MANAGEMENT AGREEMENT

 

among

 

Bluerock Residential Growth REIT, Inc.

 

Bluerock Residential Holdings, L.P.

 

and

 

BRG Manager, LLC

 

Dated as of April 2, 2014

 

1

 

  

MANAGEMENT AGREEMENT, dated as of April 2, 2014, among Bluerock Residential
Growth REIT, Inc., a Maryland corporation (“BRG”), Bluerock Residential
Holdings, L.P., a Delaware limited partnership (the “Operating Partnership”) and
BRG Manager, LLC, a Delaware limited liability company (the “Manager”).

 

W I T N E S S E T H:

 

WHEREAS, BRG intends to invest in Target Assets (as defined below) and has
qualified as a real estate investment trust for federal income tax purposes
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the “Code”) beginning with its taxable year ended December 31, 2010; and

 

WHEREAS, BRG is the general partner of the Operating Partnership, and BRG
intends to conduct substantially all of its business and make all Investments
(as defined below) through the Operating Partnership;

 

WHEREAS, BRG and the Operating Partnership desire to retain the Manager to
administer the business activities and day-to-day operations of the Company (as
defined below) and to perform services for the Company in the manner and on the
terms set forth herein and the Manager wishes to be retained to provide such
services, subject to the supervision of the Board (as defined below), on the
terms and conditions hereinafter set forth;

 

WHEREAS, the Manager wishes to be retained to administer such business
activities and day-to-day operations and to provide such services;

 

NOW THEREFORE, in consideration of the premises and agreements hereinafter set
forth, the parties hereto hereby agree as follows:

 

Section 1. Definitions.

 

(a) The following terms shall have the meanings set forth in this Section 1(a):

 

“Above-Market Rates” has the meaning set forth in Section 10(b).

 

“Acquisition Expenses” means any and all expenses incurred by the Company, the
Manager or any of their respective Affiliates in connection with the selection,
evaluation, acquisition, origination, making or development of any Investment,
whether or not acquired, including, but not limited to, legal fees and expenses,
travel and communications expenses, property inspection expenses, third party
brokerage or finder’s fees, costs of appraisals, nonrefundable option payments
on property not acquired, accounting fees and expenses, title insurance premiums
and expenses, survey expenses, closing costs and the costs of performing due
diligence.

 

“Affiliate” means (i) any Person directly or indirectly controlling, controlled
by, or under common control with such other Person, (ii) any executive officer
or general partner of such other Person, (iii) any member of the board of
directors or board of managers (or bodies performing similar functions) of such
Person, and (iv) any legal entity for which such Person acts as an executive
officer or general partner.

 

“AFFO” means adjusted funds from operations, calculated by adjusting FFO by
adding back acquisition expenses, equity based compensation expenses, and any
other non-recurring on non-cash expenses, and subtracting recurring capital
expenditures (and, when calculating the Incentive Fee only, further adjusting
FFO to include any realized gains or losses on the Company’s real estate
investments).

 

“Agreement” means this Management Agreement, as amended, supplemented or
otherwise modified from time to time.

 

“Automatic Renewal Term” has the meaning set forth in Section 10(a) hereof.

 

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“Bankruptcy” means, with respect to any Person, (a) the filing by such Person of
a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
or any other U.S. federal or state or foreign insolvency law, or such Person’s
filing an answer consenting to or acquiescing in any such petition, (b) the
making by such Person of any assignment for the benefit of its creditors,
(c) the expiration of 60 days after the filing of an involuntary petition under
Title 11 of the Unites States Code, an application for the appointment of a
receiver for a material portion of the assets of such Person, or an involuntary
petition seeking liquidation, reorganization, arrangement or readjustment of its
debts under any other U.S. federal or state or foreign insolvency law; provided,
that the same shall not have been vacated, set aside or stayed within such
60-day period or (d) the entry against such Person of a final and non-appealable
order for relief under any bankruptcy, insolvency or similar law now or
hereinafter in effect.

 

“Base Management Fee” means the base management fee in an amount equal to the
sum of (a) 0.25% of BRG’s Existing and Contributed Stockholders’ Equity, per
annum, calculated and payable in quarterly installments in arrears in cash, and
(b) 1.50% of BRG’s New Stockholders’ Equity, per annum, calculated and payable
in quarterly installments in arrears in cash.

 

“BRG” has the meaning set forth in the preamble.

 

“Board” means the board of directors of BRG. In every instance herein requiring
approval of the Board or referring to policies or directions of the Board, for
purposes of this Agreement, the Board shall be deemed to include any duly
appointed and constituted committee of the Board with respect to each and every
act that under the Governing Instruments or applicable law may be taken with the
approval of a duly appointed and constituted committee of the Board, and
references herein to the Board shall be deemed to include references to each
such committee.

 

“Business Day” means any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York are not required to be open.

 

“Cause Termination Notice” has the meaning set forth in Section 11(a).

 

“Claim” has the meaning set forth in Section 8(d) hereof.

 

“Class A Common Stock” means the Class A common stock, par value $0.01 per
share, of BRG.

 

“Class B Common Stock” means, collectively, the Class B-1 common stock, Class
B-2 common stock, and Class B-3 common stock, in each case, par value $0.01 per
share, of BRG.

 

“Closing Date” means the date of closing of the Public Offering.

 

“Code” has the meaning set forth in the Recitals.

 

“Common Stock Equivalents” means shares of the Class A Common Stock issuable
pursuant to outstanding rights, options or warrants to subscribe for, purchase
or otherwise acquire shares of Class A Common Stock that are in-the-money on
such date.

 

“Company” means, collectively, BRG and the Operating Partnership.

 

“Company Entities” means, collectively, BRG, the Operating Partnership and each
of their respective subsidiaries.

 

“Company Indemnified Party” has meaning set forth in Section 8(c) hereof.

 

“Conduct Policies” has the meaning set forth in Section 2(l) hereof.

 

“Confidential Information” has the meaning set forth in Section 5 hereof.

 

“Effective Termination Date” has the meaning set forth in Section 10(b) hereof,
and shall also mean the effective date of termination of this Agreement by any
notice given pursuant to Sections 10(d), 11(a) or 11(b) hereof.

 

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“Equity Incentive Plans” means the equity incentive plans adopted by BRG to
provide incentive compensation to attract and retain qualified independent
directors, executive officers and other key employees, including officers and
employees of the Manager and Operating Partnership and their Affiliates and
other service providers, including the Manager and its Affiliates.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Existing and Contributed Stockholders’ Equity” means (a)  the net proceeds from
(or equity value assigned to) all issuances of BRG’s equity and equity
equivalent securities (including Class B Common Stock (including upon their
conversion into shares of Class A Common Stock), Common Stock Equivalents,
preferred stock and units of limited partnership interest in the Operating
Partnership) since inception (allocated on a pro rata daily basis for such
issuances during the fiscal quarter of any such issuance), less (b) any amount
that BRG has paid to repurchase BRG’s Common Stock since inception. Existing and
Contributed Stockholders’ Equity also excludes (1) any unrealized gains and
losses and other non-cash items (including depreciation and amortization) that
have impacted stockholders’ equity as reported in the Company’s financial
statements prepared in accordance with GAAP, and (2) one-time events pursuant to
changes in GAAP, and certain non-cash items not otherwise described above, in
each case after discussions between the Manager and the Independent Directors
and approval by a majority of the Independent Directors.

 

“FFO” means funds from operations as such term is from time to time defined by
the National Association of Real Estate Investment Trusts, as net income,
computed in accordance with GAAP, excluding gains (or losses) from sales of
property, plus depreciation and amortization of real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect FFO
on the same basis.

 

“Financing Transaction” means any financing transaction with respect to any
Investment involving any of the Company Entities incurring any mortgage or other
indebtedness, including the entering into any line of credit, mezzanine
financing, preferred equity financing, and any transaction involving the
creation of any commercial mortgage-backed security.

 

“GAAP” means generally accepted accounting principles in effect in the United
States on the date such principles are applied.

 

“Governing Instruments” means, with regard to any entity, the articles of
incorporation or certificate of incorporation and bylaws in the case of a
corporation, the partnership agreement in the case of a general partnership, the
certificate of limited partnership and the partnership agreement in the case of
a limited partnership, the certificate of formation and operating agreement in
the case of a limited liability company, the trust instrument in the case of a
trust, or similar governing documents, in each case as amended from time to
time.

 

“Incentive Fee” means the incentive fee payable to the Manager, which shall be
calculated and payable with respect to each calendar quarter (or part thereof
that this Agreement is in effect) in arrears in an amount, not less than zero,
equal to the difference between (1) the product of (a) 20% and (b) the
difference between (i) AFFO of BRG for the previous 12-month period, and
(ii) the product of (A) the weighted average of the issue price of equity
securities issued in the Public Offering and in future offerings and
transactions of BRG, multiplied by the weighted average number of all shares of
Class A Common Stock outstanding on a fully-diluted basis (including, for the
avoidance of doubt, any restricted stock units, any restricted shares of Class A
Common Stock, Equity Incentive Plan units, and other shares of common stock
underlying other awards granted under one or more of BRG’s Equity Incentive
Plans and units of limited partnership interest in the Operating Partnership) in
the previous 12-month period, exclusive of equity securities issued prior to the
Public Offering, and (B) 8%, and (2) the sum of any Incentive Fees paid to the
Manager with respect to the first three calendar quarters of such previous
12-month period; provided, however, that no Incentive Fee is payable with
respect to any calendar quarter unless AFFO is greater than zero for the four
most recently completed calendar quarters, or the number of completed calendar
quarters since the Closing Date of the Public Offering, whichever is less. For
purposes of calculating the Incentive Fee during the first 12 months after
completion of the Public Offering, AFFO will be determined by annualizing the
applicable period following completion of the Public Offering.

