Document:

EXHIBIT 10.5

 

ENVIRONMENTAL INDEMNITY AGREEMENT

 

 

ENVIRONMENTAL INDEMNITY
AGREEMENT (the “Agreement”) made as of the 5th day of April, 2012 by DT STONE RIDGE, LLC, a South Carolina
limited liability company, having an office at 11132 Ventura Boulevard, Suite 415, Studio City, California 91604 (“Borrower”),
and DT COLUMBIA SC MANAGEMENT, LLC, a Delaware limited liability company, JAMES MARKEL, an individual, DANIEL
MARKEL, an individual, THOMAS GALLOP, an individual, each having an office at 11132 Ventura Boulevard, Suite 415, Studio
City, California 91604 (individually and collectively, jointly and severally, “Principal”; Borrower and Principal hereinafter
collectively referred to as “Indemnitor”), in favor of PRIP STONE RIDGE, LLC, a Delaware limited liability company,
having an office, c/o Paladin Realty Partners, LLC, at 10880 Wilshire Boulevard, Suite 1400, Los Angeles, California 90024 (“Indemnitee”),
and other Indemnified Parties (defined below).

 

RECITALS:

 

A.Borrower is the
fee owner of that certain real property located in the City of Columbia, County of Richland and State of South Carolina, known
as Stone Ridge Apartments and more particularly described in Exhibit A attached hereto (said real property, together with any real
property hereafter encumbered by the lien of the Security Instrument (as defined in the Note), being herein collectively referred
to as the “Land”; the Land, together with all structures, buildings and improvements now or hereafter located on the
Land, being collectively referred to as the “Property”).

 

B.Indemnitee is
prepared to make a loan (the “Loan”) to Borrower in the principal amount of $3,500,000, to be evidenced by a certain
promissory note of even date herewith in the principal amount of $3,500,000 made by Borrower to Indemnitee (the “Note”)
and secured by, among other things the Security Instrument (as defined in the Note) which will encumber the Property.

 

C.Indemnitee is
unwilling to make the Loan unless each Indemnitor, jointly, severally and unconditionally agrees to provide the indemnification,
representations, warranties, and covenants and other matters described in this Agreement for the benefit of Indemnified Parties.

 

D.Each Indemnitor
is a member of Borrower and thus will derive substantial benefit from the Loan. Indemnitor enters into this Agreement to induce
Indemnitee to make the Loan.

 

AGREEMENT

 

NOW THEREFORE,
in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Indemnitor hereby represents, warrants, covenants and agrees for the benefit of Indemnified Parties as follows:

 

1.Environmental
Representations and Warranties. To the best of each Indemnitor’s knowledge, after due inquiry, (a) there are no Hazardous
Substances (defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in compliance
with all Environmental Laws (defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Indemnitee in
writing pursuant to the Environmental Report (as defined in the Security Instrument); (b) there are no past, present or threatened
Releases (defined below) of Hazardous Substances in, on, under or from the Property except as described in the Environmental Report;
(c) there is no threat of any Release of Hazardous Substances migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection
with the Property, except as described in the Environmental Report; (e) Indemnitor does not know of, and has not received, any
written notice or other communication from any person or entity (including but not limited to a governmental entity) relating to
Hazardous Substances or Remediation (defined below) thereof, of possible liability of any person or entity pursuant to any Environmental
Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings
in connection with any of the foregoing; and (f) Indemnitor has truthfully and fully provided to Indemnitee, in writing, any and
all information relating to conditions in, on, under or from the Property that is known to any such Indemnitor and that is contained
in files and records of any such Indemnitor, including but not limited to any reports relating to Hazardous Substances in, on,
under or from the Property and/or to the environmental condition of the Property.

 

    	

    	 

    
 

 

