Exhibit 10.9

 

AMENDED AND RESTATED SERVICES AGREEMENT

 

THIS AMENDED AND RESTATED SERVICES AGREEMENT (this “Agreement”) by and between
Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “REIT”),
Bluerock Residential Holdings, L.P., a Delaware limited partnership, the
operating partnership subsidiary of the REIT (the “Operating Partnership”), and
the Operating Partnership’s subsidiary, Bluerock REIT Operator, LLC, a Delaware
limited liability company (“REIT Operator” and, together with the REIT and the
Operating Partnership, the “Company”), and Konig & Associates, LLC, a New Jersey
limited liability company (“Service Provider”) is dated as of the Effective
Date.

 

WHEREAS, the parties originally entered into a Services Agreement (the “Original
Agreement”) on August 3, 2017 and desire to amend and restate the Original
Agreement to delay the grant and issuance of certain awards hereunder and change
their respective vesting periods; and

 

WHEREAS, REIT Operator desires to engage Service Provider and Service Provider
desires to be engaged by REIT Operator to provide legal services for the Company
on the terms contained herein.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.                   Term of Relationship.

 

(a)                Subject to the terms and conditions of this Agreement, REIT
Operator hereby engages Service Provider, and Service Provider hereby accepts
the service relationship with REIT Operator, in the positions and with the
duties and responsibilities as set forth in Section 2 hereof for the Term (as
defined below). The REIT and the Operating Partnership agree to be jointly and
severally liable for all obligations of the REIT Operator under this Agreement,
including payment obligations.

 

(b)                The term of the relationship under this Agreement will
commence on the date of the Closing (as defined in that certain Contribution and
Sale Agreement between the REIT, the Operating Partnership, BRG Manager, LLC and
the other parties thereto, dated as of August 3, 2017) (the “Effective Date”)
and continue for an initial term through December 31, 2020 (the “Initial Term”),
unless the Agreement is terminated sooner in accordance with Section 5 below.
Commencing on the last day of the Initial Term and on each subsequent
anniversary of such date, the term of this Agreement shall automatically be
extended for successive one-year periods (each such extension, a “Renewal
Term”); provided, however, that either the Company or Service Provider may elect
not to extend the Term by giving written notice to the other party at least
sixty (60) days prior to any such anniversary date (a “Non-Renewal”). The period
commencing on the Effective Date and ending at the end of the Initial Term or
any Renewal Term (or earlier termination of Service Provider’s service
relationship hereunder) shall hereinafter be referred to as the “Term.” If the
Closing (as defined in that certain Contribution and Sale Agreement between the
REIT, the Operating Partnership, BRG Manager, LLC and the other parties thereto,
dated as of August 3, 2017) does not occur, this Agreement will automatically
terminate and be of no force or effect.

 

2.                   Position; Duties and Responsibilities.

 

(a)                During the Term, Service Provider will be engaged as a
Service Provider by the REIT Operator and will cause Michael Konig (the
“Executive”) to serve as Chief Legal Officer and Secretary of the REIT,
reporting directly to the Chief Executive Officer, and Executive’s title will be
Chief Legal Officer of the REIT. In this capacity, Service Provider and
Executive shall have the duties, authorities and responsibilities as are
required by Executive’s position commensurate with the duties,

 

 

 

authorities and responsibilities of persons in similar capacities in similarly
sized companies, and such other duties, authorities and responsibilities as may
reasonably be assigned to Executive as the Chief Executive Officer or the Board
of Directors shall designate from time to time that are not inconsistent with
such position and that are consistent with the bylaws of the REIT, the limited
partnership agreement of the Operating Partnership, and the operating agreement
of REIT Operator, each as may be amended from time to time, including, but not
limited to, managing the affairs of the Company.

 

(b)                During the Term, Service Provider will cause Executive to,
without additional compensation, also serve as an officer of, and/or perform
such executive and legal services for, or on behalf of, such subsidiaries of the
Company as the Chief Executive Officer may, from time to time, request.

 

(c)                During the Term, Service Provider will cause the Executive to
serve the Company faithfully, diligently, and to the best of his ability and
will devote substantially all of his business time and attention to the
performance of his duties hereunder, and shall have no other employment (unless
approved by the Chief Executive Officer); provided, that, nothing contained
herein shall prohibit Executive from (i) participating in trade associations or
industry organizations in furtherance of the Company’s interests, (ii) engaging
in charitable, civic, educational or political activities, (iii) engaging in
passive personal investment activities for himself and his family, (iv) devoting
time as he determines in good faith to be necessary or appropriate to fulfill
his duties to Bluerock Real Estate, LLC and its affiliates (“Bluerock”), or (v)
accepting directorships or similar positions (together, the “Personal
Activities”), in each case so long as the Personal Activities do not
unreasonably interfere, individually or in the aggregate, with the performance
of Service Provider’s duties to the Company under this Agreement or the
restrictive covenants set forth in Section 10 of this Agreement.

 

(d)                During the Term, Service Provider shall cause Executive to
perform the services required by this Agreement at the Company’s principal
offices located in New York, New York (the “Principal Location”), except for
travel to other locations as may be necessary to fulfill Service Provider’s
duties and responsibilities hereunder.

 

(e)                During the Term, Service Provider will be an independent
contractor and neither it nor Executive shall be an agent or employee of the
Company; however, Executive personally joins this Agreement to acknowledge and
agree that (i) the services provided by Service Provider hereunder will be
personally overseen by Executive and (ii) Executive will be personally bound by
the obligations set forth in Sections 8, 9, 10, 11 and 18 of this Agreement.

 

3.                   Compensation and Benefits.

 

(a)                Base Payment. During the Term, Service Provider will be
entitled to receive an annualized base payment (the “Base Payment”) of not less
than $300,000. The Base Payment shall be paid equal installations no less often
than semi-monthly.

 

(b)                Incentive Compensation. In addition to the Base Payment,
Service Provider shall be entitled to participate in any short-term and
long-term incentive programs (including without limitation equity compensation
plans) established by the Company, including for its senior level executives.
However, during the Term, and subject to subsection (e) below, such arrangements
will include:

 

(1)    Annual Performance Bonus. In each calendar year of the Term, Service
Provider shall be eligible to receive an annual incentive bonus (the “Annual
Bonus”) payable in cash, pursuant to the performance criteria and targets
established and administered by the Board (or a committee of directors to whom
such responsibility has been delegated by the Board), with a target Annual Bonus
of at least 100% of the Base Payment. The Annual Bonus payable to Service
Provider

 

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each year shall be determined and payable as soon as practicable after year-end
for such year (but no later than March 15th). The Service Provider’s cash bonus
for the stub period of 2017 will be determined in the reasonable business
judgment of the Board or another committee of directors to whom such
responsibility has been delegated by the Board. To be entitled to receive any
Annual Bonus, except as otherwise provided in Sections 5(c) and 5(d), Service
Provider must remain a service provider through the last day of the calendar
year to which the Annual Bonus relates.

