Document:

SEC Exhibit

Exhibit 10.1

HORIZON GLOBAL CORPORATION
AMENDED AND RESTATED 
2015 EQUITY AND INCENTIVE COMPENSATION PLAN
1.Purpose.  The purpose of this Plan is to attract and retain non-employee Directors, officers and other key employees of the Company and its Subsidiaries and to provide to such persons incentives and rewards for performance.
2.Definitions.  As used in this Plan:
(a)“Affiliate” means any corporation, partnership, joint venture or other entity, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company as determined by the Committee or the Board, as applicable, in its discretion.
(b)“Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and will include both Free-Standing Appreciation Rights and Tandem Appreciation Rights.
(c)“Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation Right.
(d)“Board” means the Board of Directors of the Company.
(e)“Cash Incentive Award” means a cash award granted pursuant to Section 8 of this Plan.
(f)“Change in Control” has the meaning set forth in Section 12 of this Plan.
(g)“Code” means the Internal Revenue Code of 1986, as amended from time to time.
(h)“Committee” means the Compensation Committee of the Board (or its successor(s)), or any other committee of the Board designated by the Board to administer this Plan pursuant to Section 10 of this Plan consisting solely of no fewer than two Non-Employee Directors.
(i)“Common Shares” means the shares of common stock, par value $0.01 per share, of the Company or any security into which such common stock may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.
(j)“Company” means Horizon Global Corporation, a Delaware corporation, and its successors.
(k)“Covered Employee” means a Participant who is, or is determined by the Committee to be likely to become, a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).
(l)“Date of Grant” means the date specified by the Committee on which a grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, Cash Incentive Awards, or other awards contemplated by Section 9 of this Plan, or a grant or sale of Restricted Shares, Restricted Stock Units, or other awards contemplated by Section 9 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto). 
(m)“Director” means a member of the Board.
(n)“Effective Date” means the date this Plan is approved by the Shareholders.
(o)“Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and conditions of the awards granted under the Plan.  An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant.
(p)“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.
(q) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right.
(r)“Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the Code or any successor provision.
(s)“Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares, Performance Units or Cash Incentive Awards or, when so determined by the Committee, Option Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan.  Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its Subsidiaries.  The Management Objectives may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the performance objectives themselves.  The Committee may grant awards subject to Management Objectives that are either Qualified Performance-Based Awards or are not Qualified Performance-Based Awards.  The Management Objectives applicable to any Qualified Performance-Based Award to a Covered Employee will be based on one or more, or a combination, of the following metrics (including relative or growth achievement regarding such metrics):
		
	(i)
	Profits (e.g., gross profit, EBITDA, operating income, EBIT, EBT, net income, net sales, cost of sales, earnings per share, residual or economic earnings, inventory turnover, operating profit, economic profit - these profitability metrics could be measured before certain specified special items and/or subject to GAAP definition);

1

		
	(ii)
	Cash Flow (e.g., free cash flow, free cash flow with or without specific capital expenditure target or range, including or excluding divestments and/or acquisitions, net cash provided by operating activities, net increase (or decrease) in cash and cash equivalents, total cash flow, cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); 

		
	(iii)
	Returns (e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and equity);

		
	(iv)
	Working Capital (e.g., working capital divided by sales, days’ sales outstanding, days’ sales inventory, and days’ sales in payables);

		
	(v)
	Profit Margins (e.g., profits divided by revenues, gross margins and material margins divided by revenues);

		
	(vi)
	Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt ratio); 

		
	(vii)
	Sales Growth, Gross Margin Growth, Cost Initiative and Stock Price Metrics (e.g., revenues, revenue growth, revenue growth outside the United States, gross margin and gross margin growth, material margin and material margin growth, stock price appreciation, market capitalization, total return to shareholders, sales and administrative costs divided by sales, and sales and administrative costs divided by profits); and

		
	(viii)
	Strategic Initiative Key Deliverable Metrics consisting of one or more of the following: product development, strategic partnering, research and development, vitality index, market penetration, market share, geographic business expansion goals, cost targets, selling, general and administrative expenses, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, productivity, economic value added (or another measure of profitability that considers the cost of capital employed), product quality, sales of new products, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures.

In the case of a Qualified Performance-Based Award, each Management Objective will be objectively determinable to the extent required under Section 162(m) of the Code, and, unless otherwise determined by the Committee and to the extent consistent with Code Section 162(m), will exclude the effects of certain designated items identified at the time of grant.  If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Committee may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable, except in the case of a Qualified Performance-Based Award (other than in connection with a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such case, the Committee will not make any modification of the Management Objectives or minimum acceptable level of achievement with respect to such Covered Employee.
(t)“Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the New York Stock Exchange or, if the Common Shares are not then listed on the New York Stock Exchange, on any other national securities exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during which a sale occurred.  If there is no regular public trading market for the Common Shares, then the Market Value per Share shall be the fair market value as determined in good faith by the Committee.  The Committee is authorized to adopt another fair market value pricing method provided such method is stated in the Evidence of Award and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.
(u)“Non-Employee Director” means a person who is a “Non-Employee Director” of the Company within the meaning of Rule 16b-3 promulgated under the Exchange Act and an “outside director” within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder by the U.S. Department of the Treasury.
(v)“Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.
(w)“Option Price” means the purchase price payable on exercise of an Option Right.
(x)“Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.
(y)“Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) an officer or other employee of the Company or any Subsidiary, including a person who has agreed to commence serving in such capacity within 90 days of the Date of Grant, (ii) a person who provides services to the Company or a Subsidiary that are equivalent to those typically provided by an employee (provided that such person satisfies the Form S-8 definition of an “employee”), or (iii) a non-employee Director.
(z)“Performance Period” means, in respect of a Cash Incentive Award, Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Cash Incentive Award, Performance Share or Performance Unit are to be achieved.
(aa)“Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to Section 8 of this Plan.
(ab)“Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.
(ac)“Plan” means this Horizon Global Corporation Amended and Restated 2015 Equity and Incentive Compensation Plan.

2

(ad)“Qualified Performance-Based Award” means any Cash Incentive Award or award of Performance Shares, Performance Units, Restricted Shares, Restricted Stock Units or other awards contemplated under Section 9 of this Plan, or portion of such award, to a Covered Employee that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.
(ae)“Restricted Shares” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired.
(af)“Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.
(ag)“Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares, cash or a combination thereof at the end of a specified period.
(ah)“Shareholder” means an individual or entity that owns one or more Common Shares.
(ai)“Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively.
(aj)“Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture, limited liability company, or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined Voting Power represented by all classes of stock issued by such corporation.
(ak)“Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right.
(al)“Voting Power” means at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.
3.Shares Available Under the Plan.
(a)Maximum Shares Available Under Plan.  
		
	(i)
	Subject to adjustment as provided in Section 11 of this Plan and the share counting rules set forth in Section 3(b) of this Plan, the number of Common Shares available under the Plan for awards of (A) Option Rights or Appreciation Rights, (B) Restricted Shares, (C) Restricted Stock Units, (D) Performance Shares or Performance Units, (E) awards contemplated by Section 9 of this Plan, or (F) dividend equivalents paid with respect to awards made under this Plan shall be, in the aggregate, 2,000,000 Common Shares.  Such shares may be shares of original issuance or treasury shares or a combination of the foregoing.

		
	(ii)
	The aggregate number of Common Shares available under Section 3(a)(i) of this Plan will be reduced by one Common Share for every one Common Share subject to an award granted under this Plan.

(b)Share Counting Rules.
		
	(i)
	If any award granted under this Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the Common Shares subject to such award will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, again be available under Section 3(a)(i).

		
	(ii)
	Notwithstanding anything to the contrary contained herein: (A) Common Shares withheld by the Company in payment of the Option Price of an Option Right will not be added back to the aggregate number of Common Shares available under Section 3(a)(i) above; (B) Common Shares tendered or otherwise used in payment of the Option Price of an Option Right will not be added to the aggregate number of Common Shares available under Section 3(a)(i) above; (C) Common Shares withheld by the Company or tendered or otherwise used to satisfy a tax withholding obligation will be added (or added back, as applicable) to the aggregate number of Common Shares available under Section 3(a)(i) above (provided, however, that such recycling of Common Shares for tax withholding purposes will be limited to 10 years from the date of stockholder approval of the Plan if such recycling involves Common Shares that have actually been issued by the Company); (D) Common Shares subject to an Appreciation Right that are not actually issued in connection with its Common Shares settlement on exercise thereof will not be added back to the aggregate number of Common Shares available under Section 3(a)(i) above; and (E) Common Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Option Rights will not be added to the aggregate number of Common Shares available under Section 3(a)(i) above.  If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on fair market value, such Common Shares will not count against the aggregate number of Common Shares available under Section 3(a)(i) above.

(c)Limit on Incentive Stock Options.  Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment as provided in Section 11 of this Plan, the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed 2,000,000 Common Shares.

3

(d)Individual Participant Limits.  Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary, and subject to adjustment as provided in Section 11 of this Plan:
		
	(i)
	No Participant will be granted Option Rights and/or Appreciation Rights, in the aggregate, for more than 250,000 Common Shares during any calendar year.

		
	(ii)
	No Participant will be granted Qualified Performance-Based Awards of Restricted Shares, Restricted Stock Units, Performance Shares and/or other awards under Section 9 of this Plan, in the aggregate, for more than 500,000 Common Shares during any calendar year.

		
	(iii)
	In no event will any Participant in any calendar year receive Qualified Performance-Based Awards of Performance Units and/or other awards payable in cash under Section 9 of this Plan having an aggregate maximum value as of their respective Dates of Grant in excess of $2,500,000.

		
	(iv)
	In no event will any Participant in any calendar year receive Qualified Performance-Based Awards that are Cash Incentive Awards having an aggregate maximum value in excess of $5,000,000.

		
	(v)
	No non-employee Director will be granted, in any period of one calendar year, awards under the Plan in excess of 50,000 Common Shares.

		
	(vi)
	Notwithstanding anything in this Plan to the contrary, up to 5% of the maximum number of Common Shares available for awards under this Plan as provided for in Section 3(a) of this Plan, as may be adjusted under Section 11 of this Plan, may be used for awards granted under Section 4 through Section 9 of this Plan that do not at grant comply with the applicable one-year minimum vesting or performance period requirements set forth in such sections of this Plan.

4.Option Rights.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of Option Rights.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan.
(b)Each grant will specify an Option Price per share, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant.
(c)Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee (or other consideration authorized pursuant to Section 4(d) of this Plan) having a value at the time of exercise equal to the total Option Price, (iii) subject to any conditions or limitations established by the Committee, the Company’s withholding of Common Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that, solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by such other methods as may be approved by the Committee.
(d)To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.
(e)Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.
(f)Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable; provided, that, except as otherwise described in this subsection, no grant of Option Rights may become exercisable sooner than after one year or a one-year performance period.  A grant of Option Rights may provide for the earlier exercise of such Option Rights, including in the event of the retirement, death or disability of a Participant, or in the event of a Change in Control only where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such Option Rights are not assumed or converted into replacement awards in a manner described in the Evidence of Award.
(g)Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights.
(h)Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing.  Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.
(i)The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Section 5 of this Plan.
(j)No Option Right will be exercisable more than 10 years from the Date of Grant.
(k)Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(l)Each grant of Option Rights will be evidenced by an Evidence of Award.  Each Evidence of Award will be subject to this Plan and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.

4

5.Appreciation Rights.
(a)The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (i) to any Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing Appreciation Rights.  A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.  Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option.  A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.
(b)Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
		
	(i)
	Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common Shares or any combination thereof.

		
	(ii)
	Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Committee at the Date of Grant.

		
	(iii)
	Any grant may specify waiting periods before exercise and permissible exercise dates or periods.

		
	(iv)
	Each grant may specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Rights or installments thereof will become exercisable; provided, that, except as otherwise described in this subsection, no grant of Appreciation Rights may become exercisable sooner than after one year or a one-year performance period.  A grant of Appreciation Rights may provide for the earlier exercise of such Appreciation Rights, including in the event of the retirement, death or disability of a Participant, or in the event of a Change in Control only where either (A) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (B) such Appreciation Rights are not assumed or converted into replacement awards in a manner described in the Evidence of Award.

		
	(v)
	Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights.

		
	(vi)
	Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Committee may approve.

(c)Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation.  Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised.
(d)Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(e)Regarding Free-Standing Appreciation Rights only:
		
	(i)
	Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant;

		
	(ii)
	Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and

		
	(iii)
	No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.

6.Restricted Shares.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or sale of Restricted Shares to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.
(b)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
(c)Each such grant or sale will provide that the Restricted Shares covered by such grant or sale will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee at the Date of Grant or until achievement of Management Objectives referred to in subparagraph (e) below.  If the elimination of restrictions is based only on the passage of time rather than the achievement of Management Objectives, the period of time will be no shorter than one year.
(d)Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares will be prohibited or restricted in the manner and to the extent prescribed by 

5

the Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee).
(e)Any grant of Restricted Shares may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Shares; provided, however, that notwithstanding subparagraph (c) above, for Restricted Shares that vest upon the achievement of Management Objectives, the performance period must be at least one year.
(f)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant or sale of Restricted Shares may provide for the earlier termination of restrictions on such Restricted Shares, including in the event of the retirement, death or disability of a Participant, or in the event of a Change in Control only where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such Restricted Shares are not assumed or converted into replacement awards in a manner described in the Evidence of Award; provided, however, that no award of Restricted Shares intended to be a Qualified Performance-Based Award will provide for such early termination of restrictions (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Qualified Performance-Based Award.
(g)Any such grant or sale of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional Restricted Shares, which may be subject to the same restrictions as the underlying award; provided, however, that dividends or other distributions on Restricted Shares with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.
(h)Each grant or sale of Restricted Shares will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.  Unless otherwise directed by the Committee, (i) all certificates representing Restricted Shares will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Restricted Shares will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Shares.
7.Restricted Stock Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting or sale of Restricted Stock Units to Participants.  Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash, or a combination thereof, to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Committee may specify.  
(b)If a grant of Restricted Stock Units specifies that the Restriction Period will terminate only upon the achievement of Management Objectives or that the Restricted Stock Units will be earned based on the achievement of Management Objectives, then, notwithstanding anything to the contrary contained in subparagraph (d) below, the applicable performance period must be at least one year.
(c)Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant.
(d)If the Restriction Period lapses only by the passage of time rather than the achievement of Management Objectives as provided in subparagraph (b) above, each such grant or sale will be subject to a Restriction Period of not less than one year.
(e)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant or sale of Restricted Stock Units may provide for the earlier lapse or other modification of the Restriction Period, including in the event of the retirement, death or disability of a Participant, or in the event of a Change in Control only where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such Restricted Stock Units are not assumed or converted into replacement awards in a manner described in the Evidence of Award; provided, however, that no award of Restricted Stock Units intended to be a Qualified Performance-Based Award will provide for such early lapse or modification of the Restriction Period (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Qualified Performance-Based Award.
(f)During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the Committee may, at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other distributions on Common Shares underlying Restricted Stock Units with restrictions that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.
(g)Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have been earned.  Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common Shares or cash, or a combination thereof.

