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):

March 10, 2015

Steadfast Apartment REIT, Inc.

(Exact Name of Registrant as Specified in Charter)

Maryland	333-191049	36-4769184
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

18100 Von Karman Avenue, Suite 500

Irvine, California 92612

(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (949) 852-0700

Not applicable

(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 (see General Instruction A.2.):

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

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

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

o 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 Items 2.01 and 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01.

Item 2.01 Completion of Acquisition or Disposition of Assets.

Acquisition of Preston Hills at Mill Creek

On March 10, 2015 (the “Closing Date”), Steadfast Apartment REIT, Inc. (the “Company”), through STAR Preston Hills, LLC (“STAR Preston”), an indirect wholly-owned subsidiary of the Company, acquired from a third-party seller a fee simple interest in a 464-unit multifamily residential community located in Buford, Georgia, commonly known as Preston Hills at Mill Creek (the “Preston Property”). On the Closing Date, Steadfast Asset Holdings, Inc., an affiliate of the Company, assigned to STAR Preston the Purchase and Sale Agreement, dated as of January, 21, 2015, as amended, for the purchase of the Preston Property.

STAR Preston acquired the Preston Property for an aggregate purchase price of $51,000,000, exclusive of closing costs. STAR Preston financed the payment of the purchase price for the Preston Property with a combination of (1) proceeds from the Company’s public offering and (2) a loan in the aggregate principal amount of $35,700,000 (the “Loan”) from Berkeley Point Capital LLC (“Berkeley Point”), pursuant to the requirements of the Fannie Mae Delegated Underwriting and Servicing Program, as evidenced by the Multifamily Loan and Security Agreement (Non-Recourse) (the “Loan Agreement”) and the Multifamily Note (the “Note” and, together with the Loan Agreement, the Mortgage, the Environmental Indemnity and the Guaranty, each described below, the “Loan Documents”). For additional information on the terms of the Loan and Loan Documents, see Item 2.03 below.

The Preston Property was constructed in 2000 and consists of 17 three- and four-story residential buildings and a clubhouse/leasing office situated on an approximately 43-acre site. The Preston Property is comprised of 166 one-bedroom apartment homes, 252 two-bedroom apartment homes and 46 three-bedroom apartment homes that average 1,111 square feet with an average monthly rent of $899. Apartment amenities at the Preston Property include a fully-equipped kitchen with breakfast bar, nine-foot ceilings, washer and dryer connections, crown molding, ceiling fans, private balconies/patios and exterior storage rooms. In addition, select units have roman tubs. Property amenities at the Preston Property include two resort-style swimming pools, a spacious clubhouse, a lighted tennis court, two fitness centers, a business center with Wi-Fi, a playground, a spa, valet dry cleaning, a volleyball court and detached garages. As of March 9, 2015, the Preston Property was approximately 91.4% occupied.

An acquisition fee of approximately $533,000 was earned by Steadfast Apartment Advisor, LLC (the “Advisor”) in connection with the acquisition of the Preston Property. A financing coordination fee of approximately $357,000 was earned by the Advisor in connection with the financing of the Preston Property.

The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Management of the Preston Property

On the Closing Date, STAR Preston and Steadfast Management Company, Inc. (“Steadfast Management”), an affiliate of the Advisor, entered into a Property Management Agreement (the “Management Agreement”) pursuant to which Steadfast Management serves as the exclusive leasing agent and manager of the Preston Property. Pursuant to the Management Agreement, STAR Preston is to pay Steadfast Management a monthly management fee in an amount equal to 3% of the Preston Property’s gross collections (as defined in the Management Agreement) for such month. The Management Agreement has an initial term that expires on March 10, 2016 and will continue thereafter on a month-to-month basis unless either party gives 60 days prior written notice of its desire to terminate the Management Agreement. STAR Preston may terminate the Management Agreement at any time upon 30 days prior written notice to Steadfast Management in the event of the gross negligence, willful misconduct or bad acts of Steadfast Management or any of Steadfast Management’s employees. Either party may terminate the Management Agreement due to a material breach of the other party’s obligations under the Management Agreement that remains uncured for 30 days after notification of such breach.

STAR Preston also entered into a Construction Management Services Agreement (the “Construction Services Agreement”) with Pacific Coast Land & Construction, Inc. (“PCL”), an affiliate of the Advisor. Pursuant to the Construction Services Agreement, PCL will provide construction management services with respect to capital improvements and renovations from time to time for the Preston Property for a fee in an amount equal to 8% of the total cost of the improvements and renovations. The Construction Services Agreement may be terminated by either party with 30 days prior written notice to the other party.

The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.5 and 10.6 to this Current Report on Form 8-K and incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition.

On March 13, 2015, the Company issued an earnings release announcing its financial results for the year ended December 31, 2014. A copy of the earnings release is being furnished as Exhibit 99.1 to this Form 8-K.

The information contained in this Item 2.02, including the related information set forth in the earnings release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Loan

In connection with the acquisition of the Preston Property, STAR Preston borrowed $35,700,000 from Berkeley Point pursuant to the Note. The Loan has a 120-month term with a maturity date of April 1, 2025 (the “Maturity Date”). STAR Preston paid a loan origination fee of $178,500 to Berkeley Point in connection with the Loan.

Interest on the outstanding principal balance of the Loan accrues at an initial rate of 1.87%, and an interest payment of $55,484 is due and payable on May 1, 2015. Beginning June 1, 2015 and continuing until the Maturity Date, a monthly interest payment on the outstanding principal balance of the Loan that accrues at the one-month London Interbank Offered Rate (LIBOR) plus 1.69%, as further described in the Loan Agreement, is due and payable on the first date of each month. In addition, beginning on May 1, 2020 and continuing until the Maturity Date, a monthly payment of principal in the amount of $58,676 is due and payable on the first date of each month. The entire outstanding principal balance and any accrued and unpaid interest on the Loan is due and payable in full on the Maturity Date.

STAR Preston may voluntarily prepay all of the unpaid principal balance of the Loan and all accrued interest thereon and other sums due to Berkeley Point under the Loan Documents following the second year of the Loan, provided that STAR Preston provides Berkely Point with prior notice of such prepayment and pays a prepayment fee, all in accordance with the terms of the Loan Agreement.

The performance of the obligations of STAR Preston under the Loan is secured by a Multifamily Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement with respect to the Preston Property (the “Mortgage”). Additionally, pursuant to an Assignment of Management Agreement, STAR Preston assigned all of its rights under the Management Agreement to Berkeley Point upon an event of default under the Loan Documents.

In connection with the acquisition of the Preston Property, STAR Preston also entered into an Environmental Indemnity Agreement (the “Environmental Indemnity”), pursuant to which STAR Preston agreed to indemnify, defend and hold harmless Berkeley Point and certain other parties identified in the Environmental Indemnity, from and against any actions, damages, claims or other liabilities that Berkeley Point or such other parties may suffer or incur as a result of, among other things, (1) the actual or alleged presence of certain hazardous substances on or under the Preston Property or any other property from which hazardous materials derived or allegedly derived from the Preston Property, (2) any actual or alleged violation of any environmental laws applicable to the Preston Property, (3) any breach of any representation or warranty made in the Environmental Indemnity by STAR Preston, (4) any failure by STAR Preston to perform any of its obligations under the Environmental Indemnity, (5) any remedial work as defined in the Environmental Indemnity or (6) the existence or alleged existence of any prohibited activity or condition as defined in the Environmental Indemnity.

The Company entered into a Guaranty of Non-Recourse Obligations (the “Guaranty”) in connection with the Loan. The Company absolutely, unconditionally and irrevocably guarantees to Berkeley Point the full and prompt payment and performance when due of all amounts for which STAR Preston is personally liable under the Loan Documents, in addition to all costs and expenses incurred by Berkeley Point in enforcing such Guaranty.

The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.7, 10.8, 10.9, 10.10, 10.11 and 10.12 to this Current Report on Form 8-K and incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On March 13, 2015, the Company distributed a press release announcing the completion of the acquisition of the Preston Property. The full text of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.

The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit	Description
10.1	Purchase and Sale Agreement, dated as of January 21, 2015 by and between Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC, Riverside Realty Preston Hills, LLC and Madison Title Agency, LLC, in its capacity as the escrow agent
10.2	First Amendment to Purchase and Sale Agreement, dated February 3, 2015 by and between Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC and Riverside Realty Preston Hills, LLC
10.3	Second Amendment to Purchase and Sale Agreement, dated March 5, 2015 by and among Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC and Riverside Realty Preston Hills, LLC
10.4	Assignment and Assumption of Purchase Agreement, dated as of March 10, 2015, by and between Steadfast Asset Holdings, Inc. and STAR Preston Hills, LLC
10.5	Property Management Agreement, made and entered into as of March 10, 2015, by and between Steadfast Management Company, Inc. and STAR Preston Hills, LLC
10.6	Construction Management Services Agreement entered into as of March 10, 2015, by and between STAR Preston Hills, LLC and Pacific Coast Land & Construction, Inc.
10.7	Multifamily Note, effective as of March 10, 2015, by STAR Preston Hills, LLC in favor of Berkeley Point Capital LLC
10.8	Multifamily Loan and Security Agreement (Non-Recourse), dated as of March 10, 2015, by and between STAR Preston Hills, LLC and Berkeley Point Capital LLC
10.9	Multifamily Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement, dated as of March 10, 2015, by STAR Preston Hills, LLC for the benefit of Berkeley Point Capital LLC
10.10	Guaranty of Non-Recourse Obligations, dated as of March 10, 2015 by Steadfast Apartment REIT, Inc. for the benefit of Berkeley Point Capital LLC
10.11	Environmental Indemnity, dated as of March 10, 2015, by STAR Preston Hills, LLC to and for the benefit of Berkeley Point Capital LLC
10.12	Assignment of Management Agreement, dated as of March 10, 2015, by and among STAR Preston Hills, LLC, Berkeley Point Capital LLC and Steadfast Management Company, Inc.
99.1	Earnings release, dated March 13, 2015
99.2	Press release, dated March 13, 2015

SIGNATURES

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

		STEADFAST APARTMENT REIT, INC.
Date:	March 13, 2015	By:	/s/ Ella S. Neyland
			Ella S. Neyland
			President

EXHIBIT INDEX

Exhibit	Description
10.1	Purchase and Sale Agreement, dated as of January 21, 2015 by and between Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC, Riverside Realty Preston Hills, LLC and Madison Title Agency, LLC, in its capacity as the escrow agent
10.2	First Amendment to Purchase and Sale Agreement, dated February 3, 2015 by and between Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC and Riverside Realty Preston Hills, LLC
10.3	Second Amendment to Purchase and Sale Agreement, dated March 5, 2015 by and among Steadfast Asset Holdings, Inc. and Preston Hills Gardens Associates, LLC and Riverside Realty Preston Hills, LLC
10.4	Assignment and Assumption of Purchase Agreement, dated as of March 10, 2015, by and between Steadfast Asset Holdings, Inc. and STAR Preston Hills, LLC
10.5	Property Management Agreement, made and entered into as of March 10, 2015, by and between Steadfast Management Company, Inc. and STAR Preston Hills, LLC
10.6	Construction Management Services Agreement entered into as of March 10, 2015, by and between STAR Preston Hills, LLC and Pacific Coast Land & Construction, Inc.
10.7	Multifamily Note, effective as of March 10, 2015, by STAR Preston Hills, LLC in favor of Berkeley Point Capital LLC
10.8	Multifamily Loan and Security Agreement (Non-Recourse), dated as of March 10, 2015, by and between STAR Preston Hills, LLC and Berkeley Point Capital LLC
10.9	Multifamily Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement, dated as of March 10, 2015, by STAR Preston Hills, LLC for the benefit of Berkeley Point Capital LLC
10.10	Guaranty of Non-Recourse Obligations, dated as of March 10, 2015 by Steadfast Apartment REIT, Inc. for the benefit of Berkeley Point Capital LLC
10.11	Environmental Indemnity, dated as of March 10, 2015, by STAR Preston Hills, LLC to and for the benefit of Berkeley Point Capital LLC
10.12	Assignment of Management Agreement, dated as of March 10, 2015, by and among STAR Preston Hills, LLC, Berkeley Point Capital LLC and Steadfast Management Company, Inc.
99.1	Earnings release, dated March 13, 2015
99.2	Press release, dated March 13, 2015

EX-10.1

EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (“Agreement”) is made as of January 21, 2015 by and between PRESTON HILLS GARDENS ASSOCIATES, LLC and RIVERSIDE REALTY PRESTON HILLS, LLC, each a Delaware limited liability company (collectively, the “Seller”), and STEADFAST ASSET HOLDINGS, INC., a California corporation, or its permitted assignee (“Buyer”).

RECITALS:

Subject to the provisions set forth in this Agreement, Seller has agreed to sell the Property (defined in Section 1) to Buyer, and Buyer has agreed to purchase the Property from Seller.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Buyer and Seller agree as set forth below.

1. PURCHASE AND SALE OF THE PROPERTY.

Subject to and in accordance with the provisions of this Agreement, Seller agrees to sell, assign, convey, and transfer to Buyer the following real, personal and other property (defined below as the “Property”), and Buyer agrees to purchase and accept the Property:

1.1Land. Fee simple title to that certain real property located in Buford, Georgia and legally described on Schedule 1, together with all appurtenances related thereto (“Land”).

1.2Improvements. All fixtures, buildings, and improvements located on the Land known as the Preston Hills Apartments which have a street address of 2910 Buford Drive NE, Buford, Georgia 30519 (“Improvements”).

1.3Personalty. All equipment, appliances and personal property owned by Seller which is located on or in the Land or the Improvements (“Personalty”); the material Personalty of Seller as of the date of this Agreement is listed on Schedule 1.3. The Personalty and the Property shall not include any software programs or other electronic media or services relating thereto that are the subject of licenses or other agreements that are personal to Seller or Seller's property manager.

1.4Leases. All leases, subleases, licenses, concessions, and other forms of agreement, granting to any party the right of use or occupancy of any portion of the Land and/or Improvements, and all renewals, modifications, amendments, guaranties, and other agreements affecting the same, together with any security deposits except to the extent same are treated as a credit against the Purchase Price (as defined below) at Closing (as defined below) pursuant to Section 4.3 (collectively, “Leases”).

1.5Intangible Property. All of Seller’s right, title and interest in and to the trade name “Preston Hills Apartments” and websites, web domains and internet addresses, phone number(s) for the Property, fax number(s) for the Property and logos, and any other entitlements and intangible property owned by Seller and used or designed for use in connection with the Land, Improvements and/or Personalty, and any contract or lease rights, plans, specifications, studies, reports or surveys, licenses, permits, certificates of occupancy, governmental approvals, franchises, agreements, utility contracts, unexpired claims, warranties, guaranties and sureties, or other rights relating to the ownership, development, construction, design, use and operation of the Land, Improvements and/or Personalty, in each case to the extent assignable without obtaining the consent of any third party (collectively, “Intangible Property”).

1.6Service Contracts. All contracts relating to the operation, leasing, advertising, management (other than any management agreement between Seller and its property management company), repair or maintenance of the Property, including without limitation all warranties and guarantees thereunder (collectively, “Service Contracts”) that Buyer elects, or is deemed to have elected, to assume pursuant to Section 2.6.

The Land, Improvements, Personalty, Leases, Intangible Property, and Service Contracts are collectively referred to as the “Property”. Included in the Property shall be any and all the foregoing items in which any affiliate of Seller has any right, title or interest, to the extent the same is used solely in connection with the Land or Improvements unless otherwise expressly agreed to by Buyer; it being understood and agreed that Seller shall cause such affiliate to convey the same to Buyer at Closing.

2. EARNEST MONEY; ESCROW PROVISIONS; INSPECTIONS.

2.1Earnest Money.

2.1.1Within three (3) business days after the Execution Date (defined in Section 14.14), Buyer shall deposit with Madison Title Agency, LLC at the address stated in Section 14.3 (“Escrow Agent” or “Title Company”), by wire transfer in the amount of $500,000.00 (together with any interest earned thereon as provided hereunder, “Earnest Money”). The Earnest Money shall be fully refundable until the end of the Contingency Period, and thereafter shall be non-refundable and paid to Seller if Buyer terminates this Agreement after the end of the Contingency Period for any reason other than as specifically set forth in this Agreement. The Earnest Money shall be credited against the Purchase Price at Closing.

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2.2Escrow Provisions Regarding Earnest Money.

2.2.1Escrow Agent shall hold the Earnest Money and make delivery of the Earnest Money to the party entitled thereto under the terms of this Agreement. Escrow Agent shall invest the Earnest Money in one or more government insured interest-bearing bank accounts satisfactory to Buyer (which shall have no penalty for early withdrawal), and shall not commingle the Earnest Money with any funds of Escrow Agent or any other person or entity, and all interest and income thereon shall become part of the Earnest Money and shall be remitted to the party entitled to the Earnest Money pursuant to this Agreement.

2.2.2The tax identification numbers of the parties shall be furnished to Escrow Agent upon request.

2.2.3If prior to the end of the Contingency Period Buyer makes a written demand upon Escrow Agent for payment of the Earnest Money in connection with a termination of this Agreement sent by Buyer to Seller and Escrow Agent, Escrow Agent shall give written notice to Seller and make such payment within one (1) business day. If after the end of the Contingency Period either party makes a written demand upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of such demand. If Escrow Agent does not receive a written objection from the other party to the proposed payment within 5 business days after the giving of such notice, Escrow Agent is hereby authorized to make such payment and shall do so within one (1) business day. If Escrow Agent does receive such written objection within such 5-business day period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions from the parties to this Agreement or a final judgment or arbitrator's decision. However, Escrow Agent shall have the right at any time to deliver the Earnest Money and interest thereon, if any, with a court of competent jurisdiction in the state in which the Property is located. Escrow Agent shall give written notice of such deposit to Seller and Buyer. Upon such deposit, Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder.

2.2.4The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, and that Escrow Agent shall not be deemed to be the agent of either of the parties or liable for any act or omission on its part unless taken or suffered in bad faith in breach of this Agreement or involving negligence. Seller and Buyer jointly and severally shall indemnify and hold Escrow Agent harmless from and against all costs, claims and expenses, including reasonable attorney's fees but excluding special, incidental or consequential damages and punitive or exemplary damages, incurred in connection with the performance of Escrow Agent's duties hereunder, except with respect to actions or omissions taken or suffered by Escrow Agent

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in bad faith, in breach of this Agreement or involving negligence on the part of the Escrow Agent.

2.2.5The parties shall deliver to Escrow Agent an executed copy of this Agreement. Escrow Agent shall execute the signature page for Escrow Agent attached hereto which shall confirm Escrow Agent's agreement to comply with this Agreement including, without limitation, the provisions of this Section 2.2.

2.2.6Escrow Agent, as the person responsible for closing the transaction within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of 1986 as amended (“Code”), shall file all necessary information, reports, returns, and statements regarding the transaction required by the Code including, but not limited to, the tax reports required pursuant to Section 6045 of the Code. Further, Escrow Agent agrees to indemnify and hold Buyer, Seller, and their respective attorneys and brokers harmless from and against any losses resulting from Escrow Agent's failure to file the reports Escrow Agent is required to file pursuant to this section. The provisions of this Section 2.2.6 shall survive the termination of this Agreement.

2.3Inspections; Indemnity; Insurance.

2.3.1Inspections. Within three (3) business days after the Execution Date, Seller shall, at the sole expense of Seller, deliver to Buyer in electronic format (or, for those certain documents that are difficult or costly to copy (due to size or volume), by making the same available to Buyer at the Property), copies of all documents pertaining to the Property that are in the possession or control of, or are reasonably available, to Seller including without limitation the items set forth on Schedule 2.3 attached hereto (collectively, the “Diligence Information”) other than the Excluded Documents; provided however, that to the extent previously provided by Seller to Buyer pursuant to the terms of that certain Access Agreement dated as of December 30, 2014, Seller shall not be required to redeliver such Diligence Information. The Diligence Information (and all reproductions thereof) shall remain the property of Seller. Upon demand therefor by Seller upon a termination of this Agreement, Buyer shall return all Diligence Information (and all reproductions thereof) to Seller. Notwithstanding anything to the contrary set forth herein, Buyer acknowledges and agrees that it shall have no right to review or inspect any of the following (the “Excluded Documents”): (a) reports prepared by or for Seller or any of its affiliates in connection with the proposed sale of the Property, (b) communications between Seller or any of its affiliates and their attorneys, (c) appraisals, financial assessments or other financial evaluations of the Property prepared by or for Seller or any of its affiliates, (d) engineering and property condition reports prepared by or for Seller, and (e) other correspondence, memoranda and documents prepared or intended solely for internal use of Seller

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and/or its affiliates. Buyer and Buyer’s employees, agents, representatives and contractors (hereinafter collectively referred to as “Buyer’s agents”) shall have the right to enter upon the Property at all reasonable times upon at least one (1) business day’s advance notice by Buyer to Seller, in a manner not to unreasonably disturb the tenants and other occupants of the Property (collectively, “Tenants”) nor materially damage or injure the Property, to inspect all aspects of the Property, at Buyer's sole risk, cost and expense, and to make such physical inspections, studies and tests of the Property which Buyer deems necessary or advisable in its sole discretion. Seller shall have the right to have its representative present at any such inspections. The inspections, studies and tests permitted under this Section 2.3.1 shall include the right to examine the books and records of Seller and Seller’s property manager with respect to the Property, provided that Seller shall not be required to make available any Excluded Documents. Seller shall provide Buyer with copies of any documents and other information related to the Property and reasonably requested by Buyer promptly following request by Buyer, other than the Excluded Documents. Any entry by Buyer into any individual dwelling unit shall be in compliance with the terms of the applicable Lease. Any testing that requires a physical or other intrusive invasion of the Land or Improvements shall require Seller's consent (it being agreed that the standard testing and gathering of samples for a customary Phase I environmental study and radon testing shall be permitted without Seller’s consent). Except to the extent such disclosure is required or permitted pursuant to Section 14.10, Buyer agrees that it will not disclose to any third party not approved by Seller the results of its inspections or tests. Unless legally required to report a condition that is revealed by its inspections, Buyer shall not provide any report of such inspections or tests to or request any inspection of the Property by any governmental authority without first obtaining the prior written consent of Seller thereto and Seller, at Seller’s election, shall be entitled to have a representative on any telephone call or other contact made by Buyer to a governmental authority for such purpose and to be present at any meeting between Buyer and a governmental authority for such purpose. The foregoing shall not, however, prevent Buyer from contacting governmental authorities to request zoning and code compliance letters, property tax information, utility expenses, police or fire activity or other customary due diligence and shall not prohibit Buyer from reviewing or requesting copies of public files relating to the Property. Any notice which Buyer is required to give under this Section 2.3.1 may be given verbally to Lane Shea at (212) 704-4245. If this Agreement terminates for any reason other than Seller’s default, promptly following payment by Seller to Buyer of Buyer’s actual out of pocket costs thereof, but only to the extent Buyer is permitted to do so under the terms of any agreement with the provider of the same, Buyer shall promptly deliver to Seller (without representation or warranty or right of reliance) copies of all third party reports, studies or surveys which Buyer obtained in connection with its inspections of the Property.

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2.3.2Indemnity. Buyer shall promptly after any termination of this Agreement restore any physical damage or alteration of the physical condition of the Land or Improvements that results from any inspections or activities conducted by Buyer or Buyer’s agents, at Buyer’s sole cost and expense and in strict accordance with all requirements of applicable law. Buyer shall also INDEMNIFY AND HOLD HARMLESS Seller, its members, managers, principals, employees and agents from all claims and liability (including reasonable attorneys’ fees and costs but excluding special, incidental or consequential damages and punitive or exemplary damages), related to damage to property or injury to persons and arising from any activities of Buyer or Buyer’s agents on the Land in connection with such inspections, studies and tests; provided, however, in no event shall Buyer indemnify Seller or its members, managers, principals, employees or agents from any of the foregoing arising due to the gross negligence or willful misconduct of Seller or its members, managers, principals, employees and agents, or for existing conditions which are merely discovered and not exacerbated by Buyer or Buyer’s agents. The foregoing indemnification obligation of Buyer shall survive the termination of this Agreement for a period of (a) three (3) months with respect to any claim of Seller unrelated to a claim of a third party unaffiliated with Seller or Seller’s property manager, or (b) one (1) year with respect to any claim of Seller relating to a claim made by a third party unaffiliated with Seller or Seller’s property manager; provided however that if Seller shall have provided written notice to Purchaser with reasonable detail of a specified claim for which Purchaser is responsible hereunder within the period provided in subsection (a) or (b), as applicable, then such period shall be extended until such claim is resolved. Without limiting the generality of the foregoing indemnity, Buyer shall maintain or cause Buyer’s agents to maintain commercial general liability insurance in amounts not less than $1,000,000.00 per occurrence during all periods when Buyer or such Buyer’s agent is conducting inspections of the Property.

2.4Title; Survey.

2.4.1Condition of Title. Title to the Land and Improvements shall be conveyed to Buyer by the Deed (defined in Section 6.1) subject only to the following:

(a)a lien to secure payment of general and special real estate taxes and assessments for the Property, not due and payable for the current assessment period based on the fiscal year used by the taxing authorities;

(b)matters affecting the condition of title created by or with the written consent of Buyer in accordance with the terms and conditions of this Agreement;

(c)the Permitted Exceptions (but not the Curable Matters) as such terms are defined in Section 2.4.2 and Section 2.4.3;

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(d)all applicable laws, ordinances, rules and governmental regulations (including, but not limited to, those relative to building, zoning and land use) affecting the Property; and

(e)the rights of Tenants, as tenants only, under the Leases.

2.4.2Title Review Period.

(a)Within two (2) business days after the Execution Date, Seller shall deliver to Buyer (i) a current standard ALTA Form B title insurance commitment for the Land issued by First American Title Insurance Company (“Title Commitment”) which shall also issue any title insurance policy for the Property, (ii) copies of all documents shown as exceptions to title or otherwise referenced in the Title Commitment, and (iii) the most current existing ALTA survey of the Property in Seller’s possession or control. Buyer may obtain a new or updated physical survey of the Land (“Survey”). Buyer shall have until 5:00 P.M. (California time) on January 28, 2015 to make written objection to Seller due to any exceptions, defects or conditions shown on the Survey and/or in the Title Commitment (collectively, “Buyer's Objections”). Seller shall, within three (3) business days after Buyer's notice to Seller of Buyer's Objections, notify Buyer in writing that: (a) Seller will cure all or certain of Buyer's Objections as of or prior to Closing, or (b) Seller will not cure all or certain of Buyer's Objections. Seller shall have the right, but not the obligation, to cure Buyer's Objections. If Seller fails to deliver timely notice with respect to all or any of Buyer's Objections, Seller shall be deemed to have elected option (b) above with respect to any such Buyer's Objections. If Seller elects, or is deemed to have elected, not to cure any or all of Buyer's Objections, Buyer may, as Buyer's sole and exclusive remedy, (x) waive said Buyer's Objections or (y) only by written notice to Seller given on or prior to the expiration of three (3) business days after the expiration of Seller's response period described above, terminate this Agreement. If this Agreement is terminated pursuant to the preceding sentence, the Earnest Money shall be returned to Buyer and neither party shall any further rights or obligations under this Agreement except for any obligations which expressly survive termination of this Agreement. All items shown on the Title Commitment and/or the Survey not objected to by Buyer by timely notice to Seller or waived or deemed waived by Buyer shall be deemed to be “Permitted Exceptions.”

(b)If at any time after the expiration of the Contingency Period, any update to the Title Commitment or the Survey discloses any additional item that affects title to the Property which was not disclosed in Seller’s existing title insurance policy and/or in the original Title Commitment and/or the Survey delivered to Buyer during the Contingency Period and is not the result of the acts or omissions of Buyer or Buyer’s agents (a "New

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Exception"), Buyer shall have a period of three (3) business days from the date of its receipt of such update to review and notify Seller in writing of Buyer's disapproval of any New Exception. If Buyer disapproves any such matter it shall constitute further Buyer’s Objections and be subject to the same procedures set forth in Section 2.4.2(a) above. Closing may be postponed as needed to accommodate such additional time periods.

2.4.3Curable Matters. Notwithstanding anything in this Section 2.4 to the contrary, Seller shall be obligated to cure and/or cause to be deleted from any title insurance policy issued pursuant to the Title Commitment (i) any mortgage and mechanic's liens or other monetary liens against the Property, (ii) any exceptions or encumbrances to title which are created by, under or through Seller after the date hereof without Buyer’s consent, and (iii) any matter that Seller has agreed, in writing, to cure (collectively, “Curable Matters”).

2.5Contingency Period. The Contingency Period shall mean the period of time commencing on the Execution Date and ending at 5:00 p.m. (California time) on February 3, 2015. Buyer, at its election and in its sole discretion, may terminate this Agreement for any reason or for no reason by giving written notice thereof to Seller before the expiration of the Contingency Period. If Buyer timely terminates this Agreement under this Section 2.5, the Earnest Money shall be paid to Buyer and neither party shall have any further rights or obligations hereunder unless otherwise specifically stated. If Buyer fails to timely terminate this Agreement as provided in this Section 2.5, (a) the Earnest Money shall be non-refundable to Buyer except as otherwise expressly stated in this Agreement, and (b) within two (2) business days following the expiration of the Contingency Period, Buyer shall deposit with Escrow Agent the additional sum of $500,000.00, which shall thereafter be deemed part of the Earnest Money for all purposes hereunder.

2.6Service Contracts. Buyer shall assume at Closing those Service Contracts which it elects to assume by written notice given to Seller before the end of the Contingency Period; provided, however, Buyer must assume at Closing any Service Contracts which are not terminable except upon the payment of a fee to the vendor unless Buyer agrees in writing to pay such fee or credit to Seller the amount thereof at Closing. Seller shall notify the vendors under those Service Contracts that Buyer has not agreed to assume (with a copy of such notice to Buyer) with such termination to be effective as of the Closing Date. Seller shall reasonably cooperate with Buyer, both before and after Closing, to obtain any approvals or consents required to assign any Service Contracts to Buyer that Buyer has elected to assume. If Seller fails to timely send any such request for approval or consent, Buyer may do so in Seller’s name. Seller’s obligations under this Section 2.6 shall survive the Closing for a period of three (3) months. Until the date which is five (5) business days before the expiration of the Contingency Period, Seller may, without Buyer’s consent, enter into Service Contracts in the ordinary course of Seller’s business (or amend, modify, renew, extend or terminate any existing Service Contracts), provided that Seller gives Buyer a copy of same and such new Service Contract is terminable upon thirty (30) days notice or less without penalty or fee; thereafter, Seller may do so only with the prior written consent of Buyer.

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3. PURCHASE PRICE.

The “Purchase Price” for the Property shall be $51,000,000.00 payable pursuant to the terms and conditions contained in this Agreement, but subject to credits and prorations as provided below.

4. PRORATIONS.

All normal and customarily proratable items of income and expense for the Property shall be prorated as of the Closing Date. Without limiting the foregoing, the following items shall be prorated as of the Closing Date and such prorations shall be reflected on the settlement statements prepared by Escrow Agent. Such prorations shall be made on the basis of a 365-day year, as of 11:59 p.m. on the day preceding the Closing Date. Any leasing commissions with respect to the Leases shall be the sole responsibility of Seller, and shall be paid or discharged fully at or prior to Closing.

4.1Revenues. All rentals, receipts and other revenues from the Property (“Revenues”) which have been actually received by Seller before Closing and which are allocable to the period from and after the Closing Date shall be credited to Buyer. Buyer shall use reasonable efforts for a period of ninety (90) days after Closing to collect all Revenues which are delinquent or due as of the Closing Date and Seller shall have the right commencing as of ninety-one (91) days after the Closing Date to take any action to collect any such Revenues from any Tenant, provided that Seller may take action only with respect to former tenants who no longer occupy a unit at the Property. All such delinquent Revenues from the Property collected by Buyer or Seller after Closing shall be paid (a) first, to Buyer and applied to amounts delinquent for the period from and after the Closing Date, and (b) second, to Seller to be applied to amounts delinquent for the period prior to the Closing Date, and each party hereby agrees to promptly remit the same to the other as and to the extent necessary to comply with the foregoing. In no event shall Buyer be obligated to bring any suit against any Tenant, expend any funds or exercise any of its rights or remedies under any Lease in order to collect any Revenues.

4.2Property Taxes. All real estate taxes and assessments for the Property owed for the period in which Closing occurs shall be pro-rated. If, at Closing, the Property or any part thereof is affected by a special assessment which is payable in installments of which the first installment is then a charge or lien, or has been paid, or special assessments which are imposed on the Property annually on a reoccurring basis, such assessments shall be apportioned pro rata between Seller and Buyer on a per diem basis as of the Closing Date.

4.3Security Deposits. All security and other deposits held by Seller pursuant to the Leases (excluding (a) deposits applied by Seller and not reinstated by the applicable Tenant and (b) any interest thereon if such interest is not required to be remitted to Tenants pursuant to their respective Leases or applicable law), shall be credited to Buyer, and Seller and Buyer shall deliver a notice to such Tenants advising them that: (i) Buyer has purchased the Property, and (ii) the amount of the security deposit received by the Buyer, if any, is the responsibility of Buyer.

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4.4Utility Charges. Final meter readings on all utilities charged to the Property shall be made as of the day preceding the Closing Date. Seller shall use reasonable efforts to arrange for, and shall pay for final billings of utilities to the day preceding the Closing Date, and Buyer shall be responsible for utilities used on or after the Closing Date. Any prepaid water, sewer, and other utility charges allocable to the period from and after the Closing Date shall be credited to Seller. Seller and Buyer shall deliver written notices to the applicable utility companies notifying them of the change in ownership. Any deposits on utilities paid by Seller shall be returned to Seller.

4.5Service Contracts. Seller shall pay (or be charged by a proration for) all charges due pursuant to the Service Contracts before the Closing Date, and Buyer (to the extent assumed by Buyer) shall be responsible for all such charges due from and after the Closing Date pursuant to the Service Contracts. Prepaid charges allocable to the period from and after the Closing Date in connection with any Service Contracts being assumed by the Buyer shall be credited to Seller at Closing. Accrued and unpaid charges allocable to the period prior to the Closing Date in connection with such Service Contracts shall be credited to Buyer at Closing. All upfront commissions or other amounts, if any, paid by the service provider under any Service Contract shall not be prorated.

4.6Insurance. No proration shall be made in relation to insurance premiums, and no insurance policies of Seller will be assigned to Buyer, except as expressly provided in Section 11 with respect to a casualty.

4.7Survival. The provisions of this Section 4 shall survive Closing for a period of one (1) year and shall then terminate except as otherwise stated in this Agreement.

4.8Post Closing Adjustments. If any of the items described in Section 4 above cannot be accurately apportioned at the Closing because of the unavailability of the amounts which are to be apportioned, such items shall be apportioned on the basis of good faith estimates by the parties and reconciled as soon as practicable after the Closing Date but, in any event, no later than one (1) year after the Closing Date. If either party discovers any errors in the Closing Statement, both parties agree to correct and reconcile such error as soon as practicable after the Closing Date, but, in any event, no such later corrections or reconciliations shall be made more than one (1) year after the Closing Date.

4.9Rent Ready Adjustments. Not more than forty-eight (48) hours prior to Closing (“Walk Though Date”), a representative of Buyer and a representative of Seller shall conduct an onsite walk-through of the then unoccupied rental units on the Property to determine whether such unoccupied rental units are in “rent ready” condition. With respect to any rental unit that is vacated either (a) on or before seven (7) days prior to Close of Escrow that Seller has not placed in a “rent ready” condition before the Walk Through Date or (b) on or after the Walk Through Date, Buyer shall receive a credit against the Purchase Price at Closing in the amount of $1,250 per unit. As used herein, “‘rent ready’ condition” means Seller’s practice and procedures, as of the Execution Date, for placing units in “rent ready” condition. Nothing contained in this Section 4.9 shall be construed as limiting Buyer’s rights and Seller’s obligations under the other provisions of this Agreement.

5. CONDITIONS PRECEDENT TO CLOSING.

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5.1Buyer’s Conditions to Closing. The obligation of Buyer to purchase the Property from Seller, and to perform the obligations required to be performed by Buyer at the Closing, are subject to satisfaction of each of the following conditions (“Buyer's Conditions”):

5.1.4Compliance with Agreement. Seller shall have performed and complied in all material respects with its covenants and obligations under this Agreement.

5.1.5Representations and Warranties. All of Seller's representations and warranties under Section 8.2 are true and correct in all material respects as of the Closing Date.

5.1.6Title Policy. Title Company shall have irrevocably committed to Buyer in writing to issue an ALTA 2006 extended owner’s policy of title insurance written on First American Title Insurance Company, in form and content consistent with the Title Commitment, as such may be updated before Closing (but without imposing additional requirements on Seller other than as expressly provided in Section 2.4 above), insuring Buyer’s fee simple title to the Land in an amount equal to the Purchase Price subject only to the Permitted Exceptions and subject to no conditions other than payment of the applicable premium therefor and the normal and customary conditions to be satisfied by Buyer and Seller.

5.1.7No Litigation. There shall exist no pending or threatened actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, against Seller or the Property that would prevent Seller from performing its obligations under this Agreement.

5.2Failure of Buyer’s Conditions. If any of the Buyer’s Conditions are not satisfied as of the Closing Date, Buyer shall have the right in its discretion to (i) terminate this Agreement upon three (3) days’ prior written notice to Seller in the event Seller has not satisfied all conditions to Buyer’s reasonable satisfaction within such 3-day period (provided however, that no notice or cure period shall be available for Seller’s failure to deliver any of the Closing Documents to Escrow Agent on the Closing Date), in which event the Earnest Money shall be returned to Buyer and all obligations of the parties hereto shall thereupon cease and this Agreement shall thereafter be of no further force and effect, except for any provision of this Agreement that expressly survives termination and the rights of Buyer under Section 12.2, or (ii) waive the failed condition and consummate Closing. Seller shall not, in any event, be liable to Buyer for any claims arising from a failure of any such conditions except as provided in Section 12.2.

5.3Closing Conditions for Seller. Seller's obligations under this Agreement are subject to each of the following conditions (“Seller's Conditions”):

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5.3.1Compliance with Agreement. Buyer shall have performed and complied in all material respects with its covenants and obligations under this Agreement.

5.3.2Representations and Warranties. All of Buyer's representations and warranties under Section 9 are true and correct in all material respects as of the Closing Date.

5.4Failure of Seller’s Conditions. If any of the Seller’s Conditions are not satisfied as of the Closing Date, Seller shall have the right in its discretion to (i) terminate this Agreement upon three (3) days’ prior written notice to Buyer in the event Buyer has not satisfied all conditions to Seller’s reasonable satisfaction within such 3-day period (provided however, that no notice or cure period shall be available for Buyer’s failure to deposit the remainder of the Purchase Price or deliver any applicable Closing Documents to Escrow Agent on the Closing Date), in which event the Earnest Money shall be paid to Seller in accordance with Section 12.1 if applicable or otherwise to Buyer, and all obligations of the parties hereto shall thereupon cease and this Agreement shall thereafter be of no further force and effect, except for any provision of this Agreement that expressly survives termination, or (ii) waive the failed condition and consummate Closing.

6. CLOSING DOCUMENTS.

On the Closing Date, Seller shall deliver, or cause to be delivered, to Escrow Agent the following documents and/or items with respect to the Property, executed and acknowledged, where appropriate, on behalf of Seller (collectively, “Closing Documents”):

6.1Deed. A Special Warranty Deed in the form attached as Exhibit “D” (“Deed”) conveying the Land and the Improvements to Buyer, subject only to the Permitted Exceptions.

6.2Bill of Sale. A Special Warranty Bill of Sale in the form attached as Exhibit “A” conveying title to the Personalty to Buyer.

6.3Assignment and Assumption of Leases. An Assignment and Assumption of Leases in the form attached hereto as Exhibit “B”, assigning to Buyer all of Seller's interest as landlord in all Leases, security deposits and guaranties, together with an assumption thereof by Buyer of all obligations of the landlord under the Leases accruing from and after the Closing Date. All original Leases in Seller's possession or control will be delivered to Buyer within two (2) business days following Closing; provided that Seller will deliver copies of Leases in those cases where Seller does not have possession or control of an original.

6.4Tenant Notices. Notices to Tenants under the Leases in the form attached as Exhibit “E”, as the same may be modified at the reasonable request of Buyer to conform to the requirements of applicable law.

6.5Assignment and Assumption of Service Contracts and Intangible Property. An Assignment of Service Contracts and Intangible Property in the form attached as Exhibit “C”, assigning to Buyer the Intangible Property and the Service Contracts being assumed by Buyer

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pursuant to this Agreement, together with an assumption thereof by Buyer of all obligations accruing thereunder from and after the Closing Date. The originals of all such Service Contracts in Seller's possession or control will be delivered to Buyer within two (2) business days following Closing; provided that Seller will deliver copies of such Service Contracts in those cases where Seller does not have possession or control of an original.

6.6Service Contract Notices. Notices to the counterparties under the Service Contracts being assumed by Buyer informing such counterparties of the sale of the Property to Buyer.

6.7Settlement Statement. A settlement statement prepared by Escrow Agent and reasonably acceptable to Buyer and Seller showing the Purchase Price, all applicable adjustments and credits, and all cash receipts and all disbursements to be made by Escrow Agent on the Closing Date.

6.8Non-Foreign Status Affidavit. An Affidavit of Non-Foreign Status.

6.9Evidence of Seller's Authority. Evidence satisfactory to the Title Company and Buyer that the person executing the Closing Documents on behalf of Seller has full right, power and authority to do so.

6.10Certified Rent Roll. An updated Rent Roll (defined in Section 8.2.5) effective as of a date no more than one (1) business day before the Closing Date and certified by Seller as to accuracy and completeness in all material respects.

6.11Other Documents. Other certificates and documents that are reasonably acceptable to the signing party and are customarily required to effect the closing of the sale of the Property and related transactions contemplated by this Agreement, including an Owner's Affidavit sufficient to allow deletion of standard exceptions from the title policy and identifying no construction, debts, liens or parties in possession (other than residential tenants disclosed on the Rent Roll) that may affect the Property after the Closing Date, a Form of Sale Disclosure reporting sales proceeds in form reasonably approved by Seller, and a “gap indemnity” in favor of Title Company.

Buyer shall execute, acknowledge, and deliver the assignment documents tendered by Seller, as assignor, with respect to the Leases, Service Contract(s), Intangible Property, and other applicable documents requiring execution by Buyer as set forth in Section 6 above or as otherwise stated in this Agreement.

7. CLOSING.

7.1Closing. This transaction shall close upon satisfaction of the requirements of Section 7.2 below (“Closing”) on a date selected by Buyer, but in no event later than March 10, 2015 (“Closing Date”) unless extended by the terms of Section 2.4, Section 5.2, Section 5.4 or Section 11. Notwithstanding the foregoing, Buyer shall have the one-time right to extend the Closing Date to a date selected by Buyer, but in no event later than April 13, 2015 by (a) delivering written notice to Seller and Escrow Agent and (b) depositing with Escrow Agent an additional $250,000.00 which shall thereafter be deemed part of the Earnest Money for all purposes hereunder, in each case no

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later than the third (3^rd) business day before the original Closing Date. If Buyer desires to close earlier than the above stated specific dates, it must give written notice to Seller at least five (5) business days before its designated Closing Date.

7.2Time and Place. The Closing shall take place through escrow with the Title Company on the Closing Date. On the Closing Date: (a) the parties shall cause the Escrow Agent to disburse the Purchase Price (subject to prorations and adjustments provided in this Agreement) to Seller pursuant to this Agreement and to other parties as set forth on the executed settlement statement, and (b) the parties shall direct the Escrow Agent to file, record and/or deliver all documents executed in accordance with this Agreement to the parties in accordance with this Agreement, as to be set forth in written instructions received by the parties.Notwithstanding the foregoing, Buyer acknowledges that Seller’s current loan must be defeased at Closing (the “Defeasance”).  The parties agree to “dry close” the transaction contemplated herein two (2) Business Days prior to the Closing Date (the “Dry Closing Date”) in order to allow Seller to defease the existing loan.  On the Dry Closing Date, Buyer and Seller shall deliver all closing documents into escrow (other than the final settlement statement, which shall be finalized, executed and delivered with electronic signatures not later than 1:00 pm eastern time on the Business Day immediately preceding the Closing Date) with the Escrow Agent and take all other actions reasonably necessary to close the transaction contemplated herein, except that Buyer shall not be required to deposit funds sufficient to close the transaction until 1:00 p.m. eastern time on the Closing Date.  Buyer agrees to reasonably cooperate with the procedures imposed by Seller’s lender for the Defeasance of Seller’s existing loan, but shall not be required to fund the Purchase Price until the Closing Date.

7.3Payment of Purchase Price.    The Purchase Price shall be paid as follows:

7.3.1Earnest Money. At Closing, the Earnest Money shall be credited against the Purchase Price and disbursed by Escrow Agent in accordance with the executed settlement statement.

7.3.2Cash at Closing. Subject to pro-rations and payment of expenses hereunder, Buyer shall deliver to Escrow Agent no later than 1:00 p.m. (EST) on the Closing Date immediately available funds in the amount of the Purchase Price, less the amount of the Earnest Money (and any interest thereon) paid to Seller at Closing, and subject to any prorations, credits and other adjustments hereunder. The net amount of the Purchase Price, including the Earnest Money, due to Seller as shown on the settlement statement approved by Seller and Buyer in accordance with Section 6.7 shall be paid to Seller on the Closing Date.

7.4Possession. Possession of the Property shall be delivered to Buyer on the Closing Date, subject only to the rights of Tenants, as tenants only, under the Leases and rights of other parties contained in the Permitted Exceptions and the Service Contracts that are being assumed by Buyer.

7.5Closing Costs. Buyer and Seller shall each pay at Closing one-half of any escrow fees (not to exceed $500 per side) and customary closing fees of Escrow Agent. Buyer shall pay

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(a) the costs to obtain the Survey, (b) the cost and premiums for any title insurance coverage except for the base premium for the owner’s policy and endorsements as stated in the next sentence, (c) the costs of all appraisals, engineering and environmental reports and feasibility and market studies which it may obtain, and (d) all recording fees to record the Deed. Seller shall pay (i) all transfer taxes, documentary stamps or similar taxes to record the Deed and (ii) the cost of the Title Commitment and the premium for the owner’s policy of title insurance in the amount of the Purchase Price, exclusive of any endorsements other than endorsements that are necessary to cure any title objections that Seller has elected or is required to cure under Section 2.4. Seller and Buyer shall each be responsible for paying their respective legal fees and costs.

7.6Brokerage Commissions. Any brokerage commissions shall be paid as provided in Section 13 below.

8. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER.

8.1Seller's Covenants. Seller covenants that from the Execution Date to the date preceding the Closing Date:

8.1.1Operation and Management. Seller shall operate and manage the Property in substantially the same manner as it is now operated (including, without limitation, maintenance of substantially the same advertising and marketing programs for the Property in effect as of the date hereof). Seller shall maintain the Property substantially in its present condition and pursuant to Seller's normal course of business (but not including extraordinary capital expenditures or expenditures not incurred in such normal course of business), subject to ordinary wear and tear, damage by fire or other casualty and condemnation. Seller shall (a) comply with all laws, statutes, rules, regulations and ordinances applicable to the Property, (b) perform when due all of Seller’s obligations under the Leases, Service Contracts, and Permitted Exceptions and (c) keep in force its current property liability and business interruption insurance covering all buildings, structures, improvements, machinery, fixtures and equipment included in the Property.

8.1.2Title. Seller shall not further encumber the Property or any portion thereof without the prior written consent of Buyer. Seller shall not (a) initiate or consent to, approve or otherwise take any action with respect to zoning or any other governmental rules or regulations presently applicable to the Property, (b) fail to pay in a timely fashion all proper bills for labor or services for work performed for or on behalf of Seller with respect to the Property, (c) sell, convey, assign, transfer, encumber or otherwise dispose of the Property or any part thereof or interest therein other than Personalty that is replaced in the ordinary course of business with similar quality items, or (d) market, initiate, solicit, continue or respond to any offers or negotiations related to the sale of the Property or any material portion thereof or interests therein.

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8.1.3Leases. Seller shall continue to lease apartment units at the Property at market rates and concessions consistent with its normal, current business practices. Under no circumstances may Seller enter into any new lease for a term of less than 6 months or more than 24 months.

8.1.4Notices. Seller shall promptly (a) notify Buyer in writing of any litigation, arbitration, condemnation or administrative hearing before any court or governmental agency concerning Seller or the Property that is instituted after the date hereof, other than eviction or unlawful detainer actions that will be completed prior to Closing, (b) make available at the Property copies of all Leases, and provide to Buyer copies of all Service Contracts, in each case entered into or amended after the date hereof (subject to the terms of Section 8.1.3 and Section 2.6 above) and any documents or materials received by Seller from and after the Execution Date that would have been included in the Diligence Information if received prior to the Execution Date, (c) within two (2) Business Days after Seller’s receipt of request therefor, provide to Buyer an updated Rent Roll, (d) furnish to Buyer copies of all written communications received or given by Seller after the date hereof concerning any past or present release or threatened release of any Hazardous Materials in, on or under the Land or Improvements or any past or present violation of any Environmental Laws at the Land or Improvements, and (e) promptly give Buyer copies of all written notices received by Seller after the date hereof asserting any breach or default under the Leases or the Service Contracts or any violation of the Permitted Exceptions or of any laws, statutes, rules, regulations or ordinances applicable to the Property.

8.2Seller's Representations and Warranties. Seller represents and warrants to Buyer the following as of the Execution Date and the Closing Date:

8.2.1Entity and Authorization Matters. Each Seller is a limited liability company duly organized and validly existing under the laws of the State of its organization as stated in this Agreement and has full power and authority to execute and deliver this Agreement and perform all of its obligations under this Agreement. The person executing this Agreement on behalf of Seller has been duly authorized and empowered to bind such entity to this Agreement. This Agreement constitutes the valid and binding agreement of Seller enforceable against Seller in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, or other similar laws which affect the enforcement of creditors' rights generally.

8.2.2No Conflict with or Breach of Other Agreements. Neither the execution and delivery of this Agreement, nor compliance with the terms of this Agreement, conflict with or result in a breach of any of the provisions of, or constitute a default under, any agreement to which Seller is a party or by which the Property may be bound, provided that this representation shall not apply to any Service Contracts or governmental permits or authorizations or similar items

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of Intangible Property that are not assignable by Seller (whether by their terms, at law or otherwise) without consent of a third party or as to which the failure to obtain same would not have a material adverse effect on the operation or value of the Property.

8.2.3No Bankruptcy or Reorganization Proceedings. Seller has not filed any petitions for bankruptcy or reorganization and no such petitions have been filed against Seller.

8.2.4Litigation. To Seller’s Knowledge, no legal or administrative litigation, investigation, action, proceeding or arbitration is pending or threatened, in any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality relating to Seller or the Property, other than (a) tenant eviction actions filed in the ordinary course of business and (b) matters disclosed in a written notice from Seller to Buyer after the Execution Date. Neither Seller nor any affiliate or agent of Seller has commenced any legal or administrative action or proceeding to contest or appeal the amount of real property taxes or assessments levied against the Property or the assessed value of the Property for real property tax purposes.

8.2.5Leases. The Rent Roll attached hereto as Schedule 8.2.5 is, and each updated Rent Roll provided after the date hereof will be, accurate and complete in all material respects as of the date thereof (each a “Rent Roll”) and reflects all Leases in effect as of such date. There are no persons leasing, using or occupying the Land or Improvements except the tenants under the Leases and vendors under the Service Contracts. Except as set forth on the applicable Rent Roll, to Seller’s Knowledge, (a) the Leases are in full force and effect, and the full current rent is accruing thereunder, (b) no monthly rent has been paid more than one (1) month in advance and no security deposit or prepaid rent has been paid, (c) no concession, moving or relocation allowance or credit, or other payment or credit of any kind is presently owed, or will or could become due and payable, to any Tenant under the Leases, and (d) Seller has received no written notice from any tenant under the Leases claiming any breach or default by Seller under any of the Leases that is not included in the applicable lease file that has been made available to Buyer. Seller has (and can convey at Closing) good title to the Leases, free and clear of all liens, encumbrances, security interests and adverse claims of any kind or nature whatsoever, other than liens, encumbrances and security interests that will be terminated at or prior to Closing.

8.2.6Service Contracts. To Seller’s Knowledge, Schedule 8.2.6 is a true, correct and complete list of all Service Contracts affecting the Property.

8.2.7Compliance With Law. To Seller’s Knowledge, the Property does not violate (a) in any material respect any federal, state, municipal

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or other governmental statutes, ordinances, or other legal requirements, and (b) in any respect any Environmental Laws except to the extent disclosed in any of the Diligence Information. To Seller’s Knowledge, Seller has received no written notice from any insurance broker, agent or underwriter that any noninsurable condition exists in, on or about the Land or Improvements.

8.2.8Personalty. Seller has (and can convey at Closing) good title to the Personalty, free and clear of all liens, encumbrances, security interests and adverse claims of any kind or nature whatsoever, other than liens, encumbrances and security interests that will be terminated at or prior to Closing.

8.2.9Non-Foreign Status. Seller is not a "foreign person" as that term is defined in Section 1445 of the Internal Revenue Code of 1986, as amended and the Regulations promulgated pursuant thereto.

8.2.10OFAC & Executive Order. Seller is: (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury ("OFAC") and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the "List"), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, and (iii) not an Embargoed Person (as defined below). The term "Embargoed Person" means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder.

8.3To Seller's Knowledge. The phrase “to Seller's Knowledge” and words of similar import shall mean the actual, current knowledge of Lane Shea, the representative of Seller with knowledge of the operations of the Property, without any independent investigation and does not include any imputed or constructive knowledge that may be attributed to such individual. Such individual shall have no personal liability under this Agreement.

8.4Survival. The representations and warranties of Seller contained in this Agreement and covenants set forth in Section 8.1 of this Agreement shall survive the Closing Date and the recordation of the Deed for a period of nine (9) months, at which time they will be deemed to be merged into and superseded by the Closing Documents.

8.5Limitations. Notwithstanding anything in this Agreement to the contrary, Seller's liability for breaches of the foregoing representations and warranties and covenants set forth in Section 8.1 discovered by Buyer after Closing is subject to the following limitations:

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8.5.1Filing of Claim. Any claim by Buyer against Seller for a breach of a representation or warranty or covenant set forth in Section 8.1 must be brought by judicial action within nine (9) months following the Closing Date.

8.5.2Actual Knowledge. If Buyer proceeds with Closing despite having the right to terminate this Agreement on account of any breach of a representation or warranty or covenant by Seller as to which Buyer has actual knowledge of before Closing, Buyer shall have no claim for any such breach of a representation or warranty or covenant, and, by proceeding with Closing as aforesaid, Buyer shall be deemed to have waived any and all claims based on or resulting from such representations and warranties and not being true and correct or such covenants being breached.

8.5.3Threshold Amount. Buyer shall have no recourse against Seller until the aggregate claims for breach of any of Seller's representations or warranties or covenants under this Agreement exceed $10,000.00 (“Threshold Amount”). Once the Threshold Amount has been reached as to any one or more matters in the aggregate, Buyer shall be entitled to recourse against Seller for the dollar value of all aggregate claims in excess of the Threshold Amount.

8.5.4Aggregate Liability. Seller’s aggregate liability to Buyer after Closing for a breach of Seller’s representations and warranties or covenants made under this Agreement, or for any other reason, shall in no event exceed $1,000,000.00.

8.5.5No Liability for Consequential or Punitive Damages. In no event shall Seller be liable to Buyer under this Agreement for special, incidental or consequential damages or for punitive or exemplary damages.

9. BUYER'S COVENANTS, REPRESENTATIONS AND WARRANTIES.

Buyer represents and warrants to Seller the following as of the Execution Date and the Closing Date:

9.1Entity and Authorization Matters. Buyer is duly organized and validly existing under the laws of the State of its organization and has full power and authority to execute and deliver this Agreement and perform all of its obligations under this Agreement. The person executing this Agreement on behalf of Buyer has been duly authorized and empowered to bind Buyer to this Agreement. This Agreement constitutes the valid and binding agreement of Buyer and is enforceable against Buyer in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, or other similar laws which affect the enforcement of creditors' rights generally.

9.2No Conflict with or Breach of Other Agreements. Neither the execution and delivery of this Agreement, nor the incurrence of the obligations herein set forth, nor the consummation of the transactions provided for herein, nor compliance with the terms of this Agreement, conflict with

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or result in a breach of any of the provisions of, or constitute a default under, any agreement to which Buyer is a party.

9.3OFAC & Executive Order. Buyer is: (i) not currently identified on the List, and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, and (iii) not an Embargoed Person.

9.4Survival. The representations and warranties of Buyer shall survive the Closing Date and the recordation of the Deed for a period of nine (9) months, and shall terminate except to the extent Seller has commenced judicial action within said nine (9) months. If Seller proceeds with Closing despite having the right to terminate this Agreement on account of any breach of a representation or warranty by Buyer as to which Seller has actual knowledge of before Closing, Seller shall have no claim for any such breach of a representation or warranty, and, by proceeding with Closing as aforesaid, Seller shall be deemed to have waived any and all claims based on or resulting from such representations and warranties and not being true. Seller shall have no recourse against Buyer until the aggregate claims for breach of any of Buyer’s representations or warranties or covenants under this Agreement the Threshold Amount. Buyer’saggregate liability to Seller after Closing for a breach of Buyer’s representations and warranties made under this Agreement, or for any other reason, shall in no event exceed $1,000,000.00. In no event shall Buyer be liable to Seller under this Agreement for special, incidental or consequential damages or for punitive or exemplary damages.

10. CONDITION OF THE PROPERTY.

10.1As Is Conveyance. EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN OR IN ANY CLOSING DOCUMENTS, BUYER ACKNOWLEDGES THAT IT IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER BY SELLER OR ANY AGENT OR EMPLOYEE THEREOF REGARDING THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ITS PHYSICAL CONDITION, ITS SUITABILITY FOR ANY PARTICULAR PURPOSE, ITS COMPLIANCE WITH LAWS, INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LAWS, OR THE ABSENCE OF HAZARDOUS SUBSTANCES THEREUPON, AND SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN AND IN ANY CLOSING DOCUMENTS. OTHERWISE, BUYER SHALL ACCEPT THE PROPERTY IN ITS “AS IS”, “WHERE IS”, “WITH ALL FAULTS” CONDITION, AND SELLER HEREBY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, EXPRESS OR IMPLIED.

BUYER ACKNOWLEDGES THAT IT IS A SOPHISTICATED REAL ESTATE INVESTOR WHO SHALL HAVE HAD, AS OF THE CLOSING DATE (AND PROVIDED THAT SELLER IS NOT IN DEFAULT OF ITS OBLIGATIONS UNDER THIS AGREEMENT RELATING TO PROVIDING ACCESS TO THE PROPERTY AND DILIGENCE INFORMATION AND OTHER DOCUMENTS/INFORMATION TO BUYER) OPEN ACCESS TO, AND SUFFICIENT TIME TO REVIEW, ALL INFORMATION, DOCUMENTS,

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AGREEMENTS, STUDIES AND TESTS RELATING TO THE PROPERTY THAT BUYER ELECTS TO CONDUCT, AND TO CONDUCT ANY INSPECTION, ANALYSIS AND EVALUATION OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO ENVIRONMENTAL ISSUES, IF ANY, THAT BUYER ELECTS TO CONDUCT AND TO RECEIVE AND REVIEW SUCH INFORMATION AS BUYER SHALL REQUIRE IN THE COURSE OF ITS INVESTIGATION.

The term “Environmental Laws” means any and all federal, state and local, statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations, or any other requirements of governmental authorities, as may presently exist, or as may be amended or supplemented, or hereafter enacted, relating to the presence, release, generation, use, handling, treatment, storage, transportation or disposal of Hazardous Materials, or the protection of the environment or human, plant or animal health, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 , as amended by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.A. § 9601), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), or any other statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material(s) (as defined below). The term “Hazardous Material(s)” includes, without limitation, any hazardous or toxic material, substance, irritant, chemical, or waste, including without limitation (a) any material defined, classified, designated, listed or otherwise considered under any Environmental Law as a “hazardous waste,” “hazardous substance,” “hazardous material,” “extremely hazardous waste,” “acutely hazardous waste,” “radioactive waste,” “biohazardous waste,” “pollutant,” “toxic pollutant,” “contaminant,” “restricted hazardous waste,” “infectious waste,” “toxic substance,” or any other term or expression intended to define, list, regulate or classify substances by reason of properties harmful to health, safety or the indoor or outdoor environment, (b) any material, substance or waste which is toxic, ignitable, corrosive, reactive, explosive, flammable, infectious, radioactive, carcinogenic or mutagenic, and which is or becomes regulated by any local governmental authority, any agency of the State of Georgia or any agency of the United States Government, (c) asbestos, (d) oil, petroleum, petroleum based products and petroleum additives and derived substances, (e) urea formaldehyde foam insulation, (f) polychlorinated biphenyls (PCBs), (g) freon and other chlorofluorocarbons, (h) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources, and (i) lead-based paint.

11. CASUALTY AND CONDEMNATION.

11.1Risk of Loss. Except as stated in this Agreement, Seller shall bear all risk of loss or damage to the Property from all causes until the Closing; provided, however, Seller shall have no obligation to repair such loss or damage.

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11.2Option to Terminate. Except as stated in Section 11.4, if before Closing: (a) any portion of a Property is destroyed by fire, the elements or by any other casualty (a “Casualty”), or (b) any portion of a Property is taken by eminent domain or made the subject of condemnation proceedings (a “Taking”), Seller shall give Buyer prompt written notice thereof and, in the event that the same affects a “material portion” of the Property (as hereinafter defined), Buyer may elect, by written notice to Seller within ten (10) business days after Buyer has received written notice of such event from Seller (and the Closing Date shall be extended for two (2) business days after the expiration of such termination election period, if applicable), to terminate this Agreement without further liability, except for obligations set forth in this Agreement that expressly survive termination. If before Closing a portion of a Property is destroyed by a Casualty (which is not a “material portion”) or a Taking occurs (which does not affect a “material portion” of a Property), Buyer shall proceed to Closing subject to the provisions of Section 11.3. For the purposes of this Section 11, a “material portion” of a Property shall mean (i) any portion of such Property valued at more than $750,000.00 or which would require $750,000.00 or more to repair, and (ii) with respect to a Taking only, any portion which affects access to or parking upon such Property solely to the extent an existing access point is closed or such remaining parking is not in compliance with applicable ordinances as in effect as of the date of such Taking. If Buyer elects to terminate this Agreement as aforesaid, Escrow Agent will pay the Earnest Money to Buyer, and thereafter neither Seller nor Buyer shall have any further rights or obligations hereunder, except for obligations or provisions set forth in this Agreement that expressly survive termination.

11.3Failure to Terminate. If any portion of the Property is destroyed by a Casualty or a Taking occurs, and this Agreement is not terminated pursuant to Section 11.2, then at the Closing the following shall occur:

11.3.1Credit of Award or Proceeds. Seller shall credit on account of the Purchase Price the amount, as applicable, of all condemnation awards actually received by or on behalf of Seller or any sums of money collected by or on behalf of Seller (whether retained by Seller or paid directly to a holder of any lien on the Property) under its policies of insurance or renewals thereof insuring against the loss in question to the extent same have not been expended for the purpose of restoration or repair of the Property (provided however that Seller agrees that such restoration or repair expenditures shall not exceed $10,000 without the prior written consent of Buyer, which shall not be unreasonably withheld, conditioned, or delayed; provided that the foregoing limit shall not apply to any expenses incurred in connection with emergency repairs as reasonably determined by Seller).

11.3.2Assignment of Future Awards. In the case of a Taking, Seller shall assign, transfer and set over to Buyer all of Seller's right, title and interest in and to (a) such claims and further sums payable thereunder, and (b) any awards that may be made with respect to any pending or future condemnation proceeding.

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11.3.3Assignment of Casualty Insurance Proceeds. In the case of a Casualty, Buyer shall have the sole right to adjust the applicable claim and Seller shall also assign, transfer and set over to Buyer all of Seller's right, title, and interest in and to the proceeds of any casualty insurance policies payable to Seller and rental insurance policy payable to Seller with respect to the period from and after Closing; provided however that if Seller’s insurer does not permit the assignment to Buyer of Seller's rights to any payments which may be payable subsequent to the Closing Date under any applicable insurance policy or policies in effect with respect to the Property, Buyer shall instead receive a credit for such amounts.

11.3.4Credit Deductible. In the case of a Casualty, Seller shall credit against the Purchase Price the amount of any deductible under its insurance policy, but not to exceed the amount required to fully repair or replace the portion of the Property damaged or destroyed.

The provisions of this Section 11 shall survive Closing.

12. DEFAULT AND REMEDIES.

12.1Buyer's Default. If Buyer defaults under this Agreement in any material respect (including a material breach of its representations and warranties hereunder), and such default continues for three (3) business days after Buyer’s receipt of written notice from Seller of such default or breach (provided however, that no notice or cure period shall be available for Buyer’s failure to deposit the remainder of the Purchase Price or deliver any applicable Closing Documents to Escrow Agent on the Closing Date), Seller may, as its sole and exclusive remedy, elect to terminate this Agreement, and the Earnest Money shall be forfeited by Buyer and retained on behalf of Seller as liquidated damages, and both parties shall thereafter be released from all further obligations under this Agreement except as otherwise provided herein. Buyer and Seller acknowledge that Seller's damages would be difficult or impossible to determine in the event of Buyer's failure to perform its obligations under this Agreement and that the Earnest Money is a reasonable estimate of such damages. The Earnest Money shall, therefore, be liquidated damages to Seller in the event of such a default.

12.2Seller's Default. If Seller defaults under this Agreement in any material respect (including a material breach of its representations and warranties hereunder), and such default continues for three (3) business days after Seller’s receipt of written notice from Buyer of such default (provided however, that no notice or cure period shall be available for Seller’s failure to deliver any applicable Closing Documents to Escrow Agent on the Closing Date), Buyer may elect either:

(i)    to be paid the Earnest Money and all interest earned thereon, and recover from Seller any and all Buyer’s Costs (as hereinafter defined) up to a maximum amount of $100,000.00, and thereafter terminate this Agreement, in which event neither Buyer nor Seller shall have any further liability hereunder except as to any provision which expressly survives such termination; provided, however, if the remedy of specific performance is not available to Buyer because Seller has conveyed

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the Property to another party, then Seller shall pay to Purchaser, in addition to the maximum Buyer’s Costs set forth above, up to $700,000.00 of any non-refundable rate lock or spread lock fees actually paid by Buyer to its lender not more than three (3) Business Days before the scheduled Closing Date; or

(ii)    to maintain this Agreement in full force and effect and bring suit for specific performance or injunctive relief within sixty (60) days after the Closing Date.

Buyer expressly waives all other remedies for a default by Seller before Closing, including suit for damages. If Buyer does not bring suit within sixty (60) days after the Closing Date, Buyer shall be deemed to have elected option (i) above.

For purposes of this Agreement, “Buyer’s Costs” shall mean the actual expenses incurred by Buyer and paid (A) to Buyer’s attorneys (including in-house attorneys) in connection with the negotiation of this Agreement or the proposed purchase of the Property, (B) to third party consultants in connection with the performance of examinations, inspections and/or investigations pursuant to this Agreement or the Access Agreement, and (C) to any potential lender in connection with any proposed financing of the Property. The obligations under this Section12 shall survive termination.

13. BROKERAGE COMMISSIONS AND AGENCY DISCLOSURE.

Seller represents and warrants to Buyer that Seller has not incurred, and shall not have incurred as of the Closing Date, any liability for the payment of any brokerage fee or commission in connection with the transaction contemplated in this Agreement other than to Jones Lang LaSalle, to whom Seller shall pay a commission at Closing pursuant to a separate agreement. Buyer represents and warrants to Seller that Buyer has not incurred, and shall not have incurred as of the Closing Date, any liability for the payment of any brokerage fee or commission in connection with the transaction contemplated in this Agreement. Seller and Buyer hereby agree to defend, indemnify and hold harmless the other from and against any and all claims of any person claiming a brokerage fee or commission through the indemnifying party. The provisions of this Section 13 shall survive Closing or termination of this Agreement.

14. MISCELLANEOUS.

14.1Entire Agreement. This Agreement supersedes all prior discussions, agreements and understandings between Seller and Buyer and constitutes the entire agreement between Seller and Buyer with respect to the transaction herein contemplated. This Agreement may be amended or modified only by a written instrument executed by Seller and Buyer.