2.Environmental
Covenants. Indemnitor covenants and agrees that: (a) all uses and operations on or of the Property, by such Indemnitor or any
other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) there shall
be no Releases of Hazardous Substances in, on, under or from the Property by Indemnitor or anyone controlled by, controlling or
under common control with such Indemnitor; (c) each Indemnitor shall keep the Property free and clear of all liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of Indemnitor or any other person or entity (the
“Environmental Liens”); (d) each Indemnitor shall, at its sole cost and expense, perform any environmental site assessment
or other investigation of environmental conditions in connection with the Property, pursuant to any written request of Indemnitee
(provided that such request is made based upon Indemnitee’s reasonable belief that there are Hazardous Substances in, or
under the Property which are not in compliance with Environmental Laws), and share with Indemnitee the reports and other results
thereof, and Indemnitee and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (e)
each Indemnitor shall, at its sole cost and expense, comply with all reasonable written requests of Indemnitee to (i) reasonably
effectuate Remediation of any condition (including but not limited to a Release of a Hazardous Substance) in, on, under or from
the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv)
take any other reasonable action necessary or appropriate for protection of human health or the environment; (f) each Indemnitor
shall not do or allow any tenant or other user of the Property to do any act that materially increases the dangers to human health
or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off the Property), impairs or may
impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes
waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (g) each Indemnitor shall immediately
notify Indemnitee in writing of (i) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from
or migrating towards the Property; (ii) any non-compliance with any Environmental Laws related in any way to the Property; (iii)
any actual or potential Environmental Lien; (iv) any required or proposed Remediation of environmental conditions relating to the
Property; and (v) any written or oral notice or other communication of which any Indemnitor becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible
liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with the Property,
or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Agreement.

 

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3.Indemnified
Parties’ Rights/Cooperation and Access. Indemnified Parties and any other person or entity designated by Indemnified
Parties (including but not limited to any receiver, any representative of a governmental entity and any environmental consultant),
shall have the right but not the obligation to enter upon the Property at all reasonable times to assess any and all aspects of
the environmental condition of the Property and its use, including but not limited to conducting any environmental assessment or
audit (the scope of which shall be determined in Indemnitee’s sole and absolute discretion) and taking samples of soil, groundwater
or other water, air or building materials, and conducting other invasive testing. Each Indemnitor shall cooperate with and provide
access to Indemnified Parties and any such person or entity designated by Indemnified Parties. All such investigations shall be
performed at Indemnitor’s sole cost and expense.

 

4.Indemnification.
Each Indemnitor covenants and agrees at its sole cost and expense, to protect, defend, indemnify, release and hold Indemnified
Parties harmless from and against any and all Losses (defined below) imposed upon or incurred by or asserted against any Indemnified
Parties and directly or indirectly arising out of or in any way relating to any one or more of the following (except to the extent
the same relate solely to Hazardous Substances first introduced to the Property by anyone other than Indemnitor or its respective
agents or employees following the foreclosure of the Security Instrument (or the delivery and acceptance of a deed in lieu of such
foreclosure), the expiration of any applicable right of redemption and the obtaining by the purchaser at such foreclosure sale
or grantee under such deed of possession of the Property): (a) the past, present or future presence, Release or threatened Release
of any Hazardous Substances in, on, above, or under the Property; (b) any past, present or threatened non-compliance or violations
of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with the Property or operations thereon;
(c) any legal or administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed
in this Agreement; (d) any personal injury, wrongful death, or property or other damage arising under any statutory or common law
or tort law theory concerning Hazardous Substances; and (e) any misrepresentation or inaccuracy in any representation or warranty
or material breach or failure to perform any covenants or other obligations in this Agreement or any covenants or other obligations
in the Security Instrument which are related to Hazardous Substances or Environmental Law.

 

5.Duty to Defend
and Attorneys and Other Fees and Expenses. Upon written request by any Indemnified Party, each Indemnitor shall defend and
provide legal representation for such Indemnified Party with respect to any of the matters referenced in Section 4 above (if requested
by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified
Parties. Notwithstanding the foregoing, any Indemnified Parties may, in their sole and absolute discretion, engage their own attorneys
and other professionals to defend or assist them with respect to such matters, and, at the option of Indemnified Parties, their
attorneys shall control the resolution of such matters. Upon demand, each Indemnitor shall pay or, in the sole and absolute discretion
of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in connection therewith.

 

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6.Definitions.
As used in this Agreement, the following terms shall have the following meanings:

 

The term “Hazardous
Substances” includes but is not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of
similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human
health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials,
mold, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives.

 

The term “Environmental
Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as
well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability
for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual
or threatened danger to human health or the environment. The term “Environmental Law” includes, but is not limited
to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state
or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation
Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks);
the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water
Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term “Environmental
Law” also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules,
regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval
of a governmental authority of the environmental condition of the property; requiring notification or disclosure of Releases of
Hazardous Substances or other environmental condition of the Property to any governmental authority or other person or entity,
whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection
with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the
Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition
or use of the Property.

 

The term “Release”
with respect to any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, leaching,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Substances.

 

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The term “Remediation”
includes but is not limited to any response, remedial, removal, or corrective action; any activity to clean up, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substance; any actions to prevent, cure or mitigate any Release of any Hazardous Substance;
any action to comply with any Environmental Laws or with any permits issued pursuant thereto; any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances
or to anything referred to herein.