6

(h)Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Committee may approve.
8.Cash Incentive Awards, Performance Shares and Performance Units.  The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting of Cash Incentive Awards, Performance Shares and Performance Units.  Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions:
(a)Each grant will specify the number or amount of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, to which it pertains, which number or amount may be subject to adjustment to reflect changes in compensation or other factors; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.
(b)The Performance Period with respect to each Cash Incentive Award, Performance Share or Performance Unit will be such period of time (not less than one year) as will be determined by the Committee at the time of grant, which may be subject to earlier lapse or other modification, including in the event of the retirement, death or disability of a Participant, or in the event of a Change in Control only where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such Cash Incentive Awards, Performance Shares and Performance Units are not assumed or converted into replacement awards in a manner described in the Evidence of Award; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such event, the Evidence of Award will specify the time and terms of delivery.
(c)Any grant of Cash Incentive Awards, Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of Performance Shares or Performance Units, or amount payable with respect to Cash Incentive Awards, that will be earned if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of maximum achievement of the specified Management Objectives.
(d)Each grant will specify the time and manner of payment of Cash Incentive Awards, Performance Shares or Performance Units that have been earned.  Any grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares, in Restricted Shares or Restricted Stock Units or in any combination thereof.
(e)Any grant of Cash Incentive Awards, Performance Shares or Performance Units may specify that the amount payable or the number of Common Shares or Restricted Shares or Restricted Stock Units with respect thereto may not exceed a maximum specified by the Committee at the Date of Grant.  
(f)The Committee may, at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder thereof either in cash or in additional Common Shares, subject in all cases to deferral and payment on a contingent basis based on the Participant’s earning of the Performance Shares with respect to which such dividend equivalents are paid.
(g)Each grant of Cash Incentive Awards, Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Committee may approve.
9.Other Awards.
(a)Subject to applicable law and the applicable limits set forth in Section 3 of this Plan, the Committee may grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the Common Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company.  The Committee will determine the terms and conditions of such awards.  Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common Shares, other awards, notes or other property, as the Committee determines.
(b)Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this Section 9.
(c)The Committee may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.
(d)If the earning or vesting of, or elimination of restrictions applicable to, an award granted under this Section 9 is based only on the passage of time rather than the achievement of Management Objectives, the period of time shall be no shorter than one year.  If the earning or vesting of, or elimination of restrictions applicable to, awards granted under this Section 9 is based on the achievement of Management Objectives, the performance period must be at least one year.

7

(e)Notwithstanding anything to the contrary contained in this Plan (including minimum vesting requirements), any grant of an award under this Section 9 may provide for the earning or vesting of, or earlier elimination of restrictions applicable to, such award, including in the event of the retirement, death or disability of the Participant, or in the event of a Change in Control only where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such awards are not assumed or converted into replacement awards in a manner described in the Evidence of Award; provided, however, that no such adjustment will be made in the case of a Qualified Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such event, the Evidence of Award will specify the time and terms of delivery.
10.Administration of this Plan.
(a)This Plan will be administered by the Committee.  The Committee may from time to time delegate all or any part of its authority under this Plan to a subcommittee thereof.  To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.
(b)The interpretation and construction by the Committee of any provision of this Plan or of any Evidence of Award (or related documents) and any determination by the Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.  No member of the Committee shall be liable for any such action or determination made in good faith.  In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan Section or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
(c)To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under the Plan.  The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as the Committee:  (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for awards granted to an employee who is an officer, Director, or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act, or any Covered Employee; (B) the resolution providing for such authorization sets forth the total number of Common Shares such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the nature and scope of the awards granted pursuant to the authority delegated.
11.Adjustments.  The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in the number of Common Shares covered by other awards granted pursuant to Section 9 hereof, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, in the kind of shares covered thereby, in Cash Incentive Awards, and in other award terms, as the Committee, in its sole discretion, exercised in good faith, shall determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing.  Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code.  In addition, for each Option Right or Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with any such transaction or event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or Appreciation Right.  The Committee shall also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, shall determine is appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number specified in Section 3(c) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail to so qualify.
		
	12.
	Change in Control.  For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan, a “Change in Control” will be deemed to have occurred upon the occurrence (after the Effective Date) of any of the following events:

(a)any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (i) the then-outstanding Common Shares (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change 

8

in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate or (D) any acquisition pursuant to a transaction that complies with Sections 12(c)(i), (c)(ii) and (c)(iii) below;
(b)individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for director, without objection to such nomination) shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c)consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or securities of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(d)approval by the Shareholders of a complete liquidation or dissolution of the Company.
13.Detrimental Activity and Recapture Provisions.  Any Evidence of Award may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with the Company or a Subsidiary or (b) within a specified period after termination of such employment or service, shall engage in any detrimental activity.  In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award may also provide for the cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange or national securities association on which the Common Shares may be traded.
14.Non U.S. Participants.  In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan.  No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Company.
15.Transferability.
(a)Except as otherwise determined by the Committee, no Option Right, Appreciation Right, Restricted Shares, Restricted Stock Unit, Performance Share, Performance Unit, Cash Incentive Award, award contemplated by Section 9 of this Plan or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except by will or the laws of descent and distribution. In no event will any such award granted under the Plan be transferred for value.  Except as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s lifetime only 

9

by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.
(b)The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.
16.Withholding Taxes.  To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit.  If a Participant’s benefit is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of tax, then, unless otherwise determined by the Committee, the Company will withhold Common Shares having a value equal to the amount required to be withheld.  Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under applicable income and employment tax laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the obligation, in whole or in part, by having withheld, from the shares required to be delivered to the Participant, Common Shares having a value equal to the amount required to be withheld or by delivering to the Company other Common Shares held by such Participant.  The shares used for tax withholding will be valued at an amount equal to the market value of such Common Shares on the date the benefit is to be included in Participant’s income.  In no event will the market value of the Common Shares to be withheld and delivered pursuant to this Section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld.  Participants will also make such arrangements as the Company may require for the payment of any withholding tax obligation that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.
17.Compliance with Section 409A of the Code.  
(a)To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants.  This Plan and any grants made hereunder will be administered in a manner consistent with this intent.  Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service. 
(b)Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries. 
(c)If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the fifth business day of the seventh month after such separation from service. 
(d)Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code.  In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.
18.Amendments.
(a)The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to this Plan (i) would materially increase the benefits accruing to participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the shareholders of the Company in order to comply with applicable law or the rules of the New York Stock Exchange or, if the Common Shares are not traded on the New York Stock Exchange, the principal national securities exchange upon which the Common Shares are traded or quoted, then, such amendment will be subject to shareholder approval and will not be effective unless and until such approval has been obtained.

10

(b)Except in connection with a corporate transaction or event described in Section 11 of this Plan, the terms of outstanding awards may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights, or cancel outstanding Option Rights or Appreciation Rights in exchange for cash, other awards or Option Rights or Appreciation Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base Price of the original Appreciation Rights, as applicable, without shareholder approval.  This Section 18(b) is intended to prohibit the repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in Section 11 of this Plan.  Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without approval by the Company’s shareholders.
(c)If permitted by Section 409A of the Code and Section 162(m) of the Code, but subject to the paragraph that follows, notwithstanding the Plan’s minimum vesting requirements, and including in the case of termination of employment by reason of death, disability or retirement, or in the case of unforeseeable emergency or other special circumstances or in the event of a Change in Control, to the extent a Participant holds an Option Right or Appreciation Right not immediately exercisable in full, or any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Cash Incentive Awards, Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 9 subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction imposed pursuant to Section 15(b) of this Plan, the Committee may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Cash Incentive Awards, Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award, except in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.
(d)Subject to Section 18(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan prospectively or retroactively, except in the case of a Qualified Performance-Based Award (other than in connection with the Participant’s death or disability, or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.  In such case, the Committee will not make any modification of the Management Objectives or the level or levels of achievement with respect to such Qualified Performance-Based Award.  Subject to Section 11 above, no such amendment will impair the rights of any Participant without his or her consent.  The Board may, in its discretion, terminate this Plan at any time.  Termination of this Plan will not affect the rights of Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.
19.Governing Law.  This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with the internal substantive laws of the State of Delaware.
20.Effective Date/Termination.  This Plan will be effective as of the Effective Date.  No grant will be made under this Plan on or after the tenth anniversary of the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.
21.Miscellaneous Provisions.
(a)The Company will not be required to issue any fractional Common Shares pursuant to this Plan.  The Committee may provide for the elimination of fractions or for the settlement of fractions in cash.
(b)This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.
(c)Except with respect to Section 21(e), to the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right.  Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.
(d)No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.
(e)Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.
(f)No Participant will have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Company.
(g)The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a Subsidiary to the Participant.
(h)Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance of Common Share under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of 

11

this Plan and which are intended to comply with the requirements of Section 409A of the Code.  The Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
(i)If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will remain in full force and effect.
22.Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company.  Notwithstanding anything in this Plan to the contrary:
(a)Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary.  Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
(b)In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.  
(c)Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will not reduce the Common Shares available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 3 of the Plan.  In addition, no Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will be added to the aggregate plan limit contained in Section 3 of the Plan.

12SEC Exhibit

EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT

by and between

ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an 
Illinois limited liability company

(“Seller”)

and

STEADFAST ASSET HOLDINGS, INC., 
a California corporation

(“Buyer”)

TABLE OF CONTENTS

	
							
	 
	 
	 
	 
	Page No.
	

	 
	 
	 
	 
	 

	1.
	PURCHASE AND SALE
	1
	

	 
	1.1
	

	Property
	1
	

	 
	1.2
	

	No Warranty
	 
	3
	

	 
	 
	 
	 
	 

	2.
	PURCHASE PRICE
	4
	

	 
	 
	 
	 

	3.
	PAYMENT OF PURCHASE PRICE
	4
	

	 
	3.1
	

	Deposit
	 
	4
	

	 
	3.2
	

	Remainder of Purchase Price
	 
	4
	

	 
	3.3
	

	Buyer Default; Liquidated Damages
	 
	4
	

	 
	3.4
	

	Sellers Default; Specific Performance
	 
	5
	

	 
	 
	 
	 
	 

	4.
	ESCROW INSTRUCTIONS
	5
	

	 
	4.1
	

	Opening of Escrow
	 
	5
	

	 
	4.2
	

	Conditions to Close
	 
	5
	

	 
	4.3
	

	Recordation and Transfer
	 
	6
	

	 
	 
	 
	 
	 

	5.
	CLOSING
	6
	

	 
	5.1
	

	Generally
	6
	

	 
	5.2
	

	Extension Option
	7
	

	 
	 
	 
	 
	 

	6.
	BUYER’S REVIEW
	7
	

	 
	6.1
	

	Delivery of Documents
	7
	

	 
	6.2
	

	Access
	8
	

	 
	6.3
	

	Title and Survey
	8
	

	 
	6.4
	

	Buyer’s Due Diligence; Indemnity
	9
	

	 
	6.5
	

	Buyer’s Termination Right
	10
	

	 
	6.6
	

	Contracts
	10
	

	 
	 
	 
	 
	 

	7.
	REPRESENTATIONS AND WARRANTIES
	11
	

	 
	7.1
	

	Seller’s Representations and Warranties
	11
	

	 
	7.2
	

	Buyer’s Representations and Warranties
	 
	14
	

	 
	 
	 
	 
	 

	8.
	COVENANTS
	 
	15
	

	 
	8.1
	

	Sellers
	15
	

	 
	8.2
	

	Buyer
	17
	

	 
	8.3
	

	Broker Indemnity
	 
	18
	

	 
	 
	 
	 
	 

i

	
							
	9.
	ADJUSTMENTS AND PRORATIONS
	18
	

	 
	9.1
	

	Generally
	18
	

	 
	9.2
	

	Rental Income
	19
	

	 
	9.3
	

	RUBS
	19
	

	 
	9.4
	

	Proration Period
	19
	

	 
	9.5
	

	Rent Ready Adjustments
	19
	

	 
	 
	 
	 
	 

	10.
	CLOSING DOCUMENTS
	20
	

	 
	10.1
	

	Seller’s Deliveries
	 
	20
	

	 
	10.2
	

	Buyer’s Deliveries
	 
	21
	

	 
	10.3
	

	Other Closing Documents
	 
	21
	

	 
	10.4
	

	Closing Documents
	 
	21
	

	 
	10.5
	

	Possession
	 
	21
	

	 
	 
	 
	 
	 

	11.
	COSTS
	21
	

	 
	 
	 
	 
	 

	12.
	CASUALTY OR CONDEMNATION
	21
	

	 
	 
	 
	 
	 

	13.
	ATTORNEY’S FEES
	22
	

	 
	 
	 
	 
	 

	14.
	ASSIGNMENT
	 
	22
	

	 
	 
	 
	 
	 

	15.
	WAIVER
	 
	22
	

	 
	 
	 
	 
	 

	16.
	GOVERNING LAW; TIME
	 
	23
	

	 
	 
	 
	 
	 

	17.
	NOTICES
	 
	23
	

	 
	 
	 
	 
	 

	18.
	ENTIRE AGREEMENT
	 
	23
	

	 
	 
	 
	 
	 

	19.
	COUNTERPARTS; COPIES
	 
	24
	

	 
	 
	 
	 
	 

	20.
	AUTHORITY
	 
	24
	

	 
	 
	 
	 
	 

	21.
	RECORD ACCESS AND RETENTION
	 
	24
	

	 
	 
	 
	 
	 

	22.
	CONTRACT CONSIDERATION
	 
	24
	

	 
	 
	 
	 
	 

	23.
	JURY TRIAL WAIVER
	 
	25
	

	 
	 
	 
	 
	 

	24.
	COUNSEL
	 
	25
	

	 
	 
	 
	 
	 

ii

	
							
	25.
	EQUITY PARTICIPATION
	 
	25
	

	 
	 
	 
	 
	 

	26.
	TAX-FREE EXCHANGE
	 
	25
	

	 
	 
	 
	 
	 

	27.
	CONFIDENTIALITY
	 
	26
	

	 
	 
	 
	 
	 

	28.
	JOINT AND SEVERAL OBLIGATIONS
	 
	27
	

	 
	 
	 
	 
	 

	EXHIBITS
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Exhibit “A”
	Real Property Description
	 
	 

	Exhibit “B-1”
	Personal Property Description
	 
	 

	Exhibit “B-2”
	Excluded Property
	 
	 

	Exhibit “C”
	Due Diligence Documents
	 
	 

	Exhibit “D”
	Form of Deed
	 
	 

	Exhibit “E”
	Form of General Assignment
	 
	 

	Exhibit “F”
	Form of Bill of Sale
	 
	 

	Exhibit “G”
	Form of Non-Foreign Certificate
	 
	 

	Exhibit “H”
	Form of Tenant Notice
	 
	 

	Exhibit “I”
	Joint Order Escrow
	 
	 

	

	 
	 
	 
	 

	SCHEDULES
	 
	 
	 
	 

	 
	 
	 
	 
	 

	Schedule 1
	Leases
	 
	 

	Schedule 2
	Contracts
	 
	 

	Schedule 3
	Approvals
	 
	 

	 
	 
	 
	 
	 

iii

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (“Agreement”) is made and entered into as of the 6th day of April, 2016 (the “Effective Date”), by and between ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an Illinois Limited Liability Company (“Seller”), and STEADFAST ASSET HOLDINGS, INC., a California corporation (“Buyer”), with reference to the following facts:

RECITALS:
A.Seller is the fee owner of that certain land with a multi-family residential project commonly known as CARRIAGE HOUSE APARTMENTS, consisting of 136 units, located at 4344 McClure Avenue, Gurnee, IL 60031 and more particularly described in Exhibit “A” attached hereto, together with all structures, improvements, machinery, fixtures and equipment affixed or attached to such land (collectively referred to herein as the “Real Property”).  
B.Seller desires to sell the Real Property, along with certain related personal and intangible property, to Buyer, and Buyer desires to purchase such Real Property and related personal and intangible property from Seller in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto mutually agree as follows:

1.PURCHASE AND SALE.

1.1    Property.  Subject to the terms and conditions of this Agreement, and for the consideration herein set forth, Seller agrees to sell and transfer, and Buyer agrees to purchase and acquire, all of Seller’s right, title, and interest in and to the following, whether now existing or hereafter acquired or created (collectively, the “Property”):
1.1.1    The Real Property;
1.1.2    All easements, licenses, interests, rights, privileges, tenements, hereditaments and appurtenances on or in any way appertaining to the Real Property, including, without limitation, all water and water rights;
1.1.3    Except for the equipment, tools, machinery, materials, furniture, furnishings, supplies and tangible property that is identified on Exhibit “B-2” attached hereto and that is not being sold or transferred to Buyer but retained by Seller, all equipment, tools, machinery, materials, furniture, furnishings, supplies and other tangible personal property owned by Seller and located on or used in connection with or arising out of the ownership, management or operation of the Real Property (collectively, “Personal Property”); the Personal Property owned by Seller as of the Effective Date is identified on Exhibit “B-1” attached hereto.  Seller represents and warrants that all Personal Property is owned by Seller and no other entity, including any management company or any other entity of Seller.  Further, no vehicle required to be titled are being transferred to Buyer pursuant to this Agreement.   

