender has or to which Lender may be entitled;

(b)          any right of subrogation Guarantor has, or to which Guarantor may be entitled, in and to the benefit of any security which Lender may at any time hold in connection with the obligations guaranteed hereby until such obligations have been paid and performed in full;

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(c)          notice of the acceptance of this Guaranty and presentment, demand, protest and notice of protest, nonpayment, default or dishonor of the obligations guaranteed hereby or any renewal or extension thereof;

(d)          diligence on the part of Lender in the collection of the monetary sums included in the obligations guaranteed hereby, notice of the failure of Borrower to pay or perform all or any of such obligations in a timely manner, and diligence on the part of Lender in preserving the liability of any person on any of such obligations; and

(e)          any other right Guarantor otherwise might have or might have had under the provisions of Section 26-7 of the North Carolina General Statutes, et. Seq. and/or any other North Carolina laws.

7.          No Waiver by Lender. No failure, omission or delay on the part of Lender in exercising any rights hereunder or in taking any action to collect or enforce payment or performance of the obligations guaranteed hereby or in enforcing observance or performance of any agreement, covenant, term or condition to be performed or observed under the Note, the Mortgage or the other Loan Documents, either against Borrower or any other person liable therefore shall operate as a waiver of any such right or in any manner prejudice the rights of Lender against Guarantor.

8.          Subordination. Guarantor hereby agrees that any claim for repayment it may have with respect to any amount it advances or becomes obligated to advance because of this Guaranty shall be at all times subordinate to the claims of Lender under the Note, the Mortgage and the other Loan Documents in all respects, including, without limitation, priority of lien and time of payment.

9.          Multiple Guarantors. If there is more than one Guarantor:

(a)          the obligations, covenants, warranties and representations of each Guarantor shall be joint and several;

(b)          the granting of a written release of liability hereunder of less than all of the Guarantors shall be effective with respect to the liability hereunder only of those specifically so released, but shall in no way affect the liability hereunder of any Guarantor not so released; and

(c)          each Guarantor waives any right to require Lender to proceed against any other Guarantor. Any prior or subsequent guaranty to Lender shall not be deemed to be in lieu of or to supersede or terminate this Guaranty but shall be construed as an additional or supplementary guaranty unless otherwise expressly provided therein.

10.         General.

(a)          Costs and Expenses. Guarantor shall pay all reasonable attorneys’ fees, costs and expenses actually incurred by Lender in the enforcement of this Guaranty at standard hourly rates and without regard to any statutory presumption, including, without limitation, any presumption set forth in S.C. Gen Stat. Section 6-21.2.

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(b)          Governing Law. This Guaranty shall be enforced and construed in accordance with the laws of the State and Guarantor waives the right to be sued elsewhere.

(c)          Successors and Assigns. If Guarantor is a natural person or persons, this Guaranty shall not be discharged or in any way affected by the death of Guarantor (or any one of them if Guarantor consists of more than one natural person). This Guaranty shall be binding upon Guarantor and the heirs, successors and legal representatives of Guarantor, and shall inure to the benefit of Lender and the successors, assigns and legal representatives of Lender. Guarantor may not assign its rights or delegate its duties under this Guaranty. The transfer or assignment by Lender of the Note shall operate as a transfer or assignment to the transferee or assignee of this Guaranty and all rights and privileges hereunder.

(d)          Cumulative Remedies. All of Lender’s rights, remedies and recourse under the Note, the Mortgage and the other Loan Documents, or this Guaranty, are non-exclusive, separate and cumulative and may be pursued separately, successively or concurrently, and the exercise of any one of more of them shall in no way limit or prejudice any other legal or equitable right, remedy or recourse to which Lender may be entitled.

(e)          Gender and Number. Whenever the context so requires the masculine gender shall include the feminine and/or neuter and the singular number shall include the plural and conversely in each case.

(f)          Modification. No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provision so modified or limited and signed by Guarantor and Lender, nor shall this Guaranty be modified or limited by course of conduct, usage or trade, or by the law of merchants.

(g)          Severability. In case any one or more of the provisions contained in this Guaranty shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Guaranty shall be construed as if such invalid, illegal or unenforceable provision has never been contained herein.

(h)          Notices. Any notice, request, demand or other communication required or permitted under this Guaranty (unless otherwise expressly provided therein) shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with guaranteed next day delivery or by certified United States Mail postage prepaid sent to the intended addressee at the applicable Notice Address or to such different address as either Guarantor or Lender shall have designated by written notice to the other sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified United States Mail, 2 days after deposit therein. No notice to or demand on Guarantor in any case shall of itself entitle Guarantor to any other or further notice or demand in similar or other circumstances.

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(i)          Survival. This Guaranty and the obligations of Guarantor hereunder shall survive the discharge of the Mortgage, whether through full payment of the Note, foreclosure, deed in lieu of foreclosure or otherwise.

[The remainder of this page is intentionally blank. Signatures to follow]

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[Signature Page for Guaranty]

IN WITNESS WHEREOF, this Guaranty has been executed and delivered as of the date first above written.

WITNESS:		GUARANTOR:
		BLUEROCK RESIDENTIAL GROWTH REIT, INC.
/s/ Molly Brown		By:	/s/ Michael Konig
Name:	Molly Brown	Name:	Michael Konig
/s/ Dale Pozzi		Title:	Authorized Signatory
Name:	Dale Pozzi

CHARLOTTE 134010

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EX-10.7

Exhibit 10.7

Loan No. 716925

LETTER OF UNDERTAKING

August 19, 2015

BR Ashton I Owner, LLC

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue – 9^th Floor

New York, NY 10019

Re:	Loan No.:	716925
	New Borrower:	BR Ashton I Owner, LLC
	Lender:	Sun Life Assurance Company of Canada
	Property:	The land, improvements and personal property located at 10320 Grobie Way, Charlotte,
		Mecklenburg County, North Carolina, commonly known as Ashton Reserve at Northlake (Phase I)

Ladies and Gentlemen:

Reference is hereby made to that certain Conditional Approval Letter dated July 21, 2015 (“Conditional Approval”) whereby Lender has agreed to approve the Loan Assumption (as defined in the Conditional Approval). It is the purpose of this Letter of Undertaking to set forth certain agreements between the New Borrower and the Lender with respect to the Loan Assumption.

The Lender has received a Phase I Environmental Site Assessment Report dated March 26, 2015, Project No. BRCKNY009.01 (hereinafter referred to as the “Phase I Report”) prepared by Blackstone Consulting, LLC (the “Engineer”). The Phase I Report reveals that, based on limited radon testing, six (6) apartment units contained radon levels in excess of the USEPA Action Limit of 4.0 pCi/L, and the Phase I recommends that certain short-term radon retesting be conducted on the Property. The Lender has also received a Letter Report of Short-Term Radon Testing dated August 4, 2015 (hereinafter referred to as the “Short-Term Radon Testing Letter”) prepared by the Engineer. The Short-Term Radon Testing Letter reveals that based on the short-term radon retesting and previous testing results, three (3) apartment units contained an average radon gas concentration in excess of the USEPA Action Limit of 4.0 pCi/L, and the Short-Term Radon Testing Letter recommends that certain long-term radon testing be conducted on the Property and, if necessary, mitigation of units containing elevated levels of radon, a summary of which is described on Exhibit “A” attached hereto (hereinafter, individually as “Long-Term Radon Testing” and “Radon Mitigation”, respectively, and collectively referred to as the “Radon Requirements”).

Notwithstanding the fact that New Borrower has not completed the Radon Requirements, Lender has agreed to approve the Loan Assumption upon the following conditions:

1. Short-Term Radon Retesting:

a.         The New Borrower shall retain the Engineer to complete the Long-Term Radon Testing.

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b.         Upon completion of the Long-Term Radon Testing, New Borrower shall deliver a letter to Lender certifying that the Long-Term Radon Testing has been completed and shall obtain a supplemental radon report, including test results, from the Engineer to the effect that the Long-Term Radon Testing has been satisfactorily completed in accordance with the recommendations contained in the Short-Term Radon Testing Letter and advising on whether further action is required.

3. Radon Mitigation:

a.         In the event that the result of the Long-Term Radon Testing is that one or more portions of the Property have radon levels in excess of the USEPA Action Limit of 4.0 pCi/L, then New Borrower shall retain a contractor or contractors, acceptable to Lender, to complete the Radon Mitigation as set forth in the supplemental radon report to be issued by the Engineer following the Long-Term Radon Testing.

b.         Upon completion of the Radon Mitigation, if applicable, the New Borrower shall deliver a letter to Lender certifying that the Radon Mitigation has been completed and shall obtain an additional supplemental radon report, including photographs of the areas on which Radon Mitigation has been made, as applicable, from the Engineer to the effect that the Radon Mitigation has been satisfactorily completed in accordance with the recommendations contained in the original supplemental radon report. In addition, New Borrower shall submit lien waivers, as applicable, and paid invoices from all parties performing labor or supplying materials in connection with the Radon Mitigation. Upon receipt of such additional supplemental radon report, lien waivers and paid invoices, copies thereof shall be immediately forwarded to the Lender for review and approval.

All Radon Requirements shall be completed by New Borrower by May 19, 2016 (the “Completion Date”).

If New Borrower fails to complete the Radon Requirements by the Completion Date, such failure shall constitute an Event of Default, as defined in the Loan Documents, and shall entitle the Lender to exercise all remedies available to it thereunder.

The execution of this Letter of Undertaking and the agreements contained herein constitute a material inducement to Lender to approve the Loan Assumption. Time is of the essence.

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If you are agreeable to the above terms, please so indicate in the space provided for below.

Dated: August 19, 2015

	Sincerely,
	SUN LIFE ASSURANCE COMPANY OF CANADA
/s/ [Illegible signature]	Per:	/s/ Phillippe Dougherty
Subscribing Witness	Name:	Phillippe Dougherty
	Title:	Director of Canadian Asset Management
/s/ [Illegible signature]	Per:	/s/ Christine A. Iacoucci
Subscribing Witness	Name:	Christine A. Iacoucci, AACI, P.App
	Title:	Managing Director, Real Estate

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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AGREED TO AND ACCEPTED

THIS 19^th DAY OF AUGUST, 2015:

BR ASHTON I OWNER, LLC,
a Delaware limited liability company
By:	BRG ASHTON NC, LLC, a Delaware limited liability company, its sole member
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Its:	Authorized Signatory

Loan No. 001961 

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EXHIBIT “A”

RADON REQUIREMENTS

1. Long-Term Radon Retesting: Long-term radon retesting in apartment units 6-102; 8-102; and 9-104.

2. Radon Mitigation: Mitigation as and if required by the supplemental radon report to be issued by the Engineer following the Long-Term Radon Testing.

Loan No. 001961 

5

EX-10.8

Exhibit 10.8

MANAGEMENT AGREEMENT

This Management Agreement (this "Agreement") is dated August 19 , 2015, by and between BR Ashton I Owner, LLC, a Delaware limited liability company ("Owner"), and GREP Southeast, LLC, a Delaware limited liability company ("Manager").

WHEREAS, Owner is the owner of a 322-unit multifamily residential project known as Ashton Reserve at Northlake (Phase I) (the "Project"), located in Charlotte, North Carolina (the “Property”); and

WHEREAS, Owner desires to appoint and engage Manager in the management and operation of the Project, and Manager is willing to accept such appointment and engagement on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Manager agree as follows:

Article 1

DEFINITIONS

In addition to terms defined in other provisions of this Agreement, the following terms shall have the following meanings when used in this Agreement:

1.1           Budget. A composite of (a) an “Operations Budget” which shall be an estimate of receipts and expenditures for the operation of the Project during a Fiscal Year, including a schedule of expected apartment rentals (excluding security deposits) for the Fiscal Year, and (b) a “Capital Budget” which shall be an estimate of capital replacements, substitutions and additions for the Project (other than routine repairs and maintenance) for the Fiscal Year.

1.2           Commencement Date. The Commencement Date shall be the date hereof.

1.3           Depository Account. Account opened and maintained by Manager in Owner’s name with an FDIC-insured bank designated by Manager and approved by Owner into which deposits and from which disbursements are to be made pursuant to this Agreement.

1.4           Effective Date. The Effective Date of this Agreement shall be the date hereof.

1.5           Final Accounting. The Final Accounting shall include the following: (a) final financial statements, (b) written summary of all outstanding accounts payable and copies of all outstanding invoices, (c) final bank statements following the close of the Depository Account(s), and (d) 1099 information upon request.

1.6           Fiscal Year. The period beginning January 1 and ending December 31, which is the fiscal year established by Owner for the Project.