 

The term “Legal
Action” means any claim, suit or proceeding, whether administrative or judicial in nature.

 

The term “Indemnified
Parties” includes Indemnitee, any person or entity who is or will have been involved in the origination of the Loan, any
person or entity who is or will have been involved in the servicing of the Loan, any person or entity in whose name the encumbrance
created by the Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held
a full or partial interest in the Loan, including, but not limited to, custodians, trustees and other fiduciaries who hold or have
held a full or partial interest in the Loan for the benefit of third parties.

 

The term “Losses”
includes any losses, damages, costs, fees, expenses, claims, suits, judgments, awards, liabilities (including but not limited to
strict liabilities), obligations, debts, diminutions in value, fines, penalties, charges, costs of Remediation (whether or not
performed voluntarily), amounts paid in settlement, foreseeable and unforeseeable consequential damages, litigation costs, attorneys’
fees, engineers’ fees, environmental consultants’ fees, and investigation costs (including but not limited to costs
for sampling, testing and analysis of soil, water, air, building materials, and other materials and substances whether solid, liquid
or gas), of whatever kind or nature, and whether or not incurred in connection with any judicial or administrative proceedings,
actions, claims, suits, judgments or awards.

 

7.Unimpaired
Liability. The liability of Indemnitor under this Agreement shall in no way be limited or impaired by, and each Indemnitor
hereby consents to and agrees to be bound by, any amendment or modification of the provisions of the Note, the Security Instrument
or any of the other Loan Documents (as defined in the Security Instrument). In addition, the liability of each Indemnitor under
this Agreement shall in no way be limited or impaired by (i) any extensions of time for performance required by the Note, the Security
Instrument or any of the other Loan Documents, (ii) any sale or transfer of all or part of the Property, (iii) except as provided
herein, any exculpatory provision in the Note, the Security Instrument, or any of the other Loan Documents limiting Indemnitee’s
recourse to the Property or to any other security for the Note, or limiting Indemnitee’s rights to a deficiency judgment
against Indemnitor, (iv) the accuracy or inaccuracy of the representations and warranties made by Indemnitor under the Note, the
Security Instrument or any of the other Loan Documents or herein, (v) the release of each Indemnitor or any other person from performance
or observance of any of the agreements, covenants, terms or condition contained in any of the other Loan Documents by operation
of law, Indemnitee’s voluntary act, or otherwise, (vi) the release or substitution in whole or in part of any security for
the Note, or (vii) Indemnitee’s failure to record the Security Instrument or file any UCC financing statements (or Indemnitee’s
improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given
as security for the Note; and, in any such case, whether with or without notice to Indemnitor and with or without consideration.

 

 

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8.Enforcement.Indemnified
Parties may enforce the obligations of each Indemnitor without first resorting to or exhausting any security or collateral or without
first having recourse to the Note, the Security Instrument, or any other Loan Documents or any of the Property, through foreclosure
proceedings or otherwise, provided, however, that nothing herein shall inhibit or prevent Indemnitee from suing on the Note, foreclosing,
or exercising any power of sale under, the Security Instrument, or exercising any other rights and remedies thereunder. This Agreement
is not collateral or security for the debt of Indemnitor pursuant to the Loan, unless Indemnitee expressly elects in writing to
make this Agreement additional collateral or security for the debt of Indemnitor pursuant to the Loan, which Indemnitee is entitled
to do in its sole and absolute discretion. It is not necessary for an Event of Default (as defined in the Security Instrument)
to have occurred for Indemnified Parties to exercise their rights pursuant to this Agreement. Notwithstanding any provision of
the Security Instrument, the obligations pursuant to this Agreement are exceptions to any non-recourse or exculpation provision
of the Security Instrument; Indemnitor is fully and personally liable for such obligations, and its liability is not limited to
the original or amortized principal balance of the Loan or the value of the Property.

 

9.Survival.
The obligations and liabilities of each Indemnitor under this Indemnity shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of foreclosure
of the Security Instrument.

 

10.Interest.
Any amounts payable to any Indemnified Parties under this Agreement shall become immediately due and payable on demand and, if
not paid within thirty (30) days of such demand therefor, shall bear interest at a per annum rate equal to the lesser of (a) 5%
plus the Fixed Rate (as such term is defined in the Note) or (b) the maximum interest rate which Indemnitor may by law pay or Indemnified
Parties may charge and collect, from the date payment was due.