1

1.1.4    All leases and occupancy agreements relating to the Property, including all amendments thereto (collectively, “Leases”); the Leases in effect on the Effective Date are identified on the rent roll attached hereto as Schedule 1; 
1.1.5    Subject to Section 6.6 below, all service, maintenance, supply or other contracts relating to the leasing, advertising, management, operation, maintenance or repair of the Property (including without limitation all warranties and guarantees thereunder) other than the property management agreement (collectively, “Contracts”); the Contracts in effect as of the Effective Date are identified on Schedule 2 attached hereto; 
1.1.6    All licenses, permits, certificates of occupancy and governmental approvals relating to the Property, including without limitation those identified on Schedule 3 attached hereto (collectively, “Approvals”) and any plans, specifications, studies, reports or surveys relating to the Real Property and transferable construction warranties; and
1.1.7    All entitlements and intangible personal property in connection with or arising out of the design, construction, ownership, occupancy, use, management, operation, maintenance, repair or ownership of the Real Property, including, without limitation, trade names (including “Carriage House Apartments” or derivatives thereof), websites, web domains and internet addresses, all phone number(s) for the Real Property, all fax number(s) for the Real Property and logos (collectively, the “Intangible Property”).  Seller states, to the best of its knowledge and belief, that the property currently does not have a separate website or active web domain.   
Included in the Property shall be any and all the foregoing items in which any affiliate of Seller has any right, title or interest, to the extent the same is used solely in connection with the Real Property unless otherwise expressly agreed to by Buyer; it being understood and agreed that Seller shall cause such affiliate to convey the same to Buyer at Closing.  
Excluded from the Property shall be the following items:  all cash, cash equivalents (including certificates of deposit) on hand or in any bank account, including but not limited to the lock box, operating account, deposit account, amounts in the security deposit account that may be in excess of security deposits held pursuant to the tenant leases (it being understood and agreed however that Buyer shall receive a credit at Closing for 100% of all refundable tenant security deposits), and Fannie Mae escrow account, or other account maintained in connection with the ownership, management or operation of the Property including any non-refundable security deposits (but without limiting the credits to Buyer under Section 9.1 or Section 9.2 for all refundable security deposits, prepaid rents or other matters), deposits held by third parties (e.g., utility companies), accounts receivable and any right to a refund or other payment relating to a period prior to the Closing, including any real estate tax refund (subject to the pro-rations hereinafter set forth), bank accounts, claims or other rights of Seller against any present or prior partner, member, employee, agent, manager, officer or director of Seller or its direct or indirect partners, members, shareholders or affiliates, any refund in connection with termination of Seller’s existing insurance policies, any insurance claims or proceeds arising out of or relating to events that occur prior to the Closing Date subject to the terms of Section 12 of this Agreement, all contracts between Seller and any law firm, accounting firm, property manager, or broker, and any Excluded Documents (as hereinafter defined).

2

1.2    No Warranty“AS IS WHERE IS”  Subject to the representations, warranties, covenants and agreements of Seller set forth in this Agreement, Seller is selling and Buyer is purchasing the Property “AS IS WHERE IS” with all faults.  Unless specifically stated otherwise in this Agreement, any and all representations, warranties, covenants and agreements of Seller shall be merged in the deed and shall not survive the Closing.  The Purchase Price (as hereinafter defined) and the terms and conditions set forth in this Agreement are the result of arm’s-length bargaining between entities familiar with transactions of this kind, and said price, terms and conditions reflect the fact that Buyer shall have the benefit of, but, except for the representations, warranties, covenants and agreements of Seller specifically set forth in this Agreement or any document delivered by Seller at Closing pursuant to Section 10 of this Agreement, is not relying upon, any information provided by Seller or statements, representations or warranties, express or implied, made by Seller, including, without limitation, any relating to the value of the Property, the physical or environmental condition of the Property, any state, federal, county or local law, ordinance, order or permit, or the suitability, compliance or lack of compliance of the Property with any regulation, or any other attribute or matter of or relating to the Property.  Upon Closing, Buyer hereby fully releases Seller from, and irrevocably waives its right to maintain, any and all claims and causes of action that it may then have or thereafter acquire against Seller with respect to any and all losses, damages, costs and expenses arising from or related to any defects, errors, omissions in the Seller Deliveries or other conditions affecting the Property except as otherwise provided in this Agreement or any document delivered by Seller at Closing pursuant to Section 10 of this Agreement.   Buyer acknowledges that, provided Seller complies with its obligations under this Agreement, Buyer will have sufficient opportunity prior to Closing to review and conduct such independent analyses, studies, reports, investigations and inspections as it deems appropriate in connection with the Property.  If Seller provides or has provided any documents, summaries, opinions or work product of consultants, surveyors, architects, engineers, title companies, governmental authorities or any other person or entity with respect to the Property, Buyer and Seller agree that (i) Seller has done so or shall do so only for the convenience of both parties or as required under this Agreement, (ii) except to the extent of representations or warranties specifically set forth in this Agreement or any document delivered by Seller at Closing, pursuant to Section 10 of this Agreement, Buyer shall not rely thereon, and (iii) the reliance by Buyer upon any such documents, summaries, opinions or work product shall not create or give rise to any liability of or against Seller except as otherwise expressly provided in this Agreement or any document delivered by Seller at Closing, pursuant to Section 10 of this Agreement.  Buyer acknowledges and agrees that, except as specifically set forth in this Agreement or any document delivered by Seller at Closing, pursuant to Section 10 of this Agreement, no representation has been made and no responsibility is assumed by Seller with respect to the financial earning capacity or expense history of the Property, the continuation of contracts, continued occupancy levels of the Property, or any part thereof, or the continued occupancy by tenants of any Leases or, without limiting any of the foregoing, occupancy, or any other matters arising or related to the Property at Closing.
	
					
	SELLER’S INITIALS:
	SEM
	 
	BUYER’S INITIALS:
	RFE

	 
	SSM
	 
	 
	 

	 
	 
	 
	 
	 

3

2.    PURCHASE PRICE.
The total purchase price (“Purchase Price”) to be paid by Buyer to Seller for the Property shall be SEVEN MILLION SIX HUNDRED THOUSAND AND 00/100 DOLLARS ($7,600,000.00), payable all in cash.

3.    PAYMENT OF PURCHASE PRICE.
The Purchase Price shall be paid as follows:

3.1    Deposit.  As part of the Opening of Escrow (as defined below), Buyer shall deliver to Chicago Title Company (“Escrow Holder”), which has an address of 2441 Warrenville Road, Lisle, Illinois 60532, Lisle, Illinois, Attn: Julie Ebbert, the sum of ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($100,000.00) (“Initial Deposit”) in immediately available funds as a good faith deposit.  The Initial Deposit, the Extension Deposit (as hereinafter defined, if and when made) and all interest earned on any of the foregoing, shall be collectively referred to in this Agreement as the “Deposit.”  At Buyer’s discretion, and pursuant to the policy of Escrow Holder, Escrow Holder shall place the Deposit in one or more government insured interest-bearing accounts satisfactory to Seller and Buyer (which shall have no penalty for early withdrawal), and shall not commingle the Deposit with any funds of Escrow Holder or any other person or entity.  The Deposit shall be governed by the terms of the Joint Order Escrow attached hereto as Exhibit “I”, and, if Closing occurs, shall be applied against the Purchase Price.  The term “Business Day” as used in this Agreement shall mean Monday through Friday, excluding Federal Holidays.   

3.2    Remainder of Purchase Price.  On or before the Closing Date, Buyer shall deposit into Escrow immediately available funds in an amount which, when added to the Deposit, will equal the Purchase Price plus any additional amounts necessary to cover costs and/or pro-rations under this Agreement.

3.3    Buyer Default; Liquidated Damages.  SELLER AND BUYER AGREE THAT, IF THE PURCHASE AND SALE OF THE PROPERTY IS NOT COMPLETED AND THIS AGREEMENT TERMINATES BECAUSE BUYER MATERIALLY DEFAULTS UNDER THIS AGREEMENT OR MATERIALLY BREACHES THIS AGREEMENT (AFTER WRITTEN NOTICE AND SEVEN (7) BUSINESS DAYS TO CURE, EXCEPT WITH RESPECT TO BUYER’S OBLIGATION TO DELIVER THE PURCHASE PRICE AND ANY DOCUMENT(S) REQUIRED UNDER SECTION 10.2 TO ESCROW HOLDER ON OR PRIOR TO THE SCHEDULED CLOSING DATE, FOR WHICH NO NOTICE OR CURE SHALL BE AVAILABLE), THE PORTION OF THE DEPOSIT THEN DEPOSITED WITH ESCROW HOLDER PURSUANT TO THIS AGREEMENT SHALL BE PAID TO SELLER UPON TERMINATION OF THIS AGREEMENT AND RETAINED BY SELLER AS LIQUIDATED DAMAGES AND AS SELLER’S SOLE REMEDY AT LAW OR IN EQUITY.  SELLER AND BUYER AGREE THAT, UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, ACTUAL DAMAGES MAY BE DIFFICULT TO ASCERTAIN AND THE PORTION OF THE DEPOSIT THEN DEPOSITED WITH ESCROW HOLDER PURSUANT TO THIS AGREEMENT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT WILL BE INCURRED

4

 BY SELLER IF BUYER MATERIALLY DEFAULTS UNDER OR MATERIALLY BREACHES THIS AGREEMENT AND FAILS TO PURCHASE THE PROPERTY. 
SELLER’S INITIALS:  SEM____SSM__        BUYER’S INITIALS:  _RFE______

3.4    Seller Default; Specific Performance.  If Seller fails to consummate the sale of the Property pursuant to this Agreement or otherwise materially defaults on its obligations hereunder at or prior to Closing, or if prior to Closing any one or more of Seller’s representations or warranties are breached in any material respect, and such default or breach is not cured by the earlier of the seventh (7th) Business Day after written notice thereof from Buyer or the Closing Date (except no notice or cure period shall apply to Seller’s obligation to deliver the documents required under Section 10.1 to Escrow Holder on or prior to the scheduled Closing Date or otherwise fails to consummate the sale of the Property hereunder), Buyer may (a) terminate this Agreement by giving Seller timely written notice of such termination prior to or at Closing and recover the Deposit and the first $50,000.00 of Buyer’s Costs (as hereinafter defined) incurred as of the date of such termination PLUS, if Buyer first learns of such default after has paid any non-refundable rate lock, spread lock or similar fee to its proposed lender (which Buyer hereby agrees it shall not do earlier than five (5) Business Days prior to the proposed Closing Date), the amount of such non-refundable fee, (b) enforce specific performance to consummate the sale of the Property hereunder, or (c) waive said failure or breach and proceed to Closing without any reduction in the Purchase Price.  Notwithstanding anything herein to the contrary, Buyer shall be deemed to have elected to terminate this Agreement if Buyer fails file a lawsuit asserting a claim or cause of action for specific performance against Seller in the county in which the Property is located within thirty (30) days following the Outside Closing Date.  Buyer’s remedies shall be limited to those described in this Section 3.4 and Section 13.  For purposes of this Agreement, “Buyer’s Costs” shall mean the actual expenses incurred by Buyer and paid (A) to Buyer’s attorneys (including in-house attorneys) in connection with the negotiation of this Agreement or the proposed purchase of the Property, (B) to third party consultants in connection with the performance of examinations, inspections and/or investigations pursuant to Section 6 and (C) to any potential lender in connection with any proposed financing of the Property.

4.    ESCROW INSTRUCTIONS.

4.1    Opening of Escrow.  Within three (3) Business Days after the mutual execution and delivery of this Agreement, the parties shall open an escrow (“Escrow”) with Escrow Holder in order to consummate the purchase and sale in accordance with the terms and provisions hereof by (i) Buyer delivering to Escrow Holder the Initial Deposit and (ii) Buyer and Seller delivering to Escrow Holder their respective executed counterparts of this Agreement and the Joint Order Escrow (collectively, the “Opening of Escrow”).  Escrow Holder shall deliver written confirmation of the date of the Opening of Escrow as well as its countersignature to the Joint Order Escrow to the parties in the manner set forth in Section 17 of this Agreement as well as by e-mail to counsel for the parties.

4.2    Conditions to Close.  Escrow shall not close unless and until the following conditions precedent and contingencies have been satisfied or waived in writing by the party for whose benefit the conditions have been included:

5

4.2.1.    All funds and instruments described in Sections 3 and 10 have been delivered to Escrow Holder, and Seller and Buyer have approved, executed and delivered a settlement statement reflecting the Purchase Price, all pro-rations, and all closing costs as required under this Agreement (the “Settlement Statement”).
4.2.2.    Seller shall have caused the title department of Escrow Holder to have irrevocably committed to Buyer in writing to issue an ALTA 2006 extended owner’s policy of title insurance, in form and content reasonably acceptable to Buyer (and in conformance with the required state of title as provided in Section 6.3 below) insuring Buyer’s fee simple title to the Real Property in an amount equal to the Purchase Price subject only to the Permitted Exceptions (as hereinafter defined) and subject to no conditions other than payment of the applicable premium therefor.
4.2.3    Seller and Buyer shall each have materially performed, observed and complied with all covenants, agreements and conditions required by this Agreement to be performed, observed and/or complied with by such party prior to, or as of, the Closing.
4.2.4    Seller’s and Buyer’s representations and warranties, as stated in Section 7 of this Agreement, shall be true and correct in all material respects as of the Effective Date and as of the Closing Date, except for representations and warranties made as of, or limited by, a specific date, which will be true and correct in all material respects as of the specified date or as limited by the specified date.
4.2.5    There shall exist no pending or threatened actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, against the other party that would materially and adversely affect that party’s ability to perform its obligations under this Agreement.

4.3    Recordation and Transfer.  Upon satisfaction of the conditions set forth in Section 4.2 above, Escrow Holder shall transfer the Property as follows:
4.3.1    Cause the Deed (as such term is hereinafter defined) to be recorded with the Recorder’s Office of Lake County, Illinois;
4.3.2    Deliver to the parties entitled thereto the other Closing Documents (as hereinafter defined); and
4.3.3    Disburse all funds deposited with Escrow Holder by Buyer in payment of the Purchase Price for the Property (subject to applicable pro-rations and adjustments as provided herein) to (i) Seller by wire transfer pursuant to instructions to be delivered by Seller to Escrow Holder, (ii) for closing costs, to the party entitled thereto, and (iii) any remainder to Buyer, all as set forth in the Settlement Statement. 

5CLOSING.

5.1    Generally.  Escrow shall close upon the recordation of the Deed (or if the parties have agreed to close on the basis of gap coverage from the Escrow Holder, then at such 

6

time as the Escrow Holder is otherwise prepared to record the Deed and all the conditions associated with the recording of the Deed have been satisfied) in accordance with the provisions of this Agreement (“Date of Closing”, “Closing Date”, “Closing” or “Close of Escrow”).  The Close of Escrow shall occur on a date selected by Buyer, but in no event later than the date that is sixty (60) days after the Opening of Escrow (“Outside Closing Date”) via escrow delivery of documents and funds to the office of Escrow Holder (or such other location as may be mutually agreed upon by Seller and Buyer), unless otherwise extended (i) by operation of Section 6.3 or  Section 12 below (ii) by Buyer pursuant to Section 5.2 below, or (iii) by written agreement between Buyer and Seller.  

5.2    Extension Option  Notwithstanding Section 5.1 above, Buyer shall have the option (“Extension Option”) to extend the Outside Closing Date for an additional twenty (20) days (“Extended Outside Closing Date”), in Buyer’s sole and absolute discretion, by providing written notice to Seller of such election prior to the Outside Closing Date.  In such case, Buyer shall deposit with Escrow Holder an additional sum of ONE HUNDRED THOUSAND and 00/100 DOLLARS ($100,000.00) (“Extension Deposit”) in immediately available funds on or before the original Outside Closing Date.  The Extension Deposit shall automatically become part of the Deposit for all purposes under this Agreement.  

