Document:

ex1018heritageplmultifam

                                                                         EXHIBIT 10.18   Prepared by, and after recording  return to:                                      copy as the s2me 2ppears in our                                                  files. 0r::n,.,/J,,, ,. VPO O/   Jeremy M. McLean, Esquire                       BY-L~~L- Troutman Sanders LLP                                 \cTbtLITY l~ATiONAL Tli'LE  Post Office Box 1122  Richmond, Virginia 23218-1122                           MULTIFAMILY DEED OF TRUST,                 ABSOLUTE ASSIGNMENT OF LEASES AND RENTS                           AND SECURITY AGREEMENT                          (INCLUDING FIXTURE FILING)                                    TENNESSEE                                  (Revised 3-1-2014)                      Maximum Principal Indebtedness for Tennessee                    Recording Tax Purposes is $8,710,000.00.  

 

                                                   Freddie Mac Loan No. 504021338                                                           Heritage Place Apartments                          MULTIFAMILY DEED OF TRUST,                 ABSOLUTE ASSIGNMENT OF LEASES AND RENTS                           AND SECURITY AGREEMENT                          (INCLUDING FIXTURE FILING)                                    TENNESSEE                                   (Revised 3-1-2014)  THIS MULTIFAMILY    DEED   OF TRUST,  ABSOLUTE   ASSIGNMENT    OF LEASES  AND  RENTS  AND  SECURITY AGREEMENT      (INCLUDING   FIXTURE FILING)  ("Instrument")  is made as of this 31st day of July, 2018, by STAR HERITAGE PLACE, LLC, a limited  liability company organized and existing under the laws of Delaware, whose address is c/o  Steadfast Companies, 18100 Von Karman Avenue, Suite 500, Irvine, California 92612, as  grantor ("Borrower"), to JAMES E. SPRUILL, as trustee, a resident of Williamson County,  Tennessee, whose address is c/o Fidelity National Title Insurance Company, 6840 Carothers  Parkway, Suite 200, Franklin (Williamson County), Tennessee 37067, ("Trustee"), for the  benefit of PNC BANK, NATIONAL ASSOCIATION,     a national banking association, whose  address is 26901 Agoura Road, Suite 200, Calabasas Hills, California 91301, Attention: ·Loan  Servicing Manager, as beneficiary ("Lender").  This Instrument covers property which is or may become so affixed to real property as to become  fixtures and also constitutes a fixture filing under § 47-9-502 of Tennessee Code Annotated.  THIS INSTRUMENT IS   TO BE FILED AND   INDEXED IN  THE REAL ESTATE RECORDS  AND IS  ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS UNDER  THE NAMES OF   BORROWER, AS    "DEBTOR", AND LENDER, AS   "SECURED PARTY."  NOTICE PURSUANT TO SECTION 47-28-104 OF TENNESSEE CODE ANNOTATED:          This  Instrument is for "commercial purposes" and secures future advances which may be "obligatory  advances" as defined in § 47-28-101(a)(6) of Tennessee Code Annotated. The priority of all  advances made under this Instrument relates back to the time of the initial recording of this  Instrument and the Lien of all such future advances is prior and superior to the Lien of any  encumbrance or conveyance arising or recorded subsequent to the recording of this Instrument.                                      RECITAL   Borrower, in consideration of the Indebtedness and the trust created by this Instrument,  irrevocably grants, conveys, bargains, sells, confirms and assigns to Trustee, in trust, with power  of sale, the Mortgaged Property, including the Land located in Williamson County, State of  Tennessee and described in Exhibit A attached to this Instrument.                                   AGREEMENT   TO  SECURE   TO  LENDER   the repayment of the Indebtedness evidenced by Borrower's  Multifamily Note payable to Lender dated as of the date of this Instrument, and maturing on  August 1, 2028 ("Maturity Date"), in the principal amount of $8,710,000.00, and all renewals,    Tennessee  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

extensions and modifications of the Indebtedness, and the performance of the covenants and  agreements of Borrower contained in the Loan Documents.  Borrower represents and warrants that Borrower is lawfully seized of the Mortgaged Property  and has the right, power and authority to grant, convey and assign the Mortgaged Property, and  that the Mortgaged Property is unencumbered except as shown on the schedule of exceptions to  coverage in the title policy issued to and accepted by Lender contemporaneously with the  execution and recordation of this Instrument and insuring Lender's interest in the Mortgaged  Property ("Schedule of Title Exceptions"). Borrower covenants that Borrower will warrant and  defend generally the title to the Mortgaged Property against all claims and demands, subject to  any easements and restrictions listed in the Schedule of Title Exceptions.                               UNIFORM COVENANTS                                  (Revised 5-5-2017)   Covenants. In consideration of the mutual promises set forth in this Instrument, Borrower and  Lender covenant and agree as follows:   1.    Definitions. The following terms, when used in this Instrument (including when used in        the above recitals), will have the following meanings and any capitalized term not        specifically defined in this Instrument will have the meaning ascribed to that term in the        Loan Agreement:        "Attorneys'  Fees and Costs" means (a) fees and out-of-pocket costs of Lender's and        Loan Servicer's attorneys, as applicable, including costs of Lender's and Loan Servicer's        in-house counsel, support staff costs, costs of preparing for litigation, computerized        research, telephone and facsimile transmission expenses, mileage, deposition costs,        postage, duplicating, process service, videotaping and similar costs and expenses;        (b) costs and fees of expert witnesses, including appraisers; ( c) investigatory fees; and (d)         the costs for any opinion required by Lender pursuant to the terms of the Loan        Documents.        "Borrower" means all Persons identified as "Borrower" in the first paragraph of this        Instrument, together with their successors and assigns.        "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.         "Event of Default" means the occurrence of any event described in Section 8.         "Fixtures" means all property owned by Borrower which is attached to the Land or the        Improvements so as to constitute a fixture under applicable law, including: machinery,        equipment, engines, boilers, incinerators and installed building materials; systems and        equipment for the purpose of supplying or distributing heating, cooling, electricity, gas,        water, air or light; antennas, cable, wiring and conduits used in connection with radio,        television, security, fire prevention or fire detection or otherwise used to carry electronic        signals; telephone systems and equipment; elevators and related machinery and        equipment; fire detection, prevention and extinguishing systems and apparatus; security        and access control systems and apparatus; plumbing systems; water heaters, ranges,   Tennessee                                                                 Page2  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers        and other appliances; light fixtures, awnings, storm windows and storm doors; pictures,        screens, blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and        floor and wall coverings; fences, trees and plants; swimming pools; and exercise        equipment.        "Governmental Authority" means any board, commission, department, agency or body        of any municipal, county, state or federal governmental unit, or any subdivision of any of        them, that has or acquires jurisdiction over the Mortgaged Property, or the use, operation        or improvement of the Mortgaged Property, or over Borrower.         "Ground  Lease" means the lease described in the Loan Agreement pursuant to which        Borrower leases the Land, as such lease may from time to time be amended, modified,        supplemented, renewed and extended.         "Improvements" means the buildings, structures, improvements now constructed or at        any time in the future constructed or placed upon the Land, including any future        alterations, replacements and additions.        "Indebtedness" means the principal of, interest at the fixed or variable rate set forth in        the Note on, and all other amounts due at any time under, the Note, this Instrument or any        other Loan Document, including prepayment premiums, late charges, default interest, and        advances as provided in Section 7 to protect the security of this Instrument.         "Land" means the land described in Exhibit A.         "Leasehold Estate" means Borrower's interest in the Land and any other real property        leased by Borrower pursuant to the Ground Lease, if applicable, including all of the        following:              (a)   All rights of Borrower to renew or extend the term of the Ground Lease.              (b)   All amounts deposited by Borrower with Ground Lessor under the Ground                    Lease.              ( c)  Borrower's right or privilege to terminate, cancel, surrender, modify or                    amend the Ground Lease.              (d)   All other options, privileges and rights granted and demised to Borrower                    under the Ground Lease and all appurtenances with respect to the Ground                    Lease.        "Leases" means all present and future leases, subleases, licenses, concessions or grants or        other possessory interests now or hereafter in force, whether oral or written, covering or        affecting the Mortgaged Property, or any portion of the Mortgaged Property (including        proprietary leases  or occupancy agreements if Borrower is a cooperative housing        corporation), and all modifications, extensions or renewals.         "Lender"  nieans the entity identified as "Lender" in the first paragraph of this        Instrument, or any subsequent holder of the Note.   Tennessee                                                                 Page 3  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixtnre Filing)  

 

      "Loan Agreement" means the Multifamily Loan and Security Agreement executed by        Borrower in favor of Lender and dated as of the date of this Instrument, as such        agreement may be amended from time to time.        "Loan Documents" means the Note, this Instrument, the Loan Agreement, all guaranties,        all indemnity agreements, all collateral agreements, UCC filings, O&M Programs, the        MMP and any other documents now or in the future executed by Borrower, any guarantor        or any other Person in connection with the loan evidenced by the Note, as such        documents may be amended from time to time.        "Loan Servicer" means the entity that from time to time is designated by Lender or its        designee to collect payments and deposits and receive Notices under the Note, this        Instrument and any other Loan Document, and otherwise to service the loan evidenced by        the Note for the benefit of Lender. Unless Borrower receives Notice to the contrary, the        Loan Servicer is the entity identified as "Lender" in the first paragraph of this Instrument.        "Mortgaged  Property" means all of Borrower's present and future right, title and        interest in and to all of the following:              ( a)  The Land, or, if Borrower's interest in the Land is pursuant to a Ground                    Lease, the Ground Lease and the Leasehold Estate.               (b)   The Improvements.              ( c)  The Fixtures.              (d)   The Personalty.              ( e)  All current and future rights, including air rights, development rights,                    zoning rights and other similar rights or interests, easements, tenements,                    rights of way, strips and gores of land, streets, alleys, roads, sewer rights,                    waters, watercourses and appurtenances related to or benefiting the Land                    or the Improvements, or both, and all rights-of-way, streets, alleys and                    roads which may have been or may in the future be vacated.               (f)   All proceeds paid or to be paid by any insurer of the Land, the                    Improvements, the Fixtures, the Personalty or any other part of the                    Mortgaged Property, whether or not Borrower obtained the insurance                    pursuant to Lender's requirement.              (g)   All awards, payments and other compensation made or to be made by any                    municipal, state or federal authority with respect to the Land, the                    Improvements, the Fixtures, the Personalty or any other part of the                    Mortgaged Property, including any awards or settlements resulting from                    condemnation proceedings or the total or partial taking of the Land, the                    Improvements, the Fixtures, the Personalty or any other part of the                    Mortgaged Property under the power of eminent domain or otherwise and                    including any conveyance in lieu thereof.    Tennessee                                                                 Page4  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

            (h)   All contracts, options and other agreements for the sale of the Land, or the                    Leasehold Estate, as applicable, the Improvements, the Fixtures, the                    Personalty or any other part of the Mortgaged Property entered into by                    Borrower now or in the future, including cash or securities deposited to                    secure performance by parties of their obligations.              (i)   All proceeds from the conversion, voluntary or involuntary, of any of the                    items described in subsections (a) through (h) inclusive into cash or                    liquidated claims, and the right to collect such proceeds.               G)    All Rents and Leases.               (k)   All earnings, royalties, accounts receivable, issues and profits from the                    Land, the Improvements or any other part of the Mortgaged Property, and                    all undisbursed proceeds of the loan secured by this Instrument.              (1)   All Imposition Reserve Deposits.              (m)   All refunds or rebates of Impositions by Governmental Authority or                    insurance company ( other than refunds applicable to periods before the                    real property tax year in which this Instrument is dated).              (n)   All tenant security deposits which have not been forfeited by any tenant                    under any Lease and any bond or other security in lieu of such deposits.              (o)   All names under or by which any of the above Mortgaged Property may                    be operated or known, and all trademarks, trade names, and goodwill                    relating to any of the Mortgaged Property.               (p)   If required by the terms of Section 4.05 of the Loan Agreement, all rights                    under the Letter of Credit and the Proceeds, as such Proceeds may                    increase or decrease from time to time.               ( q)  If the Note provides for interest to accrue at a floating or variable rate and                    there is a Cap Agreement, the Cap Collateral.         "Note" means the Multifamily Note or Notes (including any Amended and Restated        Note(s), Consolidated, Amended and Restated Note(s), or Extended and Restated        Note(s)) executed by Borrower in favor of Lender and dated as of the date of this        Instrument, including all schedules, riders, allonges and addenda, as such Multifamily        Note(s) may be amended, modified and/or restated from time to time.         "Notice" or "Notices" means all notices, demands and other communication required        under the Loan  Documents, provided in accordance with the requirements of        Section 11.03 of the Loan Agreement.         "Person" means any natural person, sole proprietorship, corporation, general partnership,        limited partnership, limited liability company, limited liability partnership, limited        liability limited partnership, joint venture, association, joint stock company, bank, trust,        estate, unincorporated organization, any federal, state, county or municipal government   Tennessee                                                                 Pages  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      (or  any agency or political subdivision thereof), endowment fund or any other form of        entity.         "Personalty" means all of the following:        (a)   Accounts (including deposit accounts) of Borrower related to the Mortgaged              Property.        (b)   Equipment and inventory owned by Borrower, which are used now or in the              future in connection with the ownership, management or operation of the Land or              Improvements or are located on the Land or Improvements, including furniture,              furnishings, machinery, building materials, goods, supplies, tools, books, records              (whether in written or electronic form) and computer equipment (hardware and              software).        (c)   Other tangible personal property owned by Borrower which is used now or in the              future in connection with the ownership, management or operation of the Land or              Improvements or is located on the Land or in the Improvements, including ranges,              stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,              dryers and other appliances (other  than Fixtures).        ( d)  Any operating agreements relating to the Land or the Improvements.        ( e)  Any surveys, plans and specifications and contracts for architectural, engineering              and construction services relating to the Land or the Improvements.        (f)   All other intangible property, general intangibles and rights relating to the              operation of, or used in connection with, the Land or the Improvements, including              all governmental permits relating to any activities on the Land and including              subsidy or similar payments received from any sources, including a Governmental              Authority.        (g)   Any rights of Borrower in or under letters of credit.         "Property Jurisdiction" means the jurisdiction in which the Land is located.         "Rents" means all rents (whether from residential or non-residential space), revenues and        other income of the Land or the Improvements, parking fees, laundry and vending        machine income and fees and charges for food, health care and other services provided at        the Mortgaged Property, whether now due, past due or to become due, and deposits        forfeited by tenants, and, if Borrower is a cooperative housing corporation or association,        maintenance fees, charges or assessments payable by shareholders or residents under        proprietary leases or occupancy agreements, whether now due, past due, or to become        due.        "Taxes" means all taxes, assessments, vault rentals and other charges, if any, whether        general, special or otherwise, including all assessments for schools, public betterments        and general or local improvements, which are levied, assessed or imposed by any public        authority or quasi-public authority, and which, if not paid, will become a Lien on the        Land or the Improvements.   Tennessee                                                                 Page 6  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