 

11.Waivers.
(a) Each Indemnitor hereby waives (i) any right or claim of right to cause a marshalling of any such Indemnitor’s assets
or to cause Indemnitee or other Indemnified Parties to proceed against any of the security for the Loan before proceeding under
this Agreement against Indemnitor; (ii) and relinquishes all rights and remedies accorded by applicable law to such Indemnitor,
except any rights of subrogation which Indemnitor 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 claims or defenses whatsoever which may be asserted
in connection with the enforcement or attempted enforcement of such subrogation rights including, without limitation, any claim
that such subrogation rights were abrogated by any acts of Indemnitee or other Indemnified Parties; (iii) the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against or by Indemnitee or
other Indemnified Parties; (iv) notice of acceptance hereof and of any action taken or omitted in reliance hereon; (v) presentment
for payment, demand of payment, protest or notice of nonpayment or failure to perform or observe, or other proof, or notice or
demand; and (vi) all homestead exemption rights against the obligations hereunder and the benefits of any statutes of limitations
or repose. Notwithstanding anything to the contrary contained herein, each Indemnitor hereby agrees to postpone the exercise of
any rights of subrogation with respect to any collateral securing the Loan until the Loan shall have been paid in full.

 

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(b)EACH INDEMNITOR
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER
IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN
EVIDENCED BY THE NOTE, THE NOTE, THE SECURITY INSTRUMENT, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF
ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.

 

12.Subrogation.
Each Indemnitor shall 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 the presence of any Hazardous
Substances at, in, on, under or near the Property or otherwise obligated by law to bear the cost. Indemnified Parties shall be
and hereby are subrogated to all of Indemnitors’ rights now or hereafter in such claims.

 

13.Indemnitor’s
Representations and Warranties. Each Indemnitor represents and warrants that:

 

(a)if
Indemnitor is a trust, corporation, partnership or limited liability company, it has the full trust/corporate/partnership/limited
liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the execution,
delivery and performance of this Agreement by Indemnitor has been duly and validly authorized; and all requisite trust/corporate/partnership/limited
liability company action has been taken by Indemnitor to make this Agreement valid and binding upon Indemnitor, enforceable in
accordance with its terms;

 

(b)if
Indemnitor is an individual, he/she is acting in an individual capacity and has full power and authority to make this Agreement
valid and binding upon Indemnitor, enforceable in accordance with its terms;

 

(c)if
Indemnitor is a trust, corporation, partnership or limited liability company, its execution of, and compliance with, this Agreement
is in the ordinary course of business of that Indemnitor and will not result in the breach of any term or provision of the charter,
by-laws, partnership or trust agreement, articles of organization, operating agreement or other governing instrument of that Indemnitor
or result in the breach of any term or provision of or conflict with or constitute a default under or result in the acceleration
of any obligation under any agreement, indenture or loan or credit agreement or other instrument to which the Indemnitor or the
Property is subject, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Indemnitor
or the Property is subject;

 

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(d)if
Indemnitor is an individual, his/her execution of, and compliance with, this Agreement will not result in the breach of any term
or provision of, or conflict with or constitute a default under or result in the acceleration of any obligation under any agreement,
indenture or loan or credit agreement or other instrument to which Indemnitor or the Property is subject, or result in the violation
of any law, rule, regulation, order, judgment or decree to which the Indemnitor or the Property is subject;

 

(e)there
is no action, suit, proceeding or investigation pending or threatened against it which, either in any one instance or in the aggregate,
may result in any material adverse change in the business, operations, financial condition, properties or assets of Indemnitor,
or in any material impairment of the right or ability of Indemnitor to carry on its business substantially as now conducted, or
in any material liability on the part of Indemnitor, or which would draw into question the validity of this Agreement or of any
action taken or to be taken in connection with the obligations of Indemnitor contemplated herein, or which would be likely to impair
materially the ability of Indemnitor to perform under the terms of this Agreement;

 

(f)it
does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in
this Agreement;

 

(g)no
approval, authorization, order, license or consent of, or registration or filing with, any governmental authority or other person,
and no approval, authorization or consent of any other party is required in connection with this Agreement; and

 

(h)this
Agreement constitutes a valid, legal and binding obligation of Indemnitor, enforceable against it in accordance with the terms
hereof

 

14.No Waiver.
No delay by any Indemnified Party in exercising any right, power or privilege under this Agreement shall operate as a waiver of
any such privilege, power or right.

