Document:

exhibit1024.htm

 

Exhibit 10.24

 

 

 

Freddie Mac Loan No. 968720242

The Apartments at Meadowmont

MULTIFAMILY NOTE-CME

MULTISTATE – FIXED RATE

 

(REVISION DATE 8-14-2009)

 

	
US $28,500,000.00

	
Effective Date:  As of April 9, 2010

FOR VALUE RECEIVED, the undersigned (together with such party’s or parties’ successors and assigns, “Borrower”) jointly and severally (if more than one) promises to pay to the order of CWCAPITAL LLC, a Massachusetts limited liability company, the principal sum of Twenty-Eight Million Five Hundred Thousand and 00/100 Dollars (US $28,500,000.00), with interest on the unpaid principal balance, as hereinafter provided.

1.           Defined Terms.

(a)           As used in this Note:

“Base Recourse” means a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of this Note.

“Business Day” means any day other than a Saturday, a Sunday or any other day on which Lender or the national banking associations are not open for business.

“Cut-off Date” means the twelfth (12th) Installment Due Date.

“Default Rate” means an annual interest rate equal to four (4) percentage points above the Fixed Interest Rate.  However, at no time will the Default Rate exceed the Maximum Interest Rate.

“Defeasance Period” is the period beginning the day after the Defeasance Date until but not including the first day of the Window Period.  The Defeasance Period only applies if this Note is assigned to a REMIC trust prior to the Cut-off Date.

“Fixed Interest Rate” means the annual interest rate of five and fifty-five hundredths percent (5.55%).

“Installment Due Date” means, for any monthly installment of interest only or principal and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The “First Installment Due Date” under this Note is June 1, 2010.

“Lender” means the holder from time to time of this Note.

“Loan” means the loan evidenced by this Note.

  

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“Lockout Period” means the period beginning on the day that this Note is assigned to a REMIC trust until and including the Defeasance Date.  The Lockout Period only applies if this Note is assigned to a REMIC trust prior to the Cut-off Date.

“Maturity Date” means the earlier of (i) May 1, 2020 (the “Scheduled Maturity Date”), and (ii) the date on which the unpaid principal balance of this Note becomes due and payable by acceleration or otherwise pursuant to the Loan Documents or the exercise by Lender of any right or remedy under any Loan Document.

“Maximum Interest Rate” means the rate of interest that results in the maximum amount of interest allowed by applicable law.

“Prepayment Premium Period” means the period during which, if a prepayment of principal occurs, a prepayment premium will be payable by Borrower to Lender.  The Prepayment Premium Period is the period from and including the date of this Note until but not including the earlier to occur of the following (i) the day that this Note is assigned to a REMIC trust if this Note is assigned to a REMIC trust prior to the Cut-off Date or (ii) the first day of the Window Period.  The Prepayment Premium Period only applies if this Note is not assigned to a REMIC trust or if this Note is assigned to a REMIC trust on or after the Cut-off Date.

“Security Instrument” means the multifamily mortgage, deed to secure debt or deed of trust effective as of the effective date of this Note, from Borrower to or for the benefit of Lender and securing this Note.

“Treasury Security” means the 3.375% U.S. Treasury Security due November 15, 2019.

 

“Window Period” means the three (3) consecutive calendar month period prior to the Scheduled Maturity Date.

“Yield Maintenance Period” means the period from and including the date of this Note until but not including the earlier to occur of the following (i) the first day that the Note is assigned to a REMIC trust or (ii) November 1, 2019 (the “Yield Maintenance Expiration Date”).  The Yield Maintenance Period only applies if this Note is not assigned to a REMIC trust or if this Note is assigned to a REMIC trust on or after the Cut-off Date.

(b)           Other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument.

2.           Address for Payment.  All payments due under this Note shall be payable at One Charles River Place, 63 Kendrick Street, Needham, Massachusetts 02494, or such other place as may be designated by Notice to Borrower from or on behalf of Lender.

3.           Payments.

  

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(a)           Interest will accrue on the outstanding principal balance of this Note at the Fixed Interest Rate, subject to the provisions of Section 8 of this Note.

(b)           Interest under this Note shall be computed, payable and allocated on the basis of an actual/360 interest calculation schedule (interest is payable for the actual number of days in each month, and each month’s interest is calculated by multiplying the unpaid principal amount of this Note as of the first day of the month for which interest is being calculated by the Fixed Interest Rate, dividing the product by 360, and multiplying the quotient by the number of days in the month for which interest is being calculated).  The portion of the monthly installment of principal and interest under this Note attributable to principal and the portion attributable to interest will vary based upon the number of days in the month for which such installment is paid. Each monthly payment of principal and interest will first be applied to pay in full interest due, and the balance of the monthly installment payment paid by Borrower will be credited to principal.

 

(c)           Unless disbursement of principal is made by Lender to Borrower on the first day of a calendar month, interest for the period beginning on the date of disbursement and ending on and including the last day of such calendar month shall be payable by Borrower simultaneously with the execution of this Note.  If disbursement of principal is made by Lender to Borrower on the first day of a calendar month, then no payment will be due from Borrower at the time of the execution of this Note.  The Installment Due Date for the first monthly installment payment under Section 3(d) of interest only or principal and interest, as applicable, will be the First Installment Due Date set forth in Section 1(a) of this Note.  Except as provided in this Section 3(c), Section 10 and in Section 11, accrued interest will be payable in arrears.

 

	
             (d)

	

(i)

	
Beginning on the First Installment Due Date, and continuing until and including the monthly installment due on May 1, 2012, accrued interest only shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of each monthly installment of interest only payable pursuant to this Subsection 3(d)(i) on an Installment Due Date shall vary, and shall equal $4,393.75000 multiplied by the number of days in the month prior to the Installment Due Date.

	
  

	
(ii)

	
Beginning on June 1, 2012, and continuing until and including the monthly installment due on the Maturity Date, principal and accrued interest shall be payable by Borrower in consecutive monthly installments due and payable on the first day of each calendar month. The amount of the monthly installment of principal and interest payable pursuant to this Subsection 3(d)(ii) on an Installment Due Date shall be One Hundred Sixty-Two Thousand Seven Hundred Fifteen and 06/100 Dollars ($162,715.06).

(e)           All remaining Indebtedness, including all principal and interest, shall be due and payable by Borrower on the Maturity Date.

(f)           All payments under this Note shall be made in immediately available U.S. funds.

(g)           Any regularly scheduled monthly installment of interest only or principal and interest payable pursuant to this Section 3 that is received by Lender before the date it is due shall be deemed to have been received on the due date for the purpose of calculating interest due.

  

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(h)           Any accrued interest remaining past due for 30 days or more, at Lender’s discretion, may be added to and become part of the unpaid principal balance of this Note and any reference to “accrued interest” shall refer to accrued interest which has not become part of the unpaid principal balance.  Any amount added to principal pursuant to the Loan Documents shall bear interest at the applicable rate or rates specified in this Note and shall be payable with such interest upon demand by Lender and absent such demand, as provided in this Note for the payment of principal and interest.

4.           Application of Payments.  If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply the amount received to amounts then due and payable in any manner and in any order determined by Lender, in Lender’s discretion.  Borrower agrees that neither Lender’s acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender’s application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction.

5.           Security.  The Indebtedness is secured by, among other things, the Security Instrument, and reference is made to the Security Instrument for other rights of Lender as to collateral for the Indebtedness.

6.           Acceleration.  If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, any prepayment premium payable under Section 10 and Section 11, and all other amounts payable under this Note and any other Loan Document, shall at once become due and payable, at the option of Lender, without any prior Notice to Borrower (except if notice is required by applicable law, then after such notice).  Lender may exercise this option to accelerate regardless of any prior forbearance.  For purposes of exercising such option, Lender shall calculate the prepayment premium as if prepayment occurred on the date of acceleration.  If prepayment occurs thereafter, Lender shall recalculate the prepayment premium as of the actual prepayment date.

7.           Late Charge.

(a)           If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Security Instrument or any other Loan Document is not received in full by Lender within ten (10) days after the installment or other amount is due, counting from and including the date such installment or other amount is due (unless applicable law requires a longer period of time before a late charge may be imposed, in which event such longer period shall be substituted), Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to five percent (5%) of such installment or other amount due (unless applicable law requires a lesser amount be charged, in which event such lesser amount shall be substituted).

(b)           Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan and that it is extremely difficult and impractical to determine those additional expenses.  Borrower agrees that the late charge payable pursuant to this Section represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional expenses Lender will incur by reason of such late payment.  The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate pursuant to Section 8.

8.           Default Rate.

 

  

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(a)           So long as (i) any monthly installment under this Note remains past due for thirty (30) days or more or (ii) any other Event of Default has occurred and is continuing, then notwithstanding anything in Section 3 of this Note to the contrary, interest under this Note shall accrue on the unpaid principal balance from the Installment Due Date of the first such unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at the Default Rate.

(b)           From and after the Maturity Date, the unpaid principal balance shall continue to bear interest at the Default Rate until and including the date on which the entire principal balance is paid in full.

(c)           Borrower acknowledges that (i) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, (ii) during the time that any monthly installment under this Note is delinquent for thirty (30) days or more, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities; and (iii)  it is extremely difficult and impractical to determine those additional costs and expenses.  Borrower also acknowledges that, during the time that any monthly installment under this Note is delinquent for thirty (30) days or more or any other Event of Default has occurred and is continuing, Lender’s risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk.  Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

9.           Limits on Personal Liability.

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

(b)           Borrower shall be personally liable to Lender for the amount of the Base Recourse, plus any other amounts for which Borrower has personal liability under this Section 9.

(c)           In addition to the Base Recourse, Borrower shall be personally liable to Lender for the repayment of a further portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of the occurrence of any of the following events:

	
  

	
(i)

	
Borrower fails to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence.  However, Borrower will not be personally

 

  

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liable for any failure described in this subsection (i) if Borrower is unable to pay to Lender all Rents and security deposits as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding.

 

	
  

	
(ii)

	
Borrower fails to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument.  However, Borrower will not be personally liable for any failure described in this subsection (ii) if Borrower is unable to apply insurance or condemnation proceeds as required by the Security Instrument because of a valid order issued in a bankruptcy, receivership, or similar judicial proceeding.

	
  

	
(iii)

	
Borrower fails to comply with Section 14(g) or (i) of the Security Instrument relating to the delivery of books and records, statements, schedules and reports.

