Form of Property Management Agreement

Appointment of Manager.  Owner appoints Manager to be the sole and exclusive property manager for the Property upon the terms and conditions set forth in this Agreement. Manager accepts such appointment on the terms and conditions set forth herein.

Independent Contractor Status.  Manager is not the general agent of Owner, but, is instead engaged in the business of managing properties as an independent contractor, and in that capacity, is serving as the property manager for the Property. No provision hereof shall be construed to constitute Manager or any of its officers or employees as an employee or employees of Owner, nor shall any provision of this Agreement be construed as creating a partnership or joint venture between Manager and Owner. Neither Owner nor Manager shall have the power to bind the other party except pursuant to the terms of this Agreement. This Agreement is not intended to provide or create any agency relationship between Owner and Manager, and Manager shall have no right or authority, express or implied, to commit or otherwise obligate Owner in any manner whatsoever, except as expressly provided herein, and Manager agrees that it shall not hold itself out as having authority to act on behalf of Owner in any manner, except as expressly provided herein. Notwithstanding the foregoing, but subject to Section 5.05 below, Manager shall not be liable for any monetary obligation or expenditure incurred on behalf of the Property or Owner within the scope of Manager’s authority pursuant to this Agreement.

Restrictions on Manager’s Authority.  

Term of Agreement.  This Agreement shall commence upon the Effective Date and shall continue until the last day of the calendar month following the two-year anniversary of the Effective Date, unless sooner terminated pursuant to the terms of this Agreement. Upon expiration of the original term, this Agreement will automatically renew on a month-to-month basis until terminated as provided in Article 7.

General Scope.  Subject to the provisions of this Agreement and at the direction of Owner, Manager shall manage, coordinate, and supervise the ordinary and usual business and affairs pertaining to the operation, maintenance, repair, leasing, licensing, and management of the Property in a diligent and professional manner in accordance with recognized standards of the property management industry and consistent with those customarily performed by professional property managers of properties of similar size, type and quality in the market where the Property is located and taking into account the type of tenants at the Property and, in all cases, subject to and in accordance with: (a) the budgets, policies and limitations imposed by Owner; and (b) applicable law and rulings and orders of governmental authorities having jurisdiction over the Property (the “Performance Standard”). Unless otherwise specifically provided in this Agreement, all services and actions that Manager is required or permitted to perform or take, or cause to be performed or taken, under this Agreement in connection with management of the Property shall be performed or taken, as the case may be, on behalf of Owner and, except as specifically otherwise provided for herein, at Owner’s sole cost, expense, and risk.

Proposed Management Plans.  Owner hereby approves the management plan and operating budget for the promotion, operation, and repair and maintenance of the Property for Owner’s current calendar year and the student occupancy year attached hereto as Schedule C as the initial Approved Management Plan and initial Approved Operating Budget (each as hereinafter defined). Subsequent proposed management plans and operating budgets for the immediately succeeding calendar year and the student occupancy year shall be submitted to Owner at least sixty (60) days prior to the beginning of the next student occupancy year. Each proposed management plan and operating budget shall include: (i) the proposed leasing parameters for the Property for the ensuing calendar year and the student occupancy year as well as a copy of the standard form of the lease to be used at the Property; and (ii) an amount to be added to, or expended from, separate Reserves (as defined in the LLC Agreement) for (A) payment of real estate taxes, (B) insurance, (C) capital improvements, and (D) other Reserves (including those required pursuant to the terms of any Financing Documents (as defined in the LLC Agreement)), in an amount with respect to each such Reserve equal to the greater of: (1) the amount required to be added to such Reserve during such year by any Lender (as defined in the LLC Agreement), and (2) the amount that Owner approves under the circumstances.  In addition, no such proposal shall be inconsistent with the Approved Budget and Business Plan (as defined in the LLC Agreement) that was approved by Ares pursuant to [Section 6.2] of the LLC Agreement. Within thirty (30) days after a proposed management plan and operating budget is submitted to Owner, Owner shall notify Manager in writing: (y) that it approves the proposed management plan and operating budget; or (z) of the revisions Owner believes should be made to such proposed management plan and operating budget for such fiscal year. Manager shall revise the proposed management plan and operating budget to reflect all revisions proposed by Owner. If Owner fails to respond within such thirty (30) day period, Owner shall be deemed to NOT have approved the proposed management plan and operating budget. The proposed management plan and operating budget once revised by Manager (if applicable) and approved by Owner shall be referred to herein as the “Approved Management Plan” and the “Approved Operating Budget.” If the proposed management plan and operating budget for any calendar year and student occupancy year shall not be approved by Owner, Manager shall operate the Property

Approved Marketing Plan.  Manager shall establish leasing plans, rental rates and implement marketing strategies, in each case, with the prior approval of Owner. Manager shall supervise the preparation of all advertising layouts, brochures, campaigns, and, to the extent applicable, model student living units, and submit campaign concepts and advertising templates to Owner for its prior approval. Advertising and promotional materials shall be prepared in full compliance with federal, state, and municipal fair housing laws.