2.    Uniform Commercial Code Security Agreement.        (a)   This Instrument is also a security agreement under the Uniform Commercial Code              for any of the Mortgaged Property which, under applicable law, may be subjected              to a security interest under the Uniform Commercial Code, for the purpose of              securing Borrower's obligations under this Instrument and to further secure              Borrower's obligations under the Note, this Instrument and other Loan              Documents, whether such Mortgaged Property is owned now or acquired in the              future, and all products and cash and non-cash proceeds thereof ( collectively,              "UCC  Collateral"), and by this Instrument, Borrower grants to Lender a security              interest in the UCC Collateral. To the extent necessary under applicable law,              Borrower hereby authorizes Lender to prepare and file financing statements,              continuation statements and financing statement amendments in such form as              Lender may require to perfect or continue the perfection of this security interest.        (b)   Unless Borrower gives Notice to Lender within 30 days after the occurrence of              any of the following, and executes and delivers to Lender modifications or              supplements of this Instrument ( and any financing statement which may be filed              in connection with this Instrument) as Lender may require, Borrower will not              (i) change its name, identity, structure or jurisdiction of organization; (ii) change              the location of its place of business ( or chief executive office if more than one              place of business); or (iii) add to or change any location at which any of the              Mortgaged Property is stored, held or located.         ( c)  If an Event of Default has occurred and is continuing, Lender will have the              remedies of a secured party under the Uniform Commercial Code, in addition to              all remedies provided by this Instrument or existing under applicable law. In              exercising any remedies, Lender may exercise its remedies against the UCC              Collateral separately or together, and in any order, without in any way affecting              the availability of Lender's other remedies.        ( d)  This Instrument also constitutes a financing statement with respect to any part of              the Mortgaged Property that is or may become a Fixture, if permitted by              applicable law.  3.    Assignment of Rents; Appointment of Receiver; Lender in Possession.        (a)   As  part of the consideration for the Indebtedness, Borrower absolutely and              unconditionally assigns and transfers to Lender all Rents.                (i)  It is the intention of Borrower to establish a present, absolute and                    irrevocable transfer and assignment to Lender of all Rents and to authorize                     and empower Lender to collect and receive all Rents without the necessity                     of further action on the part of Borrower.               (ii) Promptly upon request by Lender, Borrower agrees to execute and deliver                     such further assignments as Lender may from time to time require.                    Borrower and Lender intend this assignment of Rents to be immediately                     effective and to constitute an absolute present assignment and not an   Tennessee                                                                 Page7  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

                  assignment for additional security only.              (iii) For purposes of giving effect to this absolute assignment of Rents, and for                    no other purpose, Rents will not be deemed to be a part of the Mortgaged                    Property. However, if this present, absolute and unconditional assignment                    of Rents is not enforceable by its terms under the laws of the Property                    Jurisdiction, then the Rents will be included as a part of the Mortgaged                    Property and it is the intention of Borrower that in this circumstance this                    Instrument create and perfect a Lien on Rents in favor of Lender, which                    Lien will be effective as of the date of this Instrument.         (b)   (i)   Until the occurrence of an Event of Default, Lender hereby grants to                    Borrower a revocable license to collect and receive all Rents, to hold all                    Rents in trust for the benefit of Lender and to apply all Rents to pay the                    installments of interest and principal then due and payable under the Note                    and the other amounts then due and payable under the other Loan                    Documents, including Imposition Reserve Deposits, and to pay the current                    costs and expenses of managing, operating and maintaining the Mortgaged                    Property, including utilities, Taxes and insurance premiums (to the extent                    not included in Imposition Reserve Deposits), tenant improvements and                    other capital expenditures.              (ii)  So long as no Event of Default has occurred and is continuing, the Rents                    remaining after application pursuant to the preceding sentence may be                    retained by Borrower free and clear of, and released from, Lender's rights                    with respect to Rents under this Instrument.              (iii) After the occurrence of an Event of Default, and during the continuance of                    such Event of Default, Borrower authorizes Lender to collect, sue for and                    compromise Rents and directs each tenant of the Mortgaged Property to                    pay all Rents to, or as directed by, Lender. From and after the occurrence                    of an Event of Default, and during the continuance of such Event of                    Default, and without the necessity of Lender entering upon and taking and                    maintaining control of the Mortgaged Property directly, or by a receiver,                    Borrower's license to collect Rents will automatically terminate and                    Lender will without Notice be entitled to all Rents as they become due and                    payable, including Rents then due and unpaid. Borrower will pay to                    Lender upon demand all Rents to which Lender is entitled.              (iv)  At any time on or after the date of Lender's demand for Rents, Lender                    may  give, and Borrower hereby irrevocably authorizes Lender to give,                    notice to all tenants of the Mortgaged Property instructing them to pay all                    Rents to Lender. No tenant will be obligated to inquire further as to the                    occurrence or continuance of an Event of Default. No tenant will be                    obligated to pay to Borrower any amounts which are actually paid to                    Lender in response to such a notice. Any such notice by Lender will be                    delivered to each tenant personally, by mail or by delivering such demand                    to each rental unit. Borrower will not interfere with and will cooperate                    with Lender's collection of such Rents.    Tennessee                                                                 Pages  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      ( c)  If an Event of Default has occurred and is continuing, then Lender will have each              of the following rights and may take any of the following actions:              (i)   Lender may, regardless of the adequacy of Lender's security or the                    solvency of Borrower and even in the absence of waste, enter upon and                    take and maintain full control of the Mortgaged Property in order to                    perform all acts that Lender in its discretion determines to be necessary or                    desirable for the operation and maintenance of the Mortgaged Property,                    including the execution, cancellation or modification of Leases, the                    collection of all Rents, the making of Repairs to the Mortgaged Property                    and  the execution or termination of contracts providing for the                    management, operation or maintenance of the Mortgaged Property, for the                    purposes of enforcing the assignment of Rents pursuant to Section 3(a),                    protecting the Mortgaged Property or the security of this Instrument, or for                    such other purposes as Lender in its discretion may deem necessary or                    desirable.              (ii)  Alternatively, if an Event of Default has occurred and is continuing,                    regardless of the adequacy of Lender's security, without regard to                    Borrower's solvency and without the necessity of giving prior notice ( oral                    or written) to Borrower, Lender may apply to any court having jurisdiction                    for the appointment of a receiver for the Mortgaged Property to take any                    or all of the actions set forth in the preceding sentence. If Lender elects to                    seek the appointment of a receiver for the Mortgaged Property at any tiine                    after an Event of Default has occurred and is continuing, Borrower, by its                    execution of this Instrument, expressly consents to the appointment of                    such receiver, including the appointment of a receiver ex parte if permitted                    by applicable law.              (iii) If Borrower is a housing cooperative corporation or association, Borrower                    hereby agrees that if a receiver is appointed,  the order appointing the                    receiver may contain a provision requiring the receiver to pay the                    installments of interest and principal then due and payable under the Note                    and the other amounts then due and payable under the other Loan                    Documents,  including Imposition  Reserve Deposits, it . being                    acknowledged and agreed that the Indebtedness is an obligation of                    Borrower and must be paid out of maintenance charges payable by                    Borrower's tenant shareholders under their proprietary leases or                    occupancy agreements.              (iv)  Lender or the receiver, as the case may be, will be entitled to receive a                    reasonable fee for managing the Mortgaged Property.              (v)   Immediately upon appointment of a receiver or immediately upon                    Lender's entering upon and taking possession and control of the                    Mortgaged Property, Borrower will surrender possession of the Mortgaged                    Property to Lender or the receiver, as the case may be, and will deliver to                    Lender or the receiver, as the case may be, all documents, records                    (including records on electronic or magnetic media), accounts, surveys,                    plans, and specifications relating to the Mortgaged Property and all   Tennessee                                                                 Page 9  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

                  security deposits and prepaid Rents.              (vi)  If Lender takes possession and control of the Mortgaged Property, then                    Lender may exclude Borrower and its representatives from the Mortgaged                    Property.              Borrower acknowledges and agrees that the exercise by Lender of any of the              rights conferred under this Section 3 will not be construed to make Lender a              mortgagee-in-possession of the Mortgaged Property so long as Lender has not              itself entered into actual possession of the Land and Improvemerits.         (d)   If Lender enters the Mortgaged Property, Lender will be liable to account only to              Borrower and only for those Rents actually received. Except to the extent of              Lender's gross negligence or willful misconduct, Lender will not be liable to              Borrower, anyone claiming under or through Borrower or anyone having an              interest in the Mortgaged Property, by reason of any act or omission of Lender              under Section 3(c), and Borrower hereby releases and discharges Lender from any              such liability to the fullest extent permitted by law.         (e)   If the Rents are not sufficient to meet the costs of taking control of and managing              the Mortgaged Property and collecting the Rents, any funds expended by Lender              for such purposes will become an additional part of the Indebtedness as provided              in Section 7.         (±)   Any entering upon and taking of control of the Mortgaged Property by Lender or              the receiver, as the case may be, and any application of Rents as provided in this              Instrument will not cure or waive any Event of Default or invalidate any other              right or remedy of Lender under applicable law or provided for in this Instrument.   4.    Assignment of Leases; Leases Affecting the Mortgaged Property.        (a)   As  part of the consideration for the Indebtedness, Borrower absolutely and              unconditionally assigns and transfers to Lender all of Borrower's right, title and              interest in, to and under the Leases, including Borrower's right, power and              authority to modify the terms of any such Lease, or extend or terminate any such              Lease.               (i)   It is the intention of Borrower to establish a present, absolute and                    irrevocable transfer and assignment to Lender of all of Borrower's right,                    title and interest in, to and under the Leases. Borrower and Lender intend                    this assignment of the Leases to be immediately effective and to constitute                    an  absolute present assignment and not an assignment for additional                    security only.               (ii)  For purposes of giving effect to this absolute assignment of the Leases,                     and for no other purpose, the Leases will not be deemed to be a part of the                    Mortgaged Property.              (iii) However, if this present, absolute and unconditional assignment of the                    Leases is not enforceable by its terms under the laws of the Property   Tennessee                                                                Page 10  Multifamily Deed of Trust, Absolute Assigumeut of  Leases aud Rents and Security Agreement (Including Fixture Filing)  

 

                  Jurisdiction, then the Leases will be included as a part of the Mortgaged                    Property and it is the intention of Borrower that in this circumstance this                    Instrument create and perfect a Lien on the Leases in favor of Lender,                    which Lien will be effective as of the date of this Instrument.         (b)   Until Lender gives Notice to Borrower of Lender's exercise of its rights under this              Section 4, Borrower will have all rights, power and authority granted to Borrower              under any Lease ( except as otherwise limited by this Section or any other              provision of this Instrument), including the right, power and authority to modify              the terms of any Lease or extend or terminate any Lease. Upon the occurrence of              an Event of Default, and during the continuance of such Event of Default, the              permission given to Borrower pursuant to the preceding sentence to exercise all              rights, power and authority under Leases will automatically terminate. Borrower              will comply with and observe Borrower's obligations under all Leases, including              Borrower's obligations pertaining to the maintenance and disposition of tenant              security deposits.         (c)   (i)   Borrower acknowledges and agrees that the exercise by Lender, either                    directly or by a receiver, of any of the rights conferred under this Section 4                    will not be construed to make Lender a mortgagee-in-possession of the                    Mortgaged Property so long as Lender has not itself entered into actual                    possession of the Land and the Improvements.               (ii)  The acceptance by Lender of the assignment of the Leases pursuant to                    Section 4(a) will not at any time or in any event obligate Lender to take                    any action under this Instrument or to expend any money or to incur any                    expenses.              (iii) Except to the extent of Lender's gross negligence or willful misconduct,                    Lender will not be liable in any way for any injury or damage to person or                    property sustained by any Person or Persons in or about the Mortgaged                    Property.              (iv)  Prior to Lender's actual entry into and taking possession of the Mortgaged                    Property, Lender will not be obligated for any of the following:                     (A)   Lender will not be obligated to perform any of the terms,                          covenants and conditions contained in any Lease ( or otherwise                          have any obligation with respect to any Lease).                     (B)   Lender will not be obligated to appear in or defend any action or                          proceeding relating to the Lease or the Mortgaged Property.                     (C)   Lender will not be responsible for the operation, control, care,                          management or repair of the Mortgaged Property or any portion of                          the Mortgaged Property. The execution of this Instrument by                          Borrower will constitute conclusive evidence that all responsibility                          for the operation, control, care, management and repair of the                          Mortgaged Property is and will be that of Borrower, prior to such                          actual entry and taking of possession.   Tennessee                                                                Page 11  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      (d)   Upon delivery of Notice by Lender to Borrower of Lender's exercise of Lender's              rights under this Section 4 at any time after the occurrence of an Event of Default,              and during the continuance of such Event of Default, and without the necessity of              Lender entering upon and taking and maintaining control of the Mortgaged              Property directly, by a receiver, or by any other manner or proceeding permitted              by the laws of the Property Jurisdiction, Lender immediately will have all rights,              powers and authority granted to Borrower under any Lease, including the right,              power and authority to modify the terms of any such Lease, or extend or terminate              any such Lease.        ( e)  Borrower will, promptly upon Lender's request, deliver to Lender an executed              copy of each residential Lease then in effect.         (f)   If Borrower is a cooperative housing corporation or association, notwithstanding              anything to the contrary contained in this Instrument, so long as Borrower              remains a cooperative housing corporation or association and is not in breach of              any covenant of this Instrument, Lender consents to the following:              (i)   Borrower may execute leases of apartments for a term in excess of 2 years                    to a tenant shareholder of Borrower, so long as such leases, including                    proprietary leases, are and will remain subordinate to the Lien of this                    Instrument.              (ii)  Borrower may surrender or terminate such leases of apartments where the                    surrendered or terminated lease is immediately replaced or where                    Borrower makes its best efforts to secure such immediate replacement by                    a newly-executed lease of the same apartment to a tenant shareholder of                    Borrower. However, no consent is given by Lender to any execution,                    surrender, termination or assignment of a lease under terms that would                    waive or reduce the obligation of the resulting tenant shareholder under                    such lease to pay cooperative assessments in full when due or the                    obligation of the former tenant shareholder to pay any unpaid portion of                    such assessments.  5.    Prepayment  Premium. Borrower will be required to pay a prepayment premium in        connection with certain prepayments of the Indebtedness, including a payment made after        Lender's exercise of any right of acceleration of the Indebtedness, as provided in the        Note.  6.    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, then Lender may apply that payment to amounts then due and payable in        any manner and in any order determined by Lender, in Lender's discretion. Neither        Lender's acceptance of an amount that is less than all amounts then due and payable nor        Lender's application of such payment in the manner authorized will constitute or be        deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.        Notwithstanding the application of any such amount to the Indebtedness, Borrower's        obligations under this Instrument, the Note and all other Loan Documents will remain        unchanged.   Tennessee                                                                Page 12  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