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1.7           Gross Rental Revenue.  The entire amount of all revenue, as determined utilizing the method of accounting specified in Section 5.1 of this Agreement (i.e., cash versus accrual basis), from (a) tenant rentals and other sums pursuant to tenant leases (excluding security deposits, except as provided below) and other amounts for rental of the Project, including garage income, parking fees and similar amounts, (b) income from the operation of the Project, including but not limited to utility reimbursements, cable television, telephone, internet access, security monitoring, laundry and vending machines, (c) proceeds from rental loss or business interruption insurance, (d) any sums and charges in connection with termination of the tenant leases or settlement of rent claims and (e) application fees, cleaning fees, pet fees, administrative fees,  and other similar miscellaneous income.  Gross Rental Revenue does not include the proceeds of (i) any sale, exchange, refinancing, condemnation, or other disposition of all or any part of the Project, (ii) any loans to Owner, whether or not secured by all or any part of the Project, (iii) any capital contributions to Owner, (iv) any insurance (other than rental loss or business interruption insurance) maintained with regard to the Project, (v) security deposits (until applied to obligations that constitute Gross Rental Revenue), (vi) interest income, (vii) any awards from suits not related to the collection of Rent, (viii) rents paid more than thirty (30) days in advance of the due date until the month in which such payments are to apply as rental income and the proceeds from any buy-out of all or a portion of the remaining term of a lease, or from any damage claims against a tenant for lost rent, shall be amortized over the remaining term of the lease and including in gross revenue in equal monthly installments until the earlier of (A) occupancy of the subject tenant’s space under a new lease; or (B) expiration of the term of the subject lease, (ix) monies collected for capital items which are paid for by tenants, (x) sales tax on rents, or (xi) refunds.

1.8           Loan Documents. The documents evidencing and security any loan for which the Project is pledged as security, including the documents evidencing and security that certain loan in the original principal amount of $31,900,000.00 made by Sun Life Assurance Corporation of Canada and secured by a deed of trust on the Project in effect on the Commencement Date.

1.9           Payroll Reserve. A cash reserve in the amount of $15,000, such amount being two (2) weeks of estimated payroll expenses, which amount may be transferred from the Depository Account to Manager’s payroll account for use during the Term in connection with the operation of the Project in accordance with the terms of this Agreement.

1.10         Project Employees. Those persons employed by Manager on-site as a management staff (e.g., senior manager, manager, assistant managers, leasing consultants and maintenance employees), including any employees who work at the Project on a part-time or temporary basis and any employees from other sites who may work at the Project to cover time-off or other special needs at the Project, to the extent of the time they spend at the Project.

1.11         Property Close Date. The last day of the month for each reporting month during the Fiscal Year.

1.12         Required Property Services Addendum. The schedule attached hereto as Exhibit “A” which details the services and fees for all required services provided by Manager in accordance with the terms of this Agreement.

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1.13         Security Deposit Account. Account opened and maintained by Manager in Owner’s name with an FDIC-insured bank designated by Manager and approved by Owner in which tenant security deposits are to be held pursuant to this Agreement.

1.14         Start Up Costs. Those costs which Manager incurs after the Effective Date of this Agreement in connection with beginning operations at the Project, which costs are approved in writing by Owner and may include (but are not limited to) hiring and training Project Employees, purchasing software and hardware, and other office equipment costs and expenses specific to the Project.

1.15         Term. The term of this Agreement shall begin on the Effective Date and shall, subject to the other provisions in this Agreement, expire one year after the Effective Date. The Term shall automatically be extended for successive one-year periods unless either party terminates this Agreement in accordance with the terms and conditions of this Agreement.

1.16         Termination Fee. An amount equal to one (1) month’s Base Management Fee based on the average Base Management Fee over the three (3) months preceding the month in which the Term is terminated. When applicable, the Termination Fee shall be paid to Manager in addition to all other fees and amounts due to Manager pursuant to this Agreement. The parties agree that the Termination Fee is designed to reasonably compensate Manager for its costs incurred in taking on the management of the Project for a short term and Manager’s investment in time, resources and employees in that endeavor, all of which costs would be extremely difficult, if not impossible, to specifically calculate with any degree of accuracy.

1.17         Minimum Funding Requirement. A cash reserve in the amount of $100 per unit at the Project, such amount to be readily available to Manager during the Term in connection with the operation of the Project in accordance with the terms of this Agreement.

Article 2

DUTIES AND RIGHTS OF MANAGER

2.1           Appointment of Manager. Owner hereby appoints Manager as the designated property manager of the Project, and Manager agrees, for and in consideration of the compensation provided in this Agreement, that during the Term of this Agreement Manager will supervise and direct the management and operation of the Project. Manager shall have no liability whatsoever with respect to acts or omissions of Owner, previous owners of the Project, any previous property manager or any other agent of Owner. Manager’s services are provided to Owner on a non-exclusive basis with respect to other multifamily residential projects and Manager shall serve Owner in the management, operation, maintenance and repair of the Project, conforming to the professional standards of multi-family apartment complexes of similar size, age and construction in the surrounding area. Everything performed by Manager under this Agreement shall be done as Owner’s agent, and Manager shall have the right to execute and deliver documents on behalf of Owner and to otherwise bind Owner as provided in this Agreement. Manager shall act in a fiduciary capacity with respect to the proper protection and accounting for Owner’s assets associated with the Property, and shall use commercially reasonable efforts to operate the Property in a manner consistent with the requirements imposed by Owner’s lender of which Manager has received actual notice. Manager may install one or more signs on or about the Project stating that the Project is under management of Manager, and Manager may use in a commercially reasonable manner Manager's name and logo in any display advertising that may be done on behalf of the Project. Owner shall provide adequate office space at the Project, at no cost to Manager, for Manager’s exclusive use in carrying out its duties pursuant to the terms of this Agreement.

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2.2           Rental Activities. Manager shall render the following services and perform the following duties for Owner:

(a)          Use commercially reasonable efforts to collect all monthly rentals due from tenants and rental payments due from users or lessees of other non-dwelling facilities in the Project, if any, in Owner’s name and at Owner's expense institute legal action to evict tenants delinquent in payment of monthly rental or other charges as more particularly described in Section 2.9 below; provided, however, that in no event shall Manager be liable to Owner for any uncollected rents;

(b)          Use commercially reasonable efforts to advertise at Owner's expense the availability of Project units for rental and, subject to limitations imposed by local laws or restrictive covenants applicable to the Project, display "for rent" or other similar signs upon the Project; and

(c)          Use commercially reasonable efforts to do the following:

(i)          Lease apartment units in accordance with certain leasing guidelines which may be outlined in the Budget or otherwise determined by Owner and communicated to Manager in writing. Said guidelines shall include the following parameters: Without the prior written consent of Owner, Manager shall not lease space in the Project for (a) a term of less than 6 months or longer than 2 years; (b) for any non-residential purpose; or (c) for any activity that would violate any requirement imposed by Owner’s lender of which Manager has received actual notice.

(ii)         Secure tenants for the Project based on tenant selection criteria recommended by Manager and approved by Owner, and negotiate leases with such tenants in accordance with the leasing guidelines. Manager shall prepare all prospective leases on a standard form of lease approved by Owner. Owner specifically authorizes Manager to execute leases in Owner's name and on Owner's behalf, consistent with the standards established by Owner, and any lease so executed will be binding on Owner to the same extent as if executed by Owner. Manager recommends Owner use the then current National Apartment Association lease form; however, in no event shall Manager be responsible for ensuring that the terms of the form lease agreement(s) approved by Owner for the Project or the application or enforcement of those lease agreements in accordance with their terms (including but not limited to actions taken by Manager under Section 2.9 below consistent with the terms of the lease agreements) complies with all applicable laws. Absent a finding of gross negligence or willful misconduct by Manager or the Project Employees, Owner shall be responsible for any and all liabilities, claims, causes of action, losses, demands, judgments, settlements and costs and expenses (including reasonable attorneys' fees and court costs) relating to the lease agreements or other housing statutes, whether such actions are brought against Owner or Manager.

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(iii)        Supervise all dealings with tenants of the Project on behalf of Owner and receive and consider service requests; receive and attempt to resolve any complaints, disputes or disagreements among tenants; monitor the activities of tenants to ensure their compliance with terms and conditions of their respective leases and notify the respective tenants and Owner of any non-compliance with such leases; and supervise the moving in and out of all tenants of the Project.

2.3           Budget.

(a)          Manager shall submit a proposed Budget for a Fiscal Year to Owner for Owner's review no later than sixty (60) days prior to the beginning of such Fiscal Year; provided that the proposed Budget for the first Fiscal Year shall cover the portion of such Fiscal Year beginning on the Commencement Date and shall be delivered not later than the first day of such period. Owner shall respond to a proposed Budget within thirty (30) days after its receipt by Owner, and in the event Owner fails to act with respect to a proposed Budget or any part of a proposed Budget within such thirty (30) day period, the proposed Budget or those portions which are neither approved nor disapproved shall be deemed to be approved. In the event Owner disapproves a proposed Budget, in whole or in part, Owner and Manager shall jointly prepare the Budget as soon as may be reasonably practicable. Until a complete new Budget is approved, Manager shall operate on the Budget for the prior Fiscal Year adjusted to reflect changes in the Consumer Price Index - All Urban Consumers for the area in which the Project is located. It is hereby expressly acknowledged by the parties that the Budgets are intended as projections only, and Manager shall have no responsibility for any shortfall or other loss because the Project operations do not achieve the results projected in any Budget.

(b)          The Budget shall constitute a major control under which Manager shall operate the Project, and there shall be no substantial variances therefrom except as permitted by other provisions of this Agreement or approved by Owner in writing. Consequently, except as permitted by other provisions of this Agreement, no expenses may be incurred or commitments made by Manager in connection with the maintenance and operation of the Project which exceed the amounts allocated to the corresponding summary accounts in the Budget for the period in question by more than ten percent (10%) or $2,000, whichever is less, without the prior consent of Owner; provided that the foregoing limitation shall not apply to the Base Management Fee (which will be determined as provided in this Agreement), or to expenses for taxes, insurance, utilities or other non-controllable expenses, or to expenditures required due to emergencies that threaten life, injury or property or could result in civil or criminal liability for Owner and/or Manager; and provided that Manager may pay expenses in excess of Budget allowances if the expenses represent reallocation among periods of amounts otherwise allowed by this provision. Owner’s agreement to pay any fee or cost as evidenced by the inclusion of any item in an approved Budget shall have the same binding effect as if such agreement to pay was expressly set forth in this Agreement.

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(c)          In the event there shall be a variance in any summary accounts between the results of operations for any month and the estimated results of operations for such month (as set forth in the corresponding summary account contained in the Budget) in excess of ten percent (10%) or $2,000, whichever is less, Manager shall furnish to Owner, within twenty (20) days after the last day of such month, a written explanation as to why the variance occurred. If substantial variances have occurred or are anticipated by Manager during the remainder of any Fiscal Year, Manager shall prepare and submit to Owner, for review and approval by Owner, a revised forecast covering the remainder of the Fiscal Year with an explanation for the revision.

2.4           Manager and Other Employees.

(a)          Manager shall hire, train, instruct, pay, promote, supervise and discharge the work of the Project Employees in accordance with Manager’s policies and procedures. Prior to hiring any individual, Manager shall conduct, at Owner’s expense, a background check on such individual, including credit, criminal history and drug screening. The Project Employees shall be employees of Manager or an affiliate of Manager and not of Owner. Manager shall be solely responsible for legal compliance concerning the foregoing activities, and except in circumstances where Manager acts or fails to act at Owner’s express direction, Manager shall indemnify and hold harmless Owner (and defend Owner with counsel reasonably satisfactory to Owner, against any and all liabilities, claims, causes of action, losses, demands, judgments, settlements and costs and expenses (including reasonable attorneys' fees and court costs) arising out of or in connection with violations of employment-related laws by Manager with respect to any Project Employee. Certain obligations of Owner with respect to Project Employees are more fully described in Exhibit “A”.

(b)          Since a Project Employee may need to reside at the Project and be available full-time in order to properly perform the duties of his/her employment, it is further understood and agreed that each Project Employee (including his/her spouse and dependents), in addition to his/her salary and fringe benefits, may receive the normal maintenance customarily provided employees of an apartment project, including apartment rental at an agreed upon discount and use of all Project facilities. Project Employees may occupy apartment units on a month-to-month basis with an executed tenant lease, regardless of whether they are allowed a rental discount, provided that any such discount shall be included in the Budget or otherwise approved by Owner.

(c)          Manager shall prepare (or cause to be prepared) and submit all forms, reports and returns required by all federal, state or local laws in connection with unemployment insurance, workers’ compensation insurance, disability benefits, social security and other similar taxes now in effect or hereafter imposed with respect to Project Employees.

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(d)          Owner shall reimburse Manager, in advance of each regularly scheduled pay date, the total actual aggregate compensation, including salary and fringe benefits, payable with respect to Project Employees for such two week payroll period. The term "fringe benefits", as used herein, shall include, but not be limited to, the employer's contribution of F.I.C.A. and 401(k) contributions, unemployment compensation and other employment taxes, workers’ compensation, group life, accident and health/vision/dental insurance premiums, allowance for vacation and sick time, disability and other similar benefits, applicable severance payments, any vacation pay-out which may be due at the end of employment, costs for training Manager's on-site employees as described on Exhibit “A”, and reasonable costs incurred by Manager to provide suitable corporate apparel for its on-site employees. The payroll expenses charged to Owner will include accrued vacation hours earned by each Project Employee during each payroll period; however, Owner shall not be financially responsible for vacation accrued prior to a Project Employee’s employment at the Project. Owner shall not directly compensate any Project Employee without the prior consent of Manager. Owner shall also pay to Manager a payroll processing fee as described in Exhibit “A”.