	
  

	
(iv)

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

 

	
[Deferred]

	
Hazard Insurance premiums or other insurance premiums,

	
[Collect]

	
Taxes,

	
[Deferred]

	
water and sewer charges (that could become a lien on the Mortgaged Property),

	
[N/A]

	
ground rents,

	
[Deferred]

	
assessments or other charges (that could become a lien on the Mortgaged Property)

	
  

	
(v)

	
Borrower engages in any willful act of material waste of the Mortgaged Property.

(d)           In addition to the Base Recourse, Borrower shall be personally liable to Lender for:

	
  

	
(i)

	
the performance of all of Borrower’s obligations under Section 18 of the Security Instrument (relating to environmental matters);

	
  

	
(ii)

	
the costs of any audit under Section 14(g) of the Security Instrument; and

	
  

	
(iii)

	
any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Section 9, including Attorneys’ Fees and Costs and the costs of conducting any independent audit of Borrower’s books and records to determine the amount for which Borrower has personal liability.

(e)            All payments made by Borrower with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Security Instrument and the other Loan Documents shall be applied first to the portion of the Indebtedness for which Borrower has no personal liability.

 

 

  

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(f)           Notwithstanding the Base Recourse, Borrower shall become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default:

	
  

	
(i)  

	
Borrower or any SPE Equity Owner fails to comply with Section 33 of the Security Instrument;

	
  

	
(ii)   

	
a Transfer (including, but not limited to, a lien or encumbrance) that is an Event of Default under Section 21 of the Security Instrument, other than a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company;

	
(iii)  

	
fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender;

	
(iv)  

	
Borrower or any SPE Equity Owner voluntarily files for bankruptcy protection under the United States Bankruptcy Code;

	
(v)  

	
Borrower or any SPE Equity Owner voluntarily becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights;

	
(vi)  

	
The Mortgaged Property or any part thereof becomes an asset in a voluntary bankruptcy or becomes subject to any reorganization, receivership, insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights;

	
(vii)  

	
an order of relief is entered against Borrower or any SPE Equity Owner pursuant to the United States Bankruptcy Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined in by a “Related Party;” or

	
(viii)  

	
an involuntary bankruptcy or other involuntary insolvency proceeding is commenced against Borrower or any SPE Equity Owner (by a party other than Lender) but only if Borrower or such SPE Equity Owner has failed to use commercially reasonable efforts to dismiss such proceeding or has consented to such proceeding.

 

For purposes of this Section, the term “Related Party” means:

	
(A)

	
Borrower, any guarantor or any SPE Equity Owner; and

 

	
(B)

	
any Person that holds, directly or indirectly, any ownership interest in or right to manage Borrower, any guarantor or any SPE Equity Owner, including without limitation, any shareholder, member or partner of Borrower, any guarantor or any SPE Equity Owner; and

 

 

  

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(C)

	
any Person in which any ownership interest (direct or indirect) or right to manage is held by Borrower, any guarantor, any SPE Equity Owner or any partner, shareholder or member of, or any other Person holding an interest in, Borrower, any guarantor or any SPE Equity Owner; and

 

	
(D)

	
any other creditor of Borrower that is related by blood, marriage or adoption to Borrower, any guarantor, any SPE Equity Owner or any partner, shareholder or member of, or any other Person holding an interest in, Borrower, any guarantor or any SPE Equity Owner.

If Borrower, any guarantor, any SPE Equity Owner or any Related Party has solicited creditors to initiate or participate in any proceeding referred to in this Section 9, regardless of whether any of the creditors solicited actually initiates or participates in the proceeding, then such proceeding shall be considered as having been initiated by a Related Party.

(g)           To the extent that Borrower has personal liability under this Section 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. To the fullest extent permitted by applicable law, in any action to enforce Borrower’s personal liability under this Section 9, Borrower waives any right to set off the value of the Mortgaged Property against such personal liability.

	
  

	
10.

	
Voluntary and Involuntary Prepayments During the Prepayment Premium Period (Section Applies Prior to Securitization and if Loan is Assigned to REMIC Trust On or After the Cut-off Date).

(a) This Section 10 shall apply (i) prior to the date that this Note is assigned to a REMIC trust and (ii) if this Note is assigned to a REMIC trust on or after the Cut-off Date.  This Section 10 shall be of no effect if this Note is assigned to a REMIC trust prior to the Cut-off Date.

(b)           Any receipt by Lender of principal due under this Note prior to the Maturity Date, other than principal required to be paid in monthly installments pursuant to Section 3, constitutes a prepayment of principal under this Note.  Without limiting the foregoing, any application by Lender, prior to the Maturity Date, of any proceeds of collateral or other security to the repayment of any portion of the unpaid principal balance of this Note constitutes a prepayment under this Note.

(c)           During the Prepayment Premium Period, the Borrower may voluntarily prepay all of the unpaid principal balance of this Note on an Installment Due Date so long as Borrower designates the date for such prepayment in a Notice from Borrower to Lender given at least 30 days prior to the date of such prepayment.  Unless Lender has previously notified Borrower of the expiration of the Prepayment Premium Period, upon receipt of such Notice from Borrower, Lender will notify Borrower if the Note has been assigned to a REMIC trust and the Prepayment Premium Period has expired.  If an Installment Due Date (as defined in Section 1(a)) falls on a day which is not a Business Day, then with respect to payments made under this Section 10 only, the term “Installment Due Date” shall mean the Business Day immediately preceding the scheduled Installment Due Date.

 

 

  

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(d)           Notwithstanding Section 10(c) above, Borrower may voluntarily prepay all of the unpaid principal balance of this Note on a Business Day other than an Installment Due Date if Borrower provides Lender with the Notice set forth in Section 10(c) above and meets the other requirements set forth in this subsection.  Borrower acknowledges that Lender has agreed that Borrower may prepay principal on a Business Day other than an Installment Due Date only because Lender shall deem any prepayment received by Lender on any day other than an Installment Due Date to have been received on the Installment Due Date immediately following such prepayment and Borrower shall be responsible for all interest that would have been due if the prepayment had actually been made on the Installment Due Date immediately following such prepayment.

(e)           Unless otherwise expressly provided in the Loan Documents, Borrower may not voluntarily prepay less than all of the unpaid principal balance of this Note.  In order to voluntarily prepay all of the principal of this Note, Borrower must pay to Lender, together with the amount of principal being prepaid, (i) all accrued and unpaid interest due under this Note, plus (ii) all other sums due to Lender at the time of such prepayment, plus (iii) any prepayment premium calculated pursuant to Section 10(f).

(f)           Except as provided in Section 10(g) below, a prepayment premium shall be due and payable by Borrower in connection with any prepayment of principal under this Note during the Prepayment Premium Period.  The prepayment premium shall be in the form of U.S. currency.  The prepayment premium shall be computed as follows:

	
  

	
(i)

	
For any prepayment made during the Yield Maintenance Period, the prepayment premium shall be equal to the following:

the product obtained by multiplying:

	
  

	
(1)

	
the amount of principal being prepaid or accelerated,

 

	
  

	
by

 

	
  

	
(2)

	
the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment Rate,

 

	
  

	
by

 

	
  

	
(3)

	
the Present Value Factor.

For purposes of this Section 10(f)(i), the following definitions shall apply:

Monthly Note Rate: one-twelfth (1/12) of the Fixed Interest Rate, expressed as a decimal calculated to five digits.

Prepayment Date:  in the case of a voluntary prepayment, the date on which the prepayment is made; in the case of the application by Lender of collateral or security to a portion of the principal balance, the date of such application.

Assumed Reinvestment Rate:  one-twelfth (1/12) of the yield rate, as of the close of the trading session which is 5 Business Days before the

 

 

  

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Prepayment Date, on the Treasury Security, as reported in The Wall Street Journal, expressed as a decimal calculated to five digits.  In the event that no yield is published on the applicable date for the Treasury Security, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable date.  If the publication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security.  The selection of an alternate security pursuant to this Section 10 shall be made in Lender’s discretion.

Present Value Factor:  the factor that discounts to present value the costs resulting to Lender from the difference in interest rates during the months remaining in the Yield Maintenance Period using the Assumed Reinvestment Rate as the discount rate, with monthly compounding, expressed numerically as follows:

 

1-(   1   )n

      (1+ ARR)

ARR

 

	
  

	
n = the number of months remaining in the Yield Maintenance Period; provided, however, if a prepayment occurs on an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month in which such prepayment occurs and if such prepayment occurs on a Business Day other than an Installment Due Date, then the number of months remaining in the Yield Maintenance Period shall be calculated beginning with the month immediately following the date of such prepayment.

ARR = Assumed Reinvestment Rate

	
  

	
(ii)

	
For any prepayment made after the expiration of the Yield Maintenance Period but during the remainder of the Prepayment Premium Period, the prepayment premium shall be 1.0% of the amount of principal being prepaid.

(g)           Notwithstanding any other provision of this Section 10, no prepayment premium shall be payable with respect to (i) any prepayment made during the Window Period, or (ii) any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument.

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

 

 

  

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(i)           Borrower recognizes that any prepayment of any of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties.  Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages.  Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth in this Note represents a reasonable estimate of the damages Lender will incur because of a prepayment.  Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the Loan, and that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower’s voluntary agreement to the prepayment premium provisions.

	
  

	
11.

	
Voluntary and Involuntary Prepayments During the Lockout Period and During the Defeasance Period (Section Applies if Loan is Assigned to REMIC Trust Prior to the Cut-off Date).

(a)           This Section 11 shall apply in the event this Note is assigned to a REMIC trust prior to the Cut-off Date.  This Section 11 shall be of no effect if this Note is assigned to a REMIC trust on or after the Cut-off Date.

(b)           Any receipt by Lender of principal due under this Note prior to the Maturity Date, other than principal required to be paid in monthly installments pursuant to Section 3, constitutes a prepayment of principal under this Note.  Without limiting the foregoing, any application by Lender, prior to the Maturity Date, of any proceeds of collateral or other security to the repayment of any portion of the unpaid principal balance of this Note constitutes a prepayment under this Note.

(c)           Borrower may not voluntarily prepay any portion of the principal balance of this Note during the Lockout Period or during the Defeasance Period; provided, however, any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument shall be permitted during the Lockout Period and during the Defeasance Period.  If any portion of the principal balance of this Note is prepaid during the Lockout Period or during the Defeasance Period by reason of the application by Lender of any proceeds of collateral or other security to any portion of the unpaid principal balance of this Note or following a determination that the prohibition on voluntary prepayments during the Lockout Period or during the Defeasance Period is in contravention of applicable law, then Borrower must also pay to Lender upon demand by Lender, a prepayment premium equal to five percent (5.0%) of the amount of principal being prepaid.