Leasing.  Manager shall exercise efforts in accordance with the Performance Standard to obtain and keep residents who are students at the [___________________] or other colleges or universities in the vicinity of the Property (“Resident”, “Student”, and “Tenant” used interchangeably throughout) and other qualified residents. Manager shall, using efforts in accordance with the Performance Standard, ensure that the tenants receive the services required to be provided by Owner under their leases, to duly and punctually observe and perform on behalf of Owner all of Owner’s obligations under the leases, and to enforce, preserve and keep unimpaired the rights of Owner and the obligations of the tenants under the leases. Manager is authorized, subject to and in accordance with the Approved Operating Budget and Approved Management Plan, to negotiate, prepare, and execute all residential leases on a substantially similar form of residential lease as approved by Owner, as agent for Owner; provided, however, without the consent of Owner, Manager: (i) except in accordance with the Approved Operating Budget and Approved Management Plan, if applicable, shall not modify, or in any way alter the provisions of any lease in a manner which would reduce the rent thereunder below the applicable rental rate tier set forth in the leasing parameters in the then Approved Operating Budget and Approved Management Plan, shorten the term thereof, impose additional obligations on the landlord thereunder, alter any material, financial or economic term of the lease or reduce the obligations of the tenant thereunder; (ii) shall not consent to any subletting of any part of the Property, to any assignment of any lease by any tenant thereunder, or to any assignment or further subletting of any sublease; and (iii) shall not permit any person to occupy any space in the Property without: (y) a written lease approved by Owner or entered into in accordance with the Approved Operating Budget and Approved Management Plan; and (z) Manager’s receipt on behalf of Owner of any security deposit required under the terms of such lease, a current certificate of insurance (if applicable), and payment of rent required thereunder to be paid prior to the tenant’s taking occupancy.

Security Deposits.  Manager shall collect and refund security deposits in accordance with the terms of each lease and as may be required by applicable law. If required by statute, Manager will deposit security deposits into a separate interest-bearing account at CIBC or at such other bank as Manager shall propose and Owner shall approve and pay tenants the interest earned on such deposit; otherwise, Manager will deposit security deposits into the Operating Account (as hereinafter defined). To the extent permitted by a tenant’s lease and applicable law, when Manager deems reasonably appropriate, Manager may offset tenant charges with forfeited security deposit amounts and disburse any surplus security deposits from the Operating Account.

Collection of Rents and Enforcement of Leases.  Manager shall exercise efforts in accordance with the Performance Standard to promptly collect all rents and other charges for services provided in connection with the use of the Property. When reasonably necessary, but in all events subject to the approval rights of Owner in Section 3.04 above, Manager is authorized to institute the following actions, acting in accordance with the Performance Standard: (a) sign and serve such notices to residential tenants as are deemed necessary or reasonably appropriate by Manager to ensure a residential tenant’s performance of its obligations under its lease; (b) institute and prosecute actions and evict tenants of residential leases; (c) recover rents and other sums due by legal proceedings; and (d) execute agreements or official documents in the name of Owner to settle, compromise, and release such actions or suits, or re-institute such tenancies; provided, however, Manager shall not commence, defend or settle any actions or proceedings involving in excess of $50,000 without Owner’s prior written consent. Attorney’s fees, filing fees, court costs, and other necessary expenses incurred in connection with such actions and not recovered from residents shall be paid out of the Operating Account to the extent set forth in the Approved Operating Budget. Manager may select the attorney of its choice to handle such actions,

Approved Operating Expenditures.  Notwithstanding anything to the contrary contained herein, Manager shall not, without the prior written approval of Owner, make any expenditure, whether from the Operating Account or otherwise, or incur any obligation on behalf of Owner, except for: (i) expenditures or obligations approved by Owner; (ii) expenditures made and obligations incurred directly pursuant to the then-current Approved Operating Budget (as the same may be adjusted by the Permitted Variance (as defined below)); and (iii) expenditures that are immediately necessary in the reasonable judgment of Manager to avoid any imminent or existing danger, or threat of imminent danger, of material injury to person or material harm to property (including the Property) and such immediacy makes it impracticable to obtain prior Approval from Owner (“Emergency Expenditures”). Manager will promptly notify Owner, but in no event later than twenty-four (24) hours from the time Manager learns of such emergency, of any such emergency or Emergency Expenditure. Except for Emergency Expenditures, Manager shall ensure that the actual costs of maintaining and operating the Property do not exceed the Approved Operating Budget and any year-to-date budget variances will be explained to Owner each month as part of the monthly reports set forth on Schedule D. “Permitted Variance” means, with respect to any line item in any Approved Operating Budget, an increase not to exceed the lesser of: (a) three percent (3%) of the amount shown in such line item (unless such variance in excess of 3% is equal to or less than $1,000, in which case approval shall not be required); and (b) $10,000 of the amount shown in such line item, and such increase, when aggregated with all prior and any then-anticipated increases in such year, does not exceed $50,000 of the total expenses set forth in the Approved Operating Budget.

Approved Capital Expenditures.  Notwithstanding anything to the contrary contained herein, any capital expenditure over $15,000 shall be awarded on the basis of competitive bidding, solicited in the following manner: (a) a minimum of two (2) written bids shall be obtained for each purchase where possible and practical to obtain such bids; (b) each bid will be solicited in a form so that uniformity will exist in the bid quotes; (c) Manager shall provide Owner with all bid responses accompanied by manager’s recommendations as to the most acceptable bid; and (d) Owner shall be free to accept or reject any and all bids. Owner shall communicate to Manager its acceptance or rejection of bids in writing. Owner shall be responsible for capital expenses and may pay same from its own resources or may authorize payment by Manager out of available funds in the Operating Account.

Start-Up Expenditures. It is understood and agreed that certain initial start-up expenses and costs will be incurred to evaluate the Property and its submarket; to recruit, interview, hire and train staff; to create and print brochures and marketing materials; and to equip and furnish the leasing office and other areas of the Property. Provided that the foregoing is expressly contemplated by the Approved Operating Budget, Manager may incur such reasonable start-up expenses and costs on behalf of the Property.

