Document:

Ex 10.5 Assumption Agmt

Exhibit 10.5

The undersigned hereby certifies that this document is a true and 
correct copy of the original document which was delivered to the 
title company/agent for recording on the 29 day of June, 2012. 

    	
	
	/s/ Vanessa G. Morris, Esq.

	Vanessa G. Morris, Esq.

Freddie Mac Loan Number:   940979209
Property Name: Estancia Apartments

When Recorded Return to:
Vanessa G. Morris, Esq.
Morris, Manning & Martin, L.L.P.
1600 Atlanta Financial Center
3343 Peachtree Road
Atlanta, Georgia  30326

    
ASSUMPTION AGREEMENT
(CME AND PORTFOLIO)

(Revised 1-11-2012)

THIS ASSUMPTION AGREEMENT (“Agreement”) is entered into effective as of the 29 day of June, 2012, by and among ESTANCIA TULSA, LLC, a Delaware limited liability company (“Original Borrower”), SIR ESTANCIA, LLC, a Delaware limited liability company (“New Borrower”), and the FEDERAL HOME LOAN MORTGAGE CORPORATION (“Freddie Mac”), and is acknowledged and consented to by FLOURNOY DEVELOPMENT COMPANY, LLC, a Georgia limited liability company (“Original Guarantor”) and STEADFAST INCOME REIT, INC., a Maryland corporation (“New Guarantor”).

RECITALS

		
	A.
	Original Borrower obtained a mortgage loan (“Loan”) from CBRE MELODY & COMPANY, a Texas corporation (“Original Lender”), which Loan is secured by certain Land and Improvements (“Mortgaged Property”), located in Tulsa City/County, Oklahoma. The Land is more particularly described in Exhibit A, attached to this Agreement. 

		
	B.
	Original Borrower executed a promissory note evidencing the Loan, dated September 6, 2007, in the original principal amount of $20,500,000.00, payable to Original Lender (“Note”). Original Guarantor guaranteed payment of certain amounts and performance of certain obligations of Borrower under the Loan Documents by executing a Guaranty 

Assumption Agreement (CME and Portfolio)

dated September 6, 2007 (“Original Guaranty”).

		
	C. 
	To secure repayment of the Loan, Original Borrower executed and delivered to Original Lender a Multifamily Mortgage, Assignment of Rents and Security Agreement  (“Security Instrument”) of even date with the Note, which is recorded in the land records of Tulsa County, Oklahoma (“Land Records”) as Instrument No. 2007100741.

		
	D.
	The Note, Security Instrument, and any other document executed by Original Borrower in connection with the Loan that will be assumed by New Borrower, all as listed on Exhibit B to this Agreement, are referred to collectively in this Agreement as the “Assumed Loan Documents.” 

		
	E.
	Original Lender endorsed the Note to the order of Freddie Mac and by instrument dated September 6, 2007 filed for record on September 6, 2007 in the Land Records as Instrument No. 2007100742 sold, assigned, and transferred all right, title, and interest of Original Lender in and to the Security Instrument and the other Loan Documents to Freddie Mac. Freddie Mac is now the owner and holder of the Note and the Loan is serviced by GEMSA Loan Services, L.P. (“Servicer”).

		
	F.
	Original Borrower has transferred or has agreed to transfer all of its right, title, and interest in and to the Mortgaged Property to New Borrower (“Transfer”). 

		
	G.
	New Borrower has agreed to assume all of Original Borrower’s rights, obligations, and liabilities created or arising under the Assumed Loan Documents, with certain modifications, if any, as set forth in Exhibit C to this Agreement (“Assumption”).

		
	H.
	Subject to the full satisfaction of all conditions set forth below, Freddie Mac has agreed to consent to the Transfer and the Assumption.

		
	I.
	Capitalized terms not defined in this Agreement will have the meanings given to them in the Security Instrument and other Loan Documents. 

    
		
	J.
	Original Borrower desires to be released by Freddie Mac from any and all obligations and liabilities under the terms and provisions of the Loan Documents, and Freddie Mac has agreed to release Original Borrower from further liability (except as provided in Section 10 of this Agreement).

AGREEMENT

NOW, THEREFORE, in consideration of these premises, the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which the parties acknowledge, the parties agree as follows:

		
	1.
	Assumption of Obligations. New Borrower covenants, promises, and agrees that New Borrower, jointly and severally if more than one, will unconditionally assume and be bound by all terms, provisions, and covenants of the Assumed Loan Documents as if New Borrower had been the original maker of the Assumed Loan Documents. New Borrower 

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will pay all sums to be paid and perform each and every obligation to be performed by Original Borrower under and in accordance with the terms and conditions of the Assumed Loan Documents.

		
	2.
	Affirmations by New Borrower. 

(a)    New Borrower agrees that the Assumed Loan Documents are and will be and remain in full force and effect, enforceable against New Borrower in accordance with their terms, as modified by Exhibit C to this Agreement. 

(b)    The Mortgaged Property will remain subject to the lien, charge and encumbrance of the Security Instrument. Nothing contained in this Agreement or done pursuant to this Agreement will affect or be construed to affect the lien, charge, and encumbrance of the Security Instrument or the priority of the Security Instrument over other liens, charges, and encumbrances. 

(c)    Nothing contained in this Agreement or done pursuant to this Agreement will release or be construed to release or affect the liability of any party or parties who may now or after the date of this Agreement be liable under or on account of the Note and the Security Instrument, except as expressly provided in this Agreement. 

(d)    New Borrower will be liable for the payment of all sums and the performance of every obligation required under the Assumed Loan Documents to the extent set forth in the Assumed Loan Documents, as modified by this Agreement.
 

		
	3.
	Subordination of Rights of Original Borrower and New Borrower. 

(a)    Any indebtedness of Original Borrower to New Borrower, or of New Borrower to Original Borrower, now or existing after the date of this Agreement, together with any interest on such debt, is subordinated to any indebtedness of Original Borrower or New Borrower to Freddie Mac under the Loan Documents or the Assumed Loan Documents, as applicable. 

(b)    Any collection or receipts with respect to any such indebtedness of Original Borrower to New Borrower, or of New Borrower to Original Borrower, will be collected, enforced and received by New Borrower or Original Borrower (as applicable) in trust for the benefit of Freddie Mac, and will be paid over to Freddie Mac on account of the indebtedness of Original Borrower and New Borrower to Freddie Mac, but without impairing or affecting in any manner the liability of Original Borrower or New Borrower under the other provisions of the Loan Documents or the Assumed Loan Documents, as applicable, and this Agreement.

(c)    Notwithstanding the provisions of Section 3(b), until the occurrence of an Event of Default under the Security Instrument, Original Borrower or New Borrower (as applicable) will be entitled to retain for its own account all payments made on 

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account of the principal of and interest on any such indebtedness; provided no such payment is made more than 10 days in advance of the due date. 

		
	4.
	Modification of Note and Security Instrument. New Borrower and Freddie Mac agree that the provisions of the Assumed Loan Documents are modified as set forth in Exhibit C to this Agreement.

		
	5.
	New Guaranty. On the date of execution of this Agreement, New Borrower will cause New Guarantor to execute and deliver to Freddie Mac the current Freddie Mac form of Guaranty – Multistate – Assumptions and Transfers (CME and Portfolio) (“Guaranty”) under which New Guarantor guarantees the full and punctual payment and performance, when due, of certain obligations of Borrower in connection with the Loan, as more fully set forth in the Guaranty. 