2.5           Contracts and Supplies. Manager shall, in the name of and on behalf of Owner and at Owner's expense, consummate arrangements with third party concessionaires, licensees and suppliers for services and supplies for the Project, including telephone, cleaning, furnace and air-conditioning maintenance, pest control, landscaping and other similar items that are customarily provided in accordance with standards comparable to those prevailing in other comparable apartment projects in the geographic area in which the Project is located. Manager shall have the right to establish and verify certain compliance criteria for any third party concessionaires, licensees and suppliers, including but not limited to licensing, credit, insurance, criminal history, and inclusion on any government watch-lists. Owner shall indemnify and hold Manager harmless from any and all damages that arise from the use of any vendor or supplier at the Project (except to the extent caused by Manager’s gross negligence or willful misconduct). Manager shall, where necessary, execute contracts for such services and supplies, which contracts shall be in Owner's name, and Owner hereby authorizes Manager to enter into such contracts in the name of and on behalf of Owner, and to bind Owner to such contracts. Unless provided for in the Budget and agreed to by Owner, Manager shall not execute any such contract on behalf of Owner without Owner's approval unless the contract may be terminated without penalty on notice of thirty (30) days or less. Owner recognizes that the Project may be operated in conjunction with other projects in an effort to provide for more efficient and less expensive methods of operation, and Owner agrees that costs for such shared activities may be allocated or shared between the Project and such other projects on a per unit basis. Manager shall provide email accounts for the Project at Owner’s expense as described in Exhibit “A”.

2.6           Alterations, Repairs and Maintenance.

(a)          Manager shall use commercially reasonable efforts, at Owner's expense, to maintain the Project in good repair and condition. Manager shall, in Owner's name and at Owner's expense, hire and discharge independent contractors for the repair and maintenance of the Project to the extent involvement of outside parties is necessary for completion of such work. Expenditures for maintenance and repair are subject to the Budget-related limitations of this Agreement, except in the case of emergency repairs necessary to prevent injury to residents or others on or about the Project or damage to the Project or property of others located on or about the Project, in which case expenditures may be made by Manager, at Owner’s expense, without prior approval up to amounts not to exceed $10,000.00 in the aggregate, but thereafter, only with Owner's prior written consent, but Owner shall in any case be notified as soon as practicable.

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(b)          Manager shall implement capital replacements, substitutions and additions for the Project that are provided for in the Capital Budget. Owner shall be responsible for all costs of such capital replacements, substitutions and additions for the Project and Owner shall pay all such costs directly and reimburse Manager for any such costs incurred by Manager; provided, however, Manager shall not exceed the amount allowed by the Capital Budget for such capital replacement, substitution and addition without obtaining Owner's prior written consent. Subject to the terms of the immediately preceding sentence, if Owner fails to reimburse Manager for all costs incurred by Manager in connection with such capital replacements, substitutions and additions for the Project, then Manager will be excused from performance of its responsibilities under this Section 2.6(b); provided, however, that to the extent such costs are payable through the submission of a draw request, Manager shall perform on behalf of Owner, as provided in Section 5.2(e). Owner may elect to utilize the services offered by Riverstone Regional Maintenance for an additional fee agreed to by Owner and Manager.

2.7           Licenses and Permits. Manager shall, in a timely manner, apply for, obtain and maintain all licenses and permits (including deposits and bonds) required for Manager in connection with the management and operation of the Project. Owner agrees to execute and deliver any and all applications and other documents and to otherwise cooperate to the fullest extent with Manager in applying for, obtaining and maintaining such licenses and permits. Owner will be responsible for all licenses and permits required for the Project, and Manager will have no obligation to obtain any of such licenses and permits. However, Manager agrees to cooperate with Owner in gathering data for processing applications for permits and licenses that Owner pursues for the Project.

2.8           Compliance with Laws. Manager shall comply with all laws applicable to it in the performance of its duties hereunder, including laws prohibiting discrimination in housing, employment laws (including those related to unfair labor practices), laws regarding depositing tenant security deposits and laws regarding the storage, release and disposal of hazardous materials and toxic substances by Project Employees, including without limitation, asbestos, petroleum and petroleum products. Manager shall not be responsible for compliance with laws relating to the condition of the Property, including building, zoning, subdivision, fire and other codes or laws, and laws regulating hazardous materials or toxic substances (except for materials knowingly released by Project Employees), but Manager shall notify Owner of any violation of any such laws of which Manager becomes actually aware. Owner shall comply with all applicable laws with respect to the condition of the Property and the operation of the Project. Manager and Owner each shall notify the other of any notice of violation of law with respect to the Project that it receives from any governmental authority or any notice of violation or required corrective action that it receives from any board of fire underwriters or similar agency.

2.9           Legal Proceedings. Manager shall institute, in the name and at the expense of Owner, legal actions which Manager deems appropriate to collect charges, rent or other income from the Project, or to dispossess tenants or other persons in possession who default, or to cancel or terminate any lease, license or concession agreement for the breach thereof. Manager is authorized to institute and defend on behalf of Owner and/or Manager all legal actions related to Manager’s authority and performance under this Agreement. Reasonable attorneys' fees and costs for such legal actions shall be at Owner’s expense. It is expressly acknowledged by Owner that Manager shall not be responsible for providing legal advice, tax advice or other counsel to Owner or Project Employees with respect to any Project related matters, and any recommendations or advice given by Manager shall not be relied upon as legal advice. Notwithstanding anything to the contrary in this Agreement, in no event shall Manager be liable for any action (or inaction) by Manager taken in reliance on advice from legal counsel to the Owner and/or the Project. Further notwithstanding anything contained in this Agreement to the contrary, in no event shall Manager institute or defend any legal proceedings where the amount in dispute exceeds $5,000.00 without Owner’s prior written consent.

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2.10         Security Services. Owner acknowledges that Manager has not undertaken to provide, and is not responsible for providing, security services to the Project. Should Owner choose to do so, Owner (or Manager, as Owner’s agent on Owner’s behalf) may separately contract with a company providing alarm monitoring, patrol or similar services. Manager’s sole responsibility with respect to any security services shall be reasonable cooperation with the company providing such services and to use commercially reasonable efforts to enforce the terms of any separate security contract. Owner hereby agrees to indemnify, defend and hold Manager harmless with respect to any loss, claim or cause of action (including reasonable attorneys’ fees and court costs) asserted against Manager due to acts or omissions of any such security company or as to any claimed inadequacy of any security services provided.

2.11         Project Defects. Notwithstanding anything to the contrary in this Agreement, Manager is not responsible for parts of the Project during its construction or rehabilitation, and Manager's responsibility for a residential unit will not begin until Manager, Owner and Owner's contractor agree that such unit is complete (subject to minor punch list items) and ready for occupancy. In no event shall Manager be responsible for uncovering violations of building, zoning, subdivision, fire or other codes or other laws and regulations (including laws relating to accessibility) or for defects or other shortcomings in the Project or its construction. Manager hereby expressly disclaims any expertise with respect to compliance with accessibility laws, environmental and other similar laws and regulations which may govern the Project and the Property. Manager's responsibility as to such matters will be limited to advising Owner of problems that come to the attention of Manager and implementing, at Owner's cost, remedial steps directed by Owner on terms consistent with this Agreement.

2.12         Debts of Owner. In the performance of its duties as Manager, Manager shall act on behalf of Owner solely in Manager’s capacity as Owner’s agent as specifically set forth in this Agreement. All debts and liabilities to third parties incurred by Manager pursuant to this Agreement and in the course of its operation and management of the Project shall be the debts and liabilities of Owner, and Manager shall not be liable for (and is hereby indemnified with respect to) any such debts or liabilities except to the extent caused by the gross negligence or willful misconduct of Manager or the Project Employees. Manager shall have no responsibility to make payments with Manager’s funds on any indebtedness incurred by Owner whether or not secured by the Project or any portion thereof.

2.13         Scope of Owner Liability. In no event shall Owner have any liability for expenses willfully incurred by Manager to the extent incurred beyond an express authorization in this Agreement, where the consent of the Owner was required pursuant to the terms and conditions of this Agreement, and the Manager failed to obtain said consent.

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Article 3

MANAGEMENT FEES; PAYMENTS TO MANAGER

3.1           Management Fee. Owner shall pay to Manager, as compensation for its services, the Base Management Fee based upon the realized for the Project. The Base Management Fee is defined as a sum equal to 3% of the Gross Rental Revenue of the Project per month. The Base Management Fee for any partial month will be pro rated based on the number of days during the month that are within the Term. Owner shall pay Manager 85% of the Base Management Fee for each month by the 10th day of said month, with the remainder of the Base Management Fee to be paid no later than the 10th day of the following month provided that Manager has completed a reconciliation of the actual Gross Rental Revenue for the applicable month. Owner shall be responsible for the timely remittance of any tax (other than any income tax charged to Manager) which may be due with respect to (a) the payment of the Base Management Fee, payroll expenses, or any other sums due or reimbursable to Manager in accordance with the terms of this Agreement, and (b) the operation of the Project in the applicable jurisdiction.

3.2           Place of Payment. All sums payable by Owner to Manager hereunder shall be payable by automated clearing house (ACH) to Manager at 1201 Elm Street, Suite 1600, Dallas, Texas 75270, unless Manager shall, from time to time, specify a different address or method in writing.

3.3           Reimbursement of Expenses. Owner shall be liable for the costs and expenses of maintaining and operating the Project, and except as otherwise specifically provided in this Agreement, Owner shall pay, or shall reimburse Manager for, all costs and expenses incurred by Manager in connection with the maintenance or operation of the Project in accordance with the Budgets or the performance by Manager of its duties under this Agreement. Within twenty (20) days of the Effective Date, Owner shall pay to Manager the full amount of any Start Up Costs for which Manager may be out of pocket. Owner shall be liable for any fees incurred on behalf of the Project pursuant to Exhibit “A”. Purchases of, or contracts for, materials or services may be made in bulk by Manager in connection with its operation of apartment projects generally, and Owner agrees that the pro rata portion of the net costs of such materials or service used in connection with, or for the benefit of, the Project shall be allowed as a reimbursable cost hereunder. Owner shall not be obligated to reimburse Manager for expenses for office equipment or office supplies of Manager (unless incurred for the Project), for any overhead expenses of Manager incurred with respect to its general offices, for costs relating to accounting services performed hereunder, or for any salaries of off-site supervisory employees of Manager (other than extraordinary services requested by Owner). Manager shall provide, at Owner’s expense, and utilize property management software for the Project as described in Exhibit “A”. Manager shall not be obligated to make any advance to or for the account of Owner or to pay any sums except out of funds in the Depository Account, and Owner shall be liable for all expenses of maintaining and operating the Project to the extent that such expenses exceed receipts from the Project available in the Depository Account. Manager will be excused from performance of its responsibilities under this Agreement to the extent that funds are not available in the Depository Account to pay related expenses (other than expenses for which Manager is not entitled to reimbursement under the terms of this Agreement) and Owner does not provide funds within five (5) business days after request of Manager.

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3.4           Payment Obligations Survive Termination. Upon any termination of this Agreement, regardless of the cause, Owner shall continue to be obligated to pay Manager all amounts due with respect to the period prior to such termination (including all expenses that are reimbursable in accordance with the terms of this Agreement, the Base Management Fee for the period ending on the date of termination, and any applicable Termination Fee).

Article 4

PROCEDURE FOR HANDLING RECEIPTS AND OPERATING CAPITAL

4.1           Bank Deposits. Owner hereby expressly authorizes Manager to open and operate the Depository Account, and Owner shall promptly deliver to Manager any documentation reasonably requested by the depository institution which is necessary to establish the Depository Account. All monies received by Manager for, or on behalf of, Owner shall be deposited by Manager in the Depository Account. All monies of Owner held by Manager pursuant to the terms of this Agreement shall be held by Manager in trust for the benefit of Owner to be disbursed as provided in this Agreement and/or a Budget, and such funds shall not, unless Owner otherwise has agreed or directed, be commingled with the funds of any other person, including Manager, its employees or affiliates.

4.2           Security Deposit Account. Owner hereby expressly authorizes Manager to open and operate the Security Deposit Account, and Owner shall promptly deliver to Manager any documentation reasonably requested by the depository institution which is necessary to establish the Security Deposit Account. Manager shall comply with all applicable laws with respect to security deposits received from tenants in respect of the Project. All security deposit funds held by Manager shall at all times be the property of Owner, subject to all applicable laws with respect thereto.

4.3           Disbursement of Funds. Manager shall disburse funds in the Depository Account on behalf of Owner for payment of Project expenses incurred by Manager in the performance of its duties hereunder and other Project expenses identified to Manager by Owner. Owner specifically authorizes Manager to expend funds in the Depository Account as contemplated by other provisions of this Agreement, including Article 3. Manager is expressly authorized to pay or to reimburse Manager for all fees (including the Base Management Fee) and expenses and for all other sums due Manager under this Agreement from funds in the Depository Account. Should funds in the Depository Account be insufficient to satisfy the debts and obligations of the Project, such debts and obligations shall be paid in the following order: Project payroll, including all payroll related taxes and expenses; Base Management Fee and other management expenses and reimbursements permitted hereunder; underlying mortgage obligations; and other required payments; provided, however, that in the event the Loan Documents conflict with the terms of this Section 4.3, then the terms of the Loan Documents shall prevail so long as Manager has received actual notice of such provisions.