 

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If the Effective Termination Date does not correspond to the end of a calendar
quarter, the Manager’s Incentive Fee shall be calculated for the period
beginning on the day after the end of the calendar quarter immediately preceding
the Effective Termination Date and ending on the Effective Termination Date,
which Incentive Fee shall be calculated using AFFO for the 12-month period
ending on the Effective Termination Date.

 

“Indemnified Party” has the meaning set forth in Section 8(c) hereof.

 

“Independent Director” means a member of the Board who is “independent” in
accordance with BRG’s Governing Instruments and the rules of the Securities
Exchange on which the shares of Class A Common Stock are listed.

 

“Initial Term” has the meaning set forth in Section 10(a) hereof.

 

“Investment” means any investment by the Company, directly or through a
subsidiary, in a Target Asset.

 

“Investment Allocation Agreement” refers to the investment allocation agreement,
dated April 2, 2014, by and among BRG, the Operating Partnership, the Manager
and Bluerock Real Estate, L.L.C.

 

“Investment Committee” means the investment committee of the Board, which shall
be composed of at least three members appointed by the Board, at least a
majority of which shall be Independent Directors, formed for the primary purpose
of (1) periodically reviewing the Company’s Investments and (2) pursuant to the
Investment Guidelines, approving certain investments proposed to be made by the
Company.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Investment Guidelines” means the investment guidelines approved by the Board, a
copy of which is attached hereto as Exhibit A, as the same may be amended,
restated, modified, supplemented or waived pursuant to the approval of a
majority of the entire Board (which must include a majority of the Independent
Directors).

 

“Investment Transaction” means any purchase, acquisition, exchange, sale or
disposition, merger or interest exchange that results in the acquisition or
disposition of, or other transaction involving, an Investment.

 

“Last Appraiser” has the meaning set forth in Section 6(g) hereof.

 

“Losses” has the meaning set forth in Section 8(b) hereof.

 

“LTIP Unit” shall have the definition set forth in the partnership agreement of
the Operating Partnership.

 

“Manager” has the meaning set forth in the Recitals.

 

“Manager Change of Control” means a change in the direct or indirect
(i) beneficial ownership of more than fifty percent (50%) of the combined voting
power of the Manager’s then outstanding equity interests, or (ii) power to
direct or control the management policies of the Manager, whether through the
ownership of beneficial equity interests, common directors or officers, by
contract or otherwise. Manager Change of Control shall not include (i) public
offerings of the equity interests of the Manager, (ii) any of the foregoing
changes resulting from a transfer by R. Ramin Kamfar to a trust or other entity
created for estate planning purposes primarily for the benefit of R. Ramin
Kamfar, or (iii) any assignment of this Agreement by the Manager as permitted
hereby and in accordance with the terms hereof.

 

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“Manager Indemnified Party” has the meaning set forth in Section 8(a) hereof.

 

“Manager Permitted Disclosure Parties” has the meaning set forth in Section 5(a)
hereof.

 

“New Stockholders’ Equity” means (a) the sum of (1) the net proceeds from (or
equity value assigned to) all issuances of BRG’s equity and equity equivalent
securities (including Class A Common Stock, Common Stock Equivalents, preferred
stock and units of limited partnership interest in the Operating Partnership) in
the Public Offering or any subsequent offering (allocated on a pro rata daily
basis for such issuances during the fiscal quarter of any such issuance), plus
(2) BRG’s retained earnings at the end of the most recently completed calendar
quarter (without taking into account any non-cash equity compensation expense
incurred in current or prior periods), less (b) any amount that BRG has paid to
repurchase BRG’s Class A Common Stock issued in the Public Offering or any
subsequent offering. New Stockholders’ Equity also excludes (1) any unrealized
gains and losses and other non-cash items (including depreciation and
amortization) that have impacted stockholders’ equity as reported in the
Company’s financial statements prepared in accordance with GAAP, and (2)
one-time events pursuant to changes in GAAP, and certain non-cash items not
otherwise described above, in each case after discussions between the Manager
and the Independent Directors and approval by a majority of the Independent
Directors.

 

“Notice of Proposal to Negotiate” has the meaning set forth in Section 10(c)
hereof.

 

“NYSE” means the New York Stock Exchange.

 

“Person” means any natural person, corporation, partnership, association,
limited liability company, estate, trust, joint venture, any federal, state,
county or municipal government or any bureau, department or agency thereof or
any other legal entity and any fiduciary acting in such capacity on behalf of
the foregoing.

 

“Public Offering” means BRG’s sale of Class A Common Stock to the public through
underwriters pursuant to BRG’s Registration Statement on Form S-11
(No. 333-192610).

 

“Regulation FD” means Regulation FD as promulgated by the SEC.

 

“REIT” means a “real estate investment trust” as defined under the Code.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securities Exchange” means the NYSE, NYSE MKT, and any other nationally
recognized securities exchange on which BRG’s Class A Common Stock is traded.

  

“Target Assets” means the types of assets described under “Our Business and
Properties” in the prospectus contained in BRG’s Registration Statement on
Form S-11 (No. 333-192610) relating to the Public Offering, subject to, and
including any changes to the Company’s Investment Guidelines that may be
approved by the Board from time to time.

 

“Termination Fee” means a termination fee equal to three (3) times the sum of
(i) the Base Management Fee and (ii) the Incentive Fee, in each case, earned by
the Manager during the 12-month period immediately preceding the most recently
completed fiscal quarter prior to the Effective Termination Date.

 

“Termination Notice” has the meaning set forth in Section 10(b) hereof.

 

“Termination Without Cause” has the meaning set forth in Section 10(b) hereof.

 

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“Valuation Notice” has the meaning set forth in Section 6(g) hereof.

 

(b) As used herein, accounting terms relating to any Company Entity, if any, not
defined in Section 1(a) and accounting terms partly defined in Section 1(a), to
the extent not defined, shall have the respective meanings given to them under
GAAP. As used herein, “calendar quarters” shall mean the period from January 1
to March 31, April 1 to June 30, July 1 to September 30 and October 1 to
December 31 of the applicable year.

 

(c) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified.

 

(d) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms. The words include, includes
and including shall be deemed to be followed by the phrase “without limitation.”

 

Section 2. Appointment and Duties of the Manager.

 

(a) BRG and the Operating Partnership hereby appoint the Manager to manage the
investments and day-to-day operations of the Company Entities, subject at all
times to the further terms and conditions set forth in this Agreement and to the
supervision and direction of, and such further limitations or parameters as may
be imposed from time to time by, the Board. The Manager hereby agrees to use its
commercially reasonable efforts to perform each of the duties set forth herein,
provided that funds are made available by the Company for such purposes as set
forth in Section 7 hereof, and further subject to Section 6 hereof. The
appointment of the Manager shall be exclusive to the Manager, except to the
extent that the Manager elects, in its reasonable discretion, subject to the
terms of this Agreement, to cause the duties of the Manager as set forth herein
to be provided by third parties.

 

(b) The Manager, in its capacity as manager of the Investments and the
operations of the Company Entities, at all times will be subject to the
supervision and direction of the Board and will use commercially reasonable
efforts to present to the Company potential investment opportunities and will
perform its duties hereunder, including managing the Company’s business affairs
in conformity with the Investment Guidelines and other policies that are
approved and monitored by the Board. BRG, the Operating Partnership and the
Manager hereby acknowledge the recommendation by the Manager and the approval by
the Board of the Investment Guidelines, including, but not limited to the
Company’s investment strategy in the Target Assets. BRG, the Operating
Partnership and the Manager hereby acknowledge and agree that, during the term
of this Agreement, any proposed changes to the Company’s investment strategy
that would modify or expand the Target Assets shall require a change in, or
supplement to, the Investment Guidelines. The Company shall notify the Manager
promptly of any amended, restated, supplemented or waived Investment Guidelines,
including any modification or revocation of the Manager’s authority set forth in
the Investment Guidelines; provided, however, that such modification or
revocation shall not be applicable to Investment Transactions to which the
Manager has committed any Company Entity prior to the date of receipt by the
Manager of such notification.