		
	6.
	Representations and Warranties of Original Borrower. Original Borrower makes each of the following representations and warranties to Freddie Mac and to New Borrower:

 

(a)    As of the date of this Agreement, the amount of the unpaid indebtedness under the Note is $20,500,000.00.

(b)    Interest at the rate set forth in the Note has been paid to Freddie Mac in full through and including June 30, 2012. 

(c)    All of the representations and warranties made by Original Borrower in the Loan Documents are true as of the date on which Original Borrower executes this Agreement.
 

(d)    No Event of Default (or event which, with the giving of notice or the passage of time or both, would be an Event of Default) has occurred or is continuing under the Loan Documents.
 

(e)    Original Borrower has no claims, offsets, defenses, or counterclaims of any kind to its performance under, or Freddie Mac’s enforcement of, the Note and the other Loan Documents; and to the extent any such counterclaims, setoffs, defenses or other causes of action may exist, whether known or unknown, Original Borrower waives all such items. 

(f)    Original Borrower acknowledges that all of Freddie Mac’s actions in connection with the Loan have been in compliance with the terms of the applicable Loan Documents, and Original Borrower acknowledges and agrees that Freddie Mac has not breached or failed to perform any duty or obligation that Freddie Mac may owe Original Borrower.
 

(g)    There are no suits or actions threatened or pending against Original Borrower 

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which affect the enforcement or validity of the Note, the Security Instrument, and/or the Loan Documents.
 

		
	7.
	Additional Transfers. Notwithstanding Freddie Mac’s consent to the Transfer, New Borrower understands and agrees that such consent will in no way limit or operate as a waiver of Freddie Mac’s continuing rights with respect to future transfers under the provisions of the Security Instrument. 

 

		
	8.
	Continuing Obligations. New Borrower will execute, acknowledge, and deliver such other documents as Freddie Mac or Servicer may require to document the Assumption and to more fully implement the provisions of this Agreement. The failure of New Borrower to comply with the additional obligations contained in this Section will constitute an Event of Default under the Security Instrument, and Freddie Mac will be entitled to exercise all remedies available to it under the terms of the Assumed Loan Documents.

 

		
	9.
	Additional Agreements.

 

		
	(a)
	To induce Freddie Mac to consent to the Assumption, in addition to the covenants and agreements set forth in the Assumed Loan Documents, New Borrower will enter into the additional agreements set forth on Exhibit D to this Agreement (“Additional Agreements”), if applicable.

 

		
	(b)
	The failure of New Borrower to comply with the provisions of the Additional Agreements, if applicable, will constitute an Event of Default under the Security Instrument, and Freddie Mac will be entitled to exercise all remedies available to it under the terms of the Additional Agreements and the Assumed Loan Documents.

10.    Release of Original Borrower; Rights of Freddie Mac.

		
	(a)
	In reliance upon Original Borrower’s representations and warranties, Freddie Mac releases Original Borrower from any and all obligations under the terms and provisions of the Loan Documents; provided, however, that Original Borrower is not released from any liability pursuant to Section 18 [Environmental Hazards] of the Security Instrument arising out of conditions existing on or before the date of this Agreement.

		
	(b)
	If any material element of Original Borrower’s representations and warranties is materially false or misleading, this release will be canceled and Original Borrower will remain obligated under the Loan Documents as though there had been no release. 

Assumption Agreement (CME and Portfolio)         #PageNum#

		
	(c)
	If at any time all or any part of any payment by Original Borrower which has been applied by Freddie Mac to payment of the Loan on or prior to the date of this Agreement is or must be rescinded, repaid or returned by Freddie Mac for any reason whatsoever (including the application of any bankruptcy, insolvency or other law), for purposes of this Agreement, to the extent that such payment is or must be rescinded, repaid or returned, such payment will be deemed to have continued to be due and payable, notwithstanding such application by Freddie Mac and this Agreement will continue to be effective as to such payment as though such application by Freddie Mac had not been made. Original Borrower and New Borrower will each remain liable to Freddie Mac for the amount so rescinded, repaid, or returned to the same extent as if such amount had never originally been received by Freddie Mac, notwithstanding any cancellation of the Note, release or satisfaction of the Security Instrument, or the cancellation of any other Loan Document.

		
	11.
	Ratification of Original Guaranty. By signing the Acknowledgment and Consent to this Agreement where indicated below, Original Guarantor takes each of the following actions:

		
	(a)
	Original Guarantor ratifies the Original Guaranty under which it guaranteed payments of certain amounts and performance of certain obligations under the Loan Documents only to the extent that it guaranties payments of Borrower’s liability under Section 18 [Environmental Hazards] of the Security Instrument arising out of conditions existing on or before the date of this Agreement (“Preexisting Conditions”).

 

		
	(b)
	Original Guarantor agrees that Section 18 [Environmental Hazards] of the Security Instrument as assumed by New Borrower and modified by this Agreement will continue to be guaranteed by Original Guarantor as and to the full extent provided in the Original Guaranty for such Preexisting Conditions.

Freddie Mac hereby releases Original Guarantor from any and all liability under the Original Guaranty except to the extent that the Original Guaranty guarantees payment of Original Borrower’s liability under Section 18 of the Security Instrument arising out of Preexisting Conditions.

		
	12.
	Expenses. New Borrower will pay all expenses incurred by Freddie Mac in connection with the Assumption, including the payment of any title endorsement costs, legal costs (including in-house legal costs), attorneys’ fees, and assumption fees required by Freddie Mac and/or pursuant to the Loan Documents. 

 

		
	13.
	Miscellaneous.

 

		
	(a)
	This Agreement will be binding upon and will inure to the benefit of the parties to the Agreement and their respective heirs, successors, and permitted assigns.

Assumption Agreement (CME and Portfolio)         #PageNum#

 

		
	(b)
	Except as expressly modified by this Agreement, the Note, the Security Instrument, and all other Loan Documents will be unchanged and remain in full force and effect, and are hereby expressly approved, ratified, and confirmed. No provision of this Agreement that is held to be inoperative, unenforceable or invalid will affect the remaining provisions, and to this end all provisions of this Agreement are declared to be severable. 

 

		
	(c)
	Time is of the essence of this Agreement. 

 

		
	(d)
	This Agreement may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

 

		
	(e)
	This Agreement will be construed in accordance with the laws of the jurisdiction in which the Mortgaged Property is located.

 

		
	(f)
	This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same document. 

 

		
	(g)
	All notices given pursuant to the Agreement must be in writing and will be effectively given if personally delivered or, if mailed, postage prepaid, certified or registered mail, return receipt requested, to the addresses of the parties set forth below or to such other address as any party subsequently may designate in writing.

 

		
	(h)
	The failure of New Borrower to comply with the additional obligations contained in this Agreement will constitute an Event of Default under the Security Instrument, and Freddie Mac will be entitled to exercise all remedies available to it under the terms of the Assumed Loan Documents.

 

		
	14.
	Executed Originals. Executed originals of this Agreement will be (a) attached permanently to the Note as an amendment to the Note, and (b) recorded in the Land Records as a modification to the Security Instrument.

		
	15.
	State Specific Requirements. N/A 

		
	16.
	Attached Exhibits. The following Exhibits, if marked with an “X”, are attached to this Agreement:

		
	[X]  Exhibit A
	Legal Description of the Land (required)

Assumption Agreement (CME and Portfolio)         #PageNum#

		
	[X]  Exhibit B
	List of Assumed Loan Documents (required)

		
	[X]  Exhibit C
	Modifications to Assumed Loan Documents (required)

		
	[X]  Exhibit D
	Additional Agreements  

		
	[X]  Exhibit E
	Modifications to Agreement  

{Signatures on next page}

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date written above.