7.    Protection of Lender's Security; Instrument Secures Future Advances.         (a)   If Borrower fails to perform any of its obligations under this Instrument or any              other Loan Document, or if any action or proceeding is commenced which              purports to affect the Mortgaged Property, Lender's security or Lender's rights              under this Instrument, including eminent domain, insolvency, code enforcement,              civil or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent              conveyance or reorganizations or proceedings involving a bankrupt or decedent,              then Lender at Lender's option may make such appearances, file such documents,              disburse such sums and take such actions as Lender reasonably deems necessary              to perform such obligations of Borrower and to protect Lender's interest,              including all of the following:              (i)   Lender may pay Attorneys' Fees and Costs.              (ii)  Lender may  pay  fees and out-of-pocket expenses of accountants,                    inspectors and consultants.              (iii) Lender may enter upon the Mortgaged Property to make Repairs or secure                    the Mortgaged Property.              (iv)  Lender may procure the Insurance required by the Loan Agreement.              (v)   Lender may pay any amounts which Borrower has failed to pay under the                    Loan Agreement.              (vi)  Lender may  perform any of Borrower's obligations under the Loan                    Agreement.              (vii) Lender may make advances to pay, satisfy or discharge any obligation of                    Borrower for the payment of money that is secured by a Prior Lien.         (b)   Any  amounts disbursed by Lender under this Section 7, or under any other              provision of this Instrument that treats such disbursement as being made under              this Section 7, will be secured by this Instrument, will be added to, and become              part of, the principal component of the Indebtedness, will be immediately due and              payable and will bear interest from the date of disbursement until paid at the              Default Rate.        (c)   Nothing in this Section 7 will require Lender to incur any expense or take any              action.  8.    Events of Default. An Event of Default under the Loan Agreement will constitute an        Event of Default under this Instrument.  9.    Remedies Cumulative. Each right and remedy provided in this Instrument is distinct        from all other rights or remedies under this Instrument, the Loan Agreement or any other        Loan Document or afforded by applicable law or equity, and each will be cumulative and        may be exercised concurrently, independently or successively, in any order. Lender's   Tennessee                                                                Page 13  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      exercise of any particular right or remedy will not in any way prevent Lender from        exercising any other right or remedy available to Lender. Lender may exercise any such        remedies from time to time and as often as Lender chooses.  10.   Waiver of Statute of Limitations, Offsets, and Counterclaims. Borrower waives the        right to assert any statute of limitations as a bar to the enforcement of the Lien of this        Instrument or to any action brought to enforce any Loan Document. Borrower hereby        waives the right to assert a counterclaim, other than a compulsory counterclaim, in any        action or proceeding brought against it by Lender or otherwise to offset any obligations to        make the payments required by the Loan Documents. No failure by Lender to perform        any of its obligations under this Instrument will be a valid defense to, or result in any        offset against, any payments that Borrower is obligated to make under any of the Loan        Documents.  11.   Waiver of Marshalling.        (a)   Notwithstanding the existence of any other security interests in the Mortgaged              Property held by Lender or by any other party, Lender will have the right to              determine the order in which any or all of the Mortgaged Property will be              subjected to the remedies provided in this Instrument, the Note, the Loan              Agreement or any other Loan Document or applicable law. Lender will have the              right to determine the order in which any or all portions of the Indebtedness are              satisfied from the proceeds realized upon the exercise of such remedies.         (b)   Borrower and any party who now or in the future acquires a security interest in              the Mortgaged Property and who has actual or constructive notice of this              Instrument waives any  and all right to require the marshalling of assets or to              require that any of the Mortgaged Property be sold in the inverse order of              alienation or that any of the Mortgaged Property be sold in parcels or as an              entirety in connection with the exercise of any of the remedies permitted by              applicable law or provided in this Instrument.   12.   Further Assurances; Lender's Expenses.        (a)   Borrower will deliver, at its sole cost and expense, all further acts, deeds,              conveyances,  assignments, estoppel certificates, financing statements or              amendments, transfers and assurances as Lender may require from time to time in              order to better assure, grant and convey to Lender the rights intended to be              granted, now or in the future, to Lender under this Instrument and the Loan              Documents or in connection with Lender's consent rights under Article VII of the              Loan Agreement.        (b)   Borrower acknowledges and agrees that, in connection with each_ request by              Borrower under this Instrument or any Loan Document, Borrower will pay all              reasonable Attorneys' Fees and Costs and expenses incurred by Lender, including              any fees payable in accordance with any request for further assurances or an              estoppel certificate pursuant to the Loan Agreement, regardless of whether the              matter is approved, denied or withdrawn. Any amounts payable by Borrower              under this Instrument or under any other Loan Document will be deemed a part of              the Indebtedness, will be secured by this Instrument and will bear interest at the   Tennessee                                                                Page 14  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

            Default Rate if not fully paid within 10 days of written demand for payment.   13.   Governing Law; Consent to Jurisdiction and Venue. This Instrument, and any Loan        Document which does not itself expressly identify the law that is to apply to it, will be        governed by the laws of the Property Jurisdiction. Borrower agrees that any controversy        arising under or in relation to the Note, this Instrument or any other Loan Document may        be litigated in the Property Jurisdiction. The state and federal courts and authorities with        jurisdiction in the Property Jurisdiction will have jurisdiction over all controversies that        may arise under or in relation to the Note, any security for the Indebtedness or any other        Loan Document. Borrower irrevocably consents to service, jurisdiction and venue of such        courts for any such litigation and waives any other venue to which it might be entitled by        virtue of domicile, habitual residence or otherwise. However, nothing in this Section 13 is        intended to limit Lender's right to bring any suit, action or proceeding relating to matters        under this Instrument in any court of any other jurisdiction.   14.   Notice. All Notices, demands and other communications under or concerning this        Instrument will be governed by the terms set forth in the Loan Agreement.  15.   Successors and Assigns Bound. This Instrument will bind the respective successors and        assigns of Borrower and Lender, and the rights granted by this Instrument will inure to        Lender's successors and assigns.   16.   Joint and Several Liability. If more than one Person signs this Instrument as Borrower,        the obligations of such Persons will be joint and several.   17.   Relationship of Parties; No Third Party Beneficiary.        (a)   The relationship between Lender and Borrower will be solely that of creditor and              debtor, respectively, and nothing contained in this Instrument will create any              other relationship between Lender and Borrower. Nothing contained in this              Instrument will constitute Lender as a joint venturer, partner or agent of              Borrower, or render Lender liable for any debts, obligations, acts, omissions,              representations or contracts of Borrower.        (b)   No  creditor of any party to this Instrument and no other Person will be a third              party beneficiary of this Instrument or any other Loan Document. Without              limiting the generality of the preceding sentence, (i) any arrangement ("Servicing              Arrangement") between Lender and any Loan Servicer for loss sharing or              interim advancement of funds will constitute a contractual obligation of such              Loan Servicer that is independent of the obligation of Borrower for the payment              of the Indebtedness, (ii) Borrower will not be a third party beneficiary of any              Servicing Arrangement, and (iii) no payment by the Loan Servicer under any              Servicing Arrangement will reduce the amount of the Indebtedness.   18.  · Severability; Amendments.         (a)   The invalidity or unenforceability of any provision of this Instrument will not              affect the validity or enforceability of any other provision, and all other provisions              will remain in full force and effect. This Instrument contains the entire agreement    Tennessee                                                                Page 15  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

            among the parties as to the rights granted and the obligations assumed in this              Instrument.        (b)   This Instrument may not be amended or modified except by a writing signed by              the party against whom enforcement is sought; provided, however, that in the              event of a Transfer prohibited by or requiring Lender's approval under Article VII              of the Loan Agreement, some or all of the modifications to the Loan Documents              (if any) may be modified or rendered void by Lender at Lender's option by Notice              to Borrower and the transferee(s).   19.   Construction.        (a)   The captions and headings of the Sections of this Instrument are for convenience              only and will be disregarded in construing this Instrument. Any reference in this              Instrument to a "Section" will, unless otherwise explicitly provided, be construed              as referring to a Section of this Instrument.         (b)   Any reference in this Instrument to a statute or regulation will be construed as              referring to that statute or regulation as amended from time to time.        (c)   Use of the singular in this Instrument includes the plural and use of the plural              includes the singular.        ( d)  As used in this Instrument, the term "including" means "including, but not limited              to" and the term "includes" means "includes without limitation."        ( e)  The use of one gender includes the other gender, as the context may require.         (t)   Unless the context requires otherwise any definition of or reference to any              agreement, instrument or other document in this Instrument will be construed as              referring to such agreement, instrument or other document as from time to time              amended, supplemented or otherwise modified (subject to any restrictions on such              amendments, supplements or modifications set forth in this Instrument).        (g)   Any reference in this Instrument to any person will be construed to include such              person's successors and assigns.  20.   Subrogation. If, and to the extent that, the proceeds of the loan evidenced by the Note, or        subsequent advances under Section 7, are used to pay, satisfy or discharge a Prior Lien,        such loan proceeds or advances will be deemed to have been advanced by Lender at        Borrower's request, and Lender will automatically, and without further action on its part,        be subrogated to the rights, including Lien priority, of the owner or holder of the        obligation secured by the Prior Lien, whether or not the Prior Lien is released.   21-30. Reserved.   31.   Acceleration; Remedies.        (a)   At any time during the existence of an Event of Default, Lender, at Lender's              option, may declare the Indebtedness to be immediately due and payable without   Tennessee                                                                Page 16  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Secnrity Agreement (Including Fixture Filing)  

 

            further demand and Lender will have the STATUTORY POWER OF SALE and              any other remedies permitted by applicable law or provided in this Instrument or              in any other Loan Document. Borrower acknowledges that the power of sale              granted in this Instrument may  be exercised by Lender through the Trustee              without prior judicial hearing. Borrower has the right to bring an action to assert              the non-existence of an Event of Default or any other defense of Borrower to              acceleration and sale. Lender will be entitled to collect all costs and expenses              incurred in pursuing such remedies, including attorneys' fees, costs of              documentary evidence, abstracts and title reports.         (b)   If Lender invokes the power of sale, Trustee will give notice of sale by public              advertisement for the time and in the manner provided by the laws of Tennessee,              and Lender or Trustee will mail a copy of the notice of sale to Borrower in the              manner provided in Section 11.03 of the Loan Agreement. Trustee, without              demand on Borrower, will sell the Mortgaged Property at the time and under the              terms designated in the notice of sale at public auction to the highest bidder, in              one or more parcels and in such order as Trustee may determine. Trustee may              postpone sale of all or any part of the Mortgaged Property by public              announcement at the time and place of any previously scheduled sale. If the              Mortgaged Property is located in 2 or more counties, it may all be sold in one of              the counties if Trustee so elects. Otherwise, the sale will occur in the county in              which the Land is located unless Trustee, in its reasonable discretion, elects to              conduct the sale elsewhere. The sale will be held at such location in the county as              the foreclosure notice may specify. One or more exercises of the power of sale              provided for in this Instrument will not extinguish or exhaust said power until the              entire Mortgaged Property has been sold or the Indebtedness has been paid in full.              It is agreed that Lender, in the event of any sale of the Mortgaged Property, may              bid and buy as any third person might, but Lender will not be required to present              cash at the sale except to the extent, if any, by which Lender's bid exceeds the              amount of the indebtedness secured hereby, including all expenses of collection              and sale provided for in this Instrument. Trustee may delegate, in Trustee's sole              discretion, any authority possessed under this Instrument, including the authority              to conduct a foreclosure sale. Without limiting the foregoing, Trustee may retain a              professional auctioneer to preside over the bidding, and the customary charge for              the auctioneer's services will be paid from sale proceeds as an expense of sale. If              prior to any foreclosure sale a third party represents to the Trustee in writing that              such party holds the next junior Lien to this Instrument (whether by judgment              Lien, junior deed of trust or otherwise), the Trustee may disburse surplus proceeds              to such third party in an amount not to exceed the amount of Lien alleged by the              third party in its written statement to the Trustee. A foreclosure sale may be              adjourned by Trustee and may  be reset at a later time and/or date by              announcement at the time and place of the originally advertised sale and without              any further publication. The foreclosure sale of the Mortgaged Property will be              conducted for cash to be tendered upon the conclusion of the bidding; provided,              however, Trustee may accept a check issued or certified by a local bank as              consideration for the sale and if, in Trustee's sole discretion, Trustee announces              before or after bidding that, upon the failure of the high bidder to complete the              sale for cash within one hour, the Mortgaged Property may be sold to the second              highest bidder, and if the high bidder should subsequently fail to complete the              purchase within that time, then Trustee may, at its option, close the sale of the   Tennessee                                                                Page 17  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