Intentionally Omitted.

Public Utility and Service Contracts.  Manager shall negotiate and, with Owner’s prior approval, execute, in its capacity as Owner’s agent, contracts for water, electricity, gas, telephone, trash removal, vermin or pest extermination, and any other services which are necessary to properly maintain the Property as contemplated by the Approved Management Plan and Approved Operating Budget. All required utility deposits or surety bonds will be the responsibility of the Owner and each such contract shall be in the name and expense of, and executed by, the Owner. Without the consent of Owner or as otherwise permitted in this Section 3.11, Manager: (a) other than as expressly provided in this Section 3.11, shall not enter into any contract or modify, in any material respect, the provisions of any contract; and (b) shall not take any action, or omit to take any action or give any notice, the taking, omission or giving of which would (where the following would have an adverse effect on Owner and/or the Property): (x) result in the reduction, release or discharge of any other party to any contract from its obligations thereunder; (y) consent to any other party to any contract to assign or otherwise transfer its rights or obligations thereunder; or (z) result in an expenditure in excess of the budgeted amount therefor. Manager will observe, enforce, and inspect the performance under all contracts and agreements affecting the Property, including without limitation, the inspection and observation of all servicing, cleaning, decorating or routine maintenance work at the Property during the progress thereof and will approve or disapprove (as appropriate) all bills submitted for payment therefor. In connection with the foregoing, Manager shall obtain all necessary receipts, releases, waivers, discharges and assurances and shall use efforts in accordance with the Performance Standard to keep the Property free from mechanics’ and materialmen’s liens and other claims, all of which documentation shall be in such format as is required by Owner.  Manager may not contract with any Affiliate of Manager for the performance of services

Manager’s On-Site Employees.  As the employer of all Property personnel, Manager has responsibility to and shall comply with all applicable labor and employment laws, including hiring, pay practices, disciplinary actions, and terminations. Manager has developed company-wide employment policies and practices that will be applied to all its employees in the administration of this duty. All on-site personnel shall be employees of Manager (or Manager’s agent) and Owner has no right to supervise or control the operations of employees or agents; provided, however, (a) Ares shall have the right to interview candidates for the positions of property manager, head of leasing/marketing and maintenance manager/superintendent for the Property and advise Manager of any candidate that Ares does not approve for hire into such position and, unless Manager reasonably determines such advice is based on factors which may impose liability on Manager for improper employment decisions, Manager shall decline to hire such candidate, (b) if Ares determines that any contractor, subcontractor or other person or entity under contract with Manager has engaged in actions detrimental to the Property or tenants of the Property, Manager shall remove such person or entity from the Property and shall not assign such person or entity to any other property owned by Owner or any of its affiliates without the prior written consent of Ares and (c) if Ares desires to have any employee of Manager removed from the Property, Ares shall notify Manager and request Manager investigate, if appropriate, and take such disciplinary action as Manager deems appropriate in its reasonable discretion; it being agreed, however, if Ares, after consultation with Manager, determines that any employee of Manager should be terminated or removed for cause, Manager shall remove such person from the Property and shall not assign such person or entity to any other property owned by Owner or any of its affiliates without the prior written consent of Ares. Owner acknowledges all wages will be paid by Manager and agrees not to pay any additional wages to any Manager employee outside of Manager’s payroll system. Manager will take Owner’s requests, opinions and preferences into account when making personnel decisions. The parties agree to work in good faith to resolve any disputes regarding personnel. Manager shall screen, test, investigate, interview, hire, supervise, discharge, and pay all personnel necessary to maintain and operate the Property, subject to this Agreement and the Approved Operating Budget. Subject to Ares’ approval rights under this Section 3.12, Manager may fill open positions at the Property with its temporary floating employee team while recruiting for a permanent replacement(s). Cost to the Property will include an allocation of salary and benefit load for any such employees while at the Property and any associated incurred travel costs that are approved by Ares. Manager will be timely reimbursed by the Property for all costs related to personnel who are necessary to operate and maintain the Property to the extent expressly permitted pursuant to this Agreement and/or the Approved Operating Budget. All other labor/Human Resource costs associated to onsite employees are an expense of the Property, including, but not limited to: HRIS monthly fees, Taleo, Salary Surveys, recruiting and advertising tools, and background/drug screening.

Debt Service and Tax Payments.  If requested by Owner, and sufficient funds are available in the Operating Account to satisfy the same, Manager will apply any such operating funds to pay the debt service and taxes due pursuant to any federal, state, county, or municipal authority, or other similar body having appropriate jurisdiction.  Manager shall not take any action under this Section 3.13 so long as Owner is contesting, or has notified Manager of its intention to contest, any such order or requirement. Owner will supply all information necessary for Manager to comply promptly with these requirements.  Manager shall also require all tenants of the Property to pay any applicable federal, state and local taxes, including any sales, excise or use taxes, assessed on any goods or services purchased, rented, leased or otherwise utilized by the tenants at such rates as may be determined by federal, state or local authorities from time to time. Manager, on behalf of Owner, shall collect and remit such taxes to the relevant authority pursuant to federal, state and local taxation laws. Owner shall provide such information, as needed, to register Manager with any federal, state or local authority for purposes of collecting and remitting applicable sales, excise and use taxes on behalf of Owner.