 

(2)    Long-Term Equity Incentives. In connection with the Company’s long term
incentive plan as established by the Board (or a committee of directors to whom
such responsibility has been delegated by the Board) on a rolling three year
basis:

 

a.                   Time-Vested Performance Equity Award. At the beginning of
each year of the Term beginning with the year ending December 31, 2018, Service
Provider shall be granted an annual award of time-vested equity in the form of
long term incentive plan units of the Operating Partnership (“LTIPs”) (the
“Annual LTIP Award”). The number of LTIPs to be issued pursuant to the Annual
LTIP Award shall be determined by dividing an amount no less than $200,000 by
the volume weighted average price of a share of the REIT’s Class A Common Stock,
as reported on the NYSE MKT (or then-applicable Exchange), for the twenty (20)
trading days immediately preceding the date of grant of such LTIP award. In
addition, as of January 1, 2018, Service Provider shall be granted a pro-rated
Annual LTIP Award for the 2017 stub period from the Effective Date through
December 31, 2017, with the number of LTIPs granted to be determined based on
the pro-rated dollar amount of the Annual LTIP Award, divided by the volume
weighted average price of a share of the REIT’s Class A Common Stock, as
reported on the NYSE MKT (or then-applicable Exchange), for the twenty (20)
trading days immediately preceding (but not including) January 1, 2018. Each
Annual LTIP Award (except the prorated award granted on January 1, 2018 for the
2017 stub period) will vest and become nonforfeitable in three equal
installments on the effective date of each anniversary of grant, subject to
provisions set forth in Sections 3(f) and 5 of this Agreement. The prorated
award granted on January 1, 2018 for the 2017 stub period will vest and become
nonforfeitable as follows: (i) the first installment on December 31, 2018 in the
amount of one-third (1/3) of the 2017 stub period award and (ii) the second and
third installments on the second and third anniversary of the Effective Date,
respectively, in the amount of one-third (1/3) of the 2017 stub period award, in
each case subject to provisions set forth in Sections 3(f) and 5 of this
Agreement.

 

b.                  Long Term Equity Performance Award. At the beginning of each
year of the Term beginning with the year ending December 31, 2018, Service
Provider shall be granted an annual performance award of equity in the form of
LTIPs for a three-year performance period, which award shall be subject to
performance criteria and targets established and administered by the Board (or
the compensation committee of the Board (the “Compensation Committee”) or
another committee of directors to whom such responsibility has been delegated by
the Board) (the “Long Term Performance Award”). The number of LTIPs to be issued
pursuant to the Long Term Performance Award shall be no fewer than 150% of the
Annual LTIP Award. Satisfaction of the performance criteria and targets
established and administered by the Board (or the Compensation Committee or
another committee of directors to whom such responsibility has been delegated by
the Board) with respect to each Long Term Performance Award will be determined
by the Board (or the Compensation Committee or such other committee to whom such
responsibility has been delegated) and, to the extent earned, will thereupon
vest and become nonforfeitable effective as of the last day of the performance
period, subject to provisions set forth in Sections 3(f) and 5 of this
Agreement.

 

(c)                Employee Benefit Programs and Fringe Benefits. During the
Term, Service Provider will be eligible to participate in all executive
incentive programs of the Company made available to the Company’s senior level
executives generally, as such programs may be in effect from time to time;

 

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provided that nothing herein shall prevent the Company from amending or
terminating any such programs pursuant to the terms thereof (except to the
extent the amendment or termination would prevent the Company from satisfying
its obligations under Sections 3(a), 3(b) and 4). Except as provided above
regarding executive incentive arrangements, as an independent contractor,
Service Provider will not be entitled to participate in the employee benefit
programs sponsored by the Company for the benefit of its employees including any
tax qualified retirement plan, cafeteria plan, group medical plan or insured
welfare benefit arrangements. The REIT Operator will reimburse Service Provider
for any and all necessary, customary and usual business expenses incurred and
paid by Service Provider in connection with its services hereunder upon
presentation to the Company of reasonable substantiation and documentation, and
in accordance with, and subject to the terms and conditions of, applicable
Company policies. During the Term, Service Provider shall be entitled to paid
vacation and, if applicable paid time off, per year of the Term (as pro-rated
for any stub period) in accordance with the Company’s policy on accrual and use
applicable to employees as in effect from time to time, but in no event shall
Service Provider accrue less than four (4) weeks of vacation per calendar year
(pro-rated for any stub period).

 

(d)                Insurance; Indemnification. Each of Service Provider and
Executive shall be covered by such comprehensive directors’ and officers’
liability insurance and errors and omissions liability insurance as the Company
or the REIT shall have established and maintained in respect of its directors
and officers generally and at its expense, and the Company or the REIT shall
cause such insurance policies to be maintained in a manner reasonably acceptable
to Service Provider both during and, in accordance with Section 5(i) below,
after Service Provider’s service period with the Company. Each of Service
Provider and Executive shall also be entitled to indemnification rights,
benefits and related expense advances and reimbursements to the same extent as
any other director or officer of the Company or the REIT and to the maximum
extent permitted under applicable law pursuant to an indemnification agreement,
including “tail” coverage following termination of service (the “Indemnification
Agreement”); provided, however, that such indemnification to Service Provider
and Executive shall not be duplicative.

 

(e)                Annual Review. Beginning in 2018, the Compensation Committee
of the Board of Directors (the “Compensation Committee”) will undertake a formal
review of the amounts payable and potentially payable to Service Provider
pursuant to this Section 3 (the “Compensation and Benefits”) no less frequently
than annually. The Compensation Committee shall be entitled to make all
determinations relating to this Section 3(e) in its sole discretion; provided,
however, that neither the Compensation Committee nor the Company shall be
entitled to decrease Service Provider’s Base Payment or the annual or long-term
target incentive opportunities (as referenced in Section 3(b)).

 

(f)                 Clawback/Recoupment. Notwithstanding any other provisions in
this Agreement to the contrary, any compensation provided to, or gain realized
by, Service Provider or Executive pursuant to this Agreement or any other
agreement or arrangement with the Company shall be subject to repayment and/or
forfeiture by Service Provider and Executive to the Company if and to the extent
any such compensation or gain (i) is or becomes subject to the “clawback” policy
adopted by the REIT and in effect as of the date hereof that is applicable to
Service Provider and other similarly situated executives, or (ii) is, or in the
future, becomes subject to, any law, rule, requirement or regulation which
imposes mandatory recoupment or forfeiture, under circumstances set forth in
such law, rule, requirement or regulation; provided, however that such clawback
from Service Provider and Executive shall not be duplicative.

 

4.                   Initial Commitment Award. On January 1, 2018, Service
Provider shall be granted an award of LTIPs (the “Initial Commitment Award”).
The number of LTIPs to be issued pursuant to this Section 4 shall be determined
by dividing $1,250,000 by the volume weighted average price of a share of the
REIT’s Class A Common Stock, as reported on the NYSE MKT (or then-applicable
Exchange), for the twenty (20) trading days immediately preceding the date of
grant. The Initial Commitment Award will

 

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vest and become nonforfeitable as follows: (i) the first installment on December
31, 2018 in the amount of one-fifth (1/5) of the Initial Commitment Award and
(ii) the second through fifth installments on the second through fifth
anniversary of the Effective Date, respectively, in an amount equal to one-fifth
(1/5) of the Initial Commitment Award, in each case subject to provisions set
forth in Sections 3(f) and 5 of this Agreement.