            Mortgaged Property to the second highest bidder. Borrower further agrees that, in              the event of any sale hereunder, it will at once surrender possession of the              Mortgaged Property, will from the moment of sale be the tenant at will of the              purchaser, will be removable by process and will be liable to pay said purchaser              the reasonable rental value of said Mortgaged Property after such sale. Lender or              Trustee may, after default, advise third parties of the amount ( or estimated              amount) of principal, interest and expenses that will be outstanding as of the date              of any foreclosure sale and may share any other available information regarding              the Mortgaged Property. Following the occurrence of a default hereunder, any              "release" provision included in this Instrument or in any other document whereby              Lender agreed to release all or part of the Mortgaged Property upon the payment              of less than all of the Indebtedness will become void, and Lender will no longer              be obligated to release any of the Mortgaged Property until the Indebtedness has              been paid in full. Borrower agrees that Borrower will not bid at any sale              hereunder and will not allow others to bid on Borrower's behalf unless, at the              · time of sale, Borrower has cash sufficient to pay at the sale the amount of its bid.        ( c)  Within a reasonable time after the sale, Trustee will deliver to the purchaser at the              sale, a deed conveying the Mortgaged Property so sold without any covenant or              warranty, express or implied. The recitals in Trustee's deed will be prima facie              evidence of the truth of the statements made therein. Trustee will apply the              proceeds of the sale in the following order: (i) to all costs and expenses of the              sale, including Trustee's fees, attorneys' fees and costs of title evidence; (ii) to the              Indebtedness in such order as Lender, in Lender's sole discretion, directs; and (iii)              the excess, if any, to the person or persons legally entitled thereto.   32.   Release. Upon payment of the Indebtedness, Lender will release this Instrument.        Borrower will pay Lender's reasonable costs incurred in releasing this Instrument.   33.   Substitute Trustee. Lender, at Lender's option, may from time to time remove Trustee        and appoint a successor trustee to any Trustee appointed hereunder by an instrument        recorded in the county in which this Instrument is recorded. Without conveyance of the        Mortgaged Property, the successor trustee will succeed to all the title, power and duties        conferred upon the Trustee in this Instrument and by applicable law.   34.   No  Consent to Senior Liens. Lender has not consented and will not consent to any        contract or to any work or to the furnishing of any materials which might be deemed to        create a Lien or Liens superior to the Lien of this Instrument, either under § 66-11-108 of        Tennessee Code Annotated, or otherwise.   35.   Trustee Provisions.         (a)   Trustee is hereby released from all obligations imposed by statute that can be              waived including any requirement or qualification or bond.         (b)   Trustee will be entitled to reasonable  compensation for all services rendered,              whether or not a foreclosure is held hereunder, and will be reimbursed for all              reasonable expenses, charges and attorneys' fees, including fees for legal advice              concerning Trustee's duties and rights in the Mortgaged Property and title              examinations.   Tennessee                                                                Page 18  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

      (c)   Trustee may rely on any document believed by Trustee in good faith to be              genuine. All money received by Trustee will, until used or applied as in this              Instrument provided, be held in trust, but need not be segregated ( except to the              extent required by law), and Trustee will not be liable for interest thereon.        ( d)  If the Trustee will be made a party to or will intervene in any action or proceeding              affecting the Mortgaged Property or the title thereto, or the interest of the Trustee              or Lender under this Instrument, the Trustee and Lender will be reimbursed by              Borrower, immediately and without demand, for all reasonable costs, charges and              attorneys' fees incurred by him or either of them in any such case, and the same              will be secured hereby as a further charge and Lien upon the Mortgaged Property.   36.   Waiver. Borrower waives all right of homestead exemption the Mortgaged Property,        together with the equity of redemption and the statutory right of redemption and all rights        of Borrower expressed in T.C.A. § 66-8-101, et seq., as the same may be amended from        time to time, and Borrower relinquishes all right of dower and curtesy in the Mortgaged        Property. Borrower agrees, to the full extent permitted by law, that in case of a default on        the part of Borrower hereunder, neither Borrower nor anyone claiming through or under        Borrower hereunder will set up, claim or seek to take advantage of any appraisement,        valuation, stay, extension, homestead, exemption or redemption laws now or hereafter in        force, in order to prevent or hinder the enforcement or foreclosure of this Instrument, or        the absolute sale of the Mortgaged Property, or the delivery of possession thereof        immediately after such sale to the purchaser at such sale, and Borrower, for itself and all        who may at any time claim through or under it, hereby waives and renounces to the full        extent that it may lawfully so do so, the benefit of all such laws, and any and all right to        have the assets subject to the security interest of this Instrument marshalled upon any        foreclosure or sale under the power granted in this Instrument.  37.   Indebtedness Secured Hereby Not Limited By Statement For Tax And Registration        Authorities. Any legend appearing on the face of this Instrument and any affidavit that        may  be submitted to recording authorities with this Instrument pursuant to any        requirement of taxation or registration authorities is included for the benefit of such        authorities only and does not affect the terms of Lender's agreement with Borrower as        provided by this Instrument and by other documents pertaining to the Indebtedness or the        priority of the Lien of this Instrument or any advances made under this Instrument.  38.   WAIVER OF TRIAL BY JURY.        (a)   BORROWER     AND   LENDER   EACH  COVENANTS     AND  AGREES   NOT              TO   ELECT   A TRIAL   BY  JURY   WITH   RESPECT   TO  ANY   ISSUE              ARISING   OUT   OF  THIS  INSTRUMENT     OR   THE  RELATIONSHIP              BETWEEN     THE  PARTIES  AS  BORROWER     AND   LENDER   THAT   IS              TRIABLE OF RIGHT BY A JURY.        (b)   BORROWER     AND   LENDER   EACH   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    Tennessee                                                                Page 19  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

            PARTY,  KNOWINGLY AND      VOLUNTARILY WITH THE BENEFIT OF              COMPETENT LEGAL COUNSEL.   39.   Attached Riders. The following Riders are attached to this Instrument:         [X]      Rider to Security Instrument - Trade Names   40.   Attached Exhibits. The following Exhibits, if marked with an "X" in the space provided,        are attached to this Instrument:         [X]      Exhibit A   Description of the Land (required)        D        ExhibitB    Modifications to Instrument        D        Exhibit C   Ground Lease Description (if applicable)   IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or has caused this  Instrument to be signed and delivered by its duly authorized representative.                REMAINDER OF PAGE INTENTIONALLY LEFT BLANK    Tennessee                                                                Page 20  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Secnrity Agreement (Including Fixture Filing)  

 

                                   BORROWER:                                      STAR HERITAGE PLACE, LLC, a Delaware                                        limited liability company                                     By: Steadfast Apartment Advisor, LLC, a                                         Delaware limited liability company, its                                         Manager                                          By:  C ,AJ., ,,1 ~ '.'----Y\.                                              Ella S. Neyland                                              President  A notary public or other officer completing this  certificate verifies only the identity of the  individual who signed the document to which this  certificate is attached, and not the truthfulness,  accuracy, or validity of that document.    STATE OF    California      ----'O"°r'-"a"'ng"'e=------- County ss:         On this --11th_ day of July      , 2018, before me personally appeared Ella S.  Neyland, President of Steadfast Apaiiment Advisor, LLC, a Delaware limited liability company,  Manager of STAR Heritage Place, LLC, a Delaware limited liability company, to me known to  be the person who executed the foregoing instrument on behalf of said limited liability company,  and acknowledged the execution of the same to be the free act and deed of said limited liability  company. Witness my hand and official seal.   My Commission Expires: 10/04/2018                  LAURIE SANDERS (               COMM. #208486~ z              Notary Public - Cahforma g                 Orange County             M Comm. Expires Oct. 4, 2018    Tennessee                                                            Page S-1  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixture Filing)  

 

             CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT   A notary public or other officer completing this certificate verifies only the identity  of the individual who signed the document to which this certificate is attached, and  not the truthfulness, accuracy, or validity of that document.   State of CALIFORNIA     )                           ss  County of Orange        )   On July 17, 2018, before me, Laurie Sanders, Notary Public, personally appeared Ella S.  Neyland, who proved to me on the basis of satisfactory evidence to be the person whose  name is subscribed to the within instrument and acknowledged to me that she executed  the  same in her authorized capacity, and that by her signature on the instrument the  person or the entity upon behalf of which the person 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.                                O                   LAURIE SANDERS \          WITNESS my hand and official seal.                 COMM. #2084_867 ~                 Notary Public • Cahforn1a ~                   Orange County                M Comm. Expires Oct. 4, 2018  

 

              RIDER TO MULTIFAMILY SECURITY INSTRUMENT                                   TRADENAMES                                   (Revised 3-1-2014)   The following changes are made to the Instrument which precedes this Rider:   A.     Subsection ( o) of the definition of Mortgaged Property in Section 1 is restated as follows:                (o)  All names under or by which any of the above Mortgaged Property may                    be operated or known, and all trademarks, trade names, and goodwill                    relating to any of the Mortgaged Property; provided however, that the                    name§. "SIR," "STAR," and "Steadfast" and/or associated trademark                    rights are not assigned to Lender, subject to Section 6.30 of the Loan                    Agreement.    Rider to Multifamily Security Instrument  Trade Names  

 

                                  EXHIBIT A                             DESCRIPTION OF THE LAND                                Heritage Place Apartments   Land lying in the Ninth Civil District of Williamson County, Franklin, Tennessee, described as  follows:  Beginning at an iron pin ( old) being southeasterly corner of the hereon described tract, also being  South 03 deg. 28 min. 00 sec. West, a distance of 610 feet from Highway 96 and being more  particularly described as follows:   Thence, along or near the northerly line of Indian Spring Condominiums of record in Deed Book  660, Page 695, R.O.W.C. North 86 deg. 35 min. 23 sec. West, a distance of 499.80 feet; thence  along or near the easterly line of Heritage Place Subdivision of record in Plat Book 7, page 136,  R.O.W.C. North 03 deg. 25 min. 41 sec. East, a distance of 588.89 feet to an iron pin (old);   thence, along or near the southerly line of Royal Oaks Subdivision, Section Two of record in Plat  Book 4, Page 32, R.0.W.C. North 86 deg. 21 min. 17 sec. East, a distance of 713.66 feet to an  iron pin (old); thence, along or the westerly lines of Williamson Square ofrecord in Plat Book 12,  Page 98, R.O.W.C. the next three (3) courses and distances;   Thence, South 03 deg. 18 min. 22 sec. West, a distance of 281.90 feet to an iron pin (old);  thence, North 86 deg. 42 min. 06 sec. West, a distance of208.81 feet to an iron pin (old); thence,  South 03 deg. 27 min. 35 sec. West, a distance of394.24 feet to the point of beginning.   Being the same property conveyed to STAR HERITAGE PLACE, LLC,  a Delaware limited  liability company, by Special Warranty Deed of record in Book 6435, Page 890, in the Register's  Office of Williamson County, Tennessee.    The source of Borrower's interest in the above described property was a Special Warranty  Deed  recorded at Book 6435, Page 890 in the Williamson County, Tennessee Register's  Office.    Tennessee                                                               Page A-1  Multifamily Deed of Trust, Absolute Assignment of  Leases and Rents and Security Agreement (Including Fixtnre Filing)  

 

                                                copy as the same appears in our                                                  files.   Prepared by, and after recordmg                 BY~.L----1........-,\"- return to:  Jeremy M. McLean, Esquire  Troutman Sanders LLP  Post Office Box 1122  Richmond, Virginia 23218-1122                                                     Freddie Mac Loan No. 504021338                                                           Heritage Place Apartments                     ASSIGNMENT OF SECURITY INSTRUMENT                                 (Revised 12-19-2014)   FOR VALUABLE CONSIDERATION, PNC BANK, NATIONAL ASSOCIATION, a national  banking association ("Assignor"), having its principal place of business at 26901 Agoura Road,  Suite 200, Calabasas Hills, California 91301, Attention: Loan Servicing Manager, hereby  assigns, grants, sells and transfers to the FEDERAL HOME   LOAN   MORTGAGE  CORPORATION,    a corporation organized and existing under the. Jaws of the United States  ("Assignee"), having its principal place of business at 8200 Jones Branch Drive, McLean, Virginia  22102, and Assignee's successors, transferees and assigns forever, all of the right, title and interest  of Assignor in and to the Multifamily Deed of Trust, Absolute Assignment of Leases and Rents  and Security Agreement (Including Fixture Filing), dated as of July 31, 2018, entered into by  STAR HERITAGE PLACE, LLC, a Delaware limited liability company ("Borrower") for the  benefit of Assignor, securing an indebtedness of Borrower to Assignor in the principal amount of  $8,710,000.00 recorded in the land records of Williamson County, Tennessee prior to this  Assignment ("Instrument"), which indebtedness is secured by the property described in Exhibit A  attached to this Assignment and incorporated into it by this reference.  Together with the Note or other obligation described in the Instrument and all obligations secured  by the Instrument now or in the future.  IN WITNESS  WHEREOF,   Assignor has executed this Assignment as of July 31, 2018, to be  effective as of the effective date of the Instrument.    Assignment of Security Instrument                                        Page 1  

 

                                 ASSIGNOR:                                    PNC BANK, NATIONAL ASSOCIATION, a                                      national banking association    STATE OF _______________ County ss:        On this __ day of             , 2018, before me personally appeared~  Tyler, Vice President of PNC Bank, National Association, a national banking as§P-Gi.~-t;-~~  known to be the person who executed the foregoing instrument on be)lal-fof said national  banking association, and acknowledged the execution of the same to e--tiie free act and deed of  said national banking association. Witness my hand and official  My Commission Expires:                                                   Notary Public    Assignment of Security Instrument                                 Page S-1  

 

 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMEt~T                                     CIVIL CODE§ 1189      A notary public or other officer completing this certificate verifies only the identity of the individual who signed the     document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.    State of California(\  ~~ll                 )   County of      (_)(,U'\  ~ D               )                          N             O       ·   On   Jul\,/     I~,~ ll?     before me,   C@ ~!Jgl"IV~J                  o+cvy      n,ib/ 1?)               I Date                  l<tl Ii     ze:nsQr   ~f'/78,,ijlJJL[itle  of the Officer   personally appeared ------------~--------l_,__,-r.,J"___________                          _                                                   Name(s) of Signer(s)    who  proved to me  on the basis of satisfactory evidence to be the person'8j" whose namewis/a.er   subscribed to the within instrument and acknowledged to me that ~she/tt.01 executed the same in   bis1her/t!.ei!'authorized capacity(~and that by (Jia1'1ler/tJ;lefrsignature""1-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.       oseneseneenel                            WITNESS my hand and official seal.               .   CIA THONGRIVONG     I           Notary Public-California z     ~             San Diego County ~     z            Commission# 2196629       •       My Coinm. Expires Ma~ 31, 2021                    Signature of Notary Public                Place Notary Seal Above      Though this section is optional, completing this information can deter alteration of the document or                    fraudulent reattachment of this form to an unintended document.   Description of-Attached Dont,1.QJ._ent     • r "" "·.   ~ InsmA           Title or Type of Document: /ju'l:,\~ t'\~vt::UEW       t'I   ument  Date: ________    Number of Pages:           Signer(s) Other Than Named Abov  : _____________    Capacity(ies) Claimed by Signer(s)  Signer's Name: _____________                     Signer's Name: _____________    D Corporate Officer - Title(s): _______         D Corporate Officer - Title(s): _______   D Partner -  D Limited  D General                D Partner -  D Limited  D General  D Individual      D Attorney in Fact             D Individual      D Attorney in Fact  D Trustee         D Guardian or Conservator      D Trustee         D Guardian or Conservator   D Other: _______________                        D  Other: ______________   Signer Is Representing: __________               Signer Is Representing: __________     ~@-@.'W"@M'@~m'&C cZ,:ibi~@"®Wt.C                                                         cd   ©2014 National Notary Association· www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907  