 

(c) The Manager will be responsible for (1) the selection, purchase, sale and
disposition of Investments, (2) the Company’s financing activities, and (3)
providing the Company with advisory services. In addition, the Manager will be
responsible for the day-to-day operations of the Company Entities (which, for
purposes of the Manager’s responsibilities in this Agreement, includes their
respective subsidiaries) and will perform (or cause to be performed) such
services and activities relating to the Investments and operations of the
Company Entities as may be appropriate, which may include, without limitation:

 

(i) serving as the Company’s consultant with respect to the periodic review of
the Investment Guidelines and other parameters for the Company’s Investments,
financing activities and operations, any modification to which will be approved
by the Board (including a majority of the Independent Directors);

 

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(ii) investigating, analyzing, and selecting possible Investment opportunities
and acquiring, financing, retaining, selling, restructuring, exchanging or
disposing of Investments consistent with the Investment Guidelines;

 

(iii) with respect to prospective Investment Transactions and Financing
Transactions, conducting negotiations (including negotiation of definitive
agreements) on the Company’s behalf with sellers, purchasers, and brokers and,
if applicable, their respective agents and representatives;

 

(iv) negotiating and entering into, on the Company’s behalf, interest rate swap
agreements and other agreements and instruments required for the Company to
conduct the Company’s business;

 

  (v) effecting any private placement of interest in the Operating Partnership,
tenancy-in-common or other interests in Investments as may be approved by the
Board;

 

(vi) engaging and supervising, on the Company’s behalf and at the Company’s
expense, independent contractors that provide investment banking, securities
brokerage, mortgage brokerage, real estate brokerage, other financial services,
due diligence services, underwriting review services, legal and accounting
services, and all other services (including transfer agent and registrar
services) as may be required relating to the Company’s operations and actual or
potential Investments Investment Transactions or Financing Transactions;

 

(vii) coordinating and managing operations of any joint venture or co-investment
interests held by the Company and conducting all matters with the joint venture
or co-investment partners;

 

(viii) providing executive and administrative personnel, office space and office
services required in rendering services to the Company;

 

(ix) administering the day-to-day operations and performing and supervising the
performance of such other administrative functions necessary to the Company’s
management as may be agreed upon by the Manager and the Board, including,
without limitation, the collection of revenues and the payment of the Company’s
debts and obligations and maintenance of appropriate computer services to
perform such administrative functions;

 

(x) communicating on the Company’s behalf with the holders of any of the
Company’s equity or debt securities of BRG or the Operating Partnership as
required to satisfy the reporting and other requirements of any governmental
bodies or agencies or trading markets and to maintain effective relations with
such holders;

 

(xi) counseling the Board and the Company in connection with policy decisions to
be made by the Board;

 

(xii) evaluating and recommending to the Board hedging strategies and engaging
in hedging activities on the Company’s behalf, consistent with such strategies
as so modified from time to time, BRG’s qualification as a REIT and with the
Investment Guidelines;

 

(xiii) counseling the Board and the Company regarding the maintenance of BRG’s
qualification as a REIT and monitoring compliance with the various REIT
qualification tests and other rules set out in the Code and Treasury Regulations
thereunder and using commercially reasonable efforts to cause BRG to continue to
qualify for taxation as a REIT;

 

(xiv) counseling the Company regarding the maintenance of the Company’s
exemption from the status of an investment company required to register under
the Investment Company Act, monitoring compliance with the requirements for
maintaining such exemption and using commercially reasonable efforts to cause
the Company to maintain such exemption from such status;

 

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(xv) furnishing reports and statistical and economic research to the Company
regarding the Company’s activities and services performed for the Company by the
Manager, including reports to the Board with respect to potential conflicts of
interest involving the Manager or any of its Affiliates;

 

  (xvi) monitoring the operating performance of the Company’s Investments and
providing periodic reports with respect thereto to the Board, including
comparative information with respect to such operating performance and budgeted
or projected operating results;

 

(xvii) investing and reinvesting any moneys and securities of the Company
(including investing in short-term investments pending investment in other
investments, payment of fees, costs and expenses, or payments of dividends or
distributions to BRG’s stockholders and the Operating Partnership’s partners)
and advising the Company as to its capital structure and capital raising;

 

(xviii) causing the Company to retain qualified accountants and legal counsel,
as applicable, to assist in developing appropriate accounting procedures and
systems, internal controls and other compliance procedures and testing systems
with respect to financial reporting obligations and compliance with the
provisions of the Code applicable to REITs and, if applicable, taxable REIT
subsidiaries, and to conduct quarterly compliance reviews with respect thereto;

 

(xix) assisting the Company in qualifying to do business in all applicable
jurisdictions and to obtain and maintain all appropriate licenses;

 

(xx) assisting the Company in complying with all regulatory requirements
applicable to the Company in respect of the Company’s business activities,
including preparing or causing to be prepared all financial statements required
under applicable regulations and contractual undertakings and all reports and
documents, if any, required under the Exchange Act or the Securities Act, or by
the applicable Securities Exchange;

 

(xxi) assisting the Company in taking all necessary action to enable the Company
to make required tax filings and reports, including soliciting stockholders for
required information to the extent required by the provisions of the Code
applicable to REITs;

 

(xxii) handling and resolving all claims, disputes or controversies (including
all litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company may be involved or to which the Company may be subject arising
out of the Company’s day-to-day operations (other than with the Manager or its
Affiliates), subject to such limitations or parameters as may be imposed from
time to time by the Board;

 

(xxiii) using commercially reasonable efforts to cause expenses incurred by the
Company or on the Company’s behalf to be commercially reasonable or commercially
customary and within any budgeted parameters or expense guidelines set by the
Board from time to time;

 

(xxiv) serving as the Company’s consultant with respect to decisions regarding
any of its financings, hedging activities, borrowings or joint venture
arrangements undertaken by the Company, including (1) assisting the Company in
developing criteria for debt and equity financing that is specifically tailored
to its investment objectives, and (2) advising the Company with respect to
obtaining appropriate financing for its investments;

 

(xxv) arranging marketing materials, advertising, industry group activities
(such as conference participations and industry organization memberships) and
other promotional efforts designed to promote the Company’s business;

 

9

 

 

(xxvi) performing such other services as may be required from time to time for
management and other activities relating to the Company’s assets and business as
the Board shall reasonably request or the Manager shall deem appropriate under
the particular circumstances; and

 

(xxvii) using commercially reasonable efforts to cause the Company to comply
with all applicable laws.

 

(d)  The Manager may retain, for and on behalf, and at the sole cost and
expense, of the Company, such services of the persons and firms referred to in
Section 7(b) hereof as the Manager deems necessary or advisable in connection
with the management and operations of the Company. In performing its duties
under this Section 2, the Manager shall be entitled to rely reasonably on
qualified experts and professionals (including, without limitation, accountants,
legal counsel and other professional service providers) hired by the Manager at
the Company’s sole cost and expense.

 

(e)  The Manager shall refrain from any action that, in its sole judgment made
in good faith, (i) is not in compliance with the Investment Guidelines,
(ii) would adversely and materially affect the qualification of BRG as a REIT or
the Operating Partnership as a partnership under the Code or the Company’s
status as an entity exempted or excluded from investment company status under
the Investment Company Act, or (iii) would conflict with or violate any law,
rule or regulation of any governmental body or agency having jurisdiction over
the Company or of any exchange on which the securities of the Company may be
listed or any applicable Governing Instruments. If the Manager is ordered to
take any action by the Board, the Manager shall promptly notify the Board if it
is the Manager’s judgment that such action would adversely and materially affect
such status or conflict with or violate any such law, rule or regulation or
Governing Instruments. Notwithstanding the foregoing, neither the Manager nor
any of its Affiliates shall be liable to the Company, the Board, or the
Company’s stockholders or partners, as applicable, for any act or omission by
the Manager or any of its Affiliates, except as provided in Section 8 of this
Agreement.

 

(f)  The Manager shall notify the Board in advance of all proposed Investment
Transactions before they are completed. The Manager shall seek and obtain Board
approval of any Investment Transaction that does not meet the Investment
Guidelines. Subject to this Section 2(f), the Manager may execute without Board
approval (but, in all cases, with advance notice to the Board) any Investment
Transaction that fits within the Investment Guidelines, if then permitted by the
Investment Guidelines. If any proposed Investment Transaction requires approval
by the Independent Directors, the Manager will deliver to the Independent
Directors all documents and other information reasonably required by them to
evaluate properly the proposed transaction. With respect to Investment
Transactions for which Board approval is not required but advance notice is
required, the Manager shall provide to the Board a summary of its investment
analysis with respect to the proposed Investment Transaction. The Board may, at
any time upon the giving of notice to the Manager, modify or revoke the
authority set forth in this Section 2(f); provided, however, that such
modification or revocation shall be effective upon receipt by the Manager and
shall not be applicable to Investment Transactions to which the Manager has
committed the Company prior to the date of receipt by the Manager of such
notification.

 

(g) The Company (including the Board) agrees to take all actions reasonably
required to permit and enable the Manager to carry out its duties and
obligations under this Agreement, including, without limitation, all steps
reasonably necessary to allow the Manager to file any registration statement or
other filing required to be made under the Securities Act, Exchange Act, the
applicable Securities Exchange’s Listed Company Manual, the Code or other
applicable law, rule or regulation on behalf of the Company in a timely manner.
The Company further agrees to use commercially reasonable efforts to make
available to the Manager all resources, information and materials reasonably
requested by the Manager to enable the Manager to satisfy its obligations
hereunder, including its obligations to deliver financial statements and any
other information or reports with respect to the Company.

 

10

 

 

(h) As frequently as the Manager may deem reasonably necessary or advisable, or
at the direction of the Board, the Manager shall prepare, or, at the sole cost
and expense of the Company, cause to be prepared, any reports and other
information relating to any proposed or consummated Investment as may be
reasonably requested by the Company.

 

(i) The Manager shall prepare, or, at the sole cost and expense of the Company,
cause to be prepared, all reports, financial or otherwise, with respect to the
Company reasonably required by the Board in order for the Company Entities to
comply with their respective Governing Instruments or as otherwise reasonably
requested by the Board, or any other materials required to be filed with any
governmental body or agency, and shall prepare, or, at the sole cost and expense
of the Company, cause to be prepared, all materials and data necessary to
complete such reports and other materials, including, without limitation, an
annual audit of BRG’s consolidated financial statements by a nationally
recognized independent accounting firm.

 

(ii) The Manager shall prepare, or, at the sole cost and expense to the Company,
cause to be prepared, regular reports for the Board to enable the Board to
review the Company’s acquisitions, portfolio composition and characteristics,
performance and compliance with the Investment Guidelines and policies approved
by the Board.