Compliance with Building Regulations and other Requirements.  Subject to the terms of this Agreement, Manager does not assume and is given no responsibility for compliance of any building on the Property, or any equipment therein, with the requirements of any building codes or with any statute, ordinance, law, or regulation of any governmental body or of any public authority or official thereof having jurisdiction, (collectively, the “Building Codes”), except to notify Owner promptly or forward to Owner promptly any complaints, warnings, notices or summonses received by it relating to such matters. Notwithstanding the foregoing, Manager will, using efforts in accordance with the Performance Standard, ensure Building Codes, regulations, licensing, and inspections required by law are followed when overseeing repairs and maintenance and otherwise performing its duties and obligations hereunder. In addition, Manager shall perform its obligations hereunder in a manner which shall comply with and shall use efforts in accordance with the Performance Standard to cause the Property or any portion of the Property to comply in all respects with and shall abide by all applicable statutes, laws, rules, regulations, requirements, orders, notices, determinations, and ordinances of any federal, state, or local government and appropriate departments, commissions, or boards with jurisdiction over the Property, as well as with the requirements of any insurance companies covering any of the risks against which the Property is insured and with the rules, regulations and requirements of the applicable board of fire underwriters or other similar insurance body, and further with the requirements of any Financing Documents, that may now or hereafter cover all or any part of the Property or any interest of Owner therein (collectively, “Requirements”).  In complying with any Financing Document, Manager will take all appropriate steps including, but not limited to, preparation of draw requests, preparation of compliance reports required by lender(s), and preparation of financial statements.

Environmental Risk Management.  Notwithstanding anything to the contrary contained herein, but subject to the further provisions of this Section 3.15, Owner acknowledges and understands that Manager is not responsible to: (1) evaluate the presence or absence of hazardous or toxic substances, mold, waste, materials, electromagnetic field, radon, or radioactive materials upon, within, above, or beneath the Property; (2) maintain or evaluate compliance with environmental, hazardous or solid materials or waste laws, rules and regulations; or (3) conduct or ensure clean-up or remediation of hazardous materials spills or contamination.

Disclaimer of Certain Liabilities.  So long as Manager is performing its duties and obligations hereunder in accordance with the terms of this Agreement and the Performance Standard, and subject to the provisions of Section 6.06(b) below, Manager assumes no liability for (a) any acts or omissions of Owner, or any previous owners or managers of the Property, or any previous agents of any of these, (b) any failure of, or default by, any tenant in the payment of any rent or other charges due Owner or in the performance of any obligations owed by any tenant to Owner pursuant to any lease, student housing or student services, or otherwise, (c) misconduct, negligence, acts or omissions of any consultant or independent contractor retained by Manager with respect to the Property, (d) the provision of security services or devices, (e) violations of environmental regulations or other building regulations by anyone other than Manager or its affiliates, (f) vendor or tenant claims for acts or omissions of Manager within the scope of its agency and (g) subject to the termination right set forth in Section 7.01(p) below, the financial performance of the Property.

No Requirement to Advance Funds.  In no event shall Manager be required to advance any monies on behalf of Owner, lend its credit to the Property, or incur any liability in Manager’s own name.  

Representations.  Owner represents that, as of the Effective Date, it is the owner of the Property and legally entitled to designate and engage Manager in accordance with this Agreement. Manager represents and warrants that it has full power and authority to enter this Agreement and that it is fully qualified and licensed, to the extent required by law, to manage real estate and perform all obligations assumed by Manager hereunder. Manager agrees to comply with all such laws now or hereafter in effect. Manager also represents and warrants that it does not hold “plan assets” within the meaning of the Plan Asset Regulation (as defined in the LLC Agreement).

Complaints.  Manager shall handle all complaints and requests from tenants, concessionaires, licensees or other third parties and shall record each in a systematic fashion in order to show the action taken.

Accidents and Claims.  Manager shall notify Owner promptly after Manager receives notice or knowledge of any personal injury or property damage occurring at the Property; and forward to Owner any summons, subpoena, or other legal document served upon Manager relating to actual or alleged potential liability of Owner. Manager shall promptly after any such occurrence investigate and shall make a full, written report to Owner as to (a) all accidents or claims for damages for injury to person or property occurring at the Property or arising out of the ownership, operation and maintenance of the Property, and (b) all damage to or destruction of the Property, including the estimated costs of repair, and Manager shall prepare for approval by Owner all reports required by any insurance company in connection with any such accident, claim, damage or destruction. Manager shall cooperate with Owner with respect to any claim that may arise under any insurance policy.  Manager shall take no action (such as admission of liability) that might operate to bar Owner from obtaining any protection afforded by any policy, or that might prejudice Owner and its or their defense to any claim based on such loss, damage or injury.

Legal Notices.  Manager shall furnish to Owner within three (3) days after receipt by Manager, any and all legal, violation, issuance and other notices received by Manager affecting or in connection with the Property, whether from a tenant, governmental agency, insurance body or other third party, and all notices from any lender claiming any default in any Financing Document and any other notice from a lender not of a routine nature.

Inspections.  Manager shall provide regular and systematic inspections of the Property, including, without limitation, the grounds, and parking areas in order to comply with all Requirements and assure proper maintenance of the Property.  Manager shall promptly notify Owner in writing of the violation and shall obtain Owner’s prior written approval before authorizing any expenditure to correct a violation of any Requirement.  Owner shall have the right to contest any alleged violation of any Requirement.