 

                                  EXHIBITA                           DESCRIPTION OF THE PROPERTY                                Heritage Place Apartments   Land lying in the Ninth Civil District of Williamson County, Franklin, Tennessee, described as  follows:  Beginning at an iron pin ( old) being southeasterly comer of the hereon described tract, also being  South 03 deg. 28 min. 00 sec. West, a distance of 610 feet from Highway 96 and being more  particularly described as follows:  Thence, along or near the northerly line of Indian Spring Condominiums of record in Deed Book  660, Page 695, R.0.W.C. North 86 deg. 35 min. 23 sec. West, a distance of 499.80 feet; thence  along or near the easterly line of Heritage Place Subdivision of record in Plat Book 7, page 136,  R.O.W.C. North 03 deg. 25 min. 41 sec. East, a distance of 588.89 feet to an iron pin (old); thence,  along or near the southerly line of Royal Oaks Subdivision, Section Two of record in Plat Book 4,  Page 32, R.O.W.C. North 86 deg. 21 min. 17 sec. East, a distance of 713.66 feet to an iron pin  (old); thence, along or the westerly lines of Williamson Square of record in Plat Book 12, Page 98,  R.O.W.C. the next three (3) courses and distances;  Thence, South 03 deg. 18 min. 22 sec. West, a distance of281.90 feet to an iron pin (old); thence,  North 86 deg. 42 min. 06 sec. West, a distance of208.81 feet to an iron pin (old); thence, South  03 deg. 27 min. 35 sec. West, a distance of394.24 feet to the point of beginning.   Being the same property conveyed.to STAR HERITAGE PLACE,  LLC, a Delaware limited  liability company, by Special Warranty Deed of record in Book 6435, Page 890, in the Register's  Office of Williamson County, Tennessee.    Assignment of Security Instrument                                       Page A-1ex1019heritageplassgnmto

                                                                         EXHIBIT 10.19                                                     Freddie Mac Loan No. 504021338                                                           Heritage Place Apartments                 ASSIGNMENT OF MANAGEMENT AGREEMENT AND                    SUBORDINATION OF MANAGEMENT FEES                                  (Revised 7-12-2016)   THIS  ASSIGNMENT    OF MANAGEMENT      AGREEMENT     AND  SUBORDINATION     OF  MANAGEMENT FEES      ("Assignment") is made effective as of the 31st day of July, 2018, by  and among  STAR   HERITAGE    PLACE,  LLC,   a Delaware limited liability company  ("Borrower"), PNC BANK,  NATIONAL    ASSOCIATION,    a national banking association  ("Lender"), and STEADFAST MANAGEMENT COMPANY, INC.,        a California corporation  ("Property Manager").                                     RECITALS:   A.    Borrower has requested that Lender make a loan to Borrower ("Loan"). The Loan will be        evidenced by a Multifamily Note from Borrower to Lender effective as of the date of this        Assignment ("Note"). The Note is secured by, among other things, a Multifamily Loan        and Security Agreement ("Loan Agreement") and a Multifamily Deed of Trust,        Absolute Assignment of Leases and Rents and Security Agreement (Including Fixture        Filing) ("Security Instrument"), dated as of the date of this Assignment, which grants        Lender a lien on the prope11y encumbered by the Security Instrument ("Mortgaged        Property"). The Note, the Loan Agreement, the Security Instrument, this Assignment        and any of the other documents evidencing the Loan are collectively referred to as the        "Loan Documents". Other capitalized terms used but not defined in this Assignment will        have the meanings given to those tenns in the Loan Agreement.   B.    Pursuant to a Management Agreement  between Borrower and Property Manager        ("Management Agreement") (a true and correct copy of which is attached as Exhibit B),        Borrower employed Property Manager exclusively to lease, operate and manage the        Mortgaged Property, and Property Manager is entitled to certain management fees        ("Management Fees") pursuant to the Management Agreement.   C.    Lender requires as a condition to the making of the Loan that Borrower assign the        Management  Agreement and that Property Manager subordinate its interest in the        Management Fees in lien and payment to the Loan as set forth below.   For good and valuable consideration the parties agree as follows:   1.    Assignment of Management Agreement. As additional collateral security for the Loan,        Borrower conditionally transfers, sets over, and assigns to Lender all of Borrower's right,        title and interest in and to the Management Agreement and all extensions and renewals.        This transfer and assignment will automatically become a present, unconditional        assignment, at Lender's option, upon a default by Borrower under the Note, the Loan        Agreement, the Security Instrument or any of the other Loan Documents ( each, an        "Event of Default"), and the failure of Borrower to cure such Event of Default within        any applicable grace period.   2.    Subordination of Management  Fees. The Management  Fees and all rights and        privileges of Property Manager to the Management Fees are and will at all times continue        to be subject and unconditionally subordinate in all respects in lien and payment to the   Assignment of Management Agreement and  Subordination of Management Fees  

 

      lien and payment of the Loan Agreement, the Security Instrument, the Note, and the other        Loan  Documents, and to  any renewals, extensions, modifications, assignments,        replacements, or consolidations of the Loan Documents and the rights, privileges, and        powers of Lender under the Note, the Loan Agreement, the Security Instrument, or any of        the other Loan Documents.   3.    Estoppel. Property Manager and Borrower represent and warrant that all of the following        are true as of the date of this Assignment:         (a)   The Management Agreement is in full force and effect and has not been modified,              amended or assigned other than pursuant to this Assignment.        (b)   Neither Property Manager nor Borrower is in default under any of the tenns,              covenants or provisions of the Management Agreement and Property Manager              knows of no event which, but for the passage of time or the giving of notice or              both, would constitute an event of default under the Management Agreement.        (c)   Neither Property Manager nor Borrower has commenced any action or given or              received any notice for the purpose of tenninating the Management Agreement.        (d)   The Management  Fees and all other sums due and payable to the Property              Manager under the Management Agreement have been paid in full.   4.    Agreement by Borrower  and Property Manager. Borrower and Property Manager        agree that if there is an Event of Default by Borrower ( continuing beyond any applicable        grace period) under the Note, the Loan Agreement, the Security Instrument or any of the        other Loan Documents during the term of this Assignment or upon the occmTence of any        event which would entitle Lender to tenninate the Management Agreement in accordance        with the tenns of the Loan Documents, Lender may tenninate the Management        Agreement without payment of any cancellation fee or penalty and require Property        Manager to transfer its responsibility for the management of the Mortgaged Property to a        management company selected by Lender in Lender's sole discretion, effective as of the        date set forth in Lender's notice to Property Manager. Following any such tennination,        Property Manager agrees to apply all rents, security deposits, issues, proceeds and profits        of the Mortgaged Property in accordance with Lender's written directions to Property        Manager.   5.    Lender's Right to Replace Property Manager. If Lender, in Lender's reasonable        discretion, at any time during the tenn of this Assignment, detennines that the Mortgaged        Property is not being managed in accordance with generally accepted management        practices for properties similar to the Mortgaged Property, Lender will deliver written        notice to Borrower and Property Manager, which notice will specify with particularity the        grounds for Lender's determination. If Lender reasonably detennines that the conditions        specified in Lender's notice are not remedied to Lender's reasonable satisfaction by        Borrower or Property Manager within 30 days from receipt of such notice or that        Bmrnwer  or Property Manager have failed to diligently undertake correcting such        conditions within such 30-day period, Lender may direct Borrower to tenninate Property        Manager  as manager of the Mortgaged Prope1ty and tenninate the Management        Agreement without payment of any cancellation fee or penalty and to replace Property        Manager with a management company acceptable to Lender in Lender's sole discretion        pursuant to a management agreement acceptable to Lender in Lender's sole discretion.    Assignment of Management Agreement and  Subordination of Management Fees                                          Page2  

 

6.    Receipt of Management Fees. Property Manager will not be obligated to return or        refund to Lender any Management Fees or other fee, commission or other amount        received by Property Manager prior to the occurrence of the Event of Default, and to        which Property Manager was entitled under the Management Agreement. If the Property        Manager receives any Management Fees after it has received notice of an Event of        Default, Property Manager agrees that such Management Fees will be received and held        in trust for Lender, to be applied by Lender to amounts due under the Loan Documents.   7.    Consent and Agreement by Property Manager. Property Manager acknowledges and        consents to this Assignment and agrees that Property Manager will act in confonnity with        the provisions of this Assigmnent and Lender's rights under this Assigmnent or otherwise        related to the Management Agreement. If the responsibility for the management of the        Mortgaged Property is transferred from Property Manager in accordance with the        provisions of this Assignment, then Property Manager will fully cooperate in transferring        its responsibility to a new management company and complete such transfer no later than        30 days from the date the Management Agreement is terminated. Further, Property        Manager agrees as follows:         (a)   It will not contest or impede the exercise by Lender of any right Lender has under              or in connection with this Assigmnent.         (b)   It will give at least 30 days prior written notice to Lender of its intention to              terminate the Management Agreement or otherwise discontinue its management              of the Mortgaged Property, in the manner provided for in this Assignment.         ( c)  It will not mnend any of the provisions or tenns of the Management Agreement              without the prior consent of Lender.  8.    Termination. When the Loan is paid in full and the Security Instrument is released or        assigned of record, this Assignment and all of Lender's right, title and interest hereunder        with respect to the Management Agreement will terminate.  9.    Notices.        (a)   All notices under or concerning this Assignment ("Notice") will be in writing.              Each Notice will be deemed given on the earliest to occur of: (i) the date when              the Notice is received by the addressee, (ii) the first Business Day after the Notice              is delivered to a recognized overnight courier service, with arrangements made for              payment of charges for next Business Day delivery, or (iii) the third Business Day              after the Notice is deposited in the United States mail with postage prepaid,              certified mail, return receipt requested. Addresses for Notice are as follows:                Ifto Lender:        PNC Bank, National Association                                   26901 Agoura Road, Suite 200                                   Calabasas Hills, California 91301                                   Attention: Loan Servicing Manager    Assignment of Management Agreement and  Subordination of Management Fees                                          Page 3  

 

             If to Borrower:     STAR Heritage Place, LLC                                   c/o Steadfast Companies                                   18100 Von Karman A venue, Suite 500                                   Irvine, California 92612                                   Attention - General Counsel: Ana Marie del Rio                If to Property      Steadfast Management Company, Inc.               Manager:            c/o Steadfast Companies                                   18100 Von Karman Avenue, Suite 500                                   Irvine, California 92612                                   Attention - General Counsel: Ana Marie del Rio         (b)   Any party to this Assignment may change the address to which Notices intended              for it are to be directed by means of Notice given to the other parties in              accordance with this Section 9. Each party agrees that it will not refuse or reject              delivery of any Notice given in accordance with this Section 9, that it will              acknowledge, in writing, the receipt of any Notice upon request by the other party              and that any Notice rejected or refused by it will be deemed for purposes of this              Section 9 to have been received by the rejecting party on the date so refused or              rejected, as conclusively established by the records of the U.S. Postal Service or              the courier service.   10.   Governing Law; Consent to Jurisdiction and Venue.        (a)   This Assignment will be construed in accordance with and governed by the laws              of the Property Jurisdiction.        (b)   Borrower and Property Manager agree that any controversy arising under or in              relation to this Assignment may be litigated in the Property Jurisdiction. The state              and federal courts and authorities with jurisdiction in the Property Jurisdiction              will have jurisdiction over all controversies that may arise under or in relation to              this Assignment. Borrower and Property Manager irrevocably consent to service,              jurisdiction and venue of such courts for any such litigation and waive any other              venue to which it might be entitled by virtue of domicile, habitual residence or              otherwise. However, nothing in this Section 10 is intended to limit Lender's right              to bring any suit, action or proceeding relating to matters under this Assignment              in any court of any other jurisdiction.   11.   Captions, Cross References and Exhibits. The captions assigned to provisions of this        Assigmnent are for convenience only and will be disregarded in construing this        Assigmnent. Any reference in this Assigmnent to an "Exhibit" or a "Section," unless        otherwise explicitly provided, will be construed as referring, respectively, to an Exhibit        attached to this Assignment or to a section of this Assigmnent. All Exhibits attached to or        referred to in this Assignment are incorporated by reference into this Assigmnent.  12.   Number and Gender. Use of the singular in this Assigmnent includes the plural, use of        the plural includes the singular, and use of one gender includes all other genders, as the        context may require.  13.   No Partnership. This Assignment is not intended to, and will not, create a partnership or        joint venture among the parties, and no party to this Assignment will have the power or        authority to bind any other party except as explicitly provided in this Assigmnent.   Assignment of Management Agreement and  Subordination of Management Fees                                          Page4  

 

14.   Severability. The invalidity or unenforceability of any provision of this Assigmnent will        not affect the validity of any other provision, and all other provisions will remain in full        force and effect.   15.   Entire Assignment. This Assignment contains the entire agreement among the parties as        to the rights granted and the obligations assumed in this Assignment.   16.   No Waiver; No Remedy Exclusive. Any forbearance by a party to this Assigmnent in        exercising any right or remedy given under this Assignment or existing at law or in        equity will not constitute a waiver of or preclude the exercise of that or any other right or        remedy. Unless otherwise explicitly provided, no remedy under this Assignment is        intended to be exclusive of any other available remedy, but each remedy will be        cumulative and will be in addition to other remedies given under this Assignment or        existing at law or in equity.   17.   Third Party Beneficiaries. Neither any creditor of any party to this Assigmnent, nor any        other person, is intended to be a third party beneficiary of this Assigmnent.   18.   Further Assurances and Corrective Instruments. To the extent pennitted by law, the        parties will, from time to time, execute, acknowledge and deliver, or cause to be        executed, acknowledged and delivered, such supplements to this Assignment and such        further instruments as may reasonably be required for carrying out the intention of or        facilitating the perfonnance of this Assigmnent.  19.   Counterparts. This Assigmnent may be executed in multiple counterparts, each of which        will constitute an original document and all of which together will constitute one        agreement.  20.   Indemnity. By executing this Assignment Borrower agrees to indemnify and hold        hannless Lender and its successors and assigns from and against any and all losses,        claims, damages, liabilities and expenses including Attorneys' Fees and Costs, which        may be imposed or incurred in connection with this Assigmnent.   21.   Costs and Expenses. Wherever pursuant to this Assignment it is provided that Borrower        will pay any costs and expenses, such costs and expenses will include Lender's        Attorneys' Fees and Costs.   22.   Determinations by Lender. In any instance where the consent or approval of Lender        may be given or is required, or where any detennination, judgment or decision is to be        rendered by Lender under this Assigmnent, the granting, withholding or denial of such        consent or approval and the rendering of such detennination, judgment or decision will        be made or exercised by Lender (or  its designated representative) at its sole and exclusive        option and in its sole and absolute discretion and will be final and conclusive, except as        may be otherwise expressly and specifically provided in this Assigmnent.   23.   Successors and Assigns. This Assignment will be binding upon and inure to the benefit        of Borrower, Lender and Property Manager and their respective successors and assigns        forever.  24.   Secondary Market. Lender may sell, transfer and deliver the Note and assign the Loan        Agreement, the Security Instrument, this Assigmnent and the other Loan Documents to        one or more investors in the secondary mortgage market ("Investors"). In connection   Assignment of Management Agreement and  Subordination of Management Fees                                         Page 5  