4.4           Minimum Funding Requirement and Payroll Reserve. Concurrently with its execution and delivery hereof, Owner shall deposit the Minimum Funding Requirement and the Payroll Reserve into the Depository Account. Owner also shall deposit in the Depository Account funds sufficient to pay the expenses of the Project to the extent that such expenses are reasonably expected to exceed funds derived from the operation of the Project. Owner shall replenish any depletion in the Minimum Funding Requirement and/or the Payroll Reserve within five (5) business days after receiving a request from Manager. In the event Owner does not replenish any such depletion within five (5) business days, Manager may replenish any such depletion in the Minimum Funding Requirement and/or the Payroll Reserve on behalf of Owner with funds from the operation of the Project (in addition to any other remedies Manager may have pursuant to this Agreement).

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4.5           Disbursements to Owner. Any funds in the Depository Account in excess of the Minimum Funding Requirement and the Payroll Reserve may be transferred to Owner from time to time pursuant to delivery instructions and a payment schedule approved by Owner.

4.6           General Provisions.

(a)          Persons designated by Manager from time to time shall be authorized signatories on all bank accounts established by Manager hereunder and shall have authority to make disbursements from such accounts, and to the extent necessary, Owner shall make arrangements with the related depository institution to authorize such action by those persons. Owner shall not be a signatory on any account established hereunder and may not withdraw funds from any account except in the case of Manager's default hereunder that would allow Owner to exercise its rights to terminate this Agreement and in all cases subject to the notice and cure period set forth in Section 7.1 of this Agreement. All persons designated by Manager as authorized signatories or who otherwise handle funds for the Project shall be covered by commercial crime insurance maintained by Manager with coverage in the minimum amount of $1,000,000.00 employee dishonesty, $1,000,000 forgery or alteration, $1,000,000 computer fraud, $1,000,000 wire funds transfer fraud, $1,000,000 money and securities on and off premises. Coverage shall include: (i) third party coverage, (ii) no limitation or exclusion related to acts of collusion, (iii) theft of Owner’s property by Manager’s owners, directors and officers, and (iv) the definition of employee shall include leased employees if the Manager utilizes the services of an employee leasing firm.

(b)          Any expense relating to the insurance identified in Section 4.6(a) shall be borne by Manager.

(c)          Except in the event and to the extent of any theft, fraud, gross negligence or willful misconduct by Manager or its employees, Manager shall have no liability to Owner or any third party for loss of funds (including in instances of theft or fraud by third parties), even if the amount of funds maintained exceeds the available federal or other deposit insurance, and Owner hereby assumes all risk of loss with respect to funds except as otherwise specified herein. Owner shall participate, at Owner’s expense, in any fraud detection and prevention program offered by the depository institution at which the Depository Account and the Security Deposit Account are established.

(d)          Manager shall not be responsible for preparing or filing tax returns or related filings for Owner or otherwise with respect to the Project; provided, however, that Manager will cooperate with Owner in gathering data for such filings in accordance with Manager’s duties set forth in this Agreement.

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Article 5

ACCOUNTING

5.1           Books and Records. Manager shall keep, or shall supervise and direct the keeping of, a comprehensive system of office records, books and accounts pertaining to the Project. Such accounts shall be maintained using accrual method of accounting in accordance with federal tax or generally accepted accounting principles (GAAP); provided that Owner may instruct Manager in writing to utilize an accounting method other than GAAP. Such records shall be subject to examination at the office where they are maintained by Owner or its authorized agents, attorneys and accountants at reasonable hours on reasonable advance notice. Manager shall preserve all invoices for a period of four years (or such other period as may be required by applicable law) or until this Agreement terminates and such items are delivered to Owner at Owner’s request and expense. Manager shall comply with the Capitalization and Expense Policy of Bluerock which has been provided.

5.2           Periodic Statements.

(a)          Within twenty (20) days following each Property Close Date, Manager shall electronically deliver, or cause to be electronically delivered, to Owner the reports identified on Exhibit B.

(b)          Within thirty (30) days after the quarterly Property Close Date, Manager shall cause to be furnished to Owner such information as reasonably requested in writing by Owner as is necessary for any reporting requirements of any direct or indirect members of Owner or for any reporting requirements of any REIT member (whether a direct or indirect owner) to determine its qualification as a real estate investment trust and its compliance with REIT requirements. Further, Manager shall cooperate in a reasonable manner at the request of Owner and any direct or indirect member of Owner to work in good faith with any designated accountants or auditors of such party or its affiliates so that such party or its affiliate is able to comply with its public reporting, attestation, certification and other requirements under the Securities Exchange Act of 1934, as amended, applicable to such entity, and to work in good faith with the designated accountants or auditors of such party or any of its affiliates in connection therewith, including for purposes of testing internal controls and procedures of such party or its affiliates.

(c)          Within thirty (30) days after the final Property Close Date of each Fiscal Year, Manager shall deliver, or cause to be delivered, to Owner an income and expense statement showing results of operation of the Project for the Fiscal Year. If requested by Owner, Manager will cooperate with Owner in an audit of such Fiscal Year financial statement by an independent certified public accountant selected and paid for by Owner.

(d)          Owner may request, and Manager shall provide within a commercially reasonable period (not to exceed ten (10) days) after such request, such additional leasing and management reports that relate to the operations of the Project as are customary for other similar properties. Owner shall be liable for all reasonable and pre-approved costs incurred by Manager in the preparation of any such additional reports and in collecting and analyzing related data.

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(e)          Owner may request, and Manager shall provide within a commercially reasonable period after such request, assistance with draw requests, ad hoc reports and special accounting projects at a reasonable cost to be pre-approved by Owner. Manager shall also prepare and provide to Owner such reports and information as reasonably required by Owner to prepare the reports and tax returns required under (i) its limited liability company operating agreement and (ii) the Loan Documents. Such reports and information shall not exceed in scope or frequency the reports and information as Manager routinely provides other owners for which Manager is providing property management services.

(f)          In the event that Owner or Owner’s mortgagee(s) requires an audit, Manager shall cooperate with the auditors in a timely manner to complete the audit engagement. Manager shall cooperate in a reasonable manner at the request of any indirect owner of Owner and shall work in good faith with its designated representatives, accountants or auditors to enable compliance with its public reporting, attestation, certification and other requirements under applicable securities laws and regulations, including for testing internal controls and procedures.

5.3           Expenses. All costs and expenses incurred in connection with the preparation of any statements, Budgets, schedules, computations and other reports required under this Agreement shall be the responsibility of Manager, except as otherwise provided in Section 5.2(d) or this Agreement.

Article 6

GENERAL COVENANTS OF OWNER AND MANAGER

6.1           Owner’s Right of Inspection and Review. Owner and its accountants, attorneys and agents shall have the right to enter upon any part of the Project at any reasonable time during the Term of this Agreement for the purpose of examining or inspecting the Project, but any inspection shall be done with as little disruption to the business of the Project as possible and subject to the terms of any tenant leases and the rights of tenants to limit or prohibit access to space in their possession.

6.2           Indemnifications.

(a)          Owner shall indemnify and hold harmless Manager, each person who holds a direct or indirect ownership interest in Manager, and the respective officers, directors, shareholders, agents, employees, parents, subsidiaries and affiliates of such party and such owners (collectively, “Manager Indemnitees”), and defend the Manager Indemnitees with counsel reasonably satisfactory to Manager, against any and all liabilities, claims, causes of action, losses, demands, judgments, settlements and costs and expenses (including reasonable attorneys’ fees and court costs) (“Claims”) arising out of or in connection with (a) the ownership, maintenance or operation of the Property (including claims made by vendors or suppliers to the Project), or the performance by Manager of its responsibilities under this Agreement or acting under the express or implied directions of Owner, or Manager’s status as the property manager for the Project, (b) Owner’s violation of any applicable federal, state or local law or regulation, (c) any errors, prior actions or inactions taken by Owner and/or Owner’s agents prior to the Effective Date of this Agreement, and (d) any debts, liabilities or payments for which Manager is exculpated pursuant to Section 2.12 of this Agreement; except that this indemnity shall not apply to any matters for which Manager is responsible under an indemnity specifically undertaken by Manager in this Agreement. Owner’s responsibility shall specifically extend to hazardous materials, toxic wastes and similar substances, as well as insects, microorganisms and other substances that could cause property damage or pose a threat to human health, and to costs incurred in connection with any investigation of site conditions or remediation, removal or restoration work because of the presence of any of the same, except to the extent any of the same are knowingly released into the environment by, or Claims otherwise caused, by Manager or Project Employees.

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(b)          Owner agrees to defend, indemnify, and hold harmless Manager and Manager's partners, directors, shareholders, officers, and agents, against and from any and all Claims from the presence of Hazardous Substances (as defined below) on, under or about the Project, except to the extent related to Hazardous Substances knowingly released into the environment by, or Hazardous Substances Claims otherwise caused, by Manager or Project Employees. Without limiting the generality of the foregoing, the indemnification provided by this paragraph shall specifically cover costs incurred in connection with any investigation of site conditions or any remediation, removal or restoration work required by any federal, state or local governmental agency because of the presence of Hazardous Substances in, on, under or about the Property, except to the extent that the Hazardous Substances are present as a result of gross negligence, criminal activity, or any willful misconduct of Manager or Project Employees. For purposes of this section, “Hazardous Substances” shall mean all substances defined as hazardous materials, hazardous wastes, hazardous substances, or extremely hazardous waste under any federal, state or local law or regulation. Nothing herein shall exonerate Manager from liability for any Hazardous Substances Claims caused by Manager or Project Employees.

(c)          Manager shall indemnify and hold harmless Owner, each person or entity that holds a direct or indirect ownership interest in Owner, and the respective officers, directors, shareholders, agents, employees, parents, subsidiaries and affiliates of such party and such owners (collectively, “Owner Indemnitees”), and defend Owner Indemnitees with counsel reasonably satisfactory to Owner, against any and all Claims (i) to the extent arising out of third party bodily injury, property damage or financial loss caused by (a) Manager’s gross negligence (as opposed to mere negligence), willful misconduct, intentional wrongdoing, or criminal actions; or (b) material breach of this Agreement, including, without limitation, any failure to comply with the provisions of any loan document to which Manager has received actual notice; or (ii) that are the types of claims typically covered under Manager’s Employment Practices Liability Insurance or Errors and Omissions Liability insurance, or (iii) Hazardous Substances Claims caused by Manager or Project Employees. As a matter of expansion and not limitation, any breach shall be deemed material to the extent that Owner has provided Manager with written notice thereof, and Manager has failed to cure the same within the time period prescribed in Section 7.1 of this Agreement.

(d)          Owner’s obligations under Section 6.2(a) and Manager’s obligations under Section 6.2(b) are excused to the extent that indemnity and defense are provided to Manager and Owner, respectively, by the other party’s insurance; provided that this Section 6.2(c) shall not absolve a party from responsibility for defense for Claims that are within the scope of its indemnity obligations if an insurer (i) does not provide the defense in a manner reasonably satisfactory to the indemnitee or (ii) does not actually pay the Claim.

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(e)          A party seeking indemnification under this Section 6.2 shall give the party from whom it seeks indemnification prompt written notice of a claim, shall permit the other party to conduct the defense and settlement of the claim as long as the indemnifying party confirms without reservation that the claim is within the indemnifying party’s indemnification obligations, and shall provide, at the indemnifying party’s sole expense, reasonable cooperation in the defense of the claim; provided that the indemnified party shall have the right to participate in the defense of the claim with counsel of its own choosing and at its own expense. An indemnitor may not settle any Claim against the indemnitee on terms that (i) provide for a criminal sanction or fine against the indemnitee, (ii) admit to criminal liability on the part of the indemnitee, or (iii) provide for injunctive relief against the indemnitee.

(f)          All Owner Indemnitee and Manager Indemnitee parties are third-party beneficiaries of this Agreement to the extent of their indemnity, defense and similar rights under the related provision and may enforce that provision against Owner or Manager, as applicable.

(g)          The indemnity obligations of the parties in this Agreement shall survive expiration or earlier termination of the Term of this Agreement.

6.3           Claims by Owner Against Manager Parties. Owner shall release and save Manager and Manager Indemnitees harmless as to all acts and omissions of said parties relating to the management of the Project or the performance of Manager’s duties hereunder whether caused in whole or in part by the negligence of Manager or Manager Indemnitees but not in the event of said parties’ gross negligence, willful misconduct, intentional wrongdoing, or criminal actions, or as otherwise specifically excluded herein.

Article 7

DEFAULT; TERMINATION RIGHTS; END OF TERM

7.1           Default by Manager. Manager shall be deemed to be in default under this Agreement if Manager commits a material breach of any term or condition of this Agreement and fails to cure such default within fifteen (15) days after written notice thereof by Owner to Manager or, if such default cannot be cured within fifteen (15) days, then within such additional period as shall be reasonably necessary to effect a cure so long as Manager commences efforts to cure within the original fifteen (15) day period, thereafter diligently pursues the cure, and completes that cure within sixty (60) days.