Permits and Authorizations.  Manager shall obtain and keep in full force and effect all licenses, permits, consents and authorizations that may be necessary for the maintenance, operation, management, promotion, repair, servicing, occupancy or leasing of the Property or for the proper performance by Manager of its duties and obligations under this Agreement (including, without limitation, a real estate broker’s license, if required by applicable law, regulation or statute to fulfill Manager’s obligations hereunder) or as may be required under any lease covering any portion of the Property.  The cost of keeping in full force and effect all necessary licenses, permits, consents and authorizations for the benefit of the Property shall be at Owner’s expense, except that the cost of obtaining and keeping in full force and effect those licenses necessary for the proper performance by Manager and its employees of its duties or their duties under this Agreement shall be at Manager’s expense and Manager shall be solely responsible for late fees or other charges resulting from Manager’s failure to timely comply with its obligations hereunder. All licenses, permits, consents and authorizations shall be in the name of Owner, or its designee if required by Owner (except that the licenses which are

Account Agency Agreement and Operating Account.  Concurrent with the commencement of this Agreement, Owner and Manager shall enter into the Account Agency Agreement, attached as Schedule B. Manager is responsible for providing effective internal controls and efficiencies, and to accomplish this Manager has developed certain cash and online banking policies and procedures with its platform bank, CIBC Bank USA. Owner will maintain a separate operating account at the Manager’s platform bank and will name it in the Account Agency Agreement. Manager shall not change platform banks without the prior written approval of Owner. It is understood that the bank account contemplated and authorized by the Account Agency Agreement shall be a non–interest-bearing checking account. Owner shall not allow Operating Account to have a balance under $25,000 (the “Minimum Balance”) at any time during the term of this Agreement.

Financial Recordkeeping.  Manager shall maintain, at Manager’s premises, in a manner customary and consistent with generally accepted accounting principles, complete and accurate accounting records based on the Owner’s fiscal year-end, including, without limitation, books and journals and orderly files, containing rental records, insurance policies, copies of all leases, contracts and other agreements, correspondence, receipts, bills and vouchers, records of all monies received and disbursed in connection with the management of the Property and all other documents and papers pertaining directly to the Property or its operation.

Disbursement of Deposits.  If requested by Owner, Manager shall remit to Owner with the monthly financial report all unexpended operating funds except for a reserve for contingencies, as provided in Section 5.01 below, which shall remain in the Operating Account.

Initial Deposit and Contingency Reserves.  Immediately upon commencement of this Agreement, Owner shall remit to Manager the sum of $2,000 to be deposited in the Operating Account as an initial deposit representing the estimated disbursements to be made in the first month following the commencement of this Agreement, including all estimated payroll and related costs. Furthermore, Owner authorizes Manager to maintain a contingency reserve of $5,000 (the “Contingency Reserve”) at all times in the Operating Account to enable Manager to pay obligations of Owner under this Agreement as they become due.  The $5,000 reserve will be part of the Minimum Balance referred to in Section 4.01.

Insufficient Operating Funds.  If, as a result of Owner approved Management Plans, a cash flow deficit is reasonably anticipated in the next budgeted month of operations, Owner agrees to deposit into the Operating Account, prior to the commencement of the next budgeted month, sufficient funds to cover the anticipated deficiency and fully fund the Contingency Reserve. In the event that funds in the Operating Account become insufficient to cover all Operating Expenditures and the Contingency Reserve, Owner agrees to, within twelve (12) Business Days of written notice from Manager describing the items for which payment is due, deposit into the Operating Agreement sufficient funds to cover the deficiency and the Contingency Reserve.

Manager’s Compensation.  Owner agrees to pay Manager, as compensation for services rendered by Manager in accordance with the terms of this Agreement, the compensation specified in the attached Schedule E. Manager, on behalf of Owner, may pay such compensation to itself at the end of each calendar month from the Operating Account, provided that the amount of each such withdrawal is verified in Manager’s monthly reports to Owner.

Manager’s Costs to be Reimbursed.  Owner agrees to reimburse Manager for all reasonable out-of-pocket costs incurred in managing and leasing the Property (other than Manager’s Expenses), to the extent the same are expressly permitted to be incurred in accordance with the terms of this Agreement, including but not limited to those as specified in the attached Schedule F. Manager, on behalf of Owner, may pay such reimbursement to itself at the end of each calendar month as expenses are incurred, from the Operating Account, provided that the amount of each such withdrawal is verified in Manager’s monthly reports to Owner.  

Manager’s Expenses. Manager shall be responsible for, and Owner shall not pay or be required to reimburse Manager for any of the following (collectively, “Manager’s Expenses”) unless approved in writing by Owner:

Representations.  Owner represents and warrants that it has the requisite power and authority to enter this Agreement.

Resident Liability Insurance Program.  Manager will administer a Resident Legal Liability Insurance Program designed to protect the Property from certain losses caused by resident negligence in the event such resident does not provide proof of obtaining the minimum required insurance coverage as outlined within the resident’s respective lease.  For the duration of their respective leases, all residents will be required to maintain and provide the following minimum required insurance coverage through either the Manager’s program or a third-party insurance provider:

Termination.  Notwithstanding the provisions of Article 2 above, this Agreement may also be terminated as follows:

automatically, in the event Owner sells or otherwise disposes of all or substantially all the Property; or

by Manager, in the event Owner defaults in the performance of any of its obligations under this Agreement and fails to cure such default within fifteen (15) days after its receipt from Manager of a notice of default (specifying in reasonable detail the nature of the default complained of); provided, however, that if such default cannot reasonably be cured within such fifteen (15) days, then such additional period as shall be reasonable, provided that (i) on or prior to the expiration of such fifteen (15) day period, Owner shall have delivered written notice to Manager setting forth, in reasonable detail, the steps Owner has taken to cure such default prior to the date of such written notice from Owner and the steps Owner intends to take in order to cure such default within the remaining time period within which to cure such default, and (ii) Owner has commenced to cure such default within such fifteen (15) day period and thereafter has proceeded to prosecute such cure with due diligence and such cure is completed within sixty (60) days after Owner’s receipt of the notice of default; or