14.2Waiver. Each party hereto may waive any breach by the other party of any of the provisions contained in this Agreement or any default by such other party in the observance or performance of any covenant or condition required to be observed or performed by it contained herein; PROVIDED, ALWAYS, that such waiver or waivers shall be in writing, shall not be construed as a continuing waiver, and shall not extend to or be taken in any manner whatsoever to affect any subsequent breach, act or omission or default or affect each party's rights resulting therefrom. No waiver will be implied from any delay or failure by either party to take action on account of any

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default by the other party. No extension of time for performance of any obligations or acts shall be deemed an extension of the time for performance of any other obligations or acts.

14.3Notices. All notices under this Agreement must be in writing and shall be sufficiently given (a) when transmitted via telecopy to the telecopy number set forth below or via e-mail at the addresses below, provided the sender of such facsimile or e-mail has reasonable evidence that the facsimile or e-mail was received by the addressee’s machine on the date sent, in which case the notice shall be deemed delivered on the date of receipt by the addressee’s machine, (b) the day following the day on which the same has been delivered prepaid to a national overnight courier service addressed as set forth below, or (c) the third business day following the day on which the same is sent by registered or certified mail, postage prepaid, addressed as set forth below or at such other address as may be given by any party to the other pursuant to this Section 14.3:

To Seller: Harbor Group International, LLC
999 Waterside Drive, Suite 2300
Norfolk, Virginia 23510
Attn: T. Richard Litton, Jr.
Facsimile: (757) 640-0817    

E-mail: Richard@harborg.com

With a copy to: Williams Mullen
Dominion Tower, Suite 1700
999 Waterside Drive
Norfolk, Virginia 23510
Attn: Lawrence H. Bryant
Facsimile: (757) 629-0660

Email: lbryant@williamsmullen.com

To Buyer:    Steadfast Asset Holdings, Inc.

18100 Von Karman Ave., Suite 500

Irvine, CA 92612    

Attn: Ana Marie del Rio, Esq.

Facsimile: 949/852-0143

E-mail: AnaMarie.delRio@steadfastco.com

With a copy to:    Christina M. Graham

Partner

Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, Georgia 30326
Direct: 404.504-7652
Fax: 404.365.9532E-mail: cgraham@mmmlaw.com

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To Escrow Agent: Madison Title Agency, LLCP

1125 Ocean Avenue

Lakewood, NJ 08701

Attn: Chava Halberstadt

Facsimile: (732) 333-2258

E-mail: chava@madisoncres.com

14.4Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Except as provided in Section 14.15, this Agreement may not be assigned by Buyer without the prior written consent of Seller; provided that without the consent of Seller, but upon written notice to Seller, Buyer may assign its interest in this Agreement to one or more entities affiliated with Buyer or with Steadast Apartment REIT, Inc.

14.5Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located. To the fullest extent permitted by applicable law, the parties absolutely and irrevocably waive any right to trial by jury in any action or proceeding between them.

14.6No Third Parties Benefited. Except as expressly stated in this Agreement, the parties do not intend to confer any benefit on any person, firm, or corporation other than the parties to this Agreement, and their respective successors and permitted assigns.

14.7Legal Fees. If either party fails to perform any of its obligations under this Agreement or if a dispute arises concerning the meaning or interpretation of any provision of this Agreement, the defaulting party or the party not prevailing in such dispute, as the case may be, shall pay all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable legal fees.

14.8Construction. If any provision of this Agreement or the application thereof to any person or circumstance shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.

14.9Time of Essence. Time is of the essence of this Agreement and each and every term and provision hereof. Notwithstanding the foregoing, in the event the date on which performance or payment of any obligation of a party required hereunder is other than a business day, the time for payment or performance shall automatically be extended to the first business day following such date. A “business day” shall mean any day not a Saturday, Sunday, a legal holiday on which banking institutions in the State where the Property is located or the State of California are authorized or required by law to close, or on the following dates which are restricted Jewish holidays: March 5, April 4 through 11, and May 24 and 25, 2015.

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14.10Confidentiality. Buyer covenants and agrees that: (a) all information provided to it by Seller in connection with the Property (the “Proprietary Information”) or resulting from Buyer's inspections of the Property and review of the Proprietary Information which is not already public information or which subsequently becomes public information through no fault or action of Buyer will be held in confidence by Buyer and Buyer’s agents, and (b) Buyer will return all Proprietary Information to Seller if the transaction contemplated by this Agreement is not consummated. Notwithstanding the foregoing, Buyer may (i) share its information on a need-to-know basis with its consultants, accountants, attorneys and potential equity and financing sources so long as such information is delivered to such parties on the condition of confidentiality consistent with the requirements of this paragraph, and (ii) make disclosure in response to or in connection with any legal process or otherwise required by law to be made. Seller and Buyer further covenant and agree that neither of them will issue any press releases regarding the Property or the transaction contemplated herein that identifies the other party without the prior consultation and express written approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed. Notwithstanding anything in this Agreement to the contrary, Seller hereby acknowledges and agrees that Buyer and Buyer’s agents may communicate with any governmental authority or quasi-governmental authority for the purpose of gathering information in connection with the Property, Seller, or the transaction contemplated by this Agreement as set forth in Section 2.3.1.

14.11Counterparts. This Agreement may be executed in counterparts and all counterparts shall together constitute one and the same agreement of the parties. This Agreement and any subsequent amendment hereto may be delivered either by a party or its counsel by facsimile machine or by PDF document via email to the other party or its counsel and the signatures so transmitted constitute original signatures and are binding on the party so signing.

14.12Exhibits. All Exhibits and Schedules referenced in this Agreement are attached hereto and incorporated as part of this Agreement and shall have the same meaning as if they were incorporated fully within the text of this Agreement.

14.13Limitation of Liability. No obligation or liability of Seller or Buyer hereunder shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of its shareholders, partners, members, trustees, officers, employees, or agent, regardless whether such obligation or liability is in the nature of contract, tort, or otherwise, and all such obligations and liabilities shall be satisfied, if at all, out of such party’s assets only.

14.14Execution Date. The “Execution Date” shall mean the date upon which the last of Seller and Buyer has executed this Agreement and delivered a fully executed copy to the other.

14.15Tax-Deferred Exchange. Buyer and Seller acknowledge that either party may wish to structure this transaction as a tax deferred exchange of like kind property within the meaning of Section 1031 of the Internal Revenue Code. Each party agrees to reasonably cooperate with the other party to effect such an exchange; provided, however, that (a) the cooperating party shall not be required to acquire or take title to any exchange property, (b) the cooperating party shall not be required to incur any expense or liability whatsoever in connection with the exchange, including, without limitation, any obligation for the payment of any escrow, title, brokerage or other costs including attorneys’ fees incurred with respect to the exchange, (c) no substitution of the effectuating

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party shall release said party from any of its obligations, warranties or representations set forth in this Agreement or from liability for any prior or subsequent default under this Agreement by the effectuating party, its successors, or assigns, which obligations shall continue as the obligations of a principal and not of a surety or guarantor, (d) the effectuating party shall give the cooperating party at least two (2) business days prior notice of the proposed changes required to effect such exchange and the identity of any party to be substituted in the escrow, (e) the effectuating party shall be responsible for preparing all additional agreements, documents and escrow instructions (collectively, “Exchange Documents”) required by the exchange, at its sole cost and expense, (f) the effectuating party shall be responsible for making all determinations as to the legal sufficiency, tax considerations and other considerations relating to the proposed exchange, the Exchange Documents and the transactions contemplated thereby, and the cooperating party shall in no event be responsible for, or in any way be deemed to warrant or represent any tax or other consequences of the exchange transaction, and (g) the election to effect such an exchange shall not delay Closing. The effectuating party shall indemnify and hold the cooperating party harmless and defend the cooperating party from any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys' fees and expenses and court costs) of any kind and nature in connection with such exchange or with cooperating party’s cooperation hereunder to accomplish such exchange. The terms of this Section 14.15 shall survive Closing or any earlier termination of this Agreement.

14.16Record Access and Retention. Seller shall promptly provide to Buyer (at Buyer’s expense) copies of, or shall provide Buyer reasonable access to, such factual information as may be reasonably requested by Buyer, and in the possession or control of Seller, or its property manager or accountants, to enable Buyer’s auditor to conduct an audit, in accordance with Rule 3-14 of Securities and Exchange Commission Regulation S-X, of the income statements of the Property for the year to date of the year in which Closing occurs plus the two (2) immediately preceding calendar years. Buyer shall be responsible for all out-of-pocket costs associated with this audit. Seller shall reasonably cooperate (at no cost to Seller) with Buyer’s auditor in the conduct of such audit. In addition, Seller agrees to provide to Buyer, if requested by such auditor, historical financial statements for the Property, including (without limitation) income and balance sheet data for the Property, whether required before or after Closing. Seller shall maintain its records for use under this Section 14.16 for a period of not less than two (2) years after the Closing Date. In no event shall Seller be obligated to deliver any Excluded Documents to Buyer. The provisions of this Section shall survive Closing.

(Signature Lines On Next Page)

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WITNESS the following signatures:

SELLER:
PRESTON HILLS GARDENS ASSOCIATES, LLC,
a Delaware limited liability company
By:	Preston Hills Managing Co., LLC,
	a Delaware limited liability company,
	its Manager
	By:	/s/ T. Richard Litton, Jr.
		T. Richard Litton, Jr.
		Vice President

RIVERSIDE REALTY PRESTON HILLS, LLC,
a Delaware limited liability company
By:	Riverside Preston Hills Managing Co., LLC,
	a Delaware limited liability company,
	its Manager
	By:	/s/ T. Richard Litton, Jr.
		T. Richard Litton, Jr.
		Vice President
	Date: January ___, 2015

BUYER:
STEADFAST ASSET HOLDINGS, INC.
a California corporation
By:	/s/ Ana Marie del Rio
Name:	Ana Marie del Rio
Title:	Vice President
	January ___, 2015

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ESCROW AGENT SIGNATURE PAGE

The undersigned hereby executes the Agreement to which this signature page is attached for the purpose of confirming its agreement to be bound by the provisions of the Agreement regarding the Earnest Money and closing procedures including, without limitation, Section 2.2 of the Agreement.

ESCROW AGENT:

MADISON TITLE AGENCY, LLC

By:	/s/ Samual M. Shiel
Name:	Samual M. Shiel
Title:	Director National Dept.

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List of Schedules and Exhibits

Schedule 1	Legal Description of Land
Schedule 1.3	List of Personalty
Schedule 2.3	List of Diligence Information
Schedule 8.2.5	Rent Roll for Property
Schedule 8.2.6	List of Service Contracts for Property
Exhibit A:	Bill of Sale
Exhibit B:	Assignment and Assumption of Leases
Exhibit C:	Assignment and Assumption of Contracts
Exhibit D	Deed
Exhibit E	Tenant Notice Letter

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SCHEDULE 1

Legal Description of Land

SEE ATTACHED

1.    

SCHEDULE 1.3

List of Personalty

SEE ATTACHED LIST

[INTENTIONALLY OMITTED]

1.3    

SCHEDULE 2.3

List of Diligence Information

To be provided ONLY to the extent the same are in the possession or control of, or are reasonably available, to Seller

	CONSTRUCTION / REHABILITATION	Delivered (Date)	Not applicable to Property	Not available to Seller
1	Plans & Specifications: Site plan and most current civil, landscape, architectural, structural mechanical, electrical and fire protection plans, including elevations (available onsite for review)
2	Construction contracts, if any, including for all work completed in past 3 years
3	N/A
4	Detailed unit-by-unit list of upgraded vs. non-upgraded units (if applicable)
5	Warranties in effect, if any (construction, roof, mechanical equipment, etc.)
6	Copies of all licenses, permits, and governmental approvals, including business license
7	Certificate(s) of Occupancy for all buildings
8	N/A
9	Copies of all governmental correspondence or notices pertaining to the property, including but not limited to building code, health code, zoning and fire code,
10	Maintenance records/work orders, including water intrusion log, for past 12 months
11	N/A
	FINANCIAL
1	Monthly operating statements, YTD & 3-year historical (income statements)
2	Year-end financial statements: Trailing-12 past 3 years
3	Operating budget, current year
4	Tax bills: Real Property and Personal Property bills and Assessment notices, current and past 3 years, with proof of payment (including special assessments or districts and all documentation concerning appeals)
5	Utility bills for any master-metered utility expenses and any resident unit utilities paid by the Property, monthly YTD and past calendar year (access to utility billing site is preferred, if applicable)
6	List of utilities paid by Owner/Residents and list of account numbers
7	N/A
8	Security deposit/resident ledgers, current
9	Name and version of accounting software
10	N/A
11	N/A

2.3

12	REIT Property Services Questionnaire (form for completion to be provided upon request from buyer)
13	General Ledger, prior year, most recent quarter-end and YTD (in Excel format)
14	Trial Balance, prior year, most recent quarter-end and YTD (in Excel format)
15	Bank Statements and Reconciliations, past 12 months
16	N/A
17	Check Register, prior year, most recent quarter-end and YTD
18	Accounts Payable Aging Detail, prior year, most recent quarter-end and YTD
19	Aged Delinquency Report (showing total rent outstanding)
20	Rent and expense selections, prior year, most recent quarter-end and YTD (25 respective selections to be made by Buyer’s independent REIT 3-14 auditors based upon items received for #13-17 above upon request from buyer)
21	Payroll information sufficient to satisfy audit requirement to the extent available from seller’s payroll provider upon request from auditor.
	MANAGEMENT/LEASING/OPERATIONS
1	Monthly rent rolls to 6/13, 12/13, 6/14, 12/14, current
2	N/A
3	Occupancy history, monthly for past 3 years and current YTD
4	Current leases for all tenants with all available tenant correspondence files, including amendments/letters/agreements/default notices given or received, with all historical litigation pleadings, if any (access to electronic lease files is preferred, if applicable) (available onsite)
5	Access to lease files including availability to copy lease selection items as requested from auditor.
6	Current form of lease with all addenda
7	N/A
8	N/A
9	Current staff list (names, titles, hire dates, salary, unit info, hours per week, list of benefits, commissions offered, if any)
10	N/A
11	N/A
12	N/A
13	Inventory of personal property on site, including items such as furniture, supplies, appliances
14	Property brochure
15	Amenity Report (listing amenities per unit type, with any adjustment in rent)
16	List of all active vendors utilized at the property (name, function, contact information)
17	Copies of all operating and management service contracts, including but not limited to:
	a. Advertising (including any apt. locator services & pay-per-lease agreements)

2.3

	b. Alarm monitoring (including any firm alarm & security cameras)
	c. Cable/TV (including any revenue sharing programs); if none, please indicate so in writing
	d. Elevator
	e. Equipment leases (such as copier, postage machines, key control systems)
	f. Fire extinguisher (including any fire sprinkler systems)
	g. Furniture rental
	h. HVAC
	i. Internet (including any leased equipment such as modems and firewalls
	j. Janitorial services (including any uniform cleaning services)
	k. Landscaping (including any pond/lake maintenance and snow removal)
	l. Laundry
	m. Pest control (including any termite contracts)
	n. Phone (landlines, cell phones, pagers, answering service)
	o. Pool (maintenance, emergency phone, etc.)
	p. Property management agreement; indicate whether entity is related party for disclosure purposes
	q. Security (including any on-site courtesy officer arrangements)
	r. Trash (including recycling programs); Also a copy of the most recent invoice
	s. Revenue Sharing (such as vending machines, pay phones)
	t. Collection Recovery
	u. Credit/application verification
	v. Training programs (including any safety training materials and/or Safety Plan)
	w. Software (including any property management software such as OneSite, Yardi, etc.)
	x. Common Area Services (such as office cleaning, dog waste removal, etc.)
	y. Utility Billing by Third Party
	z. Gate/Access Systems (including software for programming access cards/remotes)
	aa. Towing/Parking Services
	bb. Website Domain (including any website hosting)
	cc. Boiler Maintenance and Water Treatment
	PHYSICAL ITEMS
1	N/A
2	N/A
3	N/A
4	Unit floor plans with sq. footage
5	N/A
6	N/A

2.3

7	Current insurance certificates: Evidence of Commercial Property Insurance and Certificate of Insurance
8	Insurance loss run history, past 3 years and YTD (property & general liability)
9	N/A
10	All existing third party reports, including, but not limited to:
	a. Certified, as-built ALTA Survey
	b. N/A
	c. Asbestos
	d. Lead-Based Paint Report
	e. N/A
	f. Mold
	g. Phase I Environmental
	h. N/A
	i. Operations & Maintenance (O&M) Plans, if any
	j. Radon
	k. Soils/Geotechnical
	l. Termite
	m. Fire/Life Safety Inspection Report (current)
	TITLE AND AGREEMENTS
1	Existing owner’s title insurance policy AND current title insurance commitment and all documents referenced therein
2	Zoning: any reports, compliance letters, maps, ordinances, amendments, CC&R’s, special use permits, etc.
3	Pending litigation summary and copies of all pleadings, if applicable
4	Governmental Agreements: Any city or county development agreements, bonds, tax increment financing agreements, municipal utility agreements, etc.
5	Condo / Association documents, if applicable (articles of incorporation, bylaws, CC&R’s, Declaration of Horizontal Regime, budgets, material notices, rules and regulations, etc.)
6	Development Agreements: Any development agreements or restrictions with any private party
7	Access Agreements: Any agreements for shared roadways, driveways or other access
8	Amenities Agreements: Any reciprocal easement agreements or shared used agreements for any amenities
9	Other Agreements: Any agreements that will be binding on the property after closing or that provide any material benefit to or obligation on the property

2.3

SCHEDULE 8.2.5

Rent Roll for Property

SEE ATTACHED LIST

[INTENTIONALLY OMITTED]

8.2.5

SCHEDULE 8.2.6

List of Service Contracts

SEE ATTACHED LIST

[INTENTIONALLY OMITTED]

8.2.6

EXHIBIT “A”

BILL OF SALE

THIS BILL OF SALE is made by the undersigned, __________________________, LLC, a __________ limited liability company (“Seller”), in favor of and to ___________________, a _______________ limited liability company (“Buyer”).

WHEREAS, Seller, as seller, and Buyer, as buyer (by assignment from Steadfast Asset Holdings, Inc.), entered into that certain Agreement of Purchase and Sale dated as of ______________, 2015 (the “Agreement”), pursuant to which Seller agreed to sell to Buyer, and Buyer agreed to acquire from Seller, among other things, Seller’s ownership interest in the land legally described on Exhibit A attached hereto and all of Seller’s right, title and interest in the building located at such parcel commonly known as _________________(the “Property”), including Seller’s interest in certain real and personal property related thereto;

WHEREAS, as part of the acquisition transaction contemplated by the Agreement, Seller is to sell, convey, and transfer to Buyer, by bill of sale, the Personalty (as defined in the Agreement) and the Intangible Property (as defined in the Agreement).

NOW, THEREFORE, pursuant to the Agreement, and in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller by these presents does GIVE, GRANT, CONVEY, ASSIGN, TRANSFER, BARGAIN, SELL, REMISE, RELEASE, ALIENATE, SET OVER, and CONFIRM, unto Buyer, its successors and assigns, forever, as an entirety, all of Seller’s right, title, and interest, if any, in and to (a) the Personalty, including without limitation those items listed on attached Exhibit B; and (b) the Intangible Property (as defined in the Agreement).

Except as otherwise expressly provided in the Agreement, Seller makes no representations or warranties whatsoever, regarding said Personalty or the Intangible Property, including, without limitation, any representations or warranties related to quality, merchantability or fitness for a particular purpose, except that Seller represents and warrants title to the Personalty and Intangible Property and warrants that the Personalty and the Intangible Property are free and clear of all liens and encumbrances.

In the event of any conflict or inconsistency between the terms hereof and the terms of the Agreement, the terms of the Agreement shall govern and control. Without limitation of the foregoing, all limitations on liability expressly set forth in the Agreement shall apply to this Bill of Sale and the liabilities of Seller hereunder.

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IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed by its duly authorized officer this ____________ day of ______________________, 2015.

SELLER:

__________________________, LLC,

a ______________ limited liability company

By: __________________ Managing Co., LLC,

          a _____________ limited liability company,

          its Manager

By:

      T. Richard Litton, Jr., Vice President

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EXHIBIT A TO BILL OF SALE

LEGAL DESCRIPTION

EXHIBIT B TO BILL OF SALE

INVENTORY OF PERSONALTY

Exhibit “B”

ASSIGNMENT AND ASSUMPTION OF LEASES

THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “Assignment”) is made and entered into as of ___________________, 2015, by and between __________________, a __________________ (“Assignor”), and ________________, a ________ _____________ (“Assignee”).

Recitals

A.    Assignor, as seller, and Assignee, as buyer (by assignment from Steadfast Asset Holdings, Inc.), entered into that certain Agreement of Purchase and Sale dated as of ______________, 2015 (the “Agreement”), pursuant to which Assignor agreed to sell to Assignee, and Assignee agreed to acquire from Assignor, among other things, Assignor’s ownership interest in the land legally described on Exhibit A attached hereto and all of Assignor’s right, title and interest in the building located at such parcel commonly known as _____________________(the “Property”), including Assignor’s interest in certain leases related thereto.

B.    As part of the acquisition transaction contemplated by the Agreement, Assignor has agreed to assign to Assignee, and Assignee has agreed to assume, Assignor’s interest as landlord (together with all rights and obligations relating thereto) under the Leases (as defined in the Agreement), a schedule of which Leases is attached hereto as Exhibit B and incorporated herein by this reference (herein, the “Leases”).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

1.    Transfer and Assignment by Assignor. Assignor hereby transfers and assigns to Assignee all of Assignor’s right, title and interest, in, to and under the Leases.

2.    Assumption by Assignee. Assignee hereby accepts the foregoing assignment and assumes and agrees to perform all of the duties, obligations, liabilities, commitments and covenants of Assignor, accruing from and after the date hereof with respect to or arising under each of the Leases, except that Assignee shall have no liability for the return of any security deposits, prepaid rents or other deposits that were not identified on the final Rent Roll and credited to Buyer against the Purchase Price at Closing.

3.    Indemnification by Assignor. Assignor hereby agrees to indemnify, defend and hold harmless Assignee, and its partners, officers, directors, members, shareholders, affiliates, managers, employees and agents, from, of and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees but excluding special, incidental or consequential damages and punitive or exemplary damages) arising out of or relating to the breach by Assignor of any of the obligations, terms or covenants of Assignor, under or pursuant to the Leases that accrued prior to the date hereof. The indemnification obligation

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contained in this Section 3 shall be subject to the limitations on liabilities and other provisions contained in the Agreement relating to the Assignor’s liability.

4.    Indemnification by Assignee. Assignee hereby agrees to indemnify, defend and hold harmless Assignor, and its partners, officers, directors, members, shareholders, affiliates, managers, employees and agents, from, of and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees but excluding special, incidental or consequential damages and punitive or exemplary damages) arising out of or relating to the breach by Assignee of any of the other obligations, terms or covenants of Assignor, under or pursuant to the Leases that accrue from and after the date hereof. The indemnification obligation contained in this Section 4 shall be subject to the limitations on liabilities and other provisions contained in the Agreement relating to Assignee’s liability.

5.    Further Assurances. The parties hereto covenant and agree to execute such further instruments and take such further action as may be reasonably required by either party to fully effectuate the terms and provisions of this Assignment and the transactions contemplated herein.

6.    Survival of Provisions. The covenants and obligations contained in this Assignment shall survive the consummation of the closing of the transactions contemplated by the Agreement and this Assignment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

7.    Attorneys’ Fees and Costs. If either party commences an action for the judicial interpretation, reformation, enforcement or rescission hereof, the prevailing party will be entitled to a judgment against the other party for an amount equal to reasonable attorneys’ fees and court and other costs incurred.

8.    Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State in which the Property is located.

9.    Counterparts. This Assignment may be executed in counterparts which, when integrated, shall constitute one original of this Assignment.

10.    Conflict. In the event of any conflict or inconsistency between the terms hereof and the terms of the Agreement, the terms of the Agreement shall govern and control. Without limitation of the foregoing, all waivers, releases and other limitations on liability expressly set forth in the Agreement shall apply to this Assignment and the liabilities of the parties hereunder.

11.    No Representation. Except as expressly set forth in the Agreement, it is hereby acknowledged that Assignor makes no representation or warranty of any kind or nature relative to the Leases except that Seller represents and warrants title to the Leases and warrants that the Leases are free and clear of all liens and encumbrances.

[signatures on following page]

B-3    

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their duly authorized officers on the date first written above.

ASSIGNOR: __________________________, LLC, a ___________ limited liability company By: ___________________ Managing Co., LLC,           a _____________ limited liability company           its Manager By:__________________________       T. Richard Litton, Jr., Vice President ASSIGNEE: _________________,a ___________ By:__________________________ Name:__________________________ Title:__________________________

B-3    

EXHIBIT A TO ASSIGNMENT AND ASSUMPTION OF LEASES

LEGAL DESCRIPTION OF PROPERTY

EXHIBIT B TO ASSIGNMENT AND ASSUMPTION OF LEASES

SCHEDULE OF LEASES

Exhibit “C”

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is made and entered into as of ___________________, 2015, by and between __________________________, LLC, a Virginia limited liability company (“Assignor”), and ____________, a ________ ________________ (“Assignee”).

Recitals

A.Assignor, as seller, and Assignee, as buyer (by assignment from Steadfast Asset Holdings, Inc.), entered into that certain Agreement of Purchase and Sale dated as of ______________, 2015 (the “Agreement”), pursuant to which Assignor agreed to sell to Assignee, and Assignee agreed to acquire from Assignor, among other things, Assignor’s ownership interest in the land legally described on Exhibit A attached hereto and all of Assignor’s right, title and interest in the building located at such parcel commonly known as _________________(the “Property”).

B.As part of the acquisition transaction contemplated by the Agreement, Assignor has agreed to assign to Assignee, and Assignee has agreed to assume, any and all rights and responsibilities under those Service Contracts (as such term is defined in the Agreement), identified on the schedule attached hereto as Exhibit B and incorporated herein by this reference (herein, the “Contracts” or the “Assigned Agreements”) without any obligation of Assignor to pay any fee to, or, except as otherwise expressly provided in the Agreement, to obtain any consent from, any third party.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

1.Transfer and Assignment by Assignor. Assignor hereby transfers and assigns to Assignee all of Assignor’s right, title and interest in and under the Assigned Agreements, if any, without any obligation of Assignor to pay any fee to, or except as otherwise expressly provided in the Agreement, to obtain any consent from, any third party.

2.Assumption by Assignee. Assignee hereby accepts the foregoing assignment and assumes and agrees to perform all of the duties, obligations, liabilities, commitments and covenants of Assignor accruing from and after the date hereof with respect to or arising under each of the Assigned Agreements.

3.Indemnification by Assignor. Assignor hereby agrees to indemnify, defend and hold harmless Assignee, and its partners, officers, directors, members, shareholders, affiliates, managers, employees and agents, from, of and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees but excluding special, incidental or consequential damages and punitive or exemplary damages) arising out of or relating to the breach by Assignor of any of the obligations, terms or covenants of Assignor under or pursuant

C-1

to the Assigned Agreements that accrued prior to the date hereof. The indemnification obligation contained in this Section 3 shall be subject to the limitations on liabilities and other provisions contained in the Agreement relating to the Assignor’s liability.

4.Indemnification by Assignee. Assignee hereby agrees to indemnify, defend and hold harmless Assignor, and its partners, officers, directors, members, shareholders, affiliates, managers, employees and agents, from, of and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees but excluding special, incidental or consequential damages and punitive or exemplary damages) arising out of or relating to the breach by Assignee of any of the obligations, terms or covenants of Assignor under or pursuant to the Assigned Agreements that accrue from and after the date hereof. The indemnification obligation contained in this Section 4 shall be subject to the limitations on liabilities and other provisions contained in the Agreement relating to the Assignee’s liability.

5.Further Assurances. The parties hereto covenant and agree to execute such further instruments and take such further action as may be reasonably required by either party to fully effectuate the terms and provisions of this Assignment and the transactions contemplated herein.

6.Survival of Provisions. The covenants and obligations contained in this Assignment shall survive the consummation of the closing of the transactions contemplated by the Agreement and this Assignment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

7.Attorneys’ Fees and Costs. If either party commences an action for the judicial interpretation, reformation, enforcement or rescission hereof, the prevailing party will be entitled to a judgment against the other party for an amount equal to reasonable attorneys’ fees and court and other costs incurred.

8.Governing Law. This Assignment shall be governed by and construed in accordance with the laws of the State in which the Property is located.

9.Counterparts. This Assignment may be executed in counterparts which, when integrated, shall constitute one original of this Assignment.

10.Conflict. In the event of any conflict or inconsistency between the terms hereof and the terms of the Agreement, the terms of the Agreement shall govern and control. Without limitation of the foregoing, all waivers, releases and other limitations on liability expressly set forth in the Agreement shall apply to this Assignment and the liabilities of the parties hereunder.

11.No Representation. Except as expressly set forth in the Agreement, it is hereby acknowledged that Assignor makes no representation or warranty of any kind or nature relative to the Assigned Agreements being assigned hereunder except that Seller represents and warrants that the Assigned Agreements are free and clear of all liens and encumbrances. Without limitation of any representations or warranties expressly set forth in the Agreement, this Assignment

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constitutes a quitclaim assignment only, and is intended to assign and transfer only such rights which Assignor may have, if any, with respect to the Assigned Agreements.

[signatures on following page]

C-2

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their duly authorized officers on the date first written above.

ASSIGNOR: __________________________, LLC, a ______________ limited liability company By: ___________________ Managing Co., LLC,           a _____________ limited liability company           its Manager By:__________________________       T. Richard Litton, Jr., Vice President ASSIGNEE: ____________________,a _______ By:__________________________ Name:__________________________ Title:__________________________

C-3

EXHIBIT A TO ASSIGNMENT AND ASSUMPTION OF CONTRACTS

LEGAL DESCRIPTION OF PROPERTY

EXHIBIT B TO ASSIGNMENT AND ASSUMPTION OF CONTRACTS

SCHEDULE OF CONTRACTS

Exhibit “D”

FORM OF DEED

(Above Reserved for Recording)

After recording, please return to:

[INSERT SELLER COUNSEL]

STATE OF GEORGIA

COUNTY OF _____________

LIMITED WARRANTY DEED

THIS INDENTURE, made effective as of the _____ day of _____________, 20__, between ______________________________, a ____________________________ ("Grantor"), and _____________________, a _______________ ("Grantee");

WITNESSETH:

THAT, for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) in hand paid and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby transfer and convey unto Grantee all Grantor's right, title and interest in and to that land lying in _____________ County, Georgia being more fully described in Exhibit "A" attached hereto and made a part hereof, together with all improvements located thereon, if any, together with all rights, members and appurtenances in any manner appertaining or belonging to said property (collectively, the "Property");

TO HAVE AND TO HOLD the Property unto Grantee forever in FEE SIMPLE.

AND THE SAID Grantor shall warrant and forever defend the right, title and interest to the Property unto Grantee against the claims of all persons claiming by, through or under Grantor, except for claims arising under and by virtue of the Permitted Exceptions attached hereto as Exhibit "B".

(The words "Grantor" and "Grantee" shall include all genders, singular and plural, and their respective heirs, successors and assigns where the context requires or permits);

IN WITNESS WHEREOF, Grantor has executed this Deed under seal on the day and year first above written.

Signed, sealed and delivered in the presence of: __________________________ Unofficial Witness __________________________ Notary Public My commission expires: __________             [NOTARIAL SEAL] ___________________________ By: _______________________________ Name: _____________________________ Title: ______________________________

Exhibits To Limited Warranty Deed

A - Legal Description Of Land

B - Permitted Exceptions

Exhibit “E”

FORM OF TENANT NOTICE

[**DATE**]

TO: All Valued Residents of [**COMMUNITY NAME**]

Re:    Notice of Lease Assignment and Transfer of Security Deposit

This letter is to notify you that the property commonly known as [**COMMUNITY NAME**], [**ADDRESS**] (“Property”) has this date been sold and the ownership transferred.

In connection with this sale, all of the interest of the lessor under your lease of space in the Property, together with your security deposit, have been transferred to the new owner. You are hereby notified that, from and after the date hereof and until further notice, all future payments under your lease should be made payable to [**COMMUNITY NAME**] and mailed to [**COMMUNITY LEASING OFFICE ADDRESS**]. In addition, all questions or other matters regarding your lease should be directed to the property manager at [**COMMUNITY LEASING OFFICE PHONE NUMBER**].

Thank you for your cooperation.

Very truly yours,__________________________,

a(n) __________________________

By:__________________________

Name: __________________________

Its: __________________________

__________________________,

a(n) __________________________

By:__________________________

Name: __________________________

Its: __________________________

EX-10.2

EXHIBIT 10.2

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (“Amendment”), is made as of the 3rd day of February, 2015 by and between PRESTON HILLS GARDENS ASSOCIATES, LLC and RIVERSIDE REALTY PRESTON HILLS, LLC, each a Delaware limited liability company (collectively, “Seller”) and STEADFAST ASSET HOLDINGS, INC., a California corporation (“Buyer”).

R E C I T A L S:

WHEREAS, Seller and Buyer entered into that certain Purchase and Sale Agreement dated January 21, 2015 (the “Purchase Agreement”), for the purchase and sale of improved real property, together with personal and intangible property, located in Gwinnett County, Georgia, and more particularly described in the Purchase Agreement (the “Property”);

WHEREAS, Seller is party to that certain Nonexclusive Installation and Service Agreement dated November 5, 2012 (the “Cable Agreement”), by and between Seller and Cable Equities Colorado, LLC (“Operator”); and

WHEREAS, Seller and Buyer desire to amend the Purchase Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual undertakings set forth herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as follows:

1.Definitions. All capitalized terms used but not defined herein shall have the meaning ascribed to them in the Purchase Agreement.

2.Recitals. The recitals set forth above are incorporated herein as part of this Amendment.

3.Cable Agreement Exclusivity Payment. Notwithstanding anything to the contrary contained in the Purchase Agreement or any other agreement executed by the parties at Closing, Seller agrees that all obligations regarding the repayment of the Exclusivity Payment (as defined in the Cable Agreement) shall not be assigned to Buyer at Closing, but instead shall be retained by Seller, except to the extent said repayment is directly caused by the actions or inactions of Buyer. Seller agrees to indemnify Buyer for any costs associated with repayment of the Exclusivity Payment (solely to the extent Operator’s exclusive rights under the Cable Agreement are no longer enforceable as a matter of law due to subsequent legislation, litigation, administrative action or otherwise) and agrees that the Assignment of Service Contracts and Intangible Property delivered at Closing shall explicitly exclude the above referenced obligations. The provisions of this Section 3 shall survive Closing and shall not be subject to any limitation of liability set forth in the Purchase Agreement (except as set forth in Sections 8.5.5 and 14.13).

4.Fire Alarm Panels. The Purchase Agreement is hereby amended to include the following Section 5.1.5:

“5.1.5     Fire Alarm Panels.  Seller shall repair all defective fire alarm panels no later than five (5) days prior to the Closing Date and shall provide Buyer with documentation from a third party reasonably acceptable to Buyer stating that all fire alarm panels are fully operational. Buyer, or a consultant engaged by Buyer, shall have the right to inspect the fire alarm panels prior to Closing, and in the event Buyer determines that said panels are not fully operational, Buyer shall have the right, in addition to all other rights granted under Section 5.2 below, to extend the Closing Date until Seller has satisfied the condition set forth in this Section 5.1.5. Notwithstanding the foregoing, Seller shall also have the right to extend the Closing Date until no later than March 19, 2015, for the sole purpose of satisfying the condition set forth in this Section 5.1.5, provided (i) Seller has engaged a contractor to perform the fire alarm panel repairs by February 13, 2015 and (ii) the work is promptly commenced and diligently pursued to completion.”

5.Contingency Period Expiration. Upon full execution of this Amendment, the Contingency Period shall expire and Buyer’s right to terminate the Purchase Agreement pursuant to Section 2.5 thereof shall be of no further force or effect.

6.No Other Amendments. Except as otherwise expressly amended by this Amendment, (a) this Amendment shall not otherwise operate to waive, modify, release, consent to or in any manner affect any rights or obligations of Seller and Buyer under the Purchase Agreement, and (b) the Purchase Agreement (as amended by this Amendment) remains in full force and effect.

7.Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Purchase Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

8.Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, heirs, administrators and assigns.

9.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the state in which the Property is located without regard to choice of law rules.

[The remainder of this page is intentionally left blank.]

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

SELLER:
PRESTON HILLS GARDENS ASSOCIATES, LLC,
a Delaware limited liability company
	By:	Preston Hills Managing Co., LLC, a Delaware
		limited liability company, its Manager

By:	/s/ T. Richard Litton, Jr.
Name:	T. Richard Litton, Jr.
Title:	Vice President

RIVERSIDE REALTY PRESTON HILLS, LLC
a Delaware limited liability company
	By:	Riverside Preston Hills Managing Co., LLC, a
		Delaware limited liability company, its Manager

By:	/s/ T. Richard Litton, Jr.
Name:	T. Richard Litton, Jr.
Title:	Vice President

BUYER:
STEADFAST ASSET HOLDINGS, INC.
a California corporation
By:	/s/ Ana Marie del Rio
Name:	Ana Marie del Rio
Title:	Vice President

3

EX-10.3

EXHIBIT 10.3

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (“Amendment”), is made as of the 5th day of March, 2015 by and between PRESTON HILLS GARDENS ASSOCIATES, LLC and RIVERSIDE REALTY PRESTON HILLS, LLC, each a Delaware limited liability company (collectively, “Seller”) and STEADFAST ASSET HOLDINGS, INC., a California corporation (“Buyer”).

R E C I T A L S:

WHEREAS, Seller and Buyer entered into that certain Purchase and Sale Agreement dated January 21, 2015, as amended by that certain First Amendment to Purchase and Sale Agreement dated February 3, 2015 (collectively, the “Purchase Agreement”), for the purchase and sale of improved real property, together with personal and intangible property, located in Gwinnett County, Georgia, and more particularly described in the Purchase Agreement (the “Property”); and

WHEREAS, Seller and Buyer desire to amend the Purchase Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual undertakings set forth herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as follows:

1.Definitions. All capitalized terms used but not defined herein shall have the meaning ascribed to them in the Purchase Agreement.

2.Recitals. The recitals set forth above are incorporated herein as part of this Amendment.

3.Time and Place of Closing. Section 7.2 of the Purchase Agreement is hereby deleted in its entirety and replaced with the following:

“7.2    Time and Place. The Closing shall take place through escrow with the Title Company on the Closing Date. On the Closing Date: (a) the parties shall cause the Escrow Agent to disburse the Purchase Price (subject to prorations and adjustments provided in this Agreement) to Seller pursuant to this Agreement and to other parties as set forth on the executed settlement statement, and (b) the parties shall direct the Escrow Agent to file, record and/or deliver all documents executed in accordance with this Agreement to the parties in accordance with this Agreement, as to be set forth in written instructions received by the parties.On or before the Closing Date, Buyer and Seller shall deliver all closing documents into escrow with the Escrow Agent and take all other actions reasonably necessary to close the transaction contemplated herein, except that Buyer shall not be required to deposit funds sufficient to close the transaction until 1:00 p.m. eastern time on the Closing Date.”

4.No Other Amendments. Except as otherwise expressly amended by this Amendment, (a) this Amendment shall not otherwise operate to waive, modify, release, consent to or in any manner affect any rights or obligations of Seller and Buyer under the Purchase Agreement, and (b) the Purchase Agreement (as amended by this Amendment) remains in full force and effect.

5.Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Purchase Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

6.Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, heirs, administrators and assigns.

7.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the state in which the Property is located without regard to choice of law rules.

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

SELLER:
PRESTON HILLS GARDENS ASSOCIATES, LLC,
a Delaware limited liability company
	By:	Preston Hills Managing Co., LLC, a Delaware
		limited liability company, its Manager

By:	/s/ T. Richard Litton, Jr.
Name:	T. Richard Litton, Jr.
Title:	Vice President

RIVERSIDE REALTY PRESTON HILLS, LLC
a Delaware limited liability company
	By:	Riverside Preston Hills Managing Co., LLC, a
		Delaware limited liability company, its Manager

By:	/s/ T. Richard Litton, Jr.
Name:	T. Richard Litton, Jr.
Title:	Vice President

BUYER:
STEADFAST ASSET HOLDINGS, INC.
a California corporation
By:	/s/ Ana Marie del Rio
Name:	Ana Marie del Rio
Title:	Vice President

9298763 v1

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EX-10.4

EXHIBIT 10.4

ASSIGNMENT AND ASSUMPTION OF PURCHASE AGREEMENT

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, STEADFAST ASSET HOLDINGS, INC., a California corporation (“Assignor”), hereby assigns to STAR PRESTON HILLS, LLC, a Delaware limited liability company (“Assignee”), all of Assignor’s rights and obligations under and in regard to that certain Purchase and Sale Agreement dated January 21, 2015, (as may have been amended or may hereafter be amended, the “Purchase Agreement”), by and between Preston Hills Gardens Associates, LLC and Riverside Realty Preston Hills, LLC, each a Delaware limited liability company (collectively, “Sellers”) and Assignor for the purchase and sale of that certain real property located in Buford, Georgia, as more particularly described in Exhibit A attached hereto (the “Property”).

Assignee hereby agrees to and shall assume, perform and be fully responsible for the performance of all of the obligations of Assignor under the Purchase Agreement.

All of the provisions, covenants and agreements contained in the Assignment shall extend to and be binding upon the respective legal representatives, successors and assigns of Assignor and Assignee. This Assignment represents the entire agreement between Assignor and Assignee with respect to the subject matter of the Assignment, and all prior or contemporaneous agreements regarding such matters are hereby rendered null and void and of no force and effect.

(SIGNATURES APPEAR ON FOLLOWING PAGE)

WITNESS THE EXECUTION HEREOF, as of this March 10, 2015.

ASSIGNOR:

STEADFAST ASSET HOLDINGS, INC.,

a California corporation

By:	/s/ Ana Marie del Rio
	Ana Marie del Rio, Vice President

ASSIGNEE:

STAR PRESTON HILLS, LLC,

a Delaware limited liability company

By:	Steadfast Apartment Advisor, LLC, a
	Delaware limited liability company, its Manager

By:	/s/ Kevin J. Keating
	Kevin J. Keating, Treasurer

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Exhibit A

DESCRIPTION OF THE LAND

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EX-10.5

EXHIBIT 10.5

PROPERTY MANAGEMENT AGREEMENT

THIS PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of March 10, 2015 (the “Effective Date”), by and between STAR PRESTON HILLS, LLC, a Delaware limited liability company (“Owner”), and STEADFAST MANAGEMENT COMPANY, INC., a California corporation (“Manager”).

ARTICLE 1

DEFINITIONS

Section 1.1Definitions. The following terms shall have the following meanings when used in this Agreement:

“Agreement” has the meaning given in the introductory paragraph.

“Annual Business Plan” has the meaning given in Section 3.11(a).

“Capital Budget” has the meaning given in Section 3.11(a).

“Depository” means such bank or federally-insured or other financial institution as Owner shall designate in writing.

“Effective Date” has the meaning given in the introductory paragraph.

“Fiscal Year” means the calendar year beginning January 1 and ending December 31 of each calendar year, or such other fiscal year as determined by Owner and of which Manager is notified in writing; provided that the first Fiscal Year of this Agreement shall be the period beginning on the Effective Date and ending on December 31 of the calendar year in which the Effective Date occurs.

“Governmental Requirements” has the meaning given in Section 3.14.

“Gross Collections” means all amounts actually collected as rents or other charges for use and occupancy of apartment units and from users of garage spaces (if any), leases of other non-dwelling facilities in the Property and concessionaires (if any) in respect of the Property, including furniture rental, parking fees, forfeited security deposits, application fees, late charges, income from coin‑operated machines, proceeds from rental interruption insurance, and other miscellaneous income collected at the Property; excluding, however, all other receipts, including but not limited to, income derived from interest on investments or otherwise, proceeds of claims on account of insurance policies (other than rental interruptions insurance), abatement of taxes, franchise fees, and awards arising out of eminent domain proceedings, discounts and dividends on insurance policies.

“Hazardous Materials” means any material defined as a hazardous substance under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act, or any state or local statute regulating the storage, release, transportation or other disposition of hazardous material, as any of those laws may have been amended to the date hereof, and the administrative regulations promulgated thereunder prior to the date hereof, and, whether or not defined as hazardous substances under the foregoing Governmental Requirements, petroleum products (other than petroleum products used in accordance with Governmental Requirements by Owner or its tenants in the usual and ordinary course of their activities), PCBs and radon gas.

“Major Capital Improvements” has the meaning given in Section 3.6.

“Management Fee” has the meaning given in Section 4.1.

“Manager” has the meaning given in the introductory paragraph.

“Operating Budget” has the meaning given in Section 3.11(a).

“Owner” has the meaning given in the introductory paragraph.

“Owner’s Representative” has the meaning given in Section 2.2.

“Pass-Through Amounts” means fees and/or reimbursements for services provided to the Property but not covered by the Management Fee, as described in Exhibit A attached hereto and made a part hereof.

“Property” means the multifamily apartment project listed and described on Exhibit B attached hereto and made a part hereof.

“Security Deposit Account” has the meaning given in Section 5.1.

“State” means the state in which the Property is located.

ARTICLE 2

APPOINTMENT OF AGENCY AND RENTAL RESPONSIBILITY

Section 2.1Appointment. Owner hereby appoints Manager and Manager hereby accepts appointment as the sole and exclusive leasing agent and manager of the Property on the terms and conditions set forth herein. Owner warrants and represents to Manager that Owner owns fee simple title to the Property with all requisite authority to hereby appoint Manager and to enter into this Agreement.

Section 2.2Owner’s Representative. Owner shall from time to time designate one or more persons to serve as Owner’s representative (“Owner’s Representative”) in all dealings with Manager hereunder. Whenever the approval, consent or other action of Owner is called for hereunder, such approval, consent or action shall be binding on Owner if specified in writing and signed by Owner’s Representative. The initial Owner’s Representative shall be Ella S. Neyland, President. Any Owner’s Representative may be changed at the discretion of Owner, at any time, and shall be effective upon Manager’s receipt of written notice identifying the new Owner’s Representative.

Section 2.3Leasing. Manager shall perform all promotional, leasing and management activities required to lease apartment units in the Property. Throughout the term of this Agreement, Manager shall use its diligent efforts to lease apartment units in the Property. Manager shall advertise the Property, prepare and secure advertising signs, space plans, circulars, marketing brochures and other forms of advertising. Owner hereby authorizes Manager pursuant to the terms of this Agreement to advertise the Property in conjunction with institutional advertising campaigns and allocate costs on a pro rata basis among the Properties being advertised (to the extent authorized by the Annual Business Plan). All inquiries for any leases or renewals or agreements for the rental of the Property or portions thereof shall be referred to Manager and all negotiations connected therewith shall be conducted solely by or under the direction of Manager. Manager is hereby authorized to execute, deliver and renew residential tenant leases on behalf of Owner. Manager is authorized to utilize the services of apartment locator services and the fees of such services shall be operating expenses of the Property and, to the extent paid by Manager, reimbursable by Owner.

Section 2.4Manager’s Standard of Care. Manager shall perform its duties under this Agreement in a manner consistent with professional property management services. In no event shall the scope or quality of services provided by Manager for the Property hereunder be less than those generally performed by professional property managers of similar properties in the market area where the Property is located. Manager shall make available to Owner the full benefit of the judgment, experience, and advice of the members and employees of Manager’s organization with respect to the policies to be pursued by Owner in operating the Property, and will perform the services set forth herein and such other services as may be requested by Owner in managing, operating, maintaining and servicing the Property.

ARTICLE 3

SERVICES TO BE PERFORMED BY MANAGER

Section 3.1Expense of Owner. All acts performed by Manager in the performance of its obligations under this Agreement shall be performed as an independent contractor of Owner, and all obligations or expenses incurred thereby, shall be for the account of, on behalf of, and at the expense of Owner, except as otherwise specifically provided in this Article 3, provided Owner shall be obligated to reimburse Manager only for the following:

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(a)Costs and Expenses. All costs and expenses incurred by Manager on behalf of Owner in connection with the management and operation of the Property, including but not limited to all compensation, including the cost of benefits, payable to the employees at the Property and identified in the Operating Budget and taxes and assessments payable in connection therewith and reasonable training, travel and expenses associated therewith, all marketing costs, all collection and lease enforcement costs, all maintenance and repair costs incurred in accordance with Section 3.5 hereof, all utilities and related services, all on‑site overhead costs and all other costs reasonably incurred by Manager in the operation and management of the Property, excluding, however, all of Manager’s general overhead costs, including without limitation, all expenses incurred at Manager’s corporate headquarters and other Manager office sites other than the property management office located at the Property (i.e., office expenses, long distance phone calls, postage, copying, supplies, electronic data processing and accounting expenses), general accounting and reporting expenses for services included among Manager’s duties under the Agreement; and

(b)Other. All sums otherwise due and payable by Owner as expenses of the Property authorized to be incurred by Manager under the terms of this Agreement and the Operating Budget, including compensation payable under Section 4.1 hereof to Manager for its services hereunder.

Manager may use employees normally assigned to other work centers or part-time employees to properly staff the Property, reduced, increased or emergency work load and the like including the property manager, business manager, assistant managers, leasing directors, or other administrative personnel, maintenance employees or maintenance supervisors whose wages and related expenses shall be reimbursed on a pro rata basis for the time actually spent at the Property. A property manager or business manager at the Property and any other persons performing functions substantially similar to those of a business manager, including but not limited to assistant managers, leasing directors, leasing agents, sales directors, sales agents, bookkeepers, and other administrative and/or maintenance personnel performing work at the site, and on-site maintenance personnel, shall not be considered executive employees of Manager. All reimbursable payments made by Manager hereunder shall be reimbursed from funds deposited in an account established pursuant to Section 5.2 of this Agreement. Manager shall not be obligated to make any advance to or for the account of Owner nor shall Manager be obligated to incur any liability or obligation for the account of Owner without assurance that the necessary funds for the discharge thereof will be provided by Owner. In the performance of its duties as agent and manager of the Property, Manager shall act solely as an independent contractor of Owner. All debts and liabilities to third persons incurred by Manager in the course of its operation and management of the Property shall be the debts and liabilities of Owner only, and Manager shall not be liable for any such debt or liabilities, except to the extent Manager has exceeded its authority hereunder.

Section 3.2Covenants Concerning Payment of Operating Expenses. Owner covenants to pay all sums for reasonable operating expenses in excess of gross receipts required to operate the Property upon written notice and demand from Manager within five days after receipt of written notice for payment thereof.

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Section 3.3Employment of Personnel. Manager shall use its diligent efforts to investigate, hire, pay, supervise and discharge the personnel necessary to be employed by it to properly maintain, operate and lease the Property, including without limitation a property manager or business manager at the Property. Such personnel shall in every instance be deemed agents or employees, as the case may be, of Manager. Owner has no right of supervision or direction of agents or employees of Manager whatsoever; however, Owner shall have the right to require the reassignment or termination of any employee. All Owner directives shall be communicated to Manager’s senior level management employees. Manager and all personnel of Manager who handle or who are responsible for handling Owner’s monies shall be bonded in favor of Owner. Manager agrees to obtain and keep in effect fidelity insurance in an amount not less than Two Hundred Fifty Thousand Dollars ($250,000). All reasonable salaries, wages and other compensation of personnel employed by Manager, including so-called fringe benefits, worker’s compensation, medical and health insurance and the like, shall be deemed to be reimbursable expenses of Manager. Manager may allow its employees who work at the Property and provide services to the Property after normal business hours, to reside at the Property for reduced rents (or rent fee as provided in the Operating Budget) in consideration of their benefit to Owner and the Property, provided such reduced rents are reflected in the Annual Business Plan.

Section 3.4Utility and Service Contracts. Manager shall, at Owner’s expense and in Owner’s name or in Manager’s name as agent for Owner, enter into contracts for water, electricity, gas, fuel, oil, telephone, vermin extermination, trash removal, cable television, security protection and other services deemed by Manager to be necessary or advisable for the operation of the Property. Manager shall also, in Owner’s name or in Manager’s name as agent for Owner and at Owner’s expense, place orders for such equipment, tools, appliances, materials, and supplies as are reasonable and necessary to properly maintain the Property. Owner agrees to pay or reimburse Manager for all expenses and liabilities incurred by reason of this Section provided that such amounts are in accordance with the Operating Budget.

Section 3.5Maintenance and Repair of Property. Manager shall use diligent efforts to maintain, at Owner’s expense, the buildings, appurtenances and grounds of the Property in good condition and repair, including interior and exterior cleaning, painting and decorating, plumbing, carpentry and such other normal maintenance and repair work as may be necessary or reasonably desirable taking into consideration the amount allocated therefor in the Annual Business Plan. With respect to any expenditure not contemplated by the Annual Business Plan, Manager shall not incur any individual item of repair or replacement in excess of Five Thousand Dollars ($5,000.00) unless authorized in writing by Owner’s Representative, except, however, that emergency repairs immediately necessary for the preservation and safety of the Property or to avoid the suspension of any service to the Property or danger of injury to persons or damage to property may be made by Manager without the approval of Owner’s Representative. Owner shall not establish standards of maintenance and repair that violate or may violate any laws, rules, restrictions or regulations applicable to Manager or the Property or that expose Manager to risk of liability to tenants or other persons. Manager shall not be obligated by this Section to perform any Major Capital Improvements.

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Section 3.6Supervision of Major Capital Improvements or Repairs. When requested by Owner in writing or as set forth in an Approved Business Plan, Manager or an affiliate thereof shall, at Owner’s expense and in Owner’s name or in Manager’s name as agent for Owner, supervise the installation and construction of all Major Capital Improvements to the Property where such work constitutes other than normal maintenance and repair, for additional compensation as set forth in a separate agreement. If Owner and Manager fail to reach an agreement for Manager’s additional compensation as provided in this Section 3.6, Owner may contract with a third party to supervise installation or construction of Major Capital Improvements. In such events, Manager may negotiate contracts with all necessary contractors, subcontractors, materialmen, suppliers, architects, and engineers on behalf of, and in the name of, Owner, and may compromise and settle any dispute or claim arising therefrom on behalf of and in the name of Owner; provided only that Manager shall act in good faith and in the best interest of Owner at all times and Owner shall approve all contracts for such work. Manager will furnish or will cause to be furnished all personnel necessary for proper supervision of the work and may assign personnel located at the Property where such work is being performed to such supervisory work (and such assignment shall not reduce or abate any other fees or compensation owed to Manager under this Agreement). For the purposes of this Agreement, the term “Major Capital Improvements” shall mean work having an estimated cost of $25,000 or more.

Owner acknowledges that Manager, or an affiliate of Manager, may bid on any such work, and that Manager, or an affiliate of Manager, may be selected to perform part or all of the work; provided that if Manager desires to select itself, or its affiliate to do any work, it shall first notify Owner of the terms upon which it, or its affiliate, proposes to contract for the work, and terms upon which the independent contractors have offered to perform, and shall state the reasons for preferring itself, or its affiliate, over independent contractors and Owner shall have fifteen days to disapprove Manager, or its affiliate, and to request performance by an independent contractor. Only Owner shall have the power to compromise or settle any dispute or claim arising from work performed by Manager, or its affiliate; and it is expressly understood that the selection of Manager, or its affiliate, will not affect any fee or other compensation payable to Manager hereunder.

Section 3.7Insurance.

(a)Owner Requirements. Owner agrees to maintain all forms of insurance required by law or by any loan requirements for the Property and as otherwise deemed by Owner to be reasonable and necessary to adequately protect Owner and Manager, including but not limited to public liability insurance, boiler insurance, fire and extended coverage insurance, and burglary and theft insurance. All insurance coverage shall be placed with such companies, in such amounts and with such beneficial interest appearing therein as shall be reasonably acceptable to Owner. Public liability insurance shall be maintained in such amounts as Owner determines as commercially reasonable or as otherwise required by its lenders or investors, but in no case in an amount less than $5,000,000.

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Owner agrees to timely provide evidence of required insurance to Manager, and acknowledges that if evidence of insurance coverage is not timely furnished, Manager may, but shall not be obligated to, obtain such coverage on Owner’s behalf. Manager shall be named an additional insured on all Owner obtained insurance.

(b)Manager Requirements. Manager agrees to maintain, at its own expense, public liability insurance in an amount not less than Two Million Dollars ($2,000,000) and all other forms of insurance required by law and as otherwise deemed by Owner and Manager to be reasonable and necessary to adequately protect Owner and Manager, including but not limited to workers compensation insurance, professional liability, employee practices, and fidelity insurance. Manager agrees to timely provide evidence of required insurance to Owner and to name Owner as an additional insured on appropriate policies.

Manager shall use its diligent efforts to investigate and make a written report to the insurance company as to all accidents, claims for damage relating to the ownership, operation and maintenance of the Property, any damage or destruction to the Property and the estimated cost of repair thereof, and shall prepare any and all reports for any insurance company in connection therewith. All such reports shall be timely filed with the insurance company as required under the terms of the insurance policy involved. With the prior written approval of Owner, Manager is authorized to settle any and all claims against insurance companies arising out of any policies, including the execution of proofs of loss, the adjustment of losses, signing of receipts and collection of monies (no approval by Owner shall be required for the settlement of claims of $5,000 or less). Manager is further authorized to contract for the maintenance and repair of any damage or casualty in accordance with Section 3.6 above. Manager shall receive as an additional fee for such services that fee designated in the loss adjustment as a general contractor’s fee, provided that insurance proceeds that exceed the cost of repairing the damage or restoring the loss are available to pay such fees. In such event Manager shall be responsible for all costs incurred by Manager in adjusting such loss and contracting for repairs.

(c)Loss or Liability Claims. Owner and Manager mutually agree for the benefit of each other to look only to the appropriate insurance coverages in effect pursuant to this Agreement in the event any demand, claim, action, damage, loss, liability or expense occurs as a result of injury to person or damage to property, regardless whether any such demand, claim, action, damage, loss, liability or expense is caused or contributed to, by or results from the negligence of Owner or Manager or their respective subsidiaries, affiliates, employees, directors, officers, agents or independent contractors and regardless whether the injury to person or damage to property occurs in and about the Property or elsewhere as a result of the performance of this Agreement. Except for claims that are covered by the indemnity contained in Section 3.7(d) below, Owner agrees that Owner’s insurance shall be primary without right of subrogation against Manager with respect to all claims, actions, damage, loss or liability in or about the Property. Nevertheless, in the event such insurance proceeds are insufficient to satisfy (or such insurance does not cover) the demand, claim, action, loss, liability or expense, Owner agrees, at its expense, to indemnify and hold Manager and its subsidiaries, affiliates, officers, directors, employees, agents or independent contractors harmless to the extent of excess liability. For purposes of this Section 3.7(c), any deductible amount

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under any policy of insurance shall not be deemed to be included as part of collectible insurance proceeds.

(d)Indemnification. Notwithstanding anything contained in this Agreement to the contrary, Owner shall defend, indemnify, and hold harmless Manager and its representative subsidiaries, affiliates, officers, directors, employees, agents or independent contractors from and against all claims, demands, or legal proceedings (including expenses and reasonable attorney’s fees incurred in connection with the defense of any such matter) (each a “Claim”) that are brought against Manager arising out of the operation or management of the Project, except with respect to claims arising out of Manager’s gross negligence or willful misconduct. Manager shall defend, indemnify, and hold harmless Owner and its representative subsidiaries, affiliates, officers, directors, employees, agents or independent contractors from all Claims arising out of the gross negligence or willful misconduct of Manager. The indemnification obligations under this Section 3.7(d) shall survive termination of this Agreement.

(e)Acts of Tenants and Third Parties. In no event shall Manager have any liability to Owner or others for any acts of vandalism, trespass or criminal activity of any kind by tenants or third parties on or with respect to the Property and Owner’s insurance shall be primary insurance without right of subrogation against Manager regarding claims arising out of or resulting from acts of vandalism, trespass or criminal activity.

Section 3.8Collection of Monies. Manager shall use its diligent efforts to collect all rents and other charges due from tenants, users of garage spaces, carports, storage spaces (if any), commercial lessees (if any) and concessionaires (if any) in respect of the Property and otherwise due Owner with respect to the Property in the ordinary course of business, provided that Manager does not guarantee the creditworthiness of any tenants, users, lessees or concessionaires or collectability of accounts receivable from any of the foregoing. Owner authorizes Manager to request, demand, collect, receive and receipt for all such rent and other charges and to institute legal proceedings in the name of Owner, and at Owner’s expense, for the collection thereof, and for the dispossession of tenants and other persons from the Property or to cancel or terminate any lease, license or concession agreement for breach or default thereunder, and such expense may include the engaging of legal counsel for any such matter. All monies collected by Manager shall be deposited in the separate bank account referred to in Section 5.2 herein.

Section 3.9Manager Disbursements.

(a)Manager’s Compensation and Reimbursements. From Gross Collections, Manager shall be authorized to retain and pay (1) Manager’s compensation, together with all sales or other taxes (other than income) which Manager is obligated, presently or in the future, to collect and pay to the State or any other governmental authority with respect to the Property or employees at the Property, (2) the amounts reimbursable to Manager under this Agreement, (3) the amount of all real estate taxes and other impositions levied by appropriate authorities with respect to the Property which, if not escrowed with any mortgagee, shall be paid upon specific written direction of Owner before interest begins to accrue thereon; and (4) amounts otherwise due and payable as operating expenses of the Property authorized to be incurred under the terms of this Agreement.

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(b)Debt Service. The provisions of this Section 3.9 regarding disbursements shall include the payment of debt service related to any mortgages of the Property, unless otherwise instructed in writing by Owner.

(c)Third Parties. All costs, expenses, debts and liabilities owed to third persons that are incurred by Manager pursuant to the terms of this Agreement and in the course of managing, leasing and operating the Property shall be the responsibility of Owner and not Manager. Owner agrees to provide sufficient working capital funds to Manager so that all amounts due and owing may be promptly paid by Manager. Manager is not obligated to advance any funds. If at any time there is not sufficient cash in the account available to Manager pursuant to Section 5.2 with which to promptly pay the bills due and owing, Manager will request that the necessary additional funds be deposited by Owner in an amount sufficient to meet the shortfall. Owner will deposit the additional funds requested by Manager within five days.

(d)Other Provisions. The provisions of this Section 3.9 regarding reimbursements to Manager shall not limit Manager’s rights under any other provision of this Agreement.

Section 3.10Use and Maintenance of Premises. Manager agrees that it will not knowingly permit the use of the Property for any purpose that might void any insurance policy held by Owner or that might render any loss thereunder uncollectible, or that would be in violation of Governmental Requirements, or any covenant or restriction of any lease of the Property. Manager shall use its good faith efforts to secure substantial compliance by the tenants with the terms and conditions of their respective leases. All costs of correcting or complying with, and all fines payable in connection with, all orders or violations affecting the Property placed thereon by any governmental authority or Board of Fire Underwriters or other similar body shall be at the cost and expense of Owner.

Section 3.11Annual Business Plan.

(a)Submission. No later than 60 days prior to the end of each Fiscal Year during the term of this Agreement, or such earlier date as reasonably requested by Owner, its lenders or investors, Manager shall prepare and submit to Owner for Owner’s approval, an Annual Business Plan for the promotion, leasing, operations, repair and maintenance of the Property for the succeeding Fiscal Year during which this Agreement is to remain in effect (the “Annual Business Plan”). The Annual Business Plan shall include a detailed budget of projected income and expenses for the Property for such Fiscal Year (the “Operating Budget”) and a detailed budget of projected capital improvements for the Property for such Fiscal Year (the “Capital Budget”).

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(b)Approval. Manager shall meet with Owner to discuss the proposed Annual Business Plan and Owner shall approve the proposed Annual Business Plan within 20 days of its submission to Owner, or as soon thereafter as commercially practicable. To be effective, any notice which disapproves a proposed Annual Business Plan must contain specific objections in reasonable detail to individual line items. If Owner fails to provide an effective notice disapproving a proposed Annual Business Plan within such 20-day period, the proposed Annual Business Plan shall be deemed to be approved. Owner acknowledges that the Operating Budget is intended only to be a reasonable estimate of the income and expenses of the Property for the ensuing Fiscal Year. Manager shall not be deemed to have made any guarantee, warranty or representation whatsoever in connection with the Operating Budget.

(c)Revision. Manager may revise the Operating Budget from time to time, as necessary, to reflect any unpredicted significant changes, variables or events or to include significant additional, unanticipated items of revenue and expense. Any such revision shall be submitted to Owner for approval, which approval shall not be unreasonably withheld, delayed or conditioned.

(d)Implementation. Manager agrees to use diligence and to employ all reasonable efforts to ensure that the actual costs of maintaining and operating the Property shall not exceed the Operating Budget either in total or in any one accounting category. Any expense causing or likely to cause a variance of greater than ten percent (10%) or $25,000, whichever is greater, in any one accounting category for the current month cumulative year-to-date total shall be promptly explained to Owner by Manager in the next operating statement submitted by Manager to Owner.

Section 3.12Records, Reporting. Manager shall maintain at the regular business office of Manager or at such other address as Manager shall advise Owner in writing, separate books and journals and orderly files, containing rental records, insurance policies, leases, correspondence, receipts, bills and vouchers, and all other documents and papers pertaining directly to the Property and the operation thereof. All corporate statements, receipts, invoices, checks, leases, contracts, worksheets, financial statements, books and records, and all other instruments and documents relating to or arising from the operation or management of the Property shall be and remain the property of Owner and the Owner shall have the right to inspect such records at any reasonable time upon prior notice; Manager shall have the right to request and maintain copies of all such matters, at Manager’s cost and expense, at all reasonable times during the term of this Agreement, and for a reasonable time thereafter not to exceed three years. All on-site records, including leases, rent rolls, and other related documents shall remain at the respective Property for which such records are maintained as the property of Owner.

Section 3.13Financial Reports.

(a)Monthly Reports. On or before the fifteenth (15^th) day of each month during the term of this Agreement, Manager shall deliver or cause to be delivered to Owner’s Representative a statement of cash flow for the Property (on a cash and not an accrual basis) for the preceding calendar month. All notices from any mortgagee claiming any default in any mortgage on the Property, and any other notice from any mortgagee not of a routine nature, shall be promptly delivered by Manager to Owner’s Representative.

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(b)Annual Reports. Within 45 days after the end of each Fiscal Year, Manager shall deliver to Owner’s Representative a statement of cash flow showing the results of operations for the Fiscal Year or portion thereof during which the provisions of this Agreement were in effect.

(c)Employee Files. Manager shall execute and file punctually when due all forms, reports and returns required by law relating to the employment of personnel.

Section 3.14Compliance with Governmental Requirements. Manager shall comply with all laws, ordinances and regulations relating to the management, leasing and occupancy of the Property, including any regulatory or use agreements. Owner acknowledges that Manager does not hold itself out to be an expert or consultant with respect to, or represent that, the Property currently complies with applicable ordinances, regulations, rules, statutes, or laws of governmental entities having jurisdiction over the Properties or the requirements of the Board of Fire Underwriters or other similar bodies (collectively, “Governmental Requirements”). Manager shall take such action as may be reasonably necessary to comply with any Governmental Requirements applicable to Manager, including the collection and payment of all sales and other taxes (other than income taxes) which may be assessed or charged by the State or any governmental entities in connection with Manager’s compensation. If Manager discovers that the Property does not comply with any Governmental Requirements, Manager shall take such action as may be reasonably necessary to bring the Property into compliance with such Governmental Requirements, subject to the limitation contained in Section 3.5 of this Agreement regarding the making of alterations and repairs. Manager, however, shall not take any such action as long as Owner is contesting or has affirmed its intention to contest and promptly institute proceedings contesting any such order or requirement. If, however, failure to comply promptly with any such order or requirement would or might expose Manager to civil or criminal liability, Manager shall have the right, but not the obligation, to cause the same to be complied with and Owner agrees to indemnify and hold Manager harmless for taking such actions and to promptly reimburse Manager for expenses incurred thereby. Manager shall promptly, and in no event later than 72 hours from the time of receipt, notify Owner’s Representative in writing of all such orders or notices. Manager shall not be liable for any effort or judgment or for any mistake of fact or of law, or for anything that it may do or refrain from doing, except in cases of willful misconduct or gross negligence of Manager.

ARTICLE 4
MANAGER’S COMPENSATION, TERM

Section 4.1Fees Paid to Manager. Commencing on the date hereof, Owner shall pay to Manager a fee (the “Management Fee”), payable monthly in arrears, in an amount equal to Three Percent (3.0%) of Gross Collections for such month. The Management Fee shall not be subject to off-sets and charges unless agreed upon by the parties. Pass-Through Amounts shall be collected monthly by Manager, as applicable.