6.    BUYER’S REVIEW.

6.1    Delivery of Documents.  Within seven (7) days after the Opening of Escrow, Seller shall, at the sole expense of Seller, deliver to Buyer (in electronic format to the extent feasible, otherwise by making available at the Property) all documents pertaining to the Property that are in the possession or control of, or are reasonably available to, Seller, including, without limitation, the documents listed on Exhibit “C” attached hereto (collectively, the “Seller Deliveries”) other than the Excluded Documents (as hereinafter defined) and without any obligation on the part of Seller to pay any third party to prepare or deliver any such documents that are not in Seller’s or its property manager’s possession.  Seller hereby acknowledges and agrees that the following are in the possession of or control of, or are reasonably available to, Seller and will be provided to Buyer:  monthly operating statements (year-to-date and 2-year historical); year-end financial statements, audited if available (past 2 years); general ledger (year-to-date and 2-year historical); and copies of all Leases.  Notwithstanding the foregoing, the Leases will not be delivered to Buyer, but may be reviewed and copied by Buyer at the property management office located at the Property, provided that upon Buyer’s request, Seller shall deliver to Buyer a sample set of no less than twenty percent (20%) of the Leases.  Except as specifically set forth in this Agreement pursuant to Section 7 or any document executed by Seller at Closing, Seller makes no representations or warranties, express, written, oral, statutory or implied with respect to the Seller Deliveries or the Property, and all such representations and warranties are hereby expressly disclaimed.  All Seller Deliveries or other information provided by Seller to Buyer are for informational purposes only, and Buyer shall not in any way be entitled to rely upon the completeness or accuracy of such materials and information, except as specifically set forth in this Agreement pursuant to Section 7, or any document executed by Seller at Closing, and will instead rely on its own inspections with respect to all matters it deems relevant to its decision to acquire, own and operate the Property.  Notwithstanding anything to the contrary set forth herein, Buyer acknowledges and agrees that it shall have no right to review or inspect any of the following (the “Excluded Documents”):  (a) reports prepared by or for Seller 

7

or any of its affiliates in connection with the proposed sale of the Property, (b) communications between Seller or any of its affiliates and their attorneys, (c) appraisals, financial assessments or other financial evaluations of the Property prepared by or for Seller or any of its affiliates and (d) other correspondence, memoranda and documents prepared or intended solely for internal use of Seller and/or its affiliates.  

6.2    Access.  Commencing upon the execution of this Agreement by Buyer and Seller, Seller shall permit (or cause to be permitted ) Buyer or Buyer’s agents, employees, contractors, lenders and representatives access to the Property for purposes of any non-intrusive physical or environmental test, study or inspection of the Property and, to the extent copies are not provided to Buyer by Seller pursuant to Section 6.1, review and copying of Seller’s books and records relating to the Property (other than Excluded Documents) and any of the documents described in Section 6.1 above, and other matters necessary in the discretion of Buyer to evaluate and analyze the feasibility of the Property for Buyer’s intended use thereof.  Buyer shall not conduct or authorize any physically intrusive testing of, on, or under the Property without first obtaining Seller’s consent (which may be via electronic mail, but without requirement for concurrent overnight delivery) as to the timing and scope of work to be performed, which consent shall not be unreasonably withheld, conditioned or delayed.  Seller hereby acknowledges and agrees that Buyer or Buyer’s representatives may communicate with any governmental authority or quasi-governmental authority for the purpose of gathering information in connection with the Property or the Seller, or the transaction contemplated by this Agreement.  Prior to any entry Buyer shall notify (which may be via electronic mail, but without requirement for concurrent overnight delivery) Seller and Seller shall have the right to have a representative of Seller present during any entry onto the Property by Buyer.  Buyer shall not contact any tenant of the Property without the prior written approval of Seller.  In the event that Seller does consent to Buyer’s contact with any tenant of the Property, Seller shall have the right to have a representative of Seller present during any such interview.  Prior to any entry onto the Property for purposes of inspection or testing (as opposed to solely for review of materials), Buyer shall provide Seller with evidence that Buyer maintains liability insurance with coverage in an amount not less than $1,000,000.00 combined single limit, for personal injury, including bodily injury and death, and property damage.  Such insurance shall name Seller and Seller’s property manager (if requested in writing by Seller) as additional insured parties and shall be with companies authorized to issue insurance in the state in which the Real Property is located.  

6.3    Title and Survey.
6.3.1    Upon Opening of Escrow, Seller shall place an order with Escrow Holder that shall cause Escrow Holder to issue to Buyer within ten (10) days after the date of such order a current commitment for an owner’s policy of title insurance in the amount of the Purchase Price on an ALTA 2006 form together with copies of all documents of record referenced therein (collectively, the “Title Commitment”) at Seller’s sole cost and expense (as provided in Section 11 below).  Buyer shall have twenty-five (25) days following its receipt of the Title Commitment and any survey provided to Buyer pursuant to Section 6.3.2 below (“Title Objection Period”) in which to notify Seller in writing of any objections Buyer has, in Buyer’s sole and absolute discretion, to any matters shown on the Title Commitment (“Title Objection Notice”).  All objections raised by Buyer in the manner herein provided are hereafter called “Objections.”  Subject to the 

8

requirements set forth in the penultimate sentence of this Section 6.3.1, Seller shall notify Buyer in writing as to which Objections, if any, Seller irrevocably agrees to remedy or remove at or prior to Closing within five (5) Business Days following Buyer’s delivery of the Title Objection Notice (“Seller’s Notice Period”).  In the event Seller fails to provide such notice or indicates in such notice that Seller is unwilling to irrevocably agree to remedy or cause the removal of any Objections at or prior to Closing within Seller’s Notice Period, then Buyer, within five (5) Business Days after the expiration of Seller’s Notice Period (“Buyer’s Termination Period”), shall deliver to Seller written notice electing, in Buyer’s sole and absolute discretion, to either (i) terminate this Agreement, or (ii) unconditionally waive any such Objections, failing which Buyer shall conclusively be deemed to have elected (ii) above.  Any new title or survey information received by Seller or Buyer after the expiration of the Title Objection Period, Seller’s Notice Period or Buyer’s Termination Period, as applicable, from a supplemental title report, survey or other source which is not the result of the acts or omissions of Buyer or its agents, contractors or invitees (each, a “New Title Matter”) shall be subject to the same procedure provided in this Section 6.3 (and the Date of Closing shall be extended commensurately if the Closing would have occurred but for those procedures being implemented for a New Title Matter), except that Buyer’s Title Objection Period, Seller’s Notice Period and Buyer’s Termination Period for any New Title Matters shall be five (5) Business Days each.  Close of Escrow shall be delayed as needed to accommodate such additional time periods.  Notwithstanding anything to the contrary contained herein, Seller shall have no obligation to cure title Objections except (i) financing liens of an ascertainable amount created by, under or through Seller, which liens Seller shall cause to be released at or prior to Closing (with Seller having the right to apply the Purchase Price or a portion thereof for such purpose), and Seller shall deliver the Property free and clear of any such financing liens, (ii) any exceptions or encumbrances to title which are created by, under or through Seller after the Effective Date without Buyer’s consent, and (iii) any Objections which Seller has specifically agreed, in writing, to cure.  The term “Permitted Exceptions” shall mean: the specific exceptions in the Title Commitment approved by Buyer; other exceptions to which Buyer has not raised an Objection as provided herein or has subsequently waived such Objection in writing and that Seller is not required to remove as provided above; real estate taxes not yet due and payable; rights of tenants (as tenants only) under the Leases; and any matters approved by Buyer or arising by, through or under Buyer or its or Buyer’s contractors, employees, representatives, proposed lenders, or agents.
6.3.2    Within five (5) days after the Opening of Escrow, Seller shall provide Buyer with a copy of any existing survey of the Property in Seller’s possession or control.  Buyer, at its sole cost and expense, may elect to obtain a new survey or revise, modify, or re-certify an existing survey of the Property (either, the “Survey”) as necessary in order for the title department of Escrow Holder to delete the general survey exception from title or to otherwise satisfy Buyer’s objectives.

6.4    Buyer’s Due Diligence; Indemnity.  Buyer shall have thirty (30) Business Days from and after the Opening of Escrow (“Due Diligence Period”) to evaluate and analyze the feasibility of the Property for Buyer’s intended use thereof, including, without limitation, the zoning of the Property, the physical, environmental and geotechnical condition of the Property and the economic feasibility of owning and operating the Property.  If, during the Due Diligence Period, Buyer determines in Buyer’s sole and absolute discretion that the Property is not acceptable for any 

9

reason whatsoever, Buyer shall have the right, by giving written notice to Seller on or before the last day of the Due Diligence Period, to terminate this Agreement.  Except to the extent arising out of the negligence or willful misconduct of Seller or Seller’s contractors, employees, representatives or agents, Buyer agrees to indemnify and hold Seller harmless and defend Seller from and against any claims, liabilities, liens, cause of action, expenses, costs, or damages (including reasonable attorneys’ fees and personal injury claims but expressly excluding punitive, special, consequential or incidental damages) resulting from the inspection of the Property prior to the Closing Date by Buyer or Buyer’s contractors, employees, representatives, or agents; provided, however, that Buyer shall not be responsible for any losses or expenses resulting from the discovery of adverse information regarding the Property.  In the event this Agreement is terminated for any reason, Buyer shall promptly restore the Property to the extent of any physical change or damage made as a result of the conduct of any inspection or investigation of the Property by Buyer or Buyer’s agents, representatives or contractors to substantially the same condition that existed immediately prior to Buyer’s inspection and investigation, to the extent permitted by applicable law.  Any provision to the contrary herein notwithstanding, the provisions of the previous two sentences shall survive termination of this Agreement for any reason for a period of four (4) months (as it pertains to any property damage to Seller’s property caused by Buyer or any other claim by Seller) or one (1) year (as it pertains to any property damage to any tenant’s property or any personal injury or other claim by a third party) and control over any provisions to the contrary herein; provided however that if Seller shall have provided written notice to Buyer with reasonable detail of a specified repair or payment Buyer is required to make hereunder, then such period shall be extended until such repair is complete or payment is made.

6.5    Buyer’s Termination Right.  If Buyer exercises the right to terminate this Agreement in accordance with Sections 6.3 (including without limitation for any New Title Matter) or 6.4 hereof, this Agreement shall terminate as of the date the termination notice is given by Buyer (except as to such matters that are expressly specified to survive the termination of this Agreement), and Escrow Holder shall return the Deposit to Buyer  If Buyer does not exercise the right to terminate this Agreement in accordance with Sections 6.3 or Section 6.4 hereof, this Agreement shall continue in full force and effect and the Deposit shall become non-refundable except as provided in Section 3.1 above. 

6.6    Contracts.  On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing as to which of the assumable Contracts Buyer elects to assume at Closing, in Buyer’s sole and absolute discretion; provided that to the extent that any Contract expressly requires payment of a penalty, premium, or damages, including liquidated damages, for cancellation and Buyer elects not to assume such Contract, then Buyer shall be solely responsible for the payment of the same, which obligation shall survive Closing.  If Buyer fails to provide such notice, Buyer shall be deemed to have elected not to assume any of the Contracts.  Promptly following expiration of the Due Diligence Period, Seller shall notify the vendors under those Contract(s) that Buyer has not agreed to assume (with a copy of such notice to Buyer) and, provided that Closing occurs hereunder, such Contracts shall terminate effective as of the Date of Closing. Seller shall cooperate with Buyer, both before and after the Close of Escrow, to obtain any approvals or consents required to assign any Contracts to Buyer, including, without limitation, sending requests for such approvals or consents to the party or parties whose consent or approval is required.  If Seller fails 

10

to timely send any such request for approval or consent, Buyer may do so in Seller’s name.  Seller’s obligations under this Section 6.6 shall survive the Close of Escrow for a period of three (3) months.  Notwithstanding anything in this Agreement to the contrary, Buyer shall have no obligation to assume any obligation under any Contract for reimbursement of any amounts paid prior to the Closing Date upon termination of said Contract, and, if Buyer does assume such obligation, then Seller shall indemnify Buyer with respect thereto (except to the extent that such termination is due to an affirmative act or omission of Buyer resulting in a default under said Contract). 

7.    REPRESENTATIONS AND WARRANTIES.

7.1    Seller’s Representations and Warranties.  The representations, warranties and covenants of Seller in this Section 7.1 shall survive the Closing for one (1) year.  Seller represents, warrants and covenants to Buyer as of the Effective Date and as of the Closing Date as follows: 
7.1.1    Seller is duly organized, validly existing and in good standing under the laws of the State of Illinois.  Seller has full power and authority to enter into this Agreement and to perform this Agreement.  The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action on the part of Seller and all required consents and approvals have been duly obtained.  This Agreement is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.  There is no agreement to which Seller is a party or, to Seller’s knowledge, that is binding on Seller which is in conflict with this Agreement.  
7.1.2    All of the Personal Property is described in Exhibit “B-1” attached hereto, which is a materially accurate and complete list of all material tangible personal property owned by Seller relating to the ownership, management, operation, maintenance or repair of the Real Property.  All of the Personal Property is located at the Real Property.  Seller has (and can convey at Closing) good title to the Personal Property and the Intangible Property, free and clear of all liens, encumbrances, security interests and adverse claims of any kind or nature whatsoever, other than liens, encumbrances and security interests that will be terminated at or prior to Closing.
7.1.3    All of the Leases are described in Schedule 1 attached hereto, and there are no persons leasing, using or occupying the Real Property or any part thereof except the tenants under the Leases.  All of the Contracts are described in Schedule 2 attached hereto, which is an accurate and complete list of all presently effective contracts, agreements, warranties and guaranties relating to the leasing, advertising, promotion, design, construction, ownership, management, operation, maintenance or repair of the Real Property.  All of the Approvals are described in Schedule 3 attached hereto, which is an accurate and complete list of all presently effective building permits, certificates of occupancy, and other certificates, permits, licenses and approvals relating to the design, construction, ownership, occupancy, use, management, operation, maintenance or repair of the Real Property.  Seller has (and can convey at Closing) good title to the Leases, the Contracts and the Approvals, free and clear of all liens, encumbrances, security interests and adverse claims of any kind or nature whatsoever, other than liens, encumbrances and security interests that will be terminated at or prior to Closing.  

11

7.1.4    The rent roll attached hereto as Schedule 1 is, and each updated rent roll provided after the date hereof will be, accurate and complete in all material respects as of the date thereof (each a “Rent Roll”).  Except as set forth on the applicable Rent Roll, to the best of Seller’s knowledge: (a) the Leases are in full force and effect, have not been amended or modified, and the full current rent is accruing thereunder, (b) no monthly rent has been paid more than one (1) month in advance (except as otherwise expressly permitted or required pursuant to the terms of the Lease) and no security deposit or prepaid rent has been paid, (c) no event has occurred or condition exists which, with or without notice or the passage of time, or both, would constitute a breach or a default by the landlord or by any tenant under the Leases, (d) Seller has received no notice from any tenant under the Leases claiming any breach or default by Seller under any of the Leases, and (e) no concession, moving or relocation allowance or credit, or other payment or credit of any kind is presently owed, or will or could become due and payable, to any tenant under the Leases.  
7.1.5    Seller has received no written notice from any insurance broker, agent or underwriter that any non-insurable condition exists in, on or about the Real Property or any part thereof.  Seller has received no written notice that, the Property and every part thereof and the use and occupancy thereof are not in compliance with all applicable building, earthquake, zoning, land use, environmental, antipollution, health, fire, safety, access and accommodations for the physically handicapped, subdivision, energy and resource conservation and similar laws, statutes, rules, regulations and ordinances and all covenants, conditions and restrictions applicable to the Real Property.  Seller has received no notice, citation or other claim alleging any violation of any such law, statute, rule, regulation, ordinance, covenant, condition or restriction.  To Seller’s knowledge, Seller has performed, satisfied and discharged all of the obligations, requirements and conditions imposed on the Real Property by the Approvals and the Permitted Exceptions.
7.1.6    Seller has received no written notice of the presence of any Hazardous Substances (as defined below) or the violation of any Environmental Laws (as defined below) at the Property, except as described in any environmental report provided by Seller as part of Seller’s Deliveries.  Except for the foregoing sentence, the “as-is” provisions of Section 1.2 shall apply to any and all environmental conditions of the Property, except Seller shall reasonably cooperate with Buyer obtaining, at Buyer’s cost, a Phase I Environmental Report regarding the Property or update, at Buyer’s cost, any environmental report provided by Seller as part of Seller’s Deliveries.  
7.1.7    To the best of Seller’s knowledge, and except for a possible personal injury claim due to a “slip and fall” type accident which is expected to be fully covered by insurance (and as to which Seller shall provide to Buyer all non-privileged information requested by Buyer), there is no litigation, arbitration or other legal or administrative suit, action, proceeding or investigation of any kind pending (including, without limitation, involving the federal Department of Housing and Urban Development or the Americans with Disabilities Act of 1990, as amended, or any other law, rule or regulation governing access by disabled persons, any land use or zoning action, any condemnation, eminent domain or similar action, or any action to contest or appeal the amount of real or person property taxes or assessments) or, to Seller’s knowledge, threatened against or involving Seller or relating to the Property or any part thereof and, to Seller’s knowledge, there is no valid basis for any such litigation, arbitration or other legal or administrative suit, action, proceeding or investigation.  
7.1.8    Seller is not a “foreign person” as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder. 