by either Owner or Manager, if a petition for bankruptcy, reorganization or arrangement is filed by the other party, or if any such petition shall be filed against the other party and is not dismissed within sixty (60) days of the date of such filing, or in the event the other party shall make an assignment for the benefit of creditors, or take advantage of any insolvency statute or similar law, in any such event, termination to become effective upon written notice to the other party; or

by either Owner or Manager, upon fifteen (15) days written notice, if all or substantially all the Property is destroyed by a casualty or taken by means of eminent domain or condemnation; or

by Owner, upon not less than thirty (30) days prior written notice to Manager;

by Manager, upon not less than thirty (30) days prior written notice to Owner;

by Owner, upon notice to Manager, if Manager or any of its Affiliates shall (i) intentionally fail or willfully refuse to perform any of its duties or obligations hereunder, (ii) misappropriate any funds of Owner in the possession or control of Manager, or (iii) commit willful misconduct, negligence or an act of fraud against Owner;

by Owner, upon notice to Manager, if Manager shall assign this Agreement or delegate its duties hereunder without the consent of Owner;

by Owner, if any material license or qualification held by Manager and necessary for the performance of its duties or services hereunder shall be terminated or suspended, and such termination or suspension, as the case may be, is not reversed within thirty (30) days following notice thereof by the applicable licensing authority or Owner;

by Owner, upon notice to Manager, if there shall be a dissolution or termination of the corporate existence of Manager by merger, consolidation or otherwise;

by Owner, upon notice to Manager, if Sponsor is in “Material Default” under the LLC Agreement and Ares elects to terminate this Agreement;

by Owner, upon notice to Manager if Sponsor is removed as [Administrative][Operating] Member pursuant to [Section 6.7] of the LLC Agreement and Ares elects to terminate this Agreement;

by Owner, upon notice to Manager, if Manager (or any of its Affiliates) defaults under any other agreement between Owner (or any of its Affiliates) and Manager (or any of its Affiliates), and such default continues beyond any applicable notice and cure period set forth in such other agreement;

by Owner, upon notice to Manager, if Sponsor defaults under Section 8.20 below; or

by Owner, upon notice to Manager, if Manager shall fail to maintain the Operating Threshold for any student occupancy year. For purposes hereof, the “Operating Threshold” means that (i) the Gross Income for any student occupancy year equals or exceeds ninety-five percent (95%) of the Approved Operating Budget for such year and (ii) the annual net operating income for any student occupancy year is within five percent (5%) of the Approved Operating Budget for such year, excluding any non-controllable expenses, acts of God, weather related events, governmental actions, union actions, major mechanical equipment failure, insurance claims or other incidents beyond the control of Manager. For purposes hereof, net operating income shall mean verifiable recurring rental and reimbursement income calculated on a trailing-12 month period from in-place leases (excluding leases with a tenant/guarantor in bankruptcy, retail tenants that are dark (which term is not meant to include tenants that are not in occupancy or not in full occupancy due to a public health situation or due to safety or health concerns or due to government regulations or recommendations), tenants in default beyond applicable notice and cure periods, or leases that expire within 6 months), and any other recurring income (excluding interest income) from the operation of the Property, and further adjusted to assume a vacancy factor equal to the greater of actual (to be calculated to include any leases excluded as per above) and 5.0%, less trailing-12 operating expenses, adjusted for projected increases, assuming base property management fees equal to the greater of actual and up to 2.5% of annual revenues.

Termination Compensation.  If Owner terminates this Agreement before the first anniversary of the Effective Date for any reason other than pursuant to Sections 7.01(c), 7.01(d), 7.01(e) or 7.01(h) through 7.01(o) above, Owner shall be obligated to pay Manager as liquidated damages an amount equal to the management fee earned by Manager, as determined under Section 5.03 above, for the calendar month immediately preceding the month in which the notice of termination is given to Manager or Owner, multiplied by the number of months and/or portions thereof remaining from the termination date until the first anniversary of the Effective Date. Such damages, plus any amounts accruing to Manager prior to such termination, shall be due and payable upon termination of this Agreement, subject to the right of Ares to offset any Finally Determined Damages (as defined in the LLC Agreement) against any amounts owed to Manager hereunder. To the extent that funds are available, such sums shall be payable from the Operating Account. Any amount due in excess of the funds available from the Operating Account shall be paid by Owner to Manager within twelve (12) Business Days following demand.  Upon any termination of this Agreement pursuant to Sections 7.01(c), 7.01(d), 7.01(e) or 7.01(h) through 7.01(o) above, Owner shall pay to Manager within thirty (30) days of the date of termination all amounts due to Manager prior to the date on which the default giving rise to the termination occurred; provided, however, to the extent Manager has received any portion of the Management Fee which as of the date on which such default occurred was unearned by Manager, Manager shall reimburse Owner for the amount of such unearned Management Fee.

Owner Responsible for Payments.  Owner will be responsible for the direct handling and payment of invoices received after notice of termination, provided that to the extent of available operating funds in the Operating Account, Manager may continue to pay obligations incurred by the Property through the termination date subject to and in accordance with the terms of this Agreement. Upon notice of termination, Manager will submit to Owner an estimate of the additional funds required to pay all obligations incurred by the Property through the termination date. Manager will not be obligated to advance Manager’s funds for payment of obligations incurred on behalf of the Owner in accordance with the terms of this Agreement.