7.2           Remedies of Owner. Upon the occurrence of an event of default by Manager as specified in Section 7.1 of this Agreement, Owner shall have the right to terminate the Term of this Agreement after any applicable notice and cure period. Notwithstanding the foregoing, Owner may terminate this Agreement immediately upon written notice to Manager if (a) Manager commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of its or any substantial part of its property, or consents to any such relief or to the appointment of or taking possession by any such official in the benefit of creditors, or fails generally to pay its debts as they become due, or takes any corporate action to authorize any of the foregoing; (b) Manager assigns this Agreement or delegate its duties under this Agreement without the consent of Owner; or (c) Manager dissolves or otherwise terminates by merger, consolidation or otherwise without the consent of Owner. Early termination shall not affect Owner’s right to recover from Manager damages that Owner has suffered due to Manager’s default.

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7.3           Default by Owner. Owner shall be deemed to be in default under this Agreement if Owner commits a material breach of any term or condition of this Agreement and fails to cure such default within fifteen (15) days after written notice thereof by Manager to Owner or, if such default cannot be cured within fifteen (15) days, then within such additional period as shall be reasonably necessary to effect a cure so long as Owner commences efforts to cure within the original fifteen (15) day period and thereafter diligently pursues the cure. Owner also shall be deemed to be in default hereunder in the event (i) Owner shall fail to pay any amount due Manager hereunder and Owner does not cure such default within five (5) business days after notice thereof, or (ii) Owner shall fail to provide funds for operation of the Project as required by Section 3.3 or Section 4.4 and Owner fails to cure such default within the time periods set forth in those sections.

7.4           Remedies of Manager. Upon the occurrence of an event of default by Owner as specified in Section 7.3 of this Agreement, Manager shall have the right to terminate the Term of this Agreement after any applicable notice and cure period. If Manager terminates the Term due to an event of default by Owner, Owner shall, no later than ten (10) business days after receiving notice of such termination, pay to Manager the Termination Fee. Early termination shall not affect Manager’s right to recover from Owner damages that Manager has suffered due to Owner’s default.

7.5           Sale of Property. If Owner sells or otherwise conveys fee simple title to the Property, Owner or Manager may terminate this Agreement by giving prior written notice to the other party. Owner shall use commercially reasonable efforts to provide Manager at least thirty (30) days’ prior written notice of any such sale or conveyance. If such sale or conveyance occurs before twelve (12) months following the Effective Date and either party elects to terminate this Agreement pursuant to this Section 7.5, Owner shall, no later than ten (10) business days after receiving notice of such termination, pay to Manager the Termination Fee.

7.6           Termination for Convenience. Notwithstanding anything to the contrary in this Agreement, Owner may terminate the Term of this Agreement for any reason, including its convenience or in the event of casualty, by giving Manager at least thirty (30) days prior written notice of termination and specifying the date of termination in said written notice. Notwithstanding anything to the contrary in this Agreement, Manager may terminate the Term of this Agreement for any reason, including its convenience or in the event of casualty, by giving Owner at least sixty (60) days prior written notice of termination and specifying the date of termination in said written notice. If Owner elects to terminate this Agreement in accordance with this Section 7.6 within twelve (12) months following the Effective Date, Owner shall, no later than ten (10) business days after making such election, pay to Manager the Termination Fee.

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7.7           End of Term. Within sixty (60) days after the expiration or earlier termination of the Term of this Agreement, Manager shall deliver to Owner (a) the Final Accounting with respect to the operations of the Property, (b) all books and records of Owner then in possession or control of Manager (at Owner’s expense), and (c) in the case of funds, all funds (including tenant security deposits) after deducting therefrom such sums as are then due and owing to Manager hereunder, including but not limited to the Riverstone Final Accounting Fee described in Exhibit “A” (if any), and (d) all keys or combinations to any locks on the Project, then in the possession of Manager, together with any plans and specifications pertaining to the Project then in the possession of Manager. Manager will reasonably cooperate in the transition of financial and accounting information to the Project’s new management company. In the event any action or inaction by Owner delays Manager’s delivery of said items, Manager shall have one additional day to deliver said items for each day of delay caused by Owner. Manager shall have the right to retain and remove from the Project all of its operational manuals, business records (which are not records of the Project) and any equipment owned by Manager.

7.8           Authority Ceases on Termination. Upon termination of this Agreement for any reason, Manager’s authority under this Agreement shall immediately cease and Manager shall have no further right to act for Owner or to draw funds from the Depository Account except to the extent permitted in Section 7.7 above.

Article 8

INSURANCE

8.1           Owner’s Insurance.

(a)          During the Term of this Agreement, Owner, at Owner’s expense, shall carry and maintain commercial general liability insurance on an “occurrence” basis, naming Manager as an additional insured, with limits of not less than $3,000,000 per occurrence and in the aggregate, per location, covering bodily injury, property damage and personal injury (the “Owner’s Liability Insurance”). The carrier for the Owner’s Liability Insurance shall have an A.M. Best Rating of A-/VII or higher. Owner’s Liability Insurance shall include coverage for losses arising from the ownership, management and operation of the Property and shall be written or endorsed to apply primary and non-contributory to insurance maintained by Manager under Section 8.2(a) below. If Owner’s Liability Insurance has a deductible, or similar clause, Owner shall be responsible for paying any losses that are not covered by Owner’s Liability Insurance because of said deductible or similar clause. Owner shall provide to Manager a written certificate from the carrier reflecting that Owner’s Liability Insurance is effective in accordance with this Section 8.1 and that Owner’s Liability Insurance will not be canceled or modified without thirty (30) days prior written notice to Manager. Owner shall have its insurance carrier accept these coverage requirements by endorsement to its policy.

(b)          Owner shall cause to be placed and kept in force fire and extended coverage insurance and such other property and casualty insurance as Owner may elect, at Owner’s expense. The provisions of Section 8.3 shall specifically extend to such coverage. Owner shall furnish to Manager the appropriate endorsement and certificate of insurance with respect to any such insurance.

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(c)          Manager shall promptly report to Owner, as soon as is reasonably practicable after Manager becomes actually aware of the same, all accidents and incidents occurring on or about the Property and any insured damage or destruction to the Property. Manager shall not be responsible for processing or settlement of claims, but Manager shall reasonably assist Owner with processing said claims upon Owner’s request.

(d)          Manager recommends to Owner that resident liability insurance be required of each tenant at the Project, at the tenant’s cost, unless such a requirement is in violation of any applicable law or regulation. If, at the direction of the Owner, Manager implements a renter’s insurance program at the Project whether it is a limited liability, or limited liability and personal contents coverage policy, any such policy held by the resident shall not remove, replace, reduce, or in any way modify the parties’ indemnification obligations herein or the requirements of Owner or Manager to provide insurance and indemnification in accordance with this Agreement. Manager agrees to use commercially reasonable efforts to insure compliance on the part of Project residents with any such programs. Manager assumes no responsibility, liability or reduction in payment of its Base Management Fee as a result of any expense incurred by Owner, including but not limited to payment by Owner of any insurance deductible amount, caused by the failure of a resident to have renter’s insurance in place. This exclusion of liability on Manager’s part applies whether the resident failed to procure renter’s insurance at the time of initial lease signing, at the time the resident’s renter’s insurance policy came up for renewal, or at any other time.

(e)          Owner acknowledges that Manager is not an expert or consultant regarding insurance coverage and requirements; accordingly, Owner assumes all risks with respect to the adequacy of insurance coverage.

8.2           Manager’s Insurance. Manager shall obtain and maintain the following insurance (the specifications for which may be changed from time to time by Owner) necessary to protect the interest of Owner as it relates to Manager's operations hereunder, at Manager's sole cost and expense, from authorized insurance companies approved by Owner rated by Best's Rating at A IX or higher.

(a)          During the Term of this Agreement, Manager, at Manager’s expense, shall carry and maintain commercial general liability insurance for the benefit of Manager (with blanket contractual liability coverage) on an “occurrence” basis, naming Owner as an additional insured, with limits of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate, per location and an umbrella or excess liability policy with limits of not less than $5,000,000 (collectively, the “Manager’s Liability Insurance”) and shall be written or endorsed to include Owner as an additional insured and shall be excess and contingent to Owner’s insurance required under Section 8.1(a) above, except to the extent a Claim is subject to an indemnification obligation specifically undertaken by Manager in this Agreement, in which case Manager’s Liability Insurance shall be deemed primary. Manager shall continue to name Owner as an additional insured for a period of three years following the termination of the Agreement. The carrier for the Manager’s Liability Insurance shall have an A.M. Best Rating of A IX or higher. Manager shall provide to Owner an original certificate from the carrier reflecting that Manager’s Liability Insurance is effective in accordance with this Section 8.2 and that Manager’s Liability Insurance will not be canceled or modified without thirty (30) days prior written notice to Owner. Manager shall provide Owner with an original certificate of insurance prior to each renewal date during the three-year period referenced above. Manager’s policy shall not include a Limitation of Coverage Real Estate Operations (CG 22 60 07 98) endorsement, Real Estate Property Managed Endorsement (CG 22 70 11 85) or similar endorsements excluding coverage for bodily injury, property damage or personal and advertising injury. If Manager utilizes the services of an employee leasing company, then it’s general liability policy must include ISO endorsement CG 04 24 10 93 Coverage for Injury to Leased Workers. Must include separation of insureds clause.

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(b)          Manager shall carry and maintain the crime and dishonesty insurance described in Section 4.6(a) of this Agreement. Additionally, Manager shall maintain, at its sole cost and expense, professional liability or errors and omissions liability insurance with limits of not less than $1,000,000 per occurrence, $2,000,000 aggregate. If coverage is on a claims-made basis, the retroactive date must be a date that is not later than the date on which Manager began performing services on behalf of Owner. Coverage shall be maintained for a period of three years after the termination of services. Manager shall provide Owner with an original certificate of insurance on or before each renewal date during this three-year time period. The policy shall include a separation of insureds clause.

(c)          Manager shall cause to be placed and kept in force workers’ compensation and employers’ liability insurance in compliance with all applicable federal, state and local laws and regulations covering all Project Employees of Manager. Employers’ liability limits of $1,000,000. In the event the principal has waived coverage for himself/herself, it is hereby agreed by all parties that the principal may not perform any work under this contract. Manager shall process all workers’ compensation claims and shall manage all such claims in its sole discretion. Owner shall reimburse Manager for the expense of such insurance on the basis of Manager’s current workers’ compensation rates and the payroll of the Project. Owner’s reimbursement obligation shall extend to any increase to expense derived from subsequent audits, and if any subsequent audit results in an increase in Manager’s workers’ compensation costs, Owner shall reimburse Manager for the increased amount.

(d)          Owner acknowledges that Manager and its affiliates maintain certain insurance programs on an enterprise basis, such as health insurance and workers’ compensation insurance, for the benefit of all of its employees, including Project Employees. Manager will include the costs of such employee insurance programs as line item expenses in the Budget, and upon approval of the Budget, Owner will be deemed to have expressly approved such allocated insurance expenses.

(e)          Manager, at its sole expense (which is not reimbursable) shall carry and maintain business auto liability insurance covering owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per accident. If the Manager utilizes the services of an employee leasing company then its Commercial Auto Liability policy must include ISO endorsement CA 23 25 07 97 Coverage for Injury to Leased Workers. Owner shall be named as additional insured.

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(f)          .Employment Practices Liability insurance with limits of $2,000,000 per occurrence/aggregate, including third party coverage for sexual harassment, discrimination and other coverable employment-related torts.

8.3           Waiver of Subrogation; Insurance As First Source of Recovery.

(a)          Each property insurance policy maintained by Owner or Manager with respect to the Property (including any property and casualty insurance maintained by Owner) shall, where applicable, contain a waiver of subrogation and similar rights, so that the insurer shall have no claim over or against Owner or Manager or their Indemnitees, as the case may be, by way of subrogation or otherwise, with respect to any claims that are insured under such policy. Owner or Manager, as the case may be, shall notify the other party if any insurance carrier does not agree to waive subrogation rights in any insurance policy required by this Agreement.

(b)          Notwithstanding anything to the contrary set forth in this Agreement, Manager waives any and all rights of recovery, claims, actions or causes of action against Owner and Owner Indemnitees, and Owner hereby waives any and all rights of recovery, claims, actions or causes of action against Manager and Manager Indemnitees, for any and all liabilities, claims, causes of action, losses, demands, judgments, settlements and costs and expenses (including reasonable attorneys’ fees and court costs) for damage to or loss of property to the extent the same are covered or would have been covered by the insurance coverage required to be maintained by this Agreement. The releases in this paragraph will apply even if the liability, claim, cause of action, loss, demand, judgment, settlement, cost or expense is caused in whole or in part by the negligence or strict liability of the released party, but will not apply to the extent the damage or loss is caused by the gross negligence or willful misconduct of the released party. For purposes of this Section 8.3(b), any deductible amount under any insurance policy shall be deemed to be included as part of collectible insurance proceeds.

Article 9

MISCELLANEOUS PROVISIONS

9.1           Owner Representative. Owner shall designate one person as Owner’s representative in all dealings with Manager, who shall, until further notice, be the person executing this Agreement on behalf of Owner. The person so acting as Owner’s representative from time to time shall have full authority to bind Owner, and Manager may rely on any directive of such person without further authorization or inquiry.