ORIGINAL BORROWER:
ESTANCIA TULSA, LLC, a Delaware limited liability company 
By:  Flournoy Development Company, LLC, 
a Georgia limited liability company, 
its Manager	
			
	By:
	/s/ Thomas H. Flournoy          
	(Seal)

	Name:
	Thomas H. Flournoy
	 

	Title:
	President
	 

Address for Notice to Original Borrower:
c/o Flournoy Development Company, LLC
900 Brookstone Centre Parkway
Columbus, Georgia  31904
{Acknowledgement on next page}

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ACKNOWLEDGMENT

STATE OF Georgia
COUNTY OF Muscogee

I, the undersigned Notary Public in and for said County, in said State, hereby certify that Thomas H. Flournoy, whose name as President of Flournoy Development Company, LLC, a Georgia limited liability company, which is Manager of ESTANCIA TULSA, LLC, a Delaware limited liability company, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, acting in his capacity as the President as aforesaid, executed the same voluntarily for and as the act of said limited liability company. 

Given under my hand and official seal, this 26th day of June, 2012.

/s/ Caroline M. Smith    
NOTARY PUBLIC
My Commission Expiry: 2/27/14

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NEW BORROWER:
SIR ESTANCIA, LLC, a Delaware limited liability company 
By:  Steadfast Income Advisor, LLC
a Delaware limited liability company, 
its Manager	
			
	By:
	/s/ Kevin J. Keating          
	(Seal)

	Name:
	Kevin J. Keating
	 

	Title:
	Chief Accounting Officer
	 

Address for Notice to New Borrower:
18100 Von Karman Ave.
Suite 500
Irvine, CA 92612

{Acknowledgement on next page}

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CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT

State of CALIFORNIA    )
County of ORANGE        )  ss 

On June 26, 2012, before me, Mary L. Kelly, Notary Public, personally appeared Kevin J. Keating, 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 California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

/s/ Mary L. Kelly    

State of CALIFORNIA    )
County of Orange        )  ss 

Subscribed and sworn to (or affirmed) before me on this 26th day of June, 2012, by Kevin J. Keating, proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me.

Signature /s/ Mary L. Kelly    

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CONSENTED TO BY FREDDIE MAC:
FEDERAL HOME LOAN MORTGAGE CORPROATION
    	
			
	By:
	/s/ David J. Goozman          
	 

	Name:
	David J. Goozman
	 

	Title:
	Manager
	 

	 
	Multifamily Asset Management
	 

	 
	 
	[Corporate Seal]

Date: June 29, 2012
Address for Notice to Freddie Mac:
8100 Jones Branch Drive
M.S. B-4F
McLean, Virginia 22102

ACKNOWLEDGMENT

STATE OF Virginia
COUNTY OF Fairfax

I, the undersigned Notary Public in and for said County, in said State, hereby certify that David J. Goozman, whose name as Manager, MF AM of the FEDERAL HOME LOAN MORTGAGE CORPORATION, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he/she, acting in his/her capacity as the Manager, MF AM as aforesaid, executed the same voluntarily for and as the act of said corporation. 

Given under my hand and official seal, this 29th day of June, 2012.

/s/ Patricia B. Johnson    
NOTARY PUBLIC
My Commission Expiry:_____________________

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ACKNOWLEDGED AND CONSENTED TO ORIGINAL GUARANTOR:
FLOURNOY DEVELOPMENT COMPANY, LLC, a Georgia limited liability company 
    	
			
	By:
	/s/ Thomas H. Flournoy          
	(Seal)

	Name:
	Thomas H. Flournoy
	 

	Title:
	President
	 

Date: June 29, 2012
Address for Notice to Original Guarantor:
Flournoy Development Company, LLC
900 Brookstone Centre Parkway
Columbus, Georgia  31904

ACKNOWLEDGMENT

STATE OF Georgia
COUNTY OF Muscogee

I, the undersigned Notary Public in and for said County, in said State, hereby certify that Thomas H. Flournoy, whose name as President of FLOURNOY DEVELOPMENT COMPANY, LLC, a Georgia limited liability company, is signed to the foregoing instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, acting in his capacity as the President as aforesaid, executed the same voluntarily for and as the act of said limited liability company. 

Given under my hand and official seal, this 26th day of June, 2012.

/s/ Caroline M. Smith    
NOTARY PUBLIC
My Commission Expiry 2/27/14

{Signatures continued on next page}

                    
    

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NEW GUARANTOR:
STEADFAST INCOME REIT, INC., a Maryland corporation
    	
			
	By:
	/s/ Rodney F. Emery          
	 

	Name:
	Rodney F. Emery
	 

	Title:
	President
	 

	 
	 
	[Corporate Seal]

Date: June 29, 2012
Address for Notice to New Guarantor:
18100 Von Karman Ave.
Suite 500
Irvine, CA 92612

{Acknowledgement on next page}

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CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT

State of CALIFORNIA    )
County of Orange        )  ss 

On June 26, 2012, before me, Mary L. Kelly, Notary Public, personally appeared Rodney F. Emery, 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 California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 /s/ Mary L. Kelly    

State of CALIFORNIA    )
County of Orange        )  ss 

	
		
	Subscribed and sworn to (or affirmed) before me on this 26th day of June, 2012, by Rodney F. Emery, proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me.

	 

	 

	Signature
	   /s/ Mary L. Kelly

                        

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Exhibit A
Legal Description

Lot I in Block I of Estancia, a subdivision in the City of Tulsa, Tulsa County, Oklahoma,
according to recorded Plat No. 5938.

    
EXHIBIT B

LIST OF ASSUMED LOAN DOCUMENTS

		
	1.
	Multifamily Note dated September 6, 2007 from Original Borrower in favor of Original Lender in the principal amount of $20,500,000.00, payable to Original Lender, as assigned to Freddie Mac. 

		
	2.
	Multifamily Mortgage Assignment of Rents and Security Agreement encumbering the Property dated September 6, 2007, by and between Original Borrower in favor of Original Lender, and recorded in the real estate records of Tulsa County, Oklahoma as Instrument #2007100741, as assigned to Freddie Mac pursuant to that certain Assignment of Security Instrument dated September 6, 2007, and recorded as Instrument #2007100742.

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EXHIBIT C

MODIFICATIONS TO ASSUMED LOAN DOCUMENTS

Modifications to all Assumed Loan Documents
    
		
	1.
	As used in the Assumed Loan Documents, all references to Borrower will be deemed to refer to New Borrower; provided, however, that New Borrower shall not be liable under any of the Assumed Loan Documents for any Event of Default under the Loan Documents which is personal to Original Borrower and not susceptible to cure, such as fraud, misrepresentation or breach of the single asset requirements.

		
	2.
	From and after the date hereof, all references to the defined term “Loan Documents” in any of the Assumed Loan Documents (and any documents executed concurrently with this Agreement) shall be deemed to mean, collectively, (i) this Assumption Agreement, (ii) the Note, the Security Instrument, the County UCC and the State UCC, in each case as modified hereby, (iii) the Replacement Reserve Agreement, (iv) the O&M Agreements and MMP Implementation Certificate, (v) the new Guaranty, (vi) the new Borrower's Certificate and Agreement, and (vii) any UCC-1 financing statements filed or recorded in connection herewith.