 

      with such sale, Lender may retain or assign responsibility for serv1cmg the Loan,        including the Note, the Loan Agreement, the Security Instrument, this Assignment and        the other Loan Documents, or may delegate some or all of such responsibility and/or        obligations to a servicer including any subservicer or master servicer, on behalf of the        Investors. All references to Lender in this Assignment will refer to and include any such        servicer to the extent applicable.   25.   Attached Exhibits. The following Exhibits, if marked with an "X" in the space        provided, are attached to this Assigmnent:                  Exhibit A     Modifications to Assignment                  Exhibit B     Copy of Management Agreement   IN WITNESS  WHEREOF    the undersigned have executed this Assignment as of the date and  year first written above.                             [END OF PAGE- SIGNATURES TO FOLLOW]    Assignment of Management Agreement and  Subordination of Management Fees                                         Page 6  

 

                                      BORROWER:                                         STAR HERITAGE PLACE, LLC, a Delaware                                           limited liability company                                         By:  Steadfast Apartment Advisor, LLC, a                                             Delaware limited liability company, its                                             Manager                                              By:                                                 Ella S. Neyland      /                                                  President    Assignment of Management Agreement and  Subordination of Management Fees                                            Page S-1  

 

                                             LENDER:                                                PNC   BANK, NATIONAL ASSOCIATION,              a                                                   national banking association                                                By:~c·((~                                                   KeliATyler                                                   Vice President    Assignment of Management Agreement and  Subordination of Management Fees                                                          Page S-2  

 

                                          PROPERTY MANAGER:                                            STEADFAST MANAGEMENT COMPANY,                                                INC., a Califo  ia corporation                                                                                _J)  /    Assignment of Management Agreement and  Subordination of Management Fees                                                      Page S-3  

 

                                  EXHIBIT A                         MODIFICATIONS TO ASSIGNMENT   The following modifications are made to the text of the Assignment that precedes this Exhibit.   1.    Section 3(a) is deleted in its entirety and replaced with the following:         (a)   The Management Agreement is in full force and effect and has not been modified,              Q! amended or assigned other than purnuant to this Assignment. There are no              assignments of the Management Agreement that remain in effect other than              pursuant to this Assignment.   2.    Section 6 is deleted in its entirety and replaced with the following:         6.    Receipt of Management Fees. Manager will not be obligated to return or refund              to Lender any Management Fees or other fee, commission or other amount              received by Property Manager prior to the occurrence of the Event of Default, and              to which Property Manager was entitled under the Management Agreement. If the              Property Manager receives any Management Fees after it has received notice of an              Event of Default, Property Manager agrees that such Management Fees will be              received and held in trust for Lender, to be applied by Lender to amounts due under              the Loan Documents; provided, however, that nothing herein shall prevent              Property Manager from terminating the Management Agreement in the event              Property Manager is not paid all fees due to it under the Management              Agreement.    Assignment of Management Agreement and  Subordination of Management Fees                                        PageA-1  

 

                                          EXHIBITB                                 MANAGEMENT AGREEMENT                                             See Attached    Assignment of Management Agreement and  Subordination of Management Fees                                                          Page B-1  

 

                 PROPERTY MANAGEMENT AGREEMENT          THIS PROPERTY MANAGEMENT          AGREEMENT (this   "Agreement'') is made and   entered into as of April 'v1, 2015 (the ,:Effective Date"), by and between STAR  HERITAGE   PLACE,   LLC,  a  Delaware  limited liability company ("Owner"),  and  STEADFAST  MANAGEMENT COMPANY, INC., a California corporation ("Manager").                                        ARTICLE   1                                     DEFINITIONS          Section 1.1  Definitions, The following terms shall have the following meanings when   used in this Agreement          "Agreement"  has the meaning given in the introductory paragraph.          "Annual Business Plan" has the meaning given in Section 3.11 (a).          "Capital Budget" has the meaning given in Section 3.1 l(a).          "Depository" means such bank or federally-insured or other financial institution as Owner   shall designate in writing.          "Effective DateH has the meaning given in the introductory paragraph.          "Fiscal Ycar"  means the calendar year begi1U1ing January 1 and ending December 31 of   each calendar year, or such other fiscal year as detem1ined by Owner and of which Manager is   notified in writing; provided that the first Fiscal Year of this Agreement shall be the period   beginning on the Effective Date and ending on December 31 of the calendar year in which the   Effective Date occurs.          "Governmental Requirements'' has the meaning given in Section 3.14.          "Gross Collections'' means all amounts actually collected as rents or other charges for use   and occupancy of apartment units and from users of garage spaces (if any), leases of other non­  dwelling facilities in the Property and concessionaires (if any) in respect of the Property, including   furniture rental, parking fee:;;, forfeited security deposits, application fees, late charges, income   from  coin-operated machines, proceeds from  rental interruption insurance, and other   miscellaneous income collected at the Property; excluding, however, an other receipts, including   but not limited to, income derived from interest on investments or otherwise, proceeds of claims   on account of insurance policies (other than rental interruptions insurance), abatement of taxes,   franchise fees, and awards arising out of eminent domain proceedings, discounts and dividends on   insurance policies.           "Hazardous Materials" means any material defined as a hazardous substance under the   Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource   Conservation and Recovery Act, or any state or local statute regulating the storage,  release,   transportation or other disposition of hazardous material, as any of those laws may have been   amended to the date hereof, and the administrative regulations promulgated thereunder p1ior to the  

 

date hereof, and, whether or not defined as hazardous substances under the foregoing  Governmental Requirements, petroleum products (other than petroleum products used in  accordance with Governmental Requirements by Owner or its tenants in the usual and ordinary  course of their activities), PCBs and radon gas.         "Major Capital Improvements" has the meaning given in Section 3.6.         "Management Fee" has the meaning given in Section 4.1.         "Manager" has the meaning given in the introductory paragraph.         "Operating Budget" has the meaning given in Section 3.1 l(a).         "Owner" has the meaning given in the introductory paragraph.         "Owner's Representative" has the meaning given in Section 2.2.         "Pass-Through Amounts" means fees and/orreimbursements for services provided to the  Property but not covered by the Management Fee, as described in Exhibit A attached hereto and  made a part hereof.         "Property" means the multifamily apartment project listed and described on Exhibit B  attached hereto and made a part hereof         "Security Deposit Account" has the meaning given in Section 5.1.         "State" means the state in which the Property is located.                                    ARTICLE2           APPOINTMENT OF AGENCY AND RENTAL         RESPONSIBILITY         Section 2.1 Appointment. Owner hereby appoints Manager and Manager hereby  accepts appointment as the sole and exclusive leasing agent and manager of the Property on the  terms and conditions set forth herein. Owner warrants and represents to Manager that Owner owns  fee simple title to the Property ·with all requisite authority to hereby appoint Manager and to enter  into this Agreement.         Section 2.2 Owner's Representative. Owner shall from time to time designate one or  more persons to serve as Owner's representative ("Owner's Representative") in all dealings with  Manager hereunder. Whenever the approval, consent or other action of Owner is called for  hereunder, such approval, consent or action shall be binding on Owner if specified in writing and  signed by Owner's Representative. The initial Owner's Representative shall be Ella S. Neyland,  President. Any Owner's Representative may be changed at the discretion of Owner, at any time,   and shall be effective upon Manager's receipt of written notice identitying the new Owner's   Representative.                                          2  

 

      Section 2.3 Leasing. Manager shall perform all promotional, leasing and management  activities required to lease apartment units in the Property. Throughout the term of this Agreement,  Manager shall use its diligent efforts to lease apartment units in the Property. Manager shall  advertise the Property, prepare and secure advertising signs, space plans, circulars, marketing  brochures and other forms of advertising. Owner hereby authorizes Manager pursuant to the tenns  of this Agreement to advertise the Property in conjunction with institutional advertising campaigns  and allocate costs on a pro rata basis among the Properties being advertised (to the extent  authorized by the Annual Business Plan). All inquiries for any leases or renewals or agreements  for the rental of the Property or portions thereof shall be referred to Manager and all negotiations  connected therewith shall be conducted solely by or under the direction of Manager. Manager is  hereby authorized to execute, deliver and renew residential tenant leases in its capacity as manager  pursuant to this Agreement. Manager is authorized to utilize the services of apartment locator  services and the fees of such services shall be operating expenses of the Property and, to the extent  paid by Manager, reimbursable by Owner.         Section 2.4 Manager's Standard of Care. Manager shall perform its duties under this  Agreement in a manner consistent with professional property management services. In no event  shall the scope or quality of services provided by Manager for the Property hereunder be less than  those generally performed by professional property managers of similar properties in the market  area where the Property is located. Manager shall make available to Owner the full benefit of the  judgment, experience, and advice of the members and employees of Manager's organization with  respect to the policies to be pursued by Owner in operating the Property, and will perform the  services set forth herein and such other services as may be requested by Owner in managing,  operating, maintaining and servicing the Property.                                    ARTICLE3                  SERVICES TO BE PERFORMED BY MANAGER         Section 3.1 Expense of Owner. All acts performed by Manager in the performance of  its obligations under this Agreement shall be performed as an independent contractor of Owner,  and all obligations or expenses incurred thereby, shall be for the account of, on behalf of, and at  the expense of Owner, except as otherwise specifically provided in this Article 3, provided Owner  shall be obligated to reimburse Manager only for the following:               (a)   Costs and Expenses. All costs and expenses incurred by Manager, in its  capacity as Manager pursuant to this Agreement, in connection with the management and  operation of the Property, including but not limited to all compensation, including the cost of  benefits, payable to the employees atthe Property and identified in the Operating Budget and taxes  and assessments payable in connection therewith and reasonable training, travel and expenses  associated therewith, all marketing costs, all collection and lease enforcement costs, all  maintenance and repair costs incurred in accordance with Section 3.5 hereof, all utilities and  related services, all on-site overhead costs and all other costs reasonably incurred by Manager in  the operation and management of the Property, excluding, however, all of Manager's general  overhead  costs, including without limitation, all expenses incurred at Manager's corporate  headquarters and other Manager office sites other than the property management office located at   the Property (i.e., office expenses, long distance phone calls, postage, copying, supplies, electronic                                         3  

 

data processing and accounting expenses), general accounting and reporting expenses for services  included among Manager's duties under the Agreement; and              (b)   Other. AU sums otherwise due and payable by Owner as expenses of the  Property authorized to be incmTed by Manager under the terms of this Agreement and the  Operating Budget, including compensation payable under Section 4.1 hereof to Manager for its  services hereunder.         Manager may use employees normally assigned to other work centers or part-time  employees to properly staff the Property, reduced, increased or emergency ,:vork load and the like  including the property manager, business manager, assistant managers, leasing directors, or other  administrative personnel, maintenance employees or maintenance supervisors whose wages and  related expenses shall be reimbursed on a pro rata basis for the time actually spent at the Property.  A property manager or business manager at the Property and any other persons performing  functions substantially similar to those of a business manager, including but not limited to assistant  managers, leasing directors, leasing agents, sales directors, sales agents, bookkeepers, and other  administrative and/or maintenance personnel performing work at the site, and on-site maintenance  personnel, shall not be considered executive employees of Manager. All reimbursable payments  made by Manager hereunder shall be reimbursed from funds deposited in an account established  pursuant to Section 5.2 of this Agreement. Manager shall not be obligated to make any advance  to or for the account of Owner nor shall Manager be obligated to incur any liability or obligation  for the account of Owner without assurance that the necessary funds for the discharge thereof will  be provided by Owner. In the performance of its duties as agent and manager of the Property,  Manager shall act solely as an independent contractor of Owner. All debts and liabilities to third  persons incurred by Manager in the course of its operation and management of the Property shall  be the debts and liabilities of Owner only, and Manager shall not be liable for any such debt or  liabilities, except to the extent Manager has exceeded its authority hereunder.         Section 3.2 Covenants Concerning Payment  of Operating Expenses. Owner  covenants to pay all sums for reasonable operating expenses in excess of gross receipts required  to operate the Property upon written notice and demand from Manager within five days after  receipt of written notice for payment thereof         Section 3.3 Employment of Personnel. Manager shall use its diligent efforts to  investigate, hire, pay, supervise and discharge the personnel necessary to be employed by it to  properly maintain, operate and lease the Property, including without limitation a property manager  or business manager at the Property. Such personnel shall in every instance be deemed agents or   employees, as the case may be, of Manager. Owner has no right of supervision or direction of  agents or employees of Manager whatsoever; however, Owner shall have the right to require the  reassignment or termination of any employee. All Owner directives shall be communicated to  Manager's senior level management employees. Manager and all personnel of Manager who  handle or who are responsible for handling Owner's monies shall be bonded in favor of Owner.   Manager agrees to obtain and keep in effect fidelity insurance in an amount not less than Two   Hundred Fifty Thousand Dollars ($250,000). All reasonable salaries, wages and other   compensation of personnel employed by Manager, including so-called fringe benefits, worker's   compensation, medical and health insurance and the like, shall be deemed to be reimbursable   expenses of Manager. Manager may allow its employees who work at the Property and provide                                         4  