 

(i)  Officers, employees and agents of the Manager and its Affiliates may serve
as directors, officers, agents, nominees or signatories for any Company Entity,
to the extent permitted by their respective Governing Instruments or by any
resolutions duly adopted by the Board, the Operating Partnership or such Company
Entity. When executing documents or otherwise acting in such capacities for any
Company Entity, such Persons shall indicate in what capacity they are executing
on behalf of such Company Entity. Without limiting the foregoing, while this
Agreement is in effect, the Manager will provide the Company with a management
team, including a Chief Executive Officer, President, Chief Accounting Officer,
and Chief Operating Officer, along with appropriate support personnel, to
provide the management services to be provided by the Manager to the Company
Entities hereunder, who shall devote such of their time to the management of the
Company as necessary and appropriate, commensurate with the level of activity of
the Company from time to time.

 

(j)  The Manager, at its sole cost and expense, shall at all times during the
term of this Agreement maintain reasonable and customary “errors and omissions”
insurance coverage and other customary insurance coverage in respect to its
obligations and activities under, or pursuant to, this Agreement, naming BRG and
the Operating Partnership as additional insureds.

 

(k)  The Manager, at its sole cost and expense, shall provide such third party
internal audit, compliance and control services as may be required for the
Company to comply with applicable law (including the Securities Act and Exchange
Act), regulation (including SEC regulations) and the rules and requirements of
the applicable Securities Exchange and as otherwise reasonably requested by the
Company or the Board from time to time.

 

(l)  The Manager acknowledges receipt of BRG’s Code of Business Conduct and
Ethics and Policy on Insider Trading (the “Conduct Policies”) and agrees to
require any Persons who provide services to the Company to comply with such
Conduct Policies in the performance of such services hereunder or such
comparable policies as shall in substance hold such Persons to at least the
standards of conduct set forth in the Conduct Policies.

 

(m) The Manager, at its sole cost and expense, shall maintain any required
registration of the Manager or any Affiliate with the SEC under the Investment
Advisers Act of 1940, as amended, or with any state securities authority in any
state in which the Manager or its Affiliate is required to be registered as an
investment advisor under applicable state securities laws.

 

Section 3. Additional Activities of the Manager; Non-Solicitation; Restrictions.

 

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(a)  Except as provided in the last sentence of this Section 3(a), the
Investment Allocation Agreement and/or the Investment Guidelines, nothing in
this Agreement shall (i) prevent the Manager or any of its Affiliates, officers,
directors or employees, from engaging in other businesses or from rendering
services of any kind to any other Person or entity, whether or not the
investment objectives or policies of any such other Person or entity are similar
to those of the Company; provided, however, that the Manager shall devote
sufficient resources to the Company’s business to discharge its obligations to
the Company Entities under this Agreement; or (ii) in any way bind or restrict
the Manager or any of its Affiliates, officers, directors or employees from
buying, selling or trading any securities or commodities for their own accounts
or for the account of others for whom the Manager or any of its Affiliates,
officers, directors or employees may be acting. While information and
recommendations supplied to the Company shall, in the Manager’s reasonable and
good faith judgment, be appropriate under the circumstances and in light of the
investment objectives and policies of the Company, they may be different from
the information and recommendations supplied by the Manager or any Affiliate of
the Manager to others. The Company shall be entitled to equitable treatment
under the circumstances in receiving information, recommendations and any other
services, but the Company recognizes that it is not entitled to receive
preferential treatment as compared with the treatment given by the Manager or
any Affiliate of the Manager to others. The Company shall have the benefit of
the Manager’s best judgment and effort in rendering services hereunder and, in
furtherance of the foregoing, the Manager shall not undertake activities that,
in its good faith judgment, will adversely affect the performance of its
obligations under this Agreement.

 

(b) The Manager shall report to the Board any condition or circumstance,
existing or anticipated, of which it has knowledge, which creates or could
create a conflict of interest between the Manager’s obligations to the Company
and its obligations to or its interest in any other Person. If the Manager or
any of its Affiliates sponsored any other investment program with similar
investment objectives to the Company that has investment funds available at the
same time as the Company, the Manager shall inform the Board of the method to be
applied by the Manager in allocating investment opportunities among the Company
and competing investment entities and shall provide regular updates to the Board
of the investment opportunities provided by the Manager to competing programs in
order for the Board (including the Independent Directors) to evaluate that the
Manager is allocating such opportunities in accordance with such method.

 

Section 4. Bank Accounts.

 

At the direction of the Board, the Manager may establish and maintain one or
more bank accounts in the name of any Company Entity, and may collect and
deposit into any such account or accounts, and disburse funds from any such
account or accounts, under such terms and conditions as the Board may approve;
and the Manager shall from time to time render appropriate accountings of such
collections and payments to the Board and, upon request, to the Company’s
auditors.

 

Section 5. Records; Confidentiality.

 

(a) The Manager shall maintain appropriate books of accounts and records
relating to services performed hereunder, and such books of account and records
shall be accessible for inspection by representatives of the Company Entities at
any time during normal business hours. The Manager shall keep confidential any
and all non-public information, written or oral, obtained by it in connection
with the services rendered hereunder (“Confidential Information”) and shall not
use Confidential Information except in furtherance of its duties under this
Agreement or disclose Confidential Information, in whole or in part, to any
Person other than (i) to its Affiliates, officers, directors, employees, agents,
representatives or advisors who need to know such Confidential Information for
the purpose of rendering services hereunder, (ii) to appraisers, financing
sources and others in the ordinary course of the Company’s business ((i) and
(ii) collectively, “Manager Permitted Disclosure Parties”), (iii) in connection
with any governmental or regulatory filings of the Company or filings with the
NYSE or other applicable Securities Exchange or market, or disclosure or
presentations to Company investors (subject to compliance with Regulation FD),
(iv) to governmental officials having jurisdiction over the Company, (v) as
requested by law or legal process to which the Manager or any Person to whom
disclosure is permitted hereunder is a party, or (vi) with the consent of the
Company. The Manager agrees to inform each of its Manager Permitted Disclosure
Parties of the non-public nature of the Confidential Information and to obtain
agreement from such Persons to treat such Confidential Information in accordance
with the terms hereof.

 

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(b) Nothing herein shall prevent the Manager from disclosing Confidential
Information (i) upon the order of any court or administrative agency, (ii) upon
the request or demand of, or pursuant to any law or regulation to, any
regulatory agency or authority, (iii) to the extent reasonably required in
connection with the exercise of any remedy hereunder, or (iv) to its legal
counsel or independent auditors; provided, however that with respect to clauses
(i) and (ii), it is agreed that, so long as not legally prohibited, the Manager
will provide the Company with prompt written notice of such order, request or
demand so that the Company may seek, at its sole expense, an appropriate
protective order and/or waive the Manager’s compliance with the provisions of
this Agreement. If, failing the entry of a protective order or the receipt of a
waiver hereunder, the Manager is required to disclose Confidential Information,
the Manager may disclose only that portion of such information that is legally
required without liability hereunder; provided, that the Manager agrees to
exercise its reasonable best efforts to obtain reliable assurance that
confidential treatment will be accorded such information.

 

(c) Notwithstanding anything herein to the contrary, each of the following shall
be deemed to be excluded from the provisions of this Section 5: any Confidential
Information that (A) is available to the public from a source other than the
Manager, (B) is released in writing by the Company to the public (except to the
extent exempt under Regulation FD) or to persons who are not under similar
obligation of confidentiality to the Company, or (C) is obtained by the Manager
from a third party where such disclosure, to the best of the Manager’s
knowledge, does not constitute a breach by such third party of an obligation of
confidence with respect to the Confidential Information disclosed.

 

(d) The provisions of this Agreement shall survive the expiration or earlier
termination of this Agreement for a period of one (1) year; provided that the
parties will maintain trade secrets of the other party identified in writing as
trade secrets, and which in fact constitute trade secrets, for a period of no
longer than five (5) years thereafter.

 

Section 6. Compensation.

 

(a) For the services rendered under this Agreement, the Company shall pay the
Base Management Fee and the Incentive Fee to the Manager. The Manager will not
receive any compensation for the period prior to the Closing Date other than
expenses incurred and reimbursed pursuant to Section 7 hereof.

 

(b) The parties acknowledge that the Base Management Fee is intended to
compensate the Manager for advisory services and certain general management
services rendered under this Agreement.

 

(c) The Base Management Fee shall be payable in arrears in cash, in quarterly
installments commencing with the quarter in which this Agreement is executed. If
applicable, the initial and final installments of the Base Management Fee shall
be pro-rated based on the number of days during the initial and final quarters,
respectively, that this Agreement is in effect. The Base Management Fee shall be
calculated within 30 days after the end of each quarter and such calculation
shall be promptly delivered to the Company. The Company will be obligated to pay
each quarterly installment of the Base Management Fee calculated for that
quarter in cash within five (5) Business Days after delivery to the Company of
the written statement of the Manager setting forth the computation of the Base
Management Fee for such quarter.

 

13

 

 

(d)  The Incentive Fee shall be payable in arrears, in quarterly installments
commencing with the quarter in which this Agreement is executed. The Manager
shall compute each quarterly installment of the Incentive Fee within forty-five
(45) days after the end of the calendar quarter with respect to which such
installment is payable. A copy of the computations made by the Manager to
calculate such installment shall thereafter promptly be delivered to the Board
and, upon such delivery, payment of such installment of the Incentive Fee shown
therein shall be due and payable no later than the date which is five
(5) Business Days after the date of delivery to the Board of such computations.

 

(e)  Each quarterly installment of the Incentive Fee shall be allocated and
payable as follows:

 

(i) fifty percent (50%) of the Incentive Fee will be payable in LTIP Units; and

 

(ii) the remainder will be payable in cash or in LTIP Units, at the election of
the Board.