		
	3.
	From and after the date hereof, all references to the defined terms “Note” and “Security Instrument”, in any of the Loan Documents shall be deemed to mean such document as modified hereby.

Modifications to Note

1.    Section 9(c)(iv) of the Note is hereby deleted and replaced with the following:

		
	(iv)
	Borrower fails to pay when due the amount of any item below marked “Deferred” in accordance with the terms of the Security Instrument; provided, however, that if no item is marked “Deferred”, this Section 9(c)(iv) shall be of no force or effect.

		
	[Collect]
	Hazard Insurance premiums or other insurance premiums,

[Collect]    Taxes,
		
	[Deferred]
	water and sewer charges (that could become a lien on the Mortgaged Property),

[N/A]        ground rents,
		
	[Deferred]
	assessments or other charges (that could become a lien on the Mortgaged Property)

Assumption Agreement (CME and Portfolio)        Exhibit C – Page 1

Modifications to Security Instrument

1.    Modifications #1, 3 and 4 of Exhibit B are hereby deleted.

2.    Section 1(y)(xv) is hereby amended by inserting the following at the end thereof: 

"; provided however, that the name “SIR” and “Steadfast” and/or associated trademark rights are not assigned to Lender (notwithstanding anything contained in this Instrument, Borrower agrees that Lender will have an irrevocable license, coupled with an interest and for which consideration has been paid and received, to use and disseminate existing brochures, pamphlets, and other marketing materials relating to any of the Mortgaged Property, notwithstanding they may include the name “SIR” and/or “Steadfast”, for a period not to exceed 120 days after the date Lender acquires the Mortgaged Property by foreclosure or deed-in-lieu of foreclosure.)"

3.    Section 7(a) of the Security Instrument is hereby deleted and replaced with the following:

		
	(a)
	Unless this requirement is waived in writing by Lender, which waiver may be contained in this Section 7(a), Borrower shall deposit with Lender on the day monthly installments of principal or interest, or both, are due under the Note (or on another day designated in writing by Lender), until the Indebtedness is paid in full, an additional amount sufficient to accumulate with Lender the entire sum required to pay, when due, the items marked “Collect” below. Lender will not require Borrower to make Imposition Deposits with respect to the items marked “Deferred” below.

		
	[Collect]
	Hazard Insurance premiums or other insurance premiums required by Lender under Section 19,

[Collect]    Taxes,
		
	[Deferred]
	water and sewer charges (that could become a lien on the Mortgaged Property),

[N/A]    ground rents,
		
	[Deferred]
	assessments or other charges (that could become a lien on the Mortgaged Property)

The amounts deposited under the preceding sentence are collectively referred to in this Instrument as the “Imposition Deposits.”  The obligations of Borrower for which the Imposition Deposits are required are collectively referred to in this Instrument as “Impositions.”  The amount of the Imposition Deposits shall be sufficient to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added. Lender shall maintain records indicating how much of the monthly Imposition Deposits and how 

Assumption Agreement (CME and Portfolio)        Exhibit C – Page 2

much of the aggregate Imposition Deposits held by Lender are held for the purpose of paying Taxes, insurance premiums and each other Imposition.

		
	4.
	Section 13(b) of the Security Instrument is hereby deleted and replaced with the following:

(b)    If Lender determines that Mold has developed as a result of a water intrusion event or leak, Lender, at Lender’s discretion, may require that a professional inspector inspect the Mortgaged Property as frequently as Lender determines is necessary until any issue with Mold and its cause(s) are resolved to Lender’s satisfaction. Such inspection shall be limited to a visual and olfactory inspection of the area that has experienced the Mold, water intrusion event or leak. Borrower shall be responsible for the cost of such professional inspection and any remediation deemed to be necessary as a result of the professional inspection. After any issue with Mold, water intrusion or leaks is remedied to Lender’s satisfaction, Lender shall not be entitled to require a professional inspection any more frequently than once every three years unless Lender is otherwise aware of Mold as a result of a subsequent water intrusion event or leak.

		
	5.
	Sections 19(a), (b) and (c) of the Security Instrument are deleted and replaced with the following:

		
	(a)
	Borrower shall keep the Improvements insured at all times against such hazards as Lender may from time to time require, which insurance shall include but not be limited to coverage against loss by fire, windstorm and allied perils, general boiler and machinery coverage, and business interruption including loss of rental value insurance for the Mortgaged Property with extra expense insurance. If Lender so requires, such insurance shall also include sinkhole insurance, mine subsidence insurance, earthquake insurance, and, if the Mortgaged Property does not conform to applicable zoning or land use laws, building ordinance or law coverage. In the event any updated reports or other documentation are reasonably required by Lender in order to determine whether such additional insurance is necessary or prudent, Borrower shall pay for all such documentation at its sole cost and expense. Borrower acknowledges and agrees that Lender’s insurance requirements may change from time to time throughout the term of the Indebtedness. If any of the Improvements are located in an area identified by the Federal Emergency Management Agency (or any successor to that agency) as an area having special flood hazards, Borrower shall insure such Improvements against loss by flood. All insurance required pursuant to this Section 19(a) shall be referred to as “Hazard Insurance.”  All policies of Hazard Insurance must include a non-contributing, non-reporting mortgagee clause in favor of, and in a form approved by, Lender.

Assumption Agreement (CME and Portfolio)        Exhibit C – Page 3

		
	(b)
	All premiums on insurance policies required under this Section 19 shall be paid in the manner provided in Section 7, unless Lender has designated in writing another method of payment. All such policies shall also be in a form approved by Lender. Borrower shall deliver to Lender a legible copy of each insurance policy (or duplicate original) and Borrower shall promptly deliver to Lender a copy of all renewal and other notices received by Borrower with respect to the policies and all receipts for paid premiums. At least 5 days prior to the expiration date of any insurance policy, Borrower shall deliver to Lender evidence acceptable to Lender that the policy has been renewed. If Borrower has not delivered a legible copy of each renewal policy (or a duplicate original) prior to the expiration date of any insurance policy, Borrower shall deliver a legible copy of each renewal policy (or a duplicate original) in a form satisfactory to Lender within 120 days after the expiration date of the original policy.

		
	(c)
	Borrower shall maintain at all times commercial general liability insurance, workers’ compensation insurance and such other liability, errors and omissions and fidelity insurance coverages as Lender may from time to time require. All policies for general liability insurance must contain a standard additional insured provision, in favor of, and in a form approved by, Lender.

		
	6.
	Section 19(g)(i) is hereby modified by deleting $10,000 and replacing it with “0.5% of the original principal balance of the Note, rounded to the nearest $1,000”.

		
	7.
	Section 19(g)(ii) is hereby modified by deleting $10,000 and replacing it with “0.5% of the original principal balance of the Note, rounded to the nearest $1,000” and deleting $50,000 and replacing it with “2% of the original principal balance of the Note, rounded to the nearest $1,000”.

8.    Section 19(i) is deleted and replaced with the following:

If the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the Mortgaged Property, Lender will automatically succeed to all rights of Borrower in and to any Insurance policies (other than Blanket Insurance Policies) and unearned Insurance premiums (other than Blanket Insurance Policies) and in and to the proceeds resulting from any damage to the Mortgaged Property prior to such sale or acquisition.