 

services to the Property after normal business hours, to reside at the Property for reduced rents (or   rent fee as provided in the Operating Budget) in consideration of their benefit to Owner and the  Property, provided such reduced rents arc reflected in the Annual Business Plan.         Section 3.4 Utility and Service Contracts. Manager shall, in its capacity as Manager  pursuant to this Agreement, at Owner's expense, enter into contracts for water, electricity, gas,  fuel, oil, telephone, vermin extermination, trash removal, cable television, security protection and  other services deemed by Manager to be necessary or advisable for the operation of the Property.  Manager shall also, in its capacity as Manager to this Agreement, at Owner's expense, place orders  for such equipment, tools, appliances, materials, and supplies as are reasonable and necessary to  properly maintain the Property. Owner agrees to pay or reimburse Manager for all expenses and  liabilities incurred by reason of this Section provided that such amounts are in accordance with the  Operating Budget.         Section 3.5 Maintenance and Repair of Property. Manager shall use diligent efforts  to maintain, at Owner's expense, the buildings, appurtenances and grounds of the Property in good  condition and repair, including interior and exterior cleaning, painting and decorating, plumbing,  carpentry and such other normal maintenance and repair work as may be necessary or reasonably  desirable taking into consideration the amount allocated therefor in the Annual Business Plan.  With respect to any expenditure not contemplated by the Annual Business Plan, Manager shall not  incur any individual item ofrepair or replacement in excess of Five Thousand Dollars ($5,000.00)  unless authorized in writing by Owner's Representative, except, however, that emergency repairs  immediately necessary for the preservation and safety of the Property or to avoid the suspension  of any service to the Property or danger of injury to persons or damage to property may be made  by Manager without the approval of Owner's Representative. Owner shall not establish standards  of maintenance and repair that violate or may violate any laws, rules, restrictions or regulations  applicable to Manager or the Property or that expose Manager to risk of liability to tenants or other  persons. Manager shall not be obligated by this Section to perform any Major Capital  Improvements.         Section 3.6 Supervision of Major Capital Improvements or Repairs. When  requested by Owner in writing or as set forth in an Approved Business Plan, Manager or an affiliate  thereof shall, in its capacity as Manager pursuant to this Agreement, supervise the installation and  construction of all Major Capital Improvements to the Property where such work constitutes other  than normal maintenance and repair, for additional compensation as set forth in a separate  agreement. If Owner and Manager fail to reach an agreement for Manager's additional   compensation as provided in this Section 3.6, Owner may contract with a third party to supervise   installation or construction of Major Capital Improvements. In such events, Manager may, in its   capacity as Manager pursuant to this Agreement, negotiate contracts with all necessary contractors,   subcontractors, materialmen, suppliers, architects, and engineers and may, in its capacity as   Manager pursuant to this Agreement, compromise and settle any dispute or claim arising   therefrom; provided only that Manager shall act in good faith and in the best interest of Owner at   all times and Owner shall approve all contracts for such work. Manager will furnish or will cause   to be furnished all personnel necessary for proper supervision of the work and may assign   personnel located at the Property where such work is being performed to such supervisory work   (and such assignment shall not reduce or abate any other fees or compensation owed to Manager                                         5  

 

under this Agreement).  For the purposes of this Agreement, the term "Major  Capital  Improvements" shall mean work having an estimated cost of $25,000 or more.                Owner  acknowledges that Manager, or an affiliate of Manager, may bid on any  such work, and that Manager, or an affiliate of Manager, may be selected to perform part or all of  the work; provided that if Manager desires to select itself, or its affiliate to do any work, it shall  first notify Owner of the terms upon which it, or its affiliate, proposes to contract for the work, and  tenns upon which the independent contractors have offered to perform, and shall state the reasons  for preferring itself, or its affiliate, over independent contractors and Owner shall have fifteen days  to disapprove Manager, or its affiliate, and to request performance by an independent contractor.   Only Owner shall have the power to compromise or settle any dispute or claim arising from work   performed by Manager, or its affiliate; and it is expressly understood that the selection of Manager,   or its affiliate, will not affect any fee or other compensation payable to Manager hereunder.          Section 3.7  Insurance.                (a)    Owner Requirements.   Owner agrees to maintain all forms of insurance   required by law or by any loan requirements for the Property and as otherwise deemed by Owner   to be reasonable and necessary to adequately protect Owner and Manager, including but not limited   to public liability insurance, boiler insurance, fire and extended coverage insurance, and burglary   and theft insurance. All insurance coverage shall be placed with such companies, in such amounts   and with such beneficiaJ interest appeari..ng therein as shall be reasonably acc.eptable to Owner.   Public liability insurance shall be maintained in such amounts as Owner determines as   commercially reasonable or as otherwise required by its lenders or investors, but in no case in an   amount less than $5,000,000.                 Ovmer agrees to timely provide evidence of required insurance to Manager, and   acknowledges that if evidence of insurance coverage is not timely furnished, Manager may, but   shall not be obligated to, obtain such coverage in its capacity as Manager, pursuant to this   Agreement. Manager shall be named an additional insured on all Owner obtained insurance.                 (b)   Manager Requirements. Manager agrees to maintain, at its own expense,   public liability insurance in an amount not less than Two Million Dollars ($2,000,000) and all   other forms of insurance required by law and as otherwise deemed by Owner and Manager to be   reasonable and necessary to adequately protect Owner and Manager, including but not limited to   workers compensation insurance, professional liability, employee practices, and fidelity insurance.   Manager agrees to timely provide evidence of required insurance to Owner and to name Owner as   an additional insured on appropriate policies.                 Manager shall use its diligent efforts to investigate and make a written report to the   insurance company as to all accidents, claims for damage relating to the ownership, operation and   maintenance of the Property, any damage or destruction to the Property and the estimated cost of   repair thereof, and shall prepare any and all reports for any insurance company in connection   therewith. All such reports shall be timely filed with the insurance company as required under the   terms of the insurance policy involved. With the prior written approval of Owner, Manager is   authorized to settle any and all claims against insurance companies arising out of any policies,   including the execution of proofs of loss, the adjustment of losses, signing of receipts and                                             6  

 

collection ofmonies  (no approval by Owner shall be required for the settlement of claims of $5,000  or less). Manager is further authorized to contract for the maintenance and repair of any damage  or casualty in accordance with Section 3 .6 above. Manager shall receive as an additional fee for  such services that fee designated in the loss adjustment as a general contractor's fee, provided that  insurance proceeds that exceed the cost of repairing the damage or restoring the loss are available  to pay such fees. In such event Manager shall be responsible for all costs incurred by Manager in  adjusting such loss and contracting for repairs.              (c)   Loss or Liability Claims. Owner and Manager mutually agree for the  benefit of each other to look only to the approp1iate insurance coverages in effect pursuant to this  Agreement in the event any demand, claim, action, damage, loss, liability or expense occurs as a  result of injury to person or damage to property, regardless whether any such demand, claim,  action, damage, loss, liability or expense is caused or contributed to, by or results from the  negligence of Owner or Manager or their respective subsidiaries, affiliates, employees, directors,  officers, agents or independent contractors and regardless whether the injury to person or damage  to property occurs in and about the Property or elsewhere as a result of the performance of this  Agreement. Except for claims that are covered by the indemnity contained in Section 3. 7 (d)  below,  Owner agrees that 0\\111er's insurance shall be primary without right of subrogation against  Manager with respect to all claims, actions, damage, loss or liability in or about the Property.  Nevertheless, in the event such insurance proceeds are insufficient to satisfy (or  such insurance  docs not cover) the demand, claim, action, loss, liability or expense, Owner agrees, at its expense,  to indemnify and hold Manager and its subsidiaries, affiliates, officers, directors, employees,  agents or independent contractors harmless to the extent of excess liability. For purposes of this  Section 3.7(c), any deductible amount under any policy of insurance shall not be deemed to be  included as part of collectible insurance proceeds.               (d)  Indemnification. Notwithstanding anything contained in this Agreement  to the contrary, Owner shall defend, indemnify, and hold harmless Manager and its representative  subsidiaries, affiliates, officers, directors, employees, agents or independent contractors from and  against all claims, demands, or legal proceedings (including expenses and reasonable attorney's  fees incurred in connection with the defense of any such matter) ( each a "Claim") that are brought  against Manager arising out of the operation or management of the Project, except with respect to  claims arising out of Manager's gross negligence or willful misconduct. Manager shall defend,  indemnify, and hold harmless Owner and its representative subsidiaries, affiliates, officers,  directors, employees, agents or independent contractors from all Claims arising out of the gross  negligence or willful misconduct of Manager. The indemnification obligations under this Section  3.7(d) shall survive termination of this Agreement.               (e)   Acts of Tenants and Third Parties. In no event shall Manager have any  liability to Owner or others for any acts of vandalism, trespass or criminal activity of any kind by  tenants or third parties on or with respect to the Property and Owner's insurance shall be primary  insurance without right of subrogation against Manager regarding claims arising out of or resulting  from acts of vandalism, trespass or criminal activity.         Section 3.8 Collection of Monies. Manager shall use its diligent efforts to collect all  rents and other charges due from tenants, users of garage spaces, carports, storage spaces (if any),  commercial lessees (if any) and concessionaires (if any) in respect of the Property and otherwise                                         7  

 

due Owner with respect to the Property in the ordinary course of business, provided that Manager  does not guarantee the creditworthiness of any tenants, users, lessees or concessionaires or  collectability of accounts receivable from any of the foregoing. Owner authorizes Manager, in its  capacity as Manager pursuant to this Agreement, to request, demand, collect, receive and receipt  for all such rent and other charges and to institute legal proceedings at Owner's expense, for the  collection thereof, and for the dispossession of tenants and other persons from the Property or to  cancel or terminate any lease, license or concession agreement for breach or default thereunder,  and  such expense may include the engaging of legal counsel for any such matter. All monies  collected by Manager shall be deposited in the separate bank account referred to in Section 5.2  herein.          Section 3.9  Manager Disbursements.                (a)    Manager's   Compensation   and  Reimbursements.     From   Gross  Collections, Manager shall be authorized to retain and pay (1) Manager's compensation, together  with all sales or other taxes (other than income) which Manager is obligated, presently or in the  future, to collect and pay to the State or any other governmental authority with respect to the  Property or employees at the Property, (2) the amounts reimbursable to Manager under this   Agreement, (3) the amount of all real estate taxes and other impositions levied by appropriate   authorities with respect to the Property which, if not escrowed with any mortgagee, shall be paid   upon specific written direction of Owner before interest begins to accrue thereon; and (4) amounts   otherwise due and payable as operating expenses of the Property authorized to be incurred under   the terms of this Agreement.                (b)    Debt Service. The provisions of this Section 3.9 regarding disbursements   shall .include the payment of debt service related to any mortgages of the Property, unless otherwise   instructed in writing by Owner.                 (c)   Third Parties. All costs, expenses, debts and liabilities owed to third   persons that are incurred by Manager pursuant to the terms of this Agreement and in the course of   managing, leasing and operating the Property shall be the responsibility of Owner and not   Manager. Owner agrees to provide sufficient working capital funds to Manager so that all amounts   due and owing may be promptly paid by Manager. Manager is not obligated to advance any funds.   If at any time there is not . sufficient cash in the account available to Manager pursuant to   Section 5.2 with which to promptly pay the bills due and owing, Manager will request that the   necessary additional funds be deposited by Owner in an amount sufficient to meet the shortfall.   Owner will deposit the additional funds requested by Manager within five days.                 (d)   Other  Provisions.  The  provisions of this Section 3.9 regarding   reimbursements to Manager shall not limit Manager's rights under any other provision of this   Agreement.          Section 3.10 Use  and Maintenance  of Premises.  Manager agrees that it will not   knowingly permit the use of the Property for any purpose that might void any insurance policy   held by Owner or that might render any loss thereunder uncollectible, or that would be in violation   of Governmental Requirements, or any covenant or restriction of any lease of the Property.   Manager shall use its good faith efforts to secure substantial compliance by the tenants with the                                             8  

 

terms and conditions of their respective leases. All costs of correcting or complying with, and all  fines payable in connection with, all orders or violations affecting the Property placed thereon by  any governmental authority or Board of Fire Undenvriters or other similar body shall be at the cost  and expense of Owner.          Section 3.11 Annual Business Plan.                (a)    Submission. No  later than 60 days prior to the end of each Fiscal Year  during the term of this Agreement, or such earlier date as reasonably requested by Owner, its  lenders or investors, Manager shall prepare and submit to Owner for Owner's approval, an Arumal  Business Plan for the promotion, leasing, operations, repair and maintenance of the Property for  the succeeding Fiscal Year during which this Agreement is to remain in effect (the "Annual   Business Plan"). The Annual Business Plan shall include a detailed budget of projected income   and expenses for the Prope1ty for such Fiscal Year (the "Operating Budget") and a detailed   budget of projected capital improvements for the Property for such Fiscal Year (the "Capital   Budget").                (b)    Approval. Manager shall meet with Owner to discuss the proposed Annual   Business Plan and Owner shall approve the proposed Annual Business Plan within 20 days of its   submission to Owner, or as soon thereafter as commercially practicable. To be effective, any   notice which disapproves a proposed Annual Business Plan must contain specific objections in   reasonable detail to individual line items. If Owner fails to provide an effective notice   disapproving a proposed Annual Business Plan within such 20-day period, the proposed Annual   Business Plan shall be deemed to be approved. Owner acknowledges that the Operating Budget   is intended only to be a reasonable estimate of the income and expenses of the Property for the   ensuing Fiscal Year. Manager shall not be deemed to have made any guarantee, warranty or   representation whatsoever in connection with the Operating Budget.                 (c)   Revision. Manager may revise the Operating Budget from time to time, as   necessary, to reflect any unpredicted significant changes, variables or events or to include   significant additional, unanticipated items of revenue and expense. Any such revision shall be   submitted to Owner for approval, which approval shall not be unreasonably withheld, delayed or   conditioned.                 (d)   Implementation.  Manager  agrees to use diligence and to employ all   reasonable efforts to ensure that the actual costs of maintaining and operating the Property shall   not exceed the Operating Budget either in total or in any one accounting category. Any expense   causing or likely to cause a variance of greater than ten percent (10%) or $25,000, whichever is   greater, in any one accounting category for the current month cumulative year-to-date total shall   be promptly explained to Owner by Manager in the next operating statement submitted by   Manager to Owner.          Section 3.12 Records, Reporting. Manager shall maintain at the regular business office   of Manager or at such other address as Manager shall advise Owner in writing, separate books and   journals and orderly files, containing rental records, insurance policies, leases, correspondence,   receipts, bills and vouchers, and all other documents and papers pertaining directly to the Property   and the operation thereof. All corporate statements, receipts, invoices, checks, leases, contracts,                                             9  