9.2           Owner Representations. Owner assumes all liability as to the quality and construction of the Property. Owner further represents and warrants that, to its actual knowledge, as of the Effective Date, the Property is in compliance with all applicable federal, state and local laws, rules, regulations, guidelines and ordinances, including but not limited to, the Americans with Disabilities Act, the Federal Fair Housing Act, the Federal 1990 Clean Air Act, all other state and local accessibility requirements, and the applicable building code affecting the Property.

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9.3           Confidentiality; Non-Solicitation. Each party hereby agrees to protect the financial and other confidential and/or proprietary information provided by the other party from any use, distribution or disclosure except as permitted herein. Each party shall use the same standard of care to protect said information as is used to protect its own confidential and proprietary information, but under no circumstance shall either party use less than a reasonable standard of care. The parties shall consult with each other in preparing any press release, public announcement, statement to the press, or other form of release of information to the news media or the public that is related to this Agreement or the relationship of the parties hereto (a “Press Release”); provided, however, that the foregoing shall not (a) restrict Manager from issuing information to the public or the press in the ordinary course of managing the Project and carrying out its duties in accordance with the terms of this Agreement, or (b) apply to any general listing of Manager’s represented clients. During the term of this Agreement, Owner shall not solicit any employee of Manager for employment, and for an additional one (1) year period following the termination or expiration of this Agreement, Owner shall not solicit or hire any Regional Manager which was assigned to the Project during the Term of this Agreement.

9.4           Notice. Any notice or communication hereunder must be in writing and will be deemed to be delivered, whether or not received, (i) when delivered by receipted delivery by an independent, reputable courier service, (ii) three (3) business days after deposited with the United States Postal Service, postage prepaid, certified or registered mail, with return receipt requested, addressed to the parties as listed on the signature page to this Agreement (or at such other address as the applicable party shall have specified by notice given in accordance with this provision), or (iii) when delivered by confirmed facsimile to the number listed on the signature page to this Agreement.

9.5           Severability. If any term, covenant or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to a person or circumstance other than those as to which it is held invalid or unenforceable, shall not be affected thereby. Each term, covenant or condition of this Agreement shall be enforced to the fullest extent permitted by law.

9.6           No Joint Venture or Partnership. Notwithstanding anything to the contrary in this Agreement, Owner and Manager hereby agree that nothing contained herein shall be construed as making Manager and Owner joint venturers or partners. Neither Manager nor Project Employees shall be deemed to be employees of Owner.

9.7           Integration Clause. This Agreement embodies the entire agreement and understanding between Owner and Manager with respect to its subject matter and supersedes all prior agreements and understandings, written and oral, between Owner and Manager related to that subject matter.

9.8           Force Majeure. Any delay in the performance of Manager’s obligations pursuant to the terms of this Agreement shall be excused to the extent such delay is caused by war, national emergency, natural disaster, strike, labor disputes, utility failures, governmental regulations, riots, adverse weather, and other similar causes not within Manager’s reasonable control, and any time periods required for Manager’s performance thereof shall be extended accordingly.

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9.9           Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of North Carolina without giving effect to the principles of conflict of laws to the extent such principles would require or permit the application of the laws of another jurisdiction. Manager represents that it has qualified to do business in the State of North Carolina in connection with all actions based on or arising out of this Agreement. Venue for any action brought to enforce this Agreement or collect any sum due under this Agreement shall be in any court of applicable jurisdiction in the county where the Project is located.

9.10         LIMITATION OF DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER OWNER NOR MANAGER SHALL BE LIABLE UNDER ANY CIRCUMSTANCES FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE, INCLUDING LOST REVENUES AND PROFITS AND DAMAGES, EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF THOSE DAMAGES. IN NO EVENT SHALL MANAGER BE LIABLE FOR DAMAGES IN EXCESS OF THE BASE MANAGEMENT FEES PAID BY OWNER DURING THE 24 MONTH PERIOD PRIOR TO THE DATE SAID DAMAGES ARE INCURRED, plus (b) ALL AVAILABLE INSURANCE PROCEEDS. Manager acknowledges and agrees that the members, officers, directors, employees, and trustees of Owner shall have no personal liability for the payment or performance of any obligations under this Agreement. Notwithstanding anything to the contrary contained herein, if Manager shall recover any judgment against Owner in connection with this Agreement, Manager shall look solely to Owner’s interest in the Project for the collection or enforcement of any such judgment, and no other assets of Owner or such other persons and entities shall be subject to levy, execution or other process for the satisfaction or enforcement of such judgment, and neither Owner nor any person or entity having an interest, directly or indirectly, in Owner shall be liable for any deficiency.

9.11         Modification and Waiver. This Agreement and the obligations of the parties under this Agreement may be amended, supplemented, waived and discharged only by an instrument in writing executed by the party against which enforcement of the amendment, addendum, waiver or discharge is sought.

9.12         Approvals and Consents. Neither Owner nor Manager shall unreasonably withhold or delay any approval or consent contemplated by this Agreement.

9.13         Prohibition on Assignment. Neither Owner nor Manager may assign this Agreement to any person or entity without the prior written consent of the other party. This Agreement shall be binding upon and shall inure to the benefit of Manager and Owner and their respective successors and assigns.

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9.14         Related Entities. Owner may elect to contract with entities in which Manager has a financial interest or other affiliation, including Riverstone Residential Management, LLC, Riverstone Insurance Services (through Guaranty Direct Insurance Company, Ltd. And CAS Insurance Agency, LLC), and Rockcreek Utility Services, LLC. Any relationship Owner may enter into with a related entity is that of an independent contractor and does not constitute an agency relationship between Owner and the related entity. The Riverstone related business entities are for-profit enterprises which may receive compensation, incentives, commissions and coordination fees from third parties in connection with services offered.

9.15         Time is of the Essence. Time is of the essence in this Agreement.

9.16         Attorney’s Fees. If either of the parties shall institute any action or proceeding against the other party relating to this Agreement, the non-prevailing party in such action or proceeding shall reimburse the prevailing party for its disbursements incurred in connection therewith and for its reasonable attorneys’ fees actually incurred.

9.17         Subordination. This Agreement shall be subject and subordinate to any financing or refinancing by debt, sale and leaseback or any other form of financing, relating to the Project and any deed of trust, mortgage or other instrument securing any financing now or hereafter constituting a lien upon the Project or any part hereof, including without limitation, the Loan Documents. The subordination provided in this Section shall by self-operative and shall not require any further instrument or document. However, upon the request of Owner, Manager shall promptly execute, acknowledge and deliver to the holder of such financing or refinancing an instrument in form and substance satisfactory to Owner and such holder confirming such subordination and containing such other provisions as Owner or such holder shall reasonably request. Without limiting the generality of the foregoing and notwithstanding anything herein to the contrary, it is understood and agreed that, in the event of a sale pursuant to or in lieu of foreclosure of, any deed of trust, mortgage or other instrument to which this Agreement is subordinated pursuant to this Section, the purchaser or other transferee of the Project shall have no obligation to pay or perform any of Owner’s obligations hereunder and the Project shall not be subject to any lien or other encumbrance for such obligation.

[Signature Page Follows]

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This Agreement is hereby executed by the parties hereto on the dates set forth below.

ADDRESS:	OWNER:
Bluerock Real Estate	BR Ashton I Owner, LLC
712 Fifth Avenue, 9th Floor
New York, NY  10019	By: BRG Ashton NC, LLC, its sole member
Attn: Michael Konig
Fascimile: 646.278.4220
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Title:	Authorized Signatory
	Date:  8/19/15

ADDRESS:	MANAGER:
4030 Boy Scout Blvd.	GREP Southeast, LLC, a Delaware limited
Suite 800	liability corporation
Tampa, FL 33607
Facsimile: 813.887.3343	By:	/s/ Lisa Taylor/SN
	Name:  Lisa Taylor
With a copy of notices of default	Title: Senior Managing Director
or termination to:
	Date:  7/13/15
Greystar Management Services, L.P.
Attn: Managing Director, Legal Services
600 E. Las Colinas Blvd., Suite 2100
Irving, Texas 75039
Facsimile: 214.723.7535

Signature Page

Exhibit A

Additional Compensation

1. The expense reimbursements referenced in section 7.(b) are as follows for the initial term:

Education, Support, & Marketing	Property Management Software		Techmology	Other Costs	Maintenance
Monthly	One-Time Setup	Monthly	Monthly	Office Supplies, Copies, Faxes, Postage	Monthly
$250	$1000	$300	$75	$.35/unit/month	Waived

Greystar’s Technology Services Fee includes an array of products and services that are essential to the operation of the community. Note that the package requires the license of MS Office 2007 for all PCs.

1. Web-Based e-mail accounts for all property office staff memebers

2. Virus protection, Internet filtering, Firewall and Spyware protection for each property PC

3. Centralized, managed data storage of property files

4. Access to reports stored on Owner Portal via the Internet

5. Phone support for technical issues

6. Use of RealBridge budget model

Exhibit B

Monthly Reports

1. Balance Sheet, including monthly comparison and comparison to year end (if applicable).

2. Detailed Income Statement, including prior 12 months.

3. Trial Balance that includes mapping of the accounts to the financial statements.

4. Account reconciliations for each balance sheet account within the trial balance.

5. Detailed support for each account reconciliation including the following:

a. Detail Accounts Payable Aging Listing: 0-30 days, 31-60 days, 61-90 days and over 90 days.

b. Detail Accounts Receivable/Delinquency Aging Report: 0-30 days, 31-60 days, 61-90 days, over 90 days and prepayments.

c. Fixed asset roll-forward and support (invoices and checks) for any new acquisition/additions and/or support for any disposals to fixed assets. Purchases will be accounted for using the capitalization policy of Bluerock Real Estate, LLC.

6. Security Deposit Activity

7. Mortgage Statement

8. Monthly Management Fee Calculation

9. Monthly Distribution Calculation

10. General Ledger, with description and balance detail

11. Monthly Check Register including copies of all checks disbursed and copies of cancelled checks.

12. Rent Roll

13. Monthly Reporting and evidence of withdrawal, if any, of the Minimum Funding Requirement and Payroll Reserve, and any other operating reserve accounts and capital expense reserve accounts, including, but not limited to, any calculations evidencing shortfalls payable thereunder.

14. Variance Report, including the following:

a. Cap Ex Summary and Commentary

b. Monthly Income/Expense Variance with notes

c. Yearly Income/Expense Variance with notes

d. Occupancy Commentary

e. Market/Competition Commentary

f. Rent Movement/Concessions Commentary

g. Crime Commentary

h. Staffing Commentary

i. Operating Summary, with leasing and traffic reporting

j. Other reasonable reporting, as requested (e.g. Renovation/Rehab report)

15. Budget Comparison(1), including month-to-date and year-to-date variances with narrative for any large fluctuations compared to Budget.

16. Market Survey, including property comparison, trends, and concessions.

EX-10.9

Exhibit 10.9

ESTOPPEL AND AGREEMENT

THIS ESTOPPEL AND AGREEMENT (this “Agreement”) is made as of the 18 day of August, 2015 by AR I BORROWER, LLC, a Delaware limited liability company (“Seller”), for the benefit of BR ASHTON I OWNER, LLC, a Delaware limited liability company (together with its successors and assigns, the “Purchaser”).

RECITALS

WHEREAS, Seller is the owner of that certain real property commonly known as Ashton Reserve at Northlake Phase I, located in Charlotte, Mecklenburg County, North Carolina, which is more particularly described on Exhibit “A” attached hereto and made a part hereof (the “Seller Property”); and

WHEREAS, the Seller Property is subject to that certain Declaration of Easements, Covenants and Restrictions dated as of November 22, 2013, made by Northlake Investors 288, LLC, an Alabama limited liability company (“Declarant”), dated as of November 22, 2013, and recorded in Book 28849, Page 615 in the Mecklenburg County, North Carolina Registry (the “Declaration”); and

WHEREAS, the Declaration also encumbers certain adjacent property owned by Declarant and commonly known as Ashton Reserve at Northlake Phase II, located in Charlotte, Mecklenburg County, North Carolina and more particularly described on Exhibit “B” attached hereto and made a part hereof (the “Declarant Property”);

WHEREAS, Purchaser is contemplating acquiring the Seller Property; and

WHEREAS, Seller, for the benefit of the Purchaser, desires to make certain representations, covenants and agreements with respect to the Declaration

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller, to its actual knowledge, hereby represents, covenants and agrees as follows:

1.          Seller has the power and authority under the Declaration to confirm the status of compliance by Declarant with the terms of the Declaration. The undersigned representative of Seller is duly authorized and fully qualified to execute this Agreement on behalf of Seller, thereby binding Seller.

2.          The Declaration (i) is in full force and effect, (ii) has not been assigned, supplemented, amended or otherwise modified except as provided for herein, and (iii) represents the entire understanding of the parties thereto as well as their respective successors-in-title or assigns as to the subject matter contained therein, and there exist no other documents, agreements or understandings with respect to said subject matter.

3.          Declarant is in material compliance with the material terms, conditions, provisions, and restrictions of the Declaration.

4.          Declarant is not default under the Declaration, nor has any event occurred which, with the passage of time, the giving of notice, or both, would cause Declarant to be in default under the Declaration.

5.          There are no outstanding liens, assessments or other charges or amounts owed with respect to Declarant or which are being asserted by Seller.

6.          All items required by the Declaration to be constructed or installed on the Seller Property to serve or benefit the Declarant Parcel, including, without limitation, the Detention Pond and the Dog Park Improvements, have been completed and placed into service.

7.          The last request by Declarant for Reimbursement (as defined in the Declaration) from Seller was made on     ——    , in the amount of $    ——    , and same has been paid in full by Seller.

8.          The last request by Seller for Reimbursement (as defined in the Declaration) from Declarant was made on     ——    , in the amount of $    ——    , and same has been paid in full by Declarant.

9.          The acknowledgements, agreements and certifications contained herein will be relied upon by Purchaser, and any lender making a loan to Purchaser, as well as their respective successors and assigns and such acknowledgements, agreements and certifications shall inure to the benefit of Purchaser, and any lender making a loan to Purchaser, as well as their respective successors and assigns.

[NO FURTHER TEXT ON THIS PAGE]

2

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

SELLER:
AR I BORROWER, LLC, a Delaware limited liability company
By:	AR OWNER, LLC, a Delaware limited liability company, its Sole Member and Sole Manager
	By:	AR DEVELOPER, LLC, a Georgia limited liability company, its Managing Member
		By:	CATALYST DEVELOPMENT PARTNERS II, LLC, a Georgia limited liability company, its Sole Member and Sole Manager
			By:	/s/ Robert Meyer
				Name:	Robert Meyer
				Title:	Manager/Officer

3

EXHIBIT A

Legal Description of Seller Property

Lying and being situate in Mecklenburg County, North Carolina, and being more particularly described as follows:

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public right-of-way (“Prosser Way”) and the fifty (50) foot public right of way (“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg County Register of Deeds, reference to which is hereby made for a more particular description.

TOGETHER WITH the rights and easements conferred by that Sewer Easement Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732, at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book 22541, at page 189.

TOGETHER WITH easements contained in that Declaration of Easements, Covenants and Restrictions recorded in Book 28849 at page 615, Mecklenburg County Register of Deeds.

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EXHIBIT B

Legal Description of Declarant Property

All that certain piece or parcel of land situated in the City of Charlotte, Mecklenburg County, North Carolina and described as Parcel 3B as shown on the plat entitled “Ashton Reserve at North Lake” and recorded in Map Book 55, Page 355, Mecklenburg County Registry.

5

EX-10.10

Exhibit 10.10

ASSIGNMENT OF PURCHASE AND SALE

AGREEMENT AND ESCROW INSTRUCTIONS

THIS ASSIGNMENT OF PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “Assignment”) is made this 19^th day of August, 2015, by and between BRG ASHTON NC, LLC, a Delaware limited liability company (“Assignor”); and BR ASHTON I OWNER, LLC, a Delaware limited liability company (“Assignee”).

RECITALS:

1.          Bluerock Real Estate, L.L.C., a Delaware limited liability company (“Bluerock”), entered into that certain Purchase and Sale Agreement and Escrow Instructions dated May 12, 2015 (the “Purchase Agreement”) with AR I Borrower, LLC, a Delaware limited liability company and AR Owner, LLC, a Delaware limited liability company (together “Seller”), with respect to the real property and improvements located at 10320 Grobie Way, Charlotte, North Carolina, commonly known as “Ashton Reserve at Northlake Phase I” (the “Property”), all as more particularly described in the Purchase Agreement.

2.          By Assignment of Rights Agreement dated May 13, 2015, Bluerock assigned all its right, title and interest in, to and under the Purchase Agreement to Assignor.

3.          Assignor has the right to assign all its right, title, and interest in, to, and under the Purchase Agreement to Assignee as provided in this Assignment. Assignee is an Affiliate of Assignor, and Assignor is an affiliate of Bluerock REIT.

4.          Assignor now desires to assign all its right, title, and interest as “Purchaser” under the Purchase Agreement to Assignee, and Assignee desires to assume all of Assignor’s right, title, and interests as Purchaser under the Purchase Agreement.

ASSIGNMENT:

NOW THEREFORE, in consideration of the mutual covenants contained in this Assignment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.          Incorporation of Recitals. The foregoing Recitals are incorporated herein and by this reference made a part hereof. All capitalized terms set forth herein shall have the meanings ascribed to such terms in the Purchase Agreement unless otherwise defined herein.

2.          Transfer; Assignment and Designation; Assumption. Assignor hereby sells, transfers, assigns, delivers and conveys to Assignee, its successors and assigns, and Assignee hereby accepts from Assignor, all right, title and interest of Assignor in, to and under the Purchase Agreement. Assignee hereby assumes, for the benefit of both Assignor and Seller, all of the obligations of the “Purchaser” under the Purchase Agreement. Assignor agrees to indemnify, defend and hold Assignee harmless with respect to all claims accruing under the Purchase Agreement prior to the date hereof. Assignee agrees to indemnify, defend and hold Assignor harmless with respect to all claims accruing under the Purchase Agreement from and after the date hereof.

1

3.          Representations and Warranties.     Assignor hereby certifies to Assignee that all of the representations and warranties of Assignor set forth in the Purchase Agreement are true, complete and correct in all material respects as of the date hereof.

4.          Governing Law. This Assignment shall be construed and enforced in accordance with and governed by the same law that governs the Purchase Agreement, without regard to the principles of conflicts of law.

5.          Binding Effect. This Assignment shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto.

6.          Counterparts. This Assignment may be executed in any number of counterparts and it shall be sufficient that the signature of each party appear on one or more such counterparts. All counterparts shall collectively constitute a single agreement. Signatures to this Assignment transmitted by facsimile or electronic mail shall be treated as originals in all respects.

[SIGNATURES FOLLOW]

2

WITNESS the following signatures:
ASSIGNEE:	BR ASHTON I OWNER, LLC,
	a Delaware limited liability company
	By:	BRG ASHTON NC, LLC
		a Delaware limited liability company
	Its:	Sole Member
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Title:	Authorized Signatory
ASSIGNOR:	BRG ASHTON NC, LLC,
	a Delaware limited liability company
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Title:	Authorized Signatory

3

EX-10.11

Exhibit 10.11

BILL OF SALE AND ASSIGNMENT AND ASSUMPTION

OF LEASES AND SERVICE CONTRACTS

This Bill of Sale and Assignment and Assumption of Leases and Service Contracts (this “Agreement”) is made and entered into this 19^th day of August, 2015, by and between AR I BORROWER, LLC, a Delaware limited liability company (“Seller”), and BR ASHTON I OWNER, LLC, a Delaware limited liability company (“Purchaser”).

WITNESSETH:

WHEREAS, Seller and Bluerock Real Estate, L.L.C. (“Original Purchaser”) have previously entered into that certain Purchase and Sale Agreement and Escrow Instructions, dated May 12, 2015, having AR Owner, LLC join as an additional party for the limited purposes set forth therein, as amended and as assigned by Original Purchaser to Purchaser (as amended and assigned, the “Contract”);

WHEREAS, concurrently with the execution and delivery of this Agreement and pursuant to the Contract, Seller is conveying to Purchaser, by Special Warranty Deed, (i) those certain tracts or parcels of real property located in Mecklenburg County, North Carolina, and more particularly described on Exhibit A attached hereto and made a part hereof (collectively, the “Land”), (ii) all rights, easements and appurtenances pertaining to the Land (collectively, the “Related Rights”), and (iii) all buildings, structures, fixtures and other improvements on and within the Land (the “Improvements”; and the Land, the Related Rights and the Improvements being sometimes collectively referred to as the “Real Property”);

WHEREAS, Seller has agreed to convey to Purchaser certain personal property and assign to Purchaser certain leases and service contracts as hereinafter set forth;

NOW, THEREFORE, in consideration of the receipt of Ten Dollars ($10.00), the assumptions by Purchaser hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1.           Bill of Sale.

(a)           Seller hereby sells, assigns, transfers and conveys to Purchaser all of Seller’s right, title and interest in, to and under the Phase I Personal Property and the Phase I Plans, Licenses and Permits. Seller warrants to Purchaser that Seller owns good and marketable title to the Phase I Personal Property, that the Phase I Personal Property is free and clear of all liens, charges and encumbrances other than the Phase I Permitted Exceptions (as defined in the Contract), and that Seller has full right, power and authority to sell the Phase I Personal Property and to make this Bill of Sale. Seller further warrants to Purchaser that Seller has not assigned or conveyed to any third party its right, title and interest, if any, in the Phase I Plans, Licenses and Permits.

(b)          “Phase I Personal Property” shall have the meaning ascribed to such term in the Contract.

(c)           “Phase I Plans, Licenses and Permits” shall have the meaning ascribed to such term in the Contract.

2.           Assignment and Assumption of Phase I Leases.

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser all of Seller’s right, title and interest as landlord in, to and under all tenant leases identified on Exhibit B attached hereto (collectively, the “Assigned Leases”), together with all refundable tenant security and other refundable deposits owing to tenants by the express terms of the Assigned Leases, minus any documented amounts properly applied by Seller pursuant to the terms of such Assigned Leases, as of the date of this Agreement, together with any interest owing thereon pursuant to the terms of the Assigned Leases or applicable law (collectively, the “Phase I Deposits”). The assignment of the Phase I Deposits has been made by means of a credit or payment on the closing statement executed by Seller and Purchaser pursuant to the Contract.

(b)          Purchaser hereby assumes all of the covenants, agreements, conditions and other terms and provisions stated in the Assigned Leases which, under the terms of the Assigned Leases, are to be performed, observed, and complied with by the landlord from and after the date of this Agreement. Purchaser acknowledges that Purchaser shall become solely responsible and liable as landlord under the Assigned Leases for obligations arising or accruing from and after the date hereof.

(c)          Purchaser shall indemnify, hold harmless and defend Seller from and against any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs incurred in defending any such claim or in enforcing this indemnity) that may be incurred by Seller by reason of the failure of Purchaser to perform, observe and comply with the landlord’s obligations under any of the Assigned Leases arising or accruing during the period from and after the date hereof, including, without limitation, claims made by tenants with respect to the Phase I Deposits on or after the date hereof (but only to the extent paid or assigned to Purchaser or for which Purchaser has received a credit or payment at Closing). Seller shall indemnify, hold harmless and defend Purchaser from and against any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs incurred in defending any such claim or in enforcing this indemnity) that may be incurred by Purchaser by reason of the failure of Seller to have performed, observed or complied with the landlord’s obligations under any of the Assigned Leases prior to the date hereof, including, without limitation, claims made by tenants with respect to the Phase I Deposits arising before the date hereof (to the extent such Phase I Deposits were not paid or assigned to Purchaser or for which Purchaser did not receive a credit or payment at Closing).

(d)          For purposes of this Paragraph 2, the word “landlord” means the landlord, lessor or other equivalent party under any of the Assigned Leases, and the word “tenant” means the tenant, lessee or other equivalent party under any of the Assigned Leases.

3.           Assignment and Assumption of Phase I Contracts.

(a)          Seller hereby sells, assigns, transfers and conveys to Purchaser all of Seller’s right, title and interest in, to and under those service, supply, equipment rental and similar agreements set forth on Exhibit C attached hereto and made part hereof by this reference (collectively, the “Phase I Contracts”).

(b)          Purchaser hereby assumes all of the covenants, agreements, conditions, terms, and provisions stated in the Phase I Contracts which, under the terms of the Phase I Contracts, are to be performed, observed, and complied with by the property owner from and after the date of this Agreement. Purchaser acknowledges that Purchaser shall become solely responsible and liable under the Phase I Contracts for obligations arising or accruing from and after the date hereof, including with respect to any and all payments coming due under the Phase I Contracts for which Purchaser has received a credit or payment on the closing statement executed by Purchaser and Seller, if any (the “Credited Payments”).

(c)          Purchaser shall indemnify, hold harmless and defend Seller from and against any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs incurred in defending any such claim or in enforcing this indemnity) that may be incurred by Seller by reason of the failure of Purchaser to perform, observe and comply with its obligations under any of the Phase I Contracts arising or accruing during the period from and after the date hereof, including without limitation, claims made by any other contract party with respect to the Credited Payments on or after the date hereof (to the extent paid or assigned to Purchaser or for which Purchaser received a credit or payment at Closing). Seller shall indemnify, hold harmless and defend Purchaser from and against any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs incurred in defending any such claim or in enforcing this indemnity) that may be incurred by Purchaser by reason of the failure of Seller to have performed, observed or complied with its obligations under any of the Phase I Contracts prior to the date hereof, including without limitation, claims made by any other contract party with respect to the Credited Payments arising before the date hereof (to the extent such Credited Payments were not paid or assigned to Purchaser or for which Purchaser did not receive a credit or payment at Closing).

4.           Qualifications. This Agreement is subject to the Phase I Permitted Exceptions (as defined in the Contract). This Agreement is also subject to those provisions of the Contract limiting Seller's liability to Purchaser.

5.           Counterparts. This Agreement may be executed in two or more identical counterparts, and it shall not be necessary that any one of the counterparts be executed by all of the parties hereto. Each fully or partially executed counterpart shall be deemed an original, but all of such counterparts taken together shall constitute one and the same instrument.

6.           Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the successors, executors, administrators, legal representatives and assigns of the parties hereto.

7.           Governing Law. This Agreement shall be construed under and enforced in accordance with the laws of the State of North Carolina.

[signatures commence on the following page]

EXECUTED effective as of the date first above written.

SELLER:
AR I BORROWER, LLC,
a Delaware limited liability company
By:	AR OWNER, LLC,
	a Delaware limited liability company,
	its Sole Member and Sole Manager
	By:	AR DEVELOPER, LLC,
		a Georgia limited liability company,
		its Managing Member
		By:	CATALYST DEVELOPMENT
			PARTNERS II, LLC,
			a Georgia limited liability company,
			its Sole Member and Sole Manager
			By: :	/s/ Robert Meyer
			Name:	Robert Meyer
			Title:	Manager/Officer

PURCHASER:
BR ASHTON I OWNER, LLC,
a Delaware limited liability company
By:	BRG Ashton NC, LLC,
	a Delaware limited liability company,
	its Sole Member
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Title:	Authorized Signatory

EXHIBIT A

Legal Description

Lying and being situate in Mecklenburg County, North Carolina, and being more particularly described as follows:

Being all of Parcels 1, 2 and the areas shown as the sixty-six (66) foot public right-of-way (“Prosser Way”) and the fifty (50) foot public right of way (“Skinner Lane”), as shown on a plat recorded in Map Book 53, page 886, and Parcel 3A as shown on a plat recorded in Map Book 55, page 355, Mecklenburg County Register of Deeds, reference to which is hereby made for a more particular description.

TOGETHER WITH the rights and easements conferred by that Sewer Easement Agreement recorded in Book 18053, at page 845, Mecklenburg County Register of Deeds, as amended by First Amendment to Sewer Agreement recorded in Book 20732, at page 68, and Second Amendment to Sewer Easement Agreement recorded in Book 22541, at page 189.

TOGETHER WITH easements contained in that Declaration of Easements, Covenants and Restrictions recorded in Book 28849 at page 615, Mecklenburg County Register of Deeds.

EXHIBIT B

Assigned Leases

[see Rent Roll attached hereto]

EXHIBIT C

Contracts

1. That certain Advertiser Agreement by and between Catalyst and Network Communications, Inc. d/b/a Apartment Finder dated May 19, 2014;

2. That certain Ad Insertion Agreement by and between For Rent Media Solutions and Greystar dated February 8, 2012;

3. That certain Advertising Agreement by and between Greystar Real Estate Partners, LLC and Apartment Guide dated January 31, 2015;

4. That certain Advertising Agreement by and between Apartment Guide and Ashton Reserve at Northlake dated March 26, 2013;

5. That certain Pest Control Service Agreement by and between Ashton Reserve at Northlake and Cramer Pest Control dated June 4, 2014;

6. That certain Preventative Maintenance Agreement by and between Jasko Fitness Solutions, Inc. and Ashton Reserve at Northlake;

7. That certain Full Maintenance Agreement by and between New River Landscaping and Ashton Reserve at Northlake dated February 18, 2014;

8. That certain Order Form to Master Services Agreement by and between NWP Services Corporation and Northlake Investors 288, LLC for Ashton Reserve Northlake dated February 25, 2015;

9. That certain PPC Advertising Agreement by and among Standing Dog Interactive, Greystar and Ashton Reserve dated January 13, 2015;

10. That certain Commercial Propane Gas Sales Agreement by and between Suburban Propane and Ashton Reserve dated November 13, 2013;

11. That certain Change Order to Proposal or Contract by and between Suburban Propane and Ashton I Borrower LLC dated Decmber 5, 2013;

12. That certain Guaranteed Maintenance Agreement by and between Systel Business Equipment Co., Inc. and Ashton Reserve at Northlake dated March 12, 2012;

13. That certain Guaranteed Maintenance Agreement by and between Systel Business Equipment Co., Inc. and Ashton Reserve at Northlake dated September 23, 2013;

14. That certain Life Safety Agreement by and between Wayne Automatic Fire Sprinklers, Inc. and Ashton Reserve at Northlake dated October 22, 2012;

15. That certain Life Safety Agreement by and between Wayne Automatic Fire Sprinklers, Inc. and Ashton Reserve at Northlake dated November 22, 2011;

16. That certain Service Contract by and between WebListers LLC and Ashton Reserve at Northlake dated October 3, 2013; and

17. That certain Service and Marketing Agreement by and between Time Warner Enterprises, LLC and Northlake Investors 288, LLC dated November 14, 2013.

EX-10.12

Exhibit 10.12

LIMITED LIABILITY COMPANY AGREEMENT

OF

BRG ASHTON NC, LLC

THIS LIMITED LIABILITY AGREEMENT (“Agreement”) of BRG ASHTON NC, LLC, a Delaware limited liability company (the “Company”), is effective as of April 15, 2015, between the Company and Bluerock Residential Holdings, L.P., a Delaware limited partnership, as the sole member of the Company (the “Member”).

RECITALS

A.           The Member has caused the Company to be organized as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended and in force from time to time (the “Act”).

B.           The undersigned desires to execute this Agreement in order to set forth the terms and conditions under which the management, business, and financial affairs of the Company will be conducted.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby covenants and agrees as follows:

ARTICLE I

PURPOSE AND POWERS OF COMPANY

1.01         Purpose. The Company’s purpose is to acquire, hold, invest, sell or otherwise dispose of assets which it shall from time to time own, and to engage in any and all other related business activities.

1.02         Powers. The Company shall have all powers of a limited liability company organized under the Act and not proscribed by the Act, its Certificate of Formation, or this Agreement.

1

ARTICLE II

NAME AND ADDRESS OF INITIAL MEMBER

2.01         Name and Address. The name, address, and initial membership interest of the initial Member is as follows:

Name/Address	Membership Interest
Bluerock Residential Holdings, L.P.,	100%
a Delaware limited partnership
712 Fifth Avenue, 9th Floor
New York, New York 10019

ARTICLE III

MANAGEMENT BY SOLE MEMBER

3.01         In General. The powers of the Company shall be exercised by, or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Member. Subject to the other provisions of this Agreement, the Member shall be entitled to make all decisions and take all actions for the Company, including the execution of all documents, agreements, certificates, and other writings in the name of, and on behalf of, the Company.

3.02         Indemnification. The Company shall indemnify, defend, and hold harmless the Member (including its partners, members, officers, directors, agents, employees, and affiliates) to the fullest extent permitted under the Act against any and all liability, damage, loss, cost, or expense (including, without limitation, attorneys’ fees) incurred by the Member arising out of any transaction or course of conduct relating to the business and affairs of the Company.

3.03         Elimination of Liability. In any proceeding brought in the right of the Company or by or on behalf of the Members of the Company, the damages assessed against a Member arising out of a single transaction, occurrence, or course of conduct shall not exceed one dollar, unless such member engaged in willful misconduct or a knowing violation of the criminal law.

3.04         Advances. Expenses (including legal fees and expenses) of the Member (including its partners, members, officers, directors, agents, employees, and affiliates) incurred by the Member arising out of any transaction or course of conduct relating to the business and affairs of the Company may be paid by the Company in advance of the final disposition of any proceeding relating thereto.

ARTICLE IV

CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS

4.01         Member Capital Contributions. The Member, upon execution of this Agreement, shall have contributed as the Member’s initial capital contribution the cash and/or other property set forth on Exhibit A attached hereto.

4.02         Distributions and Allocations. All distributions of cash or other property (except upon the Company’s dissolution which shall be governed by the applicable provisions of the Act) and all allocations of income, profits, and loss shall be made 100% to the Member in accordance with its membership interest in the Company.

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ARTICLE V

MISCELLANEOUS PROVISIONS

5.01         Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware without regard to conflicts of law provisions and principles thereof.

5.02         Amendments. No amendment or modification of this Agreement shall be effective unless approved in writing by the Member.

5.03         Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.

5.04         Headings. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof.

5.05         Heirs, Successors, and Assigns. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors, and assigns.

5.06         Creditors. None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any creditor of the Company or the Member.

[SIGNATURES ON FOLLOWING PAGE]

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The undersigned hereby agree, acknowledge, and certify that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company, effective as of the date first written above.

SOLE MEMBER:	Bluerock residential holdings, l.p.,
	a Delaware limited partnership
	By:	Bluerock Residential Growth REIT, Inc.,
		a Maryland corporation
	Its:	General Partner

By:	/s/ Michael Konig
Name:	Michael Konig
Title:	Authorized Signatory

COMPANY:	BRG ASHTON NC, LLC,
	a Delaware limited liability company
	By:	Bluerock Residential Holdings, L.P.,
		a Delaware limited partnership
	Its:	Sole Member

By:	Bluerock Residential Growth REIT, Inc.
	a Maryland corporation
Its:	General Partner

By:	/s/ Michael Konig
Name:	Michael Konig
Title:	Authorized Signatory

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EXHIBIT A

Initial Capital Contribution of the Member

Members	Cash or Property Contributed	Amount
Bluerock Residential Holdings, L.P.		$	100
TOTAL		$	100

EX-10.13

Exhibit 10.13

LIMITED LIABILITY COMPANY AGREEMENT

OF

BR ASHTON I OWNER, LLC

THIS LIMITED LIABILITY AGREEMENT (“Agreement”) of BR ASHTON I OWNER, LLC, a Delaware limited liability company (the “Company”), is effective as of July 7, 2015, between the Company and BRG ASHTON NC, LLC, a Delaware limited liability company, as the sole member of the Company (the “Member”).

RECITALS

A.           The Member has caused the Company to be organized as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended and in force from time to time (the “Act”).

B.           The undersigned desires to execute this Agreement in order to set forth the terms and conditions under which the management, business, and financial affairs of the Company will be conducted.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby covenants and agrees as follows:

ARTICLE I

PURPOSE AND POWERS OF COMPANY

1.01         Purpose. The Company’s purpose is to acquire, hold, invest, sell or otherwise dispose of assets which it shall from time to time own, and to engage in any and all other related business activities.

1.02         Powers. The Company shall have all powers of a limited liability company organized under the Act and not proscribed by the Act, its Certificate of Formation, or this Agreement.

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ARTICLE II

NAME AND ADDRESS OF INITIAL MEMBER

2.01         Name and Address. The name, address, and initial membership interest of the initial Member is as follows:

Name/Address	Membership Interest
BRG Ashton NC, LLC,	100%
a Delaware limited liability company
712 Fifth Avenue, 9th Floor
New York, New York 10019

ARTICLE III

MANAGEMENT BY SOLE MEMBER

3.01         In General. The powers of the Company shall be exercised by, or under the authority of, and the business and affairs of the Company shall be managed under the direction of, the Member. Subject to the other provisions of this Agreement, the Member shall be entitled to make all decisions and take all actions for the Company, including the execution of all documents, agreements, certificates, and other writings in the name of, and on behalf of, the Company.

3.02         Indemnification. The Company shall indemnify, defend, and hold harmless the Member (including its partners, members, officers, directors, agents, employees, and affiliates) to the fullest extent permitted under the Act against any and all liability, damage, loss, cost, or expense (including, without limitation, attorneys’ fees) incurred by the Member arising out of any transaction or course of conduct relating to the business and affairs of the Company.

3.03         Elimination of Liability. In any proceeding brought in the right of the Company or by or on behalf of the Members of the Company, the damages assessed against a Member arising out of a single transaction, occurrence, or course of conduct shall not exceed one dollar, unless such member engaged in willful misconduct or a knowing violation of the criminal law.

3.04         Advances. Expenses (including legal fees and expenses) of the Member (including its partners, members, officers, directors, agents, employees, and affiliates) incurred by the Member arising out of any transaction or course of conduct relating to the business and affairs of the Company may be paid by the Company in advance of the final disposition of any proceeding relating thereto.

ARTICLE IV

CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS

4.01         Member Capital Contributions. The Member, upon execution of this Agreement, shall have contributed as the Member’s initial capital contribution the cash and/or other property set forth on Exhibit A attached hereto.

4.02         Distributions and Allocations. All distributions of cash or other property (except upon the Company’s dissolution which shall be governed by the applicable provisions of the Act) and all allocations of income, profits, and loss shall be made 100% to the Member in accordance with its membership interest in the Company.

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ARTICLE V

MISCELLANEOUS PROVISIONS

5.01         Governing Law. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware without regard to conflicts of law provisions and principles thereof.

5.02         Amendments. No amendment or modification of this Agreement shall be effective unless approved in writing by the Member.

5.03         Construction. Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa.

5.04         Headings. The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof.

5.05         Heirs, Successors, and Assigns. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal representatives, successors, and assigns.

5.06         Creditors. None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any creditor of the Company or the Member.

[SIGNATURES ON FOLLOWING PAGE]

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The undersigned hereby agree, acknowledge, and certify that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company, effective as of the date first written above.

SOLE MEMBER:	BRG ASHTON NC, LLC,
	a Delaware limited liability company
	By:	/s/ Jordan Ruddy
	Name:	Jordan Ruddy
	Title:	Authorized Signatory

COMPANY:	BR ASHTON I OWNER, LLC,
	a Delaware limited liability company
	By:	BRG ASHTON NC, LLC,
		a Delaware limited liability company
	Its:	Sole Member

By:	/s/ Jordan Ruddy
Name:	Jordan Ruddy
Title:	Authorized Signatory

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EXHIBIT A

Initial Capital Contribution of the Member

Members	Cash or Property Contributed	Amount
BRG Ashton NC, LLC		$	100
TOTAL		$	100