(d)           Notwithstanding any other provision of this Section 11, no prepayment premium shall be payable with respect to (i) any prepayment made during the Window Period, or (ii) any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument.

(e)           After the expiration of the Lockout Period and the Defeasance Period, Borrower may voluntarily prepay all of the unpaid principal balance of this Note on an Installment Due Date so long as Borrower designates the date for such prepayment in a Notice from Borrower to Lender given at least 30 days prior to the date of such prepayment.  If an Installment Due Date (as defined in Section 1(a)) falls on a day which is not a Business Day, then with respect to 

 

 

  

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payments made under this Section 11 only, the term “Installment Due Date” shall mean the Business Day immediately preceding the scheduled Installment Due Date.

(f)           Notwithstanding Section 11(e) above, following the end of the Lockout Period and the Defeasance Period, Borrower may voluntarily prepay all of the unpaid principal balance of this Note on a Business Day other than an Installment Due Date if Borrower provides Lender with the Notice set forth in Section 11(e) and meets the other requirements set forth in this subsection.  Borrower acknowledges that Lender has agreed that Borrower may prepay principal on a Business Day other than an Installment Due Date only because Lender shall deem any prepayment received by Lender on any day other than an Installment Due Date to have been received on the Installment Due Date immediately following such prepayment and Borrower shall be responsible for all interest that would have been due if the prepayment had actually been made on the Installment Due Date immediately following such prepayment.

(g)           Unless otherwise expressly provided in the Loan Documents, Borrower may not voluntarily prepay less than all of the unpaid principal balance of this Note.  In order to voluntarily prepay all of the principal of this Note, Borrower must also pay to Lender, together with the amount of principal being prepaid, (i) all accrued and unpaid interest due under this Note, plus (ii) all other sums due to Lender at the time of such prepayment.

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

(i)           Borrower recognizes that any prepayment of any of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from an Event of Default by Borrower, will result in Lender’s incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender’s ability to meet its commitments to third parties.  Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages.  Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth in Section 11(c) of this Note represents a reasonable estimate of the damages Lender will incur because of a prepayment.  Borrower further acknowledges that the lockout and prepayment premium provisions of this Note are a material part of the consideration for the Loan, and that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower’s voluntary agreement to the prepayment premium provisions.

(j) If, after the expiration of the Lockout Period, the Borrower defeases the Loan as described in Section 44 of the Security Instrument during the Defeasance Period, Borrower shall not have the right to voluntarily prepay any of the principal of this Note at any time.

	
  

	
12.

	
DEFEASANCE (Section Applies if Loan is Assigned to REMIC Trust Prior to the Cut-off Date).

 

(a)           This Section 12 shall apply in the event this Note is assigned to a REMIC trust prior to the Cut-off Date.  This Section 12 shall be of no effect if this Note is assigned to a REMIC trust on or after the Cut-off Date.

(b)           Section 5 of this Note is amended by adding a new paragraph at the end thereof as follows:

 

  

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If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 44 of the Security Instrument, the Indebtedness shall be secured by the Pledge Agreement and reference shall be made to the Pledge Agreement for other rights of Lender as to collateral for the Indebtedness.

(c)           Section 9 of this Note is amended by adding a new paragraph at the end thereof as follows:

If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 44 of the Security Instrument, Borrower shall have no personal liability under this Note or the Pledge Agreement for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under this Note or the Pledge Agreement (other than any liability under Section 18 of the Security Instrument for events that occur prior to the Defeasance Closing Date, whether discovered before or after the Defeasance Closing Date), and Lender’s only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender’s exercise of its rights and remedies with respect to the collateral held by Lender under the Pledge Agreement as security for the Indebtedness.

(d)           Section 21(a) of this Note is amended by adding a new paragraph at the end thereof as follows:

If Borrower obtains a release of the Mortgaged Property from the lien of the Security Instrument pursuant to Section 44 of the Security Instrument, all Notices, demands and other communications required or permitted to be given pursuant to this Note shall be given in accordance with the Pledge Agreement.

13.           Costs and Expenses.  To the fullest extent allowed by applicable law, Borrower shall pay all expenses and costs, including Attorneys’ Fees and Costs incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding.  Borrower acknowledges and agrees that, in connection with each request by Borrower under this Note or any Loan Document, Borrower shall pay all reasonable Attorneys’ Fees and Costs and expenses incurred by Lender, including any fees charged by the Rating Agencies, regardless of whether the matter is approved, denied or withdrawn.

14.           Forbearance.  Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy.  The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment.  Enforcement by Lender of any security for Borrower’s obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender.

 

  

Page 13

  

 

15.           Waivers.  Borrower and all endorsers and guarantors of this Note and all other third party obligors waive presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness.

  

               16.           Loan Charges.  Neither this Note nor any of the other Loan Documents shall be construed to create a contract for the use, forbearance or detention of money requiring payment of interest at a rate greater than the Maximum Interest Rate.  If any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower in connection with the Loan is interpreted so that any interest or other charge provided for in any Loan Document, whether considered separately or together with other charges provided for in any other Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that interest or charge is hereby reduced to the extent necessary to eliminate that violation.  The amounts, if any, previously paid to Lender in excess of the permitted amounts shall be applied by Lender to reduce the unpaid principal balance of this Note. For the purpose of determining whether any applicable law limiting the amount of interest or other charges permitted to be collected from Borrower has been violated, all Indebtedness that constitutes interest, as well as all other charges made in connection with the Indebtedness that constitute interest, shall be deemed to be allocated and spread ratably over the stated term of this Note.  Unless otherwise required by applicable law, such allocation and spreading shall be effected in such a manner that the rate of interest so computed is uniform throughout the stated term of this Note.

17.           Commercial Purpose.  Borrower represents that Borrower is incurring the Indebtedness solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family, household, or agricultural purposes.

18.           Counting of Days.  Except where otherwise specifically provided, any reference in this Note to a period of “days” means calendar days, not Business Days.

19.           Governing Law.  This Note shall be governed by the law of the Property Jurisdiction.

20.           Captions.  The captions of the Sections of this Note are for convenience only and shall be disregarded in construing this Note.

21.           Notices; Written Modifications. 

(a)           All Notices, demands and other communications required or permitted to be given pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument.

(b)           Any modification or amendment to this Note shall be ineffective unless in writing signed by the party sought to be charged with such modification or amendment; provided, however, in the event of a Transfer under the terms of the Security Instrument that requires Lender’s consent, any or some or all of the Modifications to Multifamily Note set forth in Exhibit A to this Note may be modified or rendered void by Lender at Lender’s option, by Notice to Borrower and the transferee, as a condition of Lender’s consent.

22.           Consent to Jurisdiction and Venue.  Borrower agrees that any controversy arising under or in relation to this Note may be litigated in the Property Jurisdiction.  The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have jurisdiction over all controversies that shall arise under or in relation to this Note.  Borrower

 

 

  

Page 14

  

 

irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.  However, nothing in this Note is intended to limit any right that Lender may have to bring any suit, action or proceeding relating to matters arising under this Note in any court of any other jurisdiction.

23.           WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

24.           State-Specific Provisions. Consistent with the provisions of Section 7 pertaining to requirements of applicable law, the first sentence of Section 7 is modified to read as follows:  “If any monthly installment of interest or principal and interest or other amount payable under this Note or under the Security Instrument or any other Loan Document is not received by Lender within fifteen (15) days after the installment or amount is due, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to four percent (4%) of such installment or other amount due.”

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

 

	
X

	  	
Exhibit A

	
Modifications to Multifamily Note

 

IN WITNESS WHEREOF, and in consideration of the Lender's agreement to lend Borrower the principal amount set forth above, Borrower has signed and delivered this Note under seal or has caused this Note to be signed and delivered under seal by its duly authorized representative. Borrower intends that this Note shall be deemed to be signed and delivered as a sealed instrument. 

 

 

  

Page 15

  

 

 

	
  

	
BELL BR MEADOWMONT, LLC, a Delaware limited liability company

	
  

	
By:  Bell BR Meadowmont JV, LLC, a Delaware limited liability company, its Sole Member

	
  

	
By:  Bell Partners Inc., a North Carolina corporation, its Co-Manager

By:_______________________________(SEAL)

Name:

Title:

27-2039969

Borrower's Social Security/Employer ID Number

  

Page 16

  

PAY TO THE ORDER OF 

____________________________________, 

WITHOUT RECOURSE.

	
  

	
CWCAPITAL LLC, a Massachusetts limited liability company

By:_______________________________

Name:

Title:

Freddie Mac Loan No. 968720242

 

 

  

Page 17

  

 

 

EXHIBIT A

MODIFICATIONS TO MULTIFAMILY NOTE

The following modifications are made to the text of the Note that precedes this Exhibit.

1.   new paragraph 7(c) is added as follows:

“(c)           Notwithstanding anything contained herein to the contrary, a Late Charge will not be imposed for the payments of principal balance due at the Maturity Date or the Scheduled Maturity Date.”

2.           A new paragraph 9(c)(vi) is added as follows:

	
  

	
“(vi)

	
Borrower fails to perform all of Borrower’s obligations under Section 64 of the Security Instrument (regarding FHA Compliance); as well as for any cost, loss or damage incurred or suffered by Lender as a result of any  Potentially Non-Compliant Units, such loss or damage to include the cost of bringing all such units into compliance with all current Fair Housing Amendment Act and Americans with Disabilities Act requirements.”

3.           A new paragraph 9(d)(iv) is added as follows:

	
  

	
“(iv)

	
upon the occurrence of an Event of Default, an amount equal to the product of $2,900 times the number of Potentially Non-Compliant Units that have not been brought into compliance with all current requirements of the Fair Housing Amendment Act and Americans with Disabilities Act.”

 

  

Page A-1exhibit1025.htm

     

    Exhibit
10.25

     

     

    PROPERTY
MANAGEMENT AGREEMENT

    

    

    This
PROPERTY MANAGEMENT
AGREEMENT (the “Agreement”), entered into as of this 9th day of April,
2010, by  Bell BR Meadowmont, LLC, a Delaware limited liability
company (“Owner”) and Bell Partners Inc., a North Carolina corporation
(“Manager”).

