EXHIBIT 10.3

PROPERTY MANAGEMENT AGREEMENT

THIS PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into
as of May 22, 2014 (the “Effective Date”), by and between STAR AT SPRING HILL,
LLC,  a  Delaware limited liability company (“Owner”), and STEADFAST MANAGEMENT
COMPANY, INC., a  California corporation (“Manager”). 

Article 1  

DEFINITIONS

 

Section 1.1 Definitions.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 Article 3(l).

“Capital Budget” has the meaning given in Article 3(l).

“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

 

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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 2.1 Appointment.    

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 2.2 Owner’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 2.3 Leasing.  Manager shall perform all promotional, leasing and
management activities required to lease apartment units in the
Property.  Throughout the term of

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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 2.4 Manager’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 3.1 Expense 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:

(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

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(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 3.2 Covenants 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.

Section 3.3 Employment 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

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to Owner and the Property, provided such reduced rents are reflected in the
Annual Business Plan.

Section 3.4 Utility 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 3.5 Maintenance 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.

Section 3.6 Supervision 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.   

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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 3.7 Insurance.    

 

(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.

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

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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 Article 3(f) 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 Article 3(e), any deductible amount
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 3.8 Collection 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

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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 3.9 Manager Disbursements.

(a) Manager’s Compensation and Reimbursements.  From Gross Collections, Manager
shall be authorized to retain and pay  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,   the
amounts reimbursable to Manager under this Agreement,  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  amounts otherwise due and payable as operating expenses of the
Property authorized to be incurred under the terms of this Agreement.

(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 3.10 Use 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

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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 3.11 Annual 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”).

(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 3.12 Records, Reporting. 

Manager shall maintain at the regular business office of Manager or at such
other address as Manager shall advise Owner in writing, separate

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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 3.13 Financial Reports.

(a) Monthly Reports.  On or before the fifteenth (15th) 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.

(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 3.14 Compliance 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

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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 4.1 Fees 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.    

Section 4.2 Term. 

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 4.3 Termination 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 4.4 Duties 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
Article 3(p) 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 Article 3(q), 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.

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Article 5  

PROCEDURES FOR HANDLING RECEIPTS AND OPERATING CAPITAL

Section 5.1 Security 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.

Section 5.2 Separation 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 5.3 Depository 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 5.4 Working 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 5.5 Authorized 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

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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 6.1 Assignment. 

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 6.2 Notices.    

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 at Spring Hill, 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 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 6.3 Entire 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 6.4 No 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 6.5 No 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 6.6 Severability. 

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 6.7 Captions, Plural Terms. 

Unless the context clearly requires otherwise, the singular number herein shall
include the plural, the plural number shall include the singular and

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any gender shall include all genders.  Titles and captions herein shall not
affect the construction of this Agreement.

Section 6.8 Attorneys’ 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 6.9 Signs. 

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 6.10 Survival 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.

Section 6.11 Governing 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 6.12 Competitive 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 6.13 Set 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 6.14 Notice 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 6.15 Counterparts.

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 AT SPRING HILL, 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/ William C. Stoll

        William C. Stoll, Vice President

 

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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

 

Villages at Spring Hill Apartments is located at 200 Kedron Parkway,  Spring
Hill,  Tennessee, in the County of Maury, and described as follows:

 

The Property is comprised of 16 buildings with 176 units.    Site amenities
include clubhouse, fitness center, swimming pool, volleyball and tennis courts,
picnic area, car wash area, and a pet park.  It is situated on 17.60 acres and
it was built in 1994.

 

 

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