 

worksheets, financial statements, books and records, and all other instruments and documents  relating to or arising from the operation or management of the Property shall be and remain the  property of Owner and the Owner shall have the right to inspect such records at any reasonable  time upon prior notice; Manager shall have the right to request and maintain copies of all such  matters, at Manager's cost and expense, at all reasonable times during the term of this Agreement,  and for a reasonable lime thereafter not lo exceed three years. All on-site records, including leases,  rent rolls, and other related documents shall remain at the respective Property for which such  records are maintained as the property of Owner.         Section 3 .13 Financial Reports.              (a)   Monthly Reports. On or before the fifteenth (15 111) day of each month  during the term of this Agreement, Manager shall deliver or cause to be delivered to Owner's  Representative a statement of cash t1ow for the Property (on a cash and not an accrual basis) for  the preceding calendar month. All notices from any mortgagee claiming any default in any  mortgage on the Property, and any other notice from any mortgagee not of a routine nature, shall  be promptly delivered by Manager to Owner's Representative.               (b)  Annual Reports. Within 45 days after the end of each Fiscal Year,  Manager shall deliver to Owner's Representative a statement of cash flow showing the results of  operations for the Fiscal Year or portion thereof during which the provisions of this Agreement  were in effect.               (c)  Employee Files. Manager shall execute and file punctually when due all  forms, reports and returns required by law relating to the employment of personnel.         Section 3.14 Compliance with Gove.rnmental Requirements. Manager shall comply  with all laws, ordinances and regulations relating to the management, leasing and occupancy of  the Property, including any regulatory or usc agreements. Owner acknowledges that Manager  does not hold itself out to be an expert or consultant with respect to, or represent that, the Property  currently complies with applicable ordinances, regulations, rules, statutes, or laws of governmental  entities having jurisdiction over the Properties or the requirements of the Board of Fire  Underwriters or other similar bodies (collectively, "Governmental Requirements"). Manager  shall take such action as may be reasonably necessary to comply with any Governmental  Requirements applicable to Manager, including the collection and payment of all sales and other  taxes (other  than income taxes) which may be assessed or charged by the State or any governmental  entities in connection with Manager's compensation. If Manager discovers that the Property does  not comply with any Govenunental Requirements, Manager shall take such action as may be  reasonably necessary to bring the Property into compliance with such Governmental  Requirements, subject to the limitation contained in Section 3.5 of this Agreement regarding the  making of alterations and repairs. Manager, however, shall not take any such action as long as  Owner is contesting or has affirmed its intention to contest and promptly institute proceedings  contesting any such order or requirement. If, however, failure to comply promptly with any such  order or requirement would or might expose Manager to civil or criminal liability, Manager shall  have the right, but not the obligation, to cause the same to be complied with and Owner agrees to  indemnify and hold Manager harmless for taking such actions and to promptly reimburse Manager  for expenses incurred thereby. Manager shall promptly, and in no event later than 72 hours from                                        10  

 

the time ofreceipt, notify Owner's Representative in writing of all such orders or notices. Manager  shall not be liable for any effort or judgment or for any mistake of fact or oflaw, or for anything  that it may do or refrain from doing, except in cases of willful misconduct or gross negligence of  Manager.                                       ARTICLE4                         MANAGER'S COMPENSATION, TERM          Section 4.1  Fees Paid to Manager. Commencing on the date hereof, Owner shall pay  to Manager a fee (the "l\.1anagernent Fee"), payable monthly in arrears, in an amount equal to  Three Percent (3.0%) of Gross Collections for such month. The Management Fee shall not be  subject to off-sets and charges unless agreed upon by the parties. Pass-Through Amounts shall be  collected monthly by Manager, as applicable.          Section 4.2  Term.  This Agreement shall commence on the Effective Date, and shall  thereafter continue for a period of one (1) year fi-om the Effective Date, unless otherwise  terminated as provided herein. Thereafter, if neither party gives written notice to the other at least   60 days prior to the expiration date hereof that this Agreement is to terminate, then this Agreement   shall be automatically renewed on a month-to-month basis.          Section 4.3  Termination Rights. Notwithstanding anything that may be contained  herein to the contrary, Owner may terminate this Agreement at any time by giving Manager thirty   (30) days written notice thereof upon a determination of gross negligence, willful misconduct or   bad acts of Manager or any of its employees. If Owner or Manager shall materially breach its   obligations hereunder, and such breach remains uncured for a period of 30 days after written   notification of such breach, the party not in breach hereunder may terminate this Agreement by   giving written notice to the other. Any notice given pursuant to this Article 4, shall be sent by   certified mail.          Section 4.4  Duties on Termination.  Upon  any termination of this Agreement as   contemplated in Section 4.4, Manager shall be· entitled to receive all compensation and   reimbursements, if any, due to Manager through the date of termination. Within 30 days after any   termination, Manager shall deliver to Owner's Representative, the report required by   Section 3.13(a) for any period not covered by such a report at time of termination, and within 30   days after any such termination, Manager shall deliver to Owner's Representative, as required by   Section 3.13(b), the statement of cash flow for the Fiscal Year or portion thereof ending on the   date of termination. In addition, upon termination of this Agreement for any reason, Manager will   submit to Owner within 30 days after termination any reports required hereunder, all of the cash   and bank accounts of the Property, including, without limitation, the Security Deposit Account,   investments and records. Manager will, within 30 days after tennination, turn over to Owner all   copies of all books and records kept for the Property. If Manager desires to retain records of the   Property, Manager must reproduce them at its own expense.                                              11  

 

                                    ARTICLES        PROCEDURES FOR HANDLING RECEIPTS AND OPERATING CAPITAL          Section 5.1 Security Deposits. Manager shall collect, deposit, hold, disburse and pay  security deposits as required by applicable State law and all other applicable laws, and in  accordance with the terms of each tenant's lease. The amount of each security deposit will be  specified in the tenant's lease. Security deposits shall be deposited into a separate non-interest­ bearing account unless otherwise required by law (the "Security Deposit Account") at a  Depository selected by Manager and approved by Owner. The Security Deposit Account shall be  established in the name of Manager and held separate from all other of Manager's funds and  accounts, unless Owner informs Manager, in writing that it intends to hold the Security Deposit  Account. If such account is held byManager, only representatives of Manager will be signatories  to this account. To the extent possible, the Security Deposit Account shall be fully insured by the  Federal Deposit Insurance Corporation (FDIC). Owner agrees to indemnify and hold harmless  Manager, and Manager's representatives, officers, directors and employees for any loss or liability  with respect to any use by Owner of the tenant security deposits that is inconsistent with the terms  of tenant leases and applicable laws.          Section 5.2  Separation of Owner's Monies. Manager shall deliver all collected rents,   charges and other amounts received in connection with the management and operation of the  Property (except for tenants' security deposits, which will be handled as specified in this  Agreement) to a Depository selected by Manager and approved by Owner.          Section 5.3  Depository Accounts. Except to the extent that Manager has not complied   with its obligations under Sections 2.4 and 5.2, Owner and Manager agree that Manager shall have   no liability for loss of funds of Owner contained in the bank accounts for the Property maintained   by Owner or Manager pursuant to this Agreement due to insolvency of the bank or financial   institution in which its accounts are kept, whether or not the amounts in such accounts exceed the   maximum  amount of federal or other deposit insurance applicable with respect to the financial   institution in question.          Section 5.4  Working Capital. In addition to the funds derived from the operation of   the Property, Owner shall furnish and maintain in the operating accounts ofthe  Property such other   funds as may be necessary to discharge :financial commitments required to efficiently operate the   Property and to meet all payrolls and satisfy, before delinquency, and to discharge all accounts   payable. Manager shall have no responsibility or obligation with respect to the furnishing of any   such funds. Nevertheless, Manager shall, in its capacity as Manager pursuant to this Agreement,   have the right, but not the obligation, to advance funds or contribute property to satisfy obligations   of Owner in connection with this Agreement and the Property. Manager shall keep appropriate   records to document all reimbursable expenses paid by Manager, which records shall be made   available for inspection by Owner or its agents on request. Owner agrees to reimburse Manager   upon demand for money paid or property contributed in connection with the Property and this   Agreement.          Section 5.5  Authorized Signatures.  Any persons from time to time designated by   Manager shall be authorized signatories on all bank accounts established by Manager pursuant to   this Agreement and shall have authority to make disbursements pursuant to the tenns of this                                             12  

 

Agreement from such accounts. Funds may be withdrawn from all bank accounts established by  Manager, in accordance with this Article 5, only upon the signature of an individual who has been  granted that authority by Manager and funds may not be withdrawn from such accounts by Owner  unless Manager is in default hereunder.                                   ARTICLE6                               MISCELLANEOUS        Section 6.1 Assignment. Upon 30 days written notification, Owner may assign its  rights and obligations to any successor in title to the Property and upon such assignment shall be  relieved of all liability accruing after the effective date of such assignment. This Agreement may  not be assigned or delegated by Manager without the prior written consent of Owner, which Owner  may withhold in its sole discretion. Any unauthorized assignment shall be null and void ab initio,  and shall not in any event release Manager from any liabilities hereunder.         Section 6.2 Notices. All notices required or pennitted by this Agreement shall be in  writing and shall be sent by registered or certified mail, addressed in the case of Owner to ST AR  Heritage Place, LLC, 18100 Von Kannan Avenue, Suite 500, Irvine, CA 92612, Attention: Kevin  Keating; and in the case of Manager to Steadfast Management Company, Inc., 18100 Von Karman  Avenue, Suite 500, Irvine, CA 92612, Attention: Christopher Hilbert, or to such other address as  shall, from time to time, have been designated by written notice by either party given to the other  party as herein provided.         Section 6.3 Entire Agreement. This Agreement shall constitute the entire agreement  between the parties hereto and no modification thereof shall be effective unless in writing executed  by the parties hereto.         Section 6.4 No Partnersliip. Nothing contained in this Agreement shall constitute or  be construed to be or create a partnership or joint venture between Owner, its successors or assigns,  on the one part, and Manager, its successors and assigns, on the other part.         Section 6.5 No Third Party Beneficiary. Neither this Agreement nor any part hereof  nor any service relationship shall inure to the benefit of any third party, to any trustee in  bankruptcy, to any assignee for the benefit of creditors, to any receiver by reason ofinsolvency, to  any other fiduciary or officer representing a bankrupt or insolvent estate of either party, or to the  creditors or claimants of such an estate. Without limiting the generality of the foregoing sentence,  it is specifically understood and agreed that such insolvency or bankruptcy of either party hereto  shall, at the option of the other party, void all rights of such in sol vent or bankrupt party hereunder  (or so many of such rights as the other party shall elect to void).         Section 6.6 Severability. If any one or more of the provisions of this Agreement, or  the applicability of any such provision to a specific situation, shall be held invalid or  unenforceable, such provision should be modified to the minimum extent necessary to make it or  its application valid and enforceable, and the validity and enforceability of all other provisions of  this Agreement and all other applications of such provisions shall not be affected thereby.         Section 6. 7 Captions, Plural Terms. Unless the context clearly requires otherwise, the  singular number herein shall include the plural, the plurnl number shall include the singular and                                        13  

 

any gender shall include all genders. Titles and captions herein shall not affect the construction of  this Agreement.          Section 6.8  Attorneys' Fees. Should either party employ an attorney to enforce any of  the provisions of this Agreement) or to recover damages for breach of this Agreement, the non­ prevailing party in any action agrees to pay to the prevailing party all reasonable costs) damages  and expenses) including reasonable attorneys) fees, expended or incurred by the prevailing party  in connection therewith.          Section 6.9  Signs. Manager  shall have the right to place signs on the Property in  accordance with applicable Governmental Requirements stating that Manager is the manager and  leasing agent for the Property.          Section 6.10 Survival of Indemnities. The indemnification obligations of the parties to  this Agreement shall survive the termination of this Agreement to the extent of any claim or cause  of action based on an event occurring prior to the date of termination.          Section 6.11 Governing  Law.   This Agreement  shall be construed under and in   accordance with the laws of the State and is fully performable with respect to the Property in the   county in which the Property is located.          Section 6.12 Competitive Properties.  Manager may,  individually or with others,   engage or possess an interest in any other project or venture of every nature and description,   including but not limited to, the ownership, financing, leasing, operation, management, brokerage   and sale of real estate projects including apartment projects other than the Property, whether or not   such other venture or projects are competitive with the Property and Owner shall not have any   claim as to such project or venture or to the income or profits derived therefrom.          Section 6.13 Set Off. Without prejudice to Manager's right to te1minate this Agreement   in accordance with the tenns of this Agreement, Manager may at any time and without notice to   Owner, set off or transfer any sums held by Manager for or on behalf of Owner in the accounts   (other than the Security Deposit Account) maintained pursuant to this Agreement in or towards   satisfaction of any of Owner's liabilities to Manager in respect of any sums due to Manager under   this Agreement.          Section 6.14 Notice of Default. Manager shall not be deemed in default under this   Agreement, and Owner's right to tenninate Manager as a result of such default shall not accrue,   until Owner has delivered written notice of default to Manager and Manager has failed to cure   same within 30 days from the date ofreceipt of such notice.          Section 6.15 Counterparts.   This Agreement  may  be executed in two  or more   counterparts, each of which shall be deemed to be an original.                             [Signatures appear on following page.}                                              14  

 

             This Property Management Agreement  is hereby executed by duly authorized  representatives of the parties hereto as of the Effective Date.     OWNER:                         STAR HERITAGE PLACE, LLC,                                  a Delaware limited liability company                                   By:    Steadfast Apartment Advisor, LLC, its Manager     MANAGER:                        STEADFAST MANAGEMENT COMPANY, INC.,                                   a California corporation                                    By:---:,,"--~--~--                                       ~Vice President                                              15  

 

                                    EXHIBIT A                        ESTIMATED PASS-THROUGH AMOUNTS   Benefits Administration                                   3.0% of total employee costs  IT Infrastructure, Licenses and Support                   At cost and expense  Marketing/Training/Continuing Education                   $20.00 p.u.p.y.                                              16  

 

                                    EXHIBITB                                     THE PROPERTY   Heritage Place Apartments is located at 700 Westminster Driven, Franklin, TN, in the County of  Williamson, and described as follows:   The Property is comprised of 13 two-story buildings with 105 units. Site amenities include pool,  tennis/sports court, and a playground. It is situated on 8.4 acres and it was built in 1982.                                              17

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