 

15.Notice of
Legal Actions. Each party hereto shall, within five (5) Business Days of receipt thereof, give written notice to the other
party hereto of (i) any notice, advice or other communication from any governmental entity or any source whatsoever with respect
to Hazardous Substances on, from or affecting the Property, and (ii) any Legal Action brought against such party or related to
the Property, with respect to which each Indemnitor may have liability under this Agreement. Such notice shall comply with the
provisions of Section 19 hereof.

 

16.Examination
of Books and Records. Indemnified Parties and their accountants shall have the right to examine the records, books, management
and other papers of Indemnitor which reflect upon its financial condition, at the Property or at any office regularly maintained
by each Indemnitor where the books and records are located. Indemnified Parties and their accountants shall have the right to make
copies and extracts from the foregoing records and other papers. In addition, Indemnified Parties and their accountants shall have
the right to examine and audit the books and records of each Indemnitor pertaining to the income, expenses and operation of the
Property during reasonable business hours at any office of Indemnitor where the books and records are located.

 

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17.Transfer
of Loan. (a) Indemnitee may, at any time, sell, transfer or assign the Note, the Security Instrument, this Agreement and the
other Loan Documents, and any or all servicing rights with respect thereto, or grant participations therein or issue mortgage pass-through
certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement (the
“Securities”). Indemnitee may forward to each purchaser, transferee, assignee, servicer, participant or investor in
such Securities or any credit rating agency rating such Securities (the foregoing entities hereinafter collectively referred to
as the “Investor”) and each prospective Investor, all documents and information (including financial information) but
not limited to, which Indemnitee now has or may hereafter acquire relating to each Indemnitor and the Property, whether furnished
by such Indemnitor, any Guarantor (as defined in the Security Instrument), or otherwise, as Indemnitee determines necessary or
desirable.

 

(b)Upon any transfer
or proposed transfer contemplated above and by Section 16.1 of the Security Instrument, at Indemnitee’s request, each Indemnitor
shall provide an estoppel certificate to the Investor or any prospective Investor in such form, substance and detail as Indemnitee,
such Investor or prospective Investor may require.

 

18.Taxes.
Each Indemnitor has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed
by it and has paid all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments
received by it. Each Indemnitor does not know of any basis for any additional assessment in respect of any such taxes and related
liabilities for prior years.

 

19.Notices.
All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered
in person, (ii) one (1) Business Day (defined below) after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained
by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

If to Indemnitor:

c/o DT Stone Ridge,
LLC

11132 Ventura Boulevard, Suite
415

Studio City, California 91604

Attention: Daniel Markel

 

With a copy to:

Welch Law Firm, P.C.

1299 Farnum Street

Suite 1220

Omaha, Nebraska 68102

Attention: Ryan Scott, Esq.

 

If to Indemnitee:

Paladin Realty Income
Properties, L.P.

c/o Paladin Realty Partners,
LLC

10880 Wilshire Boulevard, Suite
1400

Los Angeles, California 90024

Attention: Jay Hartman

 

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With a copy to:

King & Spalding
LLP

1185 Avenue of the Americas

New York, NY 10036

Attention: Timothy Tucker, Esq.

 

or addressed as such party may from time
to time designate by written notice to the other parties.

 

Either party by notice
to the other may designate additional or different addresses for subsequent notices or communications.

 

For purposes of this
Section, “Business Day” shall mean a day on which commercial banks are not authorized or required by law to close in
New York, New York.

 

20.Submission
to Jurisdiction. With respect to any claim or action arising hereunder, Indemnitor (a) irrevocably submits to the nonexclusive
jurisdiction of the courts of the State in which the Property is located and the United States District Court located in the county
in which the Property is located, and appellate courts from any thereof, and (b) irrevocably waives any objection which it may
have at any time to the laying on venue of any suit, action or proceeding arising out of or relating to this Agreement brought
in any such court, irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.

 

21.No Third-party
Beneficiary. The terms of this Agreement are for the sole and exclusive protection and use of Indemnified Parties. No party
shall be a third-party beneficiary hereunder, and no provision hereof shall operate or inure to the use and benefit of any such
third party. It is agreed that those persons and entities included in the definition of Indemnified Parties are not such excluded
third party beneficiaries.

 

22.Duplicate
Originals; Counterparts. This Agreement may be executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed
an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute
this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

 

23.No Oral Change.
This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of any such Indemnitor or any Indemnified Party, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination
is sought.