    

    IN CONSIDERATION of the mutual
covenants and promises each to the other made herein, the Owner does hereby
engage Manager exclusively as an independent contractor, and the Manager does
hereby accept the engagement, to rent, lease, operate, repair and manage the
property more particularly described below (the “Project”) upon the following
terms and conditions.

    

    THE PROPERTY: Located in the
Town of Chapel Hill, Counties of Orange and Durham, State of North Carolina and
being known to consist of 258 units, and more particularly described
as:

    

    Apartments at
Meadowmont:

    100 Village Crossing
Drive

    Chapel Hill,
NC  27517

    

    SECTION
1: DEFINITIONS

    

    1.01
TERM

    The term
of this Agreement shall commence on the date hereof and shall, subject to the
provisions hereof, terminate twelve (12) months following the date hereof.  This Agreement
will automatically renew on a year to year basis thereafter until and unless
terminated in accordance with the terms hereof.

    

    1.02
FEES

    The
management fee (“Base Management
Fee”) payable each
month by Owner to Manager hereunder shall be an amount equal to three percent
(3)% of the Gross
Receipts from the Project.  Owner is entering into a $28,500,000
Mortgage Loan (the “Loan”), evidenced by that
certain Multifamily Note dated as of April 9, 2010 (the “Note”), from Owner to
CWCapital LLC/Freddie Mac, and secured by that certain Multifamily Deed of
Trust, Assignment of Rents and Security Agreement and Fixture Filing dated as of
April 9, 2010 (the “Security
Instrument”). Notwithstanding anything herein to the contrary, so long as
any indebtedness is outstanding under the Security Documents (as defined below):
(i) Owner shall not pay and Agent shall not collect any Management Fees in
excess of 3% of aggregate gross monthly income received by Owner from the
operation of the Property (“Excess Management Fees”),
until Owner has paid all operating expenses (including the management fee),
monthly principal , interest, escrows, insurance reserves and other required
items or charges due under the Security Documents; (ii) after Manager has notice
of or acquires actual knowledge of an Event of Default under the Security
Instrument (a “Default
Notice”), Manager shall not be entitled to receive any Excess Management
Fees; (iii) if payment of Excess Management Fees is included with payment of
Management Fees after a Default Notice, Manager will be entitled to retain only
that part of the payment which is not Excess Management Fees; (iv) if Manager
receives Excess Management Fees after the Default Notice, Manager agrees that
such Excess Management fees will be received and held in trust for Secured
Party, to be applied to amounts due under the Security Instrument; and (v) this
Management Agreement is terminable by Owner without cause upon not 

    
      
         

      

      
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more
than thirty (30) days written notice without the payment of penalty or
fee.  For purposes hereof, the term “Security Documents” has the
meaning assigned to that term in the Security Instrument, and the term “Secured Party” means the owner
and holder from time to time of the Note and the other Security Documents.
Notwithstanding the above, this Agreement does not contemplate or include
Manager’s entitlement to any Excess Management Fees.

    

    Yieldstar.  Owner
agrees to deploy Yield Management (the process of balancing supply and demand to
price apartments to maximize rental revenue) at the Project.  Manager
will provide pricing authority support services in exchange for cost-offset
compensation of One Dollar ($1.00) per unit per month.  Licensing fees
and software costs to run Yield Management software shall be paid by Owner to
Yieldstar as a normal operating expense at a cost of a one-time licensing fee of
$1,500 and a monthly user fee of $1.00 per unit.  Yield Management
pricing authority support services provided by Manager shall include daily
monitoring of apartment pricing, quarterly reporting and bi-weekly conference
calls with site staff.  The Manager will review pricing
recommendations and shall have final authority for making pricing decisions
concerning the Project. Manager will be responsible for set-up and maintenance
of the Yield Management software.

    

    Ops
Technology.  Owner agrees to deploy Ops Technology (enables suppliers
and service providers to present targeted pre-negotiated catalog pricing,
receive orders electronically, and insert electronic invoices into the Manager’s
payment processing system) at the Project.  Manager will provide
oversight of the e-procurement and invoicing management platform at a cost (all
paid to the service provider and not to Manager) of a one-time licensing fee of
$1,200, monthly use fee of $165 and a per invoice processing fee of $1.75, which
typically averages $119 per month for a Project of this size. Based on the
number of invoices processed, however, the actual cost may vary month to
month.   Licensing, user and invoice processing costs shall be
paid by the Owner as a normal operating expense.

    

    Owner
shall pay to Manager a payment of 10%
of upfront payments for negotiating video (cable), data (internet), voice
(phone) and laundry agreements on behalf of the Owner, estimated at
approximately, $5,000.00.

    

    If
additional services not outlined herein are required by the Owner or Manager,
Owner shall pay Manager for such additional services under the terms and
conditions to be agreed upon by the parties.  Manager shall be under
no obligation to provide such additional services unless and until the parties
have entered into a written agreement reflecting the terms and conditions
thereof.

    

    1.03
DEPOSITORY

    An FDIC
insured bank located in the United States of America, designated by Manager and
approved by Owner.

    

    1.04
FISCAL YEAR

    The year
beginning January 1st and ending December 31st.

    

    1.05
BUDGET

    A
composite of (i) an operations Budget, which shall be
an estimate of receipts and expenditures for the full and complete operation
(inclusive of all maintenance, 

    
      
         

      

      
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repairs
and alterations) of the Project during a Fiscal Year, including a schedule of
expected apartment rentals (excluding security deposits) for the period stated
herein and a schedule of expected special repairs and maintenance projects, (ii)
a capital Budget, which shall be an estimate of capital replacements,
substitutions of, and additions to, the Project for the Fiscal
Year.

    

    1.06
GROSS RECEIPTS

    The
entire amount of all receipts, determined on a cash basis, from (a) tenant
rentals, parking rent and other charges collected pursuant to tenant leases for
each month during the term hereof; provided, however, that there shall be
excluded from tenant rentals any refundable tenant security deposits (except as
provided below); (b) cleaning, tenant security and damage deposits forfeited by
tenants in such period; (c) tenant reimbursements for utilities (gas, electric,
water and sewer); (d) video (cable), data (internet), local or long-distance
services (voice), laundry and vending machine income and other ancillary revenue
generated as a percentage of gross receipts; (e) any and all receipts from the
operation of the Project received and relating to such period; (f) proceeds from
rental interruption insurance; and (g) any other sums and charges collected in
connection with termination of the tenant leases.  Gross Receipts do
not include the proceeds of (i) any sale, exchange, refinancing, condemnation,
or other disposition of all or any part of the Project, (ii) any loans to the
Owner whether or not secured by all or any part of the Project, (iii) any
capital contributions to the Owner, (iv) any insurance (other than rental
interruption insurance) maintained with regard to the Project, or (v) proceeds
of casualty insurance or damage claims as a result of damage or loss to the
Project.

    

    1.07
PROJECT EMPLOYEES

    Those
persons employed by Manager and located on-site as a management staff; e.g.,
senior manager, manager, assistant managers, leasing agents, maintenance
personnel, courtesy officers, and other personnel necessary to be directly employed by the Manager in order
to maintain and operate the Project.

    

    SECTION
2: DUTIES AND RIGHTS OF MANAGER

    

    2.01
APPOINTMENT OF MANAGER

    During
the term of this Agreement, Manager agrees, for and in consideration of the
compensation provided in Section 1.02, and Owner hereby grants to Manager the
sole and exclusive right, to supervise and direct the leasing, management,
repair, maintenance and operation of the Project as per the authority granted
herein.  All services performed by Manager under this Agreement shall
be done as an independent contractor of Owner.  All obligations or
expenses incurred hereunder, including the pro rata portion used in connection
with, or for the benefit of the Project for all purchases, contracts, sales or
services in bulk or volume which Manager may obtain for discount or convenience
in connection thereof shall be for the account of, on behalf of, and at the
expense of, Owner except as otherwise specifically provided. Owner shall be
obligated to reimburse Manager for all expenses of Manager incurred specifically
for the Project.

    

    

    2.02
GENERAL OPERATION

    Manager
shall operate the Project in the same manner as is customary and usual in the
operation of comparable facilities, and shall provide such services as are

    
      
         

      

      
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customarily
provided by operators of apartment projects of comparable class and standing
consistent with the Project's facilities, subject, however, in all events to the
limitations of the Budget.  In addition to the other obligations of
Manager set forth herein, Manager shall render the following services and
perform the following duties for Owner in a timely, faithful, diligent and
efficient manner: (a) coordinate the plans of tenants for moving their personal
effects into the Project or out of it, with a view toward scheduling such
movements so that there shall be a minimum of inconvenience to other tenants;
(b) maintain businesslike relations with tenants whose service requests shall be
received, considered and recorded in systematic fashion in order to show the
action taken with respect to each; (c) use its commercially reasonable efforts
to collect all monthly rents due from tenants and rent for users or lessees of
other non-dwelling facilities in the Project, if any; request, demand, collect,
receive and receipt for any and all charges or rents which become due to Owner,
and at Owner's expense, take such legal action as may be necessary or desirable
to evict tenants delinquent in payment of monthly rental, other charges
(security deposits, late charges, etc.); (d) prepare or cause to be prepared for
execution and filing by the Manager as an independent contractor all forms,
reports and returns required by all federal, state or local laws in connection
with the unemployment insurance, workers' compensation insurance, disability
benefits, Social Security and other similar taxes now in effect or hereafter
imposed, and also any other requirements relating to the employment of
personnel; (e) advertise when necessary, at Owner's expense and approval, the
availability for rental for the Project units using
commercially  reasonable business strategies in connection with the
use of promotional materials, market outreach efforts, internet and web-based
marketing and display "for rent" or other similar signs upon the Project, it
being understood that Manager may install one or more signs on or about the
Project stating that same is under management of Manager and may use in a
tasteful manner Manager's name and logo in any display advertising which may be
done on behalf of the Project; and (f) sign, renew and cancel tenant leases for
the Project, write apartment leases for terms  approved by
Owner  (or on a month to month basis following the expiration of the
initial term of a tenant lease) to bona fide individuals based upon Manager's
recommendations. Manager shall exercise its commercially reasonable efforts to include the
Project in signage advertising rentals available to be placed at the Project
during any lease-up period.

    

    Security
Services.  It is understood and agreed that Manager is not in the
business of, and will not be providing alarm systems, guards, patrols and/or
similar services (the “Security Services”) to the Project as a part of its
management services.  Should Owner choose to do so, Owner may
separately contract with a company (a “Security Company”) providing Security
Services.