 

5.                   Termination of Service Relationship.

 

(a)                Termination Due to Disability. The Company may cause the REIT
Operator to terminate Service Provider’s service relationship, to the extent
permitted by applicable law, if Service Provider or Executive (i) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve
(12) months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months, actually
receiving income replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the Company
(“Disability”). If Service Provider’s service relationship is terminated under
this Section 5(a) for Disability, (A) the Company shall pay to Service Provider
the Accrued Benefits pursuant to Section 5(i) below, and (B) the outstanding
equity awards (x) that are subject solely to time-based vesting conditions
(including, but not limited to, each Annual LTIP Award and the Initial
Commitment Award), shall become fully vested as of Service Provider’s date of
termination for Disability and (y) that are subject to performance-based vesting
conditions (including each Long Term Performance Award), will vest if and to the
extent the applicable performance-based vesting conditions are satisfied as of
the date of termination (without regard to the original length of the
performance period); provided, however, that any performance-based award that
vests pursuant to clause (y) will be pro-rated for the actual number of days in
the applicable vesting period preceding the date of termination of Service
Provider’s service relationship.

 

(b)                Termination Due to Death. Service Provider’s service
relationship shall terminate automatically upon Executive’s death during the
Term. If Service Provider’s service relationship is terminated because of
Executive’s death, (i) the Company shall pay to Service Provider the Accrued
Benefits pursuant to Section 5(i) below, and (ii) Service Provider shall be
entitled to all of the outstanding equity awards (x) that are subject solely to
time-based vesting conditions (including, but not limited to, each Annual LTIP
Award and the Initial Commitment Award), which shall become fully vested as of
Service Provider’s date of termination and (y) that are subject to
performance-based vesting conditions (including each Long Term Performance
Award), will vest if and to the extent the applicable performance-based vesting
conditions are satisfied as of the date of termination (without regard to the
original length of the performance period); provided, however, that any
performance-based award that vests and becomes payable pursuant to clause (y)
will be pro-rated for the actual number of days in the applicable performance
period preceding Executive’s death. Otherwise, the Company shall have no further
liability or obligation under this Agreement to Service Provider or Executive’s
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through Service Provider or Executive.

 

(c)                Company Non-Renewal. In the event that Service Provider’s
service relationship is terminated by reason of a Non-Renewal by the Company and
Service Provider is willing and able, at the time of such Non-Renewal, to
continue performing services on the terms and conditions set forth herein for
the Renewal Term that would have occurred but for the Non-Renewal, then Service
Provider shall be entitled to the payments and benefits provided in Section 5(d)
below, subject to the terms and conditions of Section 5(d) including the Release
Requirement.

 

(d)                Termination by the Company Without Cause or by Service
Provider for Good

 

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Reason. The Company may cause the REIT Operator to terminate Service Provider’s
service relationship at any time without Cause (as provided in Section 7) upon
not less than sixty (60) days’ prior written notice to Service Provider, and
Service Provider may terminate Service Provider’s service relationship by
resigning for Good Reason (as provided in Section 7) upon not less than sixty
(60) days’ prior written notice of such resignation to the Company. Upon any
such termination of Service Provider’s service relationship without Cause or for
Good Reason, Service Provider shall be entitled to receive the following:

 

(i)                 The Accrued Benefits, pursuant to Section 5(i) below; and

 

(ii)               if Service Provider and Executive sign a general release of
claims in favor of the Company in substantially the same form as attached hereto
as Exhibit A, and subject to the expiration of any applicable or legally
required revocation period, all within sixty (60) days after the effective date
of termination (the “Release Requirement”):

 

(1)                the Company shall pay Service Provider a cash amount (the
“Severance Amount”) equal to two times (the “Severance Multiple”) the sum of (A)
the then-current Base Payment and (B) the average of the Annual Bonuses paid to
Service Provider in accordance with Section 3(b) hereof for the two years
preceding the termination; provided, however, if Service Provider’s termination
pursuant to this Section 5(d) occurs (I) during the year ending December 31,
2017, Service Provider’s Target Bonus (as per the incentive plan established for
Service Provider) (“Target Bonus”) will be used in lieu of the average described
in Section 5(d)(ii)(1)(B), or (II) during the year ending December 31, 2018, the
Annual Bonus paid or payable to Service Provider for the year ending December
31, 2017 will be used in lieu of the average described in Section
5(d)(ii)(1)(B); provided, further, that if the termination occurs during the
years ending December 31, 2018 or 2019, the 2017 Annual Bonus shall be
annualized for purposes of calculating the average described in Section
5(d)(ii)(1)(B). Subject to Section 30, the Severance Amount will be paid in
equal monthly installments over the twelve-month period beginning within sixty
(60) days following the effective date of Service Provider’s termination (with
the first payment to include any installment payments that would have been made
during such sixty (60) day period if payments had commenced on the effective
date of Service Provider’s termination);

 

(2)                within sixty (60) days following the effective date of
termination, the Company shall pay Service Provider an amount equal to Service
Provider’s Target Bonus for the then-current calendar year of Service Provider’s
service (annualized, to the extent the 2017 Target Bonus is used), pro-rated for
the number of days in such calendar year ending on the effective date of Service
Provider’s termination of service; and

 

(3)                the outstanding equity awards (x) that are subject solely to
time-based vesting conditions (including, but not limited to each Annual LTIP
Award and the Initial Commitment Award), will become fully vested as of the
effective date of termination and (y) that are subject to performance-based
vesting conditions (including that each Long Term Performance Award), will vest
if and to the extent the applicable performance-based vesting conditions are
satisfied as of the date of termination (without regard to the original length
of the performance period); provided, however, that any performance-based award
that vests pursuant to clause (y) will be pro-rated for the actual number of
days in the applicable vesting period preceding the effective date of Service
Provider’s termination of service.

 

(e)                Termination by the Company for Cause. The Company may cause
the REIT Operator to terminate Service Provider’s service relationship at any
time for Cause pursuant to the provisions of Section 7(a) below, in which event
as of the effective date of such termination all payments and benefits under
this Agreement shall cease and all then unvested awards or benefits shall be
forfeited,

 

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except for the continuing obligation to pay Service Provider its Accrued
Benefits.

 

(f)                 Voluntary Termination by Service Provider without Good
Reason. Service Provider may voluntarily terminate this service relationship
without Good Reason upon sixty (60) days’ prior written notice. In any such
event, after the effective date of such termination, no further payments or
benefits shall be due under this Agreement and all then unvested awards or
benefits shall be forfeited, except for the obligation to pay Service Provider
after the effective date of such termination its Accrued Benefits. For the
avoidance of doubt, Non-Renewal by Service Provider shall constitute a
termination under this Section 5(f).

 

(g)                Notice of Termination. Any termination of Service Provider’s
service relationship shall be communicated by a written notice of termination to
the other party hereto given in accordance with Section 20 and shall specify the
termination date in accordance with the requirements of this Agreement.

 

(h)                Resignation of All Other Positions. Upon termination of
Service Provider’s service for any reason, Service Provider and Executive shall
be deemed to have resigned from all positions that Service Provider or Executive
holds as an officer of the Company or any affiliate of the Company, and from all
positions that either holds as a member of the Board of Directors (or a
committee thereof) or the board of directors (or a committee thereof) of any
subsidiary or affiliate of the REIT, unless otherwise mutually agreed with the
Board of Directors, and shall take all actions reasonably requested by the
Company to effectuate the foregoing.