9.    Section 19(i) is modified to add a new subsection (l) as follows:

(l)    Notwithstanding anything to the contrary herein, for windstorm coverage the deductible will not exceed 5% of the replacement cost if the Mortgaged Property is located (1) in Florida, (2) in Oklahoma, or (3) within 50 miles of the coast of any east coast or gulf coast state.

Assumption Agreement (CME and Portfolio)        Exhibit C – Page 4

		
	10.
	Section 21(e)(v) is hereby amended by adding the following at the end thereof: “, except as expressly permitted pursuant to Section 21(c)(viii) of this Instrument”.

11.    Section 21 is hereby further amended to insert the following as a new Section 21(c)(viii):

(viii)    Notwithstanding any terms to the contrary in this Section 21, if Borrower, Guarantor or any direct or indirect owner of Borrower or Guarantor is a publicly-held corporation, fund or real estate investment trust, then the public issuance of common stock, convertible debt, equity or other similar (“Public Fund/REIT Securities”) and the subsequent Transfer of such Public Fund/REIT Securities shall not constitute an Event of Default or require the payment of any transfer fee otherwise due under this Section 21; provided, however, that no Public Fund/REIT Securities holder may acquire an ownership percentage of 10% or more unless otherwise approved by Lender.

12.    Section 31 is modified to add a new subsection (d) as follows:

(d)    Lender shall endeavor to give to the individuals or entities listed below (“Courtesy Notice Parties”) courtesy copies of any notice or demand given to Borrower or any Guarantor by Lender, at the addresses set forth below; provided, however, failure to provide such courtesy copies of such notices/demands shall not affect the validity or sufficiency of any notice to Borrower or any Guarantor, shall not affect Lender’s rights and remedies hereunder or under any other Loan Documents, and shall not subject Lender to any claims by or liability to Borrower, any of the Courtesy Notice Parties, or any other individual or entity.

Katten Muchin Rosenman LLP
2900 K Street, NW, Suite 200
Washington, DC  20007
Attention:  Virginia Davis

Assumption Agreement (CME and Portfolio)        Exhibit C – Page 5

 
EXHIBIT D

ADDITIONAL AGREEMENTS

Replacement Reserve Agreement – Assumptions and Transfers (CME and Portfolio)

Certificate Regarding O&M Program - Mold

Assumption Agreement (CME and Portfolio)    Exhibit D – Page #PageNum#

EXHIBIT E

MODIFICATIONS TO AGREEMENT

1.    Section 1 is hereby deleted and replaced with the following:

1.    Assumption of Obligations. New Borrower covenants, promises, and agrees that New Borrower, jointly and severally if more than one, will unconditionally assume and be bound by all terms, provisions, and covenants of the Assumed Loan Documents as if New Borrower had been the original maker of the Assumed Loan Documents; provided, however, that New Borrower shall not be liable for any Event of Default under the Loan Documents which is personal to Original Borrower and is not susceptible to cure, such as fraud, misrepresentation or breach of the single asset requirements. New Borrower will pay all sums to be paid and perform each and every obligation to be performed by Original Borrower under and in accordance with the terms and conditions of the Assumed Loan Documents.

2.    Section 8 is hereby deleted and replaced with the following:

8.    Continuing Obligations. New Borrower will execute, acknowledge, and deliver such other documents as Freddie Mac or Servicer may require to document the Assumption and to more fully implement the provisions of this Agreement. The failure of New Borrower to comply with the additional obligations contained in this Section timely after written request from Freddie Mac will constitute an Event of Default under the Security Instrument, and Freddie Mac will be entitled to exercise all remedies available to it under the terms of the Assumed Loan Documents.

3.    Section 9(b) is hereby deleted and replaced with the following:

(b)    The failure of New Borrower to comply with the provisions of the Additional Agreements, if applicable, after any notice or cure period provided therein, will constitute an Event of Default under the Security Instrument, and Freddie Mac will be entitled to exercise all remedies available to it under the terms of the Additional Agreements and the Assumed Loan Documents.

Assumption Agreement (CME and Portfolio)    Exhibit E – Page #PageNum#Ex 10.6 Note

Exhibit 10.6
FHLMC Loan No. 940979209 
MULTIFAMILY NOTE 
MULTISTATE -FIXED TO FLOAT 
(REVISION DATE 3-30-2006) 
US $20,500,000.00         Effective Date: September 6, 2007
FOR VALUE RECEIVED, the undersigned (together with such party's or parties' successors and assigns, "Borrower"), jointly and severally (if more than one) promises to pay to the order of CBRE MELODY & COMPANY, a Texas corporation, the principal sum of TWENTY MILLION FNE HUNDRED THOUSAND AND NO/l00 DOLLARS (US $20,500,000.00), with interest on the unpaid principal balance, as hereinafter provided. 
1. Defined Terms. 
(a) As used in this Note: 
"Adjustable Interest Rate" means the variable annual interest rate calculated for each Interest Adjustment Period so as to equal the Index Rate for such Interest Adjustment Period (truncated at the fifth (5th) decimal place if necessary) plus the Margin. 
"Amortization Period" means a period of N/A full consecutive calendar months. 
"Base Recourse" means a portion of the Indebtedness equal to zero percent (0.00%) of the original principal balance of this Note. 
"Business Day" means any day other than a Saturday, a Sunday or any other day on which Lender or the national banking associations are not open for business. 
"Default Rate" means (i) during the Fixed Rate Period, an annual interest rate equal to four (4) percentage points above the Fixed Interest Rate; and (ii) during the Extension Period, a variable annual interest rate equal to four (4) percentage points above the Adjustable Interest Rate in effect from time to time. However, at no time will the Default Rate exceed the Maximum Interest Rate. 
"Extended Maturity Date" means, if the Extension Period becomes effective pursuant to this Note, the earlier of (i) October 1, 2018 and (ii) the date on 

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which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy thereunder. 
"Extension Period" means the twelve (12) consecutive calendar months period commencing on the Scheduled Initial Maturity Date. 
"Fixed Interest Rate" means the annual interest rate of five and ninety-four hundredths percent (5.94%). 
"Fixed Rate Period" means the period beginning on the date of this Note and continuing through September 30, 2017. 
"Index Rate" means, for any Interest Adjustment Period, the Reference Bill® Index Rate for such Interest Adjustment Period. 
"Initial Maturity Date" means the earlier of (i) October 1,2017 (the "Scheduled Initial Maturity Date"), and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy thereunder.
"Installment Due Date" means, for any monthly installment of interest only or principal and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The "First Installment Due Date" under this Note is November 1, 2007. 
"Interest Adjustment Period" means each successive one calendar month period during the Extension Period and until the entire Indebtedness is paid in full.
"Lender" means the holder from time to time of this Note. 
"LIBOR Index" means the British Bankers Association's (BBA) one (1) month LIBOR Rate for United States Dollar deposits, as displayed on the LIBOR Index Page used to establish the LIBOR Index Rate. 
"LIBOR Index Rate" means, for any Interest Adjustment Period after the first Interest Adjustment Period, the BBA's LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of such Interest Adjustment Period, as such LIBOR Rate is displayed on the LIBOR Index Page. The LIBOR Index Rate for the first Interest Adjustment Period means the British Bankers Association's (BBA) LIBOR Rate for the LIBOR Index released by the BBA most recently preceding the first day of the month in which the first Interest Adjustment Period begins, as such LIBOR Rate is 