    

    2.03
BUDGET

    (a)
Attached hereto as Exhibit A is the
Budget approved by Owner for the stated portion of the current Fiscal Year. For
subsequent Fiscal years, Manager shall submit the Budget for the ensuing Fiscal
Year for Owner's approval no later than ninety (90) days prior to the beginning
of each successive Fiscal Year. The Budget shall be reasonably approved by Owner
prior to December 31. In the event Owner disapproves the Budget, in whole or in
part, Owner will provide edits for the Manager to make as may be reasonably
practicable.  Until a complete new Budget is approved, Manager shall
operate on the Budget or part thereof which is approved and the disapproved
items shall be governed by the like item approved for the prior

    
      
         

      

      
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Fiscal
Year, with the exception of expenses for personnel which may be reasonably
increased based on existing competitive conditions unless the increase for
personnel is the item that is being disputed, in which case expenses for
personnel will not be increased.

    

    (b) The
Budget shall reflect the schedule of monthly rents for the applicable Fiscal
Year. It shall also constitute a major control under which Manager shall operate
the Project, and Manager shall make all reasonable efforts to ensure there are
no substantial variances therefrom except for the variations which are in
compliance with Section 2.07(a)(ii). Consequently, no expenses may be incurred
or commitments made by Manager in connection with the management or operation of
the Project which exceed (or would cause the total expenses to exceed) by more
than five percent (5%) in the aggregate the total expenses provided for in the
approved Budget; provided, however, the foregoing limitation with respect to
incurring any expense not covered by the Budget shall not apply to expenses
relating to taxes, insurance or utilities.  Manager makes no guaranty,
warranty or representation whatsoever in connection with the Budgets or the
operational results of owning the Project, such being intended as estimates
only.  Manager will use its commercially reasonable efforts to develop
the Budget and manage the Project in accordance with the Budget.

    

    (c)  In
the event there shall be a substantial variances (expenses greater than 5%, or
Gross Receipts less than 95%, of projection) between the actual results of
operations for any month and the estimated results of operations for such month
as set forth in the Budget, Manager shall furnish to Owner, within fifteen (15)
days after the expiration of such month, a written explanation concerning the
variances and the steps being taken by Manager to rectify the
variances.  If after a Budget has been approved substantial variations
have occurred, or are anticipated by Manager during the course of the Fiscal
Year, Manager shall immediately notify Owner and, upon Owner's request, shall
prepare and submit to Owner a revised forecast of annual income and expenses for
the remainder of the Fiscal Year based on actual year-to-date income and
expenses and Manager's forecast of income and expenses for the remainder of the
Fiscal Year. Such forecast shall not constitute a replacement Budget.

    

    2.04
PROJECT EMPLOYEES AND OTHER PERSONNEL

    (a)
Manager shall investigate, hire, employ, instruct, pay, promote, direct,
discharge and supervise the work of the Project employees and shall supervise,
through the Project employees, the firing, promotion, discharge and work of all
other operating and service employees performing services in, for or about the
Project, all in the name of Manager.  All necessary and appropriate
training and training-related costs may be included in the Budget and paid
accordingly. Manager shall be solely responsible for legal compliance concerning
the foregoing activities and shall indemnify and hold harmless Owner from
employee claims and violations of law by Manager in respect to employment
matters.  To the extent that some of the Project employees may be
required to reside at the Project and be available on a full-time basis in order
to perform properly the duties of his/her employment, it is further understood
and agreed that to the extent contemplated in the Budget or with Owner’s prior
written approval, such Project employees (including spouses or significant
others and dependent children), in addition to salary and fringe benefits, may
receive up to a 20% discount, or rental concession on the normal rental rates
for any unit 

    
      
         

      

      
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such
employee is required to occupy.

    

    (b)  At
all times, all Project employees shall at all times be deemed solely employees
of Manager, and not of Owner. Owner nevertheless agrees to reimburse Manager,
consistent with the Budget, bi-weekly for the total aggregate Budgeted
compensation, including salary and fringe benefits, payable with respect to the
Project employees and any temporary employees performing duties at the
Project.  The term "fringe" benefits, as used herein, shall mean and
include the employee's and employer’s contribution of FICA, unemployment
compensation and other employment taxes, workers' compensation, group life,
accident and health insurance premiums, performance bonuses provided for in the
Budget and approved by Owner, disability, vacation, holiday, and sick leave,
401(k) contributions and other similar benefits paid or payable to employees on
other projects operated by Manager.  Any 401(k) employee or employer
contributions forfeited by the employee remain with the plan.  The
cost of such Project Employees’ base salaries and fringe benefits shall be
separately and specifically scheduled within the Payroll line item of the
Budget.  The compensation, payroll taxes, employee benefits,
insurance, payroll and administrative costs of such employees shall be
considered a normal operating expense and shall be paid as a Project expense, as
provided and to the extent permitted in the Budget.

    

    2.05
CONTRACTS AND SUPPLIES

    Subject
to the Budget, the Manager shall, in the name of and on behalf of Owner and at
Owner's expense, consummate arrangements with unrelated third party
concessionaires, licensees, tenants or other intended users of the facilities of
the Project, shall enter into contracts for furnishing to the Project
electricity, gas, water, steam, telephone, cleaning, vermin exterminators,
furnace and air-conditioning maintenance, security protection, pest control,
landscaping, solid waste removal and any other utilities, services and
concessions which are provided in connection with the maintenance and operation
of apartment projects which are comparable to the Project and in accordance with
standards comparable to those prevailing in other comparable apartment projects,
and shall place purchase orders for such equipment, tools, appliances, materials
and supplies as are reflected in the Budget and necessary to maintain
the Project.  Manager will make a reasonable attempt to make all
contracts cancelable without penalty within (30) days written
notice.

    

    In the
event that utility or power companies require a surety bond or other form of
security in order to provide utilities, electrical or other services to the
Project, the Manager is authorized to obtain such bond at Owner’s sole expense.
Manager may, in its sole discretion, elect to guarantee, indemnify, defend and
hold harmless those parties supplying such bonds or other form of security (the
“Surety”) for any premiums, liabilities, losses, costs, damages, attorney fees
and other expenses, including interest, which the Surety may sustain or incur by
reason of, or in connection with, the issuance, renewal or continuation of such
bonds or other form of security.  In such event, Owner will reimburse
and indemnify Manager pursuant to Section 6.03 with regard to the
same.

    

    

    2.06
MANAGER'S SERVICES

    In the
performance of its duties under this Agreement, it is agreed that Manager may
enter into any contract on behalf of Owner with subsidiaries and affiliates of

    
      
         

      

      
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Manager
for the furnishing of supplies and services to the Project, including but not
limited to the purchasing of furniture, operating equipment, operating supplies,
maintenance and landscaping services, and advertising, provided, however, that
the net cost of such supplies and services to Owner is competitive with such
similar services or supplies customarily used in the industry, whose services or
supplies are reasonably available to the industry and whose services or supplies
are reasonably available to the Project.

    

    2.07
ALTERATIONS, REPAIRS AND MAINTENANCE

    (a) (i)
To the extent adequate funds are made available to Manager by Owner, Manager
shall make or install, or cause to be made and installed at Owner's expense and
in the name of Owner, all necessary or desirable repairs, interior and exterior
cleaning, painting and decorating, plumbing, alterations, replacements,
improvements and other normal maintenance and repair work on and to the Project
as are customarily made by Manager in the operation of apartment Projects or are
required by any lease. (ii) Manager may make emergency repairs involving
manifest danger to life or property which are immediately necessary for the
preservation of the safety of the Project, or for the safety of the tenants, or
are required to avoid the suspension of any necessary service to the Project, in
which event such reasonable expenditures may be made by the Manager without
prior approval and irrespective of the cost limitations imposed by the Budget,
provided that Owner or its successor in interest is notified in a timely manner
and thereafter given written notice of such situation and such costs
incurred.

    

    (b)  In
accordance with the terms of the Budget, by Manager’s recommendation or upon
Owner demand and/or approval (except in the case of emergency), Manager shall,
at Owner's expense, from time to time during the term hereof, make all required
capital replacements or repairs to the Project (“Capital
Project”).  For any Capital Projects, including but not limited to
Project improvements, rehab/renovation projects, and fire restoration, that cost
more than $10,000 on an individual basis, Owner shall pay Manager a Construction
Management Fee equal to 5% of the total cost of the completed work, including
both hard and soft costs.

    

    2.08
LICENSES AND PERMITS

    Manager
shall, in a timely manner, apply for, and thereafter use commercially reasonable
efforts to obtain and maintain in the name and at the expense of Owner all
licenses and permits (including deposits and bonds) required of Owner or Manager
in connection with the management and operation of the Project. Owner agrees to
execute and deliver any and all applications and other documents and to
otherwise cooperate to the fullest extent with Manager in applying for,
obtaining and maintaining such licenses and permits.

    

    2.09
COMPLIANCE WITH LAWS

    Manager,
at Owner's expense, shall use its commercially reasonable efforts to cause all
acts and duties to be done in and about the Project to comply with all laws,
regulations and requirements of any federal, state, regional, county or
municipal government, having jurisdiction respecting the use or manner of use of
the Project or the maintenance, alteration or operation thereof.

    

    Owner
shall use its commercially reasonable efforts to cause all acts and duties to be
done in and about the Project to comply with all laws, regulations and
requirements 

    
      
         

      

      
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of
any federal, state, regional, county or municipal government having jurisdiction
over the use or manner of use of the Project or the maintenance, alteration or
operation thereof.

    

    2.10
LEGAL PROCEEDINGS

    Manager
shall institute, in its own name or in the name of Owner, but in any event at
the expense of Owner, any and all legal actions or proceedings which Manager
deems reasonable to collect charges, rent or other income from the Project, or
to dispossess tenants or other persons in possession, or to cancel or terminate
any lease, license or concessions agreement for the breach thereof, or default
thereunder by any tenant, licensee or concessionaire, provided, that the legal
fees and related costs in connection with such proceeding do not exceed the
Budget.

    

    2.11
DEBTS OF OWNER

    In the
performance of its duties as Manager, Manager shall act solely as the
representative of the Owner.  All debts and liabilities to third
persons incurred by Manager in the course of its operation and management of the
Project shall be the debts and liabilities of the Owner only, and Manager shall
not be liable for any such debts or liabilities.