12

7.1.9    No withholding of tax will be required with respect to the sale of the Property by Seller. 
7.1.10    Seller is solvent, has not made a general assignment for the benefit of its creditors, and has not admitted in writing its inability to pay its debts as they become due, nor has Seller filed, nor does it contemplate the filing of, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or any other proceeding for the relief of debts in general, nor has any such proceeding been instituted by or against Seller.
7.1.11    Except for Todd Stofflet – Managing Partner of KIG (“Broker”), Seller has not dealt with any investment adviser, real estate broker or finder, or incurred any liability for any commission or fee to any investment adviser, real estate broker or finder, in connection with the sale of the Property to Buyer or this Agreement.
7.1.12    All loans with lenders with liens affecting the Property are currently in good standing and not in default, and Seller shall cause all lenders, including, without limitation, Lenders, to reconvey or release (as applicable) such liens at the Close of Escrow.
7.1.13    The transaction contemplated by this Agreement (and any underlying obligations contemplated by this Agreement) does not and shall not constitute a non-exempt prohibited transaction under the Employee Retirement Income Security Act of 1974 (“ERISA”) or a comparable violation of state law.
7.1.14    Seller is not any of the following:  (i) a person or entity that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (herein called the “Executive Order”); (ii) a person or entity owned or controlled by, or acting for or on behalf of any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity that is named as a “specifically designated national” or “blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control (herein called “OFAC”) at its official website, http://www.treas.gov/offices/enforcement/ofac; (iv) a person or entity that is otherwise the target of any economic sanctions program currently administered by OFAC; or  (v) a person or entity that is affiliated with any person or entity identified in the foregoing clauses (i), (ii), (iii), or (iv).
7.1.15    Seller owns no real property or personal property except for the Property.  No affiliate of Seller owns any real or personal property (tangible or intangible, and specifically including contract rights) located on or used solely in connection with the Property
7.1.16    To the best of Seller’s knowledge, all of the Seller Deliveries provided to Buyer are true and complete copies of such documents, and all material documents concerning the Property that are in Seller’s possession or reasonable control have been included in the Seller Deliveries. 

13

7.1.17    To the best of Seller’s knowledge, Seller’s property manager employed at or in connection with the Property have been paid their respective salaries and any fringe benefits (including vacation and sick-leave) accruing through the Effective Date and will be paid in full as of the Closing Date.  Seller represents it has no employees.  
7.1.18    Neither Seller nor any previous owner of the Property has sold, transferred, conveyed, or entered into any agreement regarding water or water rights relating to the Property, except as otherwise expressly set forth in the Title Commitment.
The phrases “to the best of Seller’s Knowledge”, “to the knowledge of Seller” and words of similar import shall mean the actual, current knowledge of Stephen McPartlin, Manager of Seller, or Chris McPartlin, agent for the Seller, without any independent investigation, and does not include any imputed or constructive knowledge that may be attributed to such individuals. Such individuals shall have absolutely no personal liability under this Agreement.

7.2    Buyer’s Representations and Warranties.  The representations, warranties and covenants of Buyer in this Section 7.2 shall survive the Closing for one (1) year.  Buyer represents, warrants and covenants to Buyer as of the Effective Date and as of the Closing Date as follows:
7.2.1    Buyer is duly organized, validly existing, and in good standing under the laws of the State of its formation.
7.2.2    Buyer has all requisite power and authority to execute and deliver this Agreement and to carry out its obligations hereunder and the transactions contemplated hereby.  This Agreement has been, and the documents contemplated hereby will be, duly executed and delivered by Buyer and constitute its legal, valid, and binding obligation enforceable against it in accordance with its terms.  
7.2.3    Buyer is not any of the following:  (i) a person or entity that is listed in the annex to, or is otherwise subject to the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity that is named as a “specifically designated national” or “blocked person” on the most current list published by OFAC at its official website, http://www.treas.gov/offices/enforcement/ofac; (iv) a person or entity that is otherwise the target of any economic sanctions program currently administered by OFAC; or  (v) a person or entity that is affiliated with any person or entity identified in the foregoing clauses (i), (ii), (iii), or (iv).
7.2.4    Except for Broker, Buyer has not dealt with any investment adviser, real estate broker or finder, or incurred any liability for any commission or fee to any investment adviser, real estate broker or finder, in connection with the purchase of the Property or this Agreement.

14

8.    COVENANTS.

8.1    Seller.  Seller covenants and agrees with Buyer as follows:
8.1.1    Between the Effective Date and the Closing Date, Seller shall not execute any new lease, contract, approval or encumbrance affecting the Property or amend, modify, renew, extend or terminate any of the existing Leases, Contracts, Approvals or Permitted Exceptions without the prior approval of Buyer, which approval may be withheld in Buyer’s sole and absolute discretion; provided, however, that any Leases that are either renewed on a month-to-month basis or are consistent with the current leasing practices of Seller as of the Effective Date, including, without limitation, current rental rates and concessions as of the Effective Date, shall be deemed to be automatically approved by Buyer.  Under no circumstance may Seller enter into any new lease for a term of less than 6 months or more than 15 months, or accept any payments under any Leases more than 2 months in advance.  Further, Seller, in emergency situations or in situations that are critical to the operation of the Property, may enter into Contracts for goods and services without the approval of Buyer, provided that such Contracts must be terminable upon no more than thirty (30) days’ notice without payment of any penalty or fee.  Notwithstanding anything herein to the contrary, Buyer shall be deemed to have approved a proposed lease or contract if Buyer has not made an objection to such lease or contract within two (2) Business Days after Buyer’s receipt of such proposed lease or contract and a written request for approval from Seller.  
8.1.2    Between the Effective Date and the Closing Date, Seller shall manage, operate, maintain and repair the Property in the ordinary course of business in accordance with Seller’s current management, operating, maintenance and repair practices in effect as of the Effective Date (including, without limitation, maintenance of substantially the same advertising and marketing programs for the Real Property in effect as of the Effective Date), keep the Property in good repair and working order and sound condition, comply with the Approvals, Permitted Exceptions, and all covenants, conditions, restrictions, laws, statutes, rules, regulations and ordinances applicable to the Property, keep the Leases, the Contracts, the Approvals and Permitted Exceptions in force, and promptly give Buyer copies of all default and other material notices given or received by Seller under the Leases (exclusive of customary delinquency notices given to tenants) or the Contracts or any violation of or material matters concerning the Approvals, Permitted Exceptions or any covenants, conditions, restrictions, laws, statutes, rules, regulations or ordinances applicable to the Property.  Seller shall not (i) create or agree to any easements, liens, mortgages, encumbrances or other interests that would affect the Property or Seller’s ability to comply with this Agreement; (ii) initiate or consent to, approve or otherwise take any action with respect to zoning or any other governmental rules or regulations presently applicable to all or any part of the Real Property; or (iii) fail to pay in a timely fashion all proper bills for labor or services for work performed for or on behalf of Seller with respect to the Property.  Between the Effective Date and the Closing Date, Seller shall keep in force property insurance covering all buildings, structures, improvements, machinery, fixtures and equipment included in the Real Property insuring against all risks of physical loss or damage, subject to standard exclusions, in an amount equal to the actual replacement cost (without deduction for depreciation) of such buildings, structures, improvements, machinery, fixtures and equipment.

15

8.1.3    Immediately after Seller obtains any written information indicating that any Hazardous Substances may be present or any Release or threatened Release of Hazardous Substances may have occurred in, on or under the Real Property (or any nearby real property which could migrate to the Real Property) or that any violation of any Environmental Laws may have occurred at the Real Property, Seller shall give written notice thereof to Buyer with a reasonably detailed description of the event, occurrence or condition in question.  Seller shall immediately furnish to Buyer copies of all written communications received by Seller from any person (including notices, complaints, claims or citations that any Release or threatened Release of any Hazardous Substances or any violation of any Environmental Laws has actually or allegedly occurred) or given by Seller to any person concerning any past or present Release or threatened Release of any Hazardous Substances in, on or under the Real Property (or any nearby real property which could migrate to the Real Property) or any past or present violation of any Environmental Laws at the Real Property.  Seller shall not be deemed to have breached the foregoing covenants with respect to Lawful Substances. As used in this Agreement, the following definitions shall apply:  “Environmental Laws” shall mean all federal, state and local laws, ordinances, rules and regulations now or hereafter in force, as amended from time to time, in any way relating to or regulating human health or safety, or industrial hygiene or environmental conditions, or protection of the environment, or pollution or contamination of the air, soil, surface water or groundwater, and includes the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., the Clean Water Act, 33 U.S.C. § 1251, et seq., and the Hazardous Substance Account Act.  “Hazardous Substances” shall mean any substance or material that is described as a toxic or hazardous substance waste or material or a pollutant or contaminant, or words of similar import, in any of the Environmental Laws, and includes, without limitation, asbestos, petroleum (including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), petroleum products, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive matter, medical waste, and chemicals which may cause cancer or reproductive toxicity.  “Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment, including continuing migration, of Hazardous Substances into or through soil, surface water or groundwater.  “Lawful Substances” shall mean the safe and lawful use and storage by Seller, any tenant or any other person of quantities of (i) pre-packaged supplies, cleaning materials and petroleum products customarily used in the operation and maintenance of comparable multifamily properties, (ii) cleaning materials, personal grooming items and other items sold in pre-packaged containers for consumer use and used by tenants and occupants of residential dwelling units in the Property, and (iii) petroleum products used in the operation and maintenance of motor vehicles from time to time located on the Property’s parking areas, so long as all of the foregoing are used, stored, handled, transported and disposed of in compliance with Environmental Laws (collectively, “Lawful Substances”)
8.1.4    Seller shall promptly (i) notify Buyer in writing of any litigation, arbitration, condemnation or administrative hearing before any court or governmental agency concerning Seller or the Property that is instituted after the Effective Date, other than eviction or unlawful detainer actions that will be completed prior to Closing, (ii) provide to Buyer copies of any Leases or Contracts entered into after the Effective Date (subject to the terms of Section 8.1.1 

16

above) and any documents or materials received by Seller from and after the Effective Date that would have been included in Seller Deliveries if received prior to such date, and (iii) within three (3) Business Days after Seller’s receipt of request therefor, provide to Buyer an updated Rent Roll with all information concerning the Leases updated through the date that is three (3) Business Days before the date that the updated Rent Roll is delivered to Buyer.
8.1.5    Seller shall indemnify and defend Buyer against and hold Buyer harmless from all claims, demands, liabilities, losses, damages, costs and expenses, including reasonable attorneys’ fees and disbursements, (i) that may be suffered or incurred by Buyer if any representation or warranty made by Seller in Section 7.1 hereof, excluding Section 7.1.17, was untrue or incorrect in any material respect when made or deemed remade or that may be caused by any breach by Seller of any such representation or warranty or any breach of this Agreement, or (ii) arising from or based on any failure by Seller to perform all obligations of Seller in accordance with the Leases, Contracts, Approvals, Permitted Exceptions or applicable laws before the Closing Date, or any third party property damage or personal injury occurring in, on or about the Real Property before the Closing Date.  
8.1.6    Between the Effective Date of this Agreement and the Closing Date, Seller shall not (i) in any manner sell, convey, assign, transfer, encumber or otherwise dispose of the Property or any part thereof or interest therein, or (ii) market, initiate, solicit, continue or respond to any offers or negotiations related to the sale of the Property or any material portion thereof or interests therein.
8.1.7    Seller shall not dissolve its existing entity and shall remain validly existing and in good standing under the laws of the State of its formation during the period commencing on the Effective Date of this Agreement and ending on the date that is nine (9) months after the Closing Date; provided, however, that if Buyer gives Seller written notice of a claim under this Agreement on or before the expiration of such period or final tax pro-rations remain outstanding, such covenant shall extend until the date such claim has been satisfactorily resolved in Buyer’s reasonable discretion and/or such final tax pro-rations have been paid.
The indemnification obligations of Seller set forth in this Section 8.1 shall survive the Closing for a period of nine (9) months.  Any claim made by Buyer in connection with said indemnities shall be made within nine (9) months after the Closing or termination or shall automatically be null, void and of no force or effect whatsoever, and Buyer’s remedies for any such claim shall be limited to recovery of damages not to exceed an amount equal to one and one-half percent (1.5%) of the Purchase Price; provided, however, that there shall be no such monetary limitation on Buyer’s damages in connection with any third party personal injury claims; and provided further however that Buyer shall not be entitled to indemnification from Seller with respect to a breach by Seller of a representation or warranty or of this Agreement of which Buyer had actual knowledge prior to Closing, it being understood and agreed that Buyer’s remedies with respect to any such breach actually discovered by Buyer prior to Closing shall be as set forth in Section 3.4 above.

8.2    Buyer.  Buyer covenants and agrees with Seller as follows:                                                   8.2.1    Buyer shall indemnify and defend Seller against and hold Seller harmless from all claims, demands, liabilities, losses, damages, costs and expenses, including reasonable attorneys’ fees and disbursements, (i) 

17

that may be suffered or incurred by Seller if any representation or warranty made by Buyer in Section 7.2 hereof was untrue or incorrect in any material respect when made or deemed remade or that may be caused by any breach by Buyer of any such representation or warranty or any breach of this Agreement, or (ii) arising from or based on any failure by Buyer to perform all obligations of Buyer in accordance with the Leases, Contracts Approvals, Permitted Exceptions or applicable laws arising and accruing on or after the Closing Date and during Buyer’s ownership of the Property, or any third party property damage or personal injury occurring in, on or about the Real Property from or after the Closing Date.
The indemnification obligations of Buyer set forth in this Section 8.2 shall survive the Closing for a period of nine (9) months.  Any claim made by Seller in connection with said indemnities shall be made within nine (9) months after the Closing or termination or shall automatically be null, void and of no force or effect whatsoever, and Seller’s remedies for any such claim shall be limited to recovery of damages not to exceed an amount equal to one and one-half percent (1.5%) of the Purchase Price; provided, however, that there shall be no such monetary limitation on Seller’s damages in connection with any third party personal injury claims; and provided further however that Seller shall not be entitled to indemnification from Buyer with respect to a breach by Buyer of a representation or warranty of which Seller had actual knowledge prior to Closing, it being understood and agreed that Seller’s remedies with respect to any such breach actually discovered by Seller prior to Closing shall be as set forth in Section 3.3 above.

8.3    Broker Indemnity.  Seller hereby agrees to indemnify and hold Buyer harmless from and against any and all claims for brokerage or finder’s fees or other similar commissions or compensation made by any and all other brokers or finders claiming to have dealt with Seller in connection with this Agreement or the consummation of the transaction contemplated hereby.  Buyer hereby agrees to indemnify and hold Seller harmless from and against any and all claims for brokerage or finder’s fees or other similar commissions or compensation made by any and all other brokers or finders claiming to have dealt with Buyer in connection with this Agreement or the consummation of the transaction contemplated hereby, other than Broker.  The terms of this Section 8.3 shall survive Closing.