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displayed on the LIBOR Index Page. "LIBOR Index Page" is the Bloomberg L.P., page "BBAM", or such other page for the LIBOR Index as may replace page BBAM on that service, or at the option of Lender (i) the applicable page for the LIDOR Index on another service which electronically transmits or displays BBA UBOR Rates, or (ii) any publication of LIBOR rates available from the BBA. In the event the BBA ceases to set or publish a LIBOR rate/interest settlement rate for the LIBOR Index, Lender will designate an alternative index, and such alternative index shall constitute the LIBOR Index Page. 
"Loan" means the loan evidenced by this Note. 
"Margin" means two and one-half (2.5) percentage points (250 basis points). 
"Maturity Date" means the Extended Maturity Date unless pursuant to Section 3(e) of this Note the Extension Period does not or cannot become effective, in which case the Maturity Date means the Initial Maturity Date. 
"Maximum Interest Rate" means the rate of interest that results in the maximum amount of interest allowed by applicable law. 
"Prepayment Premium Period" means the period during which, if a prepayment of principal occurs, a prepayment premium will be payable by Borrower to Lender. The Prepayment Premium Period is the period from and including the date of this Note until but not including the first day of the Window Period. For this Note, the Prepayment Premium Period equals the Yield Maintenance Period. 
"Reference Bills®" means the unsecured general obligations of the Federal Home Loan Mortgage Corporation ("Freddie Mac") designated by Freddie Mac as "Reference Bills®Securities" and having original durations to maturity most comparable to the term of the Reference Bill Index, and issued by Freddie Mac at regularly scheduled auctions. In the event Freddie Mac shall at any time cease to designate any unsecured general obligations of Freddie Mac as "Reference Bills Securities", then at the option of Lender (i) Lender may select from time to time another unsecured general obligation of Freddie Mac having original durations to maturity most comparable to the term of the Reference Bill Index and issued by Freddie Mac at regularly scheduled auctions, and the term "Reference Bills" as used in this Note shall mean such other unsecured general obligations as selected by Lender; or (ii) for anyone or more Interest Adjustment Periods, Lender may use the applicable LIBOR Index Rate as the Index Rate for such Interest Adjustment Period(s). 

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"Reference Bill Index" means the one-month Reference Bills. One-month reference bills have original durations to maturity of approximately 30 days. 
"Reference Bill Index Rate" means, for any Interest Adjustment Period after the first Interest Adjustment Period, the Money Market Yield for the Reference Bills as established by the Reference Bill auction conducted by Freddie Mac most recently preceding the first day of such Interest Adjustment Period, as displayed on the Reference Bill Index Page. The Reference Bill Index Rate for the first Interest Adjustment Period means the Money Market Yield for the Reference Bills as established by the Reference Bill auction conducted by Freddie Mac most recently preceding the first day of the month in which the first Interest Adjustment Period begins, as displayed on the Reference Bill Index Page. The "Reference Bill Index Page" is the Freddie Mac Debt Securities Web Page (accessed via the Freddie Mac internet site at www.freddiemac.com). or at the option of Lender, any publication of Reference Bills auction results available from Freddie Mac. However, if Freddie Mac has not conducted a Reference Bill auction within the 60-calendar day period prior to the first day of an Interest Adjustment Period, the Reference Bill Index Rate for such Interest Adjustment Period will be the LIDOR Index Rate for such Interest Adjustment Period. 
"Remaining Amortization Period" means, at any point in time, the number of consecutive calendar months equal to the number of months in the Amortization Period minus the number of scheduled monthly installments of principal and interest that have elapsed since the date of this Note. 
"Security Instrument" means the multifamily mortgage, deed to secure debt or deed of trust effective as of the effective date of this Note, from Borrower to or for the benefit of Lender and securing this Note. 
"Treasury Security" means the 9.125% U.S. Treasury Security due May 15, 2018. 
"Window Period" means the Extension Period. 
"Yield Maintenance Period" means the period from and including the date of this Note until but not including the Scheduled Initial Maturity Date. 
(b) Other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument. 
2. Address for Payment. All payments due under this Note shall be payable at c/o GEMSA Loan Services, LP, P.O. Box 297480, Houston, Texas 77297, or such other place as may be designated by Notice to Borrower from or on behalf of Lender. 

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3. Payments. 
(a) During the Fixed Rate Period, interest will accrue on the outstanding principal balance of this Note at the Fixed Interest Rate, subject to the provisions of Section 8 of this Note. During the Extension Period, interest will accrue on the outstanding principal balance of this Note at the Adjustable Interest Rate, subject to the provisions of Section 8 of this Note. 
(b) Interest under this Note shall be computed, payable and allocated on the basis of an actual/360 interest calculation schedule (interest is payable for the actual number of days in each month, and each month's interest is calculated by multiplying the unpaid principal amount of this Note as of the first day of the month for which interest in being calculated by the Fixed· Interest Rate (during the Fixed Rate Period) or the applicable Adjustable Interest Rate (during the Extension Period), dividing the product by 360, and mUltiplying the quotient by the number of days in the month for which interest is being calculated). For convenience in determining the amount of a monthly installment of principal and interest under this Note, Lender will use a 30/360 interest calculation payment schedule (each year is treated as consisting of twelve 30-day months). However, as provided above, the portion of the monthly installment actually payable as and allocated to interest will be based upon an actual/360 interest calculation schedule, and the amount of each installment attributable to principal and the amount attributable to interest will vary based upon the number of days in the month for which such installment is paid. Each monthly payment of principal and interest will first be applied to pay in full interest due, and the balance of the monthly payment paid by Borrower will be credited to principal. 
(c) Unless disbursement of principal is made by Lender to Borrower on the first day of a calendar month, interest for the period beginning on the date of disbursement and ending on and including the last day of such calendar month shall be payable by Borrower simultaneously with the execution of this Note. If disbursement of principal is made by Lender to Borrower on the first day of a calendar month, then no payment will be due from Borrower at the time of the execution of this Note. The Installment Due Date for the first monthly installment payment under Section 3(d) of interest only or principal and interest, as applicable, will be the First Installment Due Date set forth in Section l(a) of this Note. Except as provided in this Section 3(c) and in Section 10, accrued interest will be payable in arrears. 
(d) Beginning on the First Installment Due Date, and continuing until and including the monthly installment due on the Initial Maturity Date, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of each monthly installment of interest only payable pursuant to this Section 3(d) on an Installment Due Date shall vary, and shall equal $3,382.50 multiplied by the number of days in the month prior to the Installment Due Date. 
(e) Except as otherwise provided in this Section 3(e), all remaining Indebtedness, including all principal and interest, shall be due and payable by Borrower on the Initial Maturity Date. However, so long as (i) the Initial Maturity Date has not occurred prior to the Scheduled Initial Maturity Date, and (ii) no Event of Default or event or circumstance which, with the giving of notice or passage of time or both, could constitute an Event of Default exists on the Scheduled Initial Maturity Date, then the Extension Period automatically will become effective and the date for full payment of the Indebtedness automatically shall be extended until the Extended Maturity Date. If the Extension Period becomes effective, monthly installments of 