    

    SECTION
3: MANAGEMENT FEES

    

    3.01
MANAGEMENT FEE

    The Owner
shall pay to Manager, during the term hereof, the Management Fees and other fees
and costs due hereunder for the previous month on or before the tenth (10th) day
of each subsequent month; provided, however that with respect to the Management
Fee due for the
last month of the term hereof, such Management Fee shall be payable on the last
day of such month.  Manager shall have the right to withdraw the
monthly fee from the Operating Account established by Manager.

    

    3.02
PLACE OF PAYMENT

    All sums
payable by Owner to Manager hereunder shall be payable to Manager at 300 N.
Greene Street, Suite 1000, Greensboro, NC  27401, unless the Manager
shall, from time to time, specify a different address in writing.

    

    SECTION
4: PROCEDURE FOR HANDLING RECEIPTS AND OPERATING CAPITAL

    

    4.01 BANK
DEPOSITS

    All
monies received by Manager for or on behalf of Owner shall be deposited by
Manager with the Depository.  Manager shall maintain separate accounts
for such funds consistent with the system of accounting of the
Project.  All funds on deposit shall be managed by Manager subject to
the terms hereof. All monies of Owner held by Manager pursuant to the terms
hereof shall be held by Manager in trust for the benefit of Owner to be held and
disbursed as herein provided and shall not, unless Owner otherwise has agreed or
directed, be commingled with the funds of any other person, including Manager or
any affiliate of Manager.  In no event shall Manager be responsible
for any loss to amounts on deposit caused by the insolvency or other similar
event or occurrence with respect to the Depository.

    

    4.02
SECURITY DEPOSIT ACCOUNT

    Manager
shall comply with all applicable laws with respect to security deposits paid

    
      
         

      

      
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by
tenants.  All security deposit funds held by Manager shall at all
times be the property of Owner, subject to all applicable laws with respect
thereto.  Upon commencement of this Agreement, the Owner authorizes
the Manager to make withdrawals therefrom for the purpose of returning them as
required by the lease or by existing law.

    

    4.02A
OPERATING ACCOUNT

    Manager
shall deposit all gross receipts from the operations of the property into an
Operating Account, on which both Manager and Owner shall be signatories and pay
the normal operating expenses of the property, including Manager’s fees, debt
and taxes as directed.

    

    4.03
DISBURSEMENT OF DEPOSITS

    Manager
shall disburse and pay all funds on deposit on behalf of and in the name of
Owner, in such amounts and at such times as the same are required in connection
with the ownership, maintenance and operation of the Project on account of all
taxes, assessments and charges of every kind imposed by any governmental
authority having jurisdiction over the Project, and all costs and expenses of
maintaining, operating and supervising the operation of the Project, including,
but not limited to, the Management Fees due hereunder, salaries, fringe benefits
and expenses of the Project employees, insurance premiums, debt service, legal
and accounting fees and the cost and expense of utilities, services, marketing,
advertising and concessions.  To the extent there are insufficient
funds to pay all of such costs and expenses, Manager shall pay such of the
foregoing items in the order and manner selected by Manager.  Nothing in this
agreement shall require the Manager to advance money on the Owner’s
behalf.

    

    4.04
AUTHORIZED SIGNATURES

    Any
persons from time to time designated by Manager and agreed to in writing by
Owner shall be authorized signatories on all bank accounts established by
Manager hereunder and shall have authority to make disbursements from such
accounts to the extent permitted in this Section 4.  Funds may be
withdrawn from all bank accounts established by Manager, in accordance with this
Section 4, only upon the signature of an individual who has been granted that
authority by Owner.  Owner may at any time and at Owner's sole
discretion direct Manager to withdraw funds and make disbursements from such
accounts, except all persons who are authorized signatories or who in any way
handle funds for the Project shall be bonded or covered by dishonesty insurance
in the minimum amount of $100,000 per employee.  At the beginning of
each year and as new persons shall be designated authorized signatories, Manager
shall provide Owner with evidence of such bonding.  Any expenses
relating to such bond for on-site employees and for off-site employees shall be
borne by Manager. Owner’s designated agents shall be added as authorized
signatories at Owner’s request.

    

    

    
      SECTION
5: ACCOUNTING

    

     

    5.01
BOOKS AND RECORDS

    Manager,
on behalf of Owner, shall keep all books and accounts pertaining to the Project
on an accrual
basis.  Manager, on behalf of Owner, shall also supervise

    
      
         

      

      
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and
direct the keeping of a comprehensive system of office records, books and
accounts pertaining to the Project.  Such records shall be subject to
examination at the office where they are maintained by Owner or its authorized
agents, attorneys and accountant at all reasonable business hours and upon
reasonable, advance notice to Manager.

    

    5.02
PERIODIC STATEMENTS

    (a)  On
or before fifteen (15) days following the end of each calendar month, Manager
shall deliver or cause to be delivered to Owner its standard financial
reports customarily provided the owners of properties it manages, a list of
which is set forth on Exhibit
B.  The reports are subject to change from time to time by
Owner or Manager provided Manager shall not substantively decrease the quality
of the information provided.

    

    (b)  Within
thirty (30) days after the end of such Fiscal Year, Manager will deliver to the
Owner, an income and expense statement as of Fiscal Year end, and the results of
operation of the Project during the preceding Fiscal Year (anything contained
herein to the contrary notwithstanding, however, Manager shall be responsible
for coordinating the preparation of Owner's state and federal income tax
returns).

    

    (c)      Manager
shall also prepare and provide to Bell BR Meadowmont JV, LLC such such reports
and information as required by Bell BR Meadowmont JV, LLC to prepare the reports
and tax returns required under Section 8 of its Limited Liability Company
Agreement.

    

    (d)  In
the event that Owner or Owner's Mortgagee(s) requires an audit, the Manager
shall cooperate with the auditors in a timely manner to complete the audit
engagement. Also, Manager shall cooperate in a reasonable manner at the request
of any indirect owner of Owner and shall work in good faith with its designated
representatives, accountants or auditors to enable compliance with its public
reporting, attestation, certification and other requirements under applicable
securities laws and regulations, including for testing internal controls and
procedures.

    

    (e)  Owner
may request and Manager shall provide when available such monthly, quarterly
and/or annual leasing and management reports that relate to the operations of
the project as Manager customarily provides the owners of properties it
manages.

    

    5.03
EXPENSES

    All costs
and expenses incurred in connection with the preparation of any statements,
budgets, schedules, computations and other reports required under this Section
5, or under any other provisions of this agreement, shall be borne by the
Manager.  Any costs and expenses incurred in connection with the
preparation of any statement or report not a part of the Manager’s standard
reporting package, a list of which is set forth on Exhibit
B, shall be borne by Owner.

    

    SECTION
6: GENERAL COVENANTS OF OWNER AND MANAGER

    

    6.01
OPERATING EXPENSES

    The Owner
shall be solely liable for, and shall pay, all costs and expenses of managing
and operating the Project that have been incurred by Owner or by Manager in
accordance with the provisions of this Agreement, and shall pay, or Manager
shall 

    
      
         

      

      
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pay
on Owner's behalf, all such costs and expenses, including, without limitation,
the salaries of all Project employees, provided however, Owner shall have no
direct obligations to Project Employees for salaries or fringe benefits, as all
Project Employees are employed solely by Manager and not by Owner. Owner
covenants to advance to Manager such sums that are in excess of Gross Receipts
required to operate the Project, upon written notice and demand from Manager
within fifteen (15) days after receipt of written notice. Nothing in this
Agreement shall require Manager to advance funds on Owner’s behalf, however if
funds are advanced by Manager in the operation, or management of the property,
these funds will be reimbursed by the Owner within thirty (30) days of
submitting itemized invoices to the Owner.  Owner further recognizes
that the Project may be operated in conjunction with other projects and that
costs may be allocated or shared between such projects on a more efficient and
less expensive method of operation.  In such regard, Owner consents to
the allocation of costs and/or the sharing of any expenses in an effort to save
costs and operate the Project in a more efficient manner to be allocated in a
manner not prejudicial to Owner, so long as all allocations are clearly
indicated and approved in the Budget.

     
 

    6.02
OWNER'S RIGHT OF INSPECTION AND REVIEW

    Owner and
Owner's accountants, attorneys and agents have the right to enter upon any part
of the Project at any reasonable time during the Term of this Agreement for the
purpose of examining or inspecting the Project or examining or making copies of
books and records of the Project. Any inspection shall be done with as little
disruption to the business of the Project as possible.  Books and
records of the Project shall be kept, as of the commencement date, at the
Project or at the location where any central accounting and bookkeeping services
are performed by Manager but at all times shall be the property of
Owner.

    

    6.03
INDEMNIFICATION AND HOLD HARMLESS BY OWNER

    Except
for the gross negligence or willful misconduct of Manager (including Project
Employees) in connection with its performance under this Agreement, Owner shall
be obligated, whether named as a defendant or not, to indemnify, hold harmless,
and defend Manager (and Manager's partners, directors, shareholders, officers,
employees, and agents), with counsel reasonably satisfactory to Manager, from
and against any and all liabilities, claims, causes of action, suits, losses,
demands and expenses whatsoever including, but not limited to reasonable legal
fees and expenses arising out of or in the connection with the ownership,
maintenance or operation of the Property or this Agreement or the performance of
Manager's agreements hereunder (collectively "Claims"),
including but not limited to, Claims involving the operation and maintenance of
the security alarm system located at the property, matters in which Manager is
acting under the express or implied directions of Owner,  and/or the
loss of use of property following and resulting from damage or
destruction.  In all cases, Owner's Liability Insurance, as defined in
Section 8.02 below, will be required to provide insurance coverage for Manager,
to the extent provided in such Section 8.02.  The indemnification by
Owner contained in this Section 6.03 is in addition to any other indemnification
obligations of Owner contained in this Agreement, and is not limited by or to
Owner's LiabilityInsurance. It is the intent of the parties hereto, however, to
look first to Owner’s Liability Insurance with respect to all Claims
hereunder.

    

    6.04
INDEMNIFICATION BY MANAGER

     

     

    
      
         

      

      
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    Manager
shall indemnify Owner from and against all Claims for bodily injury and property
damage which (i) arise out of or are a result of the gross negligence or willful
misconduct of Manager except where attributable to actions or policies approved
or required by Owner and (ii) result in liability to Owner, including but not
limited to, liability to Owner as a result of a final adjudication or judgment
on the merits by a court or arbitration proceeding and liability to Owner as a
result of a good faith settlement by Owner of such Claims.  Manager
shall have no obligation to furnish Owner with a defense or with counsel to
defend any Claims which may be asserted or made against Owner, regardless of the
nature of the allegations.  If, however, any such Claims result in
liability to Owner, Manager shall reimburse Owner for any attorneys' fees and
costs actually and reasonably incurred by Owner to defend the portion or
portions of such Claims against Owner which arise out of or are a result of the
gross negligence or willful misconduct of Manager (except actions or policies
approved or required by Owner).