 

(i)                 General Provisions. (1) Upon any termination of Service
Provider’s service relationship, Service Provider shall be entitled to receive
the following: (A) any unpaid Base Payment and accrued but unused vacation
and/or paid time off (determined in accordance with Company policy) through the
date of termination (paid in cash within 30 days, or such shorter period
required by applicable law, following the effective date of termination), (B)
reimbursement for all necessary, customary and usual business expenses and fees
incurred and paid by Service Provider prior to the effective date of
termination, in accordance with Section 3(c) above (payable in accordance with
the Company’s expense reimbursement policy), and (C) vested benefits, if any, to
which Service Provider or Executive may be entitled under the Company’s employee
benefit plans, including those as provided in Section 3(c) above (payable in
accordance with the applicable employee benefit plan), and directors and
officers liability coverage pursuant to Section 3(d) for actions and inactions
occurring during the Term, and continued coverage for any actions or inactions
by Service Provider or Executive while providing cooperation under this
Agreement (collectively, “Accrued Benefits”).

 

(2) During any notice period required under Section 5 or Section 7, as
applicable, (A) Service Provider shall remain a service provider to the Company
and shall continue to be bound by all the terms of this Agreement and any other
applicable duties and obligations to the Company, (B) the Company may direct
Service Provider not to report to work, and (C) Service Provider shall only
undertake such actions on behalf of the Company, consistent with his position,
as expressly directed by the Chief Executive Officer.

 

The parties agree that a termination of Service Provider’s service relationship
pursuant to this Section 5 will not be a breach of this Agreement and does not
relieve either party of its other obligations hereunder.

 

6.                   Change in Control.

 

(a)                Termination Without Cause or Resignation for Good Reason Upon
or After a Change in Control. If, upon or within eighteen (18) months after a
Change in Control (as defined below), Service Provider’s service relationship is
terminated pursuant to Section 5(c) or 5(d), the provisions of

 

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Sections 5(d)(i) and (ii) shall then apply except that the Severance Multiple
set forth in Section 5(d)(ii)(1) shall be three.

 

(b)                Code Section 280G.

 

(i)                 Treatment of Payments. Notwithstanding anything in this
Agreement or any other plan, arrangement or agreement to the contrary, in the
event that an independent, nationally recognized, accounting firm which shall be
designated by the Company with Service Provider’s written consent (which consent
shall not be unreasonably withheld) (the “Accounting Firm”) shall determine that
any payment or benefit received or to be received by Service Provider or
Executive from the Company or any of its affiliates or from any person who
effectuates a change in control or effective control of the Company or any of
such person’s affiliates (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement) (all such payments and benefits, the
“Total Payments”) would fail to be deductible under Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), or otherwise would be subject (in
whole or part) to the excise tax imposed by Section 4999 of the Code (the
“Excise Tax”) then the payments or benefits to be received by Service Provider
or Executive that are subject to Section 280G or 4999 of the Code shall be
reduced to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax, but such reduction shall occur if and only to the
extent that the net amount of such Total Payments, as so reduced (and after
subtracting the net amount of federal, state and local income taxes, and
employment, Social Security and Medicare taxes on such reduced Total Payments),
is greater than or equal to the net amount of such Total Payments without such
reduction (but after subtracting the net amount of federal, state and local
income taxes and employment, Social Security and Medicare taxes on such Total
Payments and the amount of Excise Tax (or any other excise tax) to which Service
Provider would be subject in respect of such unreduced Total Payments). For
purposes of this Section 6(b)(i), the above tax amounts shall be determined by
the Accounting Firm, applying the highest marginal rate under Section 1 of the
Code and under state and local laws which applied (or is likely to apply) to
Executive’s taxable income for the tax year in which the transaction which
causes the application of Section 280G or 4999 of the Code occurs, or such other
rate(s) as the Accounting Firm determines to be likely to apply to Service
Provider in the relevant tax year(s) in which any of the Total Payments is
expected to be made. If the Accounting Firm determines that Service Provider and
Executive would not retain a larger amount on an after-tax basis if the Total
Payments were so reduced, then Service Provider and Executive shall retain all
of the Total Payments.

 

(ii)               Ordering of Reduction. In the case of a reduction in the
Total Payments pursuant to Section 6(b)(i), the Total Payments will be reduced
in the following order: (A) payments that are payable in cash (and that are not
deferred compensation within the meaning of Section 409A of the Code) that are
valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will
be reduced (if necessary, to zero), with amounts that are payable last reduced
first; (B) payments and benefits due in respect of any equity valued at full
value under Treasury Regulation Section 1.280G-1, Q&A 24(a) (and that are not
deferred compensation within the meaning of Section 409A of the Code), with the
highest values reduced first (as such values are determined under Treasury
Regulation Section 1.280G-1, Q&A 24) will next be reduced; (C) payments that are
payable in cash (and that are not deferred compensation within the meaning of
Section 409A of the Code) that are valued at less than full value under Treasury
Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced
first, will next be reduced; (D) payments and benefits (that are not deferred
compensation within the meaning of Section 409A of the Code) due in respect of
any equity valued at less than full value under Treasury Regulation Section
1.280G-1, Q&A 24, with the highest values reduced first (as such values are
determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be
reduced; and (E) all other cash or non-cash benefits not otherwise described in
above will be next reduced pro-rata with any payments or benefits that are
deferred compensation within the meaning of Section 409A of the Code being
reduced last.

 

 -8- 

 

(iii)       Certain Determinations. For purposes of determining whether and the
extent to which the Total Payments will be subject to the Excise Tax: (A) no
portion of the Total Payments the receipt or enjoyment of which Service Provider
shall have waived at such time and in such manner as not to constitute a
“payment” within the meaning of Section 280G(b) of the Code will be taken into
account; (B) no portion of the Total Payments will be taken into account which,
in the opinion of the Accounting Firm, does not constitute a “parachute payment”
within the meaning of Section 280G(b)(2) of the Code (including by reason of
Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments will be taken into account which, in the opinion
of the Accounting Firm, constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in
excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code)
that is allocable to such reasonable compensation; and (C) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments will be determined by the Accounting Firm in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. Service Provider and the
Company shall furnish such documentation and documents as may be necessary for
the Accounting Firm to perform the requisite calculations and analysis under
this Section 6(b) (and shall cooperate to the extent necessary for any of the
determinations in this Section 6(b)(iii) to be made), and the Accounting Firm
shall provide a written report of its determinations hereunder, including
detailed supporting calculations. If the Accounting Firm determines that
aggregate Total Payments should be reduced as described above, it shall promptly
notify Service Provider and the Company to that effect. In the absence of
manifest error, all determinations by the Accounting Firm under this Section
6(b) shall be binding on Service Provider and the Company and shall be made as
soon as reasonably practicable following the later of Service Provider’s date of
termination of service or the date of the transaction which causes the
application of Section 280G of the Code. The Company shall bear all costs, fees
and expenses of the Accounting Firm and any legal counsel retained by the
Accounting Firm.

 

(iv)       Additional Payments. If Service Provider and Executive receive
reduced payments and benefits by reason of this Section 6(b) and it is
established pursuant to a determination of a court of competent jurisdiction
which is not subject to review or as to which the time to appeal has expired, or
pursuant to an Internal Revenue Service proceeding, that Service Provider and
Executive could have received a greater amount without resulting in any Excise
Tax, then the Company shall thereafter pay Service Provider or its designee the
aggregate additional amount which could have been paid without resulting in any
Excise Tax as soon as reasonably practicable following such determination.