9.    ADJUSTMENTS AND PRORATIONS.

9.1    Generally.  All taxes (including, without limitation, real estate taxes and personal property taxes), collected rents, laundry income, fees, rents and other income paid under any contracts Buyer elects to assume pursuant to Section 6.6 above (including, without limitation, any amounts paid on or in connection with the execution of the applicable contract for rights and privileges provided over the term of the applicable contract), parking income, furniture rental, charges for utilities (including water, sewer, gas, and fuel oil) and for utility services, maintenance and service contracts under any contracts Buyer elects to assume pursuant to Section 6.6 above, all other operating costs and expenses that are customarily prorated in similar transactions (but not including insurance premiums, management fees, employee costs, etc.), and all other income of every kind that in any manner relates to the operation of the Property shall be prorated as of 11:59 p.m. the day immediately preceding the Date of Closing (the “Proration Date”).  If the amount of any such items is not known on the Proration Date, they shall be apportioned on the basis of the amounts for the preceding year, with a reapportionment as soon as the new amounts can be ascertained.  Given real estate taxes are paid in arrears in the State of Illinois, real estate taxes shall be prorated based upon a separate real estate tax re-proration agreement drafted by Seller’s counsel and approved by Buyer’s counsel.  Any deposits on utilities paid by Seller shall be returned to Seller.  

18

On the Date of Closing, Seller shall deliver to Buyer all inventories of supplies on hand at the Property owned by Seller, if any, at no additional cost to Buyer.

9.2    Rental Income.  Rental income from the Property (including, without limitation, laundry income, late fees and charges, and all other payments received from tenants under or in connection with the Leases) shall be prorated as of the Proration Date.  Non-delinquent rents shall be prorated as of the Proration Date.  Rents delinquent as of the Proration Date (i.e., rents that are due and owing after the expiration of any applicable grace period or, if no grace period is provided, after the date such rents are due), but collected later, shall be prorated as of the Proration Date when collected.  Rents collected after the Proration Date from tenants whose rental was delinquent at the Proration Date shall be deemed to apply first to the current rental due at the time of payment and second to rentals which were delinquent as of the Proration Date.  Rents collected after the Proration Date to which Seller is entitled shall be promptly paid to Seller.  For a period of sixty (60) days after the Closing Date, Buyer shall use reasonable efforts to collect all rents which are delinquent as of the Proration Date with no obligation to incur any expenses or commence litigation to collect such rents.  Commencing as of sixty one (61) days after the Closing Date, Seller may use reasonable efforts, including litigation, to collect any rents delinquent as of the Proration Date which are still uncollected; provided, however, in exercising its remedies against tenants as outlined in this Section, Seller shall not evict any tenant of the Property or otherwise unreasonably interfere with Buyer’s operation of the Property.  With respect to all unapplied security deposits, if any, made by tenants at the Property, Buyer shall receive a credit toward the Purchase Price for all such security deposits then held on behalf of Seller at Closing.  Any leasing commissions with respect to the Leases shall be the sole responsibility of Seller, and shall be paid or discharged fully at or prior to Closing.  

9.3    RUBS.  Within ninety (90) days after the Closing Date, all reimbursable utility bills for utility charges incurred by Seller and reimbursable to Seller from the tenants under the Leases for periods prior to Closing (“RUBS”), if received by Buyer, shall be remitted by Buyer to Seller.  Thereafter, Buyer shall have no obligation to remit RUBS income to Seller.

9.4    Proration Period.  If any of the items subject to proration hereunder cannot be prorated as of the Proration Date because the information necessary to compute such proration is unavailable, or if any errors or omissions in computing prorations as of the Proration Date are discovered subsequent to the Close of Escrow, then such item shall be reapportioned and such errors and omissions corrected as soon as practicable after the Close of Escrow and the proper party reimbursed within thirty (30) days after such party’s receipt of written demand therefor. This covenant shall survive the Closing of the sale contemplated hereby for a period of two years (2) year with respect to tax prorations and ninety (90) days with respect to all other prorations, and shall then terminate.

9.5    Rent Ready Adjustments.  Not more than forty-eight (48) hours prior to Close of Escrow (“Walk Through Date”), a representative of Buyer and a representative of Seller shall conduct an onsite walk-through of the then unoccupied rental units on the Property to determine whether such unoccupied rental units are in “rent ready” condition.  With respect to any rental unit that is vacated either (a) on or before five (5) days prior to Close of Escrow that Seller has not placed 

19

in a “rent ready” condition before the Walk Through Date or (b) on or after the Walk Through Date, Buyer shall receive a credit against the Purchase Price at Closing in the amount of $750 per unit.  As used herein, “‘rent ready’ condition” means Seller’s practice and procedures, as of the date of this Agreement, for placing units in “rent ready” condition.  Nothing contained in this Section 9.5 shall be construed as limiting Buyer’s rights and Seller’s obligations under the other provisions of this Agreement.  

10.    CLOSING DOCUMENTS.

10.1    Seller’s Deliveries.  Conditioned upon performance by Buyer hereunder, Seller shall execute and deliver to Escrow Holder prior to Closing the following:
10.1.1    Deed.  A special warranty deed with respect to the Real Property, in the form of attached Exhibit “D” (the “Deed”), subject only to the Permitted Exceptions; 
10.1.2    Assignment and Assumption of Leases, Contracts and Approvals.  An assignment of all of Seller’s right, title and interest in and to the Leases, Contracts and Approvals in the form of attached Exhibit “E” (“General Assignment”);
10.1.3    Bill of Sale.  A bill of sale in the form of attached Exhibit “F”, assigning and transferring to Buyer all of the right, title, and interest of Seller in and to the Personal Property and the Intangible Property;
10.1.4    Non-Foreign Certificate.  A certification that Seller is not a non-resident alien (a foreign corporation, partnership, trust, or estate as defined in the Internal Revenue Code and Treasury Regulations promulgated thereunder), in the form of attached Exhibit “G”; 
10.1.5    Tenant Notices.  Notices to the tenants under all Leases of the occurrence of the sale of the Property in the form of attached Exhibit “H”, as may be modified at the reasonable request of Buyer to conform to the requirements of applicable law;
10.1.6    Affidavit(s).  An affidavit of Title in form customarily used in real estate transactions in the State of Illinois and ALTA statement, with ALTA statement in such form customarily used by Escrow Holder, identifying no construction, debts, liens or parties in possession (other than residential tenants disclosed to Buyer) that may affect the Property after the Closing Date;
10.1.7    Gap Indemnity.  If requested by Escrow Holder to facilitate Closing, a gap indemnity in the form customarily used by Escrow Holder; and
10.1.8    Rent Roll.  An updated Rent Roll, in the same form and with the same categories of information as on the initial Rent Roll, with all information concerning the Leases updated through the Proration Date.  

20

10.2    Buyer’s Deliveries.  Conditioned upon performance by Seller hereunder, Buyer shall execute and deliver to Escrow Holder prior to Closing the General Assignment.

10.3    Other Closing Documents.  Each party shall deliver to the other party or Escrow Holder such duly executed and acknowledged or verified certificates, affidavits, and other usual and customary closing documents respecting the power and authority to perform the obligations hereunder and as to the due authorization thereof by the appropriate corporate, partnership, or other representatives acting for it, as counsel for the other party or Escrow Holder may reasonably request, and such conveyancing or transfer tax forms or returns, if any, as are required to be delivered by Seller or Buyer under applicable state or local law in connection with the conveyance of the Real Property.  Each party shall deliver any additional documents that the other party or Escrow Holder may reasonably require for the proper consummation of the transaction contemplated by this Agreement; provided, however, that no such additional document shall expand any obligation, covenant, representation or warranty of such party or result in any new or additional obligation, covenant, representation or warranty of such party under this Agreement beyond those expressly set forth in this Agreement.

10.4    Closing Documents.  All documents to be delivered to Escrow Holder pursuant to this Section 10 shall hereinafter be referred to as “Closing Documents”.

10.5    Possession.  Upon Closing, Seller shall deliver to Buyer sole possession of the Property, subject to the rights of tenants in possession (as residential tenants only) under the Leases.

11.    COSTS. Seller shall pay the State of Illinois and County of Lake real estate transfer taxes and documentary stamps, the cost of the Title Commitment and any updates thereto, the cost of a standard ALTA Owner’s Policy of Title Insurance (the “Title Policy”), the costs of any endorsements to the Title Policy to the extent that such endorsements are necessary to cure any Objections that Seller has elected or is required to cure, all fees to Broker, and the cost of preparation of Seller’s Closing Documents.  Buyer shall pay the cost for extended ALTA title insurance coverage, if desired, the cost of any endorsements to the title policy (if requested by Buyer), the cost of preparation of Buyer’s Closing Documents, and the cost of any updated survey, if desired.  Seller and Buyer shall each pay one-half (1/2) of (i) Escrow Holder’s escrow fee including the cost of a New York style closing (excluding charges assessed by Escrow Holder for special services, which shall be paid by the party requesting or using such special services), (ii) recording fees for the Deed, and (iii) other closing costs.  Each party shall pay its own attorney’s fees.  Any municipal transfer taxes or inspection fees shall be paid by the party as specified in the applicable local ordinance.

12.    CASUALTY OR CONDEMNATION.During the period from the Opening of Escrow through Closing, all risk of loss from fire or other casualty or condemnation shall be borne by Seller.  If, prior to Closing, all or any portion of the Property is damaged by fire or other natural casualty (collectively “Damage”) or is taken or made subject to condemnation, eminent domain, or other governmental acquisition proceedings (collectively “Eminent Domain”), then Seller shall promptly notify Buyer and the following procedures shall apply: 

21

 
12.1    If the aggregate cost of repair and/or replacement of the Damage (collectively, “repair and/or replacement”) is $50,000 or less, in the opinion of Buyer’s and Seller’s respective engineering consultants, Buyer shall close and take the Property as diminished by such events, subject to a reduction in the Purchase Price applied against the cash otherwise due at the Closing in the full amount of the repair and/or replacement.  Any casualty insurance shall be the sole property of Seller.
12.2    If the aggregate cost of repair and/or replacement is greater than $50,000, in the opinion of Buyer’s and Seller’s respective engineering consultants, or in the event of Eminent Domain, then Buyer may terminate this Agreement in which Deposit shall be returned to the Buyer.  If Buyer does not elect to terminate this Agreement, then Buyer shall close and take the Property as diminished by such events, subject to a reduction in the Purchase Price applied against the cash otherwise due at the Closing in the full amount of the repair and/or replacement and any casualty insurance shall be the sole property of Seller.
12.3    In the event of a dispute between Seller and Buyer with respect to the cost of repair and/or replacement with respect to the matters set forth in this Section, an engineer designated by Seller and an engineer designated by Buyer shall select an independent engineer licensed to practice in the jurisdiction where the Property is located who shall resolve such dispute.  All fees, costs, and expenses of this third engineer so selected shall be shared equally by Buyer and Seller.

13.    ATTORNEYS’ FEES.Notwithstanding anything to the contrary in this Agreement, in any action to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to request that the court, arbitration panel, or other tribunal order an award of its attorneys’ fees and costs.  The terms of this Section 13 shall survive Closing or any earlier termination of this Agreement.

14.    ASSIGNMENT.Buyer shall have the right, with approval of Seller, before the Closing Date, to assign this Agreement or to have Seller convey, assign and transfer the Property at the Closing in accordance with this Agreement to any person or entity designated by Buyer in such notice; except that no approval of Seller shall be required for the assignment by Buyer to any affiliate of Steadfast Apartment REIT, Inc. or Steadfast Apartment REIT III, Inc.  Except in connection with a like-kind exchange as provided in Section 26, Seller may not assign this Agreement.  

15.    WAIVER.No waiver of any breach of any agreement or provision contained herein shall be deemed a waiver of any preceding or succeeding breach of any other agreement or provision herein contained.  No extension of time for the performance of any obligation or act shall be deemed an extension of time for the performance of any other obligation or act.

16.    GOVERNING LAW; TIME.This Agreement shall be construed under the laws of the State in which the Real Property is located being Illinois (without regard to the principles thereof governing conflicts of laws).  All periods of time referred to in this Agreement shall include all business and non-business days unless business days are specified, however, that if the date or last date to perform any act or give a notice with respect to the Agreement shall fall on a day that is not 

22

a business day, such act or notice may be timely performed or given on the next succeeding business day.

17.    NOTICES.All notices required or permitted to be given hereunder shall be in writing and sent by overnight delivery service (such as Federal Express), in which case notice shall be deemed given on the day after the date sent, or by personal delivery, in which case notice shall be deemed given on the date received, or by certified mail, in which case notice shall be deemed given three (3) days after the date sent, or by electronic mail (with copy by overnight delivery service), in which case notice shall be deemed given on the date sent, to the appropriate address set forth below or at such other place or places as either Buyer or Seller may, from time to time, respectively, designate in a written notice given to the other in the manner described above.  In such case a copy of such notice shall also be sent by e-mail to counsel for the party at the e-mail address as appears below.  
	
		
	To Seller:

With Copy To:        

	Ashford Properties, Series D
551 Roosevelt Road-#103
Glen Ellyn, Illinois   60137
Attn:  Chris McPartlin
Phone:  630-805-1500
E-mail:  Chris@ashford-llc.com

Cisar & Mrofka, Ltd.
One Mid America Plaza, Suite 125
Oakbrook Terrace, IL 60181
Attn:  Gary Evans, Esq.
Phone: 630-530-0000
E-mail:  gevans@cismrof.com 

	To Buyer:
	Steadfast Asset Holdings, Inc.
18100 Von Karman Ave., Suite 500
Irvine, CA  92612   
Attn: Ana Marie del Rio, Esq.
E-mail: AnaMarie.delRio@steadfastco.com
Telephone No.:  (949) 852-0700

	With Copy To:
	Garrett DeFrenza Stiepel Ryder LLP
3200 Bristol Street, Suite 850
Costa Mesa, CA 92626-1808
Attn: Marcello F. De Frenza
Email: mdefrenza@gdsrlaw.com 
Phone: (714) 384-4302

18.    ENTIRE AGREEMENT.This instrument, executed in duplicate, sets forth the entire agreement between the parties and may not be canceled, modified, or amended except by a written instrument executed by both Seller and Buyer.

23

19.    COUNTERPARTS; COPIES.This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument.  Electronic, photocopy and facsimile copies of signatures may be used in place and stead of original signatures with the same force and effect as originals.

20.    AUTHORITY.The individual(s) executing this Agreement on behalf of each party hereto hereby represent and warrant that he/she has the capacity, with full power and authority, to bind such party to the terms and provisions of this Agreement.

21.    RECORD ACCESS AND RETENTION.
Seller shall promptly provide to Buyer (at Buyer’s expense) copies of, or shall provide Buyer reasonable access to, such factual information as may be reasonably requested by Buyer, and in the possession or control of Seller, or its property manager or accountants, to enable Buyer’s auditor to conduct an audit, in accordance with Rule 3-14 of Securities and Exchange Commission Regulation S-X, of the income statements of the Property for the year to date of the year in which Closing occurs plus the two (2) immediately preceding calendar years (provided, however, that other than fees paid or payable to Seller, a Seller affiliate or a third party for on-site property management, such audit shall not include an audit of asset management fees internally allocated by Seller (as opposed to paid to a third party) or interest expenses attributable to the Seller).  In no event shall Seller be obligated to deliver any Excluded Documents to Buyer.  Buyer shall be responsible for all out-of-pocket costs, including Seller’s reasonable legal and accounting fees associated with this audit.  Seller shall reasonably cooperate (at no cost to Seller) with Buyer’s auditor in the conduct of such audit.  In addition, Seller agrees to provide to Buyer or any affiliate of Buyer, if requested by such auditor, historical financial statements for the Property, including (without limitation) income and balance sheet data for the Property, whether required before or after Closing.  Without limiting the foregoing, (i) Buyer or its designated independent or other auditor may audit Seller’s operating statements of the Property, at Buyer’s expense, and Seller shall provide such documentation as Buyer or its auditor may reasonably request in order to complete such audit, and (ii) Seller shall furnish to Buyer such financial and other information as may be reasonably required by Buyer or any affiliate of Buyer to make any required filings with the Securities and Exchange Commission or other governmental authority.  Seller’s obligation to maintain its records for use under this Section 21 shall be an on-going condition to Buyer’s obligation to Close Escrow, and Seller shall maintain its records for use under this Section 21 for a period of not less than two (2) years after the Closing Date.  The provisions of this Section shall survive Closing.  Notwithstanding anything in this Agreement to the contrary, it shall not be a default or breach by Seller of this Agreement if, after making diligent and good faith efforts to provide all information in Seller’s possession or reasonable control (including that of its auditors, accountants, current property manager and previous property manager (Fiduciary)) for Buyer’s audit under this Section 21, Buyer’s auditors reasonably determine that the Property is not auditable; in which event Buyer’s sole remedies shall be to either terminate this Agreement and receive a refund of its Deposit, or to proceed to close without such information.