    

    6.05
SURVIVAL OF INDEMNITY OBLIGATIONS

    The
indemnification and hold harmless obligations of the parties in the Sections
6.03 and 6.04 shall survive the expiration or earlier termination of this
Agreement.

    

    SECTION
7: DEFAULTS AND TERMINATION RIGHTS

    

    7.01
DEFAULT BY MANAGER

    Manager
shall be deemed to be in default hereunder in the event Manager shall fail to
keep, observe or perform any material covenant, agreement, term or provision of
this Agreement to be kept, observed or performed by Manager, and such default
shall (i) result from Manager's grossly negligent acts or omissions or willful
misconduct; (ii) involve Manager's misappropriation or intentional
misapplication of funds received or held by Manager hereunder; or (iii) continue
for a period of ten (10) days after written notice thereof by Owner to Manager
as to any default in payment of money or thirty (30) days after notice thereof
by Owner to Manager as to any non-monetary default, or, if such non-monetary
default cannot be cured within thirty (30) days, then such additional period as
shall be reasonable provided that Manager is capable of curing same and has
continuously attempted to cure such default.

    

    7.02
REMEDIES OF OWNER

    Upon the
occurrence of an event of default by Manager as specified in Section 7.01
hereof, Owner shall have the right to pursue any remedy it may have at law or in
equity (provided that in no event shall Manager ever be liable to Owner for, and
Owner hereby waives all rights to receive, punitive, consequential or exemplary
damages), it being expressly understood that although Owner has no further
obligation to pay any fee due hereunder, Manager shall remain liable for any
losses suffered as a result of Manager's default and the resulting termination
of this Agreement.  Upon such termination, Manager shall deliver to
Owner any funds, books and records of Owner then in the possession or control of
Manager and all accounts established by Manager for security
deposits.

    

    7.03
DEFAULTS BY OWNER

    Owner
shall be deemed to be in default hereunder in the event Owner shall fail to
keep, observe or perform any material covenant, agreement, term or provision of
this Agreement to be kept, observed or performed by Owner, and such default
shall continue for a period of, in the case of any default which can be cured by
the 

    
      
         

      

      
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payment
of a liquidated sum of money, ten (10) days and, in the case of all other
defaults, thirty (30) days after notice thereof by Manager to Owner but, if such
non-monetary default cannot be cured within thirty (30) days, then such
additional period as shall be reasonable provided that Owner is capable of
curing same and has continuously attempted to cure such default.

    

    7.04
REMEDIES OF MANAGER

    Upon the
occurrence of an event of default by Owner as specified in Section 7.03 hereof,
Manager shall be entitled to terminate this Agreement, and upon any such
termination by Manager pursuant to this Section 7.04, Manager shall have the
right to pursue any remedy it may have at law or in equity (provided that in no
event shall Owner ever be liable to Manager for, and Manager hereby waives all
rights to receive, punitive, consequential or exemplary damages), except that
Owner shall pay Manager a termination fee for the month in which this Agreement
is terminated equal to the Management Fee paid for the last full calendar month
preceding the month in which the Agreement was terminated.

    

    7.05
EXPIRATION OF TERM

    Upon the
expiration of the Term hereof pursuant to Section 1.01 hereof, unless sooner
terminated pursuant to the terms of this Agreement, Manager shall deliver to
Owner all funds, including tenant security deposits, books and records of Owner
then in possession or control of Manager, save and except such sums as are then
due and owing to Manager hereunder. In addition, Within sixty (60) days
following expiration or termination, Manager shall deliver to Owner a final
accounting, in writing, with respect to the operations of the Project, which
obligation shall survive termination.

    

    7.06
TERMINATION WITHOUT CAUSE

    This
Agreement shall be terminable by either party without cause upon thirty (30)
days prior written notice to the other.

    

    7.07
EFFECT OF TERMINATION

    Upon
termination of this Agreement for any reason, neither the Owner, nor the Manager
have any further rights or obligations under this Agreement other than
obligations accrued prior to the termination or by the express terms surviving
this Agreement.

    

    SECTION
8: INSURANCE AND INDEMNIFICATION

    

    8.01
PROPERTY INSURANCE

    Manager
shall obtain and cause to be kept in force, all at Owner’s expense, property
damage insurance in the amount of the full replacement cost of the Project, and
such other property insurance as Owner may elect, at Owner's expense. Owner
shall furnish to Manager appropriate endorsement and certificate of
insurance.

    

    8.02
OWNER'S LIABILITY INSURANCE

    During
the term of this Agreement and all renewals thereof, Manager
shall  obtain and cause to be kept in force, all at Owner’s expense,
primary commercial general liability insurance and blanket contractual liability
insurance on an "occurrence" basis, naming Manager as an additional insured
(through endorsements in form and substance satisfactory to Manager), with
limits of not less than three Million Dollars 

    
      
         

      

      
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($3,000,000.00)
per occurrence (the "Owner's Liability Insurance").  The Owner's
Liability Insurance shall include coverage for losses arising from the
ownership, management, and operation of the Property.

    

    Owner
shall provide to Manager a Certificate of Insurance evidencing such coverage
from an insurance carrier with an A.M. Best Rating of A VIII or higher
reflecting that the Owner's Liability Insurance is effective in accordance with
this section and that the Owner's Liability Insurance will not be canceled
without at least thirty (30) days prior written notice to Manager.

    

    8.03
MANAGER'S LIABILITY INSURANCE

    During
the term of this Agreement and all renewals thereof, Manager, at Manager's
expense, shall carry and maintain commercial general liability insurance in the
amount of $1 million per occurrence and $2 million in the aggregate for the
benefit of Manager (the "Manager's Liability Insurance").

    

    8.04
OWNER'S LIABILITY INSURANCE SHALL BE PRIMARY

    In
connection with claims by third parties, as between Owner's Liability Insurance
and Manager's Liability Insurance, Owner's Liability Insurance shall for all
purposes be deemed the primary coverage. No claim shall be made by Owner or its
insurance company under or with respect to any insurance maintained by Manager
except in the event such claim is caused solely by gross negligence (except
actions or policies specifically approved or required by Owner) or willful
misconduct (except actions or policies specifically approved or required by
Owner) on the part of Manager or Manager's employees.

    

    8.05
RENTER’S INSURANCE

    If at the
direction of the Owner, a renter’s insurance program is put into place by the
Manager at the Property inclusive of a limited liability, or limited liability
and personal contents coverage policy, any such policy held by the resident
shall not remove, replace, reduce, or in any way modify the parties’
indemnification obligations herein or the requirements of Owner or Manager to
provide insurance and indemnification in accordance with Section 8. The Manager
assumes no responsibility, liability or reduction in payment of its Management
Fee for property loss or denial of claims based on the status of a resident’s
renter insurance policy whether otherwise amended, changed, or
lapsed.

    

    8.06
WAIVER OF SUBROGATION

    Each
insurance policy maintained by Owner or by Manager with respect to the Property
shall contain a waiver of subrogation clause, so that no insurers shall have any
claim over or against Owner or Manager, as the case may be, by way of
subrogation or otherwise, with respect to any claims that are insured under such
policy.  All insurance relating to the Property shall be only for the
benefit of the party securing said insurance and all others named as
insureds.  Notwithstanding any contrary provision of this
Agreement, Owner
and Manager hereby release each other from and waive all rights of recovery and
claims under or through subrogation or otherwise for any and all losses and
damages to property to the extent caused by a peril insured or insurable under
the policies of insurance required to be maintained under this Agreement by the
waiving party and agree that no insurer shall have a right to recover any
amounts paid with respect to any claim against Owner or Manager by subrogation,
assignment or otherwise.

    

    
      
         

      

      
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    8.07
HANDLING CLAIMS

    Manager
shall report within a reasonable amount of time to Owner all accidents and
claims of which it is aware for damage and injury relating to the ownership,
operation, and maintenance of the Property and any damage or destruction to the
Property coming to the attention of Manager and will assist Owner in Owner's
attempts to comply with all reporting and cooperation provisions in all
applicable policies.  Manager is authorized to settle on Owner's
behalf any and all claims against property insurers not in excess of $1,500,
which includes authority for the execution of proof of loss, the adjustment of
losses, signing of receipts, and the collection of money.  If the
claim is greater than $1,500, Manager shall act only with the prior written
approval of Owner.

    

    8.08 AUTOMOBILE INSURANCE.

    Manager,
at its expense which is not reimbursable, shall carry and maintain business auto
liability insurance covering owned, non-owned and hired vehicles with a limit of
not less than $1,000,000 per accident.

    

    8.09
WORKERS' COMPENSATION INSURANCE

    Manager
shall cause to be placed and kept in force workers' compensation insurance in
compliance with all applicable federal, state, and local laws and regulations
covering all employees of Manager and employer liability insurance with a limit
of at least $12 million and Manager shall furnish Owner certificates of
same.  Owner shall reimburse Manager for its expense on the basis of
Manager's current workers' compensation rates, the payroll of the Project, and
Manager's current premium discounts.  This will include any increase
to expense derived from subsequent audits. In the event subsequent audits result
in an increase in Manager's Workers' Compensation costs, then Owner shall
reimburse Manager for the increased amount.

    

    8.10
DISHONESTY INSURANCE

    Manager,
at its expense which is not reimbursable, shall furnish employee dishonesty
insurance with limits of at least $1,000,000 per loss and in an amount
sufficient to cover all employees (whether on-site or off-site) employed by
Manager who shall be responsible for handling any moneys belonging to Owner that
come under custody or control of Manager.