 

7.                   Definitions.

 

(a)                “Cause” shall mean any of the following grounds for
termination of Service Provider’s service relationship:

 

(i)              Executive’s conviction of, or plea of guilty or nolo contendere
to, a felony (excluding traffic-related felonies), or any financial crime
involving the Company (including, but not limited to, fraud, embezzlement or
misappropriation of Company assets) which termination shall become effective
immediately as of the date the Board of Directors determines to terminate this
Agreement, which action must be taken on or after the date of such conviction or
plea or within sixty (60) days thereafter;

 

(ii)               Service Provider’s or Executive’s willful and gross
misconduct in the performance of its or his duties (other than by reason of
incapacity or disability) it being expressly understood that the Company’s
dissatisfaction with Service Provider’s or Executive’s performance shall not
constitute Cause;

 

(iii)             Service Provider’s or Executive’s continuous, willful and
material breach of this Agreement after written notice of such breach has been
given by the Board in its reasonable

 

 -9- 

 

discretion exercised in good faith; provided that, in no event shall any action
or omission in subsection (ii) or (iii) constitute “Cause” unless (1) the
Company gives notice to Service Provider or, if applicable, Executive stating
that Service Provider or Executive, as applicable, will be terminated for Cause,
specifying the particulars thereof in reasonable detail and the effective date
of termination (which shall be no less than ten (10) business days following the
date on which such written notice is received by Service Provider) (the “Cause
Termination Notice”), (2) the Company provides Service Provider or Executive, as
applicable, and its or his counsel with an opportunity to appear before the
Board to rebut or dispute the alleged reason for termination on a specified date
that is at least three (3) business days following the date on which the Cause
Termination Notice is given, but prior to the stated termination date described
in clause (1), and (3) a majority of the Board (calculated without regard to
Service Provider or Executive, if applicable) determines that Service Provider
or Executive, as applicable, has failed to materially cure or cease such
misconduct or breach within ten (10) business days after the Cause Termination
Notice is given to him. For purposes of the foregoing sentence, no act, or
failure to act, on Service Provider’s or Executive’s part shall be considered
willful unless done or omitted to be done, by it or him not in good faith and
without reasonable belief that its or his action or omission was in the best
interest of the Company, and any act or omission by Service Provider or
Executive pursuant to the authority given pursuant to a resolution duly adopted
by the Board or on the advice of counsel to the Company will be deemed made in
good faith and in the best interest of the Company.

 

(b)                “Good Reason” shall mean, without Service Provider’s or
Executive’s consent:

 

(i)                 the assignment to Service Provider or Executive of duties or
responsibilities substantially inconsistent with Service Provider’s or
Executive’s title at the Company or a material diminution in Service Provider’s
or Executive’s title, authority or responsibilities; provided, that, a change in
title or modification of authority or responsibilities in connection with hiring
new or elevating other executives as reasonably required or commensurate with
the growth of the Company shall not constitute Good Reason;

 

(ii)               A material reduction in Service Provider’s Base Payment or
the annual or long-term target incentive opportunities (as referenced in Section
3(b)) during the Term;

 

(iii)             A continuous, willful and material breach by the Company of
this Agreement; or

 

(iv)              the relocation (without the written consent of Service
Provider) of Service Provider’s principal place of service by more than
thirty-five (35) miles from the Principal Location.

 

Notwithstanding the foregoing, (1) Good Reason shall not be deemed to exist
unless notice of termination on account thereof (specifying a termination date
of at least sixty (60) days but no more than ninety (90) days from the date of
such notice) is given no later than ninety (90) days after the time at which the
event or condition purportedly giving rise to Good Reason first occurs or arises
and (2) if there exists an event or condition that constitutes Good Reason, the
Company shall have thirty (30) days from the date notice of such termination is
received to cure such event or condition and, if the Company does so, such event
or condition shall not constitute Good Reason hereunder; provided, however, that
the Company’s right to cure such event or condition shall not apply if there
have been repeated breaches by the Company.

 

(c)                “Change in Control” shall have the same meaning as the term
“Change of Control” set forth in the Bluerock Residential Growth REIT, Inc.
Second Amended and Restated 2014 Equity Incentive Plan for Entities Effective on
the date of the Closing (as defined in that certain

 

 -10- 

 

Contribution and Sale Agreement between the REIT, the Operating Partnership, BRG
Manager, LLC and the other parties thereto, dated as of August 3, 2017).

 

8.                   Confidentiality/Non-Disclosure. Service Provider and
Executive each acknowledge that, in the course of the service relationship with
the Company, it and he have become and/or will become acquainted and trusted
with (a) certain confidential information and trade secrets, which confidential
information includes, but is not limited to, proprietary software, customer
lists and information, information concerning the Company’s finances, business
practices, long-term and strategic plans and similar matters, information
concerning the Company’s formulas, designs, methods of business, trade secrets,
technology, business operations, business records and files, and any other
information that is not generally known to the public or within the industry or
trade in which the Company competes and was not known to Service Provider or
Executive prior to its or his service relationship with the Company, and (b)
information of third parties that the Company is under a duty to maintain as
confidential (collectively, “Confidential Information”). Except in furtherance
of its duties hereunder, Service Provider and Executive each agree that it and
he will not cause any Confidential Information to be disclosed to third parties
without the prior written consent of the Company and that it and he will not,
without the prior written consent of the Company, divulge or make any use of
such Confidential Information, except as may be required by law and/or to
fulfill his obligations hereunder. Upon the termination of Service Provider’s
service relationship for whatever reason, or at any time the Company may
request, Service Provider and Executive shall immediately deliver to the Company
all of the Company’s property in Service Provider’s or Executive’s possession or
under Service Provider’s or Executive’s control, including but not limited to
all originals and copies of memoranda, notes, plans, records, reports, computer
files, disks and tapes, thumb drives, printouts, worksheets, source code,
software, programming work, and all documents, forms, records or other
information, in whatever form it may exist, regarding the Company’s business,
clients, products or services. Confidential Information does not include
information that: (i) becomes generally known to the public subsequent to
disclosure to Service Provider or Executive through no wrongful act of Service
Provider or Executive or any representative of Service Provider or Executive;
(ii) was known to the public prior to its disclosure to Service Provider or
Executive; or (iii) Service Provider or Executive is required to disclose by
applicable law, regulation or legal process. Additionally, the Parties
acknowledge and agree that the obligations of this Section 8 shall be in
addition to and shall not diminish any obligations that Service Provider or
Executive may have to Company or any customer of Company under any separate
Non-Disclosure and Confidentiality Agreement that Service Provider or Executive
may execute during the service relationship with the Company.

 

9.                   Intellectual Property, Inventions and Patents. Service
Provider and Executive acknowledge that all discoveries, concepts, ideas,
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports, patent applications, copyrightable work and mask work
(whether or not including any Confidential Information) and all registrations or
applications related thereto, all other proprietary information and all similar
or related information (whether or not patentable) which relate to the Company’s
actual or anticipated business, research and development or existing or future
products or services and which were or are conceived, developed, contributed to
or made or reduced to practice by Service Provider or Executive (whether alone
or jointly with others) while providing services to the Company, whether before
or after the date of this Agreement (“Work Product”), belong to the Company.
Service Provider and Executive shall promptly disclose such Work Product to the
Chief Executive Officer and, at the Company’s expense, perform all actions
reasonably requested by the Chief Executive Officer (whether during or after the
Term) to establish and confirm such ownership (including assignments, consents,
powers of attorney and other instruments). Service Provider and Executive each
acknowledge that all copyrightable Work Product shall be deemed to constitute
“works made for hire” under the U.S. Copyright Act of 1976, as amended, and that
the Company shall own all rights therein. To the extent that any such
copyrightable work is not a “work made for hire,” Service Provider and Executive
each hereby assign and agree to assign to the Company all right, title and
interest,

 

 -11- 

 

including a copyright, in and to such copyrightable work. The foregoing
provisions of this Section 9 shall not apply to any invention that Service
Provider or Executive developed entirely on Service Provider’s or Executive’s,
as applicable, own time without using the Company’s equipment, supplies,
facilities or trade secret information, except for those inventions that (i)
relate to the Company’s business or actual or demonstrably anticipated research
or development, or (ii) result from any work performed by Service Provider or
Executive for the Company.