 

(f)  The number of LTIP Units payable as the Incentive Fee to be issued to the
Manager will be equal to the dollar amount of the portion of the quarterly
installment of the Incentive Fee payable in such LTIP Units, divided by a value
determined as follows:

 

(i) if the Class A Common Stock is traded on a Securities Exchange, the value
shall be deemed to be the average of the closing prices of the Class A Common
Stock on such exchange on the five (5) Business Days prior to the date on which
the quarterly installment of the Incentive Fee is paid;

 

(ii) if the Class A Common Stock is not traded on a Securities Exchange but is
actively traded over-the-counter, the value shall be deemed to be the average of
the closing bids or sales prices, as applicable, on the five (5) Business Days
prior to the date on which the quarterly installment of the Incentive Fee is
paid; and

 

(iii) if the Class A Common Stock is neither traded on a Securities Exchange nor
actively traded over-the-counter, the value shall be the fair market value
thereof, as reasonably determined in good faith by the Board (including a
majority of the Independent Directors) .

 

(g)  If at any time the Manager shall, in connection with a determination of the
value of the Class A Common Stock made by the Board pursuant to
Section 6(f)(iii) hereof, (i) dispute such determination in good faith by more
than five percent (5%), and (ii) such dispute cannot be resolved between the
Independent Directors and the Manager within ten (10) Business Days after the
Manager provides written notice to the Company of such dispute (the “Valuation
Notice”), then the matter shall be resolved by an independent appraiser of
recognized standing selected jointly by the Independent Directors and the
Manager within not more than twenty (20) days after the Valuation Notice. In the
event the Independent Directors and the Manager cannot agree with respect to
such selection within the aforesaid twenty (20) day time-frame, the Independent
Directors shall select one such independent appraiser and the Manager shall
select one independent appraiser within five (5) Business Days after the
expiration of the twenty (20) day period, with one additional such appraiser
(the “Last Appraiser”) to be selected by the appraisers so designated within
five (5) Business Days after their selection. Any valuation decision made by the
Last Appraiser shall be deemed final and binding upon the Board and the Manager
and shall be delivered to the Manager and the Board within not more than fifteen
(15) days after the selection of the Last Appraiser. The expenses of the
appraisal shall be paid by the party with the estimate that deviated the
furthest from the final valuation decision made by the independent appraisers.

 

Section 7. Expenses of the Company.

 

(a)  Except as otherwise set forth in Section 7(b)(iv) hereof with respect to
the costs of legal services rendered for the Company by providers retained by
the Manager, which costs shall be the expense of the Company, the Manager shall
be responsible for the expenses related to any and all personnel of the Manager
and its Affiliates who provide services to the Company Entities pursuant to this
Agreement (including, without limitation, each of the officers of the Company
and any directors of BRG who are also directors, officers, employees or agents
of the Manager or any of its Affiliates), including, without limitation,
salaries, bonus and other wages, payroll taxes and the cost of employee benefit
plans of such personnel, and costs of insurance with respect to such personnel.
For the avoidance of doubt, any Equity Incentive Plan of BRG or the Operating
Partnership in which any person referred to above participates shall be excluded
from the operation of this Section 7(a).

 

14

 

 

(b)  The Company shall pay (or cause to be paid) all of the costs and expenses
of each Company Entity and shall reimburse the Manager or its Affiliates for
documented expenses of the Manager and its Affiliates incurred on behalf of any
Company Entity that are reasonably necessary for the performance by the Manager
of its duties and functions hereunder, which may include the Company’s pro rata
portion of rent, telephone, utilities, office furniture, equipment, machinery
and other office, internal and overhead expenses of the Manager and its
Affiliates required for the Company’s operations, provided, that such expenses
are in amounts no greater than those that would be payable to third-party
professionals or consultants engaged to perform such services pursuant to
agreements negotiated on an arm’s-length basis, and excepting only those
expenses that are specifically the responsibility of the Manager pursuant to
Section 7(a) of this Agreement. Without limiting the generality of the
foregoing, it is specifically agreed that the following costs and expenses of
the Company Entities shall be paid by the Company and shall not be paid by the
Manager or Affiliates of the Manager:

 

(i) Acquisition Expenses incurred in connection with the selection and
acquisition of Investments;

 

(ii) general and administrative expenses of the Company Entities;

 

(iii) expenses in connection with the issuance of securities of the Company, any
Financing Transaction and other costs incident to the acquisition, development,
redevelopment, construction, repositioning, leasing, disposition and financing
of the Investments;

 

(iv) costs of legal, tax, accounting, consulting, auditing and other similar
services rendered for the Company by providers retained by the Manager or, if
provided by the Manager’s personnel, in amounts which are no greater than those
which would be payable to outside professionals or consultants engaged to
perform such services pursuant to agreements negotiated on an arm’s-length
basis;

 

(v) the compensation and expenses of BRG’s directors and the cost of liability
insurance to indemnify the Company and its directors and officers;

 

(vi) costs associated with the establishment and maintenance of any of the
Company’s credit facilities, other financing arrangements, or other indebtedness
of the Company (including commitment fees, accounting fees, legal fees, closing
and other similar costs) or any of BRG’s securities offerings;

 

(vii) expenses connected with communications to holders of the securities of any
Company Entity and other bookkeeping and clerical work necessary in maintaining
relations with holders of such securities and in complying with the continuous
reporting and other requirements of governmental bodies or agencies, including,
without limitation, all costs of preparing and filing required reports with the
SEC, the costs payable by the Company to any transfer agent and registrar in
connection with the listing and/or trading of BRG’s securities on any exchange,
the fees payable by the Company to any such exchange in connection with its
listing, costs of preparing, printing and mailing BRG’s annual report to its
stockholders or the Operating Partnership’s partners, as applicable, and proxy
materials with respect to any meeting of BRG’s stockholders or the Operating
Partnership’s partners, as applicable;

 

(viii) costs associated with any computer software or hardware, electronic
equipment or purchased information technology services from third-party vendors
that is used for the Company Entities;

 

15

 

 

(ix) expenses incurred by managers, officers, personnel and agents of the
Manager for travel on the Company’s behalf and other out-of-pocket expenses
incurred by managers, officers, personnel and agents of the Manager in
connection with the acquisition, development, redevelopment, construction,
repositioning, leasing, financing, refinancing, sale or other disposition of an
Investment or establishment of any of BRG’s securities offerings, or in
connection with any Financing Transaction;

 

(x) costs and expenses incurred with respect to market information systems and
publications, research publications and materials, and settlement, clearing and
custodial fees and expenses;

 

(xi) compensation and expenses of BRG’s custodian and transfer agent, if any;

 

(xii) the costs of maintaining compliance with all federal, state and local
rules and regulations or any other regulatory agency;

 

(xiii) all taxes and license fees;

 

(xiv) all insurance costs incurred in connection with the operation of the
Company’s business except for the costs attributable to the insurance that the
Manager elects to carry for itself and its personnel;

 

(xv) costs and expenses incurred in contracting with third parties;

 

(xvi) all other costs and expenses relating to the Company’s business and
investment operations, including, without limitation, the costs and expenses of
acquiring, owning, protecting, maintaining, developing and disposing of
Investments, including appraisal, reporting, audit and legal fees;

 

(xvii) expenses relating to any office(s) or office facilities, including, but
not limited to, disaster backup recovery sites and facilities, maintained for
any Company Entity or their Investments separate from the office or offices of
the Manager;

 

(xviii) expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board to or on account of holders of the securities of any Company Entity,
including, without limitation, in connection with any dividend reinvestment
plan;

 

(xix) any judgment or settlement of pending or threatened proceedings (whether
civil, criminal or otherwise) against any Company Entity, or against any
trustee, director, partner, member or officer of such Company Entity in his
capacity as such for which any Company Entity is required to indemnify such
trustee, director, partner, member or officer pursuant to the applicable
Governing Instruments or any agreement or other instrument or by any court or
governmental agency; and

 

  (xx) all other expenses actually incurred by the Manager (except as otherwise
specified herein) that are reasonably necessary for the performance by the
Manager of its duties and functions under this Agreement.

 

(c)  Costs and expenses incurred by the Manager on behalf of the Company shall
be reimbursed monthly to the Manager. The Manager shall prepare a written
statement in reasonable detail documenting the costs and expenses of the Company
and those incurred by the Manager on behalf of the Company during each month,
and shall deliver such written statement to the Company within thirty (30) days
after the end of each month. The Company shall pay all amounts payable to the
Manager pursuant to this Section 7(c) within five (5) Business Days after the
receipt of the written statement without demand, deduction, offset or delay.
Cost and expense reimbursement to the Manager shall be subject to adjustment at
the end of each calendar year in connection with the annual audit of the
Company. The provisions of this Section 7 shall survive the expiration or
earlier termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such expiration or
termination.

 

16

 

 

Section 8. Limits of the Manager’s Responsibility.

 

(a)  The Manager assumes no responsibility under this Agreement other than to
render the services called for hereunder in good faith and shall not be
responsible for any action of the Board in following or declining to follow any
advice or recommendations of the Manager, including as set forth in the
Investment Guidelines. The Manager, its officers, members, managers, directors,
personnel, Affiliates, and any Person providing sub-advisory services to the
Manager (each, a “Manager Indemnified Party”), will not be liable to any Company
Entity or any of the stockholders, partners, members or other holders of equity
interests of any Company Entity for any acts or omissions by any Manager
Indemnified Party performed in accordance with and pursuant to this Agreement,
except by reason of any act or omission on the part of such Manager Indemnified
Party constituting bad faith, willful misconduct, gross negligence or reckless
disregard of their duties under the Management Agreement as determined by a
final, non-appealable order of a court of competent jurisdiction.