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PAGE 5

principal and interest or interest only will be payable during the Extension Period as provided in Section 3(t). Anything in Section 21 of the Security Instrument to the contrary notwithstanding, during the Extension Period, Borrower will not request that Lender consent to, and Lender will not consent to, a Transfer that, absent such consent, would constitute an Event of Default. 
(f) If the Extension Period becomes effective, beginning on November 1, 2017, and continuing until and including the monthly installment due on the Extended Maturity Date, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of interest only payable pursuant to this Section 3(t) on an Installment Due Date shall equal the product of(i) annual interest on the unpaid principal balance of this Note as of the first day of the Interest Adjustment Period immediately preceding the Installment Due Date (annual interest being such principal balance of this Note multiplied by the Adjustable Interest Rate in effect for such Interest Adjustment Period), divided by 360, multiplied by (ii) the number of days in such Interest Adjustment Period. 
(g) During the Extension Period, Lender shall provide Borrower with Notice, given in the manner specified in the Security Instrument, of the amount of each monthly installment due under this Note. However, if Lender has not provided Borrower with prior notice of the monthly payment due on any Installment Due Date, then Borrower shall pay on that Installment Due Date an amount equal to the monthly installment payment for which Borrower last received notice. If Lender at any time determines that Borrower has paid one or more monthly installments in an incorrect amount because of the operation of the preceding sentence, or because Lender has miscalculated the Adjustable Interest Rate or has otherwise miscalculated the amount of any monthly installment, then Lender shall give notice to Borrower of such determination. If such determination discloses that Borrower has paid less than the full amount due for the period for which the determination was made, Borrower, within 30 calendar days after receipt of the notice from Lender, shall pay to Lender the full amount of the deficiency. If such determination discloses that Borrower has paid more than the full amount due for the period for which the determination was made, then the amount of the overpayment shall be credited to the next installment(s) of interest only or principal and interest, as applicable, due under this Note (or, if an Event of Default has occurred and is continuing, such overpayment shall be credited against any amount owing by Borrower to Lender). 
(h) All payments under this Note shall be made in immediately available U.S. funds. 
(i) Any regularly scheduled monthly installment of interest only or principal and interest payable pursuant to this Section 3 that is received by Lender before the date it is due shall be deemed to have been received on the due date for the purpose of calculating interest due. 
(j) Any accrued interest remaining past due for 30 days or more, at Lender's discretion, may be added to and become part of the unpaid principal balance of this Note and any reference to "accrued interest" shall refer to accrued interest which has not become part of the unpaid principal balance. Any amount added to principal pursuant to the Loan Documents shall bear interest at the applicable rate or rates specified in this Note and shall be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest. 

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(k) In accordance with Section 14, interest charged under this Note cannot exceed the Maximum Interest Rate. If the Adjustable Interest Rate at any time exceeds the Maximum Interest Rate, resulting in the charging of interest hereunder to be limited to the Maximum Interest Rate, then any subsequent reduction in the Adjustable Interest Rate shall not reduce the rate at which interest under this Note accrues below the Maximum Interest Rate until the total amount of interest accrued hereunder equals the amount of interest which would have accrued had the Adjustable Interest Rate at all times been in effect. 
4. Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply the amount received to amounts then due and payable in any manner and in any order determined by Lender, in Lender's discretion. Borrower agrees that neither Lender's acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender's application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. 
5. Security. The Indebtedness is secured by, among other things, the Security Instrument, and reference is made to the Security Instrument for other rights of Lender as to collateral for the Indebtedness. 
6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, any prepayment premium payable under Section 10, and all other amounts payable under this Note and any other Loan Document, shall at once become due and payable, at the option of Lender, without any prior notice to Borrower (except if notice is required by applicable law, then after such notice). Lender may exercise this option to accelerate regardless of any prior forbearance. For purposes of exercising such option, Lender shall calculate the prepayment premium as if prepayment occurred on the date of acceleration. If prepayment occurs thereafter, lender shall recalculate the prepayment premium as of the actual prepayment date. 
7. Late Charge. 
(a) If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Security Instrument or any other Loan Document is not received in full by Lender (i) during the Fixed Rate Period, within ten (10) days after the installment or other amount is due, or (ii) during the Extension Period, within five (5) days after the installment or other amount is due, counting from and including the date such installment or other amount is due (unless applicable law requires a longer period of time before a late charge may be imposed, in which event such longer period shall be substituted), Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to five percent (5%) of such installment or other amount due (unless applicable law requires a lesser amount be charged, in which event such lesser amount shall be substituted). 
(b) Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses. Borrower agrees that the late 

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charge payable pursuant to this Section represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment. The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 8. 
8. Default Rate. 
(a) So long as (i) any monthly installment under this Note remains past due for thirty (30) days or more or (ii) any other Event of Default has occurred and is continuing, then notwithstanding anything in Section 3 of this Note to the contrary, interest under this Note shall accrue on the unpaid principal balance from the Installment Due Date of the first such unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at the Default Rate. 
(b) From and after the Maturity Date, the unpaid principal balance shall continue to bear interest at the Default Rate until and including the date on which the entire principal balance is paid in full. 
(c) Borrower acknowledges that (i) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, (ii) during the time that any monthly installment under this Note is delinquent for thirty (30) days or more, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender's ability to meet its other obligations and to take advantage of other investment opportunities; and (iii) it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment under this Note is delinquent for thirty (30) days or more or any other Event of Default has occurred and is continuing, Lender's risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower's delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan. 

9. Limits on Personal Liability. 
(a) Except as otherwise provided in this Section 9, Borrower shall have no personal liability under this Note, the Security Instrument or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents and Lender's only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender's exercise of its rights and remedies with respect to the Mortgaged Property and to any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower's liability shall not limit or impair Lender's enforcement of its rights against any guarantor of the Indebtedness or any guarantor of any other obligations of Borrower. . 
(b) Borrower shall be personally liable to Lender for the amount of the Base Recourse, plus any other amounts for which Borrower has personal liability under this Section 9. 

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(c) In addition to the Base Recourse, Borrower shall be personally liable to Lender for the repayment of a further portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events: 
(i) Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence. However, Borrower will not be personally liable for any failure described in this subsection (i) if Borrower is unable to pay to Lender all Rents and security deposits as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding. 
(ii) Borrower fails to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument. However, Borrower will not be personally liable for any failure described in this subsection (ii) if Borrower is unable to apply insurance or condemnation proceeds as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding. 
(iii) Borrower fails to comply with Section 14(g) or (h) of he Security Instrument relating to the delivery of books and records, statements, schedules and reports. 
(iv) Borrower fails to pay when due in accordance with the terms of the Security Instrument the amount of any item below marked "Deferred"; provided however, that if no item is marked "Deferred", this Section 9(c)(iv) shall be of no force or effect. 
[Deferred] Hazard Insurance premiums or other insurance premiums, 
[Collect] Taxes, 
[Deferred] water and sewer charges (that could become a lien on the Mortgaged Property), 
[N/A] ground rents, 
[Deferred] assessments or other charges (that could become a lien on the Mortgaged Property) 
(d) In addition to the Base Recourse, Borrower shall be personally liable to Lender for: 
(i) the performance o fall of Borrower's obligations under Section 18 of the Security Instrument (relating to environmental matters); 
(ii) the costs of any audit under Section 14(g) of the Security Instrument; and
(iii) any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Section 9, including Attorneys' Fees and Costs and the costs of conducting any independent audit of Borrower's books and records to determine the amount for which Borrower has personal liability. 