Close-out Management Fee.  If Owner requires Manager to perform any Close-Out Management Services after the termination of this Agreement, Manager will be paid a monthly close-out management fee equal to $[REDACTED] per month while Manager is performing such services. For purposes of this Section 7.04, “Close-Out Management Services” shall mean the following services: entering invoices and preparing checks, recording post-closing entries and preparing financial statements, reconciling bank accounts and consulting with tax preparers and auditors.

Final Accounting.  Within sixty (60) days after termination, Manager shall deliver to Owner: (a) a final accounting, reflecting the balance of income and expenses on the Property as of the date of termination; (b) all keys or access cards, records, contracts, leases, receipts, or deposits, unpaid bills, and other papers or documents which pertain to the Property, excluding data housed on Manager owned or licensed servers, including Manager’s emails, memoranda, correspondence and employee records; (c) all keys or access cards; and (d) all remaining funds held by Manager with respect to the Property and/or in any bank account (including, without limitation, the Operating Account) and any and all monies due Owner which are received by Manager after termination. Upon termination of this Agreement, Manager shall assign all licenses, permits and other agreements, if any, to Owner which Manager has entered into or obtained solely for the benefit of Owner or the Property, and Manager shall forthwith surrender and deliver to Owner any space in the Property occupied by Manager. In addition, Manager shall furnish all such information and take all such action as Owner shall reasonably require in order to effectuate an orderly and systematic termination of Manager’s duties and activities under this Agreement.  Manager hereby grants a power of attorney to Owner to endorse any checks payable to Manager but with respect to a receivable of the Property and hereby assigns to Owner effective upon the date of such termination any and all rights Manager may have in and to the Property records.

Manager’s Retention of Copies.  Manager shall be entitled to retain copies of all documents referred to in Section 7.05(b).

Survival of Obligations.  All obligations of the parties hereunder, as to which performance is contemplated to occur after termination, shall survive termination of this Agreement. Without limiting the generality of the foregoing, all representations and warranties of the parties contained herein, and the indemnification obligations of Owner and Manager hereunder shall survive the termination of this Agreement.

Notices.  All notices, demands, requests, or other communications (collectively, “Notices”) provided for in this Agreement shall be in writing and delivered: (i) by email (provided the recipient(s) thereof confirms receipt by reply e-mail or, if there is no reply e-mail, with the original to be sent the same day by a nationally recognized overnight courier service for next Business Day delivery); or (ii) by a nationally recognized overnight courier service for next Business Day delivery, to Owner or Manager at the address set forth below following the signature blocks for this Agreement, or at such other address as they individually may specify thereafter in writing. Each Notice which shall be sent by nationally recognized overnight courier service in the manner described shall be deemed sufficiently given, served, sent, received, or delivered for all purposes on the day the Notice is delivered to the addressee (with the return receipt, the delivery receipt, or the affidavit of messenger being deemed conclusive (but not exclusive) evidence of such delivery), provided that such day is a Business Day (if such day is not a Business Day, such Notice shall be deemed given and received on the first Business Day following such day), or if delivery is refused, then on the day that delivery of the Notice is refused by the addressee upon presentation, provided that such day is a Business Day (if such day is not a Business Day, such Notice shall be deemed given and received on the first Business Day following such day).  Each Notice which shall be emailed in the manner described above shall be deemed sufficiently given, served, sent, received, or delivered for all purposes on the date of such email provided that (a) such email is transmitted (y) prior to 5:00 P.M. (New York time) on a Business Day (if such email is transmitted on a day that is not a Business Day or such email is received after 5:00 P.M. (New York time) on a Business Day, such Notice shall be deemed given and received on the first Business Day following such day) and (b) if required by this Section 8.01, a copy of such notice is sent by nationally recognized overnight courier service, as provided above.

Consents and Approvals.  All consents and approvals required hereunder shall be in writing, signed by the party charged with the obligation, right, or privilege of granting such consent, approval, or notice, provided that no prior written consent or approval of Owner or its representative shall be required for any Emergency Expenditures pursuant to Section 3.07.

Confidentiality.  Except as otherwise required by any law or court order, or as authorized or permitted by Owner and Manager, Owner and Manager shall not disclose or permit the disclosure of the terms and contents of this Agreement to anyone other than their respective directors, officers, employees, affiliates, partners, members, shareholders, brokers, agents or other representatives, including, without limitation, attorneys, accountants, contractors, consultants, engineers, lenders and financial advisors. The provisions of this Section 8.03 shall survive the expiration and termination of this Agreement for one (1) year.

No Assignment.  This Agreement may not be assigned by Manager or Owner without the prior written consent of the other party. Any purported assignment in violation of this Section 8.04 is void ab initio. A majority equity transfer in Owner or Manager shall constitute an assignment for purposes of this section. Subject to the provisions hereof, all the covenants, conditions, and obligations contained in this Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the Owner and the Manager to the same extent as if each successor and assignee were in each case named as a party to this Agreement.  Notwithstanding anything to the contrary contained herein, Owner shall have the right to collaterally assign this Agreement to any lender providing financing for the Property and Manager shall cooperate with Owner in connection therewith.

Pronouns.  All nouns and pronouns shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

Amendments.  Except as otherwise herein provided, any and all amendments, additions, or deletions to this Agreement shall be null and void unless approved by the parties in writing.

Complete Agreement.  This Agreement together with all schedules attached hereto and made part hereof, supersedes and takes the place of any and all previous agreements entered into between the parties relating to the property management of the Property.

Applicable Law.  This Agreement shall be construed and enforced in accordance with the laws of the State in which the Property is located.