 

10.               Restrictive Covenants.

 

(a)                Notification of New Employer. During Service Provider’s
period of service and for a period of twelve (12) months immediately following
the termination of the service relationship with the Company, each of Service
Provider and Executive will advise the Company of any new employer of its or
his, or any other person or entity for whom it or he may perform services,
within three (3) days after commencing to work for such employer or other person
or entity. Each of Service Provider and Executive hereby agree to notify, and
grant consent to notification by the Company to, any new employer, or other
person or entity for whom it or he may perform services, of it or his
obligations under this Agreement.

 

(b)                Solicitation of Employees. Service Provider and Executive
each agree that during the period of service and for a period of twelve (12)
months immediately following the termination of the service relationship with
the Company for any reason, whether with or without cause, it and he will not
directly or indirectly, for itself or himself or any other person or entity:

 

(i)                 solicit, induce, recruit or encourage any of the Company’s
employees, exclusive consultants or exclusive independent contractors or any
person who provides services to the Company to terminate or reduce their
employment or other relationship with the Company;

 

(ii)               hire any individual who is (or was, within the six (6) month
period immediately preceding such hiring) an employee, exclusive consultant, or
exclusive independent contractor of the Company; or

 

(iii)             attempt to do any of the foregoing.

 

(c)                Solicitation of Customers. Each of Service Provider and
Executive agree that during the period of service and for a period of eighteen
(18) months immediately following the termination of service with the Company
for any reason, whether with or without cause, it and he will not directly or
indirectly, (i) solicit, entice, or induce any Customer for the purpose of
providing, or provide, products or services that are competitive with the
products or services provided by the Company, or (ii) solicit, entice, or induce
any Customer to terminate or reduce its business with (or refrain from
increasing its business with) the Company.

 

As used in this Section 10(c), “Customer” means any person or entity to which
the Company provided products or services (or was invested in products offered
by the Company), and with which Service Provider or Executive had contact on
behalf of the Company, within the last twelve (12) months of its or his service
relationship with the Company.

 

(d)                Noncompetition. Each of Service Provider and Executive agree
that during the service period and for a period of eighteen (18) months
immediately following the termination of the service relationship with the
Company for any reason, whether with or without cause, it and he will not
directly or indirectly:

 

(i)                 have any ownership interest in a Competitor other than (1)
Bluerock or

 

 -12- 

 

(2) passive investment of no more than 5% of the outstanding equity or debt
securities of a Competitor; or

 

(ii)               engage in or perform services other than Personal Activities
(whether as an employee, consultant, proprietor, partner, director or otherwise)
for any Competitor, if such services either (1) are the same as or similar to
(individually or in the aggregate) the services Service Provider performed for
the Company during its service relationship with the Company, or (2) are
performed with respect to products or services of the Competitor that are
competitive with the products or services provided by the Company with which
Service Provider was involved during the service relationship with the Company
or about which it received Confidential Information during its service
relationship with the Company.

 

As used in this section, “Competitor” means: (i) any private or publicly traded
real estate investment trust, fund or other investment vehicle or program whose
principal place of business is in the United States and whose business strategy
is based on investing in, acquiring or developing multifamily real estate,
whether directly or indirectly through joint ventures, or (ii) any entity whose
principal place of business is in the United States and that advises (including
any external advisor) such investment vehicles or programs.

 

The scope of the covenant set forth in Section 10(d) will be within or with
respect to the United States. Service Provider acknowledges that the Company’s
technology and products have nationwide application, including without
limitation over the Internet and that such geographic scope is therefore
reasonable.

 

(e)                Non-Disparagement. The Company and Service Provider and
Executive each acknowledge that any disparaging comments by any party against
another party are likely to substantially depreciate the business reputation of
the other party. The Company and Service Provider and Executive further agree
that no party will directly or indirectly defame, disparage, or publicly
criticize the services, business, integrity, veracity or reputation of another
party, including but not limited to, the Company or its owners, officers,
directors, or employees in any forum or through any medium of communication.
Nothing in this Agreement will preclude Service Provider or Executive or the
Company from supplying truthful information to any governmental authority or in
response to any lawful subpoena or other legal process.

 

(f)                 Service Provider acknowledges and agrees that during its
period of services with Company it will owe the Company duties of good faith,
loyalty and non-disclosure and such statutory duties that are applicable to an
officer of the Company under the laws of the State of New York.

 

11.               Remedies. Service Provider and Executive each acknowledge and
agree that the restrictions set forth in this Agreement are critical and
necessary to protect the Company’s legitimate business interests; are reasonably
drawn to this end with respect to duration, scope, and otherwise; are not unduly
burdensome; are not injurious to the public interest; and are supported by
adequate consideration. Service Provider and Executive each agree that it would
be impossible or inadequate to measure and calculate the Company’s damages from
any breach of the restrictions set forth herein. Accordingly, Service Provider
and Executive each agrees that if it or he breaches or threatens to breach any
of such restrictions, the Company will have available, in addition to any other
right or remedy available, the right to obtain an injunction from a court of
competent jurisdiction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement. Each of Service
Provider and Executive further agree that no bond or other security will be
required in obtaining such equitable relief and each hereby consents to the
issuance of such injunction and to the ordering of specific performance. Service
Provider and Executive each further acknowledge and agree that (a) any claim it
or he may have against the Company, whether under this Agreement or otherwise,
will not be a defense to enforcement of the restrictions set forth in this
Agreement, (b) the circumstances of his termination of the service relationship
with the Company will have no impact on his obligations under this Agreement,
and (c) this

 

 -13- 

 

Agreement is enforceable by the Company and its respective subsidiaries,
affiliates, successors and permitted assigns.