    

    8.11
ENVIRONMENTAL INDEMNIFICATION

    Owner
agrees to defend, indemnify, and hold harmless Manager and Manager's partners,
directors, shareholders, officers, and agents, against and from any and all
actions, administrative proceedings, causes of action, charges, claims,
commissions, costs, damages, decrees, demands, duties, expenses, fees, fines,
judgments, liabilities, losses, obligations, orders, penalties, recourses,
remedies, responsibilities, rights, suits, and undertakings of every nature and
kind whatsoever, including, but not limited to, attorneys' fees and litigation
expenses, from the presence of Hazardous Substances (as defined below) on, under
or about the Project.  Without limiting the generality of the
foregoing, the indemnification provided by this paragraph shall specifically
cover costs incurred in connection with any investigation of site conditions or
any remediation, removal or restoration work required by any federal, state or
local governmental agency because of the presence of Hazardous Substances in,
on, under or about the Property, except to the extent that the Hazardous
Substances are present as a result of gross negligence, criminal activity, or
any 

    
      
         

      

      
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willful
misconduct of Manager or its employees.  For purposes of this section,
"Hazardous Substances" shall mean all substances defined as hazardous materials,
hazardous wastes, hazardous substances, or extremely hazardous waste under any
federal, state or local law or regulation.

    

    8.12
SECURED PARTY REQUIREMENTS; COOPERATION.

    Notwithstanding
the foregoing, Manager shall consult and cooperate with Owner and Secured Party
and make specific recommendations to Owner to obtain such different or
additional insurance coverages for the Project so that it will comply in all
minimum respects with the insurance coverages required under the Security
Documents. In addition, Manager shall furnish whatever information is requested
by Owner for the purpose of establishing the placement of the insurance
coverages and shall aid and cooperate in every reasonable way with respect to
such insurance and any loss thereunder.

    

    SECTION
9: MISCELLANEOUS PROVISIONS

    

    9.01
GOVERNING LAW

    This
Agreement shall be governed by and construed and interpreted in accordance with
the laws of the State of North Carolina.  Manager represents that it
has qualified to do business in the State of North Carolina in connection with
all actions based on or arising out of this Agreement.

    

    9.02
NOTICES

    All
notices, demands, requests or other communications required or permitted to be
given hereunder must be sent by (i) personal delivery, (ii) FedEx or a similar
nationally recognized overnight courier service, or (iii) certified mail, return
receipt requested. Any such notice, request, demand, tender or other
communication shall be deemed to have been duly given: (a) if served in person,
when served; (b) if by overnight courier, on the first Business Day after
delivery to the courier; or (c) if by certified mail, return receipt requested,
upon receipt. Rejection or other refusal to accept, or inability to deliver
because of changed address or facsimile number of which no notice was given,
shall be deemed to be receipt of such notice, request, demand, tender or other
communication.  Any party hereto may at any time by giving ten (10)
days written notice to the other party hereto designate any other address in
substitution of the foregoing address to which such notice or communication
shall be given.

    

    OWNER:                    Bell
BR Meadowmont, LLC

    C/O Bell
Partners Inc

    Attn:
Jonathan D. Bell

    300 N.
Greene Street, Suite 1000

    Greensboro,
NC 27401

    

    COPY TO:

    C/o
Bluerock Real Estate, L.L.C.

    680 Fifth
Avenue

    New York,
New York 10019

    Attention:  R.
Ramin Kamfar and Michael Konig, Esq.

    

    MANAGER:             Chief
Operating Officer

     

    
      
         

      

      
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    Bell Partners Inc.

    300 N. Greene Street, Suite
1000

    Greensboro,
NC  27401

    

    9.03
SEVERABILITY

    If any
term, covenant or condition of this Agreement or the application thereof to any
person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Agreement or such other documents,
or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Agreement or such other documents shall be valid and shall be enforced to the
fullest extent permitted by law.

     

    9.04 NO
JOINT VENTURE OR PARTNERSHIP

    Owner
and Manager hereby agree that nothing contained herein or in any document
executed in connection herewith shall be construed as making Manager and Owner
joint venturers or partners.  In no event shall Manager have any
obligation or liability whatsoever with respect to any debts, obligations or
liabilities of Owner or vice versa, except as set forth herein or as set forth
in any separate agreement signed by Manager.

     

    9.05
MODIFICATION TERMINATION

    This
Agreement terminates any and all
prior management agreements between Owner and Manager relating to the Project,
and any amendment, modification, termination or release hereof may be effected
only by a written document executed by Manager and Owner.

    

    9.06
ATTORNEYS' FEES

    Should
either party be required to employ an attorney or attorneys to enforce any of
the provisions hereof or to protect its interest in any manner arising under
this Agreement, or to recover damages for the breach of this Agreement, the
non-prevailing party in any actions (the finality of which is not legally
contested) agrees to pay to the prevailing party all reasonable costs, damages
and expenses, including attorneys' fees expended or incurred in connection
therewith.  Each party is responsible for its own appellate fees and
costs, if any.

    

    9.07
TOTAL AGREEMENT

    This
Agreement is a total and complete integration of any and all undertakings
existing between Manager and Owner and supersedes any prior oral or written
agreements, promises or representations between them regarding the subject
matter hereof.

    

    9.08
APPROVALS AND CONSENTS

    If any
provision hereof requires the approval or consent of Owner or Manager to any act
or omission, such approval or consent shall not be unreasonably withheld or
delayed.

    

    9.09
CASUALTY

    In the
event that the Project, or any portion thereof, is substantially or totally

    
      
         

      

      
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damaged
or destroyed by fire, tornado, windstorm, flood or other casualty during the
term of this Agreement, Manager or Owner may terminate this Agreement upon
giving the other party written notice of termination on or before the date which
is thirty (30) days after the date of such casualty.  In the event of
termination pursuant to this Section 9.09, neither party hereto shall have any
further liability hereunder.

    

    9.10
SPECIAL AGREEMENTS

    Notwithstanding
Manager’s review of and recommendations in respect to capital repairs and
replacements for the Property, Owner acknowledges that Manager is not an
architect or engineer, and that all capital repairs, replacements and other
construction in the Property will be designed and performed by independent
architects, engineers and contractors.  Accordingly, Manager does not
guarantee or warrant that the construction documents for such work will comply
with Applicable Law or will be free from errors or omissions, nor that any such
work will be free from defects, and Manager will have no liability
therefor.  In the event of such errors, omissions, or defects, Manager
will use reasonable efforts to cooperate in any action Owner desires to bring
against such parties.  Notwithstanding any contrary provision hereof,
Owner agrees that no partner, agent, director, member, officer, shareholder, or
affiliate of Manager shall be personally liable to Owner or anyone claiming by,
through or under Owner, by reason of any default by Manager under this
Agreement, any obligation of Manager to Owner, or for any amount that may become
due to Owner by Manager under the terms of this Agreement
otherwise.

    

    9.11
COMPETITIVE PROJECTS

    Manager
may, individually or with others, provide management services in regard to and
possess an interest in any other projects and ventures of every nature and
description, including, but not limited to, the ownership, financing, leasing,
operation, management, brokerage, development and sale of real property and
apartment projects other than the Project, whether or not such other ventures or
projects are competitive with the Project, and Owner shall not have any right to
the income or profits derived therefrom.

    

    9.12 SUCCESSORS AND
ASSIGNS

    Owner has
entered into this Agreement with Manager based on Manager's abilities and,
accordingly, Manager may not assign this Agreement without the prior written
consent of Owner.  Subject to this limitation on assignment, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their permitted successors and assigns.  Either Manager or
Owner may assign this Agreement upon obtaining the other party's prior written
consent, provided that no consent shall be required for assignment to Owner's
Mortgagee(s).

    

    9.13 WAIVER OF JURY
TRIAL.

    Owner and
Manager hereby knowingly, voluntarily and intentionally, to the extent permitted
by law, waive the right to a trial by jury in respect of any litigation based
on, arising out of, under or in connection with this Agreement or any documents
contemplated to be executed in connection herewith or any course of conduct,
course of dealings, statements (whether oral or written) or actions of either
party arising out of or related in any manner to the property (including,
without limitation, any action  to rescind or cancel this Agreement or
any claims or defenses asserting that this Agreement was fraudulently induced or
is otherwise void or voidable). This waiver is a material inducement for the
Owner to enter into and accept this Agreement. Owner 

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

and
Manager agree that should issues arise that would have required litigation; they
mutually agree to resolve them via arbitration.

    

    

    Signatures
on following page

     

    
 

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    SECTION
11: SIGNATURES

    

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

    

    MANAGER:
Bell Partners Inc., a North Carolina corporation

    

    By:
__________________________

    Name:
________________________

    Title:
_________________________

    

    

    

    OWNER:  Bell
BR Meadowmont, LLC, a
Delaware limited liability company

    

    By:         Bell BR
Meadowmont JV, LLC

    a Delaware limited liability
company,

    its Sole Member

    

    By:         Bell
Partners Inc.

    a North Carolina
corporation,

    its Co-Manager

    

    By:           ________________________

    Name:      ________________________

    Title:        ________________________

    

    By:          BR
Meadowmont Managing Member, LLC,

    a
Delaware limited liability company,

    its Co-Manager

    

    By:           ________________________

    Name:         Jordan
Ruddy

    Title:           President

     

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

     

    

    EXHIBIT
A

    

    2010
Budget

    

     

    

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    EXHIBIT
B

    MONTHLY
REPORTS

    
      	
              1.  

            	
              Balance
      Sheet, including monthly comparison
–

            

    

    
      	
              2.  

            	
              Budget
      Comparison1, including month-to-date and
      year-to-date variances -Detailed Income Statement, including prior 12
      months

            

    

    
      	
              3.  

            	
              General
      Ledger, with description and balance
detail

            

    

    
      	
              4.  

            	
              Payables
      Summary

            

    

    
      	
              5.  

            	
              Market
      Survey, including property comparison, trends, and
    concessions

            

    

    
      	
              6.  

            	
              Rent
      Roll

            

    

    
      	
              7.  

            	
              Variance
      Report, including the following:

            

    

    -Cap Ex
Summary and Commentary

    -Monthly
Income/Expense Variance with notes

    -Yearly
Income/Expense Variance with notes

    -Occupancy
Commentary

    -Market/Competition
Commentary

    -Rent
Movement/Concessions Commentary

    -Crime
Commentary

    -Staffing
Commentary

    -Operating
Summary, with leasing and traffic reporting -Other reasonable reporting, as
requested (eg. Renovation/Rehab report)

    

    

     

      
        

      

    

      
      1 Budget Comparison shall include (i) an
unaudited income and expense statement showing the results of operation of the
Project for the preceding calendar month and the Fiscal Year to-date; (ii) a
comparison of monthly line item actual income and expenses with the monthly line
item income and expenses projected in the Budget.  The balance sheet
will show the cash balances for reserves and operating accounts as of the
cut-off date for such month.

       

       

      22

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