OFAC.  Owner and Manager each represent and warrant to the other (for themselves, only) that each is currently in compliance with, and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with, the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental actions relating thereto.

Headings.  All headings and subheadings used in this Agreement and in the accompanying schedules are solely for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

Estoppel Certificates.  Each party hereto shall, from time to time, upon not less than fifteen (15) days’ notice from the other party, execute and deliver to the other party a certificate stating that this Agreement is unmodified and in full force and effect, or, if modified, that this Agreement is in full force and effect as modified, and stating the modifications and stating whether or not, to the best of the certifying party’s knowledge, the other party is in default in any respect under this Agreement, and, if in default, specifying the nature and character of such default.

No Waiver.  No waiver by either party of any default of any other party or of any event, circumstance or condition permitting a party to terminate this Agreement shall constitute a waiver of any other default of the other party or of any other event, circumstance or condition, permitting such termination, whether of the same or of any other nature or type and whether preceding, concurrent or succeeding; and no failure on the part of either party to exercise any right it may have by the terms hereof or by law upon the default of the other party and no delay in the exercise of such right shall prevent the exercise thereof by the non-defaulting party at any time when the other party may continue to be so in default, and no such failure or delay and no waiver of default shall operate as a waiver of any other default, or as a modification in any respect of the provisions of this Agreement.  The subsequent acceptance of any payment or performance pursuant to this Agreement shall not constitute a waiver of any preceding default by a defaulting party or of any preceding event, circumstance or condition permitting termination hereunder, other than default in the payment of the particular payment or the performance of the particular matter so accepted, regardless of the non-defaulting party’s knowledge of the preceding default or the preceding event, circumstance or condition, at the time of accepting such payment or performance, nor shall the non-defaulting party’s acceptance of such payment or performance after termination constitute a reinstatement, extension or renewal of this Agreement or revocation of any notice or other act by the non-defaulting party.

Attorneys’ Fees.  Should any action or proceeding be commenced between the parties hereto or their representatives concerning any provision of this Agreement or the rights and duties of any Person (as defined in the LLC Agreement) in relation thereto, the party or parties prevailing in such action or proceeding shall be entitled, in addition to such other relief as may be granted, to an award of all actual, reasonable attorneys’ fees and costs incurred in such action or proceeding, without regard to any schedule or rule of court purporting to restrict such an award, including, without limitation, actual, reasonable attorneys’ fees, costs and expenses incurred in connection with (a) enforcing, perfecting and executing such judgment, (b) post-judgment motions; (c) contempt proceedings; (d) garnishment, levee, and debtor and third-party examinations; (e) discovery; and (f) bankruptcy litigation.

Equitable Remedies.  Each party hereto shall, in addition to all other rights provided herein or as may be provided by law, and subject to the limitations set forth herein, be entitled to all equitable remedies including those of specific performance and injunction, to enforce such party’s rights hereunder.

Remedies Cumulative.  Each right, power, and remedy provided for herein or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for herein or now or hereafter existing at law, in equity, by statute or otherwise, and the exercise or beginning of the exercise or the forbearance of exercise by any party of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by such party of any or all of such other rights, powers or remedies.

Limitation of Liability.  Notwithstanding anything to the contrary, if Manager shall recover any judgment against Owner in connection with this Agreement, Manager shall look solely to Owner for the collection or enforcement of any such judgment, and no other assets of Owner shall be subject to levy, execution or other process for the satisfaction or enforcement of such judgment.

WAIVER OF JURY TRIAL.  THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LEGAL REQUIREMENTS, ANY RIGHT THAT EITHER PARTY OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH, OR IN RESPECT OF ANY COURSE OF CONDUCT, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT.

Counterparts.  This Agreement may be executed in any number of counterparts, including counterparts transmitted by e-mail, any one of which shall constitute an original of this Agreement.  When counterparts or e-mail copies have been executed by all parties, they shall have the same effect as if the signatures to each counterpart or copy were upon the same documents and copies of such documents shall be deemed valid as originals. The parties agree that all such signatures may be transferred to a single document upon the request of any party. This Agreement shall not be binding unless and until it shall be fully executed and delivered by all parties hereto.

Non-Compete.  Manager hereby covenants and agrees that, for a period commencing on the Effective Date and ending upon the termination of this Agreement, Manager shall not, and shall cause all of its Affiliates (each, a “Covered Person”) not to, without first obtaining the prior written consent of Ares (in its sole discretion) on behalf of Owner, either (1) Compete, directly or indirectly, with the Property by engaging, in any capacity, in owning, operating or managing a retail property, retail development project, student housing property and/or student housing development project within the [________________________] submarket or (2) solicit any Property employees for employment or any tenant of the Property to rent space at another property owned, controlled, or managed by a Covered Person (provided nothing herein shall prevent a Covered Person from hiring any employee of the Property who responds to a Covered Person’s advertisement or other notice that is not specifically targeted at employees of the Property). For purposes of this provision, “Compete” means (i) to, directly or indirectly, conduct, facilitate, participate or engage in, or bid for or otherwise pursue a business, whether as a principal, sole proprietor, partner, stockholder, or agent of, or consultant to or manager for, any Person, or (ii) to, directly or indirectly, have any ownership interest in any Person or business which conducts, facilitates, participates or engages in, or bids for or otherwise pursues a business, whether as a principal, sole proprietor, partner, stockholder, or agent of, or consultant to or manager for, any such Person, in each case except as a passive investor with a non-controlling interest in such Person. The parties recognize and acknowledge that a breach of this Section 8.20 by Manager or any of its Affiliates will cause irreparable and material loss and damage to Owner and