 

24.Headings,
etc. The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

 

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25.Number and
Gender/Successors and Assigns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons referred to may require. Without limiting the effect of specific
references in any provision of this Agreement, the term “Indemnitor” shall be deemed to refer to each and every person
or entity comprising an Indemnitor from time to time, as the sense of a particular provision may require, and to include the heirs,
executors, administrators, legal representatives, successors and assigns of Indemnitor, all of whom shall be bound by the provisions
of this Agreement, provided that no obligation of any Indemnitor may be assigned except with the written consent of Indemnitee.
Each reference herein to Indemnitee shall be deemed to include its successors and assigns. This Agreement shall inure to the benefit
of Indemnified Parties and their respective successors and assigns forever.

 

26.Joint and
Several Liability. If an Indemnitor consists of more than one person or entity, the obligations and liabilities of each such
person hereunder are joint and several.

 

27.Release of
Liability. Any one or more parties liable upon or in respect of this Agreement may be released without affecting the liability
of any party not so released.

 

28.Rights Cumulative.
The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies which Indemnitee has under the
Note, the Security Instrument, or the other Loan Documents or would otherwise have at law or in equity.

 

29.Inapplicable
Provisions. If any term, condition or covenant of this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.

 

30.Governing
Law. This Agreement shall be deemed to be governed, construed, applied and enforced in accordance with the laws of the state
in which the Property is located and the applicable laws of the United States of America.

 

31.Miscellaneous.
Wherever pursuant to this Agreement (i) Indemnitee exercises any right given to it to approve or disapprove, (ii) any arrangement
or term is to be satisfactory to Indemnitee, or (iii) any other decision or determination is to be made by Indemnitee, the decision
of Indemnitee to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Indemnitee, shall be in the sole and absolute discretion of Indemnitee and shall be final
and conclusive, except as may be otherwise expressly and specifically provided herein.

 

32.Joint and
Several. The covenants, agreements, liability and obligations of each Indemnitor hereunder are joint and several.

 

    	-11-

    	 

    
 

 

IN WITNESS WHEREOF,
this Agreement has been executed and delivered by Indemnitor and is effective as of the day and year first above written.

 

INDEMNITOR:

 

DT STONE RIDGE, LLC, a South Carolina limited
liability company

 

By: DT Columbia SC Management, LLC,

a Delaware limited liability company, its Operating Member

 

By: DT Group Development, Inc., its sole manager

 

By:____________________________

James Markel, Secretary

 

 

DT COLUMBIA SC MANAGEMENT, LLC, a Delaware
limited liability company 

 

By: DT Group Development, Inc., its sole manager

 

By:____________________________

James Markel,
Secretary

 

 

 

 

_______________________________

JIM MARKEL

 

 

_______________________________

DANIEL MARKEL

 

 

_______________________________

THOMAS GALLOP

 

    	-12-

    	 

    
 

 

 

EXHIBIT A

 

(Description of the Property)

 

[Attached]EXHIBIT 10.6

 

ASSIGNMENT OF MANAGEMENT AGREEMENT AND

SUBORDINATION OF MANAGEMENT FEES

 

THIS ASSIGNMENT OF MANAGEMENT AGREEMENT
AND SUBORDINATION OF MANAGEMENT FEES (“Assignment”), is made as of the 5th day of April, 2012, by DT STONE RIDGE,
LLC, a South Carolina limited liability company, having its principal place of business at 11132 Ventura Boulevard, Suite 415,
Studio City, California 91604, (“Borrower”), and PEGASUS RESIDENTIAL, LLC, having its principal place of business
at 2300 Lakeview Parkway, Suite 700, Alpharetta, Georgia 30009 (“Agent”), for the benefit of PRIP STONE RIDGE, LLC,
a Delaware limited liability company, having an address, c/o Paladin Realty Partners, LLC, at 10880 Wilshire Boulevard, Suite 1400,
Los Angeles, California 90024 (“Lender”).

 

RECITALS:

 

A.Borrower by its
promissory note of even date herewith given to Lender (the note together with all extensions, renewals, modifications, substitutions
and amendments thereof shall collectively be referred to as the “Note”) is indebted to Lender in the principal sum
of $3,500,000 in lawful money of the United States of America, with interest from the date thereof at the rates set forth in the
Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as
the “Loan”), principal and interest to be payable in accordance with the terms and conditions provided in the Note.

 

B.The Loan is secured
by, among other things, the Security Instrument (as defined in the Note), which grants Lender a first lien on the property encumbered
thereby (the “Property”).