 

(b) The Company shall, to the full extent lawful, reimburse, indemnify and hold
harmless each Manager Indemnified Party, of and from any and all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever (including reasonable attorneys’ fees) (collectively, “Losses”) in
respect of or arising from any acts or omissions of such Manager Indemnified
Party performed in good faith under this Agreement and not constituting bad
faith, willful misconduct, gross negligence or reckless disregard of duties of
such Manager Indemnified Party under this Agreement as determined by a final,
non-appealable order of a court of competent jurisdiction. In addition, the
Company shall advance funds to a Manager Indemnified Party for legal fees and
other costs and expenses incurred as a result of any claim, suit, action or
proceeding for which indemnification is being sought pursuant to the terms of
this Agreement, provided, that such Manager Indemnified Party undertakes to
repay the advanced funds to the Company, together with the applicable legal rate
of interest thereon, if it shall ultimately be determined that such Manager
Indemnified Party is not entitled to be indemnified by the Company as provided
herein in connection with such claim, suit, action or proceeding.

 

(c)  The Manager shall, to the full extent lawful, reimburse, indemnify and hold
harmless the Company, its directors and officers, personnel, agents and
Affiliates (each, a “Company Indemnified Party,” and collectively with a Manager
Indemnified Party, each an “Indemnified Party”) of and from any and all Losses
in respect of or arising from (i) any acts or omissions of the Manager
constituting bad faith, willful misconduct, gross negligence or reckless
disregard of the duties of the Manager under this Agreement, or (ii) any claims
by the Manager’s personnel relating to the terms and conditions of their
employment by the Manager.

 

(d) In case any such claim, suit, action or proceeding (a “Claim”) is brought
against any Indemnified Party in respect of which indemnification may be sought
by such Indemnified Party pursuant hereto, the Indemnified Party shall give
prompt written notice thereof to the indemnifying party, which notice shall
include all documents and information in the possession of or under the control
of such Indemnified Party reasonably necessary for the evaluation and/or defense
of such Claim and shall specifically state that indemnification for such Claim
is being sought under this Section 8; provided, however, that the failure of the
Indemnified Party to so notify the indemnifying party shall not limit or affect
such Indemnified Party’s rights other than pursuant to this Section 8. Upon
receipt of such notice of Claim (together with such documents and information
from such Indemnified Party), the indemnifying party shall, at its sole cost and
expense, in good faith defend any such Claim with counsel reasonably
satisfactory to such Indemnified Party, which counsel may, without limiting the
rights of such Indemnified Party pursuant to the next sentence of this Section
8(c), also represent the indemnifying party in such investigation, action or
proceeding. In the alternative, such Indemnified Party may elect to conduct the
defense of the Claim, if (i) such Indemnified Party reasonably determines that
the conduct of its defense by the indemnifying party could be materially
prejudicial to its interests, (ii) the indemnifying party refuses to assume such
defense (or fails to give written notice to the Indemnified Party within ten
(10) days of receipt of a notice of Claim that the indemnifying party assumes
such defense), or (iii) the indemnifying party shall have failed, in such
Indemnified Party’s reasonable judgment, to defend the Claim in good faith. The
indemnifying party may settle any Claim against such Indemnified Party without
such Indemnified Party’s consent, provided (i) such settlement is without any
Losses whatsoever to such Indemnified Party, (ii) the settlement does not
include or require any admission of liability or culpability by such Indemnified
Party and (iii) the indemnifying party obtains an effective written release of
liability for such Indemnified Party from the party to the Claim with whom such
settlement is being made, which release must be reasonably acceptable to such
Indemnified Party, and a dismissal with prejudice with respect to all claims
made by the party against such Indemnified Party in connection with such Claim.
The applicable Indemnified Party shall reasonably cooperate with the
indemnifying party, at the indemnifying party’s sole cost and expense, in
connection with the defense or settlement of any Claim in accordance with the
terms hereof. If such Indemnified Party is entitled pursuant to this Section 8
to elect to defend such Claim by counsel of its own choosing and so elects, then
the indemnifying party shall be responsible for any good faith settlement of
such Claim entered into by such Indemnified Party. Except as provided in the
immediately preceding sentence, no Indemnified Party may pay or settle any Claim
and seek reimbursement therefor under this Section 8.

 

17

 

 

(e) Any Indemnified Party entitled to indemnification hereunder shall seek
recovery under any insurance policies by which such Indemnified Party is covered
and any Indemnified Party shall obtain the written consent of the indemnifying
party prior to entering into any compromise or settlement which would result in
an obligation of such indemnifying party to indemnify such Indemnified Party;
provided, however, that the possibility of recovery under any such insurance
policies shall not preclude an Indemnified Party from seeking indemnification
pursuant to this Agreement. If such Indemnified Party shall actually recover any
amounts under any applicable insurance policies, it shall offset the net
proceeds so received against any amounts owed by the indemnifying party by
reason of the indemnity provided hereunder or, if all such amounts shall have
been paid by the indemnifying party in full prior to the actual receipt of such
net insurance proceeds, it shall pay over such proceeds (up to the amount of
indemnification paid by the indemnifying party to such Indemnified Party) to the
indemnifying party. If the amounts in respect of which indemnification is sought
arise out of the conduct of the business and affairs of the Company or any
Subsidiary and also of any other Person or entity for which the Indemnified
Party hereunder was then acting in a similar capacity, the amount of the
indemnification to be provided by the Company may be limited to the Company
Parties’ proportionate share thereof if so determined by the Company in good
faith.

 

(f)  The provisions of this Section 8 shall survive the expiration or earlier
termination of this Agreement.

 

Section 9. No Joint Venture.

 

The parties to this Agreement are not partners or joint venturers with each
other and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on any of them.

 

Section 10. Term; Renewal; Termination Without Cause; Internalization.

 

(a)  This Agreement shall become effective on the Closing Date and shall
continue in operation, unless terminated in accordance with the terms hereof,
until the third anniversary of the Closing Date (the “Initial Term”). After the
Initial Term, this Agreement shall be deemed renewed automatically each year for
an additional one-year period (an “Automatic Renewal Term”) unless the Company
or the Manager elects not to renew this Agreement in accordance with Section
10(b) or Section 10(d), respectively.

 

(b) Notwithstanding any other provision of this Agreement to the contrary, upon
the expiration of the Initial Term or any Automatic Renewal Term and upon
180 days’ prior written notice to the Manager (the “Termination Notice”), the
Company may, without cause, in connection with the expiration of the Initial
Term or the then current Automatic Renewal Term, decline to renew this Agreement
(any such nonrenewal, a “Termination Without Cause”) upon the affirmative vote
of at least two-thirds of the Independent Directors that (1) there has been
unsatisfactory performance by the Manager that is materially detrimental to the
Company Entities taken as a whole or (2) the Base Management Fee and Incentive
Fee under this Agreement payable to the Manager are not, taken as a whole, in
accordance with then-current market rates charged by asset management companies
rendering services similar to those rendered by the Manager (“Above-Market
Rates”), subject to Section 10(c) and only after reasonable investigation by the
Independent Directors as to the market rates charged by similarly situated
managers. In the event of a Termination Without Cause, the Company shall pay the
Manager the Termination Fee before or on the last day of the Initial Term or
such Automatic Renewal Term, as the case may be (the “Effective Termination
Date”). The Company may terminate this Agreement for cause pursuant to
Section 11 hereof even after a Termination Notice and, in such case, no
Termination Fee shall be payable.

 

18

 

 

(c)  Notwithstanding the provisions of subsection (b) above, if the reason for
nonrenewal specified in the Company’s Termination Notice is that two-thirds of
the Independent Directors have determined that the Base Management Fee or the
Incentive Fee payable to the Manager are, taken as a whole, at Above-Market
Rates, the Company shall not have the foregoing nonrenewal right in the event
the Manager agrees that it will continue to perform its duties hereunder during
the Automatic Renewal Term that would commence upon the expiration of the
Initial Term or then current Automatic Renewal Term at rates that at least
two-thirds of the Independent Directors determine to be at or below market
rates, taken as a whole; provided, however, the Manager shall have the right to
renegotiate the Base Management Fee and/or the Incentive Fee, by delivering to
the Company, not less than 120 days prior to the pending Effective Termination
Date, written notice (a “Notice of Proposal to Negotiate”) of its intention to
renegotiate the Base Management Fee and/or the Incentive Fee. Thereupon, the
Company and the Manager shall endeavor to negotiate the Base Management Fee
and/or the Incentive Fee in good faith. Provided that the Company and the
Manager agree to a revised Base Management Fee, Incentive Fee or other
compensation structure within sixty (60) days following the Company’s receipt of
the Notice of Proposal to Negotiate, the Termination Notice from the Company
shall be deemed of no force and effect, and this Agreement shall continue in
full force and effect on the terms stated herein, except that the Base
Management Fee, the Incentive Fee or other compensation structure shall be the
revised Base Management Fee, Incentive Fee or other compensation structure
effective as of the date as then agreed upon by the Company and the Manager. The
Company and the Manager agree to execute and deliver an amendment to this
Agreement setting forth such revised Base Management Fee, Incentive Fee, or
other compensation structure promptly upon reaching an agreement regarding same.
In the event that the Company and the Manager are unable to agree to a revised
Base Management Fee, Incentive Fee, or other compensation structure during such
sixty (60) day period, this Agreement shall terminate on the Effective
Termination Date and the Company shall be obligated to pay the Manager the
Termination Fee upon the Effective Termination Date as a condition of such
termination action being effective.