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Section 4.2Term. This Agreement shall commence on the Effective Date, and shall thereafter continue for a period of one (1) year from the Effective Date, unless otherwise terminated as provided herein. Thereafter, if neither party gives written notice to the other at least 60 days prior to the expiration date hereof that this Agreement is to terminate, then this Agreement shall be automatically renewed on a month-to-month basis.

Section 4.3Termination Rights. Notwithstanding anything that may be contained herein to the contrary, Owner may terminate this Agreement at any time by giving Manager thirty (30) days written notice thereof upon a determination of gross negligence, willful misconduct or bad acts of Manager or any of its employees. If Owner or Manager shall materially breach its obligations hereunder, and such breach remains uncured for a period of 30 days after written notification of such breach, the party not in breach hereunder may terminate this Agreement by giving written notice to the other. Any notice given pursuant to this Article 4, shall be sent by certified mail.

Section 4.4Duties on Termination. Upon any termination of this Agreement as contemplated in Section 4.4, Manager shall be entitled to receive all compensation and reimbursements, if any, due to Manager through the date of termination. Within 30 days after any termination, Manager shall deliver to Owner’s Representative, the report required by Section 3.13(a) for any period not covered by such a report at time of termination, and within 30 days after any such termination, Manager shall deliver to Owner’s Representative, as required by Section 3.13(b), the statement of cash flow for the Fiscal Year or portion thereof ending on the date of termination. In addition, upon termination of this Agreement for any reason, Manager will submit to Owner within 30 days after termination any reports required hereunder, all of the cash and bank accounts of the Property, including, without limitation, the Security Deposit Account, investments and records. Manager will, within 30 days after termination, turn over to Owner all copies of all books and records kept for the Property. If Manager desires to retain records of the Property, Manager must reproduce them at its own expense.

ARTICLE 5

PROCEDURES FOR HANDLING RECEIPTS AND OPERATING CAPITAL

Section 5.1Security Deposits. Manager shall collect, deposit, hold, disburse and pay security deposits as required by applicable State law and all other applicable laws, and in accordance with the terms of each tenant’s lease. The amount of each security deposit will be specified in the tenant’s lease. Security deposits shall be deposited into a separate non-interest-bearing account unless otherwise required by law (the “Security Deposit Account”) at a Depository selected by Manager and approved by Owner. The Security Deposit Account shall be established in the name of Manager and held separate from all other of Manager’s funds and accounts, unless Owner informs Manager, in writing that it intends to hold the Security Deposit Account. If such account is held by Manager, only representatives of Manager will be signatories to this account. To the extent possible, the Security Deposit Account shall be fully insured by the Federal Deposit Insurance Corporation (FDIC). Owner agrees to indemnify and hold harmless Manager, and Manager’s representatives, officers, directors and employees for any loss or liability with respect to any use by Owner of the tenant security deposits that is inconsistent with the terms of tenant leases and applicable laws.

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Section 5.2Separation of Owner’s Monies. Manager shall deliver all collected rents, charges and other amounts received in connection with the management and operation of the Property (except for tenants’ security deposits, which will be handled as specified in this Agreement) to a Depository selected by Manager and approved by Owner.

Section 5.3Depository Accounts. Except to the extent that Manager has not complied with its obligations under Sections 2.4 and 5.2, Owner and Manager agree that Manager shall have no liability for loss of funds of Owner contained in the bank accounts for the Property maintained by Owner or Manager pursuant to this Agreement due to insolvency of the bank or financial institution in which its accounts are kept, whether or not the amounts in such accounts exceed the maximum amount of federal or other deposit insurance applicable with respect to the financial institution in question.

Section 5.4Working Capital. In addition to the funds derived from the operation of the Property, Owner shall furnish and maintain in the operating accounts of the Property such other funds as may be necessary to discharge financial commitments required to efficiently operate the Property and to meet all payrolls and satisfy, before delinquency, and to discharge all accounts payable. Manager shall have no responsibility or obligation with respect to the furnishing of any such funds. Nevertheless, Manager shall have the right, but not the obligation, to advance funds or contribute property on behalf of Owner to satisfy obligations of Owner in connection with this Agreement and the Property. Manager shall keep appropriate records to document all reimbursable expenses paid by Manager, which records shall be made available for inspection by Owner or its agents on request. Owner agrees to reimburse Manager upon demand for money paid or property contributed in connection with the Property and this Agreement.

Section 5.5Authorized Signatures. Any persons from time to time designated by Manager shall be authorized signatories on all bank accounts established by Manager pursuant to this Agreement and shall have authority to make disbursements pursuant to the terms of this Agreement from such accounts. Funds may be withdrawn from all bank accounts established by Manager, in accordance with this Article 5, only upon the signature of an individual who has been granted that authority by Manager and funds may not be withdrawn from such accounts by Owner unless Manager is in default hereunder.

ARTICLE 6

MISCELLANEOUS

Section 6.1Assignment. Upon 30 days written notification, Owner may assign its rights and obligations to any successor in title to the Property and upon such assignment shall be relieved of all liability accruing after the effective date of such assignment. This Agreement may not be assigned or delegated by Manager without the prior written consent of Owner, which Owner may withhold in its sole discretion. Any unauthorized assignment shall be null and void ab initio, and shall not in any event release Manager from any liabilities hereunder.

Section 6.2Notices. All notices required or permitted by this Agreement shall be in writing and shall be sent by registered or certified mail, addressed in the case of Owner to STAR Preston Hills, LLC, 18100 Von Karman Avenue, Suite 500, Irvine, CA 92612, Attention: Kevin Keating; and in the case of Manager to Steadfast Management Company, Inc., 18100 Von Karman

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Avenue, Suite 500, Irvine, CA 92612, Attention: Christopher Hilbert, or to such other address as shall, from time to time, have been designated by written notice by either party given to the other party as herein provided.

Section 6.3Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto and no modification thereof shall be effective unless in writing executed by the parties hereto.

Section 6.4No Partnership. Nothing contained in this Agreement shall constitute or be construed to be or create a partnership or joint venture between Owner, its successors or assigns, on the one part, and Manager, its successors and assigns, on the other part.

Section 6.5No Third Party Beneficiary. Neither this Agreement nor any part hereof nor any service relationship shall inure to the benefit of any third party, to any trustee in bankruptcy, to any assignee for the benefit of creditors, to any receiver by reason of insolvency, to any other fiduciary or officer representing a bankrupt or insolvent estate of either party, or to the creditors or claimants of such an estate. Without limiting the generality of the foregoing sentence, it is specifically understood and agreed that such insolvency or bankruptcy of either party hereto shall, at the option of the other party, void all rights of such insolvent or bankrupt party hereunder (or so many of such rights as the other party shall elect to void).

Section 6.6Severability. If any one or more of the provisions of this Agreement, or the applicability of any such provision to a specific situation, shall be held invalid or unenforceable, such provision should be modified to the minimum extent necessary to make it or its application valid and enforceable, and the validity and enforceability of all other provisions of this Agreement and all other applications of such provisions shall not be affected thereby.

Section 6.7Captions, Plural Terms. Unless the context clearly requires otherwise, the singular number herein shall include the plural, the plural number shall include the singular and any gender shall include all genders. Titles and captions herein shall not affect the construction of this Agreement.

Section 6.8Attorneys’ Fees. Should either party employ an attorney to enforce any of the provisions of this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action agrees to pay to the prevailing party all reasonable costs, damages and expenses, including reasonable attorneys’ fees, expended or incurred by the prevailing party in connection therewith.

Section 6.9Signs. Manager shall have the right to place signs on the Property in accordance with applicable Governmental Requirements stating that Manager is the manager and leasing agent for the Property.

Section 6.10Survival of Indemnities. The indemnification obligations of the parties to this Agreement shall survive the termination of this Agreement to the extent of any claim or cause of action based on an event occurring prior to the date of termination.

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Section 6.11Governing Law. This Agreement shall be construed under and in accordance with the laws of the State and is fully performable with respect to the Property in the county in which the Property is located.

Section 6.12Competitive Properties. Manager may, individually or with others, engage or possess an interest in any other project or venture of every nature and description, including but not limited to, the ownership, financing, leasing, operation, management, brokerage and sale of real estate projects including apartment projects other than the Property, whether or not such other venture or projects are competitive with the Property and Owner shall not have any claim as to such project or venture or to the income or profits derived therefrom.

Section 6.13Set Off. Without prejudice to Manager’s right to terminate this Agreement in accordance with the terms of this Agreement, Manager may at any time and without notice to Owner, set off or transfer any sums held by Manager for or on behalf of Owner in the accounts (other than the Security Deposit Account) maintained pursuant to this Agreement in or towards satisfaction of any of Owner’s liabilities to Manager in respect of any sums due to Manager under this Agreement.

Section 6.14Notice of Default. Manager shall not be deemed in default under this Agreement, and Owner’s right to terminate Manager as a result of such default shall not accrue, until Owner has delivered written notice of default to Manager and Manager has failed to cure same within 30 days from the date of receipt of such notice.

Section 6.15Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original.

[Signatures appear on following page.]

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This Property Management Agreement is hereby executed by duly authorized representatives of the parties hereto as of the Effective Date.

OWNER:	STAR PRESTON HILLS, LLC,
	a Delaware limited liability company
	By:	Steadfast Apartment Advisor, LLC, its Manager
		By:	/s/ Ana Marie del Rio
			Ana Marie del Rio, Secretary

MANAGER:	STEADFAST MANAGEMENT COMPANY, INC.,
	a California corporation
	By:	/s/ Dinesh Davar
		Dinesh Davar, Treasurer

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EXHIBIT A

ESTIMATED PASS-THROUGH AMOUNTS

Benefits Administration	3.0% of total employee costs
IT Infrastructure, Licenses and Support	At cost and expense
Marketing/Training/Continuing Education	$20.00 p.u.p.y.

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EXHIBIT B

THE PROPERTY

Preston Hills Apartments is located at 2910 Buford Drive NE, Buford, Georgia, in the County of Gwinnett, and described as follows:

The Property is comprised of 17 three- and four-story buildings with 464 units. Site amenities include two resort style swimming pools, clubhouse, two fitness centers, business center with Wi-Fi, tennis court, playground, spa, and volleyball court. It is situated on 43 acres and it was built in 2000.

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EX-10.6

EXHIBIT 10.6

CONSTRUCTION MANAGEMENT SERVICES AGREEMENT

THIS CONSTRUCTION MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is entered into as of March 10, 2015 by and between STAR PRESTON HILLS, LLC, a Delaware limited liability company (the “Company”), and PACIFIC COAST LAND & CONSTRUCTION, INC., a California corporation (the “Construction Manager”).

RECITALS

A.    The Company, directly or through a wholly-owned subsidiary, owns that certain 464-unit multifamily housing development located in Buford , Georgia and commonly known as the Preston Hills Apartments (the “Project”), which Project is scheduled to undertake certain capital improvements projects (the “Improvements”) and/or certain revitalization projects (the “Revitalization”) from time to time.

B.    The Construction Manager is experienced and staffed to oversee and manage completion of the Improvements and Revitalization.

C.    The Company desires to engage the Construction Manager to provide certain services for the Company with respect to the Improvements and Revitalization, including but not limited to compliance with the Agreement(s) for Contractor Services executed in connection with the Improvements and Revitalization, a form of which is attached hereto as Exhibit A, and will be entered into with each contractor (the “Contractor Agreements”).

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

AGREEMENT

1.        Appointment. The Company hereby appoints the Construction Manager to render services in connection with the Improvements and Revitalization as contemplated herein and in the Contractor Agreements, and confirms and ratifies the appointment of the Construction Manager with respect to such services rendered for the Company to date, if any.

2.Authority. The Construction Manager shall have the authority and the obligation to:

(a)monitor the Scope of Work (as described in the applicable Contractor Agreement) and timely completion of each Improvement and Revitalization project, as such Improvement and Revitalization project is to be completed pursuant to the applicable Contractor Agreement;

(b)make recommendations with respect to the Improvements and Revitalization and their repair or construction;

(c)assist the Company in making determinations and taking action under the Contractor Agreements;

(d)coordinate accurate and timely draw requests for lender, if any, and release of all applicable contractor lien rights for work completed; and

(e)maintain complete and accurate records relating to the Improvements and Revitalization, the Contractor Agreements and the services provided under this Agreement.

3.Fees. For services that are to be, or have been, performed under this Agreement, the Company agrees to pay the Construction Manager a fee (the “Construction Management Fee”), in an amount equal to Eight Percent (8%) of the total costs of the Improvements and Revitalization, which Construction Management Fee shall be payable from time to time as and when the Company makes payments under the Contractors Agreement.

4.Insurance; Indemnification. During the term of this Agreement, Construction Manager shall procure and maintain, at its sole cost and expense, at least the following types and amounts of insurance coverage: (a) Commercial General Liability with limits no less than $1 Million per occurrence and $2 Million in the aggregate; (b) Commercial Automobile Liability with limits no less than $1 Million, combined single limit, (c) Worker's Compensation insurance with limits no less than the minimum amount required by applicable law; and (d) Errors and Omissions/Professional Liability with limits no less than $1 Million per occurrence. All required insurance policies shall be issued by insurance companies with a Best's Rating of no less than A-VII and provide that such insurance carriers give the Company at least 30 days' prior written notice of cancellation or non-renewal of policy coverage. The policies are to name the Company or its applicable subsidiary as additional insureds and will waive any right of subrogation of the insurers against the Company or any of its affiliates.

The Company shall defend, indemnify and hold harmless the Construction Manager and its officers, directors, employees, agents, successors and permitted assigns (each, an “Indemnitee") from and against all claims, costs, losses and damages, arising out of or resulting from any third party claim, suit, action or proceeding relating to the Project or the Improvements and Revitalization. Construction Manager shall defend, indemnify and hold harmless the Company and its Indemnitees from and against all losses arising out of or resulting solely from the willful, fraudulent or grossly negligent acts or omissions of Construction Manager.

5.Termination. This Agreement may be terminated by either party with 30-days prior written notice to the other party.

6.Assignment; Successors and Assigns. No party shall assign its rights or delegate its obligations without the consent of the other party, which consent may be withheld in such other parties’ sole and absolute discretion; provided, however, that no consent is required for an assignment to an affiliate of such party. In the event of an assignment permitted hereunder, this Agreement shall be binding on the parties hereto and their successors and assigns.

7.Arbitration. All claims and disputes arising under or relating to this Agreement are to be settled by binding arbitration in the state of California or another location mutually agreeable to the parties. The arbitration shall be conducted on a confidential basis pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any decision or award as a result of any such arbitration proceeding shall be in writing and shall provide an explanation for all conclusions of law and fact and shall include the assessment of costs, expenses, and reasonable attorneys' fees. Any such arbitration shall be conducted by an arbitrator experienced in construction matters and mutually agreed upon by the parties. The arbitrator shall include a written record of the arbitration hearing. The ruling of such arbitrator shall be binding upon the parties hereto and shall be final and non-appealable. An award of arbitration may be confirmed in a court of competent jurisdiction.

8.Separability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision that is not essential to the effectuation of the basic purposes of this Agreement is determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement which are valid.

9.Facsimile Signatures; Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties shall not have signed the same counterpart. Any party may effect the execution and delivery of this Agreement by signing the same and sending a copy thereof to the other party or its attorney by facsimile or electronic transmission. Such facsimile document, including the signatures thereon, shall be treated in all respects as an original instrument bearing an original signature.

10.No Continuing Waiver. The waiver of any party of any breach of this Agreement shall not operate or be construed to be a waiver of any subsequent breach.

11.Applicable Law. This Agreement shall be construed and enforced under the laws of the state in which the Project is located.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties have caused this Construction Management Services Agreement to be duly executed as of the date as first written above.

COMPANY:

STAR PRESTON HILLS, LLC, a Delaware limited liability company

By: STEADFAST APARTMENT ADVISOR, LLC, its Manager

By:	/s/ Ana Marie del Rio
Name:	Ana Marie del Rio
Its:	Secretary

CONSTRUCTION MANAGER:

PACIFIC COAST LAND & CONSTRUCTION, INC., a California corporation

By:	/s/ Dinesh Davar
Name:	Dinesh Davar
Its:	Chief Financial Officer

AGREEMENT FOR CONTRACTOR SERVICES

This Agreement for Contractor Services (this "Agreement") is made as of ___________, 20__, between ______________________________, a _________________ ("Owner"), and __________________________________________, a __________________________ ("Contractor"). For purposes of this Agreement, Owner shall mean Owner or its agent, Pacific Coast Land & Construction, Inc., a California corporation ("Construction Manager"), as directed by Owner.

1. Job Site: _____________________ Apartments, located at _____________________________, City of ________, State of _________________ (the "Job Site").

2. Scope of the Work: Contractor agrees to furnish all supervision, labor, materials, equipment, supplies, services, machinery, tools and all other elements necessary for the proper, complete, expeditious and efficient performance of the work described below which shall be hereinafter referred to as (the “Work”):

(a)    Attached Proposal / Work Scope from Contractor. □Attached, or

(b)    Other (please describe): __________________________________________________________________________________________________

3. Contract Plans and Specifications: The addenda, drawings, plans, general and supplementary conditions and specifications attached to this Agreement, together with__________________ (collectively, the "Plans and Specifications"), constitute the approved Plans and Specifications for the Work. Contractor and its subcontractors will be and are bound by any and all of said Plans and Specifications insofar as they relate in any part or in any way to the work covered by this Agreement. In the event of any conflict between the provisions of Plans and Specifications and the Contractor’s proposal, the Plans and Specifications shall govern.

4. Commencement and Completion: The Work shall commence on _______________, 20__and shall be complete in accordance with this Agreement without delay on ______________, 20__.The term “day”, used throughout this Agreement, refers to calendar days. Contractor shall not be entitled to any additional compensation for any Permitted Delays. If this Agreement is not signed and returned to the Owner before any work commences, this Agreement will be considered as accepted as presented to the Contractor.

5. Payment:

(a)Contract Price: The Owner agrees to pay the Contractor for the full and faithful performance of the Work, including all applicable taxes, and the Contractor agrees to accept such payment as full and just compensation therefor. The Work is to be done on a time and material basis as it is set forth in the “Scope of Work” referenced in Section 2 above, and the total estimated cost for the Work is ___________________________________________ DOLLARS AND __/100 ($________.__) (the “Contract Price”) in current funds subject to additions and deductions for changes and/or charges as may be agreed upon in writing pursuant to this Agreement.

(b)Progress Payments: All applications for payment ("Invoices"), in form acceptable to Owner, shall include a complete description of the labor and materials supplied, and the work done during the period covered by the Invoice (the "Invoice Period"). All Invoices shall be accompanied by (i) a list of all suppliers and subcontractors whose materials or services have been utilized by Contractor to perform the work described in the Invoice, and (ii) signed waivers of and releases from any claim of lien, or stop notice that could be asserted by such suppliers, subcontractors and Contractor as a result of the work performed during the Invoice Period. Each Invoice will be accompanied by certified statements from each supplier and subcontractor (1) indicating the total amount due them as a result of the work performed during the Invoice Period, (2) acknowledging that Contractor may or may not (in the Owner’s sole discretion) be paid by means of a joint check prepared based upon such certified statements, and (3) agreeing that such supplier's or subcontractor's negotiation of any such check shall be its representation that it has been timely and fully paid for work performed through the end of the Invoice Period. Such certified statements shall be in the form prescribed by the laws of the state in which the Job Site is located, or if no such prescribed form exists, in substantially the form attached hereto as Exhibit A. Contractor agrees to furnish, if and when required by Owner, payroll affidavits, receipts, vouchers, releases of claims for labor, material and subcontractors performing work or furnishing material under this Agreement, all in form satisfactory to Owner. Subject to the payment provisions of this Agreement, ninety percent (90%) of the amount set forth in the Invoices shall be paid in any calendar month upon payment of the progress payment for such month to Contractor. Invoices shall not be submitted more frequently than monthly, and shall include all charges made since the preceding Invoice Period.

(i)    Final Payment. Contractor shall not be paid the remaining ten percent (10%) of the Contract Price until the Work has been completed in accordance with the Plans and Specifications, including but not limited to, (1) receipt of properly executed warranties; (2) attic stock materials designated in the Plans and Specifications; (3) spare parts designated in the Plans and Specifications; (4) final lien releases from all suppliers, subcontractors and Contractor in the form prescribed by the laws of the state in which the Job Site is located, or if no such prescribed form exists, in substantially the form attached hereto as Exhibit B; (5) reasons listed in “Withholding Payment” have been removed; in each case to Owner’s satisfaction and (a) either (i) thirty (30) days have elapsed after a Notice of Completion for the Work has been recorded, or (ii) if a Notice of Completion for the Work is not recorded, Contractor receives a written notice of acceptance of the Work from Owner within thirty (30) days after Owner determines in good faith that the Work has been fully and acceptably performed, and (b) within ten (10) days after Lender has released retainage funds, which will not occur prior to 50% completion for the entire project, however, holding retainage could extend to final completion of the project.

(ii)    Designated Representatives. Owner and Contractor shall each designate a field representative, as such representative may be changed from time to time by written notice to the other party. All notices, writings or other communications concerning this Agreement or the Work shall be made through each party's designated field representative, which for purposes of this Agreement shall be the respective Designated Representatives set forth below. All addenda, change orders, or modifications to this Agreement must be signed by an authorized Designated Representative.

1. General Conditions: This Agreement includes the General Conditions attached hereto and made a part hereof.

2. Supplementary Conditions:This Agreement also includes the Supplementary Conditions, if any, attached hereto as Appendix 1 and made a part hereof. In the event of any conflict between the provisions of Appendix 1 and any other provision of this Agreement, the provisions of Appendix 1 shall control. All Supplementary Conditions must be initialed by both Owner and Contractor in order to be binding upon the parties.

NOTICE: STATE REQUIRED NOTICES AND/OR DISCLOSURES, IF ANY, ARE ATTACHED HERETO AS APPENDIX 2.

OWNER: _____________________________, a ________________________ By: Pacific Coast Land & Construction, Inc.,         a California corporation,    authorized agent of Owner      By:__________________________________________________      Name: ______________________________________________      Title: ________________________________________________ Dated: _________________________________________________ Address: 18100 Von Karman Avenue, Suite 500                  Irvine, CA 92612 Designated Representative: _____________________________________________ CONTRACTOR: ____________________________________, a _______________ By:__________________________________________________ Its:__________________________________________________ Dated:_______________________________________________ Address: _____________________________________________ License No.:__________________________________________ Federal Tax I.D. or F.I.C.A. No.:_______________________ Designated Representative: _____________________________________________

GENERAL CONDITIONS

1.    The Work.

(a)    Plans and Specifications; Laws. The Work shall be performed in strict accordance with: (i) the Plans and Specifications; and (ii) all applicable federal, state and local codes, laws, permits, orders, ordinances and any rules and regulations promulgated there under, (collectively "Laws").

(b)    Shop Drawings. Contractor shall submit such shop drawings, product data, samples and similar submittals (collectively, "Shop Drawings") to Owner as are required to accomplish the Work with reasonable promptness and in such sequence so as to cause no delay in the Work or in the activities of Owner or other contractors. Owner shall review and approve all Shop Drawings with reasonable promptness. Such review shall be for the sole purpose of verifying that the Shop Drawings comply with the requirements of the Plans and Specifications and are otherwise satisfactory to Owner. Owner’s review and approval of the Shop Drawings is not an endorsement or approval of the safety or design of the Shop Drawings or their compliance with the Laws (Contractor is solely liable for such matters). For purposes of this Agreement, Shop Drawings are drawings, diagrams, schedules and other information specially prepared for the Work. Product data are illustrations, standard schedules, performance charts, instructions, brochures, diagrams and other information furnished by Contractor to illustrate materials or equipment used in connection with the Work. Samples are examples of illustrative material or workmanship and establish standards by which the Work will be evaluated.

(c)    List of Suppliers and Subcontractors. Concurrently with signing this Agreement, Contractor shall submit a signed statement under penalty of perjury to Owner in the form of Exhibit C attached hereto ("Supplier Statement") showing the names and addresses of all persons from whom Contractor expects to request or has requested services, materials, fixtures, or machinery and equipment for the Work. Owner may object to any person or entity identified in the Supplier Statement by written notice to Contractor within five (5) calendar days after Owner receives the Supplier Statement. Owner's failure to notify Contractor within the 5-day period constitutes acceptance of all persons identified in the Supplier Statement, subject to Owner's rights in Paragraph 2(a). If Owner timely objects to any person or entity identified in the Supplier Statement, Contractor shall immediately replace the objectionable person or entity and resubmit an alternate to Owner for approval in accordance with the requirements and time constraints in this Paragraph1(c) until an acceptable alternate is submitted. No additions to or changes of such statement will be made without the Owner's prior written consent.

(d)    Protection of the Work. Contractor shall take all steps necessary to protect the Work from loss or damage by the elements, including fire, flood, rain, wind, hail, sand, cave-ins, collapses, and other hazards, and by the defective or incomplete labor or materials of others, or otherwise. In the event of such loss or damage, Contractor shall promptly replace and restore the Work or any damaged portion thereof at its expense.

(e)    Overtime and Extra Labor and Equipment. Contractor shall, at its expense, work such overtime and engage such extra labor and equipment as may be required to ensure the diligent prosecution and timely completion of the Work.

(f)    Reduction in the Work. Owner may, by written notice to Contractor, reduce the amount of the Work to be completed by Contractor, without any liability to Contractor except to pay for work satisfactorily completed.

(g)    Permitted Delay. Contractor shall be excused for any delay in performance or completion of the Work caused by (1) acts of God, public utilities or public bodies, (2) the elements beyond average weather conditions for the region, (3) modifications requested by Owner, and (4) other matters Contractor could not reasonably anticipate, control or avoid ("Permitted Delays"). In such event, the Completion Date shall be extended for a period equal to the Permitted Delay to the extent that it affects the critical path for performance of the Work, and provided that Contractor gives Owner written notice of the nature of the delay within twenty-four (24) hours after the delay begins, and under no circumstances shall the time of completion be extended to a date which will prevent Owner from completing the entire project within the time that Owner allows for such completion. Contractor shall not be entitled to any additional compensation for any Permitted Delays.

(h)    Material Furnished By Others. In the event the scope of work includes installation of material or equipment furnished by others, it shall be the responsibility of Contractor to examine the items so provided and thereupon unload, lift, handle, store and install the items with such skill and care as to insure a satisfactory installation. Loss or damage due to acts of Contractor shall be charged to the account of Contractor and deducted from monies owed to Contractor under this Agreement.

2. Job Site Conditions.

(a)    Supervision of the Work. Contractor shall supervise and direct the Work at all times. In this regard, Contractor shall (i) enforce strict discipline and good order among its employees (and those of its subcontractors and suppliers), (ii) faithfully and rigidly observe and ensure that its agents, employees, suppliers and subcontractors so observe, all (1) Laws and prudent business practices, and (2) rules of Owner and Contractor in effect at the Job Site from time to time, (iii) not employ or allow at the Job Site any unfit person or anyone not skilled in the work assigned to him and (iv) retain only competent persons on the jobsite. Any person Owner determines to be incompetent, disorderly or otherwise unsatisfactory shall be immediately removed from the Job Site and shall not again be employed at the Job Site or at any other job of Owner. Contractor shall not allow its own employees, its subcontractors' employees, or any other persons associated with the Work to (i) consume alcoholic beverages or illegal substances at the Job Site, (ii) perform any labor or work or traveling to or from the Job Site while under the influence of alcohol or illegal substances, and (iii) bring pets to the Job Site.

(b)    No Defects. Contractor's commencement of the Work constitutes Contractor's acceptance of the work of other contractors previously completed or commenced, and Contractor's acknowledgment that the Plans and Specifications are free of defects that would adversely affect Contractor's performance of the Work. Contractor waives all claims against Owner with respect thereto. If Contractor discovers a defect in the Plans and Specifications, the Work or in the work of others, Contractor shall immediately notify Owner of such defect.

(c)    Signs. Contractor shall not post any sign at or in the vicinity of the Job Site nor permit any of its suppliers, subcontractors or employees to do so without the prior written approval of the style, size, type, color and location of the sign from Owner and from each applicable governmental agency.

(d)    Integration of the Work. If necessary to integrate the Work with the work of others at the Job Site, Contractor shall (i) cut, fit, patch or plaster the Work so that it will be properly integrated with, receive or be received by, as applicable, the work of others, and (ii) alter the work of others provided (1) the prior written consent of Owner and the other contractors’ whose work will be affected is obtained, and (2) Contractor patches, plasters, paints, repairs and restores, at its expense, such altered work of others.

(e)    Hazardous Material. Contractor shall not permit any Hazardous Material (as defined below) to be located, used, incorporated into the Work or brought onto the Job Site in connection with the Work unless (i) absolutely necessary because no alternative is available, (ii) the precise nature and quantity of the Hazardous Material is specified in writing to Owner, (iii) the prior written approval of Owner is obtained, and (iv) Contractor complies with all Laws and prudent business practices concerning the Hazardous Material required. If Contractor encounters any material it reasonably believes to be Hazardous Material, or becomes aware of any incident involving Hazardous Material at the Job Site, Contractor shall immediately stop the Work in the area so affected and shall immediately report the same to Owner. Contractor shall also immediately notify Owner of any notice Contractor receives concerning the presence or use of Hazardous Material at the Job Site. Contractor shall be liable for all on and off-site disposal or transport of Hazardous Material (and shall sign any manifest for the transport or storage of such Hazardous Material), and for any discharge, release, injury to any person, or injury or damage to any property resulting from use of Hazardous Material in the performance of the Work. Contractor shall, at its expense, cause the removal of the Hazardous Material and remedy any associated problems in accordance with applicable Laws and prudent business practices. "Hazardous Material" shall mean (1) any Hazardous Material as defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act, or under any applicable state or local Laws, (2) any substance or matter that results in liability to any person or entity from discharge of or exposure to such substance or matter under any statutory or common law theory, (3) pesticides, asbestos, formaldehyde, polychlorinated biphenyl, solvents, petroleum and motor fuel hydrocarbon material, and (4) any other substance or matter that becomes subject to any federal, state or local agency order or requirement for removal, treatment or remedial action.

To the extent permitted by Law, and without in any way limiting any other indemnity obligation under this Agreement, Contractor shall indemnify, defend (at Contractor's sole cost and with legal counsel acceptable to Owner) and hold Owner and their respective officers, directors, agents, employees, representatives, shareholders, partners, affiliates, successors and assigns harmless, from and against any and all claims, losses, costs or liabilities arising out of an incurred connection with removing or remediating any Hazardous Materials on or about the Job Site or transported on, to, from or about the Job Site by Contractor. This indemnity shall be effective during and after completion of the Work.

(f)    Cleanup, Storage and Safety. Contractor shall maintain the site of the Work and the vicinity thereof, in a clean, neat and safe condition, to Owner's satisfaction and shall (i) store all materials, supplies and equipment in appropriate containers or enclosures that are secure from access by persons not associated with the Work in locations acceptable to Owner, (ii) remove from the Job Site all excess material and debris nightly during the performance of the Work, and all equipment, unused material and supplies and temporary structures upon completion of the Work, (iii) return each fence, barrier and obstruction that is temporarily relocated or displaced by Contractor to its original position and condition immediately after its relocation or displacement is no longer necessary. No temporary structures, including construction trailers or other temporary office facilities, shall be placed or maintained at or in the vicinity of the Job Site without the Owner's prior written approval. Contractor shall take all reasonable safety precautions in the performance of the Work, including compliance with all OSHA requirements. Contractor shall immediately notify Owner of any injury to any employee or agent of Contractor occurring at the Job Site.

3. Examination by Contractor.

(a)    Review of Relevant Matters. Contractor has examined, investigated and familiarized itself with: (i) the Plans and Specifications; (ii) the nature and location of the Job Site; (iii) the conformation of the ground and improvements of other contractors on which the Work is to be performed; (iv) the character, quality and quantity of the materials, equipment and facilities necessary to complete the Work in a good and workmanlike manner; (v) the general and local conditions relating to the Work; and (vi) all other matters that may affect Contractors performance of this Agreement.

(b)    No Reliance on Owner. Contractor enters into this Agreement relying solely on its own examination and investigation of the foregoing matters and not on any representation or information relating to the Job Site or the Work (or the completion thereof) made by Owner or any agent of Owner not expressly contained in this Agreement. Contractor assumes all risk of unknown Job Site conditions and releases Owner from any claim for additional compensation resulting from concealed or unknown and unusual Job Site conditions.

(c)    Satisfaction with Plans. Any clarifications of any inadequacy, inconsistency, omission or conflict in the Plans and Specification or conflict or inconsistency in the Plans and Specifications and the Shop Drawings shall be made by Owner. Contractor's failure to request any such clarification before execution of this Agreement shall not relieve Contractor of its obligation to perform in accordance with Owner's interpretations of the Plans and Specifications thereafter. Contractor shall not be entitled to any additional compensation for performing the Work pursuant to Owner's interpretation of the Plans and Specifications.

4.    Insurance.

Contractor shall, at its sole expense, maintain in effect at all times during the term of this Agreement and for a period of one year following completion of the Work, from a carrier with a Best rating of A-VIII or better, Workers' Compensation and Employer’s Liability, Commercial General Liability and Commercial Automobile Liability Insurance that covers all risks associated with the performance of the Work, the operation of vehicles, and the behavior of Contractor, its employees, suppliers, subcontractors and any other persons or entities associated with the Work at the request of or on behalf of Contractor. Except as otherwise permitted by Law, such insurance shall include the following:

(a)    Statutory Workers' Compensation Insurance for all employees of Contractor together with Employer’s Liability coverage with minimum policy limits of one million dollars ($1,000,000) for bodily injury by accident/each accident, $1,000,000 bodily injury by disease/each employee, and $1,000,000 bodily injury by disease/policy limit. Coverage must include waiver of subrogation endorsement in favor of Owner.

(b)    Commercial General Liability Insurance (Occurrence Form), including, but not limited to, Products-Completed Operations coverage and Contractual Liability assumed by Contractor with minimum policy limits of two million dollars ($2,000,000) General Aggregate, $2,000,000 Products-Completed Operations Aggregate, $1,000,000 Each Occurrence and $1,000,000 Personal and Advertising Injury. Such coverage shall include an endorsement naming Owner as additional insured stating “Certificate Holder is named as Additional Insured per ACORD 25 Form (or equivalent form), an endorsement providing that the insurance afforded under Contractor’s policy is primary insurance with respect to Owner, and that any other insurance maintained by Owner is excess and non-contributory. Coverage must include a Waiver of Subrogation endorsement.

(c)    Commercial Automobile Liability with minimum policy limits of $1,000,000 Combined Single Limit per accident for bodily injury and property damage, including coverage for owned, hired or non-owned vehicles operated by or on behalf of Contractor and used in connection with this Agreement. Owner will be named as additional insured.

(d)    In addition to the above requirements, Owner reserves the right to require Umbrella or Excess Liability coverage. Such additional requirements, if any, are attached hereto as Exhibit E.

Prior to occupying or beginning any Work on the Job Site, Contractor shall provide Owner with Certificates of Insurance evidencing such coverage in a form reasonably acceptable to Owner.

5.    Withholding Payment.

(a)    Reasons for Withholding. Owner may withhold payments otherwise due to Contractor under this Agreement for any of the following reasons:

(i)    Omission of any Work required by this Agreement or Contractor's failure to cure defective or damaged Work;

(ii)    Failure to submit to Owner all information and waivers and releases required under this Agreement;

(iii)    Mechanics' liens, materialmen's liens, stop notices or bonded claims are filed or recorded or reasonable evidence indicating the probable filing or recording of such liens, notices or claims by Contractor or its suppliers or subcontractors, in which case Owner may withhold (1) in the case of a lien, notice or claim by Contractor, the amount claimed in the lien, notice or claim, and (2) in the case of a lien, notice or claim by Contractor's suppliers or subcontractors, One Hundred Fifty Percent (150%) of the amount sought;

(iv)    Contractor's failure to make payments properly to subcontractors, suppliers, materialmen, laborers, or other persons entitled to file a mechanics' lien, materialmen's lien, stop notice or claim as well as to union fringe benefit trust funds (to the extent required);

(v)    The existence of reasonable doubt by Owner that the Work will be completed for the balance of the Contract Price then unpaid, unless Contractor deposits with Owner funds in the amount of such suspected deficiency or performs a sufficient portion of the remaining Work to be performed at Contractor's sole cost so that such portion of the Contract Price then remaining unpaid is determined by Owner to be sufficient to complete the Work;

(vi)    Contractor's failure to complete the Work, or any reasonable indication that the Work will not be completed within the time required in this Agreement;

(vii)    Contractor's failure to construct, install or perform the items of the Work as required in this Agreement, or any reasonable indication that Contractor will be unable to perform the terms of the Work as required in this Agreement; and

(viii)    Any other grounds for withholding payment permitted by the Laws, or as otherwise permitted by this Agreement.

(b)    Payment of Withheld Amount. Whenever the grounds giving rise to the above withholding have been removed, Owner shall pay Contractor the amount withheld less any expenses or damages Owner incurs as a result of the withholding, the cause of the withholding or the removal of the cause of the withholding. If any of Contractor's laborers, subcontractors, suppliers or materialmen are not paid, Owner may pay such persons directly. Any payment Owner makes directly to any of Contractor's laborers, subcontractors, suppliers or materialmen or for their benefit shall be deemed payment to Contractor and shall be credited against the Contract Price.

6.    Changes in the Work.

(a)    Change Order Request. Owner may, at any time and from time to time, order additions, deletions or other modifications to the Work (a "Work Change") by submitting a written change order request to Contractor ("Change Order Request"). Owner's Designated Representative is the only person authorized to sign Change Order Requests. Contractor shall not be compensated for any Work Change performed by Contractor at the request of anyone other than Owner's Designated Representative pursuant to a written Change Order Request. Upon receipt of a duly authorized Change Order Request, Contractor shall perform any extra work, make any substitutions in the Work, or omit any portion of the Work required thereby and shall not thereafter perform any work or order materials that are inconsistent with such Change Order Request. Contractor or anyone acting for or on behalf of Contractor shall not be entitled to any additional compensation for any labor, materials or equipment performed or ordered after receipt of a duly authorized Change Order Request if the same are not consistent with the Change Order Request. Contractor shall (i) maintain records of all duly authorized modifications made to the Work, (ii) notify Owner's Representative of each such duly authorized modification immediately upon making the modification, and (iii) show such duly authorized modifications on a copy of the Plans and Specifications.

(b)    Change Order Statement. Upon receipt of a Change Order Request, Contractor shall promptly furnish to Owner a statement in the form of Exhibit D ("Change Order Statement") setting forth in detail, with a labor and material breakdown by trades and work classifications, (i) Contractor's estimate of any changes in the Contract Price attributable to the Change Order Request, and (ii) any proposed adjustment of the Completion Date resulting from the Change Order Request. Such Change Order Statement shall be delivered to Owner within five (5) business day after Contractor's receipt of a Change Order Request. Contractor shall have no claim for additional compensation as a result of the Change Order Request unless a Change Order Statement is delivered to Owner as required by this paragraph.

(c)     Adjustments to Contract Price.

(i)    Upon receipt of a Change Order Statement, Owner shall determine the adjustment, if any, to the Contract Price. Contractor shall be deemed to have accepted the adjustment or nonadjustment to the Contract Price if Owner does not receive written objection notice from Contractor within five (5) business days after Contractor's receipt of notice of the amount of the adjustment or nonadjustment to the Contract Price from Owner. If Contractor timely delivers a written objection notice to Owner, the adjustment shall be determined by applying one of the following standards: (1) by reference to Unit Prices or (2) in the case of additions to the Work, cost of performing the additional work plus fifteen percent (15%), and in the case of deletions from the Work, an amount equal to the savings in cost plus ten percent (10%). The Work shall not be delayed or interrupted during resolution of the adjustment or nonadjustment to the Contract Price.

(ii)    Alternatively, and in Owner's sole discretion, Owner may ask Contractor to submit bid prices for the modifications in the Work. Such bid prices shall be consistent with the contract prices for the Plans and Specification covered by this Agreement. If any bid price is not consistent, Owner may accept bids from other contractors. If the same are lower than that of Contractor, Owner will afford Contractor the opportunity to adjust its bid accordingly. If Contractor does not agree to adjust its bid accordingly within five (5) business days, Owner may, at its option, renegotiate or terminate this Agreement in its entirety.

(d)     Contractor Initiated Changes. If the Contractor initiates a substitution, deviation or change in the work which affects the scope ofwork or the expense of other trades, Contractor shall be liable for the expense thereof, and any incidental extra work created by the change to the Owner’s work.

7.    Warranty, Testing and Correction.

(a)    Warranty of Materials and Workmanship. Notwithstanding that any labor, equipment, or material furnished or installed by Contractor has been approved or accepted by Owner or any governmental agency, Contractor expressly warrants that all labor, material, equipment, and fixtures furnished or installed by it (or by its subcontractors or materialmen) hereunder shall be of good quality, free of any faults and defects including patent, latent or developed defects, and shall be completed as required in this Agreement. This warranty shall survive for so long as Owner may be held liable for the matters warranted hereunder (in their respective roles as contractor, builder or seller) but in no event less than one (1) year after the date of completion and final acceptance of the Work. The above warranty shall not limit or affect other warranties or guarantees expressly or impliedly made by Contractor or any of its subcontractors or materialmen and shall not limit or affect any remedies concerning express or implied warranties or negligent or willful acts or omissions of Contractor or any of its subcontractors or materialmen. The above warranty shall be for the benefit of Owner and its respective successors and assigns.

(b)    Testing and Inspection of the Work. Contractor shall, at its expense, obtain all inspections and approvals required by any Law or other guidelines of any public authority having jurisdiction over the Work. Contractor shall furnish Owner with originals of all certificates of inspection, testing and approval. Owner shall not be responsible for reviewing, nor shall its review and acceptance of the Work or any part thereof be deemed an endorsement or approval of, the safety or design of the Work or any part thereof or a determination of conformance with the Laws; provided, however, that Owner may test, inspect and approve the Work or cause the same to be accomplished without notice to Contractor. Contractor shall make all portions of the Work available for inspection, testing and approval by Owner and all applicable governmental authorities. Contractor shall notify Owner in writing of any inspection or testing that must be performed within a certain time period so as not to require modification of the Work or the work of others in connection with the inspection, testing and approval. If Contractor fails to so notify Owner, Contractor shall assume full responsibility for and costs of the uncovering of the Work or the work of others to allow the required inspection, testing and approval and the restoration of the Work and the work of others so affected.

(c)    Correction and Removal of Defective Work. Contractor shall, at its own expense, provide all materials and labor to correct any defects in the Work, materials or equipment supplied by Contractor (together with any damage to all finishes, fixtures, equipment and personal property damaged as a result of such defects) in a manner reasonably satisfactory to Owner. Contractor shall begin all corrective work necessary to cure any defect in the Work, materials or equipment supplied by Contractor within three (3) calendar days after receiving written notice from Owner; provided, however, that any defect related to plumbing, heating, electrical, and roofing shall be completed immediately after the notice to repair if Contractor is performing such type of work or supplying appurtenant equipment (e.g., HVAC). Contractor shall diligently prosecute all corrective work to completion. Contractor shall report to Owner in writing all action Contractor took to remedy the defective Work, materials or equipment and shall obtain the Owner's signature acknowledging its satisfaction of the corrective work. If any defect is not satisfactorily remedied in the above specified time, or if Owner elects (in its sole discretion) to remedy the defect, Owner may, at its election remedy such defect. If Owner remedies a defect for Contractor, Contractor shall pay to Owner the costs of all corrective work plus interest at the Default Rate from the date the corrective work is completed until the correction costs are paid by Contractor.

8.    Indemnification, Release and Limitation of Liability.

(a)    Indemnification. Contractor shall indemnify, defend (at Contractor's sole cost and with legal counsel acceptable to Owner) and hold the Owner, Construction Manager and their partners, shareholders, directors, officers, agents and employees (collectively, the "Indemnified Parties"), harmless from all losses of profit, obligations, liabilities, claims, demands, damages, debts, expenses, and causes of action including, without limitation, (i) attorney fees, (ii) liabilities or damages incurred by Owner as a result of damage to property owned by Owner or others, (iii) bodily injury, (iv) death, and (v) any claims against or expenses incurred by Owner as a result of Owner's failure to timely and fully perform its obligations under any contract with a purchaser of real property from Owner, or incurred by Owner as a result of the failure of Owner to timely and fully perform its obligations under any contract with a contractor or supplier which arises from or relates to (1) defects in or inferiority of the materials, design or workmanship of the Work, (2) acts and omissions of Contractor or of any person or entity acting on Contractor's behalf, in connection with the Work, (3) Contractor's failure to fulfill its obligations under this Agreement in strict accordance with its terms, including Contractor's failure to perform any portion of the Work, (4) Contractor's breach of any representation or warranty given in this Agreement or elsewhere or provided for by law, (5) the behavior and activities of Contractor, its employees, agents, subcontractors, materialmen, suppliers, and any other persons or entities associated with the performance of the Work, (6) violation or alleged violation of any Laws by Contractor or by any of Contractor's directors, officers, employees, agents, subcontractors or suppliers, (7) any unpatented or patented inventions, article or appliance manufactured or used by or on behalf of Contractor in connection with the performance of the Work, (8) any use or misuse of the Job Site or any portion thereof or improvement thereon by Contractor or any of its agents, employees, subcontractors or suppliers, or (9) any and all claims of lien and liens arising out of or in any manner directly or indirectly related to the Work, (provided that at the time such claim of lien or liens is brought or filed, Contractor has been paid all sums due to Contractor for the work performed to the date of such claim of lien or liens). To the extent permitted by law, this indemnification shall apply regardless of any active or passive negligent act or omission of the Indemnified Parties, but shall not include any injury or harm that is caused exclusively by the gross negligence or willful misconduct of the Indemnified Parties or any of them. This indemnification shall be effective during and after completion of the Work.

(b)    Release. Contractor waives and releases Owner from all claims, demands, expenses, debts, damages, and liabilities, including, lost wages, pain and suffering, permanent or temporary disability, medical and hospital expenses, attorney fees, and costs of repair and replacement of Contractor's property, which arises from or relates to (a) the physical condition, security or maintenance of the Job Site and the vicinity thereof; (b) vandalism, theft, or any other willful or negligent act by any person or entity at the Job Site or in the vicinity thereof, including, the operation of a motor vehicle; or (c) the activities, omissions or behavior, whether or not negligent, of suppliers and other contractors and subcontractors, whose services have been or are being utilized by or on behalf of Owner, as well as the activities, omissions or behavior of their agents and employees, whether or not actively or passively negligent. Nothing in this subparagraph (b) shall release any of the Indemnified Parties from liability for their exclusive willful or grossly negligent acts.

9.    Trade Unions and Employees.

(a)    Labor Relations/Contractor. Contractor agrees to comply with all of the terms and conditions of labor agreements governing the work insofar as Contractor may lawfully do so, and in particular agrees to comply with the terms and provisions of said agreements setting forth the jurisdiction and the scope of work claimed by each of such crafts and the procedure contained therein for resolution of jurisdictional disputes. In the absence of any such procedure, or if such procedure fails to promptly resolve the jurisdictional dispute, Contractor agrees, at his own cost and expense, upon request of Owner to take any and all lawful steps to secure a binding and final determination of said jurisdictional dispute by the National Labor Relations Board. Nothing in this Agreement shall relieve Contractor of its obligation to provide adequate staff to perform the Work in the manner prescribed by this Agreement. Immediately upon receipt of Owner's oral or written request, Contractor shall furnish Owner with a copy of (i) each collective bargaining agreement or other labor agreement governing compensation of Contractor's employees and any other person associated with the Work, (ii) Contractor's payroll records demonstrating that Contractor is not delinquent concerning payment of its employees, and (iii) Contractor's records demonstrating that Contractor is not delinquent payments to health and welfare, pension, vacation, apprenticeship, or other union fringe benefit trust funds.

(b)    Labor Relations/Contractor's Agents. Within five (5) business days of receipt of a written request from Owner, Contractor shall obtain and furnish Owner with (i) statements from each union fringe benefit trust fund established as a result of every collective bargaining agreement or other labor agreement applicable to the Work, including the collective bargaining agreement or other labor agreement governing the employees of Contractor's subcontractors, (ii) a copy of each collective bargaining agreement or other labor agreement governing compensation of the employees of Contractor's subcontractors, (iii) each such subcontractor's payroll records demonstrating that such subcontractor is not delinquent concerning payments of its employees, and (iv) each such subcontractor's records demonstrating that such subcontractor is not delinquent with respect to payments to health, welfare, pension, vacation, apprenticeship, or other union fringe benefit trust funds, in all cases, to the extent required or permitted by law.

(c)    Labor Relations/Breach. If Contractor or any of its subcontractors are or become, during the term of this Agreement, delinquent in the payment to the appropriate health, welfare pension, vacation or apprenticeship fund or funds (and regardless of whether the employees involved are employed on the Job Site or elsewhere), Owner may (i) deduct the full amount of such delinquencies from payments to be made to Contractor hereunder and without recourse by Contractor, (ii) pay such amount so deducted without inquiry as to the correctness of the amount or the validity of such claimed delinquencies, (1) directly to the appropriate fund or funds, or (2) by joint check payable to Contractor and the appropriate fund or funds.

10.    Liens and Stop Notices. Contractor shall pay when due, all claims asserted and debts in favor of persons or entities who furnish labor, material, services, fixtures, or equipment applied to or utilized in the performance of the Work. Contractor shall not cause or permit (a) the recordation of any claim of lien on Owner's property, (b) the imposition of any stop notice on funds held by a lender (a "Project Lender") that are intended to be paid to Owner pursuant to an agreement to finance completion in whole or in part of the project at the Job Site, and (c) the garnishment or attachment of funds held by Owner, by promptly satisfying all claims and debts asserted against Contractor or Contractor's subcontractors by such persons or entities. In addition, Contractor shall use all possible means to cause (a) Owner's property to be released from all claims of lien, (b) all funds withheld from Owner on account of stop notices to be released from the effect of such notices, and (c) all suits to be dismissed against Owner within fourteen (14) days after each such claim of lien has been recorded against Owner's property, each such stop notice has been served upon a Project Lender and each such suit is brought against Owner, Contractor shall not apply any payments made by Owner to satisfy claims of suppliers, materialmen, subcontractors, utilities, or insurance companies unless such claims have arisen as a result of the work described in the Invoice being paid by Owner. Contractor agrees within fourteen (14) days after written demand to cause the effect of any suit or lien to be removed from the premises, and in the event Contractor shall fail to do so, Owner is authorized to use whatever means in its discretion it may deem appropriate to cause said lien or suit to be removed or dismissed and the cost thereof, together with reasonable attorney’s fees, shall be immediately due and payable to Owner by Contractor.

11.    Bonding.

(a)    Faithful Performance Bond. Owner may at any time require Contractor to furnish a faithful performance bond issued in a form and by a surety company acceptable to Owner securing the Contractor's faithful performance of its obligations under this Agreement, in an amount not less than the value of the Work remaining to be performed. Upon Owner's request, Contractor shall indemnify the surety or post adequate collateral, or both, to secure any indemnity to any surety. Owner shall pay the bond premium amount up to a maximum of one percent (1%) of the Contract Price.

(b)    Labor and Material Payment Bond. Owner may at any time require Contractor to furnish a labor and material payment bond issued in a form and by a surety company acceptable to Owner, securing Contractor's payment of all monies owed to its employees, subcontractors, suppliers and any other persons or entities who may claim a mechanics' lien or materialmen's lien upon the Job Site. Upon Owner's request, Contractor shall indemnify the surety or post adequate collateral, or both, to secure any indemnity to any surety. The labor and material payment bond shall be an amount the lesser of one hundred and fifty percent (150%) of the Contract Price, or the maximum allowed by Law.

12.    Default and Remedies.

(a)    Failure to Perform. Contractor's failure to comply with any of the provisions of this Agreement or in the event that Contractor at any time refuses, neglects or fails to supply a sufficient number of properly skilled workmen or a sufficient quantity of materials of proper quality, (ii) make prompt payment to his materialmen and or laborers or fails in any respect to properly and diligently prosecute the work covered by this Agreement, or becomes delinquent with respect to his materialmen and or payment required to be made to any Health and Welfare, Pension, Vacation, Apprenticeship or other employee benefit program or trust, (iii) fulfill any of the provisions these General Conditions by him to be performed, or otherwise fails to perform fully any and all of the agreements herein contained, or the occurrence of any of the events set forth in Sections 12(b)(i)-(iv) below, shall constitute a default by Contractor, and Owner may, at its sole election and without notice to Contractor, take any one or more of the following remedial actions, none of which (other than subparagraph (iv) of this Paragraph 12) shall be deemed exclusive of any other:

(i)    Any remedy provided elsewhere in this Agreement.

(ii)    If Contractor fails to remedy any default within forty-eight (48) hours after receipt of written notice at the address appearing on the signature page of this Agreement or such longer period as is reasonably necessary if such breach cannot be cured within such forty-eight (48) hour time period (provided Contractor commences to cure immediately and thereafter diligently prosecutes such cure to completion), Owner may elect to terminate the Contractor's right to perform the Work in whole or in part without liability to Contractor for any Work thereafter performed by Owner or anyone else. In such event, Owner may: (1) complete the Work or correct any failures in the Work and procure such equipment, labor and materials as is necessary therefor, and in so doing use any of Contractor's equipment and consume any materials on the Job Site until it is completed, and Contractor shall pay Owner the cost of such completion or correction, plus fifteen percent (15%) of such costs to compensate Owner for overhead and administration; (2) sue for and recover from Contractor the reasonable value of all or a portion of the cost to complete the performance of the Work; (3) sue for and recover from Contractor all damages arising out of such default, including but not limited to, loss of profits and recovery of any and all costs and expenses whatsoever directly or indirectly related to such default, or (4) pursue all alternatives under (1), (2) and (3). If Owner completes the Work, Contractor shall receive no further payment until the Work is completed. When the Work is completed, Owner shall pay Contractor the amount owing on the Contract Price less all of the costs Owner incurred in completing the Work, the fifteen percent (15%) markup described above and any attorney fees incurred by Owner as a result of such breach.

(iii)    Owner may withhold payment of any monies due until the default has been cured.

(iv)    Contractor acknowledges that if Contractor breaches this Agreement by delay in commencing or completing the Work (for any reason other than a Permitted Delay), the damages Owner would suffer ("Delay Damages") would include, among other items, losses, payments, liabilities and damages resulting from additional direct costs (including such items as Job Site payroll, cost of supervision, cost of site office facilities, Job Site telephone and rental value of any equipment not being utilized in connection with the other Work being performed at the Job Site), additional overhead expenses of the main office (including such items as salaries of executives and all other personnel, rent, and utilities), increased labor and material costs, and damages Owner may be required to pay to other contractors and third parties. Contractor also acknowledges that such Delay Damages would be difficult and impracticable to ascertain. Therefore, for any day Contractor fails to commence or complete the Work required Contractor shall pay Owner, upon demand, liquidated damages of $______ per day for each day of delay. The parties agree that the liquidated damages amount is a fair and reasonable approximation of the Delay Damages and shall be Owner's sole and exclusive remedy on account of any such delay. Such liquidated damages may be deducted from amounts otherwise due Contractor. If the liquidated damages are not paid upon Owner's demand, and the amounts otherwise due Contractor by Owner are less than the amount of the liquidated damages, the difference shall bear interest from the date of demand at the Default Rate, until paid in full by Contractor.

(v)    Owner may set off the costs to complete the Work against monies due to Contractor under any other contract between Owner (or any entity owned or controlled by the Owner) and Contractor (or any entity owned or controlled by Contractor), whether such contract is in effect before or after this Agreement.

(vi)    Owner may pay any sums to any such persons, firms, itself or other entities to whom Contractor is obligated and to charge such sums paid to the account of Contractor without recourse by Contractor and without inquiry as to the validity of such obligation and the correctness of the amount thereof. If such sum is greater than the amount then due Contractor, the excess shall be a debt due from Contractor to Owner and shall bear interest at the Default Rate from the date due until paid.

(vii)    Any and all such other remedies as may be provided at law or in equity.

(b)    Termination for Insolvency. Owner may terminate Contractor's right to do the Work by giving Contractor at least twenty-four (24) hours written notice at any time after the occurrence of any of the following events (i) the filing of a petition for relief under the Bankruptcy Code or the institution of any other insolvency proceedings by, against, or on behalf of Contractor, (ii) the appointment of a receiver for Contractor, (iii) the death, dissolution or liquidation of Contractor, (iv) the transfer to others of more than twenty-five (25%) of the assets or ownership interest of Contractor, and (v) any act of insolvency by Contractor. If an order for relief is entered under the Bankruptcy Code for the benefit of Contractor, Owner may terminate Contractor's right to do the Work by giving twenty-four (24) hours’ notice to Contractor, its trustee and its surety, if any, unless Contractor, the surety or its trustee: (1) immediately cures or takes action to cure all defaults of Contractor, (2) provides Owner adequate assurance of performance under this Agreement, (3) makes Owner whole for all loss suffered by Owner as a result of Contractor's default, and (4) assumes all obligations of Contractor within statutory time limits.

(c)    Termination by Owner. Owner may also terminate this Agreement at any time before Contractor begins the Work and notifies Owner in writing of such commencement if (1) Owner sells the property on which the Work is being performed or (2) the economic climate does not warrant proceeding with the project of which the Work is a part. In such circumstance, Contractor shall be entitled to receive that portion of the Contract Price earned by Contractor for Work performed to the satisfaction of Owner less any payments made before the date this Agreement is terminated. Contractor shall not be entitled to any additional compensation or damages as a result of termination of this Agreement pursuant to this Paragraph 12(c).

(d)    Assignment of Contracts upon Termination. If Contractor's right to perform the Work is terminated, any agreement of Contractor relating to the Work with third parties shall, at the election of Owner, be assigned to Owner without the need for further documentation.

(e)    Dispute Resolution. Any dispute arising out of or relating to this Agreement shall be submitted to mediation by a neutral mediator with the parties equally sharing all costs of the mediation. Failure to mediate shall result in a forfeiture of any rights to attorneys' fees and costs as set forth below. Any dispute arising out of or relating to this Agreement, after having been submitted to mediation, shall be settled by arbitration in accordance with the rules of the American Arbitration Association. The parties shall equally share all initial costs of arbitration. The prevailing party shall be entitled to reimbursement of attorneys' fees and costs as set forth below. All decisions of the arbitrator shall be final, binding and conclusive on all parties. Judgment may be entered upon any such decision in accordance with applicable Law in any court having jurisdiction thereof. The venue for mediation and/or arbitration for any dispute arising out of or relating to this Agreement shall be in the state where the Job Site is located.

13. Contractor Representations. Contractor represents and warrants the following to Owner:

(a)    Authority. Contractor is duly organized, validly existing and in good standing under the laws of the state in which it is organized and is duly authorized to operate in the state where the Job Site is located. Contractor has all necessary powers to carry on its business. Contractor has the right, power, legal capacity and authority to enter into this Agreement. This Agreement and each document or instrument to be executed by Contractor pursuant to this Agreement, are and shall be valid, legally binding obligations of and enforceable against Contractor in accordance with their terms. Contractor has taken all necessary action to authorize the execution, delivery and performance of this Agreement. No further, approval or authority of any nature or other action by any person or entity is required in connection with the execution and delivery of this Agreement by Contractor, and the performance of the Work by Contractor.

(b)    Litigation. Except as disclosed to Owner in writing concurrently with the execution of this Agreement by Contractor, there is no suit, action, arbitration, or legal administrative or other proceeding, or non-insured workers' compensation claim or governmental investigation pending or to its best knowledge threatened after doing diligent inquiry, against or affecting Contractor. Contractor is not in default concerning any order, writ, injunction or decree of any federal, state, local or foreign court, department, agency or instrumentality. No attachments, execution proceedings, assignments for the benefit of creditors and insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Contractor or to its knowledge, any general partners of Contractor nor are any of such proceedings contemplated.

(c)    Financial Capability. Contractor is and will remain financially solvent and financially capable of discharging its obligations under this Agreement.

(d)    Skill. Contractor and everyone acting on its behalf in connection with the Work is skilled in performing the Work and in the means, methods, techniques, sequences and procedures related to completing the Work in the most expeditious and economical manner consistent with the interest of Owner. Contractor is familiar with all manufacturer's instructions and specifications concerning the Work and the application, connection, erection and use of all equipment, materials and supplies incorporated into or that are a part of the Work. Contractor is also familiar with all Laws applicable to the Work, has carefully studied the Work requirements and the Plans and Specifications, has made a thorough investigation and inspection of the physical condition of the Job Site and will remain familiar with all the physical and economic risks associated with the performance of the Work and assumes all such risks.

(e)    Licenses. Contractor has and shall maintain all licenses and permits necessary to perform the Work and all other obligations of Contractor under this Agreement.

(f)    Agreement. Contractor has read and has familiarized itself with all of the provisions of this Agreement on its own and without relying on any information obtained from Owner.

(g)    Safety. Contractor shall, at its own expense,comply with all specific safety requirements promulgated by any government authority, including, without limitation, the requirements of the Occupational Safety Health Act of 1970, the Construction Safety Act of 1969, the California Labor Code, all successions and amendments to the foregoing, and all standards and regulations relating to occupational health and safety which have been or shall be promulgated by the parties or agencies which administer the same. Contractor shall have and exercise full responsibility for compliance hereunder by itself, its agents, employees, materialmen, and subcontractors with respect to its portion of the work on this Project: and shall directly receive, respond to, defend and be responsible for any citation, assessment, fine, or penalty by reason of Contractor’s failure or failure of Contractor’s agents, employees, materialmen, and subcontractors to so comply. Contractor shall indemnify and hold harmless Owner from and against any liability, loss, damage, cost, claims, awards, judgments, fines, expenses, including litigation expense, reasonable attorney’s fees, claims or liability for harm to persons or property, expenses incurred pursuant to or attendant to any hearing or meeting and any other applicable cost which may be incurred by Owner resulting from Contractor’s failure to fulfill covenants set forth in this paragraph.

In the event Contractor fails to comply with any citation issued by the Secretary of Labor or of any other body responsible for the administration and/or enforcement of any statute, regulation or ordinance relating to occupational health and safety within the period specified in any such citation or order, Owner may, in his discretion, exercise the rights and remedies provided him under the terms of this Agreement, including, but not limited to, the rights and remedies provided.

14.    Miscellaneous.

(a)    Nondiscrimination. Contractor shall comply with all nondiscrimination Laws to the extent applicable to Contractor's performance of this Agreement.

(b)    Joint Payment. Owner may, at its election and without the Contractor's consent, make any payment due hereunder jointly to Contractor, any of its subcontractors, materialmen, suppliers, and any other persons or entities who may claim a mechanics' lien or materialmen's lien as a result of the Work.

(c)    Construction. Whenever used in this Agreement, the singular shall include the plural and the plural the singular. The word "including" shall mean "including without limitation." The word “materialman” shall have the same meaning as the term “material supplier”.

(d)    No Waiver. Owner's express or implied waiver of any provision of this Agreement shall not constitute a future or further waiver by Owner of the same or other provision of this Agreement. Delay in the enforcement of any remedy, or in the exercise of any right, shall not be a waiver.

(e)    Entire Agreement. This Agreement and all of the addenda, attachments, schedules and exhibits hereto, which are hereby incorporated into this Agreement by this reference, are the entire agreement between the parties, and supersede all previous communications, representations or agreements, either written or oral, between the parties hereto concerning the subject matter hereof. Any changes to this Agreement (including any change to any of the attachments hereto) must be in writing to be effective and signed by each party's respective Designated Representatives.

(f)    Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts. Each counterpart is an original, and all counterparts together shall constitute one instrument.This Agreement may be executed by facsimile signature by any party and such signature will be deemed binding for all purposes hereof without delivery of an original signature being thereafter required. In addition, any party may effect the execution and delivery of this Agreement by signing the same and sending a copy thereof to the other party or its attorney by facsimile transmission. Such facsimile document, including the signatures thereon, shall be treated in all respects as an original instrument bearing an original signature.

(g)    Severability. If any portion of this Agreement is declared by court of competent jurisdiction to be invalid or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining portions shall remain in full force.

(h)    Assignment. Owner may, assign all or part of this Agreement at any time. Contractor may not assign or further subcontract any portion of the Work or its obligations hereunder or assign, transfer, convey or otherwise dispose of this Agreement or its right, title or interest in or to this Agreement or any part hereof without the prior written consent of Owner and any sureties under bonds or guaranties made in favor of Owner concerning the Work. Owner's consent to an assignment shall not release Contractor from (1) any obligation otherwise imposed upon Contractor by this Agreement, (2) the consequences of a breach of this Agreement by Contractor's assignee or Contractor, or (3) the failure of Contractor's assignee or Contractor to satisfy all of the warranties made by Contractor in this Agreement. If Contractor is a corporation, a change in ownership of twenty-five percent (25%) or more of its stock, whether in one or more transactions, shall constitute an assignment ofthe Work. Contractor acknowledges the reasonableness of this provision due to the personal service nature of this Agreement.

(i)    Title to Improvements. Title to all materials, fixtures, Plans and Specifications and Shop Drawings shall be deemed vested in Owner when and as the same shall have been installed, affixed permanently to the realty or otherwise delivered to Owner. Owner shall not be liable for loss or damage to any material or fixtures as to which title is not then vested in Owner at the time of such loss or damage whether such material or fixtures are on the Job Site, in transit, under the control of Owner, or otherwise.

(j)    Time. Time is of the essence of this Agreement. It shall be Contractor’s obligation to conform to Owner’s progress schedule, subject to Owner’s modification, which is incorporated herein by this reference and made a part hereof. Contractor shall prepare and obtain approval as required by the Plans and Specifications for all shop drawings, details, samples, and do all other things necessary and incidental to the prosecution of his work in conformance with the said progress schedule. If in the opinion of the Owner the Contractor falls behind in the progress of the Work, the Owner may direct the Contractor to take such steps as the Owner deems necessary to improve the rate of progress, including, without limitation, requiring the Contractor to increase the number of shifts, personnel, overtime operations, days of work, equipment, amount of plant, or other remedies and to submit to Owner for approval an outline schedule demonstrating the manner in which the required rate of progress will be regained, without additional costs to the Owner. Owner may require Contractor to prosecute, in preference to other parts of the Work, such part or parts if the work as Owner may specify.

(k)    Attorney Fees. If either party institutes any action to enforce or interpret any provision of this Agreement the prevailing party shall be entitled to recover from the other party all costs, including costs of litigation and reasonable attorney fees and expert or consultant fees.

(l)    Independent Contractor. Contractor is an independent contractor and shall, at its sole expense, and without increase in the Contract Price, comply with all Laws and pay all manufacturers' sales, use and processing taxes and all federal, state and local taxes.

(m)    Survival of Obligations. Any indemnity, guaranty, representation or warranty given by Contractor to Owner in this Agreement shall survive the expiration or termination of this Agreement.

(n)    No Third Party Beneficiaries. This Agreement is between Owner and Contractor. Except as expressly set forth herein, no other person or entity is intended to be, nor shall be, benefited by the terms hereof, whether as a third party beneficiary or otherwise.

(o)    Default Rate. As used herein, the term "Default Rate" means the maximum legal rate which may be charged at the time.

_______________________________________________ OWNER ____________________________________________________ CONTRACTOR

EXHIBITA

TO

AGREEMENT FOR CONTRACTOR SERVICES

SUBCONTRACTORS AND SUPPLIER’S CONDITIONAL WAIVER AND RELEASE

UPON PROGRESS PAYMENT

FORM OF SUBCONTRACTOR'S AND SUPPLIER’S CERTIFIED STATEMENT

TO ACCOMPANY INVOICE

_________________________

CONDITIONAL WAIVER AND RELEASE ON

PROGRESS PAYMENT

NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT’S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information:

Name of Claimant:________________________________________________________________________

Name of Customer:_______________________________________________________________________

Job Location:____________________________________________________________________________

Owner:_________________________________________________________________________________

Through Date:____________________________________________________________________________

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant’s receipt of payment from the financial institution on which the following check is drawn:

Maker of Check:______________________________________________________________________

Amount of Check$____________________________________________________________________

Check Payable to: ____________________________________________________________________

Exceptions

This document does not affect any of the following:

(1) Retentions.

(2) Extras for which the claimant has not received payment.

(3) The following progress payments for which the claimant has previously given a conditional waiver and release but has not received payment:

Date(s) of waiver and release: _______________________________________________________

Amount(s) of unpaid progress payment(s): $ _____________________________________________

(4) Contract rights, including:

(A)    a right based on rescission, abandonment, or breach of contract, and

(B)    the right to recover compensation for work not compensated by the payment.

SIGNATURE

Claimant’s Signature: ___________________________________________

Claimant’s Title: _______________________________________________

Date of Signature: ______________________________________________

NOTE: This form is to be used by a party who applies for a progress payment when the progress check has not yet cleared the bank. This release only becomes effective when the check, properly endorsed, has cleared the bank.