22.    CONTRACT CONSIDERATION.The parties have bargained for and expressly agree that the rights and obligations of each party contained in this Agreement, including, without limitation, Buyer’s obligation to

24

 deliver the Initial Deposit to Escrow Holder, constitute sufficient consideration for the other party’s execution, delivery and performance of this Agreement in accordance with its terms, including without limitation, Buyer’s exclusive right to inspect and purchase the Property pursuant to this Agreement and all contingencies and conditions of Closing for the benefit of Buyer set forth in this Agreement.  

23.    JURY TRIAL WAIVER.EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH SELLER AND/OR BUYER MAY BE PARTIES ARISING OUT OF, IN CONNECTION WITH, OR IN ANY WAY PERTAINING TO, THIS AGREEMENT.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PARTIES AND EACH HEREBY REPRESENTS AND WARRANTS TO THE OTHER THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  EACH PARTY FURTHER REPRESENTS AND WARRANTS TO THE OTHER THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OF ITS OWN FREE WILL, AND HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.  THE PROVISIONS OF THIS SECTION SHALL SURVIVE CLOSING OR THE TERMINATION OF THIS AGREEMENT.

24.    COUNSEL.EACH PARTY HERETO WARRANTS AND REPRESENTS THAT EACH PARTY HAS BEEN REPRESENTED BY COUNSEL OF ITS CHOICE IN CONNECTION WITH THE EXECUTION OF THIS AGREEMENT AND HAS HAD AMPLE OPPORTUNITY TO READ, REVIEW, AND UNDERSTAND THE PROVISIONS OF THIS AGREEMENT.

25.    EQUAL PARTICIPATION.SELLER AND BUYER HAVE PARTICIPATED EQUALLY IN THE PREPARATION OF THIS AGREEMENT, AND, THEREFORE, THIS AGREEMENT AND EACH PROVISION HEREOF SHALL NOT BE CONSTRUED IN FAVOR OF OR AGAINST ANY PARTY TO THIS AGREEMENT BY REASON OF ONE PARTY’S BEING DEEMED TO PREPARED THIS AGREEMENT OR IMPOSED SUCH PROVISION.

26.    TAX-FREE EXCHANGE.
Should Seller intend to complete a like-kind exchange in accordance with Section 1031 of the Internal Revenue Code (“like-kind exchange”), Seller may enter into a like-kind exchange agreement with a third party exchange accommodation titleholder or qualified intermediary and, in connection therewith, assign its rights under this Agreement to said third party provided that said Agreement shall be binding upon the assignee in all respects as to the obligations to the Buyer. Buyer hereby agrees to reasonably cooperate with Seller in the like-kind exchange without any cost, expense or liability to Buyer and without reduction or alteration of the rights of Buyer under this Agreement and with respect to Seller; provided, however that Buyer shall not be required to undertake any liability or obligation and provided further that such like-kind exchange does not extend the Closing Date or be a condition to Closing. As part of such like-kind exchange, Seller shall convey the Property directly to Buyer and Buyer shall not be obligated to acquire any other property or interests as part of such like-kind exchange. Seller shall indemnify and hold Buyer harmless and defend Buyer from any and all claims, demands, causes of action, liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and expenses and court costs) of any kind and nature in connection with such like-kind exchange for benefit of Seller or Buyer’s cooperation with Seller to accomplish such like-kind exchange. Nothing herein shall release Seller 

25

of any of the obligations or liabilities under this Agreement. The terms of this Section 26 shall survive Closing or any earlier termination of this Agreement.  

27.    CONFIDENTIALITY.
The Seller Deliveries are hereby deemed confidential and shall be kept confidential, and not be disclosed or published in any manner, by Buyer without the express written consent of Seller, except for any Permitted Disclosures (as hereinafter defined).  Additionally, except for any Permitted Disclosures, Buyer and Seller agree to keep, and to direct their agents, employees, representatives and brokers to keep, the existence and content of this Agreement and the transaction contemplated herein confidential.  Seller and Buyer covenant and agree that neither of them will issue any press releases regarding the Property or the transaction contemplated herein that identifies the other party without the prior consultation and express written approval of the other, which approval shall not be unreasonably withheld, conditioned or delayed.  Notwithstanding anything to the contrary hereinabove set forth, either party may disclose such information: (a) to its employees, agents, representatives, brokers, consultants, contractors, potential lenders, and to members of professional firms serving it or its potential lenders, (b) to Escrow Holder, (c) as permitted under Section 6.2, and (d) as any governmental or quasi-governmental agency may require, as is necessary in order to comply with applicable laws or any court order, or in response to or in connection with any legal process (collectively, the “Permitted Disclosures”).  In addition, the confidentiality obligations of this Section 27 shall not apply to any information that is a matter of public record or generally available to the public (other than as a result of the disclosure thereof in breach of this Section).  The provisions of this section shall survive Closing for a period of two years.  
28.    JOINT AND SEVERAL OBLIGATIONS.
If Seller consists of more than one party, each shall be jointly and severally liable to perform the obligations of Seller under this Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

26

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

	
			
	SELLER:

	 
	 
	 

	ASHFORD PROPERTIES, LLC, Series D-

	Gurnee Partners at Carriage House, an

	Illinois limited liability company

	 
	 
	 

	By:
	 
	/s/ Stephen E. McPartlin

	Name:
	 
	Stephen E. McPartlin

	Its:
	 
	Manager

	 
	 
	 

	And
	 
	 

	 
	 
	 

	By:
	 
	/s/ S. Scott McPartlin

	Name:
	 
	S. Scott McPartlin

	Its:
	 
	Manager

	
			
	BUYER:

	 
	 
	 

	STEADFAST ASSET HOLDINGS, INC., 

	a California corporation

	 
	 
	 

	By:
	 
	/s/ Rodney F. Emery

	Name:
	 
	Rodney F. Emery

	Its:
	 
	Chief Executive Officer

    

EXHIBIT “A”
Description of Real Property

EXHIBIT “A”
Page 1 of 1

EXHIBIT “B-1”

Personal Property Description

EXHIBIT “B-2”

Excluded Personal Property Description

EXHIBIT “C”

 
	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	 
	CONSTRUCTION / REHABILITATION
	 
	 
	 

	1
	Most current Survey obtained by or on behalf of Seller
	 Survey Only
	 
	 

	2
	Construction contracts, if any, including for all work completed in past 3 years
	 
	 
	 X

	3
	Current capital improvements with schedule (past 2 years) (budget for future not required)
	 Will request from Fiduciary
	 
	 

	4
	Detailed unit-by-unit list of upgraded vs. non-upgraded units (if applicable)
	 
	 
	 X; to my knowledge, only 6 units have been “upgraded”

	5
	Warranties in effect, if any (construction, roof, mechanical equipment, etc.)
	If any, 8 boilers might be under warranty for another 6 months. Otherwise, N/A.
	 
	 

	6
	All licenses, permits, and governmental approvals,  including business license (with expiration date & annual costs), fictitious business name statements and building permits (showing placed in service/completion dates)
	 
	 X
	 

	7
	Certificate(s) of Occupancy for all buildings
	 
	 
	 X

	8
	List and description of tenant or common area work in progress, if any
	 
	 X
	 

	9
	Copies of all governmental correspondence or notices pertaining to the property, including but not limited to building code, health code, zoning and fire code
	 
	 
	X

	10
	Maintenance records/work orders, including water intrusion log, for past 12 months
	 Expected to be located in each unit file folder and seller to inquire about common areas
	 
	 

	11
	Operation & Maintenance (O&M) Manuals, if any, for maintenance of equipment or hazardous materials
	 Yes
	 
	 

EXHIBIT “C”
Page 1 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	12
	If new construction, list of all consultants and contractors for the work completed to date
a.             Asphalt company
b.             Concrete company
c.             Excavating/Grading contractor
d.             MEP contractor (utilities)
e.             Soils Engineer
f.              Surveyor (who laid out the development)
	 
	 X
	 

	13
	If new construction, confirmation if the current roads in the undeveloped area have a base under the asphalt, as well as the depth of the utilities and the sleeves.
	 
	 X
	 

	14
	If new construction, details on brick and asphalt shingles finishes (to match for balance of the buildings)
	 
	 X
	 

	 
	FINANCIAL
	 
	 
	 

	1
	Financial/Operating Statements: Trailing-12, YTD & 2-yr historical (none of which are audited)
	 Will request from Fiduciary. Perlmark is just getting YTD finalized. 
	 
	 

	2
	General Ledger, prior year, most recent quarter-end & YTD (in Excel format)
	 Will request from Fiduciary.
	 
	 

	3
	Tax bills: Real Property and Personal Property bills and Assessment notices, current and past 3 years, with proof of payment (including special assessments or districts and all documentation concerning appeals)
	 Yes; don’t believe we have assessment notices.  Have not appealed RE taxes
	 
	 

	4
	Accounts Payable Aging Detail, prior year, most recent quarter-end & YTD
	Will request from Fiduciary.
	 
	 

	5
	Aged Delinquency Report (showing total rent outstanding) with status of any files placed for eviction or collection
	 Will request from Perlmark
	 
	 

	6
	Utility bills for any master-metered utility expenses and any resident unit utilities paid by the Property, monthly YTD and past calendar year (access to utility billing site is preferred, if applicable)
	 Yes. Could grant permission to Utility website. Hard copies of bills may not be available any longer.
	 
	 

	7
	List of meters, account numbers and any required deposits (typically for gas, electric, water or phone)
	 Yes.
	 
	 

EXHIBIT “C”
Page 2 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	8
	Operating budget, current year and/or next available
	 
	 
	 2016 Budget is still be created by Perlmark

	 
	MANAGEMENT/LEASING/OPERATIONS
	 
	 
	 

	1
	Monthly rent rolls, prior year and YTD, in Excel in the same format as previously provided
	 Will provide what Fiduciary & Perlmark have
	 
	 

	2
	Current leases for all tenants with all available tenant correspondence files, including amendments/letters/agreements/default notices given or received, with all historical litigation pleadings, if any (access to electronic lease files is preferred, if applicable)
	 Will provide all tenant files.  Not certain what records Perlmark keeps.
	 
	 

	3
	Current form of lease with all addenda
	 Yes. From Perlmark.
	 
	 

	4
	List of leases under negotiation or currently out for signature
	 Yes. From Perlmark.
	 
	 

	5
	Market Rent Survey
	                             
	 
	 Not sure that Perlmark conducted one.

	6
	Occupancy history, monthly for past 2 years and current YTD
	 Yes
	 
	 

	7
	Current staff list (names, titles, hire dates, salary, unit info, hours per week, list of benefits, commissions offered, if any)
	 Yes, from Perlmark.
	 
	 

	8
	Job descriptions for staff positions
	 Yes, from Perlmark
	 
	 

	9
	Worker’s Comp insurance loss run history, including Experience Modification Rate, for current management company (YTD & past 3 yrs)
	 
	 
	 X; could request from Perlmark.

	10
	OSHA 300 Log (most recent 3 years)
	 To request from Perlmark
	 
	 

	11
	Amenity Report (listing amenities per unit type, with any adjustment in rent) - current
	 
	 
	 X

	12
	Resident Demographics Report - current
	 
	 
	 X; don’t believe Perlmark has this...

	13
	List of all active (within last 6 mos) vendors utilized at the property, including name, function, contact information
	 Yes. Request from Fiduciary & Perlmark
	 
	 

	14
	All operating and management service contracts, including but not limited to:
	 
	 
	 

EXHIBIT “C”
Page 3 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	 
	a. Advertising (including any apt. locator services & pay-per-lease agreements)
	 From Perlmark
	 
	 

	 
	b. Alarm monitoring (including any firm alarm & security cameras)
	 Office Only (Perlmark)
	 
	 

	 
	c. Cable/TV (including any revenue sharing programs); if none, please indicate so in writing
	 
	 X
	 

	 
	d. Elevator
	 
	 X
	 

	 
	e. Equipment leases (such as copier, postage machines, key control systems)
	 
	 X
	 

	 
	f. Fire extinguisher (including any fire sprinkler systems)
	 Extinguisher only (Perlmark)
	 
	 

	 
	g. Furniture rental
	 
	 X
	 

	 
	h. HVAC
	 
	 X
	 

	 
	i. Internet (including any leased equipment such as modems and firewalls
	 Office only (Perlmark)
	 
	 

	 
	j. Janitorial services (including any uniform cleaning services)
	 
	 X
	 

	 
	k. Landscaping (including any pond/lake maintenance and snow removal)
	 Perlmark 
	 
	 

	 
	l. Laundry
	 
	 X
	 

	 
	m. Pest control (including any termite contracts)
	 Perlmark 
	 
	 

	 
	n. Phone (landlines, cell phones, pagers, answering service)
	 Perlmark
	 
	 

	 
	o. Pool (maintenance, emergency phone, etc.)
	 Perlmark
	 
	 

	 
	q. Security (including any on-site courtesy officer arrangements)
	 
	 X
	 

	 
	r. Trash (including recycling programs); Also a copy of the most recent invoice
	 Perlmark
	 
	 

	 
	s. Revenue Sharing (such as vending machines, pay phones)
	 
	 X
	 

	 
	t. Collection Recovery
	 Perlmark
	 
	 

	 
	u. Credit/application verification
	 Perlmark
	 
	 

	 
	w. Software (including any property management software such as OneSite, Yardi, etc.)
	 Perlmark
	 
	 

	 
	x. Common Area Services (such as office cleaning, dog waste removal, etc.)
	 
	 X
	 

	 
	y. Utility Billing by Third Party, if any
	 
	 X; We do have a fixed contact on Gas w/ termination clause
	 

	 
	z. Gate/Access Systems (including software for programming access cards/remotes)
	 
	 X
	 

	 
	aa. Towing/Parking Services
	 Perlmark
	 
	 

EXHIBIT “C”
Page 4 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	 
	bb. Website Domain (including any website hosting)
	 Perlmark 
	 
	 

	 
	cc. Boiler Maintenance and Water Treatment
	 Perlmark
	 
	 

	15
	Copies of all default and other material notices given or received under any service contracts
	 
	 
	 X

	16
	Copies of all current Certificates of Liability Insurance for any commercial tenants (including laundry and cell towers)
	 
	 X; Don’t believe we have commercial tenants, will verify
	 

	 
	PHYSICAL ITEMS
	 
	 
	 

	1
	Marketing photos, including aerial photos if available
	 Limited; only pictures we have taken
	 
	 

	2
	List of fire safety equipment, such as smoke sensors, suppression devices, etc. (including system type, rating, map of locations, etc.)
	 Perlmark 
	 
	 

	3
	Fire/Life Safety Inspection Report (current) with proof of completion of any required work
	 Perlmark 
	 
	 

	4
	Current insurance certificates and Declarations Pages: Evidence of Commercial Property Insurance and Certificate of Insurance
	 Yes
	 
	 

	5
	Insurance loss run history, past 3 years and YTD (property & general liability)
	 Request from AFI
	 
	 

	6
	Any existing third party reports, including but not limited to:
	 
	 
	 

	 
	a. Certified, as-built ALTA Survey
	 Yes
	 
	 

	 
	b. Asbestos, Lead-Based Paint, or Mold Reports and/or Operations & Maintenance (O&M) Plans
	 Yes
	 
	 

	 
	c. Engineering study or inspection (structural or otherwise)
	 
	 
	 X

	 
	d. Phase I Environmental, with any Radon Testing Results
	 
	 
	 X

	 
	e. Property Condition Report
	 
	 
	 X

	 
	f. Soils/Geotechnical and, if new construction, concrete
	 
	 
	 X

	 
	g. Termite
	 
	 
	 X

	 
	TITLE AND AGREEMENTS
	 
	 
	 

	1
	Existing Owner’s Title Insurance Policy and  current Title Insurance Commitment with copies of all recorded documents referenced therein
	 Gary Evans will order
	 
	 

	2
	Zoning: any reports, compliance letters, maps, ordinances, amendments, CC&R’s, special use permits, etc.
	 
	 
	 X

	3
	Pending litigation summary and copies of all pleadings, if applicable
	 
	 
	 X

EXHIBIT “C”
Page 5 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	4
	Governmental Agreements:  Any city or county development agreements, bonds, tax increment financing agreements, municipal utility agreements, etc.
	 