 

12.               LTIP General Provisions. Distributions on LTIPs will be paid
from the date of grant; provided that, only for the Long Term Performance
Awards, distributions until the last day of the three year performance period
(or the date of forfeiture if earlier), shall be paid at the rate of ten percent
(10%) of the distributions otherwise payable with respect to LTIPs granted under
such Long Term Performance Awards; provided further, with respect to each LTIP
granted for Long Term Performance Awards and that vests in accordance with this
Agreement, Service Provider shall be entitled to receive, as of the date of such
vesting, a single cash payment equal to the distributions payable with respect
thereto back to the date of grant, minus the distributions already paid in
accordance with the preceding clause. The REIT will use its best efforts to
ensure that there are sufficient shares of Common Stock and/or LTIPs available
under a shareholder approved equity plan of the REIT to provide for the equity
grants described in Sections 3(b) and 4 of this Agreement; however, in the event
there are insufficient shares of Common Stock and/or LTIPs available under a
shareholder approved equity plan of the REIT to support any such grant of any
LTIPs, on the vesting date of any LTIP grant contemplated pursuant to Section
3(b) or 4, as applicable, had such LTIPs been granted as provided therein, the
Company shall make a cash payment to Service Provider equal to the number of
LTIPs that would have vested on such date multiplied by (a) to the extent the
Economic Capital Account Balance of the LTIPs has not achieved capital account
equivalence with a Common Unit held by the General Partner as of such date
(assuming, for purposes of this clause (a) that the LTIPs had been granted and
treated as outstanding under and received allocations and/or adjustments
pursuant to the Second Amended and Restated Agreement of Limited Partnership of
Bluerock Residential Holdings, L.P., as amended (the “LP Agreement”)), an amount
equal to such deemed Economic Capital Account Balance of the LTIPs, and (b) to
the extent the Economic Capital Account Balance of the LTIPs has achieved
capital account equivalence with a Common Unit held by the General Partner as of
such date (assuming, for purposes of this clause (b) that the LTIPs had been
granted and treated as outstanding under and received allocations and/or
adjustments pursuant to the LP Agreement), an amount equal to the average of the
closing sales price of the Common Stock for the 10 trading dates preceding the
vesting date. The capitalized terms used in this section, if not otherwise
defined in this Agreement, will have the meanings set forth in the LP Agreement.

 

13.               Additional Acknowledgments.

 

(a)                Service Provider, Executive and the Company each agree and
intend that Service Provider’s and Executive’s obligations under this Agreement
(to the extent not perpetual) be tolled during any period that Service Provider
is in breach of any of the obligations under this Agreement, so that the Company
is provided with the full benefit of the restrictive periods set forth herein.

 

(b)                Each of Service Provider and Executive also agree that, in
addition to any other remedies available to the Company and notwithstanding any
provision of this Agreement to the contrary, in the event Service Provider or
Executive breaches in any material respect any of its or his obligations under
Sections 8, 9 or 10, the Company shall immediately cease all payments and
benefits (including vesting of equity-based awards) under Section 5 and will
have no further obligations thereunder.

 

(c)                Service Provider, Executive and the Company further agree
that, in the event that any provision of Section 10 is determined by a court of
competent jurisdiction to be unenforceable by reason of its being extended over
too great a time, too large a geographic scope or too great a range of
activities, that provision will be deemed to be modified to permit its
enforcement to the maximum extent permitted by law. Each of Service Provider,
Executive and the Company acknowledges and agrees that the Company will suffer
irreparable harm from a breach by Service Provider or Executive of any of the
covenants or agreements contained in Sections 8, 9, or 10. Service Provider and
Executive each further acknowledge that the restrictive covenants set forth in
those Sections are of a special, unique, and

 

 -14- 

 

extraordinary character, the loss of which cannot be adequately compensated by
monetary damages. Each of Service Provider and Executive agrees that the terms
and provisions of Sections 8, 9, or 10 are fair and reasonable and are
reasonably required for the protection of the Company in whose favor such
restrictions operate. Each of Service Provider and Executive acknowledge that,
but for Service Provider’s and Executive’s agreements to be bound by the
restrictive covenants set forth in Sections 8, 9, or 10, the Company would not
have entered into this Agreement. In the event of an alleged or threatened
breach by Service Provider or Executive of any of the provisions of Sections 8,
9, or 10, the Company or its successors or assigns may, in addition to all other
rights and remedies existing in its or their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
equitable relief in order to enforce or prevent any violations of the provisions
hereof (including, without limitation, the extension of the noncompetition
period or nonsolicitation period, as applicable, by a period equal to the
duration of the violation).

 

14.               Service Provider’s Cooperation. During the Term and, to the
extent that the Company pays Service Provider’s and Executive’s actual,
reasonable and documented legal fees for legal counsel, also for a reasonable
period thereafter, Service Provider and Executive shall reasonably cooperate
with the Company in any internal investigation, any administrative, regulatory
or judicial investigation or proceeding or any dispute with a third party as
reasonably requested by the Company to the extent that such investigation,
proceeding or dispute may relate to matters in which Service Provider has
knowledge as a result of Service Provider’s service with the Company or Service
Provider’s serving as an officer or director of the Company (including Service
Provider being available to the Company upon reasonable notice for interviews
and factual investigations, appearing at the Company’s request, after reasonable
notice, to give testimony without requiring service of a subpoena or other legal
process, volunteering to the Company all pertinent information and turning over
to the Company all relevant documents which are or may come into Service
Provider’s or Executive’s possession, all at times and on schedules that are
reasonably consistent with Service Provider’s and Executive’s other permitted
activities and commitments). Without limiting the generality of the foregoing,
to the extent that the Company seeks such assistance, the Company shall use
reasonable business efforts, whenever possible, to provide Service Provider with
reasonable advance notice of its need for Service Provider’s or Executive’s
assistance and will attempt to coordinate with Service Provider the time and
place at which Service Provider’s or Executive’s assistance will be provided
with the goal of minimizing the impact of such assistance on any other material
pre-scheduled business commitment that Service Provider and Executive may have.
In the event the Company requires Service Provider’s or Executive’s reasonable
assistance or cooperation in accordance with this Section 14, the Company shall
reimburse Service Provider and Executive solely for reasonable travel expenses
(including lodging and meals) upon submission of receipts and, for cooperation
following the Term, Service Provider’s and Executive’s actual, reasonable and
documented legal fees.

 

15.               Service Provider’s and Executive’s Representations. Each of
Service Provider and Executive hereby represent and warrant to the Company that
(a) the execution, delivery and performance of this Agreement by Service
Provider or Executive does not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Service Provider or Executive is a party or by which Service
Provider or Executive are bound, (b) neither Service Provider nor Executive is
not a party to or bound by any employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity and (c) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Service Provider and, to the extent
applicable, Executive, enforceable in accordance with its terms. Service
Provider hereby acknowledges and represents that Service Provider has consulted
with independent legal counsel regarding Service Provider’s rights and
obligations under this Agreement and that Service Provider fully understands the
terms and conditions contained herein.

 

 -15- 

 

16.               Corporate Opportunity. Service Provider and Executive each
agree that during the Term and for a period of twenty-four (24) months
immediately following the termination of the service relationship with the
Company for any reason, whether with or without Cause, neither Service Provider
nor Executive will use opportunities discovered in the course of the service
relationship hereunder for its or his own personal gain or benefit. For example,
if in in any capacity described in Section 2 of this Agreement, Service Provider
or Executive is approached about or otherwise becomes aware of a potential
investment or other business transaction that may be appropriate for the
Company, neither Service Provider nor Executive will take that opportunity for
itself or himself, or share or disclose it to any third party, but rather
Service Provider will bring it to the attention of the Chief Executive Officer
or the Board of Directors.

 

17.               Insurance for Company’s Own Behalf. The Company may, at its
discretion, apply for and procure in its own name and for its own benefit life
and/or disability insurance on Executive in any amount or amounts considered
advisable. Executive agrees to cooperate in any medical or other examination,
supply any information and execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and constitute
such insurance.