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(e) All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Security instrument and the other Loan Documents shall be applied first to the portion of the Indebtedness for which Borrower has no personal liability. 
(f) Notwithstanding the Base Recourse, Borrower shall become personally liable to Lender for the repayment of all of the indebtedness upon the occurrence of any of the following Events of Default: 
(i) Borrower's ownership of any property or operation of any business not permitted by Section 33 of the Security instrument; 
(ii) a Transfer (including, but not limited to, a lien or encumbrance) that is an Event of Default under Section 21 oft he Security instrument, other than a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company; or 
(iii) fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender. 
(g) To the extent that Borrower has personal liability under this Section 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower's personal liability under this Section 9, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability. 
10. Voluntary and Involuntary Prepayments. 
(a) Any receipt by Lender of principal due under this Note prior to the Maturity Date, other than principal required to be paid in monthly installments pursuant to Section 3, constitutes a prepayment of principal under this Note. Without limiting the foregoing, any application by Lender, prior to the Maturity Date, of any proceeds of collateral or other security to the repayment of any portion of the unpaid principal balance of this Note constitutes a prepayment under this Note. 
(b) Borrower may voluntarily prepay all of the unpaid principal balance of this Note on an Installment Due Date so long as Borrower designates the date for such prepayment in a Notice from Borrower to Lender given at least 30 days prior to the date of such prepayment. If an Installment Due Date (as defined in Section l(a)) falls on a day which is not a Business Day, then with respect to payments made under this Section 1 0 only, the term "Installment Due Date" shall mean the Business Day immediately preceding the scheduled Installment Due Date. 

(c) Notwithstanding subsection (b) above, Borrower may voluntarily prepay all of the 

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unpaid principal balance of this Note on a Business Day other than an Installment Due Date if Borrower provides Lender with the Notice set forth in subsection (b) and meets the other requirements set forth in this subsection. Borrower acknowledges that Lender has agreed that Borrower may prepay principal on a Business Day other than an Installment Due Date only because Lender shall deem any prepayment received by Lender on any day other than an Installment Due Date to have been received on the Installment Due Date immediately following such prepayment and Borrower shall be responsible for all interest that would have been due if the prepayment had actually been made on the Installment Due Date immediately following such prepayment. 
(d) Unless otherwise expressly provided in the Loan Documents, Borrower may not voluntarily prepay less than all of the unpaid principal balance of this Note. In order to voluntarily prepay all or any part of the principal of this Note, Borrower must also pay to Lender, together with the amount of principal being prepaid, (i) all accrued and unpaid interest due under this Note, plus (ii) all other sums due to Lender at the time of such prepayment, plus (iii) any prepayment premium calculated pursuant to Section 10(e). 
(e) Except as provided in Section lOCi), a prepayment premium shall be due and payable by Borrower in connection with any prepayment of principal under this Note during the Prepayment Premium Period. The prepayment premium shall be whichever is the greater of subsections (A) and (B) below: 

(A) 1.0% of the amount of principal being prepaid; or 
(B) the product obtained by multiplying: 
(1) the amount of principal being prepaid or accelerated, 
      by 
(2) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment Rate, 
      by 
(3) the Present Value Factor. 

For purposes of subsection (B), the following definitions shall apply: 
Monthly Note Rate: one-twelfth (1/12) of the Fixed Interest Rate, expressed as a decimal calculated to five digits. 
Prepayment Date: in the case of a voluntary prepayment, the date on which the prepayment is made; in the case of the application by Lender of collateral or security to a portion of the principal balance, the date of such application. 
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate, as of the date 5 Business Days before the Prepayment Date, on the Treasury Security, as reported in The Wall Street Journal, expressed as a decimal calculated to five digits. In the event that no yield is published on the 

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applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date. If the pUblication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security. The selection of an alternate security pursuant to this Section shall be made in Lender's discretion. 
Present Value Factor: the factor that discounts to present value the costs resulting to Lender from the difference in interest rates during the months remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate as the discount rate, with monthly compounding, expressed numerically as follows: 

n =  the number of months remaining in Yield Maintenance Period; provided, however, if a prepayment occurs on an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month in which such prepayment occurs and if such prepayment occurs on a Business Day other than an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month immediately following the date of such prepayment. 
ARR = Assumed Reinvestment Rate 
(f) Notwithstanding any other provision of this Section 10, no prepayment premium shall be payable with respect to (i) any prepayment made during the Window Period, or (ii) any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument. 

(g) Unless Lender agrees otherwise in writing, a permitted or required prepayment of less than the unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments. 

(h) Borrower recognizes that any prepayment of any of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from an Event of Default by Borrower, will result in Lender's incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender's ability to meet its commitments to third parties. Borrower agrees to 

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PAGE 12

pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth in this Note represents a reasonable estimate of the damages Lender will incur because of a prepayment. Borrower further acknowledges that any lockout and the prepayment premium provisions of this Note are a material part of the consideration for the Loan, and that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower's voluntary agreement to the lockout and prepayment premium provisions. 

11.    Costs and Expenses. To the fullest extent allowed by applicable law, Borrower shall pay all expenses and costs, including Attorneys' Fees and Costs incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding. 
12.     Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender's right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower's obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender. 
13.     Waivers. Borrower and all endorsers and guarantors of this Note and all other third party obligors waive presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness. 
14.    Loan Charges. Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the Maximum Interest Rate. If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation. The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest,as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of this Note. Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of this Note. 

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15.    Commercial Purpose. Borrower represents that Borrower is incurring the Indebtedness solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family, household, or agricultural purposes. 
16.    Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of"days" means calendar days, not Business Days. 
17.    Governing Law. This Note shall be governed by the law of the Property Jurisdiction.
18.    Captions. The captions of the Sections of this Note are for convenience only and shall be disregarded in construing this Note. 
19.     Notices; Written Modifications. 
(a) All Notices, demands and other communications required or permitted to be given pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument. 

(b) Any modification or amendment to this Note shall be ineffective unless in writing signed by the party sought to be charged with such modification or amendment; provided, however, that in the event of a Transfer under the terms of the Security Instrument that requires Lender's consent, any or some or all of the Modifications to Multifamily Note set forth in Exhibit A to this Note may be modified or rendered void by Lender at Lender's option, by Notice to Borrower and the transferee, as a condition of Lender's consent. 
20.     Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising under or in relation to this Note may be litigated in the Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have jurisdiction over all controversies that shall arise under or in relation to this Note. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this Note is intended to limit any right that Lender may have to bring any suit, action or proceeding relating to matters arising under this Note in any court of any other jurisdiction. . 
21.     WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSIDP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 
22. State-Specific Provisions. N/A. 

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PAGE 14

ATTACHED EXHIBIT. The Exhibit noted below, if marked with an "X" in the space provided, is attached to this Note: 

[____] Exhibit A     Modifications to Multifamily Note 
{Signatures on next page} 

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PAGE 15

IN WITNESS WHEREOF, and in consideration of the Lender's agreement to lend Borrower the principal amount set forth above, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative.
BORROWER:
ESTANCIA TULSA, LLC, a Delaware limited liability company 
By: FDC Development JV, LLC, a Delaware limited liability company, its Member 
By: Flournoy Development Company, LLC, a Georgia limited liability company, 
its Manager     
	
			
	By:
	/s/ Thomas H. Flournoy          
	(Seal)

	Name:
	Thomas H. Flournoy
	 

	Title:
	President
	 

 
Taxpayer ID No: 20-2985537 

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PAGE 16

EXHIBIT A 
MODIFICATIONS TO MULTIFAMILY NOTE 
The following modifications are made to the text of the Note that precedes this Exhibit. 

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PAGE A-1

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