EXHIBIT B

TO

AGREEMENT FOR CONTRACTOR SERVICES

SUBCONTRACTORS AND SUPPLIER’S CONDITIONAL WAIVER AND RELEASE

UPON FINAL PAYMENT

FORM OF SUBCONTRACTORS AND SUPPLIER'S CERTIFIED STATEMENT

TO ACCOMPANY INVOICE

_____________________________CONDITIONAL WAIVER AND RELEASE ON

FINAL PAYMENT

NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT’S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information:

Name of Claimant:________________________________________________________________________

Name of Customer:_______________________________________________________________________

Job Location:____________________________________________________________________________

Owner:_________________________________________________________________________________

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant’s receipt of payment from the financial institution on which the following check is drawn:

Maker of Check:______________________________________________________________________

Amount of Check$____________________________________________________________________

Check Payable to: ____________________________________________________________________

Exceptions

This document does not affect any of the following:

Disputed claims for extras in the amount of: $__________________________________________

SIGNATURE

Claimant’s Signature: _______________________________________________

Claimant’s Title: _______________________________________________

Date of Signature: _______________________________________________

NOTE: This release is not effective until the check that constitutes final payment has been properly endorsed and has cleared the bank.

EXHIBIT C

LIST OF SUPPLIERS AND SUBCONTRACTORS

The following is a list of all suppliers and subcontractors whose materials and services will be or have been utilized by Contractor in the performance of the Work or as described in the Invoice, together with a description of the materials and services provided by such suppliers and subcontractors in connection with the Work or during the Invoice Period, and the price charged by such suppliers and subcontractors for such materials and services. If necessary, this list will be continued on an additional sheet. If this list is being submitted with an Invoice, attach a copy of each invoice submitted by the following suppliers and subcontractors representing all of the materials and services that Contractor has provided during the Invoice Period.

Material or Services

Name and Address                    Provided and Price Charged

1.

2.

3.

4.

5.

6.

Invoice Period: _____________________________________________, 20 to _____________________________________________, 20__ __________________________________________________, a ____________________________________________________ By:__________________________________________________ Its:__________________________________________________ "Subcontractor"

EXHIBIT D

TO

AGREEMENT FOR CONTRACTOR SERVICES

CHANGE ORDER REQUEST

FROM:_____________________________        TO:_____________________________

_____________________________

_____________________________

_____________________________

Change Order No.: _____________________________

Previous Change Order Nos.: _____________________________

The following changes are to be made in the Contract between Owner and Contractor:

One original Contract Price was      $

Net change by previous Change Order    $

The Contract Price before this Change Order was    $

The Contract Price will be (increased) (decreased)

(unchanged) by this Change Order    $

The new Contract Price including this Change

Order will be ……………………………………………………………………………………………………………………….    $

The time for completion will be (increased) (decreased) (unchanged) by days.

The Completion Date for the Work is (not extended) (extended to ).

Owner: By: ________________________________________________ Owner’s Authorized Representative Dated:____________________________ Contractor: By: ______________________________________________ Its: _______________________________________________ Dated: ___________________________

EXHIBIT E

TO

AGREEMENT FOR CONTRACTOR SERVICES

ADDITIONAL REQUIRED INSURANCE

None.

APPENDIX 1

TO

AGREEMENT FOR CONTRACTOR SERVICES

SUPPLEMENTARY CONDITIONS

 Owner Initials ______ Contractor Initials ______

APPENDIX 2

TO

AGREEMENT FOR CONTRACTOR SERVICES

STATE REQUIRED NOTICES AND/OR

DISCLOSURES

EX-10.7

EXHIBIT 10.7

MULTIFAMILY NOTE

US $35,700,000 as of March 10, 2015

FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to the order of BERKELEY POINT CAPITAL LLC, a Delaware limited liability company (“Lender”), the principal amount of Thirty Five Million Seven Hundred Thousand and 00/100 Dollars (US $35,700,000) (the “MortgageLoan”), together with interest thereon accruing at the Interest Rate on the unpaid principal balance from the date the Mortgage Loan proceeds are disbursed until fully paid in accordance with the terms hereof and of that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”).

1. Defined Terms.

Capitalized terms used and not specifically defined in this Multifamily Note (this “Note”) have the meanings given to such terms in the Loan Agreement.

2. Repayment.

Borrower agrees to pay the principal amount of the Mortgage Loan and interest on the principal amount of the Mortgage Loan from time to time outstanding at the Interest Rate or such other rate or rates and at the times specified in the Loan Agreement, together with all other amounts due to Lender under the Loan Documents. The outstanding balance of the Mortgage Loan and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date, together with all other amounts due to Lender under the Loan Documents.

3. Security.

The Mortgage Loan evidenced by this Note, together with all other Indebtedness is secured by, among other things, the Security Instrument, the Loan Agreement and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Security Instrumentand the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.

Multifamily Note – Multistate	Form 6010	Page 1
Fannie Mae	06-12	© 2012 Fannie Mae

4.Acceleration.

In accordance with the Loan Agreement, if an Event of Default has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any accrued and unpaid interest, including interest accruing at the Default Rate, the Prepayment Premium (if applicable), and all other amounts payable under this Note, the Loan Agreement and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower, unless applicable law requires otherwise (and in such case, after satisfactory notice has been given).

5.Personal Liability.

The provisions of Article 3 (Personal Liability) of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

6.Governing Law.

This Note shall be governed in accordance with the terms and provisions of Section 15.01 (Governing Law; Consent to Jurisdiction and Venue) of the Loan Agreement.

7.Waivers.

Presentment, demand for payment, notice of nonpayment and dishonor, protest and notice of protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace and diligence in collecting the Indebtedness are waived by Borrower, for and on behalf of itself, Guarantor and Key Principal, and all endorsers and guarantors of this Note and all other third party obligors or others who may become liable for the payment of all or any part of the Indebtedness.

8.Commercial Purpose.

Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise or activity, and not for agricultural, personal, family or household purposes.

9.Construction; Joint and Several (or Solidary, as applicable) Liability.

(a)Section 15.08 (Construction) of the Loan Agreement is hereby incorporated herein as if fully set forth in the body of this Note.

(b)If more than one Person executes this Note as Borrower, the obligations of such Person shall be joint and several (solidary instead for purposes of Louisiana law).

Multifamily Note – Multistate	Form 6010	Page 2
Fannie Mae	06-12	© 2012 Fannie Mae

10.Notices.

All Notices required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 15.02 (Notice) of the Loan Agreement.

11.Time is of the Essence.

Borrower agrees that, with respect to each and every obligation and covenant contained in this Note, time is of the essence.

12.Loan Charges Savings Clause.

Borrower agrees to pay an effective rate of interest equal to the sum of the Interest Rate and any additional rate of interest resulting from any other charges of interest or in the nature of interest paid or to be paid in connection with the Mortgage Loan and any other fees or amounts to be paid by Borrower pursuant to any of the other Loan Documents. Neither this Note, the Loan Agreement nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the maximum interest rate permitted to be charged under applicable law. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply with all applicable laws governing the maximum rate or amount of interest payable on the Indebtedness evidenced by this Note and the other Loan Documents. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower is interpreted so that any interest or other charge or amount provided for in any Loan Document, whether considered separately or together with other charges or amounts provided for in any other Loan Document, or otherwise charged, taken, reserved or received in connection with the Mortgage Loan, or on acceleration of the maturity of the Mortgage Loan or as a result of any prepayment by Borrower or otherwise, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate any such violation. Amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of the Mortgage Loan without the payment of any prepayment premium (or, if the Mortgage Loan has been or would thereby be paid in full, shall be refunded to Borrower), and the provisions of the Loan Agreement and any other Loan Documents immediately shall be deemed reformed and the amounts thereafter collectible under the Loan Agreement and any other Loan Documents reduced, without the necessity of the execution of any new documents, so as to comply with any applicable law, but so as to permit the recovery of the fullest amount otherwise payable under the Loan Documents. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, and any amount paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness, shall be deemed to be allocated and spread ratably over the stated term of the Mortgage Loan. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of the Mortgage Loan.

Multifamily Note – Multistate	Form 6010	Page 3
Fannie Mae	06-12	© 2012 Fannie Mae

13.WAIVER OF TRIAL BY JURY.

TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH OF BORROWER AND LENDER (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

14.Receipt of Loan Documents.

Borrower acknowledges receipt of a copy of each of the Loan Documents.

15.Incorporation of Schedules.

The schedules, if any, attached to this Note are incorporated fully into this Note by this reference and each constitutes a substantive part of this Note.

ATTACHED SCHEDULE. The following Schedule is attached to this Note:

Schedule 1 Modifications to Note

[Remainder of Page Intentionally Blank]

Multifamily Note – Multistate	Form 6010	Page 4
Fannie Mae	06-12	© 2012 Fannie Mae

IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal (where applicable) or has caused this Note to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument.

BORROWER:

STAR PRESTON HILLS, LLC

a Delaware limited liability company

By:    STEADFAST APARTMENT ADVISOR, LLC

a Delaware limited liability company

Non-Member Manager

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

Multifamily Note – Multistate	Form 6010	Page 5
Fannie Mae	06-12	© 2012 Fannie Mae

EX-10.8

EXHIBIT 10.8

MULTIFAMILY LOAN AND SECURITY AGREEMENT

(NON-RECOURSE)

BY AND BETWEEN

STAR PRESTON HILLS, LLC

a Delaware limited liability company

AND

BERKELEY POINT CAPITAL LLC

a Delaware limited liability company

DATED AS OF

MARCH 10, 2015

TABLE OF CONTENTS

ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS		1
SECTION 1.01	DEFINED TERMS.	1
SECTION 1.02	SCHEDULES, EXHIBITS, AND ATTACHMENTS INCORPORATED.	1
ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS		2
SECTION 2.01	MORTGAGE LOAN ORIGINATION AND SECURITY.	2
(a)	Making of Mortgage Loan.	2
(b)	Security for Mortgage Loan.	2
(c)	Protective Advances.	2
SECTION 2.02	PAYMENTS ON MORTGAGE LOAN.	2
(a)	Debt Service Payments.	2
(b)	Capitalization of Accrued But Unpaid Interest.	3
(c)	Late Charges.	3
(d)	Default Rate.	4
(e)	Address for Payments.	5
(f)	Application of Payments.	5
SECTION 2.03	LOCKOUT/PREPAYMENT.	6
(a)	Prepayment; Prepayment Lockout; Prepayment Premium.	6
(b)	Voluntary Prepayment in Full.	6
(c)	Acceleration of Mortgage Loan.	7
(d)	Application of Collateral.	7
(e)	Casualty and Condemnation.	7
(f)	No Effect on Payment Obligations.	7
(g)	Loss Resulting from Prepayment.	8
ARTICLE 3 - PERSONAL LIABILITY		8
SECTION 3.01	NON-RECOURSE MORTGAGE LOAN; EXCEPTIONS.	8
SECTION 3.02	PERSONAL LIABILITY OF BORROWER (EXCEPTIONS TO NON-RECOURSE PROVISION).	9
(a)	Personal Liability Based on Lender’s Loss.	9
(b)	Full Personal Liability for Mortgage Loan.	10
SECTION 3.03	PERSONAL LIABILITY FOR INDEMNITY OBLIGATIONS.	10
SECTION 3.04	LENDER’S RIGHT TO FOREGO RIGHTS AGAINST MORTGAGED PROPERTY.	11
ARTICLE 4 - BORROWER STATUS		11

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page i
Fannie Mae	08-14	© 2014 Fannie Mae

SECTION 4.01	REPRESENTATIONS AND WARRANTIES.	11
(a)	Due Organization and Qualification.	11
(b)	Location.	11
(c)	Power and Authority.	12
(d)	Due Authorization.	12
(e)	Valid and Binding Obligations.	12
(f)	Effect of Mortgage Loan on Borrower’s Financial Condition.	12
(g)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.	13
(h)	Borrower Single Asset Status.	13
(i)	No Bankruptcies or Judgments.	15
(j)	No Actions or Litigation.	15
(k)	Payment of Taxes, Assessments, and Other Charges.	15
(l)	Not a Foreign Person.	16
(m)	ERISA.	16
(n)	Default Under Other Obligations.	16
(o)	Prohibited Person.	16
(p)	No Contravention.	17
(q)	Lockbox Arrangement.	17
SECTION 4.02	COVENANTS.	17
(a)	Maintenance of Existence; Organizational Documents.	17
(b)	Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.	18
(c)	Payment of Taxes, Assessments, and Other Charges.	18
(d)	Borrower Single Asset Status.	18
(e)	ERISA.	20
(f)	Notice of Litigation or Insolvency.	20
(g)	Payment of Costs, Fees, and Expenses.	20
(h)	Restrictions on Distributions.	21
(i)	Lockbox Arrangement.	21
ARTICLE 5 - THE MORTGAGE LOAN		21
SECTION 5.01	REPRESENTATIONS AND WARRANTIES.	21
(a)	Receipt and Review of Loan Documents.	21
(b)	No Default.	22
(c)	No Defenses.	22
(d)	Loan Document Taxes.	22
SECTION 5.02	COVENANTS.	22
(a)	Ratification of Covenants; Estoppels; Certifications.	22
(b)	Further Assurances.	23
(c)	Sale of Mortgage Loan.	23
(d)	Limitations on Further Acts of Borrower.	24
(e)	Financing Statements; Record Searches.	24
(f)	Loan Document Taxes.	25

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ARTICLE 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE		25
SECTION 6.01	REPRESENTATIONS AND WARRANTIES.	25
(a)	Compliance with Law; Permits and Licenses.	25
(b)	Property Characteristics.	26
(c)	Property Ownership.	26
(d)	Condition of the Mortgaged Property.	26
(e)	Personal Property.	26
SECTION 6.02	COVENANTS	26
(a)	Use of Property.	26
(b)	Property Maintenance.	27
(c)	Property Preservation.	29
(d)	Property Inspections.	29
(e)	Compliance with Laws.	30
SECTION 6.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING THE PROPERTY.	30
(a)	Property Management.	30
(b)	Subordination of Fees to Affiliated Property Managers.	31
(c)	Property Condition Assessment.	31
ARTICLE 7 - LEASES AND RENTS		31
SECTION 7.01	REPRESENTATIONS AND WARRANTIES.	31
(a)	Prior Assignment of Rents.	31
(b)	Prepaid Rents.	31
SECTION 7.02	COVENANTS.	31
(a)	Leases.	32
(b)	Commercial Leases.	32
(c)	Payment of Rents.	33
(d)	Assignment of Rents.	33
(e)	Further Assignments of Leases and Rents.	34
(f)	Options to Purchase by Tenants.	34
SECTION 7.03	MORTGAGE LOAN ADMINISTRATION REGARDING LEASES AND RENTS	34
(a)	Material Commercial Lease Requirements.	34
(b)	Residential Lease Form.	35
ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING		35
SECTION 8.01	REPRESENTATIONS AND WARRANTIES.	35
(a)	Financial Information.	35
(b)	No Change in Facts or Circumstances.	35

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SECTION 8.02	COVENANTS.	35
(a)	Obligation to Maintain Accurate Books and Records.	35
(b)	Items to Furnish to Lender.	36
(c)	Audited Financials.	38
(d)	Delivery of Books and Records.	38
SECTION 8.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING BOOKS AND RECORDS AND FINANCIAL REPORTING.	39
(a)	Lender’s Right to Obtain Audited Books and Records.	39
(b)	Credit Reports; Credit Score.	39
ARTICLE 9 - INSURANCE		39
SECTION 9.01	REPRESENTATIONS AND WARRANTIES.	39
(a)	Compliance with Insurance Requirements.	39
(b)	Property Condition.	40
SECTION 9.02	COVENANTS.	40
(a)	Insurance Requirements.	40
(b)	Delivery of Policies, Renewals, Notices, and Proceeds.	40
SECTION 9.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING INSURANCE	41
(a)	Lender’s Ongoing Insurance Requirements.	41
(b)	Application of Proceeds on Event of Loss.	42
(c)	Payment Obligations Unaffected.	44
(d)	Foreclosure Sale.	44
(e)	Appointment of Lender as Attorney-In-Fact.	45
ARTICLE 10 - CONDEMNATION		45
SECTION 10.01	REPRESENTATIONS AND WARRANTIES.	45
(a)	Prior Condemnation Action.	45
(b)	Pending Condemnation Actions.	45
SECTION 10.02	COVENANTS.	45
(a)	Notice of Condemnation.	45
(b)	Condemnation Proceeds.	45
SECTION 10.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING CONDEMNATION.	46
(a)	Application of Condemnation Awards.	46
(b)	Payment Obligations Unaffected.	46
(c)	Appointment of Lender as Attorney-In-Fact.	46
(d)	Preservation of Mortgaged Property.	46
ARTICLE 11 - LIENS, TRANSFERS, AND ASSUMPTIONS		47

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SECTION 11.01	REPRESENTATIONS AND WARRANTIES.	47
(a)	No Labor or Materialmen’s Claims.	47
(b)	No Other Interests.	47
SECTION 11.02	COVENANTS.	47
(a)	Liens; Encumbrances.	47
(b)	Transfers.	48
(c)	No Other Indebtedness.	51
(d)	No Mezzanine Financing o r Preferred Equity	51
SECTION 11.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING LIENS, TRANSFERS, AND ASSUMPTIONS	51
(a)	Assumption of Mortgage Loan.	51
(b)	Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.	53
(c)	Estate Planning.	54
(d)	Termination or Revocation of Trust.	54
(e)	Death of Key Principal or Guarantor; Transfer Due to Death.	55
(f)	Bankruptcy of Guarantor.	56
(g)	Further Conditions to Transfers and Assumption.	56
ARTICLE 12 - IMPOSITIONS		58
SECTION 12.01	REPRESENTATIONS AND WARRANTIES.	58
(a)	Payment of Taxes, Assessments, and Other Charges.	58
SECTION 12.02	COVENANTS.	59
(a)	Imposition Deposits, Taxes, and Other Charges.	59
SECTION 12.03	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING IMPOSITIONS.	60
(a)	Maintenance of Records by Lender.	60
(b)	Imposition Accounts.	60
(c)	Payment of Impositions; Sufficiency of Imposition Deposits.	60
(d)	Imposition Deposits Upon Event of Default.	61
(e)	Contesting Impositions.	61
(f)	Release to Borrower.	61
ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS		61
SECTION 13.01	COVENANTS.	61
(a)	Initial Deposits to Replacement Reserve Account and Repairs Escrow Account.	61
(b)	Monthly Replacement Reserve Deposits.	62
(c)	Payment for Replacements and Repairs.	62
(d)	Assignment of Contracts for Replacements and Repairs.	62
(e)	Indemnification.	62

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(f)	Amendments to Loan Documents.	63
(g)	Administrative Fees and Expenses.	63
SECTION 13.02	MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING RESERVES.	63
(a)	Accounts, Deposits, and Disbursements.	63
(b)	Approvals of Contracts; Assignment of Claims.	70
(c)	Delays and Workmanship.	71
(d)	Appointment of Lender as Attorney-In-Fact.	71
(e)	No Lender Obligation.	71
(f)	No Lender Warranty.	72
ARTICLE 14 - DEFAULTS/REMEDIES		72
SECTION 14.01	EVENTS OF DEFAULT.	72
(a)	Automatic Events of Default.	72
(b)	Events of Default Subject to a Specified Cure Period.	73
(c)	Events of Default Subject to Extended Cure Period.	74
SECTION 14.02	REMEDIES.	74
(a)	Acceleration; Foreclosure.	74
(b)	Loss of Right to Disbursements from Collateral Accounts.	74
(c)	Remedies Cumulative.	75
SECTION 14.03	ADDITIONAL LENDER RIGHTS; FORBEARANCE.	75
(a)	No Effect Upon Obligations.	75
(b)	No Waiver of Rights or Remedies.	76
(c)	Appointment of Lender as Attorney-In-Fact.	76
(d)	Borrower Waivers.	78
SECTION 14.04	WAIVER OF MARSHALING.	78
ARTICLE 15 - MISCELLANEOUS		79
SECTION 15.01	GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.	79
(a)	Governing Law.	79
(b)	Venue.	79
SECTION 15.02	NOTICE.	79
(a)	Process of Serving Notice.	79
(b)	Change of Address.	80
(c)	Default Method of Notice.	80
(d)	Receipt of Notices.	80
SECTION 15.03	SUCCESSORS AND ASSIGNS BOUND; SALE OF MORTGAGE LOAN.	80
(a)	Binding Agreement.	80
(b)	Sale of Mortgage Loan; Change of Servicer.	81
SECTION 15.04	COUNTERPARTS.	81
SECTION 15.05	JOINT AND SEVERAL (OR SOLIDARY) LIABILITY.	81

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SECTION 15.06	RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.	81
(a)	Solely Creditor and Debtor.	81
(b)	No Third Party Beneficiaries.	81
SECTION 15.07	SEVERABILITY; ENTIRE AGREEMENT; AMENDMENTS.	82
SECTION 15.08	CONSTRUCTION.	82
SECTION 15.09	MORTGAGE LOAN SERVICING.	83
SECTION 15.10	DISCLOSURE OF INFORMATION.	83
SECTION 15.11	WAIVER; CONFLICT.	83
SECTION 15.12	NO RELIANCE	83
SECTION 15.13	SUBROGATION.	84
SECTION 15.14	COUNTING OF DAYS.	84
SECTION 15.15	REVIVAL AND REINSTATEMENT OF INDEBTEDNESS.	84
SECTION 15.16	TIME IS OF THE ESSENCE.	84
SECTION 15.17	FINAL AGREEMENT.	85
SECTION 15.18	WAIVER OF TRIAL BY JURY.	85

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SCHEDULES & EXHIBITS

Schedules

Schedule 1	Definitions Schedule (required)	Form 6101.SARM
Schedule 2	Summary of Loan Terms (required)	Form 6102.SARM
Schedule 2	Addenda - Summary of Loan Terms (Conversion Option - SARM Loan)	Form 6102.06
Schedule 3	Interest Rate Type Provisions (required)	Form 6103.SARM
Schedule 4	Prepayment Premium Schedule (required)	Form 6104.11 SARM
Schedule 5	Required Replacement Schedule (required)
Schedule 6	Required Repair Schedule (required)
Schedule 7	Exceptions to Representations and Warranties Schedule (required)

Exhibits

Exhibit A Modifications to Loan Agreement (if applicable) Form 6225

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MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Non-Recourse)

This MULTIFAMILY LOAN AND SECURITY AGREEMENT (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Loan Agreement”) is made as of the Effective Date (as hereinafter defined) by and between STAR PRESTON HILLS, LLC,a Delaware limited liability company (“Borrower”), and BERKELEY POINT CAPITAL LLC, a Delaware limited liability company (“Lender”).

RECITALS:

WHEREAS, Borrower desires to obtain the Mortgage Loan (as hereinafter defined) from Lender to be secured by the Mortgaged Property (as hereinafter defined); and

WHEREAS, Lender is willing to make the Mortgage Loan on the terms and conditions contained in this Loan Agreement and in the other Loan Documents (as hereinafter defined);

NOW, THEREFORE, in consideration of the making of the Mortgage Loan by Lender and other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, the parties hereby covenant, agree, represent, and warrant as follows:

AGREEMENTS:

ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE
LOAN TERMS

Section 1.01Defined Terms.

Capitalized terms not otherwise defined in the body of this Loan Agreement shall have the meanings set forth in the Definitions Schedule attached as Schedule 1 to this Loan Agreement.

Section 1.02Schedules, Exhibits, and Attachments Incorporated.

The schedules, exhibits, and any other addenda or attachments are incorporated fully into this Loan Agreement by this reference and each constitutes a substantive part of this Loan Agreement.

ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS

Section 2.01Mortgage Loan Origination and Security.

(a)Making of Mortgage Loan.

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Subject to the terms and conditions of this Loan Agreement and the other Loan Documents, Lender hereby makes the Mortgage Loan to Borrower, and Borrower hereby accepts the Mortgage Loan from Lender. Borrower covenants and agrees that it shall:

(1)pay the Indebtedness, including the Prepayment Premium, if any (whether in connection with any voluntary prepayment or in connection with an acceleration by Lender of the Indebtedness), in accordance with the terms of this Loan Agreement and the other Loan Documents; and

(2)perform, observe, and comply with this Loan Agreement and all other provisions of the other Loan Documents.

(b)Security for Mortgage Loan.

The Mortgage Loan is made pursuant to this Loan Agreement, is evidenced by the Note, and is secured by the Security Instrument, this Loan Agreement, and the other Loan Documents that are expressly stated to be security for the Mortgage Loan.

(c)Protective Advances.

As provided in the Security Instrument, Lender may take such actions or disburse such funds as Lender reasonably deems necessary to perform the obligations of Borrower under this Loan Agreement and the other Loan Documents and to protect Lender’s interest in the Mortgaged Property.

Section 2.02Payments on Mortgage Loan.

(a)Debt Service Payments.

(1)Short Month Interest.

If the date the Mortgage Loan proceeds are disbursed is any day other than the first day of the month, interest for the period beginning on the disbursement date and ending on and including the last day of the month in which the disbursement occurs shall be payable by Borrower on the date the Mortgage Loan proceeds are disbursed. In the event that the disbursement date is not the same as the Effective Date, then:

(A)the disbursement date and the Effective Date must be in the same month, and

(B)the Effective Date shall not be the first day of the month.

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(2)Interest Accrual and Computation.

Except as provided in Section 2.02(a)(1), interest shall be paid in arrears. Interest shall accrue as provided in the Schedule of Interest Rate Type Provisions and shall be computed in accordance with the Interest Accrual Method. If the Interest Accrual Method is “Actual/360,” Borrower acknowledges and agrees that the amount allocated to interest for each month will vary depending on the actual number of calendar days during such month.

(3)Monthly Debt Service Payments.

Consecutive monthly debt service installments (comprised of either interest only or principal and interest, depending on the Amortization Type), each in the amount of the applicable Monthly Debt Service Payment, shall be due and payable on the First Payment Date, and on each Payment Date thereafter until the Maturity Date, at which time all Indebtedness shall be due. Any regularly scheduled Monthly Debt Service Payment that is received by Lender before the applicable Payment Date shall be deemed to have been received on such Payment Date solely for the purpose of calculating interest due. All payments made by Borrower under this Loan Agreement shall be made without set-off, counterclaim, or other defense.

(4)Payment at Maturity.

The unpaid principal balance of the Mortgage Loan, any Accrued Interest thereon and all other Indebtedness shall be due and payable on the Maturity Date.

(5)Interest Rate Type.

See the Schedule of Interest Rate Type Provisions for additional provisions, if any, specific to the Interest Rate Type.

(b)Capitalization of Accrued But Unpaid Interest.

Any accrued and unpaid interest on the Mortgage Loan remaining past due for thirty (30) days or more may, at Lender’s election, be added to and become part of the unpaid principal balance of the Mortgage Loan.

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(c)Late Charges.

(1)If any Monthly Debt Service Payment due hereunder is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the applicable Payment Date, or any amount payable under this Loan Agreement (other than the payment due on the Maturity Date for repayment of the Mortgage Loan in full) or any other Loan Document is not received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property located in Mississippi or North Carolina to comply with applicable law) after the date such amount is due, inclusive of the date on which such amount is due, Borrower shall pay to Lender, immediately without demand by Lender, the Late Charge.

The Late Charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 2.02(d).

(2)Borrower acknowledges and agrees that:

(A)its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan;

(B)it is extremely difficult and impractical to determine those additional expenses;

(C)Lender is entitled to be compensated for such additional expenses; and

(D)the Late Charge represents a fair and reasonable estimate, taking into account all circumstances existing on the date hereof, of the additional expenses Lender will incur by reason of any such late payment.

(d)Default Rate.

(1)Default interest shall be paid as follows:

(A)If any amount due in respect of the Mortgage Loan (other than amounts due on the Maturity Date) remains past due for thirty (30) days or more, interest on such unpaid amount(s) shall accrue from the date payment is due at the Default Rate and shall be payable upon demand by Lender.

(B)If any Indebtedness due is not paid in full on the Maturity Date, then interest shall accrue at the Default Rate on all such unpaid amounts from the Maturity Date until fully paid and shall be payable upon demand by Lender.

Absent a demand by Lender, any such amounts shall be payable by Borrower in the same manner as provided for the payment of Monthly Debt Service Payments. To the extent permitted by applicable law, interest shall also accrue at the Default Rate on any judgment obtained by Lender against Borrower in connection with the Mortgage Loan.

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(2)Borrower acknowledges and agrees that:

(A)its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Mortgage Loan; and

(B)in connection with any failure to timely pay all amounts due in respect of the Mortgage Loan on the Maturity Date, or during the time that any amount due in respect of the Mortgage Loan is delinquent for more than thirty (30) days:

(i)Lender’s risk of nonpayment of the Mortgage Loan will be materially increased;

(ii)Lender’s ability to meet its other obligations and to take advantage of other investment opportunities will be adversely impacted;

(iii)Lender will incur additional costs and expenses arising from its loss of the use of the amounts due;

(iv)it is extremely difficult and impractical to determine such additional costs and expenses;

(v)Lender is entitled to be compensated for such additional risks, costs, and expenses; and

(vi)the increase from the Interest Rate to the Default Rate represents a fair and reasonable estimate of the additional risks, costs, and expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquency on the Mortgage Loan (taking into account all circumstances existing on the Effective Date).

(e)Address for Payments.

All payments due pursuant to the Loan Documents shall be payable at Lender’s Payment Address, or such other place and in such manner as may be designated from time to time by written notice to Borrower by Lender.

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(f)Application of Payments.

If at any time Lender receives, from Borrower or otherwise, any payment in respect of the Indebtedness that is less than all amounts due and payable at such time, then Lender may apply such payment to amounts then due and payable in any manner and in any order determined by Lender or hold in suspense and not apply such payment at Lender’s election. Neither Lender’s acceptance of a payment that is less than all amounts then due and payable, nor Lender’s application of, or suspension of the application of, such payment, shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. Notwithstanding the application of any such payment to the Indebtedness, Borrower’s obligations under this Loan Agreement and the other Loan Documents shall remain unchanged.

Section 2.03Lockout/Prepayment.

(a)Prepayment; Prepayment Lockout; Prepayment Premium.

(1)Borrower shall not make a voluntary full or partial prepayment on the Mortgage Loan during any Prepayment Lockout Period nor shall Borrower make a voluntary partial prepayment at any time. Except as expressly provided in this Loan Agreement (including as provided in the Prepayment Premium Schedule), a Prepayment Premium calculated in accordance with the Prepayment Premium Schedule shall be payable in connection with any prepayment of the Mortgage Loan.

(2)If a Prepayment Lockout Period applies to the Mortgage Loan, and during such Prepayment Lockout Period Lender accelerates the unpaid principal balance of the Mortgage Loan or otherwise applies collateral held by Lender to the repayment of any portion of the unpaid principal balance of the Mortgage Loan, the Prepayment Premium shall be due and payable and equal to the amount obtained by multiplying the percentage indicated (if at all) in the Prepayment Premium Schedule by the amount of principal being prepaid at the time of such acceleration or application.

(b)Voluntary Prepayment in Full.

At any time after the expiration of any Prepayment Lockout Period, Borrower may voluntarily prepay the Mortgage Loan in full on a Permitted Prepayment Date so long as:

(1)Borrower delivers to Lender a Prepayment Notice specifying the Intended Prepayment Date not more than sixty (60) days, but not less than thirty (30) days (if given via U.S. Postal Service) or twenty (20) days (if given via facsimile, e-mail, or overnight courier) prior to such Intended Prepayment Date; and

(2)Borrower pays to Lender an amount equal to the sum of:

(A)the entire unpaid principal balance of the Mortgage Loan; plus

(B)all Accrued Interest (calculated through the last day of the month in which the prepayment occurs); plus

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(C)the Prepayment Premium; plus

(D)all other Indebtedness.

In connection with any such voluntary prepayment, Borrower acknowledges and agrees that interest shall always be calculated and paid through the last day of the month in which the prepayment occurs (even if the Permitted Prepayment Date for such month is not the last day of such month, or if Lender approves prepayment on an Intended Prepayment Date that is not a Permitted Prepayment Date). Borrower further acknowledges that Lender is not required to accept a voluntary prepayment of the Mortgage Loan on any day other than a Permitted Prepayment Date. However, if Lender does approve an Intended Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment on such Intended Prepayment Date, such prepayment shall be deemed to be received on the immediately following Permitted Prepayment Date. If Borrower fails to prepay the Mortgage Loan on the Intended Prepayment Date for any reason (including on any Intended Prepayment Date that is approved by Lender) and such failure either continues for five (5) Business Days, or into the following month, Lender shall have the right to recalculate the payoff amount. If Borrower prepays the Mortgage Loan either in the following month or more than five (5) Business Days after the Intended Prepayment Date that was approved by Lender, Lender shall also have the right to recalculate the payoff amount based upon the amount of such payment and the date such payment was received by Lender. Borrower shall immediately pay to Lender any additional amounts required by any such recalculation.

(c)Acceleration of Mortgage Loan.

Upon acceleration of the Mortgage Loan, Borrower shall pay to Lender:

(1)the entire unpaid principal balance of the Mortgage Loan;

(2)all Accrued Interest (calculated through the last day of the month in which the acceleration occurs);

(3)the Prepayment Premium; and

(4)all other Indebtedness.

(d)Application of Collateral.

Any application by Lender of any collateral or other security to the repayment of all or any portion of the unpaid principal balance of the Mortgage Loan prior to the Maturity Date in accordance with the Loan Documents shall be deemed to be a prepayment by Borrower. Any such prepayment shall require the payment to Lender by Borrower of the Prepayment Premium calculated on the amount being prepaid in accordance with this Loan Agreement.

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(e)Casualty and Condemnation.

Notwithstanding any provision of this Loan Agreement to the contrary, no Prepayment Premium shall be payable with respect to any prepayment occurring as a result of the application of any insurance proceeds or amounts received in connection with a Condemnation Action in accordance with this Loan Agreement.

(f)No Effect on Payment Obligations.

Unless otherwise expressly provided in this Loan Agreement, any prepayment required by any Loan Document of less than the entire unpaid principal balance of the Mortgage Loan shall not extend or postpone the due date of any subsequent Monthly Debt Service Payments, Monthly Replacement Reserve Deposit, or other payment, or change the amount of any such payments or deposits.

(g)Loss Resulting from Prepayment.

In any circumstance in which a Prepayment Premium is due under this Loan Agreement, Borrower acknowledges that:

(1)any prepayment of the unpaid principal balance of the Mortgage Loan, whether voluntary or involuntary, or following the occurrence of an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional risk, expense, and frustration or impairment of Lender’s ability to meet its commitments to third parties;

(2)it is extremely difficult and impractical to ascertain the extent of such losses, risks, and damages;

(3)the formula for calculating the Prepayment Premium represents a reasonable estimate of the losses, risks, and damages Lender will incur as a result of a prepayment; and

(4)the provisions regarding the Prepayment Premium contained in this Loan Agreement are a material part of the consideration for the Mortgage Loan, and that the terms of the Mortgage Loan are in other respects more favorable to Borrower as a result of Borrower’s voluntary agreement to such prepayment provisions.

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ARTICLE 3 - PERSONAL LIABILITY

Section 3.01Non-Recourse Mortgage Loan; Exceptions.

Except as otherwise provided in this Article 3 or in any other Loan Document, none of Borrower, or any director, officer, manager, member, partner, shareholder, trustee, trust beneficiary, or employee of Borrower, shall have personal liability under this Loan Agreement or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lender’s only recourse for the satisfaction of such Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the Mortgaged Property and any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not limit or impair Lender’s enforcement of its rights against Guarantor under any Loan Document.

Section 3.02Personal Liability of Borrower (Exceptions to Non-Recourse Provision).

(a)Personal Liability Based on Lender’s Loss.

Borrower shall be personally liable to Lender for the repayment of the portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of, subject to any notice and cure period, if any:

(1)failure to pay as directed by Lender upon demand after an Event of Default (to the extent actually received by Borrower):

(A)all Rents to which Lender is entitled under the Loan Documents; and

(B)the amount of all security deposits then held or thereafter collected by Borrower from tenants and not properly applied pursuant to the applicable Leases;

(2)failure to maintain all insurance policies required by the Loan Documents, except to the extent Lender has the obligation to pay the premiums pursuant to Section 12.03(c);

(3)failure to apply all insurance proceeds received by Borrower or any amounts received by Borrower in connection with a Condemnation Action, as required by the Loan Documents;

(4)failure to comply with any provision of this Loan Agreement or any other Loan Document relating to the delivery of books and records, statements, schedules, and reports;

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(5)except to the extent directed otherwise by Lender pursuant to Section 3.02(a)(1), failure to apply Rents to the ordinary and necessary expenses of owning and operating the Mortgaged Property and Debt Service Amounts, as and when each is due and payable, except that Borrower will not be personally liable with respect to Rents that are distributed by Borrower in any calendar year if Borrower has paid all ordinary and necessary expenses of owning and operating the Mortgaged Property and Debt Service Amounts for such calendar year;

(6)waste or abandonment of the Mortgaged Property; or

(7)grossly negligent or reckless unintentional material misrepresentation or omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, or member of Borrower, Guarantor, or Key Principal or any Person having a Restricted Ownership Interest in Guarantor or Key Principalin connection with on-going financial or other reporting required by the Loan Documents, or any request for action or consent by Lender.

Notwithstanding the foregoing, Borrower shall not have personal liability under clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right to direct the disbursement of the applicable funds due to an involuntary Bankruptcy Event that occurs without the consent, encouragement, or active participation of (A) Borrower, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal or (C) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal.

(b)Full Personal Liability for Mortgage Loan.

Borrower shall be personally liable to Lender for the repayment of all of the Indebtedness, and the Mortgage Loan shall be fully recourse to Borrower, upon the occurrence of any of the following:

(1)failure by Borrower to comply with the single-asset entity requirements of Section 4.02(d) of this Loan Agreement;

(2)a Transfer (other than a conveyance of the Mortgaged Property at a Foreclosure Event pursuant to the Security Instrument and this Loan Agreement) that is not permitted under this Loan Agreement or any other Loan Document;

(3)the occurrence of any Bankruptcy Event (other than an acknowledgement in writing as described in clause (b) of the definition of “Bankruptcy Event”); provided, however, in the event of an involuntary Bankruptcy Event, Borrower shall only be personally liable if such involuntary Bankruptcy Event occurs with the consent, encouragement, or active participation of (A) Borrower, Guarantor, or Key Principal, (B) any Person Controlling Borrower, Guarantor, or Key Principal, or (C) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal;

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(4)fraud, written material misrepresentation, or material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, or member of Borrower, Guarantor, or Key Principal or any Person having a Restricted Ownership Interest in Guarantor or Key Principalin connection with any application for or creation of the Indebtedness; or

(5)fraud, written intentional material misrepresentation, or intentional material omission by Borrower, Guarantor, Key Principal, or any officer, director, partner, manager, or member of Borrower, Guarantor, or Key Principal or any Person having a Restricted Ownership Interest in Guarantor or Key Principal in connection with on-going financial or other reporting required by the Loan Documents, or any request for action or consent by Lender.

Section 3.03Personal Liability for Indemnity Obligations.

Borrower shall be personally and fully liable to Lender for Borrower’s indemnity obligations under Section 13.01(e) of this Loan Agreement, the Environmental Indemnity Agreement, and any other express indemnity obligations provided by Borrower under any Loan Document. Borrower’s liability for such indemnity obligations shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness, or otherwise, provided that Borrower’s liability for such indemnities shall not include any loss caused by the gross negligence or willful misconduct of Lender as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.

Section 3.04Lender’s Right to Forego Rights Against Mortgaged Property.

To the extent that Borrower has personal liability under this Loan Agreement or any other Loan Document, Lender may exercise its rights against Borrower personally to the fullest extent permitted by applicable law without regard to whether Lender has exercised any rights against the Mortgaged Property, the UCC Collateral, or any other security, or pursued any rights against Guarantor, or pursued any other rights available to Lender under this Loan Agreement, any other Loan Document, or applicable law. For purposes of this Section 3.04 only, the term “Mortgaged Property” shall not include any funds that have been applied by Borrower as required or permitted by this Loan Agreement prior to the occurrence of an Event of Default, or that Borrower was unable to apply as required or permitted by this Loan Agreement because of a Bankruptcy Event. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Article 3, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability.

ARTICLE 4 - BORROWER STATUS

Section 4.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 4.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

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(a)Due Organization and Qualification.

Borrower is validly existing and qualified to transact business and is in good standing in the state in which it is formed or organized, the Property Jurisdiction, and in each other jurisdiction that qualification or good standing is required according to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to be so qualified or in good standing would adversely affect Borrower’s operation of the Mortgaged Property or the validity, enforceability or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan Document.

(b)Location.

Borrower’s General Business Address is Borrower’s principal place of business and principal office.

(c)Power and Authority.

Borrower has the requisite power and authority:

(1)to own the Mortgaged Property and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of its obligations under this Loan Agreement and under the other Loan Documents to which it is a party; and

(2)to execute and deliver this Loan Agreement and the other Loan Documents to which it is a party, and to carry out the transactions contemplated by this Loan Agreement and the other Loan Documents to which it is a party.

(d)Due Authorization.

The execution, delivery, and performance of this Loan Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action and proceedings by or on behalf of Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of Borrower as a condition to the valid execution, delivery, and performance by Borrower of this Loan Agreement or any of the other Loan Documents to which it is a party, except filings required to perfect and maintain the liens to be granted under the Loan Documents and routine filings to maintain good standing and its existence.

(e)Valid and Binding Obligations.

This Loan Agreement and the other Loan Documents to which it is a party have been duly executed and delivered by Borrower and constitute the legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable Insolvency Laws or by the exercise of discretion by any court.

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(f)Effect of Mortgage Loan on Borrower’s Financial Condition.

The Mortgage Loan will not render Borrower Insolvent. Borrower has sufficient working capital, including proceeds from the Mortgage Loan, cash flow from the Mortgaged Property, or other sources, not only to adequately maintain the Mortgaged Property, but also to pay all of Borrower’s outstanding debts as they come due, including all Debt Service Amounts, exclusive of Borrower’s ability to refinance or pay in full the Mortgage Loan on the Maturity Date. In connection with the execution and delivery of this Loan Agreement and the other Loan Documents (and the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence by Borrower of the obligations under this Loan Agreement and the other Loan Documents, Borrower did not receive less than reasonably equivalent value in exchange for the incurrence of the obligations of Borrower under this Loan Agreement and the other Loan Documents.

(g)Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.

(1)None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is in violation of any applicable civil or criminal laws or regulations (including those requiring internal controls) intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.

(2)None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is a Person:

(A)against whom proceedings are pending for any alleged violation of any laws described in Section 4.01(g)(1);

(B)that has been convicted of any violation of, has been subject to civil penalties or economic sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.01(g)(1); or

(C)with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is prohibited from transacting business of the type contemplated by this Loan Agreement and the other Loan Documents under any other applicable law.

(3)Borrower, Guarantor, and Key Principal are in compliance with all applicable economic sanctions laws administered by OFAC, the United States Department of State, or the United States Department of Commerce.

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(h)Borrower Single Asset Status.

Borrower:

(1)does not own or lease any real property, personal property, or assets other than the Mortgaged Property;

(2)does not own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property;

(3)has no material financial obligation under or secured by any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party, or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:

(A)unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property) that (i) are not evidenced by a promissory note, (ii) are payable within sixty (60) days of the date incurred, and (iii) as of the Effective Date, do not exceed, in the aggregate, four percent (4%) of the original principal balance of the Mortgage Loan;

(B)if the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating such leasehold estate; and

(C)obligations under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

(4)has maintained its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets have been included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

(5)has not commingled its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified in the ordinary course of business from those of any other Person;

(6)has been adequately capitalized in light of its contemplated business operations;

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(7)has not assumed, guaranteed, or pledged its assets to secure the liabilities or obligations of any other Person (except in connection with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement or similar instrument), or held out its credit as being available to satisfy the obligations of any other Person;

(8)has not made loans or advances to any other Person; and

(9)has not entered into, and is not a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s length transaction with an unrelated third party.

(i)No Bankruptcies or Judgments.

None of Borrower, Guarantor, or Key Principal, nor to Borrower’s knowledge, any Person Controlling Borrower, Guarantor, or Key Principal, nor any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, is currently:

(1)the subject of or a party to any completed or pending bankruptcy, reorganization, including any receivership or other insolvency proceeding (other than as a creditor);

(2)preparing or intending to be the subject of a Bankruptcy Event; or

(3)the subject of any judgment unsatisfied of record or docketed in any court; or

(4)Insolvent.

(j)No Actions or Litigation.

(1)There are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending against or, to Borrower’s knowledge, threatened against or affecting Borrower or the Mortgaged Property not otherwise covered by insurance (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be disclosed); and

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(2)there are no claims, actions, suits, or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrower’s knowledge, threatened against or affecting Guarantor or Key Principal, which claims, actions, suits, or proceedings, if adversely determined (individually or in the aggregate) reasonably would be expected to materially adversely affect the financial condition or business of Borrower, Guarantor, or Key Principal or the condition, operation, or ownership of the Mortgaged Property (except claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be deemed material).

(k)Payment of Taxes, Assessments, and Other Charges.

Borrower confirms that:

(1)it has filed all federal, state, county, and municipal tax returns and reports required to have been filed by Borrower;

(2)it has paid, before any fine, penalty, interest, lien, or costs may be added thereto, all taxes, governmental charges, and assessments due and payable with respect to such returns and reports;

(3)there is no controversy or objection pending, or to the knowledge of Borrower, threatened in respect of any tax returns of Borrower; and

(4)it has made adequate reserves on its books and records for all taxes that have accrued but which are not yet due and payable.

(l)Not a Foreign Person.

Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code.

(m)ERISA.

Borrower represents and warrants that:

(1)Borrower is not an Employee Benefit Plan;

(2)no asset of Borrower constitutes “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3‑101) of an Employee Benefit Plan;

(3)no asset of Borrower is subject to any laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and

(4)neither Borrower nor any ERISA Affiliate is subject to any obligation or liability with respect to any ERISA Plan.

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(n)Default Under Other Obligations.

(1)The execution, delivery, and performance of the obligations imposed on Borrower under this Loan Agreement and the Loan Documents to which it is a party will not cause Borrower to be in default under the provisions of any agreement, judgment, or order to which Borrower is a party or by which Borrower is bound.

(2)None of Borrower, Guarantor, or Key Principal is in default under any obligation to Lender.

(o)Prohibited Person.

None of Borrower, Guarantor, or Key Principal is a Prohibited Person, nor to Borrower’s knowledge, is any Person:

(1)Controlling Borrower, Guarantor, or Key Principal a Prohibited Person; or

(2)Controlled by and having a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal a Prohibited Person.

(p)No Contravention.

Neither the execution and delivery of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the fulfillment of or compliance with the terms and conditions of this Loan Agreement and the other Loan Documents to which Borrower is a party, nor the performance of the obligations of Borrower under this Loan Agreement and the other Loan Documents does or will conflict with or result in any breach or violation of, or constitute a default under, any of the terms, conditions, or provisions of Borrower’s organizational documents, or any indenture, existing agreement, or other instrument to which Borrower is a party or to which Borrower, the Mortgaged Property, or other assets of Borrower are subject.

(q)Lockbox Arrangement.

Neither Borrower nor the direct or indirect owners of Borrower is party to any type of lockbox agreement or other similar cash management arrangement with any direct or indirect owner of Borrower with respect to the Mortgaged Property that has not been approved by Lender in writing. In the event that Lender has approved any such arrangement, Borrower has, at Lender’s option, entered into a lockbox agreement or other similar cash management agreement with Lender in form and substance acceptable to Lender.

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Section 4.02Covenants.

(a)Maintenance of Existence; Organizational Documents.

Borrower shall maintain its existence, its entity status, franchises, rights, and privileges under the laws of the state of its formation or organization (as applicable). Borrower shall continue to be duly qualified and in good standing to transact business in each jurisdiction in which qualification or standing is required according to applicable law to conduct its business with respect to the Mortgaged Property and where the failure to do so would adversely affect Borrower’s operation of the Mortgaged Property or the validity, enforceability, or the ability of Borrower to perform its obligations under this Loan Agreement or any other Loan Document. Neither Borrower nor any partner, member, manager, officer, or director of Borrower shall:

(1)make or allow any material change to the organizational documents or organizational structure of Borrower, including changes relating to the Control of Borrower, or

(2)file any action, complaint, petition, or other claim to:

(A)divide, partition, or otherwise compel the sale of the Mortgaged Property, or

(B)otherwise change the Control of Borrower.

(b)Economic Sanctions, Anti-Money Laundering, and Anti-Corruption.

(1)Borrower, Guarantor, Key Principal, and any Person Controlling Borrower, Guarantor, or Key Principal, or any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal shall remain in compliance with any applicable civil or criminal laws or regulations (including those requiring internal controls) intended to prohibit, prevent, or regulate money laundering, drug trafficking, terrorism, or corruption, of the United States and the jurisdiction where the Mortgaged Property is located or where the Person resides, is domiciled, or has its principal place of business.

(2)At no time shall Borrower, Guarantor, or Key Principal, or any Person Controlling Borrower, Guarantor, or Key Principal, or any Person Controlled by Borrower, Guarantor, or Key Principal that also has a direct or indirect ownership interest in Borrower, Guarantor, or Key Principal, be a Person:

(A)against whom proceedings are pending for any alleged violation of any laws described in Section 4.02(b)(1);

(B)that has been convicted of any violation of, has been subject to civil penalties or economic sanctions pursuant to, or had any of its property seized or forfeited under, any laws described in Section 4.02(b)(1); or

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(C)with whom any United States Person, any entity organized under the laws of the United States or its constituent states or territories, or any entity, regardless of where organized, having its principal place of business within the United States or any of its territories, is prohibited from transacting business of the type contemplated by this Loan Agreement and the other Loan Documents under any other applicable law.

(3)Borrower, Guarantor, and Key Principal shall at all times remain in compliance with any applicable economic sanctions laws administered by OFAC, the United States Department of State, or the United States Department of Commerce.

(c)Payment of Taxes, Assessments, and Other Charges.

Borrower shall file all federal, state, county, and municipal tax returns and reports required to be filed by Borrower and shall pay, before any fine, penalty, interest, or cost may be added thereto, all taxes payable with respect to such returns and reports.

(d)Borrower Single Asset Status.

Until the Indebtedness is fully paid, Borrower:

(1)shall not acquire or lease any real property, personal property, or assets other than the Mortgaged Property;

(2)shall not acquire, own, operate, or participate in any business other than the leasing, ownership, management, operation, and maintenance of the Mortgaged Property;

(3)shall not commingle its assets or funds with those of any other Person, unless such assets or funds can easily be segregated and identified in the ordinary course of business from those of any other Person;

(4)shall maintain its financial statements, accounting records, and other partnership, real estate investment trust, limited liability company, or corporate documents, as the case may be, separate from those of any other Person (unless Borrower’s assets are included in a consolidated financial statement prepared in accordance with generally accepted accounting principles);

(5)shall have no material financial obligation under any indenture, mortgage, deed of trust, deed to secure debt, loan agreement, or other agreement or instrument to which Borrower is a party or by which Borrower is otherwise bound, or to which the Mortgaged Property is subject or by which it is otherwise encumbered, other than:

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(A)unsecured trade payables incurred in the ordinary course of the operation of the Mortgaged Property (exclusive of amounts (i) to be paid out of the Replacement Reserve Account or Repairs Escrow Account, or (ii) for rehabilitation, restoration, repairs, or replacements of the Mortgaged Property or otherwise approved by Lender) so long as such trade payables (1) are not evidenced by a promissory note, (2) are payable within sixty (60) days of the date incurred, and (3) as of any date, do not exceed, in the aggregate, two percent (2%) of the original principal balance of the Mortgage Loan; provided, however, that otherwise compliant outstanding trade payables may exceed two percent (2%) up to an aggregate amount of four percent (4%) of the original principal balance of the Mortgage Loan for a period (beginning on or after the Effective Date) not to exceed ninety (90) consecutive days;

(B)if the Security Instrument grants a lien on a leasehold estate, Borrower’s obligations as lessee under the ground lease creating such leasehold estate; and

(C)obligations under the Loan Documents and obligations secured by the Mortgaged Property to the extent permitted by the Loan Documents;

(6)shall not assume, guaranty, or pledge its assets to secure the liabilities or obligations of any other Person (except in connection with the Mortgage Loan or other mortgage loans that have been paid in full or collaterally assigned to Lender, including in connection with any Consolidation, Extension and Modification Agreement or similar instrument) or hold out its credit as being available to satisfy the obligations of any other Person;

(7)shall not make loans or advances to any other Person; or

(8)shall not enter into, or become a party to, any transaction with any Borrower Affiliate, except in the ordinary course of business and on terms which are no more favorable to any such Borrower Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.

(e)ERISA.

Borrower covenants that:

(1)no asset of Borrower shall constitute “plan assets” (within the meaning of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3‑101) of an Employee Benefit Plan;

(2)no asset of Borrower shall be subject to the laws of any Governmental Authority governing the assets of an Employee Benefit Plan; and

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(3)neither Borrower nor any ERISA Affiliate shall incur any obligation or liability with respect to any ERISA Plan.

(f)Notice of Litigation or Insolvency.

Borrower shall give immediate written notice to Lender of any claims, actions, suits, or proceedings at law or in equity (including any insolvency, bankruptcy, or receivership proceeding) by or before any Governmental Authority pending or, to Borrower’s knowledge, threatened against or affecting Borrower, Guarantor, Key Principal, or the Mortgaged Property, which claims, actions, suits, or proceedings, if adversely determined reasonably would be expected to materially adversely affect the financial condition or business of Borrower, Guarantor, or Key Principal, or the condition, operation, or ownership of the Mortgaged Property (including any claims, actions, suits, or proceedings regarding fair housing, anti-discrimination, or equal opportunity, which shall always be deemed material).

(g)Payment of Costs, Fees, and Expenses.

In addition to the payments specified in this Loan Agreement, Borrower shall pay, on demand, all of Lender’s out-of-pocket fees, costs, charges, or expenses (including the reasonable fees and expenses of attorneys, accountants, and other experts) incurred by Lender in connection with:

(1)any amendment to, or consent, or waiver required under, this Loan Agreement or any of the Loan Documents (whether or not any such amendments, consents, or waivers are entered into);

(2)defending or participating in any litigation arising from actions by third parties and brought against or involving Lender with respect to:

(A)the Mortgaged Property;

(B)any event, act, condition, or circumstance in connection with the Mortgaged Property; or

(C)the relationship between or among Lender, Borrower, Key Principal, and Guarantor in connection with this Loan Agreement or any of the transactions contemplated by this Loan Agreement;

(3)the administration or enforcement of, or preservation of rights or remedies under, this Loan Agreement or any other Loan Documents including or in connection with any litigation or appeals, any Foreclosure Event or other disposition of any collateral granted pursuant to the Loan Documents; and

(4)any Bankruptcy Event or Guarantor Bankruptcy Event.

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(h)Restrictions on Distributions.

Borrower shall not declare or make any distributions or dividends of any nature to any Person having an ownership interest in Borrower if an Event of Default has occurred and is continuing.

(i)Lockbox Arrangement.

Neither Borrower nor the direct or indirect owners of Borrower shall enter into any type of lockbox agreement or other similar cash management arrangement with any direct or indirect owner of Borrower with respect to the Mortgaged Property without the prior written consent of Lender. In the event that Lender issues such consent, Borrower shall, at Lender’s option, be required to enter into a lockbox agreement or other similar cash management agreement with Lender in form and substance acceptable to Lender.

ARTICLE 5 - THE MORTGAGE LOAN

Section 5.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 5.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Receipt and Review of Loan Documents.

Borrower has received and reviewed this Loan Agreement and all of the other Loan Documents.

(b)No Default.

No default exists under any of the Loan Documents.

(c)No Defenses.

The Loan Documents are not currently subject to any right of rescission, set-off, counterclaim, or defense by either Borrower or Guarantor, including the defense of usury, and neither Borrower nor Guarantor has asserted any right of rescission, set-off, counterclaim, or defense with respect thereto.

(d)Loan Document Taxes.

All mortgage, mortgage recording, stamp, intangible, or any other similar taxes required to be paid by any Person under applicable law currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents, including the Security Instrument, have been paid or will be paid in the ordinary course of the closing of the Mortgage Loan.

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Section 5.02Covenants.

(a)Ratification of Covenants; Estoppels; Certifications.

Borrower shall:

(1)promptly notify Lender in writing upon any violation of any covenant set forth in any Loan Document of which Borrower has notice or knowledge; provided, however, any such written notice by Borrower to Lender shall not relieve Borrower of, or result in a waiver of, any obligation under this Loan Agreement or any other Loan Document; and

(2)within ten (10) days after a request from Lender, provide a written statement, signed and acknowledged by Borrower, certifying to Lender or any person designated by Lender, as of the date of such statement:

(A)that the Loan Documents are unmodified and in full force and effect (or, if there have been modifications, that the Loan Documents are in full force and effect as modified and setting forth such modifications);

(B)the unpaid principal balance of the Mortgage Loan;

(C)the date to which interest on the Mortgage Loan has been paid;

(D)that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail);

(E)whether or not there are then-existing any setoffs or defenses known to Borrower against the enforcement of any right or remedy of Lender under the Loan Documents; and

(F)any additional facts reasonably requested in writing by Lender.

(b)Further Assurances.

(1)Other Documents As Lender May Require.

Within ten (10) days after request by Lender, Borrower shall, subject to Section 5.02(d) below, execute, acknowledge, and deliver, at its cost and expense, all further acts, deeds, conveyances, assignments, financing statements, transfers, documents, agreements, assurances, and such other instruments as Lender may reasonably require from time to time in order to better assure, grant, and convey to Lender the rights intended to be granted, now or in the future, to Lender under this Loan Agreement and the other Loan Documents.

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(2)Corrective Actions.

Within ten (10) days after request by Lender, Borrower shall provide, or cause to be provided, to Lender, at Borrower’s cost and expense, such further documentation or information reasonably deemed necessary or appropriate by Lender in the exercise of its rights under the related commitment letter between Borrower and Lender or to correct patent mistakes in the Loan Documents, the Title Policy, or the funding of the Mortgage Loan.

(c)Sale of Mortgage Loan.

Borrower shall, subject to Section 5.02(d) below:

(1)comply with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s cost and expense, such further documentation or information as Lender or Investor may reasonably require, in order to enable:

(A)Lender to sell the Mortgage Loan to such Investor;

(B)Lender to obtain a refund of any commitment fee from any such Investor; or

(C)any such Investor to further sell or securitize the Mortgage Loan;

(2)ratify and affirm in writing the representations and warranties set forth in any Loan Document as of such date specified by Lender modified as necessary to reflect changes that have occurred subsequent to the Effective Date;

(3)confirm that Borrower is not in default in paying the Indebtedness or in performing or observing any of the covenants or agreements contained in this Loan Agreement or any of the other Loan Documents (or, if Borrower is in default, describing such default in reasonable detail); and

(4)execute and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions, or additions to this Loan Agreement or other Loan Document(s) as is reasonably required by Lender or such Investor.

(d)Limitations on Further Acts of Borrower.

Nothing in Section 5.02(b) and Section 5.02(c) shall require Borrower to do any further act that has the effect of:

(1)changing the economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;

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(2)imposing on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter between Borrower and Lender; or

(3)materially changing the rights and obligations of Borrower or Guarantor under the commitment letter.

(e)Financing Statements; Record Searches.

(1)Borrower shall pay all costs and expenses associated with:

(A)any filing or recording of any financing statements, including all continuation statements, termination statements, and amendments or any other filings related to security interests in or liens on collateral; and

(B)any record searches for financing statements that Lender may require.

(2)Borrower hereby authorizes Lender to file any financing statements, continuation statements, termination statements, and amendments (including an “all assets” or “all personal property” collateral description or words of similar import) in form and substance as Lender may require in order to protect and preserve Lender’s lien priority and security interest in the Mortgaged Property (and to the extent Lender has filed any such financing statements, continuation statements, or amendments prior to the Effective Date, such filings by Lender are hereby authorized and ratified by Borrower).

(f)Loan Document Taxes.

Borrower shall pay, on demand, any transfer taxes, documentary taxes, assessments, or charges made by any Governmental Authority in connection with the execution, delivery, recordation, filing, registration, perfection, or enforcement of any of the Loan Documents or the Mortgage Loan.

ARTICLE 6 - PROPERTY USE, PRESERVATION, AND MAINTENANCE

Section 6.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 6.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

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(a)Compliance with Law; Permits and Licenses.

(1)To Borrower’s knowledge, all improvements to the Land and the use of the Mortgaged Property comply with all applicable laws, ordinances, statutes, rules, and regulations, including all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, anti-discrimination, fair housing, and rent control, and Borrower has no knowledge of any action or proceeding (or threatened action or proceeding) regarding noncompliance or nonconformity with any of the foregoing.

(2)To Borrower’s knowledge, there is no evidence of any illegal activities on the Mortgaged Property.

(3)To Borrower’s knowledge, no permits or approvals from any Governmental Authority, other than those previously obtained and furnished to Lender, are necessary for the commencement and completion of the Repairs or Replacements, as applicable, other than those permits or approvals which will be timely obtained in the ordinary course of business.

(4)All required permits, licenses, and certificates to comply with all zoning and land use statutes, laws, ordinances, rules, and regulations, and all applicable health, fire, safety, and building codes, and for the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent, have been obtained and are in full force and effect.

(5)No portion of the Mortgaged Property has been purchased with the proceeds of any illegal activity.

(b)Property Characteristics.

(1)The Mortgaged Property contains at least:

(A)the Property Square Footage;

(B)the Total Parking Spaces; and

(C)the Total Residential Units.

(2)No part of the Land is included or assessed under or as part of another tax lot or parcel, and no part of any other property is included or assessed under or as part of the tax lot or parcels for the Land.

(c)Property Ownership.

Borrower is sole owner or ground lessee of the Mortgaged Property.

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(d)Condition of the Mortgaged Property.

(1)Borrower has not made any claims, and to Borrower’s knowledge, no claims have been made, against any contractor, engineer, architect, or other party with respect to the construction or condition of the Mortgaged Property or the existence of any structural or other material defect therein; and

(2)neither the Land nor the Improvements has sustained any damage other than damage which has been fully repaired, or is fully insured and is being repaired in the ordinary course of business.

(e)Personal Property.

Borrower owns (or, to the extent disclosed on the Exceptions to Representations and Warranties Schedule, leases) all of the Personal Property that is material to and is used in connection with the management, ownership, and operation of the Mortgaged Property.

Section 6.02Covenants

(a)Use of Property.

From and after the Effective Date, Borrower shall not, unless required by applicable law or Governmental Authority:

(1)change the use of all or any part of the Mortgaged Property;

(2)convert any individual dwelling units or common areas to commercial use, or convert any common area or commercial use to individual dwelling units without Lender’s prior written consent;

(3)initiate or acquiesce in a change in the zoning classification of the Land;

(4)establish any condominium or cooperative regime with respect to the Mortgaged Property;

(5)subdivide the Land; or

(6)suffer, permit, or initiate the joint assessment of any Mortgaged Property with any other real property constituting a tax lot separate from such Mortgaged Property which could cause the part of the Land to be included or assessed under or as part of another tax lot or parcel, or any part of any other property to be included or assessed under or as part of the tax lot or parcels for the Land.

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(b)Property Maintenance.

Borrower shall:

(1)pay the expenses of operating, managing, maintaining, and repairing the Mortgaged Property (including insurance premiums, utilities, Repairs, and Replacements) before the last date upon which each such payment may be made without any penalty or interest charge being added;

(2)keep the Mortgaged Property in good repair and marketable condition (ordinary wear and tear excepted) (including the replacement of Personalty and Fixtures with items of equal or better function and quality) and subject to Section 9.03(b)(3) and Section 10.03(d) restore or repair promptly, in a good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its original condition or condition immediately prior to the damage (if improved after the Effective Date), whether or not any insurance proceeds or amounts received in connection with a Condemnation Action are available to cover any costs of such restoration or repair;

(3)commence all Required Repairs, Additional Lender Repairs, and Additional Lender Replacements as follows:

(A)with respect to any Required Repairs, promptly following the Effective Date (subject to Force Majeure, if applicable), in accordance with the timelines set forth on the Required Repair Schedule, or if no timelines are provided, as soon as practical following the Effective Date;

(B)with respect to Additional Lender Repairs, in the event that Lender determines that Additional Lender Repairs are necessary from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Repairs (subject to Force Majeure, if applicable), commence any such Additional Lender Repairs in accordance with Lender’s timelines, or if no timelines are provided, as soon as practical;

(C)with respect to Additional Lender Replacements, in the event that Lender determines that Additional Lender Replacements are necessary from time to time or pursuant to Section 6.03(c), promptly following Lender’s written notice of such Additional Lender Replacements (subject to Force Majeure, if applicable), commence any such Additional Lender Replacements in accordance with Lender’s timelines, or if no timelines are provided, as soon as practical;

(4)make, construct, install, diligently perform, and complete all Replacements and Repairs:

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(A)in a good and workmanlike manner as soon as practicable following the commencement thereof, free and clear of any Liens, including mechanics’ or materialmen’s liens and encumbrances (except Permitted Encumbrances and mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials);

(B)in accordance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority, including applicable building codes, special use permits, and environmental regulations;

(C)in accordance with all applicable insurance and bonding requirements; and

(D)within all timeframes required by Lender, and Borrower acknowledges that it shall be an Event of Default if Borrower abandons or ceases work on any Repair at any time prior to the completion of the Repairs for a period of longer than twenty (20) days (except when Force Majeure exists and Borrower is diligently pursuing the reinstitution of such work, provided, however, any such abandonment or cessation shall not in any event allow the Repair to be completed after the Completion Period, subject to Force Majeure); and

(5)subject to the terms of Section 6.03(a) provide for professional management of the Mortgaged Property by a residential rental property manager satisfactory to Lender under a contract approved by Lender in writing;

(6)give written notice to Lender of, and, unless otherwise directed in writing by Lender, appear in and defend any action or proceeding purporting to affect the Mortgaged Property, Lender’s security for the Mortgage Loan, or Lender’s rights under this Loan Agreement; and

(7)upon Lender’s written request, submit to Lender any contracts or work orders described in Section 13.02(b).

(c)Property Preservation.

Borrower shall:

(1)not commit waste or abandon or (ordinary wear and tear excepted) permit impairment or deterioration of the Mortgaged Property;

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(2)except as otherwise permitted herein in connection with Repairs and Replacements, not remove, demolish, or alter the Mortgaged Property or any part of the Mortgaged Property (or permit any tenant or any other person to do the same) except in connection with the replacement of tangible Personalty or Fixtures (provided such Personalty and Fixtures are replaced with items of equal or better function and quality);

(3)not engage in or knowingly permit, and shall take appropriate measures to prevent and abate or cease and desist, any illegal activities at the Mortgaged Property that could endanger tenants or visitors, result in damage to the Mortgaged Property, result in forfeiture of the Land or otherwise materially impair the lien created by the Security Instrument or Lender’s interest in the Mortgaged Property;

(4)not permit any condition to exist on the Mortgaged Property that would invalidate any part of any insurance coverage required by this Loan Agreement; or

(5)notsubject the Mortgaged Property to any voluntary, elective, or non-compulsory tax lien or assessment (or opt in to any voluntary, elective, or non-compulsory special tax district or similar regime).

(d)Property Inspections.

Borrower shall:

(1)permit Lender, its agents, representatives, and designees to enter upon and inspect the Mortgaged Property (including in connection with any Replacement or Repair, or to conduct any Environmental Inspection pursuant to the Environmental Indemnity Agreement), and shall cooperate and provide access to all areas of the Mortgaged Property (subject to the rights of tenants under the Leases):

(A)during normal business hours;

(B)at such other reasonable time upon reasonable notice of not less than one (1) Business Day;

(C)at any time when exigent circumstances exist; or

(D)at any time after an Event of Default has occurred and is continuing; and

(2)pay for reasonable costs or expenses incurred by Lender or its agents in connection with any such inspections.

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(e)Compliance with Laws.

Borrower shall:

(1)comply with all laws, ordinances, statutes, rules, and regulations of any Governmental Authority and all recorded lawful covenants and agreements relating to or affecting the Mortgaged Property, including all laws, ordinances, statutes, rules and regulations, and covenants pertaining to construction of improvements on the Land, fair housing, and requirements for equal opportunity, anti-discrimination, and Leases;

(2)procure and maintain all required permits, licenses, charters, registrations, and certificates necessary to comply with all zoning and land use statutes, laws, ordinances, rules and regulations, and all applicable health, fire, safety, and building codes and for the lawful use and operation of the Mortgaged Property, including certificates of occupancy, apartment licenses, or the equivalent;

(3)comply with all applicable laws that pertain to the maintenance and disposition of tenant security deposits;

(4)at all times maintain records sufficient to demonstrate compliance with the provisions of this Section 6.02(e); and

(5)promptly after receipt or notification thereof, provide Lender copies of any building code or zoning violation from any Governmental Authority with respect to the Mortgaged Property.