 

C.Pursuant to a certain
Property Management Agreement between Borrower and Agent (the “Management Agreement”) (a true and correct copy of which
Management Agreement is attached hereto as Exhibit A), Borrower employed Agent exclusively to rent, lease, operate and manage the
Property and Agent is entitled to certain management fees (the “Management Fees”) thereunder.

 

D.Lender requires
as a condition to the making of the Loan that Borrower assign the Management Agreement and that Agent subordinate its interest
in the Management Fees in lien and payment to the Security Instrument as set forth below.

 

AGREEMENT:

 

For good and valuable
consideration the parties hereto agree as follows:

 

1.Assignment of
Management Agreement. As additional collateral security for the Loan, Borrower hereby conditionally transfers, sets over and
assigns to Lender all of Borrower’s right, title and interest in and to the Management Agreement, said transfer and assignment
to automatically become a present, unconditional assignment, at Lender’s option, in the event of a default by Borrower under
the Note, the Security Instrument or any of the other Loan Documents (as defined in the Note) and the failure of Borrower to cure
such default within any applicable grace period.

 

    	

    	 

    
 

 

2.Subordination
of Management Fees. The Management Fees and all rights and privileges of Agent to the Management Fees are hereby and shall
at all times continue to be subject and unconditionally subordinate in all respects in lien and payment to the lien and payment
of the Security Instrument, the Note, and the other Loan Documents and to any renewals, extensions, modifications, assignments,
replacements, or consolidations thereof and the rights, privileges, and powers of Lender thereunder.

 

3.Termination.
At such time as the Loan is paid in full and the Security Instrument is released or assigned of record, this Assignment and all
of Lender’s right, title and interest hereunder with respect to the Management Agreement shall terminate.

 

4.Estoppel.
Agent represents and warrants that (a) the Management Agreement is in full force and effect and has not been modified, amended
or assigned with respect to the Property, (b) neither Agent nor Borrower is in default under any of the terms, covenants or provisions
of the Management Agreement with respect to the Property and Agent knows of no event which, but for the passage of time or the
giving of notice or both, would constitute an event of default under the Management Agreement with respect to the Property, (c)
neither Agent nor Borrower has commenced any action or given or received any notice for the purpose of terminating the Management
Agreement with respect to the Property and (d) the Management Fees and all other sums due and payable to the Agent under the Management
Agreement have been paid in full with respect to the Property.

 

5.Borrower’s
Covenants. Borrower hereby covenants with Lender that during the term of this Assignment: (a) Borrower shall not transfer the
responsibility for the management of the Property from Agent to any other person or entity without prior written notification to
Lender and the prior written consent of Lender, which consent may be withheld by Lender in Lender’s sole discretion; (b)
Borrower shall not terminate or amend any of the terms or provisions of the Management Agreement without the prior written consent
of Lender, which consent may be withheld by Lender in Lender’s sole discretion; and (c) Borrower shall, in the manner provided
for in this Assignment, give notice to Lender of any notice or information that Borrower receives which indicates that Agent is
terminating the Management Agreement or that Agent is otherwise discontinuing its management of the Property. Borrower shall exercise
each individual option, if any, to extend or renew the term of the Management Agreement while the Loan is outstanding.

 

6.Agreement by
Borrower and Agent. Borrower and Agent hereby agree that upon the occurrence of an Event of Default (as defined in the Security
Instrument) may exist during the term of this Assignment, at the option of Lender exercised by written notice to Borrower and Agent:
(a) all rents, security deposits, issues, proceeds and profits of the Property collected by Agent, after payment of all costs and
expenses of operating the Property (including, without limitation, operating expenses, real estate taxes, insurance premiums and
repairs and maintenance) shall be applied in accordance with Lender’s written directions to Agent; (b) Agent shall not collect
or be entitled to any Management Fee or other fee or commission due under the Management Agreement; and (c) Lender may exercise
its rights under this Assignment and may immediately terminate the Management Agreement and require Agent to transfer its responsibility
for the management of the Property to a management company selected by Lender in Lender’s sole and absolute discretion.

 

    	-2-

    	 

    
 

 

7.Lender’s
Right to Replace Agent. In addition to the foregoing, in the event that the Debt Service Coverage Ratio (as defined in the
Security Instrument shall fall below 1.45:1, or if Agent shall be in default beyond any applicable cure periods under the Management
Agreement, Lender may exercise its rights under this Assignment and direct Borrower to terminate the Management Agreement and to
replace Agent with a management company acceptable to Lender in Lender’s sole and absolute discretion.