 

18.               Taxes and Withholding. Service Provider and Executive each
acknowledge and agree that Service Provider will be solely responsible for the
payment of taxes associated with amounts payable to Service Provider under this
Agreement and that the Company will not withhold on such amounts. Executive
agrees to provide quarterly reports to the Company evidencing the payment of
estimated taxes by Executive within 30 days following the payment of such taxes.
Executive will indemnify and hold Company harmless for any taxes or penalties
assessed against Company as a result of Company’s failure to withhold on
payments made to Service Provider.

 

19.               Survival. The rights and obligations of the parties under this
Agreement shall survive as provided herein or if necessary or desirable to
accomplish the purposes of other surviving provisions following the termination
of Service Provider’s service relationship with the Company, regardless of the
manner of or reasons for such termination.

 

20.               Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or mailed by prepaid first class
certified mail, return receipt requested, or mailed by overnight courier
prepaid, to (a) Service Provider at the address on file with the Company, and
(b) Company at the following address:

 

Notices to the Company:

 

Bluerock REIT Operator, LLC

c/o Bluerock Residential Growth REIT, Inc.

712 Fifth Avenue, 9th Floor

New York, NY 10019

Attention: Chief Executive Officer

 

Notices to Service Provider:

 

Konig & Associates, LLC

c/o Bluerock Residential Growth REIT, Inc.

712 Fifth Avenue, 9th Floor

New York, NY 10019

Attention: Michael Konig

 

 -16- 

 

AND

 

Michael L. Konig

375 East Main Street

Manasquan, NJ 08736

 

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 20, be deemed given on the
day so delivered, or, if delivered after 5:00 p.m. local time or on a day other
than a Saturday, Sunday or any day on which banks located in the State of New
York are authorized or obligated to close (a “Business Day”), then on the next
proceeding Business Day, (ii) if delivered by certified mail in the manner
described above to the address as provided in this Section 20, be deemed given
on the earlier of the third Business Day following mailing or upon receipt and
(iii) if delivered by overnight courier to the address as provided for in this
Section 20, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt, in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
20. Any party hereto from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.

 

21.               Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

 

22.               Entire Agreement. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. For the avoidance of doubt, Service
Provider shall not be eligible to participate in any severance plan or program
during the Term to the extent such participation would result in a duplication
of benefits. This Agreement will control the vesting and payment of any short
term or long term incentive compensation (including equity compensation whether
settleable in cash or Common Stock) to the extent this Agreement provides for
more favorable vesting regardless of whether such awards are granted after the
Effective Date.

 

23.               No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.

 

24.               Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

25.               Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Service Provider, the Company and
their respective heirs, successors and assigns, except that Service Provider may
not assign Service Provider’s rights or delegate Service Provider’s duties or
obligations hereunder (other than any assignment or delegation to Executive)
without the prior written consent of the Company. The Company may only assign
this Agreement to a successor to all or substantially all of the business and/or
assets of the Company. As used in this Agreement, “Company” shall mean the
Company and any successor to its business and/or assets, which assumes and
agrees to perform the duties and obligations of the Company under this Agreement
by operation of law or otherwise.

 

 -17- 

 

26.               Choice of Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any
choice-of-law or conflict-of-law rules or provisions (whether of the State of
New York or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of New York.

 

27.               Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company (as
approved by the Chief Executive Officer) and Service Provider, and no course of
conduct or course of dealing or failure or delay by any party hereto in
enforcing or exercising any of the provisions of this Agreement (including the
Company’s right to terminate the Term for Cause) shall affect the validity,
binding effect or enforceability of this Agreement or be deemed to be an implied
waiver of any provision of this Agreement.

 

28.               Consent to Jurisdiction. EACH OF THE PARTIES IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER
AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S.
REGISTERED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PARTY’S RESPECTIVE ADDRESS
SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR
PROCEEDING IN THE STATE OF NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS
SUBMITTED TO JURISDICTION IN THIS SECTION 27. EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF
ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, AND HEREBY AND THEREBY FURTHER
IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

29.               Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED-FOR
INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER
HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY
WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR
ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

30.               Section 409A.

 

(a)                Interpretation. Notwithstanding the other provisions hereof,
this Agreement is intended to comply with the requirements of Section 409A of
the Code and regulations thereunder (“Section 409A”) or any exemption
thereunder, to the extent applicable, and this Agreement shall be interpreted
accordingly. If necessary, any provisions of this Agreement that would otherwise
violate Section 409A shall be deemed amended to comply with Section 409A. For
purposes of Section 409A, each payment made under this Agreement shall be
treated as a separate payment. In no event may Service Provider, directly or
indirectly, designate the calendar year of any payment that constitutes deferred
compensation for purposes of Section 409A. To the extent any payment or benefit
provided under Sections 5 or 6 is contingent upon Service Provider’s execution
of the general release of claims described in Section 5(d)(ii), if such payment
or benefit constitutes deferred compensation for purposes of

 

 -18- 

 

Section 409A and the 60-day period described in Section 5(d)(ii) spans calendar
years, such payment and/or benefit shall be paid or commence, as applicable, in
the latter calendar year. Service Provider will be deemed to have a separation
from service for purposes of determining the timing of any payments or benefits
hereunder that constitute deferred compensation for purposes of Section 409A
only upon a “separation from service” within the meaning of Section 409A.

 

(b)                Payment Delay. Notwithstanding any provision to the contrary
in this Agreement, if on the date of Service Provider’s termination of service,
either Service Provider or Executive is a “specified employee” (as such term is
used in Section 409A), then any amounts payable to Service Provider that
constitute deferred compensation for purposes of Section 409A that are payable
due to Service Provider’s termination of services shall be postponed and paid
(without interest) to Service Provider in a lump sum on the date that is six (6)
months and one (1) day following Service Provider’s “separation from service”
with the Company (or any successor thereto); provided, however, that if
Executive dies during such six-month period and prior to payment of the
postponed cash amounts hereunder, the amounts delayed on account of Section 409A
shall be paid to the personal representative of Executive’s estate on the
sixtieth (60th) day after Executive’s death.

 

(c)                Reimbursements. All reimbursements provided under this
Agreement that constitute deferred compensation under Section 409A shall be made
or provided in accordance with the requirements of Section 409A, including,
where applicable, the requirement that (i) any reimbursement is for expenses
incurred during Executive’s lifetime (or during a shorter period of time
specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the taxable year following the
year in which the expense is incurred, and (iv) the right to reimbursement is
not subject to liquidation or exchange for another benefit.

 

 

 

* * * * *

 

 

 

 

 

 

 

 

[Signature Page Follows]

 

 -19- 

 

 

 

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

 

  Bluerock Residential Growth REIT, Inc.               By: /s/ R. Ramin Kamfar  
Name:    R. Ramin Kamfar   Title: Chairman of the Board, Chief Executive
Officer, and President               Bluerock Residential Holdings, L.P.      
By: Bluerock Residential Growth REIT, Inc.   Its: General Partner              
By: /s/ R. Ramin Kamfar   Name: R. Ramin Kamfar   Title: Chairman of the Board,
Chief Executive Officer, and President               BLUEROCK REIT OPERATOR, LLC
      By: BRG Manager, LLC, its Sole Member   By: Bluerock Real Estate, L.L.C.,
its Sole Member               By: /s/ R. Ramin Kamfar   Name: R. Ramin Kamfar  
Title: Chief Executive Officer               Konig & Associates, LLC            
  By: /s/ Michael Konig   Name: Michael Konig   Its: Sole Member              
/s/ Michael Konig   Michael Konig

 

 -20-