Section 6.03Mortgage Loan Administration Matters Regarding the Property.

(a)Property Management.

From and after the Effective Date, each property manager and each property management agreement must be approved by Lender. If, in connection with the making of the Mortgage Loan, or at any later date, Lender waives in writing the requirement that Borrower enter into a written contract for management of the Mortgaged Property, and Borrower later elects to enter into a written contract or change the management of the Mortgaged Property, such new property manager or the property management agreement must be approved by Lender. As a condition to any approval by Lender, Lender may require that Borrower and such new property manager enter into a collateral assignment of the property management agreement on a form approved by Lender.

(b)Subordination of Fees to Affiliated Property Managers.

Any property manager that is a Borrower Affiliate to whom fees are payable for the management of the Mortgaged Property must enter into an assignment of management agreement or other agreement with Lender, in a form approved by Lender, providing for subordination of those fees and such other provisions as Lender may require.

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(c)Property Condition Assessment.

If, in connection with any inspection of the Mortgaged Property, Lender determines that the condition of the Mortgaged Property has deteriorated (ordinary wear and tear excepted) since the Effective Date, Lender may obtain, at Borrower’s expense, a property condition assessment of the Mortgaged Property. Lender’s right to obtain a property condition assessment pursuant to this Section 6.03(c) shall be in addition to any other rights available to Lender under this Loan Agreement in connection with any such deterioration. Any such inspection or property condition assessment may result in Lender requiring Additional Lender Repairs or Additional Lender Replacements as further described in Section 13.02(a)(9)(B).

ARTICLE 7 - LEASES AND RENTS

Section 7.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 7.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Prior Assignment of Rents.

Borrower has not executed any:

(1)prior assignment of Rents (other than an assignment of Rents securing prior indebtedness that has been paid off and discharged or will be paid off and discharged with the proceeds of the Mortgage Loan); or

(2)instrument which would prevent Lender from exercising its rights under this Loan Agreement or the Security Instrument.

(b)Prepaid Rents.

Borrower has not accepted, and does not expect to receive prepayment of, any Rents for more than two (2) months prior to the due dates of such Rents.

Section 7.02Covenants.

(a)Leases.

Borrower shall:

(1)comply with and observe Borrower’s obligations under all Leases, including Borrower’s obligations pertaining to the maintenance and disposition of tenant security deposits;

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(2)surrender possession of the Mortgaged Property, including all Leases and all security deposits and prepaid Rents, immediately upon appointment of a receiver or Lender’s entry upon and taking of possession and control of the Mortgaged Property, as applicable;

(3)require that all Residential Leases have initial lease terms of not less than six (6) months and not more than twenty-four (24) months (notwithstanding the foregoing, Residential Leases with initial terms of less than six (6) months, but not less than one (1) month, shall be permitted for up to ten percent (10%) of the units at the Mortgaged Property; however, if customary in the applicable market for properties comparable to the Mortgaged Property, more than ten percent (10%) of the Residential Leases with terms of less than six (6) months (but in no case less than one (1) month) may be permitted with Lender’s prior written consent); and

(4)promptly provide Lender a copy of any non-Residential Lease at the time such Lease is executed (subject to Lender’s consent rights for Material Commercial Leases in Section 7.02(b)) and, upon Lender’s written request, promptly provide Lender a copy of any Residential Lease then in effect.

(b)Commercial Leases.

(1)With respect to Material Commercial Leases, Borrower shall not:

(A)enter into any Material Commercial Lease except with the prior written consent of Lender; or

(B)modify the terms of, extend, or terminate any Material Commercial Lease (including any Material Commercial Lease in existence on the Effective Date) without the prior written consent of Lender.

(2)With respect to any non-Material Commercial Lease, Borrower shall not:

(A)enter into any non-Material Commercial Lease that materially alters the use and type of operation of the premises subject to the Lease in effect as of the Effective Date or reduces the number or size of residential units at the Mortgaged Property; or

(B)modify the terms of any non-Material Commercial Lease (including any non-Material Commercial Lease in existence on the Effective Date) in any way that materially alters the use and type of operation of the premises subject to such non-Material Commercial Lease in effect as of the Effective Date, reduces the number or size of residential units at the Mortgaged Property, or results in such non-Material Commercial Lease being deemed a Material Commercial Lease.

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(3)With respect to any Material Commercial Lease or non-Material Commercial Lease, Borrower shall cause the applicable tenant to provide within ten (10) days after a request by Borrower, a certificate of estoppel, or if not provided by tenant within such ten (10) day period, Borrower shall providesuch certificate of estoppel, certifying:

(A)that such Material Commercial Lease or non-Material Commercial Lease is unmodified and in full force and effect (or if there have been modifications, that such Material Commercial Lease or non-Material Commercial Lease is in full force and effect as modified and stating the modifications);

(B)the term of the Lease including any extensions thereto;

(C)the dates to which the Rent and any other charges hereunder have been paid by tenant;

(D)the amount of any security deposit delivered to Borrower as landlord;

(E)whether or not Borrower is in default (or whether any event or condition exists which, with the passage of time, would constitute an event of default) under such Lease;

(F)the address to which notices to tenant should be sent; and

(G)any other information as may be reasonably required by Lender.

(c)Payment of Rents.

Borrower shall:

(1)pay to Lender upon demand all Rents after an Event of Default has occurred and is continuing;

(2)cooperate with Lender’s efforts in connection with the assignment of Rents set forth in the Security Instrument; and

(3)not accept Rent under any Lease (whether a Residential Lease or a non-Residential Lease) for more than two (2) months in advance.

(d)Assignment of Rents.

Borrower shall not:

(1)perform any acts nor execute any instrument that would prevent Lender from exercising its rights under the assignment of Rents granted in the Security Instrument or in any other Loan Document; nor

(2)interfere with Lender’s collection of such Rents.

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(e)Further Assignments of Leases and Rents.

Borrower shall execute and deliver any further assignments of Leases and Rents as Lender may reasonably require.

(f)Options to Purchase by Tenants.

No Lease (whether a Residential Lease or a non-Residential Lease) shall contain an option to purchase, right of first refusal to purchase or right of first offer to purchase, except as required by applicable law.

Section 7.03Mortgage Loan Administration Regarding Leases and Rents.

(a)Material Commercial Lease Requirements.

Each Material Commercial Lease, including any renewal or extension of any Material Commercial Lease in existence as of the Effective Date, shall provide, directly or pursuant to a subordination, non-disturbance and attornment agreement approved by Lender, that:

(1)the tenant shall, upon written notice from Lender after the occurrence of an Event of Default, pay all Rents payable under such Lease to Lender;

(2)such Lease and all rights of the tenant thereunder are expressly subordinate to the lien of the Security Instrument;

(3)the tenant shall attorn to Lender and any purchaser at a Foreclosure Event (such attornment to be self-executing and effective upon acquisition of title to the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in any manner);

(4)the tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a Foreclosure Event may from time to time request; and

(5)such Lease shall not terminate as a result of a Foreclosure Event unless Lender or any other purchaser at such Foreclosure Event affirmatively elects to terminate such Lease pursuant to the terms of the subordination, non-disturbance and attornment agreement.

(b)Residential Lease Form.

All Residential Leases entered into from and after the Effective Date shall be on forms approved by Lender.

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ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING

Section 8.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 8.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Financial Information.

All financial statements and data, including statements of cash flow and income and operating expenses, that have been delivered to Lender in respect of the Mortgaged Property:

(1)are true, complete, and correct in all material respects; and

(2)accurately represent the financial condition of the Mortgaged Property as of such date.

(b)No Change in Facts or Circumstances.

All information in the Loan Application and in all financial statements, rent rolls, reports, certificates, and other documents submitted in connection with the Loan Application are complete and accurate in all material respects. There has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate.

Section 8.02Covenants.

(a)Obligation to Maintain Accurate Books and Records.

Borrower shall keep and maintain at all times at the Mortgaged Property or the property management agent’s offices or Borrower’s General Business Address and, upon Lender’s written request, shall make available at the Land:

(1)complete and accurate books of account and records (including copies of supporting bills and invoices) adequate to reflect correctly the operation of the Mortgaged Property; and

(2)copies of all written contracts, Leases, and other instruments that affect Borrower or the Mortgaged Property.

(b)Items to Furnish to Lender.

Borrower shall furnish to Lender the following, certified as true, complete, and accurate, in all material respects, by an individual having authority to bind Borrower (or Guarantor, as applicable), in such form and with such detail as Lender reasonably requires:

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(1)within forty-five (45) days after the end of each first, second, and third calendar quarter, a statement of income and expenses for Borrower on a year-to-date basis as of the end of each calendar quarter;

(2)within one hundred twenty (120) days after the end of each calendar year:

(A)for any Borrower and any Guarantor that is an entity, a statement of income and expenses and a statement of cash flows for such calendar year;

(B)for any Borrower and any Guarantor that is an individual, or a trust established for estate-planning purposes, a personal financial statement for such calendar year;

(C)when requested in writing by Lender, balance sheet(s) showing all assets and liabilities of Borrower and Guarantor and a statement of all contingent liabilities as of the end of such calendar year;

(D)a written certification ratifying and affirming that:

(i)Borrower has taken no action in violation of Section 4.02(d) regarding its single asset status;

(ii)Borrower has received no notice of any building code violation, or if Borrower has received such notice, evidence of remediation;

(iii)Borrower has made no application for rezoning nor received any notice that the Mortgaged Property has been or is being rezoned; and

(iv)Borrower has taken no action and has no knowledge of any action that would violate the provisions of Section 11.02(b)(1)(F) regarding liens encumbering the Mortgaged Property;

(E)an accounting of all security deposits held pursuant to all Leases, including the name of the institution (if any) and the names and identification numbers of the accounts (if any) in which such security deposits are held and the name of the person to contact at such financial institution, along with any authority or release necessary for Lender to access information regarding such accounts; and

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(F)written confirmation of:

(i)any changes occurring since the Effective Date (or that no such changes have occurred since the Effective Date) in (1) the direct owners of Borrower, (2) the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), or (3) the indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts), and their respective interests;

(ii)the names of all officers and directors of (1) any Borrower which is a corporation, (2) any corporation which is a general partner of any Borrower which is a partnership, or (3) any corporation which is the managing member or non-member manager of any Borrower which is a limited liability company; and

(iii)the names of all managers who are not members of (1) any Borrower which is a limited liability company, (2) any limited liability company which is a general partner of any Borrower which is a partnership, or (3) any limited liability company which is the managing member or non-member manager of any Borrower which is a limited liability company; and

(G)if not already provided pursuant to Section 8.02(b)(2)(A) above, a statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end of each calendar year;

(3)within forty-five (45) days after the end of each first, second, and third calendar quarter and within one hundred twenty (120) days after the end of each calendar year, and at any other time upon Lender’s written request, a rent schedule for the Mortgaged Property showing the name of each tenant and for each tenant, the space occupied, the lease expiration date, the rent payable for the current month, the date through which rent has been paid, and any related information requested by Lender; and

(4)upon Lender’s written request (but, absent an Event of Default, no more frequently than once in any six (6) month period):

(A)any item described in Section 8.02(b)(1) or Section 8.02(b)(2) for Borrower, certified as true, complete, and accurate by an individual having authority to bind Borrower;

(B)a property management or leasing report for the Mortgaged Property, showing the number of rental applications received from tenants or prospective tenants and deposits received from tenants or prospective tenants, and any other information requested by Lender;

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(C)a statement of income and expenses for Borrower’s operation of the Mortgaged Property on a year-to-date basis as of the end of each month for such period as requested by Lender, which statement shall be delivered within thirty (30) days after the end of such month requested by Lender;

(D)a statement of real estate owned directly or indirectly by Borrower and Guarantor for such period as requested by Lender, which statement(s) shall be delivered within thirty (30) days after the end of such month requested by Lender; and

(E)a statement that identifies:

(i)the direct owners of Borrower and their respective interests;

(ii)the indirect owners (and any non-member managers) of Borrower that Control Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests; and

(iii)the indirect owners of Borrower that hold twenty-five percent (25%) or more of the ownership interests in Borrower (excluding any Publicly-Held Corporations or Publicly-Held Trusts) and their respective interests.

(c)Audited Financials.

In the event Borrower or Guarantor receives or obtains any audited financial statements and such financial statements are required to be delivered to Lender under Section 8.02(b), Borrower shall deliver or cause to be delivered to Lender the audited versions of such financial statements.

(d)Delivery of Books and Records.

If an Event of Default has occurred and is continuing, Borrower shall deliver to Lender, upon written demand, all books and records relating to the Mortgaged Property or its operation.

Section 8.03Mortgage Loan Administration Matters Regarding Books and Records and Financial Reporting.

(a)Lender’s Right to Obtain Audited Books and Records.

Lender may require that Borrower’s or Guarantor’s books and records be audited, at Borrower’s expense, by an independent certified public accountant selected by Lender in order to produce or audit any statements, schedules, and reports of Borrower, Guarantor, or the Mortgaged Property required by Section 8.02, if:

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(1)Borrower or Guarantor fails to provide in a timely manner the statements, schedules, and reports required by Section 8.02 and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c);

(2)the statements, schedules, and reports submitted to Lender pursuant to Section 8.02 are not full, complete, and accurate in all material respects as determined by Lender and, thereafter, Borrower or Guarantor fails to provide such statements, schedules, and reports within the cure period provided in Section 14.01(c); or

(3)an Event of Default has occurred and is continuing.

Notwithstanding the foregoing, the ability of Lender to require the delivery of audited financial statements shall be limited to not more than once per Borrower’s fiscal year so long as no Event of Default has occurred during such fiscal year (or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing). Borrower shall cooperate with Lender in order to satisfy the provisions of this Section 8.03(a). All related costs and expenses of Lender shall become immediately due and payable by Borrower within ten (10) Business Days after demand therefor.

(b)Credit Reports; Credit Score.

No more often than once in any twelve (12) month period, Lender is authorized to obtain a credit report (if applicable) on Borrower or Guarantor, the cost of which report shall be paid by Borrower. Lender is authorized to obtain a Credit Score (if applicable) for Borrower or Guarantor at any time at Lender’s expense.

ARTICLE 9 - INSURANCE

Section 9.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 9.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Compliance with Insurance Requirements.

Borrower is in compliance with Lender’s insurance requirements (or has obtained a written waiver from Lender for any non-compliant coverage) and has timely paid all premiums on all required insurance policies.

(b)Property Condition.

(1)The Mortgaged Property has not been damaged by fire, water, wind, or other cause of loss; or

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(2)if previously damaged, any previous damage to the Mortgaged Property has been repaired and the Mortgaged Property has been fully restored.

Section 9.02Covenants.

(a)Insurance Requirements.

(1)As required by Lender and applicable law, and as may be modified from time to time, Borrower shall:

(A)keep the Improvements insured at all times against any hazards, which insurance shall include coverage against loss by fire and all other perils insured by the “special causes of loss” coverage form, general boiler and machinery coverage, business income coverage, and flood (if any of the Improvements are located in an area identified by the Federal Emergency Management Agency (or any successor) as an area having special flood hazards and to the extent flood insurance is available in that area), and may include sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism insurance, windstorm insurance and, if the Mortgaged Property does not conform to applicable building, zoning, or land use laws, ordinance and law coverage;

(B)maintain at all times commercial general liability insurance, workmen’s compensation insurance, and such other liability, errors and omissions, and fidelity insurance coverage; and

(C)maintain builder’s risk and public liability insurance, and other insurance in connection with completing the Repairs or Replacements, as applicable.

(b)Delivery of Policies, Renewals, Notices, and Proceeds.

Borrower shall:

(1)cause all insurance policies (including any policies not otherwise required by Lender) which can be endorsed with standard non-contributing, non-reporting mortgagee clauses making loss payable to Lender (or Lender’s assigns) to be so endorsed;

(2)promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums;

(3)deliver evidence, in form and content acceptable to Lender, that each required insurance policy under this Article 9 has been renewed not less than fifteen (15) days prior to the applicable expiration date, and (if such evidence is other than an original or duplicate original of a renewal policy) deliver the original or duplicate original of each renewal policy (or such other evidence of insurance as may be required by or acceptable to Lender) in form and content acceptable to Lender within ninety (90) days after the applicable expiration date of the original insurance policy;

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(4)provide immediate written notice to the insurance company and to Lender of any event of loss;

(5)execute such further evidence of assignment of any insurance proceeds as Lender may require; and

(6)provide immediate written notice to Lender of Borrower’s receipt of any insurance proceeds under any insurance policy required by Section 9.02(a)(1) above and, if requested by Lender, deliver to Lender all of such proceeds received by Borrower to be applied by Lender in accordance with this Article 9.

Section 9.03Mortgage Loan Administration Matters Regarding Insurance

(a)Lender’s Ongoing Insurance Requirements.

Borrower acknowledges that Lender’s insurance requirements may change from time to time. All insurance policies and renewals of insurance policies required by this Loan Agreement shall be:

(1)in the form and with the terms required by Lender;

(2)in such amounts, with such maximum deductibles and for such periods required by Lender; and

(3)issued by insurance companies satisfactory to Lender.

BORROWER ACKNOWLEDGES THAT ANY FAILURE OF BORROWER TO COMPLY WITH THE REQUIREMENTS SET FORTH IN SECTION 9.02(a) OR SECTION 9.02(b)(3) ABOVE SHALL PERMIT LENDER TO PURCHASE THE APPLICABLE INSURANCE AT BORROWER’S COST. SUCH INSURANCE MAY, BUT NEED NOT, PROTECT BORROWER’S INTERESTS. THE COVERAGE THAT LENDER PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST BORROWER IN CONNECTION WITH THE MORTGAGED PROPERTY. IF LENDER PURCHASES INSURANCE FOR THE MORTGAGED PROPERTY AS PERMITTED HEREUNDER, BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING INTEREST AT THE DEFAULT RATE AND ANY OTHER CHARGES LENDER MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR THE EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE SHALL BE ADDED TO BORROWER’S TOTAL OUTSTANDING BALANCE OR OBLIGATION AND SHALL CONSTITUTE ADDITIONAL INDEBTEDNESS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN. BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDER, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED BY THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

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(b)Application of Proceeds on Event of Loss.

(1)Upon an event of loss, Lender may, at Lender’s option:

(A)hold such proceeds to be applied to reimburse Borrower for the cost of Restoration (in accordance with Lender’s then-current policies relating to the restoration of casualty damage on similar multifamily residential properties); or

(B)apply such proceeds to the payment of the Indebtedness, whether or not then due; provided, however, Lender shall not apply insurance proceeds to the payment of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)(A) if all of the following conditions are met:

(i)no Event of Default has occurred and is continuing(or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing);

(ii)Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;

(iii)Lender determines that the net operating income generated by the Mortgaged Property after completion of the Restoration will be sufficient to support a debt service coverage ratio not less than the debt service coverage ratio immediately prior to the event of loss, but in no event less than 1.0x (the debt service coverage ratio shall be calculated on a thirty (30) year amortizing basis (if applicable, on a proforma basis approved by Lender) in all events and shall include all operating costs and other expenses, Imposition Deposits, deposits to Collateral Accounts, and Mortgage Loan repayment obligations);

(iv)Lender determines that the Restoration will be completed before the earlier of (1) one year before the stated Maturity Date, or (2) one year after the date of the loss or casualty; and

(v)Borrower provides Lender, upon written request, evidence of the availability during and after the Restoration of the insurance required to be maintained by Borrower pursuant to this Loan Agreement.

After the completion of Restoration in accordance with the above requirements, as determined by Lender, the balance, if any, of such proceeds shall be returned to Borrower.

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(2)Notwithstanding the foregoing, if any loss is estimated to be in an amount equal to or less than $50,000, Lender shall not exercise its rights and remedies as power-of-attorney herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims under policies of property damage insurance, to appear in and prosecute any action arising from such policies of property damage insurance, and to collect and receive the proceeds of property damage insurance; providedthat each of the following conditions shall be satisfied:

(A)Borrower shall immediately notify Lender of the casualty giving rise to the claim;

(B)no Event of Default has occurred and is continuing(or any event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing);

(C)the Restoration will be completed before the earlier of (i) one year before the stated Maturity Date, or (ii) one year after the date of the loss or casualty;

(D)Lender determines that the combination of insurance proceeds and amounts provided by Borrower will be sufficient funds to complete the Restoration;

(E)all proceeds of property damage insurance shall be issued in the form of joint checks to Borrower and Lender;

(F)all proceeds of property damage insurance shall be applied to the Restoration;

(G)Borrower shall deliver to Lender evidence satisfactory to Lender of completion of the Restoration and obtainment of all lien releases;

(H)Borrower shall have complied to Lender’s satisfaction with the foregoing requirements on any prior claims subject to this provision, if any; and

(I)Lender shall have the right to inspect the Mortgaged Property (subject to the rights of tenants under the Leases).

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(3)If Lender elects to apply insurance proceeds to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of the Mortgaged Property and, at its expense and regardless of whether such costs are covered by insurance, clean up any debris resulting from the casualty event, and, if required or otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 9.03(b) shall affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.

(c)Payment Obligations Unaffected.

The application of any insurance proceeds to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement or in any other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the Indebtedness in connection with a casualty of less than the entire Mortgaged Property, and after such application of proceeds the debt service coverage ratio (as determined by Lender) is less than 1.25x based on the then-applicable Monthly Debt Service Payment and the anticipated on-going net operating income of the Mortgaged Property after such casualty event, then Lender may, at its discretion, permit an adjustment to the Monthly Debt Service Payments that become due and owing thereafter, based on Lender’s then-current underwriting requirements. In no event shall the preceding sentence obligate Lender to make any adjustment to the Monthly Debt Service Payments.

(d)Foreclosure Sale.

If the Mortgaged Property is transferred pursuant to a Foreclosure Event or Lender otherwise acquires title to the Mortgaged Property, Borrower acknowledges that Lender shall automatically succeed to all rights of Borrower in and to any insurance policies and unearned insurance premiums applicable to the Mortgaged Property and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such Foreclosure Event or such acquisition.

(e)Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

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ARTICLE 10 - CONDEMNATION

Section 10.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 10.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Prior Condemnation Action.

No part of the Mortgaged Property has been taken in connection with a Condemnation Action.

(b)Pending Condemnation Actions.

No Condemnation Action is pending nor, to Borrower’s knowledge, is threatened for the partial or total condemnation or taking of the Mortgaged Property.

Section 10.02Covenants.

(a)Notice of Condemnation.

Borrower shall:

(1)promptly notify Lender of any Condemnation Action of which Borrower has knowledge;

(2)appear in and prosecute or defend, at its own cost and expense, any action or proceeding relating to any Condemnation Action, including any defense of Lender’s interest in the Mortgaged Property tendered to Borrower by Lender, unless otherwise directed by Lender in writing; and

(3)execute such further evidence of assignment of any condemnation award in connection with a Condemnation Action as Lender may require.

(b)Condemnation Proceeds.

Borrower shall pay to Lender all awards or proceeds of a Condemnation Action promptly upon receipt.

Section 10.03Mortgage Loan Administration Matters Regarding Condemnation.

(a)Application of Condemnation Awards.

Lender may apply any awards or proceeds of a Condemnation Action, after the deduction of Lender’s expenses incurred in the collection of such amounts, to:

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(1)the restoration or repair of the Mortgaged Property, if applicable;

(2)the payment of the Indebtedness, with the balance, if any, paid to Borrower; or

(3)Borrower.

(b)Payment Obligations Unaffected.

The application of any awards or proceeds of a Condemnation Action to the Indebtedness shall not extend or postpone the Maturity Date, or the due date or the full payment of any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, or any other installments referred to in this Loan Agreement or in any other Loan Document.

(c)Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

(d)Preservation of Mortgaged Property.

If a Condemnation Action results in or from damage to the Mortgaged Property and Lender elects to apply the proceeds or awards from such Condemnation Action to the Indebtedness in accordance with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the Mortgaged Property. Rather, Borrower shall restrict access to any portion of the Mortgaged Property which has been damaged or destroyed in connection with such Condemnation Action and, at Borrower’s expense and regardless of whether such costs are covered by insurance, clean up any debris resulting in or from the Condemnation Action, and, if required by any Governmental Authority or otherwise permitted by Lender, demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to keep and maintain the Mortgaged Property in a safe, habitable, and marketable condition. Nothing in this Section 10.03(d) shall affect any of Lender’s remedial rights against Borrower in connection with a breach by Borrower of any of its obligations under this Loan Agreement or under any Loan Document, including any failure to timely pay Monthly Debt Service Payments or maintain the insurance coverage(s) required by this Loan Agreement.

ARTICLE 11 - LIENS, TRANSFERS, AND ASSUMPTIONS

Section 11.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 11.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

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(a)No Labor or Materialmen’s Claims.

All parties furnishing labor and materials on behalf of Borrower have been paid in full. There are no mechanics’ or materialmen’s liens (whether filed or unfiled) outstanding for work, labor, or materials (and no claims or work outstanding that under applicable law could give rise to any such mechanics’ or materialmen’s liens) affecting the Mortgaged Property, whether prior to, equal with, or subordinate to the lien of the Security Instrument.

(b)No Other Interests.

No Person:

(1)other than Borrower has any possessory ownership or interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of existing Leases, the material terms of all such Leases having been previously disclosed in writing to Lender; nor

(2)has an option, right of first refusal, or right of first offer (except as required by applicable law) to purchase the Mortgaged Property, or any interest in the Mortgaged Property.

Section 11.02Covenants.

(a)Liens; Encumbrances.

Borrower shall not permit the grant, creation, or existence of any Lien, whether voluntary, involuntary, or by operation of law, on all or any portion of the Mortgaged Property (including any voluntary, elective, or non-compulsory tax lien or assessment pursuant to a voluntary, elective, or non-compulsory special tax district or similar regime) other than:

(1)Permitted Encumbrances;

(2)the creation of:

(A)any tax lien, municipal lien, utility lien, mechanics’ lien, materialmen’s lien, or judgment lien against the Mortgaged Property if bonded off, released of record, or otherwise remedied to Lender’s satisfaction within sixty (60) days after the earlier of the date Borrower has actual notice or constructive notice of the existence of such lien; or

(B)any mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and

(3)the lien created by the Loan Documents.

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(b)Transfers.

(1)Mortgaged Property.

Borrower shall not Transfer, or cause or permit a Transfer of, all or any part of the Mortgaged Property (including any interest in the Mortgaged Property) other than:

(A)a Transfer to which Lender has consented in writing;

(B)Leases permitted pursuant to the Loan Documents;

(C)[reserved];

(D)a Transfer of obsolete or worn out Personalty or Fixtures that are contemporaneously replaced by items of equal or better function and quality which are free of Liens (other than those created by the Loan Documents);

(E)    the grant of an easement, servitude, or restrictive covenant to which Lender has consented, and Borrower has paid to Lender, upon demand, all costs and expenses incurred by Lender in connection with reviewing Borrower’s request; provided, however, that Borrower shall be permitted to grant an easement over the Mortgaged Property to a publicly operated or private franchise utility provided that each of the following conditions is satisfied:

(i)    Borrower provides Lender with at least 30 days prior written notice of the proposed easement;

(ii)    no Event of Default has occurred and is continuing, and no event or condition has occurred and is continuing that, with the giving of written notice or the passage of time, or both, would become an Event of Default;

(iii)    prior to the grant, Lender determines, in its sole discretion, (aa) that the easement will not materially affect the operation, marketability, or value of the Mortgaged Property; the health or safety of tenants or visitors; Lender’s interest in the Mortgaged Property; or Borrower’s access to the Mortgaged Property or the use of any easements or amenities which benefit the Mortgaged Property and (bb) that the easement will not result in the loss of the use of any residential or commercial units;

(iv)    Borrower has paid to Lender all costs and expenses incurred by Lender in connection with reviewing Borrower’s request;

(v)    at Borrower’s expense, Borrower delivers an endorsement to the Lender’s Loan Policy and an update to the survey, if applicable, to reflect the easement; and

(vi)    Lender has reviewed and approved the documents evidencing the proposed easement, and Borrower delivers to Lender recorded copies of the easement and signed copies of any unrecorded documents within ten (10) days following the granting of the easement.

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Any consideration paid to Borrower under this Section 11.02(b)(1)(E) shall be distributed as follows:

(AA)    first, to payment of all of Lender’s out of pocket expenses, including but not limited to attorneys’ fees, as well as recording and title costs;

(BB)    second, to restoration or repair of the remainder of the Mortgaged Property, if applicable;

(CC)    third, an amount not to exceed $250 per individual dwelling (after deducting Borrower’s cost and expense incurred in connection with the granting of such easement) unit to Borrower for its own account; and

(DD)    fourth, any remaining funds will be deposited into the Replacement Reserve;

(F)a lien permitted pursuant to Section 11.02(a) of this Loan Agreement; or

(G)the conveyance of the Mortgaged Property following a Foreclosure Event.

(2)Interests in Borrower, Key Principal, or Guarantor.

Other than a Transfer to which Lender has consented in writing, Borrower shall not Transfer, or cause or permit to be Transferred:

(A)any direct or indirect ownership interest in Borrower, Key Principal, or Guarantor (if applicable) if such Transfer would cause a change in Control;

(B)a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor (if applicable);

(C)fifty percent (50%) or more of Key Principal’s or Guarantor’s direct or indirect ownership interests in Borrower that existed on the Effective Date (individually or on an aggregate basis);

(D)the economic benefits or rights to cash flows attributable to any ownership interests in Borrower, Key Principal, or Guarantor (if applicable) separate from the Transfer of the underlying ownership interests if the Transfer of the underlying ownership interest is prohibited by this Loan Agreement; or

(E)a Transfer to a new key principal or new guarantor (if such new key principal or guarantor is an entity), which entity has an organizational existence termination date that ends before the Maturity Date.

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Notwithstanding the foregoing, if a Publicly-Held Corporation or a Publicly-Held Trust Controls Borrower, Key Principal, or Guarantor, or owns a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor, a Transfer of any ownership interests in such Publicly-Held Corporation or Publicly-Held Trust shall not be prohibited under this Loan Agreement as long as (%6) such Transfer does not result in a conversion of such Publicly-Held Corporation or Publicly-Held Trust to a privately held entity, and (%3) Borrower provides written notice to Lender not later than thirty (30) days thereafter of any such Transfer that results in any Person owning ten percent (10%) or more of the ownership interests in such Publicly-Held Corporation or Publicly-Held Trust.

(3)Name Change or Entity Conversion.

Lender shall consent to Borrower changing its name, changing its jurisdiction of organization, or converting from one type of legal entity into another type of legal entity for any lawful purpose, provided that Borrower shall not be permitted to convert to a Delaware Statutory Trust, and provided further that:

(A)Lender receives written notice at least thirty (30) days prior to such change or conversion, which notice shall include organizational charts that reflect the structure of Borrower both prior to and subsequent to such name change or entity conversion;

(B)such Transfer is not otherwise prohibited under the provisions of Section 11.02(b)(2);

(C)Borrower executes an amendment to this Loan Agreement and any other Loan Documents required by Lender documenting the name change or entity conversion;

(D)Borrower agrees and acknowledges, at Borrower’s expense, that (i) Borrower will execute and record in the land records any instrument required by the Property Jurisdiction to be recorded to evidence such name change or entity conversion (or provide Lender with written confirmation from the title company (via electronic mail or letter) that no such instrument is required), (ii) Borrower will execute any additional documents required by Lender, including the amendment to this Loan Agreement, and allow such documents to be recorded or filed in the land records of the Property Jurisdiction, (iii) at Lender’s sole discretion, Lender will obtain a “date down” endorsement to the Lender’s Loan Policy (or obtain a new Loan Policy if a “date down” endorsement is not available in the Property Jurisdiction), evidencing title to the Mortgaged Property being in the name of the successor entity and the Lien of the Security Instrument against the Mortgaged Property, and (iv) Lender will file any required UCC-3 financing statement and make any other filing deemed necessary to maintain the priority of its Liens on the Mortgaged Property; and

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(E)no later than ten (10) days subsequent to such name change or entity conversion, Borrower shall provide Lender (i) the documentation filed with the appropriate office in Borrower’s state of formation evidencing such name change or entity conversion, (ii) copies of the organizational documents of Borrower, including any amendments, filed with the appropriate office in Borrower’s state of formation reflecting the post-conversion Borrower name, form of organization, and structure, and (iii) if available, new certificates of good standing or valid formation for Borrower.

(c)No Other Indebtedness.

Other than the Mortgage Loan, Borrower shall not incur or be obligated at any time with respect to any loan or other indebtedness (except trade payables as otherwise permitted in this Loan Agreement), including any indebtedness secured by a Lien on, or the cash flows from, the Mortgaged Property.

(d)No Mezzanine Financing or Preferred Equity.

Neither Borrower nor any direct or indirect owner of Borrower shall: (1) incur any Mezzanine Debt other than Permitted Mezzanine Debt; (2) issue any Preferred Equity other than Permitted Preferred Equity; or (3) incur any similar indebtedness or issue any similar equity.

Section 11.03Mortgage Loan Administration Matters Regarding Liens, Transfers, and Assumptions.

(a)Assumption of Mortgage Loan.

Lender shall consent to a Transfer of the Mortgaged Property to and an assumption of the Mortgage Loan by a new borrower if each of the following conditions is satisfied prior to the Transfer:

(1)Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(a);

(2)no Event of Default has occurred and is continuing, and no event which, with the giving of written notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing;

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(3)Lender determines that:

(A)the proposed new borrower, new key principal, and any other new guarantor fully satisfy all of Lender’s then-applicable borrower, key principal, or guarantor eligibility, credit, management, and other loan underwriting standards, which shall include an analysis of (i) the previous relationships between Lender and the proposed new borrower, new key principal, new guarantor, and any Person in Control of them, and the organization of the new borrower, new key principal, and new guarantor (if applicable), and (ii) the operating and financial performance of the Mortgaged Property, including physical condition and occupancy;

(B)none of the proposed new borrower, new key principal, and any new guarantor, or any owners of the proposed new borrower, new key principal, and any new guarantor, are a Prohibited Person; and

(C)none of the proposed new borrower, new key principal, and any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date;

(4)[reserved];

(5)the proposed new borrower has:

(A)executed an assumption agreement acceptable to Lender that, among other things, requires the proposed new borrower to assume and perform all obligations of Borrower (or any other transferor), and that may require that the new borrower comply with any provisions of any Loan Document that previously may have been waived by Lender for Borrower, subject to the terms of Section 11.03(g);

(B)if required by Lender, delivered to the Title Company for filing and/or recording in all applicable jurisdictions, all applicable Loan Documents including the assumption agreement to correctly evidence the assumption and the confirmation, continuation, perfection, and priority of the Liens created hereunder and under the other Loan Documents; and

(C)delivered to Lender a “date-down” endorsement to the Title Policy acceptable to Lender (or a new title insurance policy if a “date-down” endorsement is not available);

(6)one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

(A)an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or

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(B)a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender;

(7)Lender has reviewed and approved the Transfer documents; and

(8)Lender has received the fees described in Section 11.03(g).

(b)Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.

(1)Except as otherwise covered in Section 11.03(b)(2) below, Transfers of direct or indirect ownership interests in Borrower to Key Principal or Guarantor, or to a transferee through which Key Principal or Guarantor (as applicable) Controls Borrower with the same rights and abilities as Key Principal or Guarantor (as applicable) Controls Borrower immediately prior to the date of such Transfer, shall be consented to by Lender if:

(A)such Transfer satisfies the applicable requirements of Section 11.03(a), other than Section 11.03(a)(5); and

(B)after giving effect to any such Transfer, each Key Principal or Guarantor (as applicable) continues to own not less than fifty percent (50%) of such Key Principal’s or Guarantor’s (as applicable) direct or indirect ownership interests in Borrower that existed on the Effective Date.

(2)Transfers of direct or indirect interests in Borrower held by a Key Principal or Guarantor to other Key Principals or Guarantors, as applicable, shall be consented to by Lender if such Transfer satisfies the following conditions:

(A)the Transfer does not cause a change in the Control of Borrower; and

(B)the transferor Key Principal or Guarantor maintains the same right and ability to Control Borrower as existed prior to the Transfer.

If the conditions set forth in this Section 11.03(b) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).

(c)Estate Planning.

Notwithstanding the provisions of Section 11.02(b)(2), so long as (1) the Transfer does not cause a change in the Control of Borrower, and (2) the transferor Key Principal or Guarantor, as applicable, maintains the same right and ability to Control Borrower as existed prior to the Transfer, Lender shall consent to Transfers of direct or indirect ownership interests in Borrower held by a Key Principal or Guarantor and Transfers of direct or indirect ownership interests, in an entity Key Principal or entity Guarantor to:

(A)Immediate Family Members of such Key Principal or Guarantor each of whom must have obtained the legal age of majority;

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(B)United States domiciledtrusts established for the benefit of the transferor Key Principal or transferor Guarantor, or Immediate Family Members of the transferor Key Principal or the transferor Guarantor; or

(C)partnerships or limited liability companies of which the partners or members, respectively, are comprised entirely of (i) such Key Principal or Guarantor and Immediate Family Members (each of whom must have obtained the legal age of majority) of such Key Principal or Guarantor, (ii) Immediate Family Members (each of whom must have obtained the legal age of majority) of such Key Principal or Guarantor, or (iii) United States domiciledtrusts established for the benefit of the transferor Key Principal or transferor Guarantor, or Immediate Family Members of the transferor Key Principal or the transferor Guarantor.

If the conditions set forth in this Section 11.03(c) are satisfied, the Transfer Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).

(d)Termination or Revocation of Trust.

If any of Borrower, Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust is an unpermitted Transfer; provided that the termination or revocation of the trust due to the death of an individual trustor shall not be considered an unpermitted Transfer so long as:

(1)Lender is notified within thirty (30) days of the death; and

(2)such Borrower, Guarantor, Key Principal, or other Person, as applicable, is replaced with an individual or entity acceptable to Lender, in accordance with the provisions of Section 11.03(a) within ninety (90) days of the date of the death causing the termination or revocation.

If the conditions set forth in this Section 11.03(d) are satisfied, the Transfer Fee shall be waived; provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).

(e)Death of Key Principal or Guarantor; Transfer Due to Death.

(1)If a Key Principal or Guarantor that is a natural person dies, or if Control of Borrower, Guarantor, or Key Principal is Transferred, or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred as a result of the death of a Person (except in the case of trusts which is addressed in Section 11.03(d)), Borrower must notify Lender in writing within ninety (90) days in the event of such death. Unless waived in writing by Lender, the deceased shall be replaced by an individual or entity within one hundred eighty (180) days, subject to Borrower’s satisfaction of the following conditions:

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(A)Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(e);

(B)Lender determines that:

(i)the proposed new key principal and any other new guarantor (or Person Controlling such new key principal or new guarantor) fully satisfies all of Lender’s then-applicable key principal or guarantor eligibility, credit, management, and other loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new key principal and new guarantor (or Person Controlling such new key principal or new guarantor) and the organization of the new key principal and new guarantor (if applicable));

(ii)none of the proposed new key principal or any new guarantor, or any owners of the proposed new key principal or any new guarantor, is a Prohibited Person; and

(iii)none of the proposed new key principal or any new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date; and

(C)if applicable, one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

(i)an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or

(ii)a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

(2)In the event a replacement Key Principal, Guarantor, or other Person is required by Lender due to the death described in this Section 11.03(e), and such replacement has not occurred within such period, the period for replacement may be extended by Lender to a date not more than one year from the date of such death; however, Lender may require as a condition to any such extension that:

(A)the then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or

(B)a lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such extended replacement period be instituted.

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If the conditions set forth in this Section 11.03(e) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).

(f)Bankruptcy of Guarantor.

(1)Upon the occurrence of any Guarantor Bankruptcy Event, unless waived in writing by Lender, the applicable Guarantor shall be replaced by an individual or entity within ninety (90) days of such Guarantor Bankruptcy Event, subject to Borrower’s satisfaction of the following conditions:

(A)Borrower has submitted to Lender all information required by Lender to make the determination required by this Section 11.03(f);

(B)Lender determines that:

(i)the proposed new guarantor fully satisfies all of Lender’s then-applicable guarantor eligibility, credit, management, and other loan underwriting standards (including any standards with respect to previous relationships between Lender and the proposed new guarantor and the organization of the new guarantor (if applicable));

(ii)no new guarantor is a Prohibited Person; and

(iii)no new guarantor (if any of such are entities) shall have an organizational existence termination date that ends before the Maturity Date; and

(C)one or more individuals or entities acceptable to Lender as new guarantors have executed and delivered to Lender:

(i)an assumption agreement acceptable to Lender that requires the new guarantor to assume and perform all obligations of Guarantor under any Guaranty given in connection with the Mortgage Loan; or

(ii)a substitute Non-Recourse Guaranty and other substitute guaranty in a form acceptable to Lender.

(2)In the event a replacement Guarantor is required by Lender due to the Guarantor Bankruptcy Event described in this Section 11.03(f), and such replacement has not occurred within such period, the period for replacement may be extended by Lender in its discretion; however, Lender may require as a condition to any such extension that:

(A)the then-current property manager be replaced with a property manager reasonably acceptable to Lender (or if a property manager has not been previously engaged, a property manager reasonably acceptable to Lender be engaged); or

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(B)a lockbox agreement or similar cash management arrangement (with the property manager) reasonably acceptable to Lender during such extended replacement period be instituted.

If the conditions set forth in this Section 11.03(f) are satisfied, the Transfer Fee shall be waived, provided Borrower shall pay the Review Fee and out-of-pocket costs set forth in Section 11.03(g).

(g)Further Conditions to Transfers and Assumption.

(1)In connection with any Transfer of the Mortgaged Property, or an ownership interest in Borrower, Key Principal, or Guarantor for which Lender’s approval is required under this Loan Agreement (including Section 11.03(a)), Lender may, as a condition to any such approval, require:

(A)additional collateral, guaranties, or other credit support to mitigate any risks concerning the proposed transferee or the performance or condition of the Mortgaged Property;

(B)amendment of the Loan Documents to delete or modify any specially negotiated terms or provisions previously granted for the exclusive benefit of original Borrower, Key Principal, or Guarantor and to restore the original provisions of the standard Fannie Mae form multifamily loan documents, to the extent such provisions were previously modified; or

(C)a modification to the amounts required to be deposited into the Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B).

(2)In connection with any request by Borrower for consent to a Transfer, Borrower shall pay to Lender upon demand:

(A)the Transfer Fee (to the extent charged by Lender);

(B)the Review Fee (regardless of whether Lender approves or denies such request); and

(C)all of Lender’s out-of-pocket costs (including reasonable attorneys’ fees) incurred in reviewing the Transfer request, regardless of whether Lender approves or denies such request.

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(h)    Public Offering of Securities in Guarantor and/or Key Principal.

Notwithstanding any terms to the contrary in Section 11.02(b)(2) above, Guarantor and/or Key Principal may engage in a public offering of securities of Guarantor and/or Key Principal, as applicable, and Lender shall waive any Transfer Fee otherwise due in connection therewith, so long as: (1) such public offering shall not occur without Lender’s prior written notice and consent to the same; (2) such public offering shall not result in any change in the management and/or Control of Borrower; (3) such public offering shall not result in the dilution of the aggregate ownership interests of Guarantor or Key Principal in Borrower to less than a 51% ownership interest; and (4) following any such public offering, there is no Transfer of a Restricted Ownership Interest in Borrower.

ARTICLE 12 - IMPOSITIONS

Section 12.01Representations and Warranties.

The representations and warranties made by Borrower to Lender in this Section 12.01 are made as of the Effective Date and are true and correct except as disclosed on the Exceptions to Representations and Warranties Schedule.

(a)Payment of Taxes, Assessments, and Other Charges.

Borrower has:

(1)paid (or with the approval of Lender, established an escrow fund sufficient to pay when due and payable) all amounts and charges relating to the Mortgaged Property that have become due and payable before any fine, penalty interest, lien, or costs may be added thereto, including Impositions, leasehold payments, and ground rents;

(2)paid all Taxes for the Mortgaged Property that have become due before any fine, penalty interest, lien, or costs may be added thereto pursuant to any notice of assessment received by Borrower and any and all taxes that have become due against Borrower before any fine, penalty interest, lien, or costs may be added thereto;

(3)no knowledge of any basis for any additional assessments;

(4)no knowledge of any presently pending special assessments against all or any part of the Mortgaged Property, or any presently pending special assessments against Borrower; and

(5)not received any written notice of any contemplated special assessment against the Mortgaged Property, or any contemplated special assessment against Borrower.

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Section 12.02Covenants.

(a)Imposition Deposits, Taxes, and Other Charges.

Borrower shall:

(1)deposit the Imposition Deposits with Lender on each Payment Date (or on another day designated in writing by Lender) in amount sufficient, in Lender’s discretion, to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added, plus an amount equal to no more than one-sixth (1/6) (or the amount permitted by applicable law) of the Impositions for the trailing twelve (12) months (calculated based on the aggregate annual Imposition costs divided by twelve (12) and multiplied by two (2));

(2)deposit with Lender, within ten (10) days after written notice from Lender (subject to applicable law), such additional amounts estimated by Lender to be reasonably necessary to cure any deficiency in the amount of the Imposition Deposits held for payment of a specific Imposition;

(3)except as set forth in Section 12.03(c) below, pay all Impositions, leasehold payments, ground rents, and Taxes when due and before any fine, penalty, interest, lien, or costs may be added thereto;

(4)promptly deliver to Lender a copy of all notices of, and invoices for, Impositions, and, if Borrower pays any Imposition directly, Borrower shall promptly furnish to Lender receipts evidencing such payments; and

(5)promptly deliver to Lender a copy of all notices of any special assessments and contemplated special assessments against the Mortgaged Property or Borrower.

Section 12.03Mortgage Loan Administration Matters Regarding Impositions.

(a)Maintenance of Records by Lender.

Lender shall maintain records of the monthly and aggregate Imposition Deposits held by Lender for the purpose of paying Taxes, insurance premiums, and each other obligation of Borrower for which Imposition Deposits are required.

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(b)Imposition Accounts.

All Imposition Deposits shall be held in an institution (which may be Lender, if Lender is such an institution) whose deposits or accounts are insured or guaranteed by a federal agency and which accounts meet the standards for custodial accounts as required by Lender from time to time. Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in additional institutions, when the amount of the Imposition Deposits exceeds the maximum amount of the federal deposit insurance or guaranty. No interest, earnings, or profits on the Imposition Deposits shall be paid to Borrower unless applicable law so requires. Imposition Deposits shall not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for that purpose in accordance with this Loan Agreement. For the purposes of 9-104(a)(3) of the UCC, Lender is the owner of the Imposition Deposits and shall be deemed a “customer” with sole control of the account holding the Imposition Deposits.

(c)Payment of Impositions; Sufficiency of Imposition Deposits.

Lender may pay an Imposition according to any bill, statement, or estimate from the appropriate public office or insurance company without inquiring into the accuracy of the bill, statement, or estimate or into the validity of the Imposition. Imposition Deposits shall be required to be used by Lender to pay Taxes, insurance premiums and any other individualImposition only if:

(1)no Event of Default exists;

(2)Borrower has timely delivered to Lender all applicable bills or premium notices that it has received; and

(3)sufficient Imposition Deposits are held by Lender for each Imposition at the time such Imposition becomes due and payable.

Lender shall have no liability to Borrower for failing to pay any Imposition if any of the conditions are not satisfied. If at any time the amount of the Imposition Deposits held for payment of a specific Imposition exceeds the amount reasonably deemed necessary by Lender to be held in connection with such Imposition, the excess may be credited against future installments of Imposition Deposits for such Imposition.

(d)Imposition Deposits Upon Event of Default.

If an Event of Default has occurred and is continuing, Lender may apply any Imposition Deposits, in such amount and in such order as Lender determines, to pay any Impositions or as a credit against the Indebtedness.

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(e)Contesting Impositions.

Other than insurance premiums, Borrower may contest, at its expense, by appropriate legal proceedings, the amount or validity of any Imposition if:

(1)Borrower notifies Lender of the commencement or expected commencement of such proceedings;

(2)Lender determines that the Mortgaged Property is not in danger of being sold or forfeited;

(3)Borrower deposits with Lender (or the applicable Governmental Authority if required by applicable law) reserves sufficient to pay the contested Imposition, if required by Lender (or the applicable Governmental Authority);

(4)Borrower furnishes whatever additional security is required in the proceedings or is reasonably requested in writing by Lender; and

(5)Borrower commences, and at all times thereafter diligently prosecutes, such contest in good faith until a final determination is made by the applicable Governmental Authority.

(f)Release to Borrower.

Upon payment in full of all sums secured by the Security Instrument and this Loan Agreement and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower the balance of any Imposition Deposits then on deposit with Lender.

ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS

Section 13.01Covenants.

(a)Initial Deposits to Replacement Reserve Account and Repairs Escrow Account.

On the Effective Date, Borrower shall pay to Lender:

(1)the Initial Replacement Reserve Deposit for deposit into the Replacement Reserve Account; and

(2)the Repairs Escrow Deposit for deposit into the Repairs Escrow Account.

(b)Monthly Replacement Reserve Deposits.

Borrower shall deposit the applicable Monthly Replacement Reserve Deposit into the Replacement Reserve Account on each Payment Date.

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(c)Payment for Replacements and Repairs.

Borrower shall:

(1)pay all invoices for the Replacements and Repairs, regardless of whether funds on deposit in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, are sufficient, prior to any request for disbursement from the Replacement Reserve Account or the Repairs Escrow Account, as applicable (unless Lender has agreed to issue joint checks in connection with a particular Replacement or Repair);

(2)pay all applicable fees and charges of any Governmental Authority on account of the Replacements and Repairs, as applicable; and

(3)provide evidence satisfactory to Lender of completion of the Replacements and any Required Repairs (within the Completion Period or within such other period or by such other date set forth in the Required Repair Schedule and any Borrower Requested Repairs and Additional Lender Repairs (by the date specified by Lender for any such Borrower Requested Repairs or Additional Lender Repairs)).

(d)Assignment of Contracts for Replacements and Repairs.

Borrower shall collaterally assign to Lender as additional security any contract or subcontract for Replacements or Repairs, upon Lender’s written request, on a form of assignment approved by Lender.

(e)Indemnification.

If Lender elects to exercise its rights under Section 14.03 due to Borrower’s failure to timely commence or complete any Replacements or Repairs, Borrower shall indemnify and hold Lender harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arising from or in any way connected with the performance by Lender of the Replacements or Repairs or investment of the Reserve/Escrow Account Funds; provided that Borrower shall have no indemnity obligation if such actions, suits, claims, demands, liabilities, losses, damages, obligations, and costs or expenses, including litigation costs and reasonable attorneys’ fees, arise as a result of the willful misconduct or gross negligence of Lender, Lender’s agents, employees, or representatives as determined by a court of competent jurisdiction pursuant to a final non-appealable court order.

(f)Amendments to Loan Documents.

Subject to Section 5.02, Borrower shall execute and deliver to Lender, upon written request, an amendment to this Loan Agreement, the Security Instrument, and any other Loan Document deemed necessary or desirable to perfect Lender’s lien upon any portion of the Mortgaged Property for which Reserve/Escrow Account Funds were expended.

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(g)Administrative Fees and Expenses.

Borrower shall pay to Lender:

(1)by the date specified in the applicable invoice, the Repairs Escrow Account Administrative Fee and the Replacement Reserve Account Administration Fee for Lender’s services in administering the Repairs Escrow Account and Replacement Reserve Account and investing the funds on deposit in the Repairs Escrow Account and the Replacement Reserve Account, respectively;

(2)upon demand, a reasonable inspection fee, not exceeding the Maximum Inspection Fee, for each inspection of the Mortgaged Property by Lender in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such inspections; and

(3)upon demand, all reasonable fees charged by any engineer, architect, inspector or other person inspecting the Mortgaged Property on behalf of Lender for each inspection of the Mortgaged Property in connection with a Repair or Replacement, plus all other reasonable costs and out-of-pocket expenses relating to such inspections.

Section 13.02Mortgage Loan Administration Matters Regarding Reserves.

(a)Accounts, Deposits, and Disbursements.

(1)Custodial Accounts.

(A)The Replacement Reserve Account shall be an interest-bearing account that meets the standards for custodial accounts as required by Lender from time to time. Lender shall not be responsible for any losses resulting from the investment of the Replacement Reserve Deposits or for obtaining any specific level or percentage of earnings on such investment. All interest, if any, earned on the Replacement Reserve Deposits shall be added to and become part of the Replacement Reserve Account; provided, however, if applicable law requires, and so long as no Event of Default has occurred and is continuing under any of the Loan Documents, Lender shall pay to Borrower the interest earned on the Replacement Reserve Account not less frequently than the Replacement Reserve Account Interest Disbursement Frequency. In no event shall Lender be obligated to disburse funds from the Reserve/Escrow Account if an Event of Default has occurred and is continuing.

(B)Lender shall not be obligated to deposit the Repairs Escrow Depositsinto an interest-bearing account.

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(2)Disbursements by Lender Only.

Only Lender or a designated representative of Lender may make disbursements from the Replacement Reserve Account and the Repairs Escrow Account. Except as provided in Section 13.02(a)(8), disbursements shall only be made upon Borrower request and after satisfaction of all conditions for disbursement.

(3)Adjustment to Deposits.

(A)Mortgage Loan Terms Exceeding Ten (10) Years.

If the Loan Term exceeds ten (10) years (or five (5) years in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the Summary of Loan Terms), a property condition assessment shall be ordered by Lender for the Mortgaged Property at the expense of Borrower (which expense may be paid out of the Replacement Reserve Account if excess funds are available). The property condition assessment shall be performed no earlier than the sixth (6th) month and no later than the ninth (9th) month of the tenth (10th) Loan Year and every tenth (10th) Loan Year thereafter if the Loan Term exceeds twenty (20) years (or the fifth (5th) Loan Year in the case of any Mortgaged Property that is an “affordable housing property” as indicated on the Summary of Loan Terms and every fifth (5th) Loan Year thereafter if the Loan Term exceeds ten (10) years). After review of the property condition assessment, the amount of the Monthly Replacement Reserve Deposit may be adjusted by Lender for the remaining Loan Term by written notice to Borrower so that the Monthly Replacement Reserve Deposits are sufficient to fund the Replacements as and when required and/or the amount to be held in the Repairs Escrow Account may be adjusted by Lender so that the Repairs Escrow Deposit is sufficient to fund the Repairs as and when required.

(B)Transfers.

In connection with any Transfer of the Mortgaged Property, or any Transfer of an ownership interest in Borrower, Guarantor, or Key Principal that requires Lender’s consent, Lender may review the amounts on deposit, if any, in the Replacement Reserve Account or the Repairs Escrow Account, the amount of the Monthly Replacement Reserve Deposit and the likely repairs and replacements required by the Mortgaged Property, and the related contingencies which may arise during the remaining Loan Term. Based upon that review, Lender may require an additional deposit to the Replacement Reserve Account or the Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit as a condition to Lender’s consent to such Transfer.

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(4)Insufficient Funds.

Lender may, upon thirty (30) days’ prior written notice to Borrower, require an additional deposit(s) to the Replacement Reserve Account or Repairs Escrow Account, or an increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that the amounts on deposit in either the Replacement Reserve Account or the Repairs Escrow Account are not sufficient to cover the costs for Required Repairs or Required Replacements or, pursuant to the terms of Section 13.02(a)(9), not sufficient to cover the costs for Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements, or Additional Lender Replacements. Borrower’s agreement to complete the Replacements or Repairs as required by this Loan Agreement shall not be affected by the insufficiency of any balance in the Replacement Reserve Account or the Repairs Escrow Account, as applicable.

(5)Disbursements for Replacements and Repairs.

(A)Disbursement requests may only be made after completion of the applicable Replacements and only to reimburse Borrower for the actual approved costs of the Replacements (unless Lender has agreed to issue joint checks in connection with a particular Replacement). Lender shall not disburse from the Replacement Reserve Account the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Repairs Escrow Account or any similar account. Disbursement from the Replacement Reserve Account shall not be made more frequently than the Maximum Replacement Reserve Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Replacement Reserve Account shall not be less than the Minimum Replacement Reserve Disbursement Amount.

(B)Disbursement requests may only be made after completion of the applicable Repairs and only to reimburse Borrower for the actual cost of the Repairs (unless Lender has agreed to issue joint checks in connection with a particular Repair), up to the Maximum Repair Cost. Lender shall not disburse any amounts which would cause the funds remaining in the Repairs Escrow Account after any disbursement (other than with respect to the final disbursement) to be less than the Maximum Repair Cost of the then-current estimated cost of completing all remaining Repairs. Lender shall not disburse from the Repairs Escrow Account the costs of routine maintenance to the Mortgaged Property or for costs which are to be reimbursed from the Replacement Reserve Account or any similar account. Disbursement from the Repairs Escrow Account shall not be made more frequently than the Maximum Repair Disbursement Interval. Other than in connection with a final request for disbursement, disbursements from the Repairs Escrow Account shall not be less than the Minimum Repairs Disbursement Amount.

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(6)Disbursement Requests.

Each request by Borrower for disbursement from the Replacement Reserve Account or the Repairs Escrow Account must be in writing, must specify the Replacement or Repair for which reimbursement is requested (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)), and must:

(A)if applicable, specify the quantity and price of the items or materials purchased, grouped by type or category;

(B)if applicable, specify the cost of all contracted labor or other services involved in the Replacement or Repair for which such request for disbursement is made;

(C)if applicable, include copies of invoices for all items or materials purchased and all contracted labor or services provided;

(D)include evidence of payment of such Replacement or Repair satisfactory to Lender (unless Lender has agreed to issue joint checks in connection with a particular Repair or Replacement as provided in this Loan Agreement); and

(E)contain a certification by Borrower that the Repair or Replacement has been completed lien free and in a good and workmanlike manner, in accordance with any plans and specifications previously approved by Lender (if applicable) and in compliance with all applicable laws, ordinances, rules, and regulations of any Governmental Authority having jurisdiction over the Mortgaged Property, and otherwise in accordance with the provisions of this Loan Agreement.

(7)Conditions to Disbursement.

Lender may require any or all of the following at the expense of Borrower as a condition to disbursement of funds from the Replacement Reserve Account or the Repairs Escrow Account (provided that for any Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, and Additional Lender Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)):

(A)an inspection by Lender of the Mortgaged Property and the applicable Replacement or Repair;

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(B)an inspection or certificate of completion by an appropriate independent qualified professional (such as an architect, engineer or property inspector, depending on the nature of the Repair or Replacement) selected by Lender;

(C)either:

(i)a search of title to the Mortgaged Property effective to the date of disbursement; or

(ii)a “date-down” endorsement to Lender’s Title Policy (or a new Lender’s Title Policy if a “date-down” is not available) extending the effective date of such policy to the date of disbursement, and showing no Liens other than (1) Permitted Encumbrances, (2) liens which Borrower is diligently contesting in good faith that have been bonded off to the satisfaction of Lender, or (3) mechanics’ or materialmen’s liens which attach automatically under the laws of any Governmental Authority upon the commencement of any work upon, or delivery of any materials to, the Mortgaged Property and for which Borrower is not delinquent in the payment for any such work or materials; and

(D)an acknowledgement of payment, waiver of claims, and release of lien for work performed and materials supplied from each contractor, subcontractor or materialman in accordance with the requirements of applicable law and covering all work performed and materials supplied (including equipment and fixtures) for the Mortgaged Property by that contractor, subcontractor, or materialman through the date covered by the disbursement request (or, in the event that payment to such contractor, subcontractor, or materialman is to be made by a joint check, the release of lien shall be effective through the date covered by the previous disbursement).

(8)Joint Checks for Periodic Disbursements.

Lender may, upon Borrower’s written request, issue joint checks, payable to Borrower and the applicable supplier, materialman, mechanic, contractor, subcontractor, or other similar party, if:

(A)the cost of the Replacement or Repair exceeds the Replacement Threshold or the Repair Threshold, as applicable, and the contractor performing such Replacement or Repair requires periodic payments pursuant to the terms of the applicable written contract;

(B)the contract for such Repair or Replacement requires payment upon completion of the applicable portion of the work;

(C)Borrower makes the disbursement request after completion of the applicable portion of the work required to be completed under such contract;

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(D)the materials for which the request for disbursement has been made are on site at the Mortgaged Property and are properly secured or installed;

(E)Lender determines that the remaining funds in the Replacement Reserve Account designated for such Replacement, or in the Repairs Escrow Account designated for such Repair, as applicable, are sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender;

(F)each supplier, materialman, mechanic, contractor, subcontractor, or other similar party receiving payments shall have provided, if requested in writing by Lender, a waiver of liens with respect to amounts which have been previously paid to them; and

(G)all other conditions for disbursement have been satisfied.

(9)Replacements and Repairs Other than Required Replacements or Required Repairs.

(A)Borrower Requested Replacements and Borrower Requested Repairs.

Borrower may submit a disbursement request from the Replacement Reserve Account or the Repairs Escrow Account to reimburse Borrower for any Borrower Requested Replacement or Borrower Requested Repair. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements for Borrower Requested Replacements or Borrower Requested Repairs if:

(i)they are of the type intended to be covered by the Replacement Reserve Account or the Repairs Escrow Account, as applicable;

(ii)the costs are commercially reasonable;

(iii)the amount of funds in the Replacement Reserve Account or Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements or Additional Lender Repairs that have been previously approved by Lender; and

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(iv)all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

Nothing in this Loan Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit in connection with any such Borrower Requested Replacements, or an additional deposit to the Repairs Escrow Account for any such Borrower Requested Repairs.

(B)Additional Lender Replacements and Additional Lender Repairs.

Lender may require, as set forth in Section 6.02(b), Section 6.03(c), or otherwise from time to time, upon written notice to Borrower, that Borrower make Additional Lender Replacements or Additional Lender Repairs. Lender shall make disbursements from the Replacement Reserve Account for Additional Lender Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as applicable, if:

(i)the costs are commercially reasonable;

(ii)the amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and

(iii)all conditions for disbursement from the Replacement Reserve Account or Repairs Escrow Account, as applicable, have been satisfied.

Nothing in this Loan Agreement shall limit Lender’s right to require an additional deposit to the Replacement Reserve Account or an increase to the Monthly Replacement Reserve Deposit for any such Additional Lender Replacements or an additional deposit to the Repairs Escrow Account for any such Additional Lender Repair.

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(10)Excess Costs.

In the event any Replacement or Repair exceeds the approved cost set forth on the Required Replacement Schedule for Replacements, or the Maximum Repair Cost for Repairs, Borrower may submit a disbursement request to reimburse Borrower for such excess cost. The disbursement request must be in writing and include an explanation for such request. Lender shall make disbursements from the Replacement Reserve Account or the Repairs Escrow Account, as applicable, if:

(A)the excess cost is commercially reasonable;

(B)the amount of funds in the Replacement Reserve Account or the Repairs Escrow Account, as applicable, is sufficient to pay such costs and the then-current estimated cost of completing all remaining Required Replacements or Required Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender Replacements, or Additional Lender Repairs that have been previously approved by Lender; and

(C)all conditions for disbursement from the Replacement Reserve Account or the Repairs Escrow Account have been satisfied.

(11)Final Disbursements.

Upon completion of all Repairs in accordance with this Loan Agreement and so long as no Event of Default has occurred and is continuing, Lender shall disburse to Borrower any amounts then remaining in the Repairs Escrow Account. Upon payment in full of the Indebtedness and release by Lender of the lien of the Security Instrument, Lender shall disburse to Borrower any and all amounts then remaining in the Replacement Reserve Account and the Repairs Escrow Account (if not previously released).

(b)Approvals of Contracts; Assignment of Claims.

Lender retains the right to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors, or other parties providing labor or materials in connection with the Replacements or Repairs. Notwithstanding Borrower’s assignment (in the Security Instrument) of its rights and claims against all Persons supplying labor or materials in connection with the Replacement or Repairs, Lender will not pursue any such right or claim unless an Event of Default has occurred and is continuing or as otherwise provided in Section 14.03(c).

(c)Delays and Workmanship.

If any work for any Replacement or Repair has not timely commenced, has not been timely performed in a workmanlike manner, or has not been timely completed in a workmanlike manner, Lender may, without notice to Borrower:

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(1)withhold disbursements from the Replacement Reserve Account or Repairs Escrow Account for such unsatisfactory Replacement or Repair, as applicable;

(2)proceed under existing contracts or contract with third parties to make or complete such Replacement or Repair;

(3)apply the funds in the Replacement Reserve Account or Repairs Escrow Account toward the labor and materials necessary to make or complete such Replacement or Repair, as applicable; or

(4)exercise any and all other remedies available to Lender under this Loan Agreement or any other Loan Document, including any remedies otherwise available upon an Event of Default pursuant to the terms of Section 14.02.

To facilitate Lender’s completion or making of such Replacements or Repairs, Lender shall have the right to enter onto the Mortgaged Property and perform any and all work and labor necessary to make or complete the Replacements or Repairs and employ watchmen to protect the Mortgaged Property from damage. All funds so expended by Lender shall be deemed to have been advanced to Borrower, shall be part of the Indebtedness and shall be secured by the Security Instrument and this Loan Agreement.

(d)Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to Section 14.03(c).

(e)No Lender Obligation.

Nothing in this Loan Agreement shall:

(1)make Lender responsible for making or completing the Replacements or Repairs;

(2)require Lender to expend funds, whether from the Replacement Reserve Account, the Repairs Escrow Account, or otherwise, to make or complete any Replacement or Repair;

(3)obligate Lender to proceed with the Replacements or Repairs; or

(4)obligate Lender to demand from Borrower additional sums to make or complete any Replacement or Repair.

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(f)No Lender Warranty.

Lender’s approval of any plans for any Replacement or Repair, release of funds from the Replacement Reserve Account or Repairs Escrow Account, inspection of the Mortgaged Property by Lender or its agents, representatives, or designees, or other acknowledgment of completion of any Replacement or Repair in a manner satisfactory to Lender shall not be deemed an acknowledgment or warranty to any person that the Replacement or Repair has been completed in accordance with applicable building, zoning, or other codes, ordinances, statutes, laws, regulations, or requirements of any governmental agency, such responsibility being at all times exclusively that of Borrower.

ARTICLE 14 - DEFAULTS/REMEDIES

Section 14.01Events of Default.

The occurrence of any one or more of the following in this Section 14.01 shall constitute an Event of Default under this Loan Agreement.

(a)Automatic Events of Default.

Any of the following shall constitute an automatic Event of Default:

(1)any failure by Borrower to pay or deposit when due any amount required by the Note, this Loan Agreement or any other Loan Document;

(2)any failure by Borrower to maintain the insurance coverage required by any Loan Document;

(3)any failure by Borrower to comply with the provisions of Section 4.02(d) relating to its single asset status;

(4)if any warranty, representation, certification, or statement of Borrower, Guarantor, or Key Principal in this Loan Agreement or any of the other Loan Documents is false, inaccurate, or misleading in any material respect when made;

(5)fraud, gross negligence, willful misconduct, or material misrepresentation or material omission by or on behalf of Borrower, Guarantor, or Key Principal or any of their officers, directors, trustees, partners, members, or managers in connection with:

(A)the application for, or creation of, the Indebtedness;

(B)any financial statement, rent roll, or other report or information provided to Lender during the term of the Mortgage Loan; or

(C)any request for Lender’s consent to any proposed action, including a request for disbursement of Reserve/Escrow Account Funds or Collateral Account Funds;

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(6)the occurrence of any Transfer not permitted by the Loan Documents;

(7)the occurrence of a Bankruptcy Event;

(8)the commencement of a forfeiture action or other similar proceeding, whether civil or criminal, which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged Property or otherwise materially impair the lien created by this Loan Agreement or the Security Instrument or Lender’s interest in the Mortgaged Property;

(9)if Borrower, Guarantor, or Key Principal is a trust, or if Control of Borrower, Guarantor, or Key Principal is Transferred or if a Restricted Ownership Interest in Borrower, Guarantor, or Key Principal would be Transferred due to the termination or revocation of a trust, the termination or revocation of such trust, except as set forth in Section 11.03(d);

(10)any failure by Borrower to complete any Repair related to fire, life, or safety issues in accordance with the terms of this Loan Agreement within the Completion Period (or such other date set forth on the Required Repair Schedule or otherwise required by Lender in writing for such Repair); or

(11)any exercise by the holder of any other debt instrument secured by a mortgage, deed of trust, or deed to secure debt on the Mortgaged Property of a right to declare all amounts due under that debt instrument immediately due and payable.