	 
	 X

	5
	Condo / Association documents, if applicable (articles of incorporation, bylaws, CC&R’s, Declaration of Horizontal Regime, budgets, material notices, rules and regulations, names of officers/directors, contact information, etc.)
	 
	 X
	 

	 
	IF PROPERTY IS SUBJECT TO CONDO, HOA OR OTHER ASSOCATION, PLEASE ALSO INDICATE WHETHER SELLER CONTROLS THE ASSOCIATION OR HAS ELECTED/APPOINTED ANY OFFICERS/DIRECTORS, in which event we also need:  all contracts to which the association is a party (including management agreement and service contracts, bank statements, list of members, status of dues/delinquency report and other books and records
	 
	 X
	 

	6
	Development Agreements:  Any development agreements or restrictions with any private party
	 
	 X
	 

	7
	Access Agreements:  Any agreements for shared roadways, driveways or other access
	 
	 X
	 X

	8
	Amenities Agreements:  Any reciprocal easement agreements or shared used agreements for any amenities
	 
	 X        
	 X

	9
	Any other agreements that will be binding on the property after closing or that provide any material benefit to or obligation on the property, including any specific plan associated with subdivision
	 Locked Rate agreement for Gas...will provide. 
	 
	 

	10
	All default and other material notices given or received relating to any violation of or material matters concerning any governmental approvals, any covenants, conditions, restrictions, encumbrances,  affecting the Property, or any laws, statutes, rules, regulations or ordinances applicable to the Property
	 
	 
	 X

	 
	REIT 3-14 AUDIT ITEMS
	 
	 
	 

	1
	Cash Disbursement Journal or Check Register (prior year, most recent quarter-end and YTD)
	 
	 
	 

	2
	Trial Balance, prior year, most recent quarter-end and YTD (in Excel format)
	 Request from Fiduciary& Perlmark
	 
	 

	3
	Bank Statements and Reconciliations, prior year, most recent quarter-end and YTD (monthly)
	 Yes
	 
	 

	4
	Tax bills (Real Property & Personal Property) - Proof of payment for past full calendar year and YTD
	 Yes
	 
	 

	5
	Property management agreement; indicate whether entity is related party for disclosure purposes
	 Yes; Third Party Management
	 
	 

	6
	Copies of insurance policies and Declarations Pages, past 3 years
	 Yes.
	 
	 

EXHIBIT “C”
Page 6 of 6

	
					
	 
	 
	Deliverable?
	N/A to Property
	Not to Seller’s Knowledge, or available to Seller

	7
	UPON REQUEST, rent and expense selections, prior year, most recent quarter-end and YTD (25 respective selections to be made by Buyer’s independent REIT 3-14 auditors based upon items received for #1-6 above)
	 
	 
	 

	8
	UPON REQUEST, payroll selections, prior year, most recent quarter-end and YTD (2-months of selections with detailed support to be made by Buyer’s independent REIT 3-14 auditors; detailed support to be requested may include inputs, timecards, reimbursement calculations, agreements or contracts as necessary, to support and recalculate the payroll amounts shown in the financial statements)
	 
	 
	 

	9
	UPON REQUEST, current or former lease selections, as the case may be, with copies of back-up for rents received (for both resident and any housing authority portion paid, as applicable), prior year and YTD (25 selections to be made by Buyer’s independent REIT 3-14 auditors)
	 
	 
	 

 
 

EXHIBIT “C”
Page 7 of 6

EXHIBIT “D”
Form of Deed

[INSERT CAPTION/RECORDING REQ’TS FROM TITLE CO]

THIS SPECIAL WARRANTY DEED, made this _____ day of ______, 2016, between ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an Illinois limited liability company, duly authorized to transact business in the State of Illinois, party of the first part, and _____________, a Delaware limited liability company, with its offices at 18100 Von Karman Ave., Suite 500, Irvine, CA  92612, party of the second part, WITNESSETH, that the party of the first part, for and in consideration of Ten and 00/100 Dollars ($10.00) in hand paid by the party of the second part, the receipt whereof is hereby acknowledged, and pursuant to authority of the Members/Managers of said Company by these presents does REMISE, RELEASE, ALIEN AND CONVEY unto the party of the second part, and to its successors and assigns, FOREVER, all the following described real estate, situated in the County of Lake and State of Illinois known and described as follows, to wit:

See legal description attached hereto as Exhibit A and made a part hereof.

PIN:  

		
	ADDRESS:
	Carriage House Apartments, consisting of 136 units, located at 4344 McClure Avenue, Gurnee, IL  60031

Together with all and singular hereditaments and appurtenances thereunto belonging, or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues, and profits thereof, and all the estate, right, title, interest, claim or demand whatsoever, of the party of the first part, either in law or equity, of, in and to the above described premises, with the hereditaments and appurtenances: TO HAVE AND TO HOLD the said premises as above described, with the appurtenances, unto the party of the second part, its heirs and assigns forever.

And the party of the first part, for itself, and its successors, does covenant, promise and agree, to and with the party of the second part, its heirs and assigns, that it has not done or suffered to be done, anything whereby the said premises hereby granted are, or may be, in any manner encumbered or charged, except as herein recited; and that the said premises, against all persons lawfully claiming, or to claim the same, by, through or under it, it WILL WARRANT AND DEFEND SPECIALLY, subject to: See Exhibit B  attached hereto and made a part hereof.

EXHIBIT “D”
Page 1 of 1

IN WITNESS WHEREOF, said party of the first part has caused its seal to be hereto affixed, and has caused its name to be signed to these presents by its Manager, the day and year first above written.

ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an 
Illinois limited liability company

By:  _____________
Name: ____________
Title: _____________

[INSERT NOTARY BLOCK]

This instrument was prepared by:                          
    
(Name and Address)

Mail To:                        SEND SUBSEQUENT TAX BILLS TO:

_____________________
c/o Steadfast Companies
18100 Von Karman Ave., Suite 500
Irvine, CA  92612

EXHIBIT “C”
Page 2 of 6

EXHIBIT “E”
Form of General Assignment
ASSIGNMENT AND ASSUMPTION 
OF LEASES, CONTRACTS AND APPROVALS 

THIS ASSIGNMENT AND ASSUMPTION OF LEASES, CONTRACTS AND APPROVALS (this “Assignment”) is made as of the _____ day of __________________, 2016, by and between ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an Illinois limited liability company (“Assignor”), and _________________________, a _________________________ (“Assignee”).
W I T N E S S E T H:
For good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1.    Assignor hereby sells, transfers, assigns and conveys to Assignee the following:
(a)    All right, title and interest of Assignor in and to all leases and occupancy agreements relating to the Property, including, without limitation, those certain leases described on Exhibit A attached hereto and made a part hereof (collectively, the “Leases”), relating to the leasing of space in or on that certain land and improvements located in the County of Lake, State of Illinois, more particularly described in Exhibit B attached hereto (the “Property”), and all of the rights, interests, benefits and privileges of the lessor thereunder, and all prepaid rents and security and other deposits held by Assignor under the Leases and not credited to Assignee under the Purchase Agreement (defined below) or credited or returned to tenants; but subject to all terms, conditions, reservations and limitations set forth in the Leases.
(b)    To the extent assignable, all right, title and interest of Assignor in and to those certain contracts set forth on Exhibit C attached hereto and made a part hereof, and all warranties, guaranties, indemnities and claims (including, without limitation, for workmanship, materials and performance) and which exist or may hereafter exist against any contractor, subcontractor, manufacturer or supplier or laborer or other services relating thereto (collectively, the “Contracts”).
(c)    To the extent assignable, all right, title and interest of Assignor in and to all building permits, certificates of occupancy, and other certificates, permits, licenses and governmental approvals relating to the design, construction, ownership, occupancy, use, management, operation, maintenance or repair of the Property, including, without limitation, those identified on Exhibit D attached hereto and made a part hereof (collectively, the “Approvals”) and any plans, specifications, studies, reports or surveys relating to the Property.
2.    This Assignment is given pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions (as amended, the “Purchase Agreement”) dated as of __________ 2016, between Assignor and Assignee’s predecessor-in-interest, STEADFAST ASSET HOLDINGS, 

EXHIBIT “E”
Page 1 of 3

INC., a California corporation, providing for, among other things, the conveyance of the Leases, the Contracts and the Approvals. 
3.    Assignee hereby accepts the assignment of the Leases, the Contracts and the Approvals and agrees to assume and discharge, in accordance with the terms thereof, all of the obligations thereunder arising from and after the date hereof.  
4.    Assignor agrees to indemnify, defend and hold harmless Assignee from and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) asserted against or suffered or incurred by Assignee as a result of or in connection with any liabilities or obligations under all leases and occupancy agreements relating to the Property in effect at any time before the date hereof, and all contracts and agreements relating to the Property in effect at any time before the date hereof; provided, however, that Assignor’s indemnification obligations under this Paragraph 4 shall be limited to liabilities or obligations thereunder relating to periods before the date hereof.  The indemnification obligation of Assignor set forth herein shall automatically expire nine (9) months after the date of this Agreement.  

5.    Assignee agrees to indemnify, defend and hold harmless Assignor from and against any and all claims, demands, liabilities, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) asserted against or suffered or incurred by Assignor as a result of or in connection with any liabilities or obligations under all leases and occupancy agreements relating to the Property in effect at any time on or after the date hereof, and all contracts and agreements relating to the Property in effect at any time on or after the date hereof; provided, however, that Assignee’s indemnification obligations under this Paragraph 5 shall be limited to liabilities or obligations thereunder relating to periods from and after the date hereof.  The indemnification obligation of Assignee set forth herein shall automatically expire nine (9) months after the date of this Agreement.

6.    In any action to enforce the provisions of this Assignment, the prevailing party shall be entitled to an award of its attorneys’ fees and costs.  This Assignment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Assignment.  The terms, covenants and conditions hereof shall inure to the benefit of and be binding upon the respective parties hereto, their heirs, executors, administrators, successors and assigns.  Any alteration, change or modification of or to this Assignment, in order to become effective, must be made in writing and in each instance signed on behalf of each party to be charged.  No provision of this Assignment that is held to be inoperative, unenforceable or invalid shall affect the remaining provisions, and to this end all provisions of this Agreement shall be severable.  This Assignment shall be governed by the laws of the State of Illinois.

7.    If Assignor consists of more than one party, each shall be jointly and severally liable to perform the obligations of Assignor under this Assignment.

EXHIBIT “E”
Page 2 of 3

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first above written.
	
					
	 
	 
	ASSIGNOR:

	 
	 
	 
	 
	 

	 
	 
	ASHFORD PROPERTIES, LLC, Series D-Gurnee

	 
	 
	Partners at Carriage House, an

	 
	 
	Illinois limited liability company

	 
	 
	 
	 
	 

	 
	 
	By:_______________________________________

	 
	 
	Name:_____________________________________

	 
	 
	Its:________________________________________

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	ASSIGNEE:

	 
	 
	_________________________________,

	 
	 
	a ________________________________

	 
	 
	 
	 
	 

	 
	 
	By:______________________________________

	 
	 
	Name:____________________________________

	 
	 
	Its: ______________________________________

Exhibit A    Leases 
Exhibit B    Description of the Property
Exhibit C    Contracts
Exhibit D    Approvals

EXHIBIT “E”
Page 3 of 3

EXHIBIT “F”
Form of Bill of Sale
BILL OF SALE
Know all men by these presents, that ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an Illinois limited liability company (“Grantor”), for and in consideration of the sum of ten dollars and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, does bargain, sell, grant, transfer, assign, and convey to _________________________, a Delaware limited liability company (“Grantee”) all of its right, title, and interest, if any, in and to any and all (i) tangible personal property owned by Grantor and now at, in or upon or used in connection with the property commonly known as Carriage House Apartments, located in the City of Gurnee, County of Lake and State of Illinois (“Property”), and more particularly described on Exhibit A attached hereto, including without limitation the tangible personal property listed on Schedule 1 attached hereto, and (ii) intangible personal property owned by Grantor in connection with or arising out of the ownership of the Property.  
Grantor is selling and Grantee is purchasing the Property “AS IS WHERE IS” with all faults except as provided in that certain Purchase and Sale Agreement and Joint Escrow Instructions dated as of ______________, 2016 between Grantor and Grantee’s predecessor-in-interest, STEADFAST ASSET HOLDINGS, INC., a California corporation.
If Grantor consists of more than one party, each shall be jointly and severally liable to perform the obligations of Grantor under this Bill of Sale.
IN WITNESS WHEREOF, Grantor has executed this Bill of Sale as of the ____ day of ___________________, 2016.

ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an 
Illinois limited liability company

By: __________________________________
Name: ________________________________
Its: ___________________________________

EXHIBITS:
A - Legal Description
SCHEDULES:
1 – Tangible Personal Property 

EXHIBIT “F”
Page 1 of 2

EXHIBIT “G”
Form of Non-Foreign Certificate 
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  To inform _________________________, a Delaware limited liability company (“Transferee”), that withholding of tax is not required upon the disposition of a U.S. real property interest by ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an Illinois limited liability company (“Transferor”), the undersigned hereby certifies to Transferee the following on behalf of Transferor:

1.    Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);
2.    Transferor’s U.S. employer identification number is _____________; and
3.    Transferor’s office address is _________________________________________.
Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, the undersigned declares that the undersigned has examined this certification and to the best of the undersigned’s knowledge and belief it is true, correct and complete, and the undersigned further declares that the undersigned has authority to sign this document on behalf of Transferor.
Dated as of ____________________, 2016. 

	
		
	 
	

ASHFORD PROPERTIES, LLC, Series D-Gurnee Partners at Carriage House, an 
Illinois limited liability company

By:   __________________________
Name:   ________________________
Title:   _________________________

	 
	 

EXHIBIT “G”
Page 1 of 1

STATE OF ___________________    ) 
    )    ss. 
COUNTY OF _______________    )

On         , before me,         ________            , a Notary Public personally appeared                                 , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of _________________ that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
    
________________
Notary Public                (SEAL)

EXHIBIT “E”

EXHIBIT “H”
Form of Tenant Notice

[**DATE**]

	
		
	TO:
	All Valued Residents of Carriage House Apartments

	
		
	Re:
	Notice of Lease Assignment and Transfer of Security Deposit

This letter is to notify you that the property commonly known as Carriage House Apartments, 4344 McClure Avenue, Gurnee, IL  60031 (“Property”) has this date been sold and the ownership transferred.

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

Thank you for your cooperation.

	
	
	

	 

	By:___________________________
Name: ________________________
Its: ____________________________

	
	
	_______________________, a Delaware limited liability company

	 

	By: _______________________
Name: _____________________
Its: _________________________

EXHIBIT “H”
Page 1 of 1

SCHEDULE 1

LEASES

[Rent Roll Attached]

EXHIBIT “J”
Page 2 of 2

SCHEDULE 2

CONTRACTS

[Attached]

1) Nordic Energy
2) Property Management Agreement
3) (Seller is looking into waste contract)

SCHEDULE 2

SCHEDULE 3

APPROVALS

	
				
	TYPE OF APPROVAL

	DATE ISSUED
	EXPIRATION DATE
	ISSUING AGENCY

	Certificate of Occupancy

	(est. 1980’s)
	 
	 

	Plats/Plans

	Tendered
	 
	 

	Building Permit [only if recently constructed]

	N/A
	 
	 

	Elevator Permit

	N/A
	 
	 

	Pool Permit

	To be provided
	 
	 

	Business License

	N/A
	 
	 

	Retention Pond Approval

	 
	 
	 

	[OTHER]

	N/A
	 
	 

	[OTHER]
	 
	 
	 

SCHEDULE 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}]]