 

(d)  No later than 180 days prior to the expiration of the Initial Term or the
then current Automatic Renewal Term, the Manager may deliver written notice to
the Company informing it of the Manager’s intention to decline to renew this
Agreement, whereupon this Agreement shall not be renewed and extended and this
Agreement shall terminate effective on the anniversary date of this Agreement
next following the delivery of such notice. The Company is not required to pay
to the Manager the Termination Fee if the Manager terminates this Agreement
pursuant to this Section 10(d).

 

(e)  Except as set forth in this Section 10, a nonrenewal of this Agreement
pursuant to this Section 10 shall be without any further liability or obligation
of either party to the other, except as provided in Section 5, Section 7,
Section 8 and Section 14 of this Agreement.

 

19

 

 

(f) (i) Notwithstanding any other provision of this Agreement, at the earlier of
(1) the date of the end of the Initial Term and (2) the date on and after which
the total of (a) BRG’s Existing and Contributed Stockholders’ Equity, and (b)
BRG’s New Stockholders’ Equity, exceeds $250,000,000, and continuing thereafter,
the Company may terminate this Agreement upon 30 days’ prior written notice,
provided that, two-thirds of the Independent Directors have determined in good
faith to pursue an internalization of the management functions of the Company
provided by the Manager. To the extent the Company elects to terminate this
Agreement pursuant to this Section 10(f)(i), the Company shall pay the
Termination Fee to the Manager within thirty (30) days of the effective date of
such termination, subject to clause (ii) hereof.

 

(ii) If the Company elects to terminate this Agreement pursuant to Section
10(f)(i), then either the Manager or the Company may further elect to structure
such internalization as an acquisition of all of the membership interests in the
Manager for which the acquisition consideration shall be equal to the amount of
the Termination Fee (and no separate Termination Fee would be paid), which may
include a contribution of the Manager’s assets in exchange for units of limited
partnership interest in the Operating Partnership or other tax-efficient
transaction. To the extent of an election under this Section 10(f)(ii), the
parties shall negotiate in good faith to prepare an acquisition agreement and
related documents containing customary, standard and commercially reasonable
representations, warranties, covenants and indemnities. The consummation of an
acquisition of the Manager pursuant to Section 10(f)(ii) shall be subject to the
prior approval of (1) a majority of the Independent Directors, and (2) the
Company’s stockholders as required under Maryland law or the rules of the
applicable Securities Exchange.

 

Section 11. Termination for Cause.

 

(a)  The Company may terminate this Agreement effective upon 30 days’ prior
written notice of termination from the Company to the Manager (a “Cause
Termination Notice”), without payment of any Termination Fee, if (i)  the
Manager, its agents or assignees breaches any material provision of this
Agreement and such breach shall continue for a period of 30 days after written
notice thereof specifying such breach and requesting that the same be remedied
in such 30-day period (or 45 days after written notice of such breach if the
Manager takes steps to cure such breach within 30 days of the written notice),
(ii) there is a commencement of any proceeding relating to the Manager’s
Bankruptcy or insolvency, including an order for relief in an involuntary
bankruptcy case or the Manager authorizing or filing a voluntary bankruptcy
petition, (iii) any Manager Change of Control which a majority of the
Independent Directors determines is materially detrimental to the Company
Entities taken as a whole, (iv) the Manager is unable to perform its obligations
under this Agreement; (v) the dissolution of the Manager, or (vi) the Manager
commits fraud against the Company, misappropriates or embezzles funds of the
Company, or acts, or fails to act, in a manner constituting gross negligence, or
acts in a manner constituting bad faith or willful misconduct, in the
performance of its duties under this Agreement; provided, however, that if any
of the actions or omissions described in this clause (vi) are caused by an
employee and/or officer of the Manager or one of its Affiliates and the Manager
takes all necessary and appropriate action against such person and cures the
damage caused by such actions or omissions within 30 days of the Manager actual
knowledge of its commission or omission, the Company shall not have the right to
terminate this Agreement pursuant to this Section 11(a)(vi) and any Cause
Termination Notice previously given in reliance on this clause (vi)
automatically shall be deemed to have been rescinded and nugatory.

 

(b)  The Manager may terminate this Agreement effective upon 60 days’ prior
written notice of termination to the Company in the event that the Company shall
default in the performance of any material term, condition or covenant contained
in this Agreement and such default shall continue for a period of 30 days after
written notice thereof specifying such default and requesting that the same be
remedied in such 30-day period. The Company is required to pay to the Manager
the Termination Fee if the termination of this Agreement is made pursuant to
this Section 11(b).

 

(c)  The Manager may terminate this Agreement if the Company becomes required to
register as an investment company under the Investment Company Act, with such
termination deemed to occur immediately before such event, in which case the
Company shall not be required to pay the Termination Fee.

 

20

 

 

Section 12. Action Upon Termination.

 

From and after the effective date of termination of this Agreement pursuant to
Sections 10 or 11 of this Agreement, the Manager shall not be entitled to
compensation for further services hereunder, but shall be paid all compensation
accruing to the date of termination and, if (x) terminated pursuant to Section
11(b) hereof or (y) not renewed pursuant to (i) Section 10(b) hereof (subject to
Section 10(c) hereof) or (ii) Section 10(f) (subject to Section 10(f)(ii)
hereof), the Termination Fee. Upon any such termination, the Manager shall
forthwith:

 

(a)  after deducting any accrued compensation and reimbursement for its expenses
that have been submitted to the Company prior to the effective date of
termination, pay over to each Company Entity all money collected and held for
the account of such Company Entity pursuant to this Agreement;

 

(b)  deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board with
respect to the Company Entities;

 

(c)  deliver to the Board all property and documents of the Company Entities
then in the custody of the Manager; and

 

(d) cooperate with the Company Entities to provide an orderly management
transition, including, but not limited to, the transition to a new manager of
control of the assets of the Company Entities.

 

Section 13. Assignments.

 

(a)  Assignments by the Manager. This Agreement shall terminate automatically
without payment of the Termination Fee in the event of its assignment, in whole
or in part, by the Manager, unless such assignment is consented to in writing by
BRG with the consent of a majority of the Independent Directors and the
Operating Partnership. Any such permitted assignment shall bind the assignee
under this Agreement in the same manner as the Manager is bound, and the Manager
shall be liable to the Company for all acts or omissions of the assignee under
any such assignment. In addition, the assignee shall execute and deliver to the
Company a counterpart of this Agreement naming such assignee as the Manager.
Notwithstanding the foregoing, the Manager may, without the approval of the
Company’s Independent Directors, (i) assign this Agreement to an Affiliate of
the Manager, conditioned on such Affiliate becoming a party to, or becoming
subject to the rights and obligations of, the Investment Allocation Agreement,
and (ii) delegate to one or more of its Affiliates the performance of any of its
responsibilities hereunder so long as it remains liable for any such Affiliate’s
performance. Nothing contained in this Agreement shall preclude any pledge,
hypothecation or other transfer of any amounts payable to the Manager under this
Agreement.

 

(b)  Assignments by the Company. This Agreement shall not be assigned by the
Company without the prior written consent of the Manager, except in the case of
assignment by the Company to another REIT or other organization which is a
successor (by merger, consolidation, purchase of assets, or other transaction)
to the Company, in which case such successor organization shall be bound under
this Agreement and by the terms of such assignment in the same manner as the
Company is bound under this Agreement.

 

Section 14. Release of Money or Other Property Upon Written Request.

 

The Manager agrees that any money or other property of the Company Entities held
by the Manager shall be held by the Manager as custodian for the Company, and
the Manager’s records shall be appropriately and clearly marked to reflect the
ownership of such money or other property by the Company. Upon the receipt by
the Manager of a written request signed by a duly authorized officer of the
Company requesting the Manager to release to the Company any money or other
property then held by the Manager for the account of the Company under this
Agreement, then subject to the Manager’s right to offset pursuant to Section
12(a) hereof, the Manager shall release such money or other property to the
Company within a reasonable period of time, but in no event later than 60 days
following such request. Upon delivery of such money or other property to the
Company, the Manager shall not be liable to the Company, the Board, BRG’s
stockholders or Operating Partnership’s partners or any of the directors or
equity holders of any subsidiary of the Company for any acts or omissions by the
Company in connection with the money or other property released to the Company
in accordance with this Section 14. The Company shall indemnify the Manager
Indemnified Parties against any and all Losses which arise in connection with
the Manager’s proper release of such money or other property to the Company in
accordance with the terms of this Section 14. Indemnification pursuant to this
provision shall be in addition to any right of the Manager Indemnified Parties
to indemnification under Section 8 of this Agreement.

 

21

 

 

Section 15. Representations and Warranties.

 

(a)  BRG hereby represents and warrants to the Manager as follows:

 

(i) BRG is duly organized, validly existing and in good standing under the laws
of the State of Maryland, has the corporate power and authority and the legal
right to own and operate its assets, to lease any property it may operate as
lessee and to conduct the business in which it is now engaged and is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except for failures to be so qualified,
authorized or licensed that could not in the aggregate have a material adverse
effect on the business operations, assets or financial condition of the Company
Entities, taken as a whole.