(b)Events of Default Subject to a Specified Cure Period.

Any of the following shall constitute an Event of Default subject to the cure period set forth in the Loan Documents:

(1)if Key Principal or Guarantor is a natural person, the death of such individual, unless all requirements of Section 11.03(e) are met;

(2)the occurrence of a Guarantor Bankruptcy Event, unless requirements of Section 11.03(f) are met;

(3)any failure by Borrower, Key Principal, or Guarantor to comply with the provisions of Section 5.02(b) and Section 5.02(c); or

(4)any failure by Borrower to perform any obligation under this Loan Agreement or any Loan Document that is subject to a specified written notice and cure period, which failure continues beyond such specified written notice and cure period as set forth herein or in the applicable Loan Document.

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(c)Events of Default Subject to Extended Cure Period.

The following shall constitute an Event of Default if the existence of such condition or event, or such failure to perform or default in performance continues for a period of thirty (30) days after written notice by Lender to Borrower of the existence of such condition or event, or of such failure to perform or default in performance, provided, however, such period may be extended for up to an additional thirty (30) days if Borrower, in the discretion of Lender, is diligently pursuing a cure of such; provided, further, however, no such written notice, grace period, or extension shall apply if, in Lender’s discretion, immediate exercise by Lender of a right or remedy under this Loan Agreement or any Loan Document is required to avoid harm to Lender or impairment of the Mortgage Loan (including the Loan Documents), the Mortgaged Property or any other security given for the Mortgage Loan:

(1)any failure by Borrower to perform any of its obligations under this Loan Agreement or any Loan Document (other than those specified in Section 14.01(a) or Section 14.01(b) above) as and when required.

Section 14.02Remedies.

(a)Acceleration; Foreclosure.

If an Event of Default has occurred and is continuing, the entire unpaid principal balance of the Mortgage Loan, any Accrued Interest, interest accruing at the Default Rate, the Prepayment Premium (if applicable), and all other Indebtedness, at the option of Lender, shall immediately become due and payable, without any prior written notice to Borrower, unless applicable law requires otherwise (and in such case, after any required written notice has been given). Lender may exercise this option to accelerate regardless of any prior forbearance. In addition, Lender shall have all rights and remedies afforded to it hereunder and under the other Loan Documents, including, foreclosure on and/or the power of sale of the Mortgaged Property, as provided in the Security Instrument, and any rights and remedies available to it at law or in equity (subject to Borrower’s statutory rights of reinstatement, if any, prior to a Foreclosure Event). Any proceeds of a foreclosure or other sale under this Loan Agreement or any other Loan Document may be held and applied by Lender as additional collateral for the Indebtedness pursuant to this Loan Agreement. Notwithstanding the foregoing, the occurrence of any Bankruptcy Event shall automatically accelerate the Mortgage Loan and all obligations and Indebtedness shall be immediately due and payable without written notice or further action by Lender.

(b)Loss of Right to Disbursements from Collateral Accounts.

If an Event of Default has occurred and is continuing, Borrower shall immediately lose all of its rights to receive disbursements from the Reserve/Escrow Accounts and any Collateral Accounts. During the continuance of any such Event of Default, Lender may use the Reserve/Escrow Account Funds and any Collateral Account Funds (or any portion thereof) for any purpose, including:

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(1)repayment of the Indebtedness, including principal prepayments and the Prepayment Premium applicable to such full or partial prepayment, as applicable (however, such application of funds shall not cure or be deemed to cure any Event of Default);

(2)reimbursement of Lender for all losses and expenses (including reasonable legal fees) suffered or incurred by Lender as a result of such Event of Default;

(3)completion of the Replacement or Repair or for any other replacement or repair to the Mortgaged Property; and

(4)payment of any amount expended in exercising (and the exercise of) all rights and remedies available to Lender at law or in equity or under this Loan Agreement or under any of the other Loan Documents.

Nothing in this Loan Agreement shall obligate Lender to apply all or any portion of the Reserve/Escrow Account Funds or Collateral Account Funds on account of any Event of Default by Borrower or to repayment of the Indebtedness or in any specific order of priority.

(c)Remedies Cumulative.

Each right and remedy provided in this Loan Agreement is distinct from all other rights or remedies under this Loan Agreement or any other Loan Document or afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of additional default by Borrower in order to exercise any of its remedies with respect to an Event of Default.

Section 14.03Additional Lender Rights; Forbearance.

(a)No Effect Upon Obligations.

Lender may, but shall not be obligated to, agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any effect upon the obligations of, Guarantor, Key Principal, or other third party obligor, to take any of the following actions:

(1)the time for payment of the principal of or interest on the Indebtedness may be extended, or the Indebtedness may be renewed in whole or in part;

(2)the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;

(3)the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;

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(4)any or all payments due under this Loan Agreement or any other Loan Document may be reduced;

(5)any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;

(6)any amounts under this Loan Agreement or any other Loan Document may be released;

(7)any security for the Indebtedness may be modified, exchanged, released, surrendered, or otherwise dealt with, or additional security may be pledged or mortgaged for the Indebtedness;

(8)the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower; or

(9)any other terms of the Loan Documents may be modified.

(b)No Waiver of Rights or Remedies.

Any waiver of an Event of Default or forbearance by Lender in exercising any right or remedy under this Loan Agreement or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of any other Event of Default or preclude the exercise or failure to exercise of any other right or remedy. The acceptance by Lender of payment of all or any part of the Indebtedness after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Indebtedness or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise or failure to exercise of any other right available to Lender. Lender’s receipt of any insurance proceeds or amounts in connection with a Condemnation Action shall not operate to cure or waive any Event of Default.

(c)Appointment of Lender as Attorney-In-Fact.

Borrower hereby irrevocably makes, constitutes, and appoints Lender (and any officer of Lender or any Person designated by Lender for that purpose) as Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in Borrower’s name, place, and stead, with full power of substitution, to:

(1)use any of the funds in the Replacement Reserve Account or Repairs Escrow Account for the purpose of making or completing the Replacements or Repairs;

(2)make such additions, changes, and corrections to the Replacements or Repairs as shall be necessary or desirable to complete the Replacements or Repairs;

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(3)employ such contractors, subcontractors, agents, architects, and inspectors as shall be required for such purposes;

(4)pay, settle, or compromise all bills and claims for materials and work performed in connection with the Replacements or Repairs, or as may be necessary or desirable for the completion of the Replacements or Repairs, or for clearance of title;

(5)adjust and compromise any claims under any and all policies of insurance required pursuant to this Loan Agreement and any other Loan Document, subject only to Borrower’s rights under this Loan Agreement;

(6)appear in and prosecute any action arising from any insurance policies;

(7)collect and receive the proceeds of insurance, and to deduct from such proceeds Lender’s expenses incurred in the collection of such proceeds;

(8)commence, appear in, and prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any condemnation;

(9)settle or compromise any claim in connection with any condemnation;

(10)execute all applications and certificates in the name of Borrower which may be required by any of the contract documents;

(11)prosecute and defend all actions or proceedings in connection with the Mortgaged Property or the rehabilitation and repair of the Mortgaged Property;

(12)take such actions as are permitted in this Loan Agreement and any other Loan Documents;

(13)execute such financing statements and other documents and to do such other acts as Lender may require to perfect and preserve Lender’s security interest in, and to enforce such interests in, the collateral; and

(14)carry out any remedy provided for in this Loan Agreement and any other Loan Documents, including endorsing Borrower’s name to checks, drafts, instruments and other items of payment and proceeds of the collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of Borrower, changing the address of Borrower to that of Lender, opening all envelopes addressed to Borrower, and applying any payments contained therein to the Indebtedness.

Borrower hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable and shall not be affected by the disability or incompetence of Borrower. Borrower specifically acknowledges and agrees that this power of attorney granted to Lender may be assigned by Lender to Lender’s successors or assigns as holder of the Note (and the other Loan Documents). The foregoing powers conferred on Lender under this Section 14.03(c) shall not impose any duty upon

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Lender to exercise any such powers and shall not require Lender to incur any expense or take any action. Borrower hereby ratifies and confirms all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Loan Agreement and any other Loan Documents.

Notwithstanding the foregoing provisions, Lender shall not exercise its rights as set forth in this Section 14.03(c) unless: (A) an Event of Default has occurred and is continuing, or (B) Lender determines, in its discretion, that exigent circumstances exist or that such exercise is necessary or prudent in order to protect and preserve the Mortgaged Property, or Lender’s lien priority and security interest in the Mortgaged Property.

(d)Borrower Waivers.

If more than one Person signs this Loan Agreement as Borrower, each Borrower, with respect to any other Borrower, hereby agrees that Lender, in its discretion, may:

(1)bring suit against Borrower, or any one or more of Borrower, jointly and severally, or against any one or more of them;

(2)compromise or settle with any one or more of the persons constituting Borrower, for such consideration as Lender may deem proper;

(3)release one or more of the persons constituting Borrower, from liability; or

(4)otherwise deal with Borrower, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from any Borrower the full amount of the Indebtedness.

Section 14.04Waiver of Marshaling.

Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Loan Agreement, any other Loan Document or applicable law. Lender shall have the right to determine the order in which all or any part of the Indebtedness is satisfied from the proceeds realized upon the exercise of such remedies. Borrower and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Loan Agreement waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels or as an entirety in connection with the exercise of any of the remedies permitted by applicable law or provided in this Loan Agreement or any other Loan Documents.

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Lender shall account for any moneys received by Lender in respect of any foreclosure on or disposition of collateral hereunder and under the other Loan Documents provided that Lender shall not have any duty as to any collateral, and Lender shall be accountable only for amounts that it actually receives as a result of the exercise of such powers. NONE OF LENDER OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER (a) FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED PURSUANT TO A FINAL, NON-APPEALABLE COURT ORDER BY A COURT OF COMPETENT JURISDICTION, NOR (b) FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE 15 - MISCELLANEOUS

Section 15.01Governing Law; Consent to Jurisdiction and Venue.

(a)Governing Law.

This Loan Agreement and any other Loan Document which does not itself expressly identify the law that is to apply to it, shall be governed by the laws of the Property Jurisdiction without regard to the application of choice of law principles.

(b)Venue.

Any controversy arising under or in relation to this Loan Agreement or any other Loan Document shall be litigated exclusively in the Property Jurisdiction without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Loan Agreement or any other Loan Document. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence, or otherwise.

Section 15.02Notice.

(a)Process of Serving Notice.

Except as otherwise set forth herein or in any other Loan Document, all notices under this Loan Agreement and any other Loan Document shall be:

(1)in writing and shall be:

(A)delivered, in person;

(B)mailed, postage prepaid, either by registered or certified delivery, return receipt requested;

(C)sent by overnight courier; or

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(D)sent by electronic mail with originals to follow by overnight courier;

(2)addressed to the intended recipient at Borrower’s Notice Address and Lender’s Notice Address, as applicable; and

(3)deemed given on the earlier to occur of:

(A)the date when the notice is received by the addressee; or

(B)if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.

(b)Change of Address.

Any party to this Loan Agreement may change the address to which notices intended for it are to be directed by means of notice given to the other parties identified on the Summary of Loan Terms in accordance with this Section 15.02.

(c)Default Method of Notice.

Any required notice under this Loan Agreement or any other Loan Document which does not specify how notices are to be given shall be given in accordance with this Section 15.02.

(d)Receipt of Notices.

Neither Borrower nor Lender shall refuse or reject delivery of any notice given in accordance with this Loan Agreement. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.

Section 15.03Successors and Assigns Bound; Sale of Mortgage Loan.

(a)Binding Agreement.

This Loan Agreement shall bind, and the rights granted by this Loan Agreement shall inure to, the successors and assigns of Lender and the permitted successors and assigns of Borrower. However, a Transfer not permitted by this Loan Agreement shall be an Event of Default and shall be void ab initio.

(b)Sale of Mortgage Loan; Change of Servicer.

Nothing in this Loan Agreement shall limit Lender’s (including its successors and assigns) right to sell or transfer the Mortgage Loan or any interest in the Mortgage Loan. The Mortgage Loan or a partial interest in the Mortgage Loan (together with this Loan Agreement and the other Loan Documents) may be sold one or more times without prior written notice to Borrower. A sale may result in a change of the Loan Servicer.

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Section 15.04Counterparts.

This Loan Agreement may be executed in any number of counterparts with the same effect as if the parties hereto had signed the same document and all such counterparts shall be construed together and shall constitute one instrument.

Section 15.05Joint and Several (or Solidary) Liability.

If more than one Person signs this Loan Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes of Louisiana law).

Section 15.06Relationship of Parties; No Third Party Beneficiary.

(a)Solely Creditor and Debtor.

The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Loan Agreement shall create any other relationship between Lender and Borrower. Nothing contained in this Loan Agreement shall constitute Lender as a joint venturer, partner, or agent of Borrower, or render Lender liable for any debts, obligations, acts, omissions, representations, or contracts of Borrower.

(b)No Third Party Beneficiaries.

No creditor of any party to this Loan Agreement and no other Person shall be a third party beneficiary of this Loan Agreement or any other Loan Document or any account created or contemplated under this Loan Agreement or any other Loan Document. Nothing contained in this Loan Agreement shall be deemed or construed to create an obligation on the part of Lender to any third party nor shall any third party have a right to enforce against Lender any right that Borrower may have under this Loan Agreement. Without limiting the foregoing:

(1)any Servicing Arrangement between Lender and any Loan Servicer shall constitute a contractual obligation of such Loan Servicer that is independent of the obligation of Borrower for the payment of the Indebtedness;

(2)Borrower shall not be a third party beneficiary of any Servicing Arrangement; and

(3)no payment by the Loan Servicer under any Servicing Arrangement will reduce the amount of the Indebtedness.

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Section 15.07Severability; Entire Agreement; Amendments.

The invalidity or unenforceability of any provision of this Loan Agreement or any other Loan Document shall not affect the validity or enforceability of any other provision of this Loan Agreement or of any other Loan Document, all of which shall remain in full force and effect, including the Guaranty. This Loan Agreement contains the complete and entire agreement among the parties as to the matters covered, rights granted, and the obligations assumed in this Loan Agreement. This Loan Agreement may not be amended or modified except by written agreement signed by the parties hereto.

Section 15.08Construction.

(a)The captions and headings of the sections of this Loan Agreement and the Loan Documents are for convenience only and shall be disregarded in construing this Loan Agreement and the Loan Documents.

(b)Any reference in this Loan Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit or Schedule attached to this Loan Agreement or to a Section or Article of this Loan Agreement.

(c)Any reference in this Loan Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.

(d)Use of the singular in this Loan Agreement includes the plural and use of the plural includes the singular.

(e)As used in this Loan Agreement, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only and not a limitation.

(f)Whenever Borrower’s knowledge is implicated in this Loan Agreement or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Loan Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

(g)Unless otherwise provided in this Loan Agreement, if Lender’s approval, designation, determination, selection, estimate, action, or decision is required, permitted, or contemplated hereunder, such approval, designation, determination, selection, estimate, action, or decision shall be made in Lender’s sole and absolute discretion.

(h)All references in this Loan Agreement to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

(i)“Lender may” shall mean at Lender’s discretion, but shall not be an obligation.

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(j)If the Mortgage Loan proceeds are disbursed on a date that is later than the Effective Date, as described in Section 2.02(a)(1), the representations and warranties in the Loan Documents with respect to the ownership and operation of the Mortgaged Property shall be deemed to be made as of the disbursement date.

Section 15.09Mortgage Loan Servicing.

All actions regarding the servicing of the Mortgage Loan, including the collection of payments, the giving and receipt of notice, inspections of the Mortgaged Property, inspections of books and records, and the granting of consents and approvals, may be taken by the Loan Servicer unless Borrower receives notice to the contrary. If Borrower receives conflicting notices regarding the identity of the Loan Servicer or any other subject, any such written notice from Lender shall govern. The Loan Servicer may change from time to time (whether related or unrelated to a sale of the Mortgage Loan). If there is a change of the Loan Servicer, Borrower will be given written notice of the change.

Section 15.10Disclosure of Information.

Lender may furnish information regarding Borrower, Key Principal, or Guarantor, or the Mortgaged Property to third parties with an existing or prospective interest in the servicing, enforcement, evaluation, performance, purchase, or securitization of the Mortgage Loan, including trustees, master servicers, special servicers, rating agencies, and organizations maintaining databases on the underwriting and performance of multifamily mortgage loans. Borrower irrevocably waives any and all rights it may have under applicable law to prohibit such disclosure, including any right of privacy.

Section 15.11Waiver; Conflict.

No specific waiver of any of the terms of this Loan Agreement shall be considered as a general waiver. If any provision of this Loan Agreement is in conflict with any provision of any other Loan Document, the provision contained in this Loan Agreement shall control.

Section 15.12No Reliance.

Borrower acknowledges, represents, and warrants that:

(a)it understands the nature and structure of the transactions contemplated by this Loan Agreement and the other Loan Documents;

(b)    it is familiar with the provisions of all of the documents and instruments relating to such transactions;

(c)    it understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property;

(d)    it has had the opportunity to consult counsel; and

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(e)it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Loan Agreement or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into, or otherwise in connection with this Loan Agreement, any other Loan Document, or any of the matters contemplated hereby or thereby.

Section 15.13Subrogation.

If, and to the extent that, the proceeds of the Mortgage Loan are used to pay, satisfy, or discharge any obligation of Borrower for the payment of money that is secured by a pre-existing mortgage, deed of trust, or other lien encumbering the Mortgaged Property, such Mortgage Loan proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall automatically, and without further action on its part, be subrogated to the rights, including lien priority, of the owner or holder of the obligation secured by such prior lien, whether or not such prior lien is released.

Section 15.14Counting of Days.

Except where otherwise specifically provided, any reference in this Loan Agreement to a period of “days” means calendar days, not Business Days. If the date on which Borrower is required to perform an obligation under this Loan Agreement is not a Business Day, Borrower shall be required to perform such obligation by the Business Day immediately preceding such date; provided, however, in respect of any Payment Date, or if the Maturity Date is other than a Business Day, Borrower shall be obligated to make such payment by the Business Day immediately following such date.

Section 15.15Revival and Reinstatement of Indebtedness.

If the payment of all or any part of the Indebtedness by Borrower, Guarantor, or any other Person, or the transfer to Lender of any collateral or other property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable costs, expenses, and attorneys’ fees incurred by Lender in connection therewith, and the Indebtedness shall automatically shall be revived, reinstated, and restored by such amount and shall exist as though such Voidable Transfer had never been made.

Section 15.16Time is of the Essence.

Borrower agrees that, with respect to each and every obligation and covenant contained in this Loan Agreement and the other Loan Documents, time is of the essence.

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Section 15.17Final Agreement.

THIS LOAN AGREEMENT ALONG WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Loan Agreement and the other Loan Documents. This Loan Agreement, the other Loan Documents, and any of their provisions may not be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement.

Section 15.18WAIVER OF TRIAL BY JURY.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER, THAT IS TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, Borrower and Lender have signed and delivered this Loan Agreement under seal (where applicable) or have caused this Loan Agreement to be signed and delivered under seal (where applicable) by their duly authorized representatives. Where applicable law so provides, Borrower and Lender intend that this Loan Agreement shall be deemed to be signed and delivered as a sealed instrument.

BORROWER:

STAR PRESTON HILLS, LLC

a Delaware limited liability company

By:    STEADFAST APARTMENT ADVISOR, LLC

a Delaware limited liability company

Non-Member Manager

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

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LENDER:

BERKELEY POINT CAPITAL LLC

a Delaware limited liability company

By:	/s/ Deborah Demoney	(SEAL)
	Deborah Demoney
	Assistant Vice President

By:	Heidi Marrin	(SEAL)
	Heidi Marrin
	Director

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SCHEDULE 1

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

Definitions Schedule

(Interest Rate Type – Structured ARM (1 and 3 Month LIBOR))

Capitalized terms used in the Loan Agreement have the meanings given to such terms in this Definitions Schedule.

“Accrued Interest” means unpaid interest, if any, on the Mortgage Loan that has not been added to the unpaid principal balance of the Mortgage Loan pursuant to Section 2.02(b) (Capitalization of Accrued But Unpaid Interest) of the Loan Agreement.

“Additional Lender Repairs” means repairs of the type listed on the Required Repair Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.

“Additional Lender Replacements” means replacements of the type listed on the Required Replacement Schedule but not otherwise identified thereon that are determined advisable by Lender to keep the Mortgaged Property in good order and repair (ordinary wear and tear excepted) and in good marketable condition or to prevent deterioration of the Mortgaged Property.

“Adjustable Rate” has the meaning set forth in the Summary of Loan Terms.

“Amortization Period” has the meaning set forth in the Summary of Loan Terms.

“Amortization Type” has the meaning set forth in the Summary of Loan Terms.

“Bank Secrecy Act” means the Bank Secrecy Act of 1970, as amended (e.g., 31 U.S.C. Sections 5311-5330).

“Bankruptcy Event” means any one or more of the following:

(a)    the commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Borrower;

(b)    the acknowledgment in writing by Borrower (other than to Lender in connection with a workout)that it is unable to pay its debts generally as they mature;

(c)    the making of a general assignment for the benefit of creditors by Borrower;

(d)    the commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Borrower; or

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(e)    the appointment of a receiver(other than a receiver appointed at the direction or request of Lender under the terms of the Loan Documents), liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Borrower or any substantial part of the assets of Borrower;

provided, however, that any proceeding or case under (d) or (e) above shall not be a Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Guarantor, or Key Principal, (2) any Person Controlling Borrower, Guarantor, or Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Guarantor, or Key Principal (in which event such case or proceeding shall be a Bankruptcy Event immediately).

“Borrower” means, individually (and jointly and severally (solidarily instead for purposes of Louisiana law) if more than one), the entity (or entities) identified as “Borrower” in the first paragraph of the Loan Agreement.

“Borrower Affiliate” means, as to Borrower, Guarantor or Key Principal:

(a)any Person (other than the shareholders or beneficial owners of any Publicly-Held Corporation or a Public-Held Trust) that owns any direct ownership interest in Borrower, Guarantor or Key Principal;

(b)    any Person that indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in Borrower, Guarantor or Key Principal;

(c)    any Person Controlled by, under common Control with, or which Controls, Borrower, Guarantor or Key Principal;

(d)    any entity in which Borrower, Guarantor or Key Principal directly or indirectly owns, with the power to vote, twenty percent (20%) or more of the ownership interests in such entity, or

(e)    any other individual that is related (to the third degree of consanguinity) by blood or marriage to Borrower, Guarantor or Key Principal.

“Borrower Requested Repairs” means repairs not listed on the Required Repair Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.

“Borrower Requested Replacements” means replacements not listed on the Required Replacement Schedule requested by Borrower to be reimbursed from the Replacement Reserve Account and determined advisable by Lender to keep the Mortgaged Property in good order and repair and in a good marketable condition or to prevent deterioration of the Mortgaged Property.

“Borrower’s General Business Address” has the meaning set forth in the Summary of Loan Terms.

“Borrower’s Notice Address” has the meaning set forth in the Summary of Loan Terms.

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“Business Day” means any day other than (a) a Saturday, (b) a Sunday, (c) a day on which Lender is not open for business, or (d) a day on which the Federal Reserve Bank of New York is not open for business.

“Collateral Account Funds” means, collectively, the funds on deposit in any or all of the Collateral Accounts, including the Reserve/Escrow Account Funds.

“Collateral Accounts” means any account designated as such by Lender pursuant to a Collateral Agreement or as established pursuant to this Loan Agreement, including the Reserve/Escrow Account.

“Collateral Agreement” means any separate agreement between Borrower and Lender for the establishment of any other fund, reserve or account.

“Completion Period” has the meaning set forth in the Summary of Loan Terms.

“Condemnation Action” has the meaning set forth in the Security Instrument.

“Control” (including with correlative meanings, such as “Controlling,” “Controlled by” and “under common Control with”) means, as applied to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the management and operations of such entity (including, by way of illustration, the power to (1) elect the majority of the directors of such entity; (2) make management decisions on behalf of or independently select the manager of a limited liability company or the managing partner of a partnership; (3) independently remove and then select a majority of those individuals exercising managerial authority over any entity; (4) limit or otherwise modify the extent of control over the management and operations of an entity by any Person exercising managerial authority over such entity) whether through the ownership of voting securities or other ownership interests, by contract or otherwise.

“Credit Score” means a numerical value or a categorization derived from a statistical tool or modeling system used to measure credit risk and predict the likelihood of certain credit behaviors, including default.

“Current Index” has the meaning set forth in the Summary of Loan Terms.

“Debt Service Amounts” means the Monthly Debt Service Payments and all other amounts payable under the Loan Agreement, the Note, the Security Instrument or any other Loan Document.

“Default Rate” means an interest rate equal to the lesser of:

(a)    the sum of the Interest Rate plus four (4) percentage points; or

(b)    the maximum interest rate which may be collected from Borrower under applicable law.

“Definitions Schedule” means this Schedule 1 (Definitions Schedule) to the Loan Agreement.

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“Effective Date” has the meaning set forth in the Summary of Loan Terms.

“Employee Benefit Plan” means a plan described in Section 3(3) of ERISA, regardless of whether the plan is subject to ERISA.

“Enforcement Costs” has the meaning set forth in the Security Instrument.

“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of the Effective Date made by Borrower to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.

“Environmental Inspections” has the meaning set forth in the Environmental Indemnity Agreement.

“Environmental Laws” has the meaning set forth in the Environmental Indemnity Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean, with respect to Borrower, any entity that, together with Borrower, would be treated as a single employer under Section 414(b) or (c) of the Internal Revenue Code, or Section 4001(a)(14) of ERISA, or the regulations thereunder.

“ERISA Plan” means any employee pension benefit plan within the meaning of Section 3(2) of ERISA (or related trust) that is subject to the requirements of Title IV of ERISA, Sections 430 or 431 of the Internal Revenue Code, or Sections 302, 303, or 304 of ERISA, which is maintained or contributed to by Borrower or its ERISA Affiliates.

“Event of Default” means the occurrence of any event listed in Section 14.01 (Events of Default) of the Loan Agreement.

“Exceptions to Representations and Warranties Schedule” means that certain Schedule 7 (Exceptions to Representations and Warranties Schedule) to the Loan Agreement.

“First Payment Date” has the meaning set forth in the Summary of Loan Terms.

“First Principal and Interest Payment Date” has the meaning set forth in the Summary of Loan Terms, if applicable.

“Fixed Monthly Principal Component” has the meaning set forth in the Summary of Loan Terms.

“Fixed Rate” has the meaning set forth in the Summary of Loan Terms.

“Fixtures” has the meaning set forth in the Security Instrument.

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“Force Majeure” shall mean acts of God, acts of war, civil disturbance, governmental action (including the revocation or refusal to grant licenses or permits, where such revocation or refusal is not due to the fault of Borrower), strikes, lockouts, fire, unavoidable casualties or any other causes beyond the reasonable control of Borrower (other than lack of financing), and of which Borrower shall have notified Lender in writing within ten (10) days after its occurrence.

“Foreclosure Event” means:

(a)    foreclosure under the Security Instrument;

(b)    any other exercise by Lender of rights and remedies (whether under the Security Instrument or under applicable law, including Insolvency Laws) as holder of the Mortgage Loan and/or the Security Instrument, as a result of which Lender (or its designee or nominee) or a third party purchaser becomes owner of the Mortgaged Property;

(c)    delivery by Borrower to Lender (or its designee or nominee) of a deed or other conveyance of Borrower’s interest in the Mortgaged Property in lieu of any of the foregoing; or

(d)    in Louisiana, any dation en paiement.

“Governmental Authority” means any court, board, commission, department or body of any municipal, county, state or federal governmental unit, or any subdivision of any of them, that has or acquires jurisdiction over Borrower or the Mortgaged Property or the use, operation or improvement of the Mortgaged Property.

“Guarantor” means, individually and collectively, any guarantor of the Indebtedness or any other obligation of Borrower under any Loan Document.

“Guarantor Bankruptcy Event” means any one or more of the following:

(a)    the commencement, filing or continuation of a voluntary case or proceeding under one or more of the Insolvency Laws by Guarantor;

(b)    the acknowledgment in writing by Guarantor (other than to Lender in connection with a workout)that it is unable to pay its debts generally as they mature;

(c)    the making of a general assignment for the benefit of creditors by Guarantor;

(d)    the commencement, filing or continuation of an involuntary case or proceeding under one or more Insolvency Laws against Guarantor; or

(e)    the appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over Guarantor or any substantial part of the assets of Guarantor, as applicable;

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provided, however, that any proceeding or case under (d) or (e) above shall not be a Guarantor Bankruptcy Event until the ninetieth (90th) day after filing (if not earlier dismissed) so long as such proceeding or case occurred without the consent, encouragement or active participation of (1) Borrower, Guarantor or Key Principal, (2) any Person Controlling Borrower, Guarantor or Key Principal, or (3) any Person Controlled by or under common Control with Borrower, Guarantor or Key Principal (in which event such case or proceeding shall be a Guarantor Bankruptcy Event immediately).

“Guarantor’s General Business Address” has the meaning set forth in the Summary of Loan Terms.

“Guarantor’s Notice Address” has the meaning set forth in the Summary of Loan Terms.

“Guaranty” means, individually and collectively, any Payment Guaranty, Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with the Mortgage Loan.

“Immediate Family Members” means a child, stepchild, grandchild, spouse, sibling, or parent, each of whom is not a Prohibited Person.

“Imposition Deposits” has the meaning set forth in the Security Instrument.

“Impositions” has the meaning set forth in the Security Instrument.

“Improvements” has the meaning set forth in the Security Instrument.

“Indebtedness” has the meaning set forth in the Security Instrument.

“Index” has the meaning set forth in the Summary of Loan Terms.

“Initial Adjustable Rate” has the meaning set forth in the Summary of Loan Terms.

“Initial Monthly Debt Service Payment” has the meaning set forth in the Summary of Loan Terms.

“Initial Replacement Reserve Deposit” has the meaning set forth in the Summary of Loan Terms.

“Insolvency Laws” means the United States Bankruptcy Code, 11 U.S.C. Section 101, et seq., together with any other federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, moratorium, readjustment of debt, dissolution, liquidation or similar laws, proceedings, or equitable principles affecting the enforcement of creditors’ rights, as amended from time to time.

“Insolvent” means:

(a)    that the sum total of all of a specified Person’s liabilities (whether secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in excess of the value of such Person’s non-exempt assets, i.e., all of the assets of such Person that are available to satisfy claims of creditors; or

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(b)    such Person’s inability to pay its debts as they become due.

“Intended Prepayment Date” means the date upon which Borrower intends to make a prepayment on the Mortgage Loan, as set forth in the Prepayment Notice.

“Interest Accrual Method” has the meaning set forth in the Summary of Loan Terms.

“Interest Only Term” has the meaning set forth in the Summary of Loan Terms.

“Interest Rate” means the Initial Adjustable Rate or the Adjustable Rate, as applicable.

“Interest Rate Type” has the meaning set forth in the Summary of Loan Terms.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Investor” means any Person to whom Lender intends to sell, transfer, deliver or assign the Mortgage Loan in the secondary mortgage market.

“Key Principal” means, collectively:

(a)    the natural person(s) or entity that Controls Borrower that Lender determines is critical to the successful operation and management of Borrower and the Mortgaged Property, as identified as such in the Summary of Loan Terms; or

(b)    any natural person or entity who becomes a Key Principal after the date of the Loan Agreement and is identified as such in an assumption agreement, or another amendment or supplement to the Loan Agreement.

“Key Principal’s General Business Address” has the meaning set forth in the Summary of Loan Terms.

“Key Principal’s Notice Address” has the meaning set forth in the Summary of Loan Terms.

“Land” means the land described in Exhibit A to the Security Instrument.

“Last Interest Only Payment Date” has the meaning set forth in the Summary of Loan Terms, if applicable.

“Late Charge” means an amount equal to the delinquent amount then due under the Loan Documents multiplied by five percent (5%).

“Leases” has the meaning set forth in the Security Instrument.

“Lender” means the entity identified as “Lender” in the first paragraph of the Loan Agreement and its transferees, successors and assigns, or any subsequent holder of the Note.

“Lender’s General Business Address” has the meaning set forth in the Summary of Loan Terms.

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“Lender’s Notice Address” has the meaning set forth in the Summary of Loan Terms.

“Lender’s Payment Address” has the meaning set forth in the Summary of Loan Terms.

“Lien” has the meaning set forth in the Security Instrument.

“Loan Agreement” means the Multifamily Loan and Security Agreement dated as of the Effective Date executed by and between Borrower and Lender to which this Definitions Schedule is attached, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Loan Amount” has the meaning set forth in the Summary of Loan Terms.

“Loan Application” means the application for the Mortgage Loan submitted by Borrower to Lender.

“Loan Documents” means the Note, the Loan Agreement, the Security Instrument, the Environmental Indemnity Agreement, the Guaranty, all guaranties, all indemnity agreements, all Collateral Agreements, all O&M Plans, and any other documents now or in the future executed by Borrower, Guarantor, Key Principal, any other guarantor or any other Person in connection with the Mortgage Loan, as such documents may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Loan Servicer” means the entity that from time to time is designated by Lender to collect payments and deposits and receive notices under the Note, the Loan Agreement, the Security Instrument and any other Loan Document, and otherwise to service the Mortgage Loan for the benefit of Lender. Unless Borrower receives notice to the contrary, the Loan Servicer shall be the Lender originally named on the Summary of Loan Terms.

“Loan Term” has the meaning set forth in the Summary of Loan Terms.

“Loan Year” has the meaning set forth in the Summary of Loan Terms.

“Margin” has the meaning set forth in the Summary of Loan Terms.

“Material Commercial Lease” means any non-Residential Lease, including any master lease (which term “master lease” shall include any master lease to a single corporate tenant), other than:

(a)    a non-Residential Lease that comprises less than five percent (5%) of total gross income of the Mortgaged Property on an annualized basis, so long as the lease is not a cell tower lease, a solar (power) lease or a solar power purchase agreement;

(b)    a cable television lease or broadband network lease with a lessee that is not a Borrower Affiliate, Key Principal or Guarantor;

(c)    storage units leased pursuant to any Residential Lease; or

(d)    a laundry lease, so long as:

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(1)    the lessee is not a Borrower Affiliate, Key Principal or Guarantor;

(2)    the rent payable is not below-market (as determined by Lender); and

(3)    such laundry lease is terminable for cause by lessor.

“Maturity Date” has the meaning set forth in the Summary of Loan Terms.

“Maximum Inspection Fee” has the meaning set forth in the Summary of Loan Terms.

“Maximum Repair Cost” shall be the amount(s) set forth in the Required Repair Schedule, if any.

“Maximum Repair Disbursement Interval” has the meaning set forth in the Summary of Loan Terms.

“Maximum Replacement Reserve Disbursement Interval” has the meaning set forth in the Summary of Loan Terms.

“Mezzanine Debt” means a loan to a direct or indirect owner of Borrower secured by a pledge of such owner’s interest in an entity owning a direct or indirect interest in Borrower.

“Minimum Repairs Disbursement Amount” has the meaning set forth in the Summary of Loan Terms.

“Minimum Replacement Reserve Disbursement Amount” has the meaning set forth in the Summary of Loan Terms.

“Monthly Debt Service Payment” has the meaning set forth in the Summary of Loan Terms.

“Monthly Replacement Reserve Deposit” has the meaning set forth in the Summary of Loan Terms.

“Mortgage Loan” means the mortgage loan made by Lender to Borrower in the principal amount of the Note made pursuant to the Loan Agreement, evidenced by the Note and secured by the Loan Documents that are expressly stated to be security for the Mortgage Loan.

“Mortgaged Property” has the meaning set forth in the Security Instrument.

“Multifamily Project” has the meaning set forth in the Summary of Loan Terms.

“Multifamily Project Address” has the meaning set forth in the Summary of Loan Terms.

“Non-Recourse Guaranty” means, if applicable, that certain Guaranty of Non-Recourse Obligations of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

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“Note” means that certain Multifamily Note of even date herewith in the original principal amount of the stated Loan Amount made by Borrower in favor of Lender, and all schedules, riders, allonges and addenda attached thereto, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“O&M Plan” has the meaning set forth in the Environmental Indemnity Agreement.

“OFAC” means the United States Treasury Department, Office of Foreign Assets Control, and any successor thereto.

“Payment Change Date” has the meaning set forth in the Summary of Loan Terms.

“Payment Date” means the First Payment Date and the first day of each month thereafter until the Mortgage Loan is fully paid.

“Payment Guaranty” means, if applicable, that certain Guaranty (Payment) of even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Permitted Encumbrance” has the meaning set forth in the Security Instrument.

“Permitted Mezzanine Debt” means Mezzanine Debt incurred by a direct or indirect owner or owners of Borrower where the exercise of any of the rights and remedies by the holder or holders of the Mezzanine Debt would not in any circumstance cause (a) a change in Control in Borrower, Key Principal, or Guarantor, or (b) a Transfer of a direct or indirect Restricted Ownership Interest in Borrower, Key Principal, or Guarantor.

“Permitted Preferred Equity” means Preferred Equity that does not (a) require mandatory dividends, distributions, payments or returns (including at maturity or in connection with a redemption), or (b) provide the Preferred Equity owner with rights or remedies on account of a failure to receive any preferred dividends, distributions, payments or returns (or, if such rights are provided, the exercise of such rights do not violate the Loan Documents or are otherwise exercised with the prior written consent of Lender in accordance with Article 11 (Liens, Transfers and Assumptions) of the Loan Agreement and the payment of all applicable fees and expenses as set forth in Section 11.03(g) (Further Conditions to Transfers and Assumption)).

“Permitted Prepayment Date” means the last Business Day of a calendar month.

“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).

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“Personal Property” means all of Borrower’s present and hereafter acquired right, title, and interest in Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles, instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes, records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts and other property or assets of any kind or nature related to the Land or the Improvements, including operating agreements, surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements, and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.

“Personalty” has the meaning set forth in the Security Instrument.

“Preferred Equity” means a direct or indirect equity ownership interest in, economic interests in, or rights with respect to, Borrower that provide an equity owner preferred dividend, distribution, payment or return treatment relative to other equity owners.

“Prepayment Lockout Period” has the meaning set forth in the Summary of Loan Terms.

“Prepayment Notice” means the written notice that Borrower is required to provide to Lender in accordance with Section 2.03 (Lockout/Prepayment) of the Loan Agreement in order to make a prepayment on the Mortgage Loan, which shall include, at a minimum, the Intended Prepayment Date.

“Prepayment Premium” means the amount payable by Borrower in connection with a prepayment of the Mortgage Loan, as provided in Section 2.03 (Lockout/Prepayment) of the Loan Agreement and calculated in accordance with the Prepayment Premium Schedule.

“Prepayment Premium Schedule” means that certain Schedule 4 (Prepayment Premium Schedule) to the Loan Agreement.

“Prepayment Premium Term” has the meaning set forth in the Summary of Loan Terms.

“Prohibited Person” means:

(a)    any Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any law, rule, regulation, judicial proceeding or administrative directive; or

(b)    any Person identified on the United States Department of Housing and Urban Development’s “Limited Denial of Participation, HUD Funding Disqualifications and Voluntary Abstentions List,” or on the General Services Administration’s “System for Award Management (SAM)” exclusion list, each of which may be amended from time to time, and any successor or replacement thereof; or

(c)    any Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the aggregate amount of debt of such Person owned or held by Fannie Mae; or

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(d)    any Person that has caused any unsatisfactory experience of a material nature with Fannie Mae or Lender, such as a default, fraud, intentional misrepresentation, litigation, arbitration or other similar act.

“Property Jurisdiction” has the meaning set forth in the Security Instrument.

“Property Square Footage” has the meaning set forth in the Summary of Loan Terms.

“Publicly-Held Corporation” means a corporation, the outstanding voting stock of which is registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.

“Publicly-Held Trust” means a real estate investment trust, the outstanding voting shares or beneficial interests of which are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.

“Rate Change Date” has the meaning set forth in the Summary of Loan Terms.

“Rents” has the meaning set forth in the Security Instrument.

“Repair Threshold” has the meaning set forth in the Summary of Loan Terms.

“Repairs” means, individually and collectively, the Required Repairs, Borrower Requested Repairs, and Additional Lender Repairs.

“Repairs Escrow Account” means the account established by Lender into which the Repairs Escrow Deposit is deposited to fund the Repairs.

“Repairs Escrow Account Administrative Fee” has the meaning set forth in the Summary of Loan Terms.

“Repairs Escrow Deposit” has the meaning set forth in the Summary of Loan Terms.

“Replacement Reserve Account” means the account established by Lender into which the Replacement Reserve Deposits are deposited to fund the Replacements.

“Replacement Reserve Account Administration Fee” has the meaning set forth in the Summary of Loan Terms.

“Replacement Reserve Account Interest Disbursement Frequency” has the meaning set forth in the Summary of Loan Terms.

“Replacement Reserve Deposits” means the Initial Replacement Reserve Deposit, Monthly Replacement Reserve Deposits and any other deposits to the Replacement Reserve Account required by the Loan Agreement.

“Replacement Threshold” has the meaning set forth in the Summary of Loan Terms.

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“Replacements” means, individually and collectively, the Required Replacements, Borrower Requested Replacements and Additional Lender Replacements.

“Required Repair Schedule” means that certain Schedule 6 (Required Repair Schedule) to the Loan Agreement.

“Required Repairs” means those items listed on the Required Repair Schedule.

“Required Replacement Schedule” means that certain Schedule 5 (Required Replacement Schedule) to the Loan Agreement.

“Required Replacements” means those items listed on the Required Replacement Schedule.

“Reserve/Escrow Account Funds” means, collectively, the funds on deposit in the Reserve/Escrow Accounts.

“Reserve/Escrow Accounts” means, together, the Replacement Reserve Account and the Repairs Escrow Account.

“Residential Lease” means a leasehold interest in an individual dwelling unit and shall not include any master lease.

“Restoration” means restoring and repairing the Mortgaged Property to the equivalent of its physical condition immediately prior to the casualty or to a condition approved by Lender following a casualty.

“Restricted Ownership Interest” means, with respect to any entity, the following:

(a)    if such entity is a general partnership or a joint venture, fifty percent (50%) or more of all general partnership or joint venture interests in such entity;

(b)    if such entity is a limited partnership:

(1)    the interest of any general partner; or

(2)    fifty percent (50%) or more of all limited partnership interests in such entity;

(c)    if such entity is a limited liability company or a limited liability partnership:

(1)    the interest of any managing member or the contractual rights of any non-member manager; or

(2)    fifty percent (50%) or more of all membership or other ownership interests in such entity;

(d)    if such entity is a corporation (other than a Publicly-Held Corporation) with only one class of voting stock, fifty percent (50%) or more of voting stock in such corporation;

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(e)    if such entity is a corporation (other than a Publicly-Held Corporation) with more than one class of voting stock, the amount of shares of voting stock sufficient to have the power to elect the majority of directors of such corporation; or

(f)    if such entity is a trust (other than a land trust or a Publicly-Held Trust), the power to Control such trust vested in the trustee of such trust or the ability to remove, appoint or substitute the trustee of such trust (unless the trustee of such trust after such removal, appointment or substitution is a trustee identified in the trust agreement approved by Lender).

“Review Fee” means the non-refundable fee of Three Thousand Dollars ($3,000) payable to Lender.

“Schedule of Interest Rate Type Provisions” means that certain Schedule 3 (Schedule of Interest Rate Type Provisions) to the Loan Agreement.

“Security Instrument” means that certain multifamily mortgage, deed to secure debt or deed of trust executed and delivered by Borrower as security for the Mortgage Loan and encumbering the Mortgaged Property, including all riders or schedules attached thereto, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Servicing Arrangement” means any arrangement between Lender and the Loan Servicer for loss sharing or interim advancement of funds.

“Summary of Loan Terms” means that certain Schedule 2 (Summary of Loan Terms) to the Loan Agreement.

“Taxes” has the meaning set forth in the Security Instrument.

“Title Policy”means the mortgagee’s loan policy of title insurance issued in connection with the Mortgage Loan and insuring the lien of the Security Instrument as set forth therein, as approved by Lender.

“Total Parking Spaces” has the meaning set forth in the Summary of Loan Terms.

“Total Residential Units” has the meaning set forth in the Summary of Loan Terms.

“Transfer” means:

(a)    a sale, assignment, transfer or other disposition (whether voluntary, involuntary, or by operation of law), other than Residential Leases, Material Commercial Leases or non-Material Commercial Leases permitted by this Loan Agreement;

(b)    a granting, pledging, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary, or by operation of law);

(c)    an issuance or other creation of a direct or indirect ownership interest;

Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type-SARM)	Form 6001.NR	Page 14
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(d)    a withdrawal, retirement, removal or involuntary resignation of any owner or manager of a legal entity; or

(e)    a merger, consolidation, dissolution or liquidation of a legal entity.

“Transfer Fee” means a fee equal to one percent (1%) of the unpaid principal balance of the Mortgage Loan payable to Lender.

“UCC” has the meaning set forth in the Security Instrument.

“UCC Collateral” has the meaning set forth in the Security Instrument.

“Voidable Transfer” means any fraudulent conveyance, preference or other voidable or recoverable payment of money or transfer of property.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type-SARM)	Form 6001.NR	Page 15
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KJK

Borrower Initials

Schedule 1 to Multifamily Loan and Security Agreement - Definitions Schedule (Interest Rate Type-SARM)	Form 6001.NR	Page 16
Fannie Mae	08-14	© 2014 Fannie Mae

SCHEDULE 2

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

Summary of Loan Terms

(Interest Rate Type - Structured ARM (1 and 3 Month LIBOR))

I. GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION
Borrower	STAR PRESTON HILLS, LLC,a Delaware limited liability company
Lender	BERKELEY POINT CAPITAL LLC, a Delaware limited liability company
Key Principal	Steadfast Apartment REIT, Inc., a Maryland corporation
Guarantor	Steadfast Apartment REIT, Inc., a Maryland corporation
Multifamily Project	PRESTON HILLS AT MILL CREEK
ADDRESSES
Borrower’s General Business Address	c/o Steadfast Companies 18100 Von Karman Avenue, Suite 500 Irvine, California 92612
Borrower’s Notice Address	c/o Steadfast Companies 18100 Von Karman Avenue, Suite 500 Irvine, California 92612 Email: AnaMarie.delRio@SteadfastCo.com Kevin.Keating@SteadfastCo.com with a courtesy copy to Borrower’s counsel:1 Morris, Manning & Martin, LLP 1600 Atlanta Financial Center 3343 Peachtree Road, NE Atlanta, Georgia 30326Direct: 404.504.7652 Attention: Christina M. Graham Email: cmg@mmmlaw.com 1 Lender shall endeavor to give Borrower’s counsel a courtesy copy of any notice given to Borrower by Lender; provided, however, failure to provide such courtesy copy notice shall not affect the validity or sufficiency of any notice to Borrower, shall not affect Lender’s rights and remedies hereunder or under any other Loan Document, nor subject Lender to any claim by or liability to Borrower.
Multifamily Project Address	2910 Buford Drive Buford, GA 30519
Multifamily Project County	Gwinnett County

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 1
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Key Principal’s General Business Address		c/o Steadfast Companies 18100 Von Karman Avenue, Suite 500 Irvine, California 92612
Key Principal’s Notice Address		c/o Steadfast Companies 18100 Von Karman Avenue, Suite 500 Irvine, California 92612 Email:AnaMarie.delRio@SteadfastCo.com Kevin.Keating@SteadfastCo.com
Guarantor’s General Business Address		c/o Steadfast Companies 18100 Von Karman Avenue, Suite 500 Irvine, California 92612
Guarantor’s Notice Address		18100 Von Karman Avenue, Suite 500 Irvine, California 92612 Email address: AnaMarie.delRio@SteadfastCo.com Kevin.Keating@SteadfastCo.com with a courtesy copy to Guarantor’s counsel:1 Morris, Manning & Martin, LLP 1600 Atlanta Financial Center 3343 Peachtree Road, NE Atlanta, Georgia 30326Direct: 404.504.7652 Attention: Christina M. Graham Email: cmg@mmmlaw.com 1 Lender shall endeavor to give Guarantor’s counsel a courtesy copy of any notice given to Guarantor by Lender; provided, however, failure to provide such courtesy copy notice shall not affect the validity or sufficiency of any notice to Guarantor, shall not affect Lender’s rights and remedies hereunder or under any other Loan Document, nor subject Lender to any claim by or liability to Guarantor.
Lender’s General Business Address		4550 Montgomery Avenue, Suite 1100 Bethesda, Maryland 20814
Lender’s Notice Address		Attention: Director Loan Servicing One Beacon Street, 14th Floor Boston, Massachusetts 02108 OR email:  servicing.requests@berkpoint.com
Lender’s Payment Address		See Below
Payment Mailing Address: Berkeley Point Capital LLC Lockbox Box 773194 3194 Solutions Center Chicago, IL 60677-3001	Payment Overnight Address: Berkeley Point Capital LLC Lockbox Box 773194 350 East Devon Avenue Itasca, IL 60143		Payment Wiring Instructions: PNC Bank, NA ABA#043000096 Berkeley Point Capital LLC Credit #1019788912 Ref Loan #

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 2
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II. MULTIFAMILY PROJECT INFORMATION
Property Square Footage	1,874,852
Total Parking Spaces	1018
Total Residential Units	464
Affordable Housing Property	Yes  X No

III. MORTGAGE LOAN INFORMATION
Adjustable Rate	Until the first Rate Change Date, the Initial Adjustable Rate, and from and after each Rate Change Date following the first Rate Change Date until the next Rate Change Date, a per annum interest rate that is the sum of (i) the Current Index, and (ii) the Margin, which sum is then rounded to the nearest three (3) decimal places; provided, however, that the Adjustable Rate shall never be less than the Margin.
Amortization Period	360 months.
Amortization Type	Amortizing      Full Term Interest Only X Partial Interest Only
Current Index	The published Index that is effective on the Business Day immediately preceding the applicable Rate Change Date.
Effective Date	March 10, 2015
First Payment Date	The first day of May 1, 2015.
First Principal and Interest Payment Date	The first day of May, 2020.
Fixed Monthly Principal Component	$58,676.39
Fixed Rate	3.6100% per annum.

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 3
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III. MORTGAGE LOAN INFORMATION
Index	The ICE Benchmark Administration Limited (or any successor administrator) fixing of the London Inter-Bank Offered Rate for one (1)-month U.S. Dollar-denominated deposits as reported by Reuters through electronic transmission. If the Index is no longer available, or is no longer posted through electronic transmission, Lender will choose a new index that is based upon comparable information.
Initial Adjustable Rate	1.8650% per annum.
Initial Monthly Debt Service Payment	$55,483.75
Interest Accrual Method	Actual/360 (computed on the basis of a three hundred sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Mortgage Loan by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual number of days elapsed in the applicable month).
Interest Only Term	60 months
Interest Rate Type	Structured ARM
Last Interest Only Payment Date	The first day of April 1, 2020.
Loan Amount	$35,700,000
Loan Term	120 months.
Loan Year	The period beginning on the Effective Date and ending on the last day of March, 2016, and each successive twelve (12) month period thereafter.
Margin	1.69%
Maturity Date	The first day of April, 2025, or any later date to which the Maturity Date may be extended (if at all) in connection with an election by Borrower to convert the Interest Rate on the Mortgage Loan to a fixed rate pursuant to the terms of the Loan Agreement, or any earlier date on which the unpaid principal balance of the Mortgage Loan becomes due and payable by acceleration or otherwise.

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 4
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III. MORTGAGE LOAN INFORMATION
Monthly Debt Service Payment	(i) for the First Payment Date, the Initial Monthly Debt Service Payment; (ii) for each Payment Date thereafter through and including the Last Interest Only Payment Date, the amount obtained by multiplying the unpaid principal balance of the Mortgage Loan by the Adjustable Rate, dividing the product by three hundred sixty (360), and multiplying the quotient by the actual number of days elapsed in the applicable month; (iii) for the First Principal and Interest Payment Date and each Payment Date thereafter until the Mortgage Loan is fully paid, an amount equal to the sum of: (1) the Fixed Monthly Principal Component; plus (2) an interest payment equal to the amount obtained by multiplying the unpaid principal balance of the Mortgage Loan by the Adjustable Rate, dividing the product by three hundred sixty (360), and multiplying the quotient by the actual number of days elapsed in the applicable month.
Payment Change Date	The first (1st) day of the month following each Rate Change Date until the Mortgage Loan is fully paid.
Prepayment Lockout Period	The first (1st) Loan Year and the second (2nd) Loan Year of the term of the Mortgage Loan.
Rate Change Date	The First Payment Date and the first (1st) day of each month thereafter until the Mortgage Loan is fully paid.

IV. YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION
Prepayment Premium Term	The period beginning on the Effective Date and ending on the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 5
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V. RESERVE INFORMATION
Completion Period	Within one (1) month after the Effective Date or as otherwise shown on the Required Repair Schedule.
Initial Replacement Reserve Deposit	$0
Maximum Inspection Fee	$1,000.00
Maximum Repair Disbursement Interval	One (1) time per calendar month
Maximum Replacement Reserve Disbursement Interval	One (1) time per calendar month
Minimum Repairs Disbursement Amount	$5,000.00
Minimum Replacement Reserve Disbursement Amount	$5,000.00
Monthly Replacement Reserve Deposit	$12,605.33
Repair Threshold	$10,000.00
Repairs Escrow Account Administrative Fee	$0.00, payable one time
Repairs Escrow Deposit	$28,375.00
Replacement Reserve Account Administration Fee	$0.00, payable annually
Replacement Reserve Account Interest Disbursement Frequency	quarterly
Replacement Threshold	$10,000.00

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 6
Fannie Mae	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Schedule 2 to Multifamily Loan and Security Agreement - Summary of Loan Terms (Interest Rate Type - SARM)	Form 6001.NR	Page 7
Fannie Mae	08-14	© 2014 Fannie Mae

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

ADDENDA TO SCHEDULE 2 – SUMMARY OF LOAN TERMS

(Conversion Option – SARM Loan)

VI. CONVERSION OPTION – SARM LOAN
Conversion Review Fee	A non-refundable fee in the amount of $10,000.
Guaranty Fee	The guaranty fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Fixed Rate Conversion Effective Date.
Minimum Conversion Debt Service Coverage Ratio	1.25
Servicing Fee	The servicing fee offered by Fannie Mae for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower) at the time of the Fixed Rate Conversion Effective Date.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Modifications to Multifamily Loan and Security Agreement - Schedule 2 Addenda - Summary of Loan Terms (Conversion Option - SARM Loan)	Form 6001.NR	Page 1
Fannie Mae	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Modifications to Multifamily Loan and Security Agreement - Schedule 2 Addenda - Summary of Loan Terms (Conversion Option - SARM Loan)	Form 6001.NR	Page 2
Fannie Mae	08-14	© 2014 Fannie Mae

SCHEDULE 3

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

Schedule of Interest Rate Type Provisions

(Structured ARM (1 and 3 Month LIBOR))

1.Defined Terms.

Capitalized terms not otherwise defined in this Schedule have the meanings given to such terms in the Definitions Schedule to the Loan Agreement.

2.Interest Accrual.

Except as otherwise provided in the Loan Agreement, interest shall accrue at the Adjustable Rate until the Mortgage Loan is fully paid.

3.Adjustable Rate; Adjustments.

The Initial Adjustable Rate shall be effective until the first Rate Change Date. Thereafter, the Adjustable Rate shall change on each Rate Change Date based on fluctuations in the Current Index.

4.Fixed Monthly Principal Component.

Each amortizing Monthly Debt Service Payment shall include a principal payment equal to the Fixed Monthly Principal Component, which shall be determined in accordance with the Fixed Rate.

5.Notification of Interest Rate and Monthly Debt Service Payment.

Before each Payment Change Date, Lender shall notify Borrower of any change in the Adjustable Rate and the amount of the next Monthly Debt Service Payment.

6.[Intentionally Deleted]

7.[Intentionally Deleted]

8.Correction to Monthly Debt Service Payments.

If Lender determines at any time that it has miscalculated the amount of a Monthly Debt Service Payment (whether because of a miscalculation of the Adjustable Rate or otherwise), then Lender shall give notice to Borrower of the corrected amount of the Monthly Debt Service Payment (and the corrected Adjustable Rate, if applicable) and (a) if the corrected amount of the Monthly Debt Service Payment represents an increase, then Borrower shall, within thirty (30) calendar days thereafter, pay to Lender any sums that Borrower would have otherwise been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated, or (b) if the corrected amount of the Monthly Debt Service Payment represents a decrease and Borrower is not

Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate Type Provisions (SARM)	Form 6001.NR	Page 1
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otherwise in default under any of the Loan Documents, then Borrower shall thereafter be paid the sums that Borrower would not have otherwise been obligated to pay to Lender had the amount of the Monthly Debt Service Payment not been miscalculated.

9.Conversion to Fixed Rate.

The Adjustable Rate may be converted to a fixed rate in accordance with Article 16 (Conversion) of the Loan Agreement.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate Type Provisions (SARM)	Form 6001.NR	Page 2
Fannie Mae	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Schedule 3 to Multifamily Loan and Security Agreement - Interest Rate Type Provisions (SARM)	Form 6001.NR	Page 3
Fannie Mae	08-14	© 2014 Fannie Mae

SCHEDULE 4

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

Prepayment Premium Schedule

(1% Prepayment Premium – ARM, SARM)

1.Defined Terms.

All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the meanings assigned to them in the Loan Agreement.

2.Prepayment Premium.

(a)Any Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the Loan Agreement shall be equal to the following percentage of the amount of principal being prepaid at the time of such prepayment, acceleration or application:

Prepayment Lockout Period	5.00%
Third Loan Year, and each Loan Year thereafter	1.00%

(b)Notwithstanding the provisions of Section 2.03 (Lockout/Prepayment) of the Loan Agreement or anything to the contrary in this Prepayment Premium Schedule, no Prepayment Premium shall be payable with respect to any prepayment made on or after the last calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule - 1% Prepayment Premium - ARM, SARM)	Form 6001.NR	Page 1
Fannie Mae	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Schedule 4 to Multifamily Loan and Security Agreement (Prepayment Premium Schedule - 1% Prepayment Premium - ARM, SARM)	Form 6001.NR	Page 2
Fannie Mae	08-14	© 2014 Fannie Mae

SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Required Replacement Schedule

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
Schedule 5	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
Schedule 5	08-14	© 2014 Fannie Mae

SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Required Repair Schedule

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
Schedule 6	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
Schedule 6	08-14	© 2014 Fannie Mae

SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Exceptions to Representations and Warranties Schedule

None.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 1
Schedule 7	08-14	© 2014 Fannie Mae

KJK

Borrower Initials

Multifamily Loan and Security Agreement (Non-Recourse)	Form 6001.NR	Page 2
Schedule 7	08-14	© 2014 Fannie Mae

EXHIBIT A

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Conversion Option - SARM Loan)

The foregoing Loan Agreement is hereby modified as follows:

1.Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.

2.The Definitions Schedule is hereby amended by adding the following new definitions in the appropriate alphabetical order:

“Conversion” means the conversion of the Mortgage Loan from an adjustable rate to a fixed rate and, if applicable, the extension of the Maturity Date of the Mortgage Loan to the New Maturity Date.

“Conversion Amendment” means Lender’s then-current form of Amendment to Multifamily Loan and Security Agreement to be executed by Borrower and Lender to amend and/or restate all or any part of this Loan Agreement (including any Schedules, Exhibits or other attachments)in connection with, and reflecting the terms of, a Conversion of the Mortgage Loan.

“Conversion Closing Date” means, after Borrower exercises the Conversion Option,the date designated by Lender for the closing of the Conversion which date (a) is a Business Day, (b) is within the Conversion Period and (c) is not more than ten (10) days after the Conversion Exercise Date.

“Conversion Exercise Date” means the date Borrower accepts the rate quote provided by Lender in connection with Borrower’s Rate Lock Request, as provided in Section 16.02(c) (Exercise of Conversion Option; Rate Lock Request).

“Conversion Option” means Borrower’s one-time option to effect the Conversion pursuant to the terms hereof.

“Conversion Period” means the period commencing on the first (1st) day of the second (2nd) Loan Year and ending on the first (1st) day of the third (3rd) month prior to the Maturity Date of the Mortgage Loan.

“Conversion Review Fee” has the meaning set forth in the Summary of Loan Terms.

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“Debt Service Coverage Ratio” means the ratio of the annual Net Operating Income of the Mortgaged Property to the annual underwritten debt service for the Mortgage Loan at the proposed Fixed Rate, provided that (a) the interest rate used in determining such ratio shall be the greater of (1) the Fixed Rate, or (2) the Underwriting Interest Rate (if any); and (b) an Amortization Period of three hundred sixty (360) months shall be used in determining such ratio.

“Fixed Rate” means an interest rate per annum equal to the sum of the Investor Yield, the Servicing Fee and the Guaranty Fee.

“Fixed Rate Conversion Effective Date” means,if the Conversion Exercise Date occurs on a Payment Date, the first (1st) day of the calendar month following the Conversion Exercise Date, or, if the Conversion Exercise Date occurs on any other day other than a Payment Date, the first (1st) day of the second (2nd) calendar month following the Conversion Exercise Date, but in no event shall the Fixed Rate Conversion Effective Date be after the last day of the Conversion Period.

“Fixed Rate Option” means, in connection with a Conversion, Borrower’s selection of one (1) of the following fixed rate options for the Loan from and after the Fixed Rate Conversion Effective Date:

(a)    seven (7) year term with a five (5) year yield maintenance period;

(b)    seven (7) year term with a six and one-half (6.5) year yield maintenance period;

(c)    ten (10) year term with a seven (7) year yield maintenance period;

(d)    ten (10) year term with a nine and one-half (9.5) year yield maintenance period; or

(e)    eight (8) through eleven (11) year Fixed+1 loans; provided Fannie Mae is then offering Fixed+1 loans on a regular basis.

“Good Faith Deposit” means a fee in an amount equal to two percent (2%) of the unpaid principal balance of the Mortgage Loan immediately prior to the Initial Fixed Rate Payment Date.

“Guaranty Fee” has the meaning set forth in the Summary of Loan Terms.

“Initial Fixed Rate Payment Date” means the first (1st) day of the calendar month following the Fixed Rate Conversion Effective Date.

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“Investor Yield” means, in connection with a Conversion, the percentage equal to (a) the required net yield offered for purchase by Fannie Mae or (b) the MBS pass-through rate offered for purchase by regular buyers of mortgage backed securities, as applicable, for a new Fannie Mae mortgage loan with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower).

“Maximum Fixed Rate” means the maximum Fixed Rate to which the Mortgage Loan may be converted, as determined by Lender, so that the Debt Service Coverage Ratio of the Mortgage Loan is not less than the Minimum Conversion Debt Service Coverage Ratio.

“MBS” meansan investment security that represents an undivided beneficial interest in a pool of mortgage loans or participation interests in mortgage loans held in trust pursuant to the terms of a governing trust document.

“Minimum Conversion Debt Service Coverage Ratio” has the meaning set forth in the Summary of Loan Terms.

“Net Operating Income” means the amount determined by Lender, pursuant to Section 16.02(b)(2) (Conversion Eligibility Determination), to be the net operating income of the Mortgaged Property. At the time of Conversion, the Net Operating Income used to calculate the Debt Service Coverage Ratio for purposes of satisfying the Minimum Conversion Debt Service Coverage Ratio requirement in Section 16.02(b)(3) (Conversion Eligibility Determination) is the surplus net operating income resulting after subtracting (a) the amount required to support any other indebtedness on the Mortgaged Property (at the applicable debt service coverage ratio for each such indebtedness) at the time of conversion based on the underwriting requirements in effect at the time of Conversion from (b) the Net Operating Income.

“New Maturity Date” means the date to which the Maturity Date is changed, if applicable.

“NOI Determination Notice” means the notice given by Lender to Borrower pursuant to Section 16.02(b)(1) (Conversion Eligibility Determination) in which Lender establishes the Net Operating Income of the Mortgaged Property and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

“NOI Determination Request” means the notice given by Borrower to Lender pursuant to Section 16.02(a)(1) (NOI Determination Request) in which Borrower requests that Lender determines the Net Operating Income of the Mortgaged Property and the Maximum Fixed Rate to which the Mortgage Loan may be converted.

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“Rate Lock Request” means a request from Borrower and Lender for a rate quotation for the Fixed Rate which shall apply after the Conversion, taking into account the applicable yield maintenance period.

“Servicing Fee”has the meaning set forth in the Summary of Loan Terms.

“Survey” means the plat of survey of the Mortgaged Property approved by Lender.

“Underwriting Interest Rate” means, in connection with the Conversion, the then-current minimum underwriting interest rate (if applicable) used by Lender for underwriting new loans with the same or substantially similar loan terms and credit characteristics as the Mortgage Loan (taking into account the Fixed Rate Option selected by Borrower).

3.The following Article is hereby added to the Loan Agreement as Article 16 (Conversion):

ARTICLE 16 – CONVERSION

Section 16.01    Conversion Option.

(a)    Subject to the terms and conditions of this Loan Agreement, Borrower may exercise the Conversion Option pursuant to which the interest rate payable on the Mortgage Loan may be converted, one (1) time only, on any Payment Date during the Conversion Period from the Adjustable Rate to the Fixed Rate, after which the interest rate on the Mortgage Loan shall remain at the Fixed Rate until the Maturity Date or New Maturity Date (as applicable).

(b)    The Amortization Period from and after the Fixed Rate Conversion Effective Date shall be:

(1)    three hundred sixty (360) months, if (A) Borrower selects a Fixed Rate Option having a term greater than or equal to the original term of the Mortgage Loan from the Effective Date through the Maturity Date, and (B) the most recent inspection of the Mortgaged Property by Lender resulted in a rating of either “1” or “2”; or

(2)    in all other cases, the number of months equal to (A) three hundred sixty (360) months, minus (B) the number of Monthly Debt Service Payments that have elapsed since the Effective Date.

(c)    The Monthly Debt Service Payment following a Conversion shall be in an amount required to pay the unpaid principal balance of the Mortgage Loan immediately prior to the Initial Fixed Rate Payment Date in equal monthly installments, including accrued interest at the Fixed Rate, over the Amortization Period utilizing the 30/360 Interest Accrual Method even if Actual/360 is the Interest Accrual Method.

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(d)    The Conversion Option shall lapse (1) at 5:00 p.m. (prevailing eastern time)on the ninetieth (90th) day prior to the expiration of the Conversion Period if Borrower has not previously delivered to Lender a NOI Determination Request in accordance with the terms of this Loan Agreement or (2) on the Fixed Rate Conversion Effective Date, if the Conversion Option is timely exercised but the Fixed Rate does not become effective on such Fixed Rate Conversion Effective Date.

(e)    It is anticipated that the Conversion will be effected by the issuance by Lender of a fixed-rate MBS or by the cash purchase of the Mortgage Loan by Lender into its portfolio (subject to the provisions of Section 16.02(b)(3) (Conversion Eligibility Determination)). Borrower acknowledges, however, that the Conversion is contingent on the capital markets generally, and that from time to time, disruptions in the capital markets may make conversion infeasible. In the event Lender is not able to obtain any quotes for the Mortgage Loan at the Fixed Rate (and does not make a cash bid for the Mortgage Loan), or if the quotes exceed the Maximum Fixed Rate, the interest rate on the Mortgage Loan shall remain at the Adjustable Rate.

Section 16.02    Procedures for Conversion.

(a)    NOI Determination Request.

(1)    Subject to the terms of this Loan Agreement, if Borrower desires to exercise the Conversion Option, Borrower shall submit an NOI Determination Request to Lender.

(2)    The NOI Determination Request shall be accompanied by Conversion Review Fee in the form of a check payable to Lender or by wire transfer to an account designated by Lender.

(3)    In no event shall the NOI Determination Request be made prior to the commencement of the Conversion Period or less than ninety (90) days prior to the expiration of the Conversion Period. Borrower may not submit an NOI Determination Request if an Event of Default has occurred and is continuing at the time of the request or if an Event of Default has occurred at any time within the twelve (12) month period immediately preceding the date of Borrower’s request. In addition, Borrower may not submit an NOI Determination Request more than twice in any Loan Year. Borrower shall submit to Lender, within five (5) days after receipt of a request therefor, all information relating to the operation of the Mortgaged Property required by Lender to determine the Net Operating Income and Borrower’s compliance with this Loan Agreement. If Borrower fails to provide such information within such period, Borrower’s NOI Determination Request shall be deemed canceled (however, such canceled NOI Determination

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Request shall count as a request for the Loan Year in which the request was made).

(b)    Conversion Eligibility Determination.

(1)    Within fifteen (15) days after receipt of an NOI Determination Request (or, if Lender requests additional information from Borrower pursuant to Section 16.02(a)(3) (NOI Determination Request), within fifteen (15) days after Lender’s receipt of such additional information), Lender shall determine the Net Operating Income of the Mortgaged Property and the Maximum Fixed Rate to which the Mortgage Loan may be converted and shall provide Borrower with the NOI Determination Notice.