 

8.Receipt of Management
Fees. Borrower and Agent hereby agree that Agent shall not be entitled to receive any Management Fees or other fee, commission
or other amount payable to Agent under the Management Agreement for and during any period of time that any Event of Default exists;
provided, however, that Agent shall not be obligated to (i) return or refund to Lender any Management Fee or other fee, commission
or other amount already received by Agent prior to the occurrence of the Event of Default, and to which Agent was entitled under
the Management Agreement, or (ii) render any services pursuant to the Management Agreement during any period in which the Agent’s
right to receive Management Fees and other fees, commissions and other amounts payable to Agent under the Management Agreement
has been suspended pursuant to this Assignment.

 

9.Consent and
Agreement by Agent. Agent hereby acknowledges and consents to this Assignment and agrees that Agent will act in conformity
with the provisions of this Assignment and Lender’s rights hereunder or otherwise related to the Management Agreement. In
the event that the responsibility for the management of the Property is transferred from Agent in accordance with the provisions
hereof, Agent shall, and hereby agrees to, fully cooperate in transferring its responsibility to a new management company and effectuate
such transfer no later than thirty (30) days from the date the Management Agreement is terminated. Further, Agent hereby agrees
(a) not to contest or impede the exercise by Lender of any right it has under or in connection with this Assignment; and (b) that
it shall, in the manner provided for in this Assignment, give at least thirty (30) days prior written notice to Lender of its intention
to terminate the Management Agreement or otherwise discontinue its management of the Property.

 

10.Governing Law.
This Assignment shall be governed, construed, applied and enforced in accordance with the laws of the state in which the Property
is located and the applicable laws of the United States of America.

 

11.Notices.
All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered
in person, (ii) one (1) Business Day (hereinafter defined) after having been deposited for overnight delivery with any reputable
overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed
as follows:

 

If to Borrower:

DT STONE RIDGE, LLC

11132 Ventura Boulevard, Suite
415

Studio City, California 91604

Attention: Daniel Markel

 

    	-3-

    	 

    
 

With a copy to:

Welch Law Firm, P.C.

1299 Farnum Street

Suite 1220

Omaha, Nebraska 68102

Attention: Ryan Scott, Esq.

 

If to Lender:

PRIP Stone Ridge, LLC

do Paladin Realty Partners, LC

10880 Wilshire Boulevard, Suite
1400

Los Angeles, California 90024

Attention: Jay Hartman

 

With a copy to:

King & Spalding
LLP

1185 Avenue of the Americas

New York, New York 10036

Attention: Timothy Tucker, Esq.

 

If to Agent:

Pegasus Residential, LLC

2300 Lakeview Parkway, Suite
700

Alpharetta, Georgia 30009

Attention: Debbie Conley

 

or addressed as such party may from time
to time designate by written notice to the other parties. For purposes of this Section 11, the term “Business Day”
shall mean a day on which commercial banks are not authorized or required by law to close in New York, New York.

 

Any party by notice to
the others may designate additional or different addresses for subsequent notices or communications.

 

12.No Oral Change.
This Assignment, and any provisions hereof, may not’be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

 

13.Liability.
If Borrower consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and
several. This Assignment shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors
and assigns forever.

 

14.Inapplicable
Provisions. If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect,
this Assignment shall be construed without such provision.

 

15.Headings, etc.
The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions hereof.

 

    	-4-

    	 

    
 

 

16.Duplicate Originals;
Counterparts. This Assignment may be executed in any number of duplicate originals and each duplicate original shall be deemed
to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment,
or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

 

17.Number and
Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

 

18.Exculpation.
Borrower’s obligations under this Assignment are subject to the provisions of Article 13 of the Security Instrument.

 

19.Miscellaneous.
Wherever pursuant to this Assignment (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement
or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of
Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions
and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except
as may be otherwise expressly and specifically provided herein.

 

 

[The remainder of this page left intentionally
blank.]

 

    	-5-

    	 

    
 

 

 

IN WITNESS WHEREOF the
undersigned have executed this Assignment as of the date and year first written above.

 

 

BORROWER:

 

DT STONE RIDGE, LLC, a South Carolina limited
liability company

 

 

 By: DT Columbia SC Management, LLC,

a Delaware limited liability company, its Operating Member

 

By:  DT Group Development, Inc., its sole manager

 

By:_______________________

James Markel, Secretary

 

 

AGENT:

 

PEGASUS RESIDENTIAL, LLC

 

 

By:____________________________________

Name:

Title:

 

    	-6-

    	 

    
 

 

EXHIBIT A

 

MANAGEMENT AGREEMENT

 

[ATTACHED]

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