 

(ii) BRG has the corporate power and authority and the legal right to make,
deliver and perform this Agreement and all obligations required hereunder and
has taken all necessary corporate action to authorize this Agreement on the
terms and conditions hereof and the execution, delivery and performance of this
Agreement and all obligations required hereunder. No consent of any other
Person, including stockholders and creditors of BRG, and no license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
by BRG in connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or document
required hereunder will be, executed and delivered by a duly authorized officer
of BRG, and this Agreement constitutes, and each instrument or document required
hereunder when executed and delivered hereunder will constitute, the legally
valid and binding obligation of BRG enforceable against BRG in accordance with
its terms.

 

(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder will not violate any provision of
any existing law or regulation binding on BRG, or any order, judgment, award or
decree of any court, arbitrator or governmental authority binding on BRG, or the
Governing Instruments of, or any securities issued by BRG or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which BRG is a party or by which BRG or any of its assets may be bound, the
violation of which would have a material adverse effect on the business
operations, assets or financial condition of the Company Entities, taken as a
whole, and will not result in, or require, the creation or imposition of any
lien or any of its property, assets or revenues pursuant to the provisions of
any such mortgage, indenture, lease, contract or other agreement, instrument or
undertaking.

 

(b)  The Operating Partnership hereby represents and warrants to the Manager as
follows:

 

22

 

 

(i) The Operating Partnership is duly organized, validly existing and in good
standing under the laws of the State of Delaware, has the limited partnership
power and authority and the legal right to own and operate its assets, to lease
any property it may operate as lessee and to conduct the business in which it is
now engaged and is duly qualified as a foreign limited partnership and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification, except for
failures to be so qualified, authorized or licensed that could not in the
aggregate have a material adverse effect on the business operations, assets or
financial condition of the Company Entities, taken as a whole.

 

(ii) The Operating Partnership has the limited partnership power and authority
and the legal right to make, deliver and perform this Agreement and all
obligations required hereunder and has taken all necessary limited partnership
action to authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all obligations
required hereunder. No consent of any other Person, including partners and
creditors of the Operating Partnership, and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required by the Operating
Partnership in connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or document
required hereunder will be, executed and delivered by a duly authorized officer
of the Operating Partnership, and this Agreement constitutes, and each
instrument or document required hereunder when executed and delivered hereunder
will constitute, the legally valid and binding obligation of the Operating
Partnership enforceable against the Operating Partnership in accordance with its
terms.

 

(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder will not violate any provision of
any existing law or regulation binding on the Operating Partnership, or any
order, judgment, award or decree of any court, arbitrator or governmental
authority binding on the Operating Partnership, or the Governing Instruments of,
or any securities issued by the Operating Partnership or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which the Operating Partnership is a party or by which the Operating Partnership
or any of its assets may be bound, the violation of which would have a material
adverse effect on the business operations, assets or financial condition of the
Company Entities, taken as a whole, and will not result in, or require, the
creation or imposition of any lien or any of its property, assets or revenues
pursuant to the provisions of any such mortgage, indenture, lease, contract or
other agreement, instrument or undertaking.

 

(c) The Manager hereby represents and warrants to the Company as follows:

 

(i) The Manager is duly organized, validly existing and in good standing under
the laws of the State of Delaware, has the limited liability company power and
authority and the legal right to own and operate its assets, to lease the
property it operates as lessee and to conduct the business in which it is now
engaged and is duly qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except for failures to
be so qualified, authorized or licensed that could not in the aggregate have a
material adverse effect on the business operations, assets or financial
condition of the Manager.

 

(ii) The Manager has the limited liability company power and authority and the
legal right to make, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary limited liability company action
to authorize this Agreement on the terms and conditions hereof and the
execution, delivery and performance of this Agreement and all obligations
required hereunder. No consent of any other Person, including members and
creditors of the Manager, and no license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required by the Manager in connection with this
Agreement or the execution, delivery, performance, validity or enforceability of
this Agreement and all obligations required hereunder. This Agreement has been,
and each instrument or document required hereunder will be, executed and
delivered by a duly authorized officer of the Manager, and this Agreement
constitutes, and each instrument or document required hereunder when executed
and delivered hereunder will constitute, the legally valid and binding
obligation of the Manager enforceable against the Manager in accordance with its
terms.

 

23

 

 

(iii) The execution, delivery and performance of this Agreement and the
documents or instruments required hereunder will not violate any provision of
any existing law or regulation binding on the Manager, or any order, judgment,
award or decree of any court, arbitrator or governmental authority binding on
the Manager, or the Governing Instruments of, or any securities issued by the
Manager or of any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Manager is a party or by which the
Manager or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Manager, and will not result in, or require, the creation or
imposition of any lien or any of its property, assets or revenues pursuant to
the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.

 

Section 16. Miscellaneous.

 

(a) Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered against receipt or upon actual receipt of (i) personal
delivery, (ii) delivery by reputable overnight courier, (iii) delivery by
facsimile transmission with telephonic confirmation or (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below (or to such other address as may be hereafter
notified by the respective parties hereto in accordance with this Section 16):

 

 

 

BRG:

 

 

 

 

 

Bluerock Residential Growth REIT, Inc.

    712 Fifth Avenue, 9th Floor     New York, New York 10019     Attention: R.
Ramin Kamfar     Fax: (646) 278-4220       with a copy to:   Kaplan Voekler
Cunningham & Frank, PLC     1401 E. Cary Street     Richmond, Virginia 23219    
Attention: Richard P. Cunningham, Jr., Esq.     Fax: (804) 823-4099       The
Operating Partnership:   Bluerock Residential Holdings, LP     712 Fifth Avenue,
9th Floor     New York, New York 10019     Attention: R. Ramin Kamfar     Fax:
(646) 278-4220       with a copy to:   Kaplan Voekler Cunningham & Frank, PLC  
  1401 E. Cary Street     Richmond, Virginia 23219     Attention: Richard P.
Cunningham, Jr., Esq.     Fax: (804) 823-4099       The Manager:   BRG Manager,
LLC     712 Fifth Avenue, 9th Floor     New York, New York 10019     Attention:
Jordan Ruddy and Michael L. Konig, Esq.     Fax: (646) 278-4220      

 

24

 

 

(b)  Binding Nature of Agreement; Successors and Assigns; No Third Party
Beneficiaries. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns as provided herein. Except as provided in this Agreement
with respect to indemnification of Indemnified Parties hereunder, nothing in
this Agreement shall confer any rights upon any Person other than the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns.

 

(c)  Integration. This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, understandings, inducements
and conditions, express or implied, oral or written, of any nature whatsoever
with respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

 

(d)  Amendments. This Agreement, nor any terms hereof, may not be amended,
supplemented or modified except in an instrument in writing executed by the
parties hereto.

 

(e)  GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY
ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY OBJECTION TO THE LAYING
OF VENUE OF ANY SUCH ACTION OR JUDGMENT IN SUCH COURTS, AND IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT OR
PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(f)  WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(g)  Survival of Representations and Warranties. All representations and
warranties made hereunder, and in any document, certificate or statement
delivered pursuant hereto or in connection herewith, shall survive the execution
and delivery of this Agreement.

 

(h)  No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of a party hereto, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

25

 

 

(i)  Costs and Expenses. Each party hereto shall bear its own costs and expenses
(including the fees and disbursements of counsel and accountants) incurred in
connection with the negotiations and preparation of and the closing under this
Agreement, and all matter incident thereto.

 

(j) Section Headings. The section and subsection headings in this Agreement are
for convenience in reference only and shall not be deemed to alter or affect the
interpretation of any provisions hereof.

 

(k)  Counterparts. This Agreement may be executed by the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

 

(l)  Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

26

 

 

 

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

 

  Bluerock Residential Growth REIT, Inc.

    By:   /s/ Christopher J. Vohs     Name:   Christopher J. Vohs      Title:  
Treasurer and Chief Accounting Officer 

 

  Bluerock Residential Holdings, L.P.

    By:  

Bluerock Residential Growth REIT, Inc.,
its General Partner

 

 

By: /s/ Christopher J. Vohs

    Name:   Christopher J. Vohs      Title:   Treasurer and Chief Accounting
Officer 

 

  BRG Manager, LLC

    By:  

Bluerock Real Estate, L.L.C., its
Manager

 

 

By: /s/ Jordan B. Ruddy

    Name:   Jordan B. Ruddy      Title:   Authorized Signatory 

 

 

 

 

27

 

  

Exhibit A

 

Investment Guidelines

 

 

 

1. No investment shall be made that would cause BRG to fail to qualify as a REIT
under the Code.

 

2. No investment shall be made that would cause BRG or the Operating Partnership
to be regulated as an investment company under the Investment Company Act.

 

3. The Company’s investments shall be in the Target Assets.

 

4.   Until appropriate investments in the Target Assets are identified, the
Manager may invest the proceeds of the Public Offering and any future offerings
of BRG’s or the Operating Partnership’s securities for cash in interest-bearing,
short-term investment-grade investments, subject to the requirements for BRG’s
qualification as a REIT under the Code.

 

5. The Manager shall have the authority to approve any Investment Transaction
involving an Investment less than five percent (5%) of the Company’s current
total assets at the time of the Manager’s consideration (but exclusive of such
project).

 

6.  The approval of the Investment Committee shall be required for any
Investment Transaction involving an Investment equal to or in excess of five
percent (5%) and up to ten percent (10%) of the Company’s current total assets
at the time of the Investment Committee’s consideration (but exclusive of such
project).

 

7. The approval of the full Board shall be required for any Investment
Transaction involving an Investment equal to or in excess of ten percent (10%)
of the Company’s current total assets at the time of the Board’s consideration
(but exclusive of such project).

 

These Investment Guidelines may be amended, restated, modified, supplemented or
waived by the Board (which must include a majority of the Independent Directors)
without the approval of BRG’s stockholders.

 

 

 

28