(2)    Lender shall determine the Net Operating Income on the basis of the most current annual operating statements (as such statements may be adjusted by Lender as necessary to accurately reflect items of income, operating expenses, ground lease payments, if applicable, and replacement reserves to reflect suitable underwriting) prepared by Borrower for the Mortgaged Property. In connection with any request by Lender for additional information, Borrower shall have five (5) days after Borrower’s receipt of such request to provide Lender with such additional information.

(3)    Borrower may not exercise the Conversion Option unless Lender determines that, based upon the Net Operating Income set forth in the NOI Determination Notice and the Fixed Rate quoted in connection with a Rate Lock Request, the Debt Service Coverage Ratio for the Mortgaged Property is equal to or greater than the Minimum Conversion Debt Service Coverage Ratio.

(c)    Exercise of Conversion Option; Rate Lock Request.

(1)    If, after receipt of the NOI Determination Notice, Borrower desires to pursue the exercise of the Conversion Option, Borrower shall, within fifteen (15) days of Borrower’s receipt of the NOI Determination Notice:

(A)    provide Lender with a title report for the Mortgaged Property prepared by, or by an agent for, the issuer of the Title Policy, showing marketable fee simple or leasehold title to the Mortgaged Property (as applicable) to be vested in Borrower, free and clear of all liens, encumbrances, easements, covenants, conditions, restrictions and other matters affecting title other than the Permitted Encumbrances;

(B)    pay to Lender the Good Faith Deposit; and

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(C)    make a Rate Lock Request.

(2)    If the Conversion closes, Lender shall refund the Good Faith Deposit to Borrower within thirty (30) days after the Conversion Closing Date.  If Borrower pays the Good Faith Deposit but does not timely exercise the Conversion Option and the Fixed Rate is not rate locked, Lender shall refund the Good Faith Deposit to Borrower within forty-five (45) days after receipt of a written request from Borrower (and the interest rate shall remain at the Adjustable Rate). If Borrower timely exercises the Conversion Option, but the Conversion is not consummated for any reason other than a default by Lender in performing its obligations under this Loan Agreement, Borrower shall forfeit the Good Faith Deposit and (A) if the MBS Investor is not Fannie Mae, shall be fully liable for, and agrees to pay on demand, any and all loss, costs and/or damages incurred by Lender in connection with Borrower’s failure to consummate the Conversion as provided herein, including any loss, costs and/or damages incurred by Lender in excess of the Good Faith Deposit, and (B) if the MBS Investor is Fannie Mae or if the converted Mortgage Loan is held by Fannie Mae and does not back an MBS, the Good Faith Deposit shall serve as liquidated damages resulting from failure to consummate the Conversion. Borrower expressly acknowledges that by electing to convert the interest rate on the Mortgage Loan to the Fixed Rate, and agreeing to the Fixed Rate as provided herein, Borrower is causing Lender to take a position in the financial markets in reliance thereon, and the failure of Borrower to convert the interest rate on the Mortgage Loan to the Fixed Rate as provided herein will cause Lender to incur economic damages.

(3)    If Borrower desires to exercise the Conversion Option and has complied with all other requirements of Section 16.04 (Conditions Precedent to Closing of Conversion), within fifteen (15) days of Borrower’s receipt of the NOI Determination Notice, Borrower shall contact Lender to initiate a Rate Lock Request.If the Fixed Rate quoted to Borrower is greater than the Maximum Fixed Rate, Borrower shall not be permitted to accept the quoted Fixed Rate (or exercise its Conversion Option). On or before 5:00 p.m. (prevailing eastern time) of the day Borrower accepts the quoted Fixed Rate, Borrower and Lender shall confirm to each other (by letter addressed from Lender to Borrower, acknowledged and accepted in writing by Borrower and transmitted, in each case, by facsimile or other electronic transmission acceptable to Lender), (A) the Fixed Rate, (B) the New Maturity Date (if applicable), (C) the Fixed Rate Conversion Effective Date, (D) the new Monthly Debt Service Payment and (E) the Initial Fixed Rate Payment Date.

Section 16.03    Amendment to Multifamily Loan and Security Agreement.

The Conversion shall be evidenced by the Conversion Amendment.

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Section 16.04    Conditions Precedent to Closing of Conversion.

Borrower’s right to consummate the Conversion and Lender’s obligation to execute and deliver the Conversion Amendment, shall be subject to satisfaction of each of the following conditions precedent:

(a)All representations and warranties of Borrower set forth in the Loan Documents shall be true and correct in all material respects on and as of the Conversion Closing Date as though made on and as of the Conversion Closing Date.

(b)Borrower shall have performed or complied with all of its obligations under this Loan Agreement to be performed or complied with on or before the Conversion Closing Date.

(c)On the Conversion Closing Date, no Event of Default shall have occurred and be continuing (or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default has occurred and is continuing).

(d)On the Conversion Closing Date, Lender shall have received all of the following, each of which, where applicable, shall be executed by individuals authorized to do so, shall be dated as of the Closing Date, and shall be in form and substance acceptable to Lender:

(1)    the Conversion Amendment;

(2)    an endorsement to the Title Policy or a new Title Policy as of the Conversion Closing Date showing that the Security Instrument constitutes a valid mortgage lien on the Mortgaged Property, with the same lien priority insured by the Title Policy, subject only to the Permitted Encumbrances;

(3)    either (A) the Survey, redated to a date within fifteen (15) days prior to the Conversion Closing Date showing that there are no liens, encumbrances, or other matters that have arisen since the date of the Survey other than matters approved in writing by Lender, or (B) affirmative coverage in the title insurance endorsement referred to in Section 16.04(d)(2) (Conversion – Conditions Precedent to Conversion) that there are no exceptions based upon the results of a visual inspection of the Mortgaged Property, or the absence of any exception based upon any facts or conditions which have arisen since the date of the Survey and which would be disclosed by a current survey of the Mortgaged Property;

(4)    if necessary, as determined by Lender, an amendment to the Security Instrument to be recorded in the land records and insured as a supplement to the Security Instrument to reflect the New Maturity Date;

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(5)    an opinion of counsel satisfactory to Lender as to such matters as Lender may reasonably request; and

(6)    such other documents as Lender may reasonably request related to this Loan Agreement, the Conversion Amendment or the transactions contemplated hereby or thereby.

The Mortgaged Property shall not have been damaged, destroyed or subject to any condemnation or other taking, in whole or any material part, and Lender shall have received a certificate of Borrower, dated as of the Conversion Closing Date, to such effect.

[BORROWER INITIALS LOCATED ON THE FOLLOWING PAGE]

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KJK

Borrower Initials

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EX-10.9

EXHIBIT 10.9

Prepared by, and after recording

return to:

Melissa A. Johnson, Esq.

Krooth & Altman LLP

1850 M Street, NW, Suite 400

Washington, DC 20036

MULTIFAMILY DEED TO SECURE DEBT,

ASSIGNMENT OF LEASES AND RENTS

AND SECURITY AGREEMENT

(GEORGIA)

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MULTIFAMILY DEED TO SECURE DEBT,

ASSIGNMENT OF LEASES AND RENTS

AND SECURITY AGREEMENT

This MULTIFAMILY DEED TO SECURE DEBT, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Security Instrument”) dated as of March 10, 2015, is executed by STAR PRESTON HILLS, LLC,a limited liability company organized and existing under the laws of Delaware, as mortgagor (“Borrower”), to and for the benefit of BERKELEY POINT CAPITAL LLC, a limited liability company organized and existing under the laws of Delaware, as mortgagee (“Lender”).

Borrower, in consideration of (i) the loan in the original principal amount of $35,700,000 (the “Mortgage Loan”) evidenced by that certain Multifamily Note dated as of the date of this Security Instrument, executed by Borrower and made payable to the order of Lender maturing on April 1, 2025 (as amended, restated, replaced, supplemented, or otherwise modified from time to time, the “Note”), (ii) that certain Multifamily Loan and Security Agreement dated as of the date of this Security Instrument, executed by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), and (iii) the security title created and transferred to Lender by this Security Instrument, and to secure to Lender the repayment of the Indebtedness (as defined in this Security Instrument), and all renewals, extensions and modifications thereof, and the performance of the covenants and agreements of Borrower contained in the Loan Documents (as defined in the Loan Agreement), excluding the Environmental Indemnity Agreement (as defined in this Security Instrument), irrevocably and unconditionally mortgages, grants, warrants, conveys, bargains, sells, and assigns to and for the benefit of Lender, with power of sale and right of entry and possession, the Mortgaged Property (as defined in this Security Instrument), including the real property located in Gwinnett County, State of Georgia, and described in Exhibit A attached to this Security Instrument and incorporated by reference (the “Land”), to have and to hold such Mortgaged Property unto Lender and Lender’s successors and assigns, forever; Borrower hereby releasing, relinquishing and waiving, to the fullest extent allowed by law, all rights and benefits, if any, under and by virtue of the homestead exemption laws of the Property Jurisdiction (as defined in this Security Instrument), if applicable.

Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property and has the right, power and authority to mortgage, grant, warrant, convey, bargain, sell, and assign the Mortgaged Property, and that the Mortgaged Property is not encumbered by any Lien (as defined in this Security Instrument) other than Permitted Encumbrances (as defined in this Security Instrument). Borrower covenants that Borrower will warrant and defend the title to the Mortgaged Property against all claims and demands other than Permitted Encumbrances.

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Borrower and (by its acceptance hereof) Lender covenants and agrees as follows:

1.Defined Terms.

Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement. All terms used and not specifically defined herein, but which are otherwise defined by the UCC, shall have the meanings assigned to them by the UCC. The following terms, when used in this Security Instrument, shall have the following meanings:

“Condemnation Action” means any action or proceeding, however characterized or named, relating to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged Property, whether direct or indirect.

“Enforcement Costs” means all expenses and costs, including reasonable attorneys’ fees and expenses, fees and out-of-pocket expenses of expert witnesses and costs of investigation, incurred by Lender as a result of any Event of Default under the Loan Agreement or in connection with efforts to collect any amount due under the Loan Documents, or to enforce the provisions of the Loan Agreement or any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy or insolvency proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding or Foreclosure Event) or judicial or non-judicial foreclosure proceeding, to the extent permitted by law.

“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of the date of this Security Instrument, executed by Borrower to and for the benefit of Lender, as the same may be amended, restated, replaced, supplemented, or otherwise modified from time to time.

“Environmental Laws” has the meaning set forth in the Environmental Indemnity Agreement.

“Event of Default” has the meaning set forth in the Loan Agreement.

“Fixtures” means all Goods that are so attached or affixed to the Land or the Improvements as to constitute a fixture under the laws of the Property Jurisdiction.

“Goods” means all of Borrower’s present and hereafter acquired right, title and interest in all goods which are used now or in the future in connection with the ownership, management, or operation of the Land or the Improvements or are located on the Land or in the Improvements, including inventory; furniture; furnishings; machinery, equipment, engines, boilers, incinerators, and installed building materials; systems and equipment for the purpose of supplying or distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring, and conduits used in connection with radio, television, security, fire prevention, or fire detection, or otherwise used to carry electronic signals; telephone systems and equipment; elevators and related machinery and equipment; fire detection, prevention and extinguishing systems and apparatus; security and access control systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers, and other appliances; light fixtures, awnings, storm windows, and storm doors; pictures, screens, blinds, shades, curtains, and curtain rods; mirrors,

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cabinets, paneling, rugs, and floor and wall coverings; fences, trees, and plants; swimming pools; exercise equipment; supplies; tools; books and records (whether in written or electronic form); websites, URLs, blogs, and social network pages; computer equipment (hardware and software); and other tangible personal property which is used now or in the future in connection with the ownership, management, or operation of the Land or the Improvements or are located on the Land or in the Improvements.

“Imposition Deposits” means deposits in an amount sufficient to accumulate with Lender the entire sum required to pay the Impositions when due.

“Impositions” means

(a)    any water and sewer charges which, if not paid, may result in a lien on all or any part of the Mortgaged Property;

(b)    the premiums for fire and other casualty insurance, liability insurance, rent loss insurance and such other insurance as Lender may require under the Loan Agreement;

(c)    Taxes; and

(d)    amounts for other charges and expenses assessed against the Mortgaged Property which Lender at any time reasonably deems necessary to protect the Mortgaged Property, to prevent the imposition of liens on the Mortgaged Property, or otherwise to protect Lender’s interests, all as reasonably determined from time to time by Lender.

“Improvements” means the buildings, structures, improvements, and alterations now constructed or at any time in the future constructed or placed upon the Land, including any future replacements, facilities, and additions and other construction on the Land.

“Indebtedness” means the principal of, interest on, and all other amounts due at any time under the Note, the Loan Agreement, this Security Instrument or any other Loan Document (other than the Environmental Indemnity Agreement and Guaranty), including Prepayment Premiums, late charges, interest charged at the Default Rate, and accrued interest as provided in the Loan Agreement and this Security Instrument, advances, costs and expenses to perform the obligations of Borrower or to protect the Mortgaged Property or the security of this Security Instrument, all other monetary obligations of Borrower under the Loan Documents (other than the Environmental Indemnity Agreement), including amounts due as a result of any indemnification obligations, and any Enforcement Costs.

“Land” means the real property described in Exhibit A.

“Leases” means all present and future leases, subleases, licenses, concessions or grants or other possessory interests now or hereafter in force, whether oral or written, covering or affecting the Mortgaged Property, or any portion of the Mortgaged Property (including proprietary leases or occupancy agreements if Borrower is a cooperative housing corporation), and all modifications, extensions or renewals thereof.

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“Lien” means any claim or charge against property for payment of a debt or an amount owed for services rendered, including any mortgage, deed of trust, deed to secure debt, security interest, tax lien, any materialman’s or mechanic’s lien, or any lien of a Governmental Authority, including any lien in connection with the payment of utilities, or any other encumbrance.

“Mortgaged Property” means all of Borrower’s present and hereafter acquired right, title and interest, if any, in and to all of the following:

(a)    the Land;

(b)    the Improvements;

(c)    the Personalty;

(d)    current and future rights, including air rights, development rights, zoning rights and other similar rights or interests, easements, tenements, rights‑of‑way, strips and gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and appurtenances related to or benefitting the Land or the Improvements, or both, and all rights-of-way, streets, alleys and roads which may have been or may in the future be vacated;

(e)    insurance policies relating to the Mortgaged Property (and any unearned premiums) and all proceeds paid or to be paid by any insurer of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property, whether or not Borrower obtained the insurance pursuant to Lender’s requirements;

(f)    awards, payments and other compensation made or to be made by any municipal, state or federal authority with respect to the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property, including any awards or settlements resulting from (1) Condemnation Actions, (2) any damage to the Mortgaged Property caused by governmental action that does not result in a Condemnation Action, or (3) the total or partial taking of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property under the power of eminent domain or otherwise and including any conveyance in lieu thereof;

(g)    contracts, options and other agreements for the sale of the Land, the Improvements, the Personalty, or any other part of the Mortgaged Property entered into by Borrower now or in the future, including cash or securities deposited to secure performance by parties of their obligations;

(h)    Leases and Lease guaranties, letters of credit and any other supporting obligation for any of the Leases given in connection with any of the Leases, and all Rents;

(i)    earnings, royalties, accounts receivable, issues and profits from the Land, the Improvements or any other part of the Mortgaged Property, and all undisbursed proceeds of the Mortgage Loan and, if Borrower is a cooperative housing corporation, maintenance charges or assessments payable by shareholders or residents;

(j)    Imposition Deposits;

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(k)    refunds or rebates of Impositions by any municipal, state or federal authority or insurance company (other than refunds applicable to periods before the real property tax year in which this Security Instrument is dated);

(l)    tenant security deposits;

(m)    names under or by which any of the above Mortgaged Property may be operated or known, and all trademarks, trade names, and goodwill relating to any of the Mortgaged Property;

(n)    Collateral Accounts and all Collateral Account Funds;

(o)    products, and all cash and non-cash proceeds from the conversion, voluntary or involuntary, of any of the above into cash or liquidated claims, and the right to collect such proceeds; and

(p)    all of Borrower’s right, title and interest in the oil, gas, minerals, mineral interests, royalties, overriding royalties, production payments, net profit interests and other interests and estates in, under and on the Mortgaged Property and other oil, gas and mineral interests with which any of the foregoing interests or estates are pooled or unitized.

“Permitted Encumbrance” means only the easements, restrictions and other matters listed in a schedule of exceptions to coverage in the Title Policy and Taxes for the current tax year that are not yet due and payable.

“Personalty” means all of Borrower’s present and hereafter acquired right, title and interest in all Goods, accounts, choses of action, chattel paper, documents, general intangibles (including Software), payment intangibles, instruments, investment property, letter of credit rights, supporting obligations, computer information, source codes, object codes, records and data, all telephone numbers or listings, claims (including claims for indemnity or breach of warranty), deposit accounts and other property or assets of any kind or nature related to the Land or the Improvements now or in the future, including operating agreements, surveys, plans and specifications and contracts for architectural, engineering and construction services relating to the Land or the Improvements, and all other intangible property and rights relating to the operation of, or used in connection with, the Land or the Improvements, including all governmental permits relating to any activities on the Land.

“Prepayment Premium” has the meaning set forth in the Loan Agreement.

“Property Jurisdiction” means the jurisdiction in which the Land is located.

“Rents” means all rents (whether from residential or non-residential space), revenues and other income from the Land or the Improvements, including subsidy payments received from any sources, including payments under any “Housing Assistance Payments Contract” or other rental subsidy agreement (if any), parking fees, laundry and vending machine income and fees and charges for food, health care and other services provided at the Mortgaged Property, whether now due, past due, or to become due, and tenant security deposits.

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“Software” means a computer program and any supporting information provided in connection with a transaction relating to the program. The term does not include any computer program that is included in the definition of Goods.

“Taxes” means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, may become a lien, on the Land or the Improvements or any taxes upon any Loan Document.

“Title Policy” has the meaning set forth in the Loan Agreement.

“UCC” means the Uniform Commercial Code in effect in the Property Jurisdiction, as amended from time to time.

“UCC Collateral” means any or all of that portion of the Mortgaged Property in which a security interest may be granted under the UCC and in which Borrower has any present or hereafter acquired right, title or interest.

2.Security Agreement; Fixture Filing.

(a)To secure to Lender, the repayment of the Indebtedness, and all renewals, extensions and modifications thereof, and the performance of the covenants and agreements of Borrower contained in the Loan Documents, Borrower hereby pledges, assigns, and grants to Lender a continuing security interest in the UCC Collateral. This Security Instrument constitutes a security agreement and a financing statement under the UCC. This Security Instrument also constitutes a financing statement pursuant to the terms of the UCC with respect to any part of the Mortgaged Property that is or may become a Fixture under applicable law, and will be recorded as a “fixture filing” in accordance with the UCC. Borrower hereby authorizes Lender to file financing statements, continuation statements and financing statement amendments in such form as Lender may require to perfect or continue the perfection of this security interest without the signature of Borrower. If an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured party under the UCC or otherwise provided at law or in equity, in addition to all remedies provided by this Security Instrument and in any Loan Document. Lender may exercise any or all of its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability or validity of Lender’s other remedies. For purposes of the UCC, the debtor is Borrower and the secured party is Lender. The name and address of the debtor and secured party are set forth after Borrower’s signature below which are the addresses from which information on the security interest may be obtained.

(b)Borrower represents and warrants that: (1) Borrower maintains its chief executive office at the location set forth after Borrower’s signature below, and Borrower will notify Lender in writing of any change in its chief executive office within five (5) days of such change; (2) Borrower is the record owner of the Mortgaged Property; (3) Borrower’s state of incorporation, organization, or formation, if applicable, is as set forth on Page 1 of this Security Instrument; (4) Borrower’s exact legal name is as set forth on Page 1 of this Security Instrument; (5) Borrower’s

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organizational identification number, if applicable, is as set forth after Borrower’s signature below; (6) Borrower is the owner of the UCC Collateral subject to no liens, charges or encumbrances other than the lien hereof; (7) except as expressly provided in the Loan Agreement, the UCC Collateral will not be removed from the Mortgaged Property without the consent of Lender; and (8) no financing statement covering any of the UCC Collateral or any proceeds thereof is on file in any public office except pursuant hereto.

(c)All property of every kind acquired by Borrower after the date of this Security Instrument which by the terms of this Security Instrument shall be subject to the lien and the security interest created hereby, shall immediately upon the acquisition thereof by Borrower and without further conveyance or assignment become subject to the lien and security interest created by this Security Instrument. Nevertheless, Borrower shall execute, acknowledge, deliver and record or file, as appropriate, all and every such further deeds of trust, mortgages, deeds to secure debt, security agreements, financing statements, assignments and assurances as Lender shall require for accomplishing the purposes of this Security Instrument and to comply with the rerecording requirements of the UCC.

3.Assignment of Leases and Rents; Appointment of Receiver; Lender in Possession.

(a)As part of the consideration for the Indebtedness, Borrower absolutely and unconditionally assigns and transfers to Lender all Leases and Rents. It is the intention of Borrower to establish present, absolute and irrevocable transfers and assignments to Lender of all Leases and Rents and to authorize and empower Lender to collect and receive all Rents without the necessity of further action on the part of Borrower. Borrower and Lender intend the assignments of Leases and Rents to be effective immediately and to constitute absolute present assignments, and not assignments for additional security only. Only for purposes of giving effect to these absolute assignments of Leases and Rents, and for no other purpose, the Leases and Rents shall not be deemed to be a part of the Mortgaged Property. However, if these present, absolute and unconditional assignments of Leases and Rents are not enforceable by their terms under the laws of the Property Jurisdiction, then each of the Leases and Rents shall be included as part of the Mortgaged Property, and it is the intention of Borrower, in such circumstance, that this Security Instrument create and perfect a lien on each of the Leases and Rents in favor of Lender, which liens shall be effective as of the date of this Security Instrument.

(b)Until an Event of Default has occurred and is continuing, but subject to the limitations set forth in the Loan Documents, Borrower shall have a revocable license to exercise all rights, power and authority granted to Borrower under the Leases (including the right, power and authority to modify the terms of any Lease, extend or terminate any Lease, or enter into new Leases, subject to the limitations set forth in the Loan Documents), and to collect and receive all Rents, to hold all Rents in trust for the benefit of Lender, and to apply all Rents to pay the Monthly Debt Service Payments and the other amounts then due and payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs and expenses of managing, operating and maintaining the Mortgaged Property, including utilities and Impositions (to the extent not included in Imposition Deposits), tenant improvements and other capital expenditures. So long as no Event of Default has occurred and is continuing (and no event which, with the giving of notice or the

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passage of time, or both, would constitute an Event of Default has occurred and is continuing), the Rents remaining after application pursuant to the preceding sentence may be retained and distributed by Borrower free and clear of, and released from, Lender’s rights with respect to Rents under this Security Instrument.

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(c)If an Event of Default has occurred and is continuing, without the necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property directly, by a receiver, or by any other manner or proceeding permitted by the laws of the Property Jurisdiction, the revocable license granted to Borrower pursuant to Section 3(b) shall automatically terminate, and Lender shall immediately have all rights, powers and authority granted to Borrower under any Lease (including the right, power and authority to modify the terms of any such Lease, or extend or terminate any such Lease) and, without notice, Lender shall be entitled to all Rents as they become due and payable, including Rents then due and unpaid. During the continuance of an Event of Default, Borrower authorizes Lender to collect, sue for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or as directed by, Lender, and Borrower shall, upon Borrower’s receipt of any Rents from any sources, pay the total amount of such receipts to Lender. Although the foregoing rights of Lender are self-effecting, at any time during the continuance of an Event of Default, Lender may make demand for all Rents, and Lender may give, and Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged Property instructing them to pay all Rents to Lender. No tenant shall be obligated to inquire further as to the occurrence or continuance of an Event of Default, and no tenant shall be obligated to pay to Borrower any amounts that are actually paid to Lender in response to such a notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by delivering such demand to each rental unit.

(d)If an Event of Default has occurred and is continuing, Lender may, regardless of the adequacy of Lender’s security or the solvency of Borrower, and even in the absence of waste, enter upon, take and maintain full control of the Mortgaged Property, and may exclude Borrower and its agents and employees therefrom, in order to perform all acts that Lender, in its discretion, determines to be necessary or desirable for the operation and maintenance of the Mortgaged Property, including the execution, cancellation or modification of Leases, the collection of all Rents (including through use of a lockbox, at Lender’s election), the making of repairs to the Mortgaged Property and the execution or termination of contracts providing for the management, operation or maintenance of the Mortgaged Property, for the purposes of enforcing this assignment of Rents, protecting the Mortgaged Property or the security of this Security Instrument and the Mortgage Loan, or for such other purposes as Lender in its discretion may deem necessary or desirable.

(e)Notwithstanding any other right provided Lender under this Security Instrument or any other Loan Document, if an Event of Default has occurred and is continuing, and regardless of the adequacy of Lender’s security or Borrower’s solvency, and without the necessity of giving prior notice (oral or written) to Borrower, Lender may apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged Property to take any or all of the actions set forth in Section 3. If Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an Event of Default has occurred and is continuing, Borrower, by its execution of this Security Instrument, expressly consents to the appointment of such receiver, including the appointment of a receiver ex parte, if permitted by applicable law. Borrower consents to shortened time consideration of a motion to appoint a receiver. Lender or the receiver, as applicable, shall be entitled to receive a reasonable fee for managing the Mortgaged Property and such fee shall become an additional part of the Indebtedness. Immediately upon appointment of a receiver or Lender’s entry upon and taking possession and control of the Mortgaged Property, possession of the

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Mortgaged Property and all documents, records (including records on electronic or magnetic media), accounts, surveys, plans, and specifications relating to the Mortgaged Property, and all security deposits and prepaid Rents, shall be surrendered to Lender or the receiver, as applicable.  If Lender or receiver takes possession and control of the Mortgaged Property, Lender or receiver may exclude Borrower and its representatives from the Mortgaged Property.

(f)The acceptance by Lender of the assignments of the Leases and Rents pursuant to this Section 3 shall not at any time or in any event obligate Lender to take any action under any Loan Document or to expend any money or to incur any expense. Lender shall not be liable in any way for any injury or damage to person or property sustained by any Person in, on or about the Mortgaged Property. Prior to Lender’s actual entry upon and taking possession and control of the Land and Improvements, Lender shall not be:

(1)obligated to perform any of the terms, covenants and conditions contained in any Lease (or otherwise have any obligation with respect to any Lease);

(2)obligated to appear in or defend any action or proceeding relating to any Lease or the Mortgaged Property; or

(3)responsible for the operation, control, care, management or repair of the Mortgaged Property or any portion of the Mortgaged Property.

The execution of this Security Instrument shall constitute conclusive evidence that all responsibility for the operation, control, care, management and repair of the Mortgaged Property is and shall be that of Borrower, prior to such actual entry and taking possession and control by Lender of the Land and Improvements.

(g)Lender shall be liable to account only to Borrower and only for Rents actually received by Lender. Lender shall not be liable to Borrower, anyone claiming under or through Borrower or anyone having an interest in the Mortgaged Property by reason of any act or omission of Lender under this Section 3, and Borrower hereby releases and discharges Lender from any such liability to the fullest extent permitted by law, provided that Lender shall not be released from liability that occurs as a result of Lender’s gross negligence or willful misconduct as determined by a court of competent jurisdiction pursuant to a final, non-appealable court order. If the Rents are not sufficient to meet the costs of taking control of and managing the Mortgaged Property and collecting the Rents, any funds expended by Lender for such purposes shall be added to, and become a part of, the principal balance of the Indebtedness, be immediately due and payable, and bear interest at the Default Rate from the date of disbursement until fully paid. Any entering upon and taking control of the Mortgaged Property by Lender or the receiver, and any application of Rents as provided in this Security Instrument, shall not cure or waive any Event of Default or invalidate any other right or remedy of Lender under applicable law or provided for in this Security Instrument or any Loan Document.

4.Protection of Lender’s Security.

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If Borrower fails to perform any of its obligations under this Security Instrument or any other Loan Document, or any action or proceeding is commenced that purports to affect the Mortgaged Property, Lender’s security, rights or interests under this Security Instrument or any Loan Document (including eminent domain, insolvency, code enforcement, civil or criminal forfeiture, enforcement of Environmental Laws, fraudulent conveyance or reorganizations or proceedings involving a debtor or decedent), Lender may, at its option, make such appearances, disburse or pay such sums and take such actions, whether before or after an Event of Default or whether directly or to any receiver for the Mortgaged Property, as Lender reasonably deems necessary to perform such obligations of Borrower and to protect the Mortgaged Property or Lender’s security, rights or interests in the Mortgaged Property or the Mortgage Loan, including:

(a)paying fees and out-of-pocket expenses of attorneys, accountants, inspectors and consultants;

(b)entering upon the Mortgaged Property to make repairs or secure the Mortgaged Property;

(c)obtaining (or force-placing) the insurance required by the Loan Documents; and

(d)paying any amounts required under any of the Loan Documents that Borrower has failed to pay.

Any amounts so disbursed or paid by Lender shall be added to, and become part of, the principal balance of the Indebtedness, be immediately due and payable and bear interest at the Default Rate from the date of disbursement until fully paid. The provisions of this Section 4 shall not be deemed to obligate or require Lender to incur any expense or take any action.

5.Default; Acceleration; Remedies.

(a)If an Event of Default has occurred and is continuing, Lender, at its option, may declare the Indebtedness to be immediately due and payable without further demand, and may either with or without entry or taking possession as herein provided or otherwise, proceed by suit or suits at law or in equity or any other appropriate proceeding or remedy (1) to enforce payment of the Mortgage Loan; (2) to foreclose this Security Instrument judicially or non-judicially by the power of sale granted herein; (3) to enforce or exercise any right under any Loan Document; and (4) to pursue any one (1)or more other remedies provided in this Security Instrument or in any other Loan Document or otherwise afforded by applicable law. Each right and remedy provided in this Security Instrument or any other Loan Document is distinct from all other rights or remedies under this Security Instrument or any other Loan Document or otherwise afforded by applicable law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order. Borrower has the right to bring an action to assert the nonexistence of an Event of Default or any other defense of Borrower to acceleration and sale.

(b)Borrower acknowledges that the power of sale granted in this Security Instrument may be exercised or directed by Lender without prior judicial hearing and hereby appoints Lender

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as Borrower’s agent and attorney-in-fact to exercise such power of sale in the name and on behalf of Borrower. In the event Lender invokes the power of sale:

(1)Borrower hereby authorizes and empowers Lender to take possession of the Mortgaged Property, or any part thereof, and hereby grants to Lender a power of sale and authorizes and empowers Lender to sell (or, in the case of the default of any purchaser, to resell) the Mortgaged Property or any part thereof, in compliance with applicable law, including compliance with any and all notice and timing requirements for such sale;

(2)Lender may sell and dispose of the Mortgaged Property at public auction, at the usual place for conducting sales at the courthouse in the county where all or any part of the Mortgaged Property is located, to the highest bidder for cash, first advertising the time, terms and place of such sale by publishing a notice of sale once a week for four (4) consecutive weeks (without regard to the actual number of days) in a newspaper in which serves as the official publication of legal notices and advertisements in such county, all other notice being waived by Borrower; and Lender may thereupon execute and deliver to the purchaser a sufficient instrument of conveyance of the Mortgaged Property, which may contain recitals as to the happening of the Event of Default upon which the execution of the power of sale granted by this Section 5 depends. The recitals in the instrument of conveyance shall be presumptive evidence that Lender duly complied with all preliminary acts prerequisite to the sale and instrument of conveyance. Borrower constitutes and appoints Lender as Borrower’s agent and attorney-in-fact to make such recitals, sale and conveyance;

(3)the power and agency granted in this Section 5 are coupled with an interest, are irrevocable by death or otherwise, and are in addition to the remedies for collection of the Indebtedness as provided by law. Borrower ratifies all of Lender’s acts, as such attorney-in-fact, and Borrower agrees that such recitals shall be binding and conclusive upon Borrower and that the conveyance to be made by Lender (and in the event of a deed in lieu of foreclosure, then as to such conveyance) shall be effectual to bar all right, title and interest, equity of redemption, including all statutory redemption, homestead, dower, curtsey, and all other exemptions of Borrower, or its successors in interest, in and to the Mortgaged Property; and

(4)the Mortgaged Property may be sold in one (1) parcel and as an entirety, or in such parcels, manner or order as Lender, in its discretion, may elect, and one (1) or more exercises of the powers granted in this Section 5 shall not extinguish or exhaust the power unless the entire Mortgaged Property is sold or the Indebtedness is paid in full, and Lender shall collect the proceeds of such sale, applying such proceeds as provided in this Section 5. In the event of a deficiency, Borrower shall immediately on demand from Lender pay such deficiency to Lender, subject to the provisions of the Note limiting Borrower’s personal liability for payment of the Indebtedness. Borrower waives all rights, claims, and defenses with respect to Lender’s ability to obtain a deficiency judgment. Borrower acknowledges that Lender may bid for and purchase the Mortgaged Property at any foreclosure sale and shall be entitled to apply all or any part of the Indebtedness as a credit to the purchase price.

(c)If the Mortgaged Property is sold pursuant to this Section 5, Borrower, or any person holding possession of the Mortgaged Property through Borrower, shall surrender possession of the

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Mortgaged Property to the purchaser at such sale on demand. If possession is not surrendered on demand, Borrower or such person shall be a tenant holding over and may be dispossessed in accordance with Georgia law.

(d)Borrower covenants and agrees that Lender shall apply the proceeds of any sale in the following order:

(1)to all reasonable costs and expenses of the sale, including reasonable attorneys’ fees and costs associated with title evidence and the reasonable cost of such other professionals who provided services in connection with the sale or establishing a deficiency, if any;

(2)to the Indebtedness in such order as Lender, in Lender’s discretion, directs; and

(3)the excess, if any, to the person or persons legally entitled to the excess.

(e)In connection with the exercise of Lender’s rights and remedies under this Security Instrument and any other Loan Document, there shall be allowed and included as Indebtedness: (1) all expenditures and expenses authorized by applicable law and all other expenditures and expenses which may be paid or incurred by or on behalf of Lender for reasonable legal fees, appraisal fees, outlays for documentary and expert evidence, stenographic charges and publication costs; (2) all expenses of any environmental site assessments, environmental audits, environmental remediation costs, appraisals, surveys, engineering studies, wetlands delineations, flood plain studies, and any other similar testing or investigation deemed necessary or advisable by Lender incurred in preparation for, contemplation of or in connection with the exercise of Lender’s rights and remedies under the Loan Documents; and (3) costs (which may be reasonably estimated as to items to be expended in connection with the exercise of Lender’s rights and remedies under the Loan Documents) of procuring all abstracts of title, title searches and examinations, title insurance policies, and similar data and assurance with respect to title as Lender may deem reasonably necessary either to prosecute any suit or to evidence the true conditions of the title to or the value of the Mortgaged Property to bidders at any sale which may be held in connection with the exercise of Lender’s rights and remedies under the Loan Documents. All expenditures and expenses of the nature mentioned in this Section 5 and such other expenses and fees as may be incurred in the protection of the Mortgaged Property and rents and income therefrom and the maintenance of the lien of this Security Instrument, including the fees of any attorney employed by Lender in any litigation or proceedings affecting this Security Instrument, the Note, the other Loan Documents, or the Mortgaged Property, including bankruptcy proceedings, any Foreclosure Event, or in preparation of the commencement or defense of any proceedings or threatened suit or proceeding, or otherwise in dealing specifically therewith, shall be so much additional Indebtedness and shall be immediately due and payable by Borrower, with interest thereon at the Default Rate until paid.

(f)Any action taken by Lender pursuant to the provisions of this Section 5 shall comply with the laws of the Property Jurisdiction. Such applicable laws shall take precedence over the provisions of this Section 5, but shall not invalidate or render unenforceable any other provision of any Loan Document that can be construed in a manner consistent with any applicable law. If any

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provision of this Security Instrument shall grant to Lender (including Lender acting as a mortgagee-in-possession) or a receiver appointed pursuant to the provisions of this Security Instrument any powers, rights or remedies prior to, upon, during the continuance of or following an Event of Default that are more limited than the powers, rights, or remedies that would otherwise be vested in such party under any applicable law in the absence of said provision, such party shall be vested with the powers, rights, and remedies granted in such applicable law to the full extent permitted by law.

6.Waiver of Statute of Limitations and Marshaling.

Borrower hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien of this Security Instrument or to any action brought to enforce any Loan Document. Notwithstanding the existence of any other security interests in the Mortgaged Property held by Lender or by any other party, Lender shall have the right to determine the order in which any or all of the Mortgaged Property shall be subjected to the remedies provided in this Security Instrument and/or any other Loan Document or by applicable law. Lender shall have the right to determine the order in which any or all portions of the Indebtedness are satisfied from the proceeds realized upon the exercise of such remedies. Borrower, for itself and all who may claim by, through, or under it, and any party who now or in the future acquires a security interest in the Mortgaged Property and who has actual or constructive notice of this Security Instrument waives any and all right to require the marshaling of assets or to require that any of the Mortgaged Property be sold in the inverse order of alienation or that any of the Mortgaged Property be sold in parcels (at the same time or different times) in connection with the exercise of any of the remedies provided in this Security Instrument or any other Loan Document, or afforded by applicable law.

7.Waiver of Redemption; Rights of Tenants.

(a)Subject, in any event, to Section 11(c) hereof, Borrower hereby covenants and agrees that it will not at any time apply for, insist upon, plead, avail itself, or in any manner claim or take any advantage of, any appraisement, stay, exemption or extension law or any so-called “Moratorium Law” now or at any time hereafter enacted or in force in order to prevent or hinder the enforcement or foreclosure of this Security Instrument. Without limiting the foregoing:

(1)Borrower for itself and all Persons who may claim by, through, or under Borrower, hereby expressly waives any so-called “Moratorium Law” and any and all rights of reinstatement and redemption, if any, under any order or decree of foreclosure of this Security Instrument, it being the intent hereof that any and all such “Moratorium Laws,” and all rights of reinstatement and redemption of Borrower and of all other Persons claiming by, through, or under Borrower are and shall be deemed to be hereby waived to the fullest extent permitted by applicable law;

(2)Borrower shall not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any right, power remedy herein or otherwise granted or delegated to Lender but will suffer and permit the execution of every such right, power and remedy as though no such law or laws had been made or enacted; and

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(3)if Borrower is a trust, Borrower represents that the provisions of this Section 7 (including the waiver of reinstatement and redemption rights) were made at the express direction of Borrower’s beneficiaries and the persons having the power of direction over Borrower, and are made on behalf of the trust estate of Borrower and all beneficiaries of Borrower, as well as all other persons mentioned above.

(b)Lender shall have the right to foreclose subject to the rights of any tenant or tenants of the Mortgaged Property having an interest in the Mortgaged Property prior to that of Lender. The failure to join any such tenant or tenants of the Mortgaged Property as party defendant or defendants in any such civil action or the failure of any decree of foreclosure and sale to foreclose their rights shall not be asserted by Borrower as a defense in any civil action instituted to collect the Indebtedness, or any part thereof or any deficiency remaining unpaid after foreclosure and sale of the Mortgaged Property, any statute or rule of law at any time existing to the contrary notwithstanding.

8.Notice.

(a)All notices under this Security Instrument shall be:

(1)in writing, and shall be (A) delivered, in person, (B) mailed, postage prepaid, either by registered or certified delivery, return receipt requested, or (C) sent by overnight express courier;

(2)addressed to the intended recipient at its respective address set forth at the end of this Security Instrument; and

(3)deemed given on the earlier to occur of:

(A)the date when the notice is received by the addressee; or

(B)if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.

(b)Any party to this Security Instrument may change the address to which notices intended for it are to be directed by means of notice given to the other party in accordance with this Section 8.

(c)Any required notice under this Security Instrument which does not specify how notices are to be given shall be given in accordance with this Section 8.

9.Mortgagee-in-Possession.

Borrower acknowledges and agrees that the exercise by Lender of any of the rights conferred in this Security Instrument shall not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as Lender has not itself entered into actual possession of the Land and Improvements.

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10.Release.

Upon payment in full of the Indebtedness, Lender shall cause the release of this Security Instrument and Borrower shall pay Lender’s costs incurred in connection with such release.

11.Georgia State Specific Provisions.

(a)To the fullest extent permitted by law, Borrower agrees that Borrower will not at any time insist upon, plead, claim or take the benefit or advantage of any present or future law providing for any appraisement, valuation, stay, extension or redemption, homestead, moratorium, reinstatement, marshaling or forbearance, and Borrower, for Borrower, Borrower’s heirs, devisees, representatives, successors and assigns, and for any and all persons ever claiming any interest in the Mortgaged Property, to the fullest extent permitted by law, waives and releases all rights of redemption, valuation, appraisement, stay of execution, reinstatement (including all rights under O.C.G.A. Section 44‑14‑-85), notice of intention to mature or declare due the whole of the Indebtedness, and all rights to a marshaling of assets of Borrower, including the Mortgaged Property.

(b)This Security Instrument secures future advances.

(c)This conveyance is intended to and shall constitute and be construed as (1) a deed passing fee title to the Mortgaged Property to Lender, and is made under those provisions of the existing laws of the State of Georgia (O.C.G.A. Section 44-14-60 et seq.) relating to conveyances and deeds to secure debt (a/k/a “security deed”), and not a mortgage, and is given to secure the payment and performance of the Indebtedness, and (2) a security agreement pursuant to the provisions of the Uniform Commercial Code of Georgia, Title 11 of the Official Code of Georgia.

(d)Lender’s acceptance, if any, of an assumption of the obligations of this Security Instrument and the Note, and the release of Borrower pursuant to the Loan Agreement, shall not constitute a novation and shall not affect the priority of the lien created by this Security Instrument.

(e)Borrower represents and warrants to Lender that neither all nor any part of the Mortgaged Property is to be used as a dwelling place by Borrower at the time this Security Instrument is entered into and, accordingly, the notice requirements of O.C.G.A. Section 44-14-162.2 shall not be applicable to any exercise of the power of sale contained in this Security Instrument.

(f)The interest of Lender under this Security Instrument and the liability and obligation of Borrower for the Indebtedness arise from a “commercial transaction” within the meaning of O.C.G.A. Section 44-14-260(1). Accordingly, pursuant to O.C.G.A. Section 44-14-263, Borrower waives any and all rights which Borrower may have to notice (other than as may be expressly provided for herein) prior to seizure by Lender of any interest in personal property of Borrower which constitutes part of the Mortgaged Property, whether such seizure is by writ of possession or otherwise.

(g)In all events where Borrower may be obligated to pay all reasonable costs, expenses and attorneys’ fees incurred by Lender in connection with the Loan Documents, “all reasonable costs, expenses and attorneys’ fees” or words of similar import shall in all events mean reasonable

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attorneys’ fees, actually incurred, without the application of the statutory presumption established by the O.C.G.A. Section 13-1-11.

12.Governing Law; Consent to Jurisdiction and Venue.

This Security Instrument shall be governed by the laws of the Property Jurisdiction without giving effect to any choice of law provisions thereof that would result in the application of the laws of another jurisdiction. Borrower agrees that any controversy arising under or in relation to this Security Instrument shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies that arise under or in relation to any security for the Indebtedness. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

13.Miscellaneous Provisions.

(a)This Security Instrument shall bind, and the rights granted by this Security Instrument shall benefit, the successors and assigns of Lender. This Security Instrument shall bind, and the obligations granted by this Security Instrument shall inure to, any permitted successors and assigns of Borrower under the Loan Agreement. If more than one (1) person or entity signs this Security Instrument as Borrower, the obligations of such persons and entities shall be joint and several. The relationship between Lender and Borrower shall be solely that of creditor and debtor, respectively, and nothing contained in this Security Instrument shall create any other relationship between Lender and Borrower. No creditor of any party to this Security Instrument and no other person shall be a third party beneficiary of this Security Instrument or any other Loan Document.

(b)The invalidity or unenforceability of any provision of this Security Instrument or any other Loan Document shall not affect the validity or enforceability of any other provision of this Security Instrument or of any other Loan Document, all of which shall remain in full force and effect. This Security Instrument contains the complete and entire agreement among the parties as to the matters covered, rights granted and the obligations assumed in this Security Instrument. This Security Instrument may not be amended or modified except by written agreement signed by the parties hereto.

(c)The following rules of construction shall apply to this Security Instrument:

(1)The captions and headings of the sections of this Security Instrument are for convenience only and shall be disregarded in construing this Security Instrument.

(2)Any reference in this Security Instrument to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Security Instrument or to a Section or Article of this Security Instrument.

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(3)Any reference in this Security Instrument to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.

(4)Use of the singular in this Security Instrument includes the plural and use of the plural includes the singular.

(5)As used in this Security Instrument, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.

(6)Whenever Borrower’s knowledge is implicated in this Security Instrument or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Security Instrument, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

(7)Unless otherwise provided in this Security Instrument, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.

(8)All references in this Security Instrument to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

(9)“Lender may” shall mean at Lender’s discretion, but shall not be an obligation.

14.Time is of the Essence.

Borrower agrees that, with respect to each and every obligation and covenant contained in this Security Instrument and the other Loan Documents, time is of the essence.

15.WAIVER OF TRIAL BY JURY.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS SECURITY INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH OF BORROWER AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

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ATTACHED EXHIBITS. The following Exhibits are attached to this Security Instrument and incorporated fully herein by reference:

|X| Exhibit A        Description of the Land (required)

|| Exhibit B        Modifications to Security Instrument

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, Borrower has signed and delivered this Security Instrument under seal (where applicable) or has caused this Security Instrument to be signed and delivered by its duly authorized representative under seal (where applicable). Where applicable law so provides, Borrower intends that this Security Instrument shall be deemed to be signed and delivered as a sealed instrument.

BORROWER:

STAR PRESTON HILLS, LLC

a Delaware limited liability company

By:    STEADFAST APARTMENT ADVISOR, LLC

a Delaware limited liability company

Non-Member Manager    

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

The name, chief executive office and organizational identification number of Borrower (as Debtor under any applicable Uniform Commercial Code) are:

Debtor Name/Record Owner: STAR Preston Hills, LLC

Debtor Chief Executive Office Address:

c/o Steadfast Companies

18100 Von Karman Avenue, Suite 500

Irvine, California 92612

Debtor Organizational ID Number: 5690040

The name and chief executive office of Lender (as Secured Party) are:

Secured Party Name: Berkeley Point Capital, LLC

Secured Party Chief Executive Office Address:

4550 Montgomery Avenue, Suite 1100

Bethesda, Maryland 20814

Notice Address:

Attention: Director Loan Servicing
One Beacon Street, 14th Floor
Boston, Massachusetts 02108

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EXHIBIT A

All that certain lot, piece or parcel of land, with the buildings and improvements thereon erected,

situate, lying and being in the City of Buford, County of Gwinnett, State of Georgia.

TRACT I (Fee Simple):

All that tract or parcel of land lying in Land Lots 146, 147 and 174 of the 7th District, Gwinnett

County, Georgia, being more particularly described as follows:

To find the true place or point of beginning, begin at an iron pin found at a corner common to

Land Lots 146, 147, 174 and 175; thence along the land lot line common to Land Lots 146 and

147 S 31° 02’ 14” E, 52.92 feet to a 3/4 inch open top pipe found, said point being the True

Place or Point of Beginning.

From the point of beginning continue thence along said land lot line common to Land Lots 146

and 147, S 31° 02’ 14” E, 1035.79 feet; thence S 31° 02’ 18” E, 28.38 feet to an iron pin set;

thence leaving said land lot line, N 52° 31’ 00” E, 102.82 feet to a point of curvature of a curve

to the right; thence along said curve in a northeasterly direction having a radius of 731.00 feet,

a length of 83.96 feet and a chord of 83.92 feet, bearing N 55° 48’ 26” E; thence N 59’ 05’ 51”

E, 104.55 feet to the point of curvature of a curve to the right; thence along said curve in a

northeasterly direction having a radius of 175.00 feet, a length of 45.53 feet and a chord of

45.40 feet bearing N 66° 33’ 04” E to a point of compound curvature of a curve to the right;

thence along said curve in a northeasterly direction having a radius of 299.00 feet, a length of

27.28 feet and a chord of 27.27 feet bearing N 76° 37’ 06” E; thence N 79° 13’ 56” E, 27.15

feet; thence N 66° 19’ 55” E, 205.03 feet to an iron pin set located on the southwesterly right of

way of Georgia State Road 20 (a/k/a Buford Drive, right of way varies); thence along the said

right of way of Georgia State Road 20, S 12° 09’ 12” E, 122.67 feet to an iron pin set and a

point on a curve to the left; thence leaving the said right of way along said curve in a

northwesterly direction having a radius of 20.00 feet, a length of 31.43 feet and a chord of

28.30 feet bearing N 57° 10’ 05” W; thence S 77° 49’ 48” W, 186.04 feet to a point of curvature

of a curve to the left; thence along said curve in a southwesterly direction having a radius of

395.00 feet, a length of 121.50 feet and a chord of 121.03 feet bearing S 69° 01’ 04” W; thence

S 47° 32’ 23” W, 156.47 feet; thence S 52° 31’ 00” W, 90.12 feet to an iron pin set located on

the land lot line common to Land Lots 146 and 147; thence along said land lot line S 31° 02’ 18”

E, 292.35 feet to an iron pin set; thence leaving said land lot line, S 59° 41’ 30” W, 1,481.63

feet to an iron pin found; thence

N 30° 44’ 41” W, 684.22 feet to an iron pin found; thence

N 30° 44’ 41” W, 82.25 feet to an iron pin set; thence

N 58° 21’ 47” W, 36.57 feet to an iron pin set; thence

N 31° 42’ 04” E, 391.20 feet to an iron pin set; thence

N 30° 40’ 17” W, 284.41 feet to an iron pin set; thence

N 59° 12’ 03” E, 309.75 feet to an iron pin found; thence

S 83° 00’ 10” E, 116.09 feet to an iron pin set; thence

N 30° 36’ 19” E, 190.77 feet to an iron pin found; thence

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N 61° 43’ 38” E, 26.97 feet to an iron pin found; thence

N 40° 14’ 32” E, 43.07 feet to an iron pin found; thence

N 18° 39’ 23” E, 283.55 feet to an iron pin set; thence

N 27° 37’ 48” E, 68.07 feet; thence

S 60° 03’ 09” E, 108.75 feet; thence

N 57° 10’ 52” E, 181.00 feet to a point located on the land lot line common to Land Lots 146

and 147, said point being the true place or point of Beginning.

TRACT II (Easement):

The appurtenant easement rights benefiting the Land set forth in that certain Declaration of

Easements and Agreements between ATD Ga, LLC PNT Ga, LLC, Buford Apartment Complex,

LLC, Buford-98, Ltd., QuikTrip Corporation and Sentinel Partners, J.V., a joint venture

composed of RS20, Inc. and Buford-98 recorded August 27, 1998, in Book 16659 Page 25,

Gwinnett County, Georgia records, as affected by that certain Driveway Access and

Improvement Agreement between Riverside Realty Preston Hills, LLC, Preston Hills Gardens

Associates, LLC, Brandsmart U.S.A. of Georgia, LLC, Twentieth Century Land Corporation,

QuikTrip Corporation and Storesmart of Buford, LLC recorded on June 26, 2008 in Book 48937

Page 1, and as affected by that certain Amendment to Driveway Access and Improvement

Agreement recorded on June 26, 2008, Book 48937 Page 98.

TRACT III (Easement):

The appurtenant easement rights benefiting the Land set forth in that certain Sewer Easement

granted to Sentinel Partners, J.V., a joint venture composed of RS20, Inc. and Buford 98, Ltd.

recorded on August 27, 1998 in Book 16658 Page 258.

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EX-10.10

EXHIBIT 10.10

GUARANTY OF NON-RECOURSE OBLIGATIONS

This GUARANTY OF NON-RECOURSE OBLIGATIONS (this “Guaranty”), dated as of March 10, 2015, is executed by the undersigned (“Guarantor”), to and for the benefit of BERKELEY POINT CAPITAL LLC, a Delaware limited liability company (“Lender”).

RECITALS:

A.    Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between STAR PRESTON HILLS, LLC,a Delaware limited liability company (“Borrower”) and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender is making a loan to Borrower in the original principal amount of Thirty Five Million Seven Hundred Thousand and 00/100 Dollars ($35,700,000) (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).

B.    The Note will be secured by, among other things, a Security Instrument (as defined in the Loan Agreement)encumbering the real property described in the Security Instrument (the “Property”).

C.    Guarantor has an economic interest in Borrower or will otherwise obtain a material financial benefit from the Mortgage Loan.

D.    As a condition to making the Mortgage Loan to Borrower, Lender requires that Guarantor execute this Guaranty.

NOW, THEREFORE, in order to induce Lender to make the Mortgage Loan to Borrower, and in consideration thereof, Guarantor agrees as follows:

AGREEMENTS:

1. Recitals.

The recitals set forth above are incorporated herein by reference as if fully set forth in the body of this Guaranty.

2. Defined Terms.

Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Loan Agreement.

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3.Guaranteed Obligations.

Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender the full and prompt payment and performance when due, whether at maturity or earlier, by reason of acceleration or otherwise, and at all times thereafter, of:

(a)all amounts, obligations and liabilities owed to Lender under Article 3 (Personal Liability) of the Loan Agreement (including the payment and performance of all indemnity obligations of Borrower described in Section 3.03 (Personal Liability for Indemnity Obligations) of the Loan Agreement and including all of Borrower’s obligations under the Environmental Indemnity Agreement); and

(b)all costs and expenses, including reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, incurred by Lender in enforcing its rights under this Guaranty.

4.Survival of Guaranteed Obligations.

The obligations of Guarantor under this Guaranty shall survive any Foreclosure Event, and any recorded release or reconveyance of the Security Instrument or any release of any other security for any of the Indebtedness.

5.Guaranty of Payment; Community Property.

Guarantor’s obligations under this Guaranty constitute a present and unconditional guaranty of payment and not merely a guaranty of collection. If Guarantor (or any Guarantor, if more than one) is a married person, and the state of residence of Guarantor or Guarantor’s spouse is a community property jurisdiction, Guarantor (or each such married Guarantor, if more than one) agrees that Lender may satisfy Guarantor’s obligations under this Guaranty to the extent of all Guarantor’s separate property and Guarantor’s interest in any community property.

6.Obligations Unsecured; Cross-Default.

The obligations of Guarantor under this Guaranty shall not be secured by the Security Instrument or the Loan Agreement. However, a default under this Guaranty shall be an Event of Default under the Loan Agreement, and a default under this Guaranty shall entitle Lender to be able to exercise all of its rights and remedies under the Loan Agreement and other Loan Documents.

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7.Continuing Guaranty.

The obligations of Guarantor under this Guaranty shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of any provision of this Guaranty, the Note, the Loan Agreement, the Security Instrument or any other Loan Document. Guarantor agrees that performance of the obligations hereunder shall be a primary obligation, shall not be subject to any counterclaim, set-off, recoupment, abatement, deferment or defense based upon any claim that Guarantor may have against Lender, Borrower, any other guarantor of the obligations hereunder or any other person or entity, and shall remain in full force and effect without regard to, and shall not be released, discharged or affected in any way by any circumstance or condition (whether or not Guarantor shall have any knowledge thereof), including:

(a)any furnishing, exchange, substitution or release of any collateral securing repayment of the Mortgage Loan, or any failure to perfect any lien in such collateral;

(b)any failure, omission or delay on the part of Borrower, Guarantor, any other guarantor of the obligations hereunder or Lender to conform or comply with any term of any of the Loan Documents or failure of Lender to give notice of any Event of Default;

(c)any action or inaction by Lender under or in respect of any of the Loan Documents, any failure, lack of diligence, omission or delay on the part of Lender to perfect, enforce, assert or exercise any lien, security interest, right, power or remedy conferred upon it in any of the Loan Documents, or any other action or inaction on the part of Lender;

(d)any Bankruptcy Event, or any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, liquidation, marshaling of assets and liabilities or similar events or proceedings with respect to Guarantor or any other guarantor of the obligations hereunder, or any of their respective property or creditors or any action taken by any trustee or receiver or by any court in such proceeding;

(e)any merger or consolidation of Borrower into or with any entity or any sale, lease or Transfer of any asset of Borrower, Guarantor or any other guarantor of the obligations hereunder to any other Person;

(f)any change in the ownership of Borrower or any change in the relationship between Borrower, Guarantor or any other guarantor of the obligations hereunder, or any termination of such relationship;

(g)any release or discharge by operation of law of Borrower, Guarantor or any other guarantor of the obligations hereunder, or any obligation or agreement contained in any of the Loan Documents; or

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(h)any other occurrence, circumstance, happening or event, whether similar or dissimilar to the foregoing, and whether seen or unforeseen, which otherwise might constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which otherwise might limit recourse against Borrower or Guarantor to the fullest extent permitted by law.

8.Guarantor Waivers.

Guarantor hereby waives:

(a)the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty (and agrees that Guarantor’s obligations shall not be affected by any circumstances, whether or not referred to in this Guaranty, which might otherwise constitute a legal or equitable discharge of a surety or a guarantor);

(b)the benefits of any right of discharge under any and all statutes or other laws relating to guarantors or sureties and any other rights of sureties and guarantors;

(c)diligence in collecting the Indebtedness, presentment, demand for payment, protest and all notices with respect to the Loan Documents and this Guaranty which may be required by statute, rule of law or otherwise to preserve Lender’s rights against Guarantor under this Guaranty, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest and notice of the incurring by Borrower of any obligation or indebtedness; and

(d)all rights to require Lender to:

(1)proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness;

(2)proceed against or pursue any remedy it may now or hereafter have against Borrower or anyguarantor, or, if Borrower or any guarantor is a partnership, any general partner of Borrower or general partner of any guarantor; or

(3)demand or require collateral security from Borrower, any other guarantor or any other Person as provided by applicable law or otherwise.

9.No Effect Upon Obligations.

At any time or from time to time and any number of times, without notice to Guarantor and without releasing, discharging or affecting the liability of Guarantor:

(a)the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part;

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(b)the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;

(c)the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;

(d)the maturity of the Indebtedness may be accelerated as provided in the Loan Documents;

(e)any or all payments due under the Loan Agreement or any other Loan Document may be reduced;

(f)any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;

(g)any amounts under the Loan Agreement or any other Loan Document may be released;

(h)any security for the Indebtedness may be modified, exchanged, released, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness;

(i)the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower;

(j)any payments made by Borrower to Lender may be applied to the Indebtedness in such priority as Lender may determine in its discretion; and

(k)any other terms of the Loan Documents may be modified as required by Lender.

10.Joint and Several (or Solidary) Liability.

If more than one Person executes this Guaranty as Guarantor, such Persons shall be liable for the obligations hereunder on a joint and several (solidary instead for purposes of Louisiana law) basis. Lender, in its discretion, may:

(a)to the extent permitted by applicable law, bring suit against Guarantor, or any one or more of the Persons constituting Guarantor, and any otherguarantor, jointly and severally (solidarily instead for purposes of Louisiana law), or against any one or more of them;

(b)compromise or settle with any one or more of the Persons constituting Guarantor, or any other guarantor, for such consideration as Lender may deem proper;

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(c)discharge or release one or more of the Persons constituting Guarantor, or any other guarantor, from liability or agree not to sue such Person; and

(d)otherwise deal with Guarantor and any guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from Guarantor any amount guaranteed by Guarantor under this Guaranty.

Nothing contained in this Section 10 shall in any way affect or impair the rights or obligations of Guarantor with respect to any other guarantor.

11.Subordination of Affiliated Debt.

Any indebtedness of Borrower held by Guarantor now or in the future is and shall be subordinated to the Indebtedness and any such indebtedness of Borrower shall be collected, enforced and received by Guarantor, as trustee for Lender, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.

12.Subrogation.

Guarantor shall have no right of, and hereby waives any claim for, subrogation or reimbursement against Borrower or any general partner of Borrower by reason of any payment by Guarantor under this Guaranty, whether such right or claim arises at law or in equity or under any contract or statute, until the Indebtedness has been paid in full and there has expired the maximum possible period thereafter during which any payment made by Borrower to Lender with respect to the Indebtedness could be deemed a preference under the Insolvency Laws.

13.Voidable Transfer.

If any payment by Borrower is held to constitute a preference under any Insolvency Laws or similar laws, or if for any other reason Lender is required to refund any sums to Borrower, such refund shall not constitute a release of any liability of Guarantor under this Guaranty. It is the intention of Lender and Guarantor that Guarantor’s obligations under this Guaranty shall not be discharged except by Guarantor’s performance of such obligations and then only to the extent of such performance. If any payment by any Guarantor should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then the obligations guaranteed hereunder shall automatically be revived, reinstated and restored by the amount of such Voidable Transfer or the amount of such Voidable Transfer that Lender is required or elects to repay or restore, including all reasonable costs, expenses and legal fees incurred by Lender in connection therewith, and shall exist as though such Voidable Transfer had never been made, and any other guarantor, if any, shall remain liable for such obligations in full.

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14.Credit Report/Credit Score.

Guarantor acknowledges and agrees that Lender is authorized, no more frequently than once in any twelve (12) month period, to obtain a credit report (if applicable) on Guarantor, the cost of which shall be paid for by Guarantor. Guarantor acknowledges and agrees that Lender is authorized to obtain a Credit Score (if applicable) for Guarantor at any time at Lender’s expense.

15.Financial Reporting.

Guarantor shall deliver to Lender such Guarantor financial statements as required by Section 8.02 (Books and Records; Financial Reporting – Covenants) of the Loan Agreement.

16.Further Assurances.

Guarantor acknowledges that Lender (including its successors and assigns) may sell or transfer the Mortgage Loan, or any interest in the Mortgage Loan.

(a)Guarantorshall, subject to Section 16(b) below:

(1)do anything necessary to comply with the reasonable requirements of Lender or any Investor of the Mortgage Loan or provide, or cause to be provided, to Lender or any Investor of the Mortgage Loan within ten (10) days of the request, at Borrower’s and Guarantor’scost and expense, such further documentation or information as Lender or Investor may reasonably require, in order to enable:

(A)Lender to sell the Mortgage Loan to such Investor;

(B)Lender to obtain a refund of any commitment fee from any such Investor; or

(C)any such Investor to further sell or securitize the Mortgage Loan;

(2)confirm that Guarantor is not in default under this Guaranty or in observing any of the covenants or agreements contained in this Guaranty (or, if Guarantor is in default, describing such default in reasonable detail); and

(3)execute and deliver to Lender and/or any Investor such other documentation, including any amendments, corrections, deletions or additions to this Guaranty as is reasonably required by Lender or such Investor.

(b)Nothing in this Section 16 shall require Guarantorto do any further act that has the effect of:

(1)changing the essential economic terms of the Mortgage Loan set forth in the related commitment letter between Borrower and Lender;

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(2)imposing on Borrower or Guarantor greater personal liability under the Loan Documents than that set forth in the related commitment letter between Borrower and Lender; or

(3)materially changing the rights and obligations of Borrower or Guarantor under the commitment letter.

17.Successors and Assigns.

Lender may assign its rights under this Guaranty in whole or in part and, upon any such assignment, all the terms and provisions of this Guaranty shall inure to the benefit of such assignee to the extent so assigned. Guarantor may not assign its rights, duties and obligations under this Guaranty, in whole or in part, without Lender’s prior written consent and any such assignment shall be deemed void ab initio. The terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors and assigns of such parties.

18.Final Agreement.

Guarantor acknowledges receipt of a copy of each of the Loan Documents and this Guaranty. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Guaranty. Neither this Guaranty nor any of its provisions may be waived, modified, amended, discharged or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in that agreement.

19.Governing Law.

This Guaranty shall be governed by and construed in accordance with the substantive law of the Property Jurisdiction without regard to the application of choice of law principles that would result in the application of the laws of another jurisdiction.

20.Property Jurisdiction.

Guarantor agrees that any controversy arising under or in relation to this Guaranty shall be litigated exclusively in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Guaranty or any other Loan Document with respect to the subject matter hereof. Guarantor irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

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21.Time is of the Essence.

Guarantor agrees that, with respect to each and every obligation and covenant contained in this Guaranty, time is of the essence.

22.No Reliance.

Guarantor acknowledges, represents and warrants that:

(a)it understands the nature and structure of the transactions contemplated by this Guaranty and the other Loan Documents;

(b)it is familiar with the provisions of all of the documents and instruments relating to such transactions;

(c)it understands the risks inherent in such transactions, including the risk of loss of all or any part of the Mortgaged Property or of the assets of Guarantor;

(d)it has had the opportunity to consult counsel; and

(e)it has not relied on Lender for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Guaranty or any other Loan Document or otherwise relied on Lender in any manner in connection with interpreting, entering into or otherwise in connection with this Guaranty, any other Loan Document or any of the matters contemplated hereby or thereby.

23.Notices.

Guarantor agrees to notify Lender of any change in Guarantor’s address within ten (10) Business Days after such change of address occurs. All notices under this Guaranty shall be:

(a)in writing and shall be

(1)delivered, in person;

(2)mailed, postage prepaid, either by registered or certified delivery, return receipt requested;

(3)sent by overnight courier; or

(4)sent by electronic mail with originals to follow by overnight courier;

(b)addressed to the intended recipient at the notice addresses provided under the signature block at the end of this Guaranty; and

(c)deemed given on the earlier to occur of:

(1)the date when the notice is received by the addressee; or

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(2)if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or such express courier service.

24.Construction.

(a)Any reference in this Guaranty to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Guaranty or to a Section or Article of this Guaranty.

(b)Any reference in this Guaranty to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.

(c)Use of the singular in this Guaranty includes the plural and use of the plural includes the singular.

(d)As used in this Guaranty, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.

(e)Whenever Guarantor’s knowledge is implicated in this Guaranty or the phrase “to Guarantor’s knowledge” or a similar phrase is used in this Guaranty, Guarantor’s knowledge or such phrase(s) shall be interpreted to mean to the best of Guarantor’s knowledge after reasonable and diligent inquiry and investigation.

(f)Unless otherwise provided in this Guaranty, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.

(g)All references in this Guaranty to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

(h)“Lender may” shall mean at Lender’s discretion, but shall not be an obligation.

25.WAIVER OF JURY TRIAL.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,EACH OF GUARANTOR AND LENDER (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR ANY LOAN DOCUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY GUARANTOR AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

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26.Schedules.

The schedules, if any, attached to this Guaranty are incorporated fully into this Guaranty by this reference and each constitutes a substantive part of this Guaranty.

ATTACHED SCHEDULE. The following Schedule is attached to this Guaranty:

X Schedule 1 Modifications to Guaranty

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, Guarantor has signed and delivered this Guaranty under seal (where applicable) or has caused this Guaranty to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Guarantor intends that this Guaranty shall be deemed to be signed and delivered as a sealed instrument.

GUARANTOR:

STEADFAST APARTMENT REIT, INC.

a Maryland corporation

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

Address for Notices to Guarantor:

18100 Von Karman Avenue, Suite 500

Irvine, California 92612     

Email address: AnaMarie.delRio@steadfastco.com

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SCHEDULE 1 TO

GUARANTY OF NON-RECOURSE OBLIGATIONS

State-Specific Provisions

1.    Capitalized terms used and not specifically defined herein have the meanings given to such terms in the Guaranty to which this Schedule is attached.

2.    The additional provision(s) set forth below shall also apply and are incorporated into the Guaranty:

GEORGIA: Section 8 of the Guaranty is hereby amended by adding the following new language to the end thereof:

(e)    In addition, Guarantor waives the benefit of O.C.G.A. Section 10-7-24.

KJK

Guarantor Initials

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EX-10.11

EXHIBIT 10.11

ENVIRONMENTAL INDEMNITY AGREEMENT

This ENVIRONMENTAL INDEMNITY AGREEMENT (this “Agreement”), dated as of March 10, 2015, is executed by STAR PRESTON HILLS, LLC,a Delaware limited liability company (“Borrower”), to and for the benefit of BERKELEY POINT CAPITAL LLC, a Delaware limited liability company (“Lender”).

RECITALS:

A.    Borrower is the owner of the real property more particularly described on Exhibit A attached hereto and made a part hereof (the “MortgagedProperty”).

B.    Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender is making a loan to Borrower in the original principal amount of Thirty Five Million Seven Hundred Thousand and 00/100 Dollars ($35,700,000) (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the Mortgage Loan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).

C.    The Mortgage Loan is evidenced by the Note issued pursuant to the Loan Agreement and is secured by, among other things, the Security Instrument and the Loan Agreement.

D.    As a condition to the making of the Mortgage Loan to Borrower, Lender requires Borrower to deliver this Agreement.

AGREEMENTS:

NOW, THEREFORE, for and in consideration of the foregoing and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Borrower agrees as follows:

1. Recitals.

The recitals set forth above are true and correct and are hereby incorporated by reference.

2. Defined Terms.

All capitalized terms used but not defined in this Agreement shall have the meanings assigned to them in the Loan Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Environmental Inspections” means environmental inspections, reports, tests, investigations, studies, audits, reviews or other analyses (including those related to Significant Mold) with respect to the Mortgaged Property.

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“Environmental Laws” means (a) all present and future federal, state, and local laws, ordinances, regulations, standards, rules, policies, and other governmental requirements, administrative rulings, court judgments, and decrees, and all amendments thereto, relating to pollution or protection of human health, wildlife, wetlands, natural resources or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) including such laws governing or regulating the use, generation, storage, removal, remediation, recovery, treatment, handling, transport, disposal, control, release, discharge of, or exposure to, Hazardous Materials. Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq., the Occupational Safety and Health Act, 29 U.S.C. Chapter 15, et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701, et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Section 136, et seq., and the River and Harbors Appropriation Act, 33 U.S.C. Section 403, et seq., and their state and local analogs, as any such statutes may be amended, restated, modified, or supplemented from time to time, and (b) all voluntary cleanup programs and/or brownfields programs under federal, state or local law, as may be amended, restated, modified, or supplemented from time to time.

“Environmental Permit” means any permit, license, agreement (including any agreement or undertaking pursuant to a voluntary cleanup program and/or a brownfields program) or other authorization issued under any Environmental Law with respect to any activities or businesses conducted on or in relation to the Mortgaged Property.

“Hazardous Materials” means any substance, chemical, material or waste now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the meaning of or regulated or addressed under any Environmental Law. Without limiting the generality of the foregoing, Hazardous Materials includes: Significant Mold; petroleum and petroleum products and compounds containing them or derived from them, including natural gas, gasoline, diesel fuel, oil and other fuels and petroleum products or fractions thereof; radon; carcinogenic materials; explosives; flammable materials; infectious materials; corrosive materials; mutagenic materials; radioactive materials; polychlorinated biphenyls (PCBs) and compounds containing them; lead and lead-based paint; asbestos or asbestos‑containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; pipelines constructed for the purpose of transporting Hazardous Materials, whether empty or containing any substance; any substance the presence of which on, under or about the Mortgaged Property is regulated or prohibited by any Governmental Authority; any substance that is designated, classified or regulated pursuant to any Environmental Law; and any medical products or devices, including those materials defined as “medical waste” or “biological waste” under relevant statutes or regulations pertaining to any Environmental Law.

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“Indemnitees” means, collectively:

(a)    Lender;

(b)    any prior owner or holder of the Note;

(c)    the Loan Servicer;

(d)    any prior Loan Servicer;

(e)    the officers, directors, shareholders, partners, managers, members, employees and trustees of any of the foregoing; and

(f)    the heirs, legal representatives, successors and assigns of each of the foregoing.

“O&M Plan” means a written plan, document, or agreement containing ongoing operating, maintenance, or monitoring actions for the Mortgaged Property or Improvements thereon.

“Prohibited Activities or Conditions” means any of the following:

(a)    the presence, use, generation, release, treatment, processing, storage, handling or disposal of any Hazardous Materials on, about or under the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property or which impacts the Mortgaged Property;

(b)    the transportation of any Hazardous Materials to, from or across the Mortgaged Property;

(c)    any Remedial Work at, about or under the Mortgaged Property that has not been fully conducted in accordance with an O&M Plan approved in writing by Lender;

(d)    any activity on the Mortgaged Property that requires an Environmental Permit or other written authorization under Environmental Laws without Lender’s prior written consent;

(e)    any occurrence or condition on the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property, which occurrence or condition is or is expected to be in violation of or noncompliance with Environmental Laws, or in violation of or noncompliance with the terms of any Environmental Permit; or

(f)    any activities on the Mortgaged Property that directly or indirectly result in other property (whether adjacent to the Mortgaged Property or otherwise) being contaminated with Hazardous Materials or which causes such other property to be in violation of or noncompliance with Environmental Laws.

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Provided, however, excluded from this definition shall be the safe and lawful use and storage of:

(1)    pre-packaged supplies, cleaning materials and petroleum products in such quantities and types as are customarily used for residential purposes and in the operation and maintenance of comparable multifamily properties so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws;

(2)    cleaning materials, personal grooming items and other items sold in pre-packaged containers for consumer use in such quantities and types as are customarily found in comparable multifamily properties and which are used by tenants and occupants of residential dwelling units in the Mortgaged Property;

(3)    petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Mortgaged Property’s parking areas, in such quantities and types as are customarily used in the operation and maintenance of comparable multifamily properties and so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws;

(4)    petroleum products stored in above-ground and underground storage tanks, so long as the existence of such above-ground and underground storage tanks has been previously disclosed by Borrower to Lender in writing and any such tank complies with and at all times continues to comply with all requirements of Environmental Laws; and

(5)    natural gas when transported and used for residential purposes in combustion appliances.

“Remedial Work” means any investigation, site monitoring, containment, abatement, clean-up, removal, restoration or other remedial work in connection with any Significant Mold, Environmental Laws, or order of or agreement with any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property, or the use, operation or improvement of the Mortgaged Property under any Environmental Law or as recommended in writing by an environmental professional, certified industrial hygienist or person with similar qualifications with respect to Significant Mold.

“Significant Mold” means any mold, fungus, bacterial, viral, or microbial matter or pathogenic organisms at, in or about the Mortgaged Property of a type or quantity that:

(a)results in, or should reasonably result in, Remedial Work or a significant risk to human health or the environment as determined by a written analysis prepared by an environmental professional, certified industrial hygienist or person with similar qualifications reasonably acceptable to Lender;

(b)is required or recommended to be addressed pursuant to Environmental Law, or written recommendation of an environmental professional, certified industrial hygienist or person with similar qualifications; or

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(c)would materially and negatively impact the value of the Mortgaged Property.

3. Environmental Representations and Warranties.

Borrower represents and warrants to Lender that as of the Effective Date, except as previously disclosed by Borrower to Lender in writing or as set forth in any Environmental Inspection performed with respect to the origination of the Mortgage Loan dated prior to the Effective Date:

(a)neither Borrower nor any Borrower Affiliates are in possession of any Environmental Inspections (or any environmental inspections of any other property owned, leased or otherwise controlled by Borrower or Borrower Affiliate that is adjacent to the Mortgaged Property) that have not been provided to Lender, nor have any Environmental Inspections (or any environmental inspections of any other property owned, leased or otherwise controlled by Borrower or Borrower Affiliate that is adjacent to the Mortgaged Property) been conducted by or on behalf of Borrower that have not been provided to Lender;

(b)Borrower has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions other than Prohibited Activities or Conditions that are the subject of an O&M Plan approved in writing by Lender;

(c)Guarantor has not at any time engaged in, caused or permitted any Prohibited Activities or Conditions with respect to the Mortgaged Property or any adjacent property owned by Borrower, Guarantor, Key Principal or any Borrower Affiliate;

(d)to Borrower’s knowledge, no Prohibited Activities or Conditions exist or have existed on the Mortgaged Property or on any adjacent property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate;

(e)the Mortgaged Property does not now contain any above-ground or underground storage tanks, and, to Borrower’s knowledge, the Mortgaged Property has not contained any above-ground or underground storage tanks in the past. If there is or was any storage tank located on the Mortgaged Property which has been previously disclosed by Borrower to Lender in writing or in any Environmental Inspection, that tank complies with, or has been removed in accordance with, all requirements of Environmental Laws;

(f)Borrower has complied with all Environmental Laws, including all requirements for notification regarding the presence of or any releases of Hazardous Materials. Without limiting the generality of the foregoing, Borrower has obtained all Environmental Permits required for the operation of the Mortgaged Property in accordance with Environmental Laws now in effect, Borrower has disclosed all such Environmental Permits to Lender, and all such Environmental Permits are in full force and effect;

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(g)to Borrower’s knowledge, no event has occurred with respect to the Mortgaged Property that constitutes, or with the passing of time or the giving of notice would constitute, noncompliance with the terms of any Environmental Permit;

(h)there are no actions, suits, claims, orders, proceedings pending or, to Borrower’s knowledge, threatened that involve the Mortgaged Property and allege, arise out of or relate to any Prohibited Activity or Condition; and

(i)Borrower has not received any written complaint, order, notice of violation or other communication from any Governmental Authority with regard to air emissions, water discharges, noise emissions or Hazardous Materials, or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property.

4. Environmental Covenants.

(a)Borrower shall not engage in, cause or permit any Prohibited Activities or Conditions other than Prohibited Activities or Conditions that are the subject of an O&M Plan approved in writing by Lender so long as Borrower remains in full compliance therewith.

(b)Borrower shall take all commercially reasonable actions (including the inclusion of appropriate provisions in any Leases executed after the date of this Agreement) to prevent its employees, agents and contractors, and all tenants and other occupants from causing or permitting any Prohibited Activities or Conditions. Borrower shall not lease or allow the sublease or use of all or any portion of the Mortgaged Property to any tenant or subtenant for nonresidential use by any user that, in the ordinary course of its business, would cause or permit any Prohibited Activity or Condition.

(c)Borrower shall not permit Guarantor to engage in, cause or permit any Prohibited Activities or Conditions with respect to any property that is adjacent to the Mortgaged Property that is owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate;

(d)Lender shall have the right to require the establishment of, monitor and review an O&M Plan with respect to Hazardous Materials on the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property. If an O&M Plan has been established, Borrower and its employees shall comply in a timely manner with, and shall use all commercially reasonable efforts to cause all agents and contractors of Borrower and any other persons present on the Mortgaged Property to comply with, the O&M Plan. All costs of performance of Borrower’s obligations under any O&M Plan shall be paid by Borrower, and Lender’s reasonable out‑of‑pocket costs incurred in connection with the monitoring and review of the O&M Plan and Borrower’s performance shall be paid by Borrower within ten (10) days of demand by Lender. Any such out-of-pocket costs of Lender which Borrower fails to pay promptly shall become an additional part of the Indebtedness as provided in the Security Instrument.

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(e)Borrower shall comply with all Environmental Laws applicable to the Mortgaged Property, including (1) all requirements for notification regarding the presence of or any releases of Hazardous Materials, and (2) all requirements governing the presence or removal of any above-ground or underground storage tank located on the Mortgaged Property. Without limiting the generality of the previous sentence, Borrower shall obtain and maintain all Environmental Permits required by Environmental Laws, shall comply with all conditions of such Environmental Permits and all such Environmental Permits shall be kept in full force and effect.

(f)Borrower shall promptly notify Lender in writing upon the occurrence of any of the following events:

(1)Borrower’s discovery of any Prohibited Activity or Condition;

(2)any plans to conduct or requirements to conduct any Remedial Work;

(3)Borrower’s receipt of notice of any action, suit, claim, proceeding, order, notice of violation or other communication from any property management agents, Governmental Authority or other Person with regard to present or future alleged Prohibited Activities or Conditions or any other environmental, health or safety matters affecting the Mortgaged Property or any other property owned, leased or otherwise controlled by Borrower, Guarantor, Key Principal or any Borrower Affiliate that is adjacent to the Mortgaged Property; and

(4)any representation or warranty in Section 3 of this Agreement was untrue as of the date of this Agreement, or Borrower’s breach of any of its obligations under this Section 4.

Any such notice given by Borrower shall not relieve Borrower of, or result in a waiver of, any obligation under this Agreement, the Note or any other Loan Document.

5. Inspections.

Lender shall have the right to cause to be undertaken and thereafter obtain any Environmental Inspections in connection with any Foreclosure Event, or as a condition of Lender’s consent to any Transfer, or required by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions may exist. Borrower shall pay within ten (10) days after written demand from Lender the reasonable costs of any Environmental Inspections required by Lender in accordance with this Section 5. Any such costs incurred by Lender (including the fees and out-of-pocket costs of attorneys and technical consultants whether incurred in connection with any judicial or administrative process or otherwise) which Borrower fails to pay promptly after notice and request by Lender shall become an additional part of the Indebtedness as provided in the Security Instrument. The results of all Environmental Inspections made by Lender shall at all times remain the property of Lender and Lender shall have no obligation to disclose or otherwise make available to Borrower or any other party such results or any other information obtained by Lender in connection with its Environmental Inspections; provided, however, if Borrower reimbursed Lender for the cost of such Environmental Inspections, upon request by Borrower, Lender shall provide a copy of such

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Environmental Inspections to Borrower. Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make available to any party, including any prospective bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental Inspections made by Lender or Borrower with respect to the Mortgaged Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or otherwise) of the results of any Environmental Inspections. Borrower acknowledges that Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any Environmental Inspections and that the release of such results to prospective bidders at a foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount which a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever as a result of delivering the results of any Environmental Inspections to any third party, and Borrower hereby releases and forever discharges Lender from any and all actions, suits, claims, proceedings, orders, damages or causes of action, arising out of, connected with or incidental to conducting any such Environmental Inspections or providing the results of the same or delivering the same to any person or entity.

6. Remedial Work.

If any Remedial Work is contemplated, planned or undertaken at or about the Mortgaged Property or is (a) necessary to comply with or required by any Environmental Law or order (that has not been stayed on appeal) of any Governmental Authority that has or acquires jurisdiction over the Mortgaged Property or the use, operation or improvement of the Mortgaged Property under any Environmental Law or order, or (b) required by Lender based on written recommendation from an environmental professional, certified industrial hygienist or person with similar qualifications with respect to Significant Mold, or (c) is otherwise required by Lender as a consequence of any Prohibited Activity or Condition or to prevent the occurrence of a Prohibited Activity or Condition, Borrower shall, at its sole cost and expense and by the earlier of (1) thirty (30) days after notice from Lender demanding such action, or (2) the applicable deadline required by Environmental Law or order, begin performing the Remedial Work, and thereafter diligently prosecute it to completion, and shall in any event complete the work by the time required by applicable Environmental Law or order or relevant Governmental Authority. If Borrower fails to begin on a timely basis or diligently prosecute any required Remedial Work, Lender may, at its option, cause the Remedial Work to be completed, in which case Borrower shall reimburse Lender on demand for the cost of doing so (including any related reasonable attorneys’ fees). Any reimbursement due from Borrower to Lender shall be due and payable within ten (10) days of demand by Lender.

7. Cooperation.

Borrower, at its sole cost and expense, shall cooperate with any inquiry by any Governmental Authority and any determination of Lender that Prohibited Activities or Conditions may exist (as provided in Section 5), and shall timely comply with any governmental or judicial order which arises from any alleged Prohibited Activity or Condition.

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8. Indemnification.

(a)Except (1) in connection with any Prohibited Activity or Condition caused directly by Lender or its agents or employees after it takes possession as mortgagee-in-possession or otherwise, (2) as set forth in Section 8(g), or (3) to the extent that any such items occur solely as a result of the gross negligence or willful misconduct of Lender or its affiliates, employees or representatives, as determined by a court of competent jurisdiction pursuant to a final non-appealable court order, Borrower shall indemnify, hold harmless and defend the Indemnitees for, from and against all actions, suits, claims, proceedings, orders, damages, penalties and costs (whether initiated or sought by Governmental Authorities or private parties), including any reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, investigatory fees and remediation costs, whether incurred in connection with any judicial or administrative process or otherwise, arising directly or indirectly from any of the following:

(A)any breach of any representation or warranty of Borrower in this Agreement;

(B)any failure by Borrower to perform any of its obligations under this Agreement;

(C)any Remedial Work;

(D)the existence or alleged existence of any Prohibited Activity or Condition, including any loss, cost or damage arising out of the existence of any underground storage tank on the Mortgaged Property, whether known or unknown to any Borrower;

(E)the presence or alleged presence of Hazardous Materials on or under (i) the Mortgaged Property or (ii) any other property if the Hazardous Materials were derived from, or alleged to have derived from, the Mortgaged Property; and

(F)the actual or alleged violation of any Environmental Law at the Mortgaged Property.

(b)Borrower shall be fully and personally liable for its obligations under this Agreement. To the extent permitted by law, Borrower’s liability shall not be limited by the amount of the Indebtedness, the repayment of the Indebtedness or otherwise (including as a result of any limitation on personal liability set forth in the Loan Agreement or any other Loan Document).

(c)Counsel selected by Borrower to defend Indemnitees shall be subject to the approval of those Indemnitees, which approval shall not be unreasonably withheld, conditioned or delayed. However, any Indemnitee may elect to defend any action, suit, claim, proceeding, or order at Borrower’s expense if such Indemnitee reasonably determines that there is a conflict between the interests of Borrower and such Indemnitee, or if such Indemnitee reasonably determines that such election is necessary to protect Indemnitee’s security under the Security Instrument. Notwithstanding the foregoing, Lender may employ at its own cost and expense its own legal counsel

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and consultants to prosecute, defend or negotiate any action, suit, claim, proceeding, or order. Further, with the prior written consent of Borrower (which shall not be unreasonably withheld, delayed or conditioned), Lender may settle or compromise any action, suit, claim, proceeding, or order. Borrower shall reimburse Lender within fifteen (15) days of its receipt of written demand from Lender for all reasonable costs and expenses incurred by Lender which are required to be reimbursed under the terms of this provision, including all costs of settlements entered into in good faith, and the reasonable fees and out-of-pocket expenses of attorneys and consultants.

(d)Borrower shall not, without the prior written consent of those Indemnitees who are named as parties to any action, suit, claim, proceeding, or order, settle or compromise such action, suit, claim, proceeding, or order if the settlement may materially and adversely affect any Indemnitee, as determined by Lender, or results in the entry of any judgment that does not include as an unconditional term the delivery by the claimant or plaintiff to Lender of a written release of the applicable Indemnitees (such release satisfactory in form and substance to Lender).

(e)Borrower’s obligation to indemnify the Indemnitees shall not be limited or impaired by any of the following, or by any failure of Borrower or any guarantor to receive notice of or consideration for any of the following:

(1)the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part;

(2)the rate of interest on or period of amortization of the Mortgage Loan or the amount of the Monthly Debt Service Payments payable under the Loan Documents may be modified;

(3)the time for Borrower’s performance of or compliance with any covenant or agreement contained in any Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived;

(4)the maturity of the Indebtedness may be accelerated as provided in the Loan Documents;

(5)any or all payments due under the Loan Agreement or any other Loan Document may be reduced;

(6)any Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount of the Mortgage Loan;

(7)any amounts under the Loan Agreement or any other Loan Document may be released;

(8)any security for the Indebtedness may be modified, exchanged, released, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness;

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(9)the payment of the Indebtedness or any security for the Indebtedness, or both, may be subordinated to the right to payment or the security, or both, of any other present or future creditor of Borrower;

(10)any payments made by Borrower to Lender may be applied to the Indebtedness in such priority as Lender may determine; and

(11)any other terms of the Loan Documents may be modified as required by Lender.

(f)Borrower shall, at its own cost and expense, do all of the following:

(1)pay or satisfy any judgment or decree that may be entered against any Indemnitee in any legal or administrative proceeding incident to any matters against which Indemnitees are entitled to be indemnified under this Agreement;

(2)reimburse Indemnitees for any expenses paid or incurred in connection with any matters against which Indemnitees are entitled to be indemnified under this Agreement; and

(3)reimburse Indemnitees for any and all expenses, including reasonable fees and out-of-pocket expenses of attorneys and expert witnesses, paid or incurred in connection with the enforcement by Indemnitees of their rights under this Agreement, or in monitoring and participating in any legal or administrative proceeding.

(g)The provisions of this Agreement shall be in addition to any and all other obligations and liabilities that Borrower may have under applicable law or under other Loan Documents, and each Indemnitee shall be entitled to indemnification under this Agreement without regard to whether Lender or that Indemnitee has exercised any rights against the Mortgaged Property or any other security, pursued any rights against any guarantor, or pursued any other rights available under the Loan Documents or applicable law. The obligation of Borrower to indemnify the Indemnitees under this Agreement shall not be applicable to any Prohibited Activities or Conditions or any other environmental contamination that occurs after:

(1)the date of any Foreclosure Event, or

(2)if Borrower has a right under applicable law to physical possession or control of the Mortgaged Property following the date of any Foreclosure Event, the earlier of the date:

(A)Lender takes physical possession and control of the Mortgaged Property, or

(B)Lender has the legal right to take physical possession and control of the Mortgaged Property;

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provided, however, that in any such event, Borrower (i) must have relinquished physical possession and control of the Mortgaged Property as of such date, and (ii) shall have the burden of providing evidence to Lender’s satisfaction that any Prohibited Activities or Conditions or any other environmental contamination occurred after such date.

9. Event of Default.

Borrower understands that a default of its obligations under this Agreement that is not cured after the expiration of all applicable notice and cure periods, if any, shall be an Event of Default under the Loan Agreement (as provided in Article 14 thereof), and that in addition to any remedies specified in this Agreement, Lender shall be entitled to exercise all of its rights and remedies under the Loan Agreement and other Loan Documents, however, the obligations hereunder shall not be secured by the Security Instrument.

10. Subrogation.

Borrower shall at its sole cost and expense take any and all reasonable actions, including institution of legal action against third-parties, necessary or appropriate to obtain reimbursement, payment or compensation from such persons responsible for any Prohibited Activities or Conditions or for the presence of any Hazardous Materials at, in, on, under or near the Mortgaged Property or otherwise obligated by law to bear the cost of any of the foregoing. Indemnitees shall be and hereby are subrogated to all of Borrower’s rights now or hereafter in such actions, suits, claims, or proceedings arising out of or relating to any Prohibited Activity or Condition or any Hazardous Materials.

11. Termination of Indemnification Obligations.

Except as provided in Section 11(a), Section 11(b), and Section 11(c), upon full performance by Borrower of all of its obligations under the Loan Documents, including payment in full by Borrower of all Indebtedness pursuant to the terms of the Loan Documents, either at the Maturity Date or by voluntary prepayment, Borrower shall have no obligation to indemnify the Indemnitees from and after the date of the receipt by Lender of payment in full of all Indebtedness under the Loan Documents (the “Repayment Date”). Notwithstanding the foregoing:

(a)If the payment of all or any part of the Indebtedness by Borrower, any Guarantor or any other Person should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the advice of its counsel, then this Agreement and the indemnification obligations of Borrower under this Agreement shall automatically be revived, reinstated and restored, and shall exist as though such Voidable Transfer had never been made and the Lien of the Security Instrument not been released.

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(b)The indemnification obligations of Borrower under this Agreement shall survive payment in full of the Indebtedness with respect to any claims, suits, orders, proceedings or actions existing as of the Repayment Dateor which subsequently come into existence prior to the date on which Lender repays or restores, in whole or in part, any such Voidable Transfer as set forth in Section 11(a).

(c)The obligation of Borrower to indemnify the Indemnitees under this Agreement, as limited by Section 8(g), shall survive the occurrence of any Foreclosure Event, even if, as a result of the occurrence of such Foreclosure Event, the Indebtedness is paid or satisfied in full.

12. Entity Representations.

Borrower represents and warrants that:

(a)Borrower has the full corporate, trust, limited liability company or partnership power and authority, as applicable, to execute and deliver this Agreement and to perform its obligations hereunder;

(b)the execution, delivery and performance of this Agreement by Borrower has been duly and validly authorized;

(c)all requisite corporate, trust, limited liability company or partnership action, as applicable has been taken by Borrower to make this Agreement valid and binding upon Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by applicable Insolvency Laws or the exercise of discretion by any court; and

(d)this Agreement constitutes a valid, legal and binding obligation of Borrower, enforceable against it in accordance with the terms hereof, except as such enforceability may be limited by applicable Insolvency Laws or the exercise of discretion by any court.

13. Waiver.

Borrower hereby waives and relinquishes:

(a)any right or claim of right to cause a marshaling of Borrower’s assets or to cause any Indemnitee to proceed against any other Person or any of the security for the Indebtedness before proceeding under this Agreement against Borrower;

(b)all rights and remedies accorded by applicable law to indemnitors or guarantors or sureties, except any rights of subrogation which Borrower may have, provided that the indemnity provided for hereunder shall neither be contingent upon the existence of any such rights of subrogation nor subject to any actions, suits, claims, proceedings, orders or defenses whatsoever which may be asserted in connection with the enforcement or attempted enforcement of such subrogation rights including any actions, suits, claims, proceedings, or orders that such subrogation rights were abrogated by any acts of any Indemnitee;

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(c)the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by any Indemnitee;

(d)notice of acceptance hereof and of any action taken or omitted in reliance hereon;

(e)presentment for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or demand under this Agreement;

(f)all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations or repose; and

(g)any limitation on the amount or type of damages, compensation or benefits payable by or for Borrower under workers’ compensation acts, disability benefit acts or other employee benefit acts.

Notwithstanding anything to the contrary contained herein, Borrower hereby agrees to postpone the exercise of any rights of subrogation with respect to any collateral securing the Indebtedness until the Indebtedness shall have been paid in full. No delay by any Indemnitee in exercising any right, power or privilege under this Agreement shall operate as a waiver of any such power, privilege or right.

14. Notices.

All notices, demands and other communications under or concerning this Agreement shall be in writing and given in accordance with the provisions of Section 15.02 (Notice) of the Loan Agreement.

15. Rights Cumulative.

The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which Indemnitee has under the Note, the Loan Agreement, the Security Instrument or any other Loan Document or would otherwise have at law or in equity.

16. Entire Agreement.

This Agreement constitutes the entire agreement of Borrower for the benefit of Lender and supersedes any prior agreements with respect to the subject matter hereof.

17. No Modification Without Writing.

This Agreement may not be terminated or modified in any way nor can any right of Lender or any obligation of Borrower be waived or modified, except by a writing signed by Lender and Borrower.

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18. Severability.

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

19. Governing Law.

This Agreement shall be governed by and construed in accordance with the substantive law of the Property Jurisdiction without regard to the application of choice of law principles that would result in the application of the laws of another jurisdiction.

20. Jurisdiction.

Any controversy arising under or in relation to this Agreement shall be litigated exclusively in the Property Jurisdiction without regard to conflict of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Agreement or any other Loan Document. Borrower irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

21. Successors and Assigns.

Subject to the terms of the Loan Agreement, no Borrower may transfer or assign any of its rights or obligations under this Agreement without the prior written consent of Lender. Subject to the foregoing, this Agreement shall be continuing, irrevocable and binding on each Borrower and its successors and assigns and shall inure to the benefit of Lender and the other Indemnitees, and Lender’s successors and assigns, including to any transferee pursuant to a Foreclosure Event.

22. Time is of the Essence.

Borrower agrees that, with respect to each and every obligation and covenant contained in this Agreement, time is of the essence.

23. Joint and Several (or Solidary) Liability.

If more than one Person executes this Agreement as Borrower, the obligations of such Persons shall be joint and several (solidary instead for purposes of Louisiana law).

24. Construction.

(a)The captions and headings of the sections of this Agreement are for convenience only and shall be disregarded in construing this Agreement.

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(b)Any reference in this Agreement to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Agreement or to a Section or Article of this Agreement.

(c)Any reference in this Agreement to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.

(d)Use of the singular in this Agreement includes the plural and use of the plural includes the singular.

(e)As used in this Agreement, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only, and not a limitation.

(f)Whenever Borrower’s knowledge is implicated in this Agreement or the phrase “to Borrower’s knowledge” is used in this Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

(g)Unless otherwise provided in this Agreement, if Lender’s designation, determination, selection, estimate, action, approval or decision is required, permitted or contemplated hereunder, such designation, determination, selection, estimate, action, approval or decision shall be made or withheld in Lender’s sole and absolute discretion.

(h)All references in this Agreement to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

25. WAIVER OF TRIAL BY JURY.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN BY BORROWER AND LENDER, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, Borrower has signed and delivered this Agreement under seal (where applicable) or has caused this Agreement to be signed and delivered under seal (where applicable) by its duly authorized representative. Where applicable law so provides, Borrower intends that this Agreement shall be deemed to be signed and delivered as a sealed instrument.

BORROWER:

STAR PRESTON HILLS, LLC

a Delaware limited liability company

By:    STEADFAST APARTMENT ADVISOR, LLC

a Delaware limited liability company

Non-Member Manager

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

Address:    c/o Steadfast Companies

18100 Von Karman Avenue, Suite 500

Irvine, California 92612    

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EXHIBIT A

TO

ENVIRONMENTAL INDEMNITY AGREEMENT

The land referred to in this Policy is described as follows:

All that certain lot, piece or parcel of land, with the buildings and improvements thereon erected,

situate, lying and being in the City of Buford, County of Gwinnett, State of Georgia.

TRACT I (Fee Simple):

All that tract or parcel of land lying in Land Lots 146, 147 and 174 of the 7th District, Gwinnett

County, Georgia, being more particularly described as follows:

To find the true place or point of beginning, begin at an iron pin found at a corner common to

Land Lots 146, 147, 174 and 175; thence along the land lot line common to Land Lots 146 and

147 S 31° 02’ 14” E, 52.92 feet to a 3/4 inch open top pipe found, said point being the True

Place or Point of Beginning.

From the point of beginning continue thence along said land lot line common to Land Lots 146

and 147, S 31° 02’ 14” E, 1035.79 feet; thence S 31° 02’ 18” E, 28.38 feet to an iron pin set;

thence leaving said land lot line, N 52° 31’ 00” E, 102.82 feet to a point of curvature of a curve

to the right; thence along said curve in a northeasterly direction having a radius of 731.00 feet,

a length of 83.96 feet and a chord of 83.92 feet, bearing N 55° 48’ 26” E; thence N 59’ 05’ 51”

E, 104.55 feet to the point of curvature of a curve to the right; thence along said curve in a

northeasterly direction having a radius of 175.00 feet, a length of 45.53 feet and a chord of

45.40 feet bearing N 66° 33’ 04” E to a point of compound curvature of a curve to the right;

thence along said curve in a northeasterly direction having a radius of 299.00 feet, a length of

27.28 feet and a chord of 27.27 feet bearing N 76° 37’ 06” E; thence N 79° 13’ 56” E, 27.15

feet; thence N 66° 19’ 55” E, 205.03 feet to an iron pin set located on the southwesterly right of

way of Georgia State Road 20 (a/k/a Buford Drive, right of way varies); thence along the said

right of way of Georgia State Road 20, S 12° 09’ 12” E, 122.67 feet to an iron pin set and a

point on a curve to the left; thence leaving the said right of way along said curve in a

northwesterly direction having a radius of 20.00 feet, a length of 31.43 feet and a chord of

28.30 feet bearing N 57° 10’ 05” W; thence S 77° 49’ 48” W, 186.04 feet to a point of curvature

of a curve to the left; thence along said curve in a southwesterly direction having a radius of

395.00 feet, a length of 121.50 feet and a chord of 121.03 feet bearing S 69° 01’ 04” W; thence

S 47° 32’ 23” W, 156.47 feet; thence S 52° 31’ 00” W, 90.12 feet to an iron pin set located on

the land lot line common to Land Lots 146 and 147; thence along said land lot line S 31° 02’ 18”

E, 292.35 feet to an iron pin set; thence leaving said land lot line, S 59° 41’ 30” W, 1,481.63

feet to an iron pin found; thence

N 30° 44’ 41” W, 684.22 feet to an iron pin found; thence

N 30° 44’ 41” W, 82.25 feet to an iron pin set; thence

N 58° 21’ 47” W, 36.57 feet to an iron pin set; thence

N 31° 42’ 04” E, 391.20 feet to an iron pin set; thence

N 30° 40’ 17” W, 284.41 feet to an iron pin set; thence

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N 59° 12’ 03” E, 309.75 feet to an iron pin found; thence

S 83° 00’ 10” E, 116.09 feet to an iron pin set; thence

N 30° 36’ 19” E, 190.77 feet to an iron pin found; thence

N 61° 43’ 38” E, 26.97 feet to an iron pin found; thence

N 40° 14’ 32” E, 43.07 feet to an iron pin found; thence

N 18° 39’ 23” E, 283.55 feet to an iron pin set; thence

N 27° 37’ 48” E, 68.07 feet; thence

S 60° 03’ 09” E, 108.75 feet; thence

N 57° 10’ 52” E, 181.00 feet to a point located on the land lot line common to Land Lots 146

and 147, said point being the true place or point of Beginning.

TRACT II (Easement):

The appurtenant easement rights benefiting the Land set forth in that certain Declaration of

Easements and Agreements between ATD Ga, LLC PNT Ga, LLC, Buford Apartment Complex,

LLC, Buford-98, Ltd., QuikTrip Corporation and Sentinel Partners, J.V., a joint venture

composed of RS20, Inc. and Buford-98 recorded August 27, 1998, in Book 16659 Page 25,

Gwinnett County, Georgia records, as affected by that certain Driveway Access and

Improvement Agreement between Riverside Realty Preston Hills, LLC, Preston Hills Gardens

Associates, LLC, Brandsmart U.S.A. of Georgia, LLC, Twentieth Century Land Corporation,

QuikTrip Corporation and Storesmart of Buford, LLC recorded on June 26, 2008 in Book 48937

Page 1, and as affected by that certain Amendment to Driveway Access and Improvement

Agreement recorded on June 26, 2008, Book 48937 Page 98.

TRACT III (Easement):

The appurtenant easement rights benefiting the Land set forth in that certain Sewer Easement

granted to Sentinel Partners, J.V., a joint venture composed of RS20, Inc. and Buford 98, Ltd.

recorded on August 27, 1998 in Book 16658 Page 258.

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EX-10.12

EXHIBIT 10.12

ASSIGNMENT OF MANAGEMENT AGREEMENT

This ASSIGNMENT OF MANAGEMENT AGREEMENT (this “Assignment”) dated as of March 10, 2015 is executed by and among (i) STAR PRESTON HILLS, LLC,a Delaware limited liability company (“Borrower”), (ii) BERKELEY POINT CAPITAL LLC, a Delaware limited liability company (“Lender”), and (iii) STEADFAST MANAGEMENT COMPANY, INC., a California corporation (“Manager”).

RECITALS:

A.    Borrower is the owner of a multifamily residential apartment project located in Buford, Georgia (the “Mortgaged Property”).

B.    Manager is the managing agent of the Mortgaged Property pursuant to a Management Agreement dated as of March 10, 2015, between Borrower and Manager (the “Management Agreement”).

C.    Pursuant to that certain Multifamily Loan and Security Agreement dated as of the date hereof, executed by and between Borrower and Lender (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Lender has agreed to make a loan to Borrower in the original principal amount of Thirty Five Million Seven Hundred Thousand and 00/100 Dollars ($35,700,000) (the “Mortgage Loan”), as evidenced by that certain Multifamily Note dated as of the date hereof, executed by Borrower and made payable to the order of Lender in the amount of the MortgageLoan (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Note”).

D.    In addition to the Loan Agreement, the MortgageLoan and the Note are also secured by, among other things, a certain Multifamily Mortgage, Deed of Trust or Deed to Secure Debt dated as of the date hereof, which encumbers the Mortgaged Property (as amended, restated, replaced, supplemented or otherwise modified from time to time, the “Security Instrument”; the Loan Agreement, the Note, the Security Instrument, and all other documents evidencing or securing the Mortgage Loan, the “Loan Documents”).

E.    Borrower is willing to assign its rights under the Management Agreement to Lender as additional security for the MortgageLoan.

F.    Manager is willing to consent to this Assignment and to attorn to Lender upon receipt of notice of the occurrence of an Event of Default (as hereinafter defined) by Borrower under the Loan Documents, and perform its obligations under the Management Agreement for Lender, or its successors in interest, or to permit Lender to terminate the Management Agreement without liability.

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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Borrower, Lender and Manager agree as follows:

AGREEMENTS:

Section 1.Recitals.

The recitals set forth above are incorporated herein by reference as if fully set forth in the body of this Assignment.

Section 2.Assignment.

Borrower hereby transfers, assigns and sets over to Lender, its successors and assigns, all right, title and interest of Borrower in and to the Management Agreement. Manager hereby consents to the foregoing assignment. The foregoing assignment is being made by Borrower to Lender as collateral security for the full payment and performance by Borrower of all of its obligations under the Loan Documents. Although it is the intention of the parties that the assignment hereunder is a present assignment, until the occurrence of any default or failure to perform or observe any obligation, condition, covenant, term, agreement or provision required to be performed or observed by Borrower or any other party under any of the Loan Documents beyond any applicable grace or cure period provided for therein (an “Event of Default”), Borrower may exercise all rights as owner of the Mortgaged Property under the Management Agreement, except as otherwise provided in this Assignment. The foregoing assignment shall remain in effect as long as the MortgageLoan, or any part thereof, remains unpaid, but shall automatically terminate upon the release of the Security Instrument as a lien on the Mortgaged Property.

Section 3.Representations and Warranties.

Borrower and Manager represent and warrant to Lender that (a) the Management Agreement is unmodified and is in full force and effect, (b) the Management Agreement is a valid and binding agreement enforceable against the parties in accordance with its terms, and (c) neither party is in default in performing any of its obligations under the Management Agreement. Borrower further represents and warrants to Lender that it has not executed any prior assignment of the Management Agreement, nor has it performed any acts or executed any other instrument which might prevent Lender from operating under any of the terms and conditions of this Assignment, or which would limit Lender in such operation. Manager further represents and warrants to Lender that (1) Manager has not assigned its interest in the Management Agreement, (2) Manager has no notice of any prior assignment, hypothecation or pledge of Borrower’s interest under the Management Agreement, (3) as of the date hereof, Manager has no counterclaim, right of set-off, defense or like right against Borrower, and (4) as of the date hereof, Manager has been paid all amounts due under the Management Agreement.

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Section 4.Lender’s Right to Cure.

In the event of any default by Borrower under the Management Agreement, Lender shall have the right, but not the obligation, upon notice to Borrower and Manager and until such default is cured, to cure any default and take any action under the Management Agreement to preserve the same. Borrower hereby grants to Lender the right of access to the Mortgaged Property for this purpose, if such action is necessary. Borrower hereby authorizes Manager to accept the performance of Lender in such event, without question. Any advances made by Lender to cure a default by Borrower under the Management Agreement shall become part of the indebtedness and shall bear interest at the Default Rate under the Loan Agreement and shall be secured by the Security Instrument.

Section 5.Covenants.

(a)Borrower Covenants.

Borrower hereby covenants with Lender that, during the term of this Assignment:

(1)Borrower shall not assign Borrower’s interest in the Management Agreement or any portion thereof, or transfer the responsibility for management of the Mortgaged Property from Manager to any other person or entity without the prior written consent of Lender;

(2)Borrower shall not cancel, terminate, surrender, modify or amend any of the terms or provisions of the Management Agreement without the prior written consent of Lender;

(3)Borrower shall not forgive any material obligation of the Manager or any other party under the Management Agreement, without the prior written consent of Lender;

(4)Borrower shall perform all obligations of Borrower under the Management Agreement in accordance with the provisions thereof, any failure of which would constitute a default under the Management Agreement; and

(5)Borrower shall give Lender written notice of any notice or information that Borrower receives which indicates that Manager is terminating the Management Agreement or that Manager is otherwise discontinuing its management of the Mortgaged Property.

Subject to Section 14.01(c) of the Loan Agreement, any of the foregoing acts done or suffered to be done without Lender’s prior written consent shall constitute an Event of Default.

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(b)Affiliated Manager Subordination.

Manager agrees that:

(1)(A) any fees payable to Manager pursuant to the Management Agreement are and shall be subordinated in right of payment, to the extent and in the manner provided in this Assignment, to the prior payment in full of the indebtedness described in the Loan Agreement, and (B) the Management Agreement is and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Security Instrument and the other Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Loan Documents (including all sums advanced for the purposes of (i) protecting or further securing the lien of the Security Instrument, curing Events of Default by Borrower under the Loan Documents or for any other purposes expressly permitted by the Loan Documents, or (ii) constructing, renovating, repairing, furnishing, fixturing or equipping the Mortgaged Property);

(2)if, by reason of its exercise of any other right or remedy under the Management Agreement, Manager acquires by right of subrogation or otherwise a lien on the Mortgaged Property which (but for this Section 5(b)) would be senior to the lien of the Security Instrument, then, in that event, such lien shall be subject and subordinate to the lien of the Security Instrument;

(3)until Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager shall be entitled to retain for its own account all payments made under or pursuant to the Management Agreement;

(4)after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, it will not accept any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent;

(5)if, after Manager receives notice (or otherwise acquires actual knowledge) of an Event of Default, Manager receives any payment of fees under the Management Agreement, or if Manager receives any other payment or distribution of any kind from Borrower or from any other person or entity in connection with the Management Agreement which Manager is not permitted by this Assignment to retain for its own account, such payment or other distribution will be received and held in trust for Lender and unless Lender otherwise notifies Manager, will be promptly remitted, in cash or readily available funds, to Lender, properly endorsed to Lender, to be applied to the principal of, interest on and other amounts due under the Loan Documents evidencing and securing the Loan in such order and in such manner as Lender shall determine in its sole and absolute discretion. Manager hereby irrevocably designates, makes, constitutes and appoints Lender (and all persons or entities designated by Lender) as Manager’s true and lawful attorney in fact with power to endorse the name of Manager upon any checks representing payments referred to in this Section 5(b), which power of attorney is coupled with an interest and cannot be revoked, modified or amended without the written consent of Lender;

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(6)Manager shall notify (via telephone or email, followed by written notice) Lender of Manager’s receipt from any person or entity other than Borrower of a payment with respect to Borrower’s obligations under the Loan Documents, promptly after Manager obtains knowledge of such payment; and

(7)during the term of this Assignment, Manager will not commence or join with any other creditor in commencing any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings with respect to Borrower, without Lender’s prior written consent.

Section 6.Lender’s Rights Upon an Event of Default.

(a)Upon receipt by Manager of written notice from Lender that an Event of Default has occurred and is continuing, Lender shall have the right to exercise all rights as owner of the Mortgaged Property under the Management Agreement.

(b)Borrower agrees that after Borrower receives notice (or otherwise has actual knowledge) of an Event of Default, it will not make any payment of fees under or pursuant to the Management Agreement without Lender’s prior written consent.

Section 7.Termination of Management Agreement.

After the occurrence and during the continuance of an Event of Default, Lender (or its nominee) shall have the right any time thereafter to terminate the Management Agreement, without cause and without liability, by giving written notice to Manager of its election to do so. Lender’s notice shall specify the date of termination, which shall not be less than thirty (30) days after the date of such notice.

Section 8.Books and Records.

On the effective date of termination of the Management Agreement, Manager shall turn over to Lender all books and records relating to the Mortgaged Property (copies of which may be retained by Manager, at Manager’s expense), together with such authorizations and letters of direction addressed to tenants, suppliers, employees, banks and other parties as Lender may reasonably require. Manager shall cooperate with Lender in the transfer of management responsibilities to Lender or its designee. A final accounting of unpaid fees (if any) due to Manager under the Management Agreement shall be made within sixty (60) days after the effective date of termination, but Lender shall not have any liability or obligation to Manager for unpaid fees or other amounts payable under the Management Agreement which accrue before Lender (or its nominee) acquires title to the Mortgaged Property, or Lender becomes a mortgagee in possession.

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Section 9.Notice.

(a)Process of Serving Notice.

All notices under this Assignment shall be:

(1)inwriting and shall be:

(A)delivered, in person;

(B)mailed, postage prepaid, either by registered or certified delivery, return receipt requested;

(C)sent by overnight courier; or

(D)sent by electronic mail with originals to follow by overnight courier;

(2)addressed to the intended recipient at its respective address set forth at the end of this Assignment; and

(3)deemed given on the earlier to occur of:

(A)    the date when the notice is received by the addressee; or

(B)    if the recipient refuses or rejects delivery, the date on which the notice is so refused or rejected, as conclusively established by the records of the United States Postal Service or any express courier service.

(b)Change of Address.

Any party to this Assignment may change the address to which notices intended for it are to be directed by means of notice given to the other parties to this Assignment in accordance with this Section 9.

(c)Default Method of Notice.

Any required notice under this Assignment which does not specify how notices are to be given shall be given in accordance with this Section 9.

(d)Receipt of Notices.

Borrower, Manager and Lender shall not refuse or reject delivery of any notice given in accordance with this Assignment. Each party is required to acknowledge, in writing, the receipt of any notice upon request by the other party.

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Section 10.Counterparts.

This Assignment may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall constitute one and the same instrument.

Section 11.Governing Law; Venue and Consent to Jurisdiction.

(a)Governing Law.

This Assignment shall be governed by the laws of the jurisdiction in which the Mortgaged Property is located (the “Property Jurisdiction”), without regard to the application of choice of law principles.

(b)Venue; Consent to Jurisdiction.

Any controversy arising under or in relation to this Assignment shall be litigated exclusively in the Property Jurisdiction without regard to conflicts of laws principles. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Assignment. Borrower irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

Section 12.Severability; Amendments.

The invalidity or unenforceability of any provision of this Assignment shall not affect the validity or enforceability of any other provision of this Assignment, all of which shall remain in full force and effect. This Assignment contains the complete and entire agreement among the parties as to the matters covered, rights granted and the obligations assumed in this Assignment. This Assignment may not be amended or modified except by written agreement signed by the parties hereto.

Section 13.Construction.

(a)The captions and headings of the sections of this Assignment are for convenience only and shall be disregarded in construing this Assignment.

(b)Any reference in this Assignment to an “Exhibit” or “Schedule” or a “Section” or an “Article” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an exhibit or schedule attached to this Assignment or to a Section or Article of this Assignment. All exhibits and schedules attached to or referred to in this Assignment, if any, are incorporated by reference into this Assignment.

(c)Any reference in this Assignment to a statute or regulation shall be construed as referring to that statute or regulation as amended from time to time.

(d)Use of the singular in this Assignment includes the plural and use of the plural includes the singular.

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(e)As used in this Assignment, the term “including” means “including, but not limited to” or “including, without limitation,” and is for example only and not a limitation.

(f)Whenever Borrower’s knowledge is implicated in this Assignment or the phrase “to Borrower’s knowledge” or a similar phrase is used in this Assignment, Borrower’s knowledge or such phrase(s) shall be interpreted to mean to the best of Borrower’s knowledge after reasonable and diligent inquiry and investigation.

(g)Unless otherwise provided in this Assignment, if Lender’s approval, designation, determination, selection, estimate, action or decision is required, permitted or contemplated hereunder, such approval, designation, determination, selection, estimate, action or decision shall be made in Lender’s sole and absolute discretion.

(h)All references in this Assignment to a separate instrument or agreement shall include such instrument or agreement as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

(i)“Lender may” shall mean at Lender’s discretion, but shall not be an obligation.

[Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, Borrower, Lender and Manager have signed and delivered this Assignment under seal (where applicable) or have caused this Assignment to be signed and delivered under seal (where applicable), each by its duly authorized representative. Where applicable law so provides, Borrower, Lender and Manager intend that this Assignment shall be deemed to be signed and delivered as a sealed instrument.

BORROWER:

STAR PRESTON HILLS, LLC

a Delaware limited liability company

By:    STEADFAST APARTMENT ADVISOR, LLC

a Delaware limited liability company

Non-Member Manager

By:	/s/ Kevin J. Keating	(SEAL)
Name:	Kevin J. Keating
Title:	Treasurer

Address:    c/o Steadfast Companies

18100 Von Karman Avenue, Suite 500

Irvine, California 92612        

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LENDER:

BERKELEY POINT CAPITAL LLC

a Delaware limited liability company

By:	/s/ Deborah Demoney	(SEAL)
	Deborah Demoney
	Assistant Vice President

By:	Heidi Marrin	(SEAL)
	Heidi Marrin
	Director

Address:    4550 Montgomery Avenue

Suite 1100

Bethesda, Maryland 20814

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MANAGER:

STEADFAST MANAGEMENT COMPANY, INC.

a California corporation

By:	/s/ Ana Marie del Rio	(SEAL)
Name:	Ana Marie del Rio
Title:	Vice President

Address:    c/o Steadfast Companies

18100 Von Karman Avenue,

Suite 500

Irvine, California 92612

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EX-99.1

EXHIBIT 99.1

18100 Von Karman Avenue Suite 500 Irvine, CA 92612 949.852.0700

NEWS RELEASE

Contact: Jennifer Franklin

Phone: 949.333.1721

Email: jfranklin@steadfastcmg.com

STEADFAST APARTMENT REIT, INC. ANNOUNCES

RESULTS FOR THE YEAR ENDED DECEMBER 31, 2014

Irvine, Calif., March 13, 2015 — Steadfast Apartment REIT, Inc. (the “Company”) announced today its operating results for the year ended December 31, 2014.

For the year ended December 31, 2014, the Company had total revenues of $7.3 million while net loss was $11.8 million. Total assets of the Company grew from $0.2 million at December 31, 2013 to $306.5 million at December 31, 2014.

Highlights:

The Company:

• Reported modified funds from operations (“MFFO”), as defined by the Investment Program Association, of $1.0 million for the year ended December 31, 2014. (See the reconciliation of MFFO to net loss and accompanying notes contained within this release for additional information on how the Company calculates MFFO.)

• Reported net operating income (“NOI”) of $4.2 million for the year ended December 31, 2014. (See the reconciliation of NOI to net loss and accompanying notes contained within this release for additional information on how the Company calculates NOI.)

• Acquired seven multifamily properties with a total of 2,495 apartment homes for an aggregate purchase price of $274.6 million during the year ended December 31, 2014.

• Had $196.9 million of variable rate debt with a weighted average interest rate of 1.99% as of December 31, 2014, which represented the Company's total outstanding debt as of December 31, 2014.

• Reported net cash used in operating activities of $3.9 million for the year ended December 31, 2014. Net cash used in investing activities was $277.8 million million for the year ended December 31, 2014.

• Reported net cash provided by financing activities of $310.1 million for the year ended December 31, 2014, which included $0.9 million of distributions paid, net of $0.7 million in non-cash distributions paid pursuant to the Company's distribution reinvestment plan.

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• Raised $117.9 million in net proceeds from the sale of 9.2 million shares of common stock in its public offering during the year ended December 31, 2014.

Recent Property Acquisitions:

As previously announced, in February and March 2015 the Company acquired two additional multifamily properties for an aggregate purchase price of $76 million resulting in a total of nine owned properties with 3,151 apartment homes with an aggregate purchase price of approximately $350.6 million. The Company has an active pipeline of potential property acquisitions. The acquisition of any of these properties is subject to substantial conditions and there is no guaranty that the Company will be successful in acquiring any of these properties.

"Steadfast Apartment REIT is off to a great start," said Ella Neyland, President of the Company. "We continue our business strategy of buying in markets where people are moving to find jobs. Job growth is the major driver of demand for apartments and our markets have above average job growth. Home ownership rates are also at the lowest levels in 20 years. For example, last year there were two million renter households created, which was largely driven by the millennial generation. We believe as millenials are getting married later and having children later, they view apartment living as a lifestyle of choice. Moreover, baby boomers are also increasingly taking that same approach to a low maintenance lifestyle."

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About Steadfast Apartment REIT

Steadfast Apartment REIT is a real estate investment trust that was formed to acquire and operate a diverse portfolio of well-positioned, institutional-quality apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles.

Steadfast Apartment REIT is sponsored by Steadfast REIT Investments LLC, an affiliate of Steadfast Companies, an Orange County, Calif.-based group of affiliated real estate investment and operating companies that acquire, develop and manage real estate in the U.S. and Mexico.

This release contains certain forward-looking statements. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may” and “should” and their variations identify forward-looking statements. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this release. Such factors include those described in the Risk Factors section of the Annual Report on Form 10-K for Steadfast Apartment REIT, Inc. Forward-looking statements in this document speak only as of the date on which such statements were made, and the company undertakes no obligation to update any such statements that may become untrue because of subsequent events. Such forward-looking statements are subject to the safe harbor protection for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES.

###

FINANCIAL TABLES, NOTES AND EXHIBITS FOLLOW

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STEADFAST APARTMENT REIT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,
	2014			2013
ASSETS
Assets:
Real Estate:
Land	$	34,558,732		$	—
Building and improvements	234,259,502			—
Tenant origination and absorption costs	5,578,528			—
Total real estate, cost	274,396,762			—
Less accumulated depreciation and amortization	(4,409,133		)	—
Total real estate, net	269,987,629			—
Cash and cash equivalents	28,595,826			203,500
Restricted cash	2,792,589			—
Rents and other receivables	2,056,147			—
Deferred financing costs and other assets, net	3,038,306			—
Total assets	$	306,470,497		$	203,500
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities	$	3,386,648		$	74,771
Mortgage notes payable	196,930,600			—
Distributions payable	608,904			—
Due to affiliates	1,499,869			11,873
Total liabilities	202,426,021			86,644
Commitments and contingencies
Redeemable common stock	660,089			—
Stockholders’ Equity:
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding	—			—
Common stock, $0.01 par value per share; 999,999,000 shares authorized, 9,179,536 and 13,500 shares issued and outstanding at December 31, 2014 and 2013, respectively	91,795			135
Convertible stock, $0.01 par value per share; 1,000 shares authorized, issued and outstanding as of December 31, 2014 and 2013, respectively	10			10
Additional paid-in capital	117,443,760			203,355
Cumulative distributions and net losses	(14,151,178		)	(86,644		)
Total stockholders’ equity	103,384,387			116,856
Total liabilities and stockholders’ equity	$	306,470,497		$	203,500

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STEADFAST APARTMENT REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Year Ended December 31, 2014			Period from August 22, 2013 (Inception) to December 31, 2013
Revenues:
Rental income	$	6,651,206		$	—
Tenant reimbursements and other	604,060			—
Total revenues	7,255,266			—
Expenses:
Operating, maintenance and management	1,793,769			—
Real estate taxes and insurance	1,011,078			—
Fees to affiliates	5,678,614			—
Depreciation and amortization	5,316,510			—
Interest expense	1,589,848			—
General and administrative expenses	1,670,171			86,644
Acquisition costs	2,035,731			—
Total expenses	19,095,721			86,644
Net loss	$	(11,840,455	)	$	(86,644	)
Loss per common share — basic and diluted	$	(4.74	)	$	(7.06	)
Weighted average number of common shares outstanding — basic and diluted	2,495,771			12,273

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Steadfast Apartment REIT, Inc.

Non-GAAP Measures - FFO and MFFO Reconciliation

For the Year Ended December 31, 2014

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, has promulgated a measure known as funds from operations (FFO), which the Company believes to be an appropriate supplemental measure to reflect the operating performance of a real estate investment trust (REIT). The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to the Company's net income or loss as determined under GAAP.

The Company defines FFO, a non-GAAP financial measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property and non-cash impairment charges of real estate related investments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In particular, the Company believes it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of the Company's operations, it could be difficult to recover any impairment charges. The Company's FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. The Company believes that since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, the Company believes that the use of FFO, which excludes the impact of

6

real estate related depreciation and amortization, provides a more complete understanding of its performance to investors and to management, and when compared year over year, reflects the impact on its operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. However, FFO, and modified funds from operations (MFFO) as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating the Company's operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.

Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses. The Company's management believes these fees and expenses do not affect the Company's overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, the Company believes that public, non-listed REITs, are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases. The Company's board of directors will determine to pursue a liquidity event when it believes that the then-current market conditions are favorable. However, the board of directors does not anticipate evaluating a liquidity event (i.e., a listing of the Company's common stock on a national exchange, a merger or sale of the Company or another similar transaction) until five years after the completion of its offering stage. Thus, as a limited life REIT the Company will not continuously purchase assets and will have a limited life.

Due to the above factors and other unique features of publicly registered, non-listed REITs, the Investment Program Association (IPA), an industry trade group, has standardized a measure known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered non-listed REITs and which the Company believes to be another appropriate supplemental measure to reflect the operating performance of a public, non-listed REIT having the characteristics described above. MFFO is not equivalent to net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if the Company does not continue to operate with a limited life and targeted exit strategy, as currently intended. The Company believes that, because MFFO excludes costs that it considers more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect its operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of its operating performance after the period in which it is acquiring properties and once its portfolio is in place. By providing MFFO, the Company believes it is presenting useful information that assists investors and analysts to better assess the sustainability of its operating performance after its

7

offering has been completed and its properties have been acquired. The Company also believes that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, the Company believes MFFO is useful in comparing the sustainability of its operating performance after its offering and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of the Company's operating performance after its offering has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on the Company's operating performance during the periods in which properties are acquired.

The Company defines MFFO, a non-GAAP financial measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the Practice Guideline), issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While the Company relies on its external advisor for managing interest rate, hedge and foreign exchange risk, the Company does not retain an outside consultant to review all of its hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of the Company's operations, the Company believes it is appropriate to exclude such non-recurring gains and losses in calculating MFFO, as such gains and losses are not reflective of on-going operations.

The Company's MFFO calculation complies with the IPA’s Practice Guideline described above. In calculating MFFO, the Company excludes acquisition related expenses, amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Under GAAP, acquisition fees and expenses are characterized as operating expenses in determining operating net income. These expenses are paid in cash by the Company. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the Company, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. In the event that proceeds from the Company's initial

8

public offering are not available to fund its reimbursement of acquisition fees and expenses incurred by its advisor, such fees and expenses will need to be reimbursed to the advisor from other sources, including debt, operational earnings or cash flow, net proceeds from the sale of properties, or from ancillary cash flows. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of the Company's business plan to generate operational income and cash flow to fund distributions to stockholders. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, the Company views fair value adjustments of derivatives and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance.

The Company's management uses MFFO and the adjustments used to calculate MFFO in order to evaluate the Company's performance against other public, non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if the Company does not continue to operate in this manner. The Company believes that its use of MFFO and the adjustments used to calculate MFFO allow the Company to present its performance in a manner that reflects certain characteristics that are unique to public, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. By excluding expensed acquisition costs, the use of MFFO provides information consistent with the Company's management’s analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to the Company's current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, the Company believes MFFO provides useful supplemental information.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance to that of other public, non-listed REITs, although it should be noted that not all public, non-listed REITs calculate FFO and MFFO the same way, so comparisons with other public, non-listed REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of the Company's performance, as an alternative to cash flows from operations as an indication of the Company's liquidity, or indicative of funds available to fund the Company's cash needs, including the Company's ability to make distributions to stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of the Company's performance. MFFO has limitations as a performance measure in an offering such as the Company's where the price of a share of common stock is a stated value and there is no regular net asset value determinations during the offering stage and for a period thereafter. MFFO is useful in assisting the Company's management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a

9

useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining MFFO.

Neither the SEC, NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that the Company uses to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and in response to such standardization the Company may have to adjust its calculation and characterization of FFO or MFFO accordingly.

The Company's calculation of FFO and MFFO is presented in the following table for the year ended December 31, 2014 (amounts unaudited):

	Year Ended December 31, 2014
Reconciliation of net loss to MFFO:
Net loss	$	(11,840,455	)
Depreciation of real estate assets	2,206,072
Amortization of lease-related costs	3,110,438
FFO	(6,523,945		)
Acquisition fees and expenses (1)(2)	6,959,186
Unrealized loss on derivative instruments	578,014
MFFO	$	1,013,255

________________

(1) By excluding expensed acquisition costs, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management's analysis of the investing and operating performance of the Company's properties. Acquisition fees and expenses include payments to the Company's advisor or third parties. Acquisition fees and expenses under GAAP are considered operating expenses and as expenses included in the determination of net income (loss) and income from continuing operations, both of which are performance measures under GAAP. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the Company, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. In the event that proceeds from the Company's initial public offering are not available to fund the Company's reimbursement of acquisition fees and expenses incurred by the Company's advisor, such fees and expenses will need to be reimbursed to the advisor from other sources, including debt, operational earnings or cash flow, net proceeds from the sale of properties, or from ancillary cash flows. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of the Company's business plan to generate operational income and cash flow to fund distributions to its stockholders.

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(2) Acquisition fees and expenses for the year ended December 31, 2014 include acquisition fees of $2,954,149 and loan coordination fees of $1,969,306, that are recorded in fees to affiliates in the accompanying statements of operations. Acquisition fees and expenses for the year ended December 31, 2014 also include acquisition expenses of $2,035,731 that are recorded in acquisition costs in the accompanying consolidated statements of operations.

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Steadfast Apartment REIT, Inc.

Non-GAAP Measures - Net Operating Income

For the Year Ended December 31, 2014

Net Operating Income (NOI), is a non-GAAP financial measure of performance. NOI is used by investors and the Company's management to evaluate and compare the performance of the Company's properties and to determine trends in earnings and to compute the fair value of the Company's properties as it is not affected by (1) the cost of funds of the Company, (2) acquisition costs of the Company, (3) non-operating fees paid to affiliates, (4) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, or (5) general and administrative expenses and other gains and losses that are specific to the Company. The cost of funds is eliminated from net income because it is specific to the particular financing capabilities and constraints of the Company. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by the Company regarding the appropriate mix of capital which may have changed or may change in the future. Acquisition costs and non-operating fees to affiliates are eliminated because they do not reflect continuing operating costs of the Company. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in the Company's multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing the Company's operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. The Company believes that eliminating these costs from net (loss) income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating its properties as well as trends in occupancy rates, rental rates and operating costs.

However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, acquisition costs, certain fees paid to affiliates, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.

NOI is a measure of the operating performance of the Company's properties but does not measure the Company's performance as a whole. NOI is therefore not a substitute for net (loss) income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net (loss) income computed in accordance with GAAP. Other companies may

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use different methods for calculating NOI or similarly entitled measures and, accordingly, the Company's NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as the Company does.

The following is a reconciliation of the Company's NOI to net loss for the three months and year ended December 31, 2014 (amounts unaudited):

	Three Months Ended December 31, 2014			Year Ended December 31, 2014
Net loss	$	(7,481,532	)	$	(11,840,455	)
Fees to affiliates (1)	3,767,438			5,396,282
Depreciation and amortization	3,962,138			5,316,510
Interest expense	1,184,379			1,589,848
General and administrative expenses	591,336			1,670,171
Acquisition costs	1,095,196			2,035,731
Net operating income	$	3,118,955		$	4,168,087

________________

(1) Fees to affiliates for the three months and year ended December 31, 2014 excludes property management fees of $148,515 and $206,553 and other fees of $49,458 and $75,779, respectively, that are included in NOI.

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EXHIBIT A

Monthly Portfolio Snapshot	December 2014
Property	Location	Total Units	Non-Revenue Units	Rentable Units	Average Occupied Units	Average % Occupied	% Leased
Multi-Family
Villages at Spring Hill Apartments	Spring Hill, TN	176	1	175	172	97.7%	99.9%
Harrison Place Apartments	Indianapolis, IN	307	1	306	286	93.2%	96.3%
Club at Summer Valley	Austin, TX	260	1	259	241	92.7%	95.0%
Terrace Cove Apartment Homes	Austin, TX	304	2	302	286	94.1%	98.6%
The Residences on McGinnis Ferry	Suwanee, GA	696	5	691	655	94.1%	95.8%
The 1800 at Barrett Lakes	Kennesaw, GA	500	1	499	469	93.8%	95.3%
The Oasis	Colorado Springs, CO	252	1	251	241	95.6%	96.0%
Total		2,495	12	2,483	2,350	94.2%	96.7%

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Monthly Portfolio Snapshot	NOVEMBER 2014
Property	Location	Total Units	Non-Revenue Units	Rentable Units	Average Occupied Units	Average % Occupied	% Leased
Multi-Family
Villages at Spring Hill Apartments	Spring Hill, TN	176	1	175	172	97.7%	99.7%
Harrison Place Apartments	Indianapolis, IN	307	1	306	286	93.2%	95.3%
Club at Summer Valley	Austin, TX	260	1	259	244	93.8%	95.4%
Terrace Cove Apartment Homes	Austin, TX	304	2	302	284	93.4%	95.8%
The Residences on McGinnis Ferry	Suwanee, GA	696	4	692	666	95.7%	97.0%
The 1800 at Barrett Lakes	Kennesaw, GA	500	1	499	474	94.8%	95.6%
Total		2,243	10	2,233	2,126	94.8%	96.5%

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Monthly Portfolio Snapshot	OCTOBER 2014
Property	Location	Total Units	Non-Revenue Units	Rentable Units	Average Occupied Units	Average % Occupied	% Leased
Multi-Family
Villages at Spring Hill Apartments	Spring Hill, TN	176	1	175	171	97.2%	99.7%
Harrison Place Apartments	Indianapolis, IN	307	1	306	287	93.5%	95.4%
Club at Summer Valley	Austin, TX	260	1	259	246	94.6%	96.7%
Terrace Cove Apartment Homes	Austin, TX	304	2	302	290	95.4%	98.0%
The Residences on McGinnis Ferry	Suwanee, GA	696	4	692	674	96.8%	98.5%
Total		1,743	9	1,734	1,668	95.7%	97.7%

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DEFINITIONS OF PORTFOLIO PERFORMANCE METRICS

Total Units: Number of units per property at the end of the reporting period.

Non-Revenue Units: Number of model units or other non-revenue administrative units at the end of the reporting period.

Rentable Units: Total Units less Non-Revenue Units at the end of the reporting period.

Average Occupied Units: Number of units occupied based on a weekly average during the reporting period.

Average Percent Occupied: Percent of units occupied (Average Occupied Units divided by Total Units).

Percent Leased: Percent of Total Units leased at the end of the reporting period (number of leased units divided by Total Units).

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EX-99.2

	EXHIBIT 99.2
	18100 Von Karman Avenue Suite 500 Irvine, CA 92612 949.852.0700

NEWS RELEASE

Contact:    Jennifer Franklin

Phone:        949.333.1721

Email:        jfranklin@steadfastcmg.com

STEADFAST APARTMENT REIT ACQUIRES A $51 MILLION

APARTMENT COMMUNITY NEAR ATLANTA Represents REIT’s Second Atlanta-area Acquisition

IRVINE, Calif., March 13, 2015 – Steadfast Apartment REIT announced today the acquisition of Preston Hills at Mill Creek, a 464-unit apartment community in Buford, Ga., just 35 miles from downtown Atlanta, for $51 million. The REIT has now invested over $350 million in nine apartment communities in six Midwestern and Southern States.

“Preston Hills at Mill Creek is in a prime location that offers residents easy access to Atlanta’s growing economy. Additionally, it is proximate to the Mall of Georgia, Coolray Field and Lake Lanier for a high-end suburban lifestyle experience,” said Ella Shaw Neyland, president of Steadfast Apartment REIT. “We believe these factors will continue to attract more residents to the area, which will bode well for this community.”

Preston Hills at Mill Creek was constructed in 2000 on 43 acres with 17 three- and four-story apartment buildings, a clubhouse and two amenity buildings. The apartment community is currently just over 90% occupied, and features one-, two‐ and three-bedroom floor plans that range from 882 to 1,426 square feet. The apartment homes are fitted with vaulted ceilings, fully equipped kitchens with breakfast bars, crown molding, ceiling fans, private balconies/patios and Roman bathtubs in select units. Average in-place rents are $899.

A varied amenity package completes the Preston Hills at Mill Creek living experience, including two resort-style swimming pools, a clubhouse, tennis court, two fitness centers, volleyball court, detached garages, business center, playground, spa and valet dry cleaning.

Steadfast Apartment REIT will initiate a moderate revitalization strategy at Preston Hills at Mill Creek that will encompass appliance upgrades, kitchen and bathroom fixture replacements, new ceiling fans and lighting, and new hardware throughout the units. In addition to interior improvements, a comprehensive exterior value enhancement program will renovate the clubhouse, repair and upgrade the pools, replace signage and refresh the landscaping.

Located within the thriving employment center along the I-85 and Highway 316 corridor, Preston Hills at Mill Creek is supported by a diverse job market and growing population. An influx of recent high-profile employers, including two Fortune 500 companies, educational institutions, medical centers and retail have moved to the area—bolstering the long-term apartment outlook.

Preston Hills at Mill Creek represents Steadfast Apartment REIT’s second Atlanta-area apartment community, previously acquiring the Residences on McGinnis Ferry in nearby Suwanee, Ga. in October 2014.

About Steadfast Apartment REIT

Steadfast Apartment REIT intends to acquire and operate a diverse portfolio of well-positioned, institutional-quality apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles.

Steadfast Apartment REIT is sponsored by Steadfast REIT Investments LLC, an affiliate of Steadfast Companies, an Orange County, Calif.-based group of affiliated real estate investment and operating companies that acquire, develop and manage real estate in the U.S. and Mexico.

This release contains certain forward-looking statements. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements and you should not place undue reliance on any such statements. A number of important factors could cause actual results to differ materially from the forward-looking statements contained in this release. Such factors include those described in the Risk Factors sections of Steadfast Apartment REIT annual report on Form 10-K and other reports filed with the Securities and Exchange Commission. Forward-looking statements in this document speak only as of the date on which such statements were made, and the company undertakes no obligation to update any such statements that may become untrue because of subsequent events. Such forward-looking statements are subject to the safe harbor protection for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES.