Exhibit 10.28

 

PROPERTY MANAGEMENT AGREEMENT

 

This PROPERTY MANAGEMENT AGREEMENT (the "Agreement"), entered into as of this
16th day of March, 2015 BR Park & Kingston Charlotte, LLC, a North Carolina
limited liability company ("Owner") and Bell Partners Inc., a North Carolina
corporation ("Manager").

 

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

 

THE PROPERTY: Located in the City of Charlotte, County of Mecklenburg, State of
North Carolina and being known to consist of l53 units, and more particularly
described as:

 

Park & Kingston Apartments Phase I

125 West Park Avenue

Charlotte, NC 28203

 

At Owner's option, upon written notice to Manager, Owner shall have the right to
add 15 units commonly known as Park & Kingston Apartments Phase II, 125 West
Park Avenue, Charlotte, NC 28203 to the scope of this Agreement, whereupon all
168 units located at such address shall constitute the "Project" for all
purposes under this Agreement.

 

SECTION 1:DEFINITIONS

 

1.1TERM

The term of this Agreement shall commence on the date hereof and shall, subject
to the provisions hereof, terminate twelve (12) months following the date
hereof. This Agreement will automatically renew on a year to year basis
thereafter until and unless terminated in accordance with the terms hereof under
Section 7.06.

 

1.2FEES

The management fee ("Base Management Fee") payable each month by Owner to
Manager hereunder shall be an amount equal to Three percent (3.0%) of the Gross
Receipts from the Project including any partial month in which Manager accepts
engagement.

 

Yield Management. Owner agrees to deploy Yield Management (the process of
balancing supply and demand to price apartments to maximize rental revenue) at
the Project.

 

Manager provides Pricing Authority Support to include daily monitoring of
apartment pricing, quarterly reporting and bi-weekly conference calls with site
staff. Manager will review pricing recommendations and will have authority to
make pricing decisions concerning the Property. Manager will be responsible for
overseeing selection, set-up and maintenance of the revenue management software.
Licensing fees and software costs to run revenue management software shall be
paid at the then-prevailing rate by Owner to the software licensor (currently
RealPage for Yieldstar product, but licensor and product subject to change at
Manager's election) as a normal operating expense. Owner acknowledges and agrees
that some revenue management software contracts may impose indemnification
obligations on Owner with respect to third party providers and others;

 

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E-procurement and Invoice Management. Owner agrees to deploy Ops Technology
(enables suppliers and service providers to present targeted pre-negotiated
catalog pricing, receive orders electronically, and insert electronic invoices
into the Manager's payment processing system) at the Project. Manager provides
e-procurement and invoice management services to control property spending and
optimize expenses. Such a platform enables suppliers and service providers to
present pre-negotiated catalog pricing, receive orders electronically, and
insert electronic invoices into Manager's payment processing system. Manager
will provide oversight of the e-procurement and invoice management platform. If
required by the software licensor (currently RealPage for OpsTechnology product,
but licensor and product subject to change at Manager' s election), Owner shall
pay a one-time licensing fee, a monthly use fee and a per-paper invoice
processing fee at the then-prevailing rate as a normal operating expense. In
addition, Property vendors will pay a fee directly to the software licensor to
participate in the e-procurement and invoice management program. Owner
acknowledges and agrees that some contracts with software providers may impose
indemnification obligations on Owner with respect to third party providers and
others.

 

Resident Utility Billing and Invoice Processing. Owner agrees to deploy Bell
Utilities Management resident utility billing and invoice processing best
practices at the Project including, but not limited to, third party resident
utility billing, utilities invoice processing, meter maintenance, trash services
and deregulated market company/consultants as selected by the Manager. Manager
will provide Utilities Management support services in exchange for cost-offset
compensation of ninety-nine cents ($.99) per unit per month that will be passed
to the residents on the monthly Resident One Bill via the “Rent Service Fee” as
a $0 net impact to the Owner. Utilities Management support services provided by
Manager shall include implementation of Utilities Management Bell Best Practices
in order to maximize utilities reimbursements and to minimize related fees and
expenses. The Manager will review utilities management practices (resident
utility billing and utility invoice processing) and shall have final authority
for making utilities related decisions concerning the Project. Manager will be
responsible for set-up and maintenance of the Utilities Management program.

 

1.3ADMINISTRATIVE CHARGES

Market rate fees or charges may also be charged or passed through for those
services set forth below:

 

(a)Revenue Management Charge. To maximize total rental revenue at the Property,
Owner agrees to deploy yield management software (software that uses algorithms
to establish apartment rental rates) at the Property. Use of such software
requires additional staffing and expertise on Manager's part ("Pricing Authority
Support''). Owner will pay Manager a per-unit-per-month amount to provide
Pricing Authority Support. Such amount will initially be
$1.25_per-unit-per-month, and may be adjusted as part of the annual Budget
process.

 

(b)Marketing and Training Charges. To maximize total rental revenue at the
Property, Owner agrees to pay certain support amounts for marketing and training
of Manager's employees. Such amounts shall be $1.32 per-unit-per-month for
training and $37.00 per Property-per-month for marketing and shall increase
thereafter only upon Owner's approval.

 

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(c)Contract Negotiation Charge. If, at Owner's request, Manager negotiates video
(cable), data (internet), voice (phone) on behalf of the Owner to maximize
revenue at the Property, and such agreements provide for the payment to Owner of
an upfront or “door” fee payment, then Manager will be paid 10% of the upfront
or “door” fee in return for negotiating and overseeing work performed under such
contracts.

 

(d)Meter Replacement and Maintenance Oversight Charge. If a property-wide meter
change-out or meter maintenance is required, Owner will pay to Manager a fee of
5% of total project cost for managing such project.

 

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

 

1.3DEPOSITORY

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

 

1.4FISCAL YEAR

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

 

1.5BUDGET

A composite of (i) an operations Budget, which shall be an estimate of receipts
and expenditures for the full and complete operation (inclusive of all
maintenance, repairs and alterations) of the Project during a Fiscal Year,
including a schedule of expected apartment rentals (excluding security deposits)
for the period stated herein and a schedule of expected special repairs and
maintenance projects, and (ii) a capital Budget, which shall be an estimate of
capital replacements, substitutions of, and additions to, the Project for the
Fiscal Year.

 

1.6GROSS RECEIPTS

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

 

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1.7PROJECT EMPLOYEES

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

 

SECTION 2: DUTIES AND RIGHTS OF MANAGER

 

2.1APPOINTMENT OF MANAGER

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

 

Owner shall designate up to three people, to include a representatives from
accounting and asset management to serve as Owner's representative (''Owner's
Representative") in all dealings with Manager hereunder. Whenever the approval,
consent, or other action of Owner is called hereunder, such approval, consent or
action shall be binding on Owner if specified in writing via email, facsimile,
or written correspondence and approved by Owner's Representative. The initial
Owner's Representative is Laurance Kaufman. Manager shall be entitled to rely on
all instruction of the Owner's representative pending further notification by
Owner. The Owner's Representative may be changed at the discretion of Owner

 

All obligations or expenses incurred hereunder, including the pro rata portion
used in connection with, or for the benefit of the Project for all purchases,
contracts, sales or services in bulk or volume which Manager may obtain for
discount or convenience in connection thereof shall be for the account of, on
behalf of, and at the expense of, Owner except as otherwise specifically
provided. Owner shall be obligated to reimburse Manager for all reasonable
customary expenses of Manager incurred specifically for the Project, which were
authorized in the Budget or otherwise approved in writing by the Owner.

 

2.2OWNER' S MINIMUM TECHNOLOGY REQUIREMENTS.

Owner agrees to use and pay associated software costs for Manager’s standard
business application platform for property management (e.g. RealPage),
financials (e.g. Yardi), and other business applications (e.g. HR/Payroll -
Workday). Owner agrees to provide the Property with technology, including but
not limited to, hardware (e.g. computer, printer, scanner, check scanner, etc.),
software (e.g. Microsoft Windows, etc.), and high-speed internet access (e.g.
bandwidth, etc.) that satisfies Manager's minimum technology standard, as may be
modified from time to time. If the technology device falls below the minimum
standard or upgraded technology is deemed necessary for continuing operations,
Owner agrees to upgrade, at Owner's expense, as reasonably needed to achieve the
agreed upon minimum standard attached hereto as Exhibit C (as the same may be
modified from time to time) which were authorized in the Budget or otherwise
approved in writing by Owner to reasonably achieve the minimum technology
standard.

 

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2.3GENERAL OPERATION

Manager shall operate the Project in the same manner as is customary and usual
in the operation of comparable facilities, and shall provide such services as
are customarily provided by operators of apartment projects of comparable class
and standing consistent with the Project's facilities, subject, however, in all
events to the limitations of the Budget. In addition to the other obligations of
Manager set forth herein, Manager shall render the following services and
perform the following duties for Owner in a timely, faithful, diligent and
efficient manner: (a) coordinate the plans of tenants for moving their personal
effects into the Project or out of it, with a view toward scheduling such
movements so that there shall be a minimum of inconvenience to other tenants;
(b) maintain businesslike relations with tenants whose service requests shall be
received, considered and recorded in systematic fashion in order to show the
action taken with respect to each; (c) use its commercially reasonable efforts
to collect all monthly rents due from tenants and rent for users or lessees of
other non-dwelling facilities in the Project, if any; request, demand, collect,
receive and receipt for any and all charges or rents which become due to Owner,
and at Owner's expense, take such legal action as may be necessary or desirable
to evict tenants delinquent in payment of monthly rental, other charges
(security deposits, late charges, etc.); (d) prepare or cause to be prepared for
execution and filing by the Manager as an independent contractor all forms,
reports and returns required by all federal, state or local laws in connection
with the unemployment insurance, workers' compensation insurance, disability
benefits, Social Security and other similar taxes now in effect or hereafter
imposed, and also any other requirements relating to the employment of
personnel; (e) advertise when necessary, at Owner's expense and approval, the
availability for rental for the Project units using commercially reasonable
business strategies in connection with the use of promotional materials, market
outreach efforts, internet and web-based marketing and display “for rent” or
other similar signs upon the Project, it being understood that Manager may
install one or more signs on or about the Project stating that same is under
management of Manager and may use in a tasteful manner Manager1s name and logo
in any display advertising which may be done on behalf of the Project; and (f)
sign, renew and cancel tenant leases for the Project for terms and on forms
agreed to by Manager and approved by Owner (or on a month to month basis
following the expiration of the initial term of a tenant lease) to bona fide
individuals based upon Manager's recommendations. Manager shall exercise its
commercially reasonable efforts to include the Project in signage advertising
rentals available to be placed at the Project during any lease-up period.
Notwithstanding anything herein to the contrary, in the event the Project name
contains the trade names and/or trademarks “Bell Partners” or “Bell”
(collectively, the "Bell Brand Rights"), Owner shall not be entitled to any
right, title or interest of Manager in the Bell Brand Rights. Owner, at its
cost, shall immediately cease using any Bell Brand Right and shall replace all
signage and all collateral material that contains a Bell Brand Right (1) during
the term of this Agreement within 30 days after a request to do so by Bell; and
(2) within 30 days after the termination of this Agreement;

 

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

 

2.4BUDGET

(a) Attached hereto as Exhibit A is the Budget approved by Owner for the stated
portion of the current Fiscal Year. For subsequent Fiscal years, Manager shall
submit the Budget for the ensuing Fiscal Year for Owner's approval no later than
ninety (90) days prior to the beginning of each successive Fiscal Year. Owner
shall make reasonable business efforts to approve the proposed Budget prior to
December 31. In the event Owner disapproves the Budget, in whole or in part,
Owner will provide such edits for the Manager to make as may be reasonably
practicable. Until a complete new Budget is approved, Manager shall operate on
the Budget or part thereof which is approved and the disapproved items shall be
governed by the like item approved for the prior Fiscal Year, with the exception
of expenses for personnel which may be reasonably increased based on existing
competitive conditions unless the increase for personnel is the item that is
being disputed, in which case expenses for personnel will not be increased.

 

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

 

(c) In the event there shall be a substantial variances (expenses exceeding 5%
of any "line item" amount allocated for such category of expense, or Gross
Receipts less than 95%, of projection) between the actual results of operations
for any month and the estimated results of operations for such month as set
forth in the Budget, Manager shall furnish to Owner, within ten (10) business
days after the expiration of such month, a written explanation concerning the
variances and the steps being taken by Manager to rectify the variances. If
after a Budget has been approved substantial variations have occurred, or are
anticipated by Manager during the course of the Fiscal Year, Manager shall
immediately notify Owner and, upon Owner's request, shall prepare and submit to
Owner a revised forecast of annual income and expenses for the remainder of the
Fiscal Year based on actual year-to-date income and expenses and Manager's
forecast of income and expenses for the remainder of the Fiscal Year. Such
forecast shall not constitute a replacement Budget.

 

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2.5PROJECT EMPLOYEES AND OTHER PERSONNEL

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

 

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

 

2.6CONTRACTS AND SUPPLIES

Subject to the Budget, the Manager shall, in the name of and on behalf of Owner
and at Owner's expense, consummate arrangements with unrelated third party
concessionaires, licensees, tenants or other intended users of the facilities of
the Project, shall enter into contracts for furnishing to the Project
electricity, gas, water, steam, telephone, cleaning, vermin exterminators,
furnace and air-conditioning maintenance, security protection, pest control,
landscaping, solid waste removal and any other utilities, services and
concessions which are provided in connection with the maintenance and operation
of apartment projects which are comparable to the Project and in accordance with
standards comparable to those prevailing in other comparable apartment projects,
and shall place purchase orders for such equipment, tools, appliances, materials
and supplies as are reflected in the Budget and necessary to maintain the
Project. Manager will make a reasonable attempt to make all contracts cancelable
without penalty within (30) days written notice provided, however, that Owner's
prior written consent shall be required for service contract or purchase order
providing for a term or duration of more than one (1) year period; and further
provided, that Owner's prior written consent shall be required for any such
agreement that is not cancelable without penalty upon thirty (30) day written
notice.

 

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In the event that utility or power companies require a surety bond or other form
of security in order to provide utilities, electrical or other services to the
Project, upon Owner's written consent thereto, the Manager is authori7.ed to
obtain such bond at Owner's sole expense. Manager may, in its sole discretion,
elect to guarantee, indemnify, defend and hold harmless those parties supplying
such bonds or other form of security (the "Surety") for any premiums,
liabilities, losses, costs, damages, attorney fees and other expenses, including
interest, which the Surety may sustain or incur by reason of, or in connection
with, the issuance, renewal or continuation of such bonds or other form of
security. In such event, Owner will reimburse and indemnify Manager pursuant to
Section 6.03 with regard to the same.

 

2.7MANAGER'S SERVICES

In the performance of its duties under this Agreement and subject to the
limitations set forth in Section 2.05 hereof, it is agreed that Manager may
enter into any contract on behalf of Owner with subsidiaries and affiliates of
Manager for the furnishing of supplies and services to the Project, including
but not limited to the purchasing of furniture, operating equipment, operating
supplies, maintenance and landscaping services, and advertising, provided,
however, that the net cost of such supplies and services to Owner is competitive
with such similar services or supplies customarily used in the industry, whose
services or supplies are reasonably available to the industry and whose services
or supplies are reasonably available to the Project. Manager may implement a
renter's insurance program through an insurance company affiliated with Manager
provided rates are comparable with the industry standard.

 

2.8ALTERATIONS,REPAIRS AND MAINTENANCE

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

 

(b)              In accordance with the terms of the Budget, by Manager's
recommendation (with Owner's approval) or upon Owner demand and/or approval
(except in the case of emergency), Manager shall, at Owner's expense, from time
to time during the term hereof, make all required capital replacements or
repairs to the Project (“Capital Project”). For any Capital Projects, including
but not limited to Project improvements and rehab/renovation projects that cost
more than $10,000 on an individual basis, Owner shall pay Manager a fee to
supervise such Capital Projects equal to six percent (6%) of the total cost of
the completed work, including both hard and soft costs.

 

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(c) In connection with this Agreement, Manager shall provide construction
management services and supervision to restore or repair physical damage to the
Property resulting from fortuitous loss or acts of God, including but not
limited to, fire, wind, hail and flood ("Casualty Projects").

 

Manager shall be paid a construction management oversight fee of five percent
(5%) based upon the total cost of the Casualty Project work, including hard and
soft costs.

 

The construction management fee shall be paid to Manager by Owner as soon as
practical, either at the earlier of as draws are paid, or at the completion of
the project work.

 

Manager shall where applicable make reasonable efforts to secure at least three
(3) bids for all insurance loss claims and casualty work. and shall use best
efforts to obtain at least three (3) such bids for any contract for labor and/or
material relating to the Project which has an aggregate cost to Owner of more
than Twenty Five Thousand Dollars ($25,000).

 

(d)              Manager's responsibilities with respect to the Casualty
Projects shall be performed with the professional skill and care of first-class
construction managers in the geographic area in which the Project is located.
The services to be provided will include, but not be limited to, the following:
coordination of space planning; providing a detailed scope of work; coordination
of acquisition of city approvals and permits to be obtained by General
Contractor; acquisition of competitive bids from contractors where required by
Owner; bid summary and recommendations for review by Owner; negotiation of
construction contracts; handling relations with tenants of the Project;
coordination of change orders; securing and recording conditional and
unconditional lien releases (whether partial or final) from all contractors,
subcontractors, material men, suppliers and the like prior to or concurrent with
the making of any payments, and providing for such other arrangements as may be
reasonably prudent under the circumstances to assure the appropriate application
of construction funds; inspection of construction to ensure quality and
completion prior to payment; timely filing or recording of notices of completion
and posting of notices of non responsibility on behalf of Owner (if applicable)
as well as otherwise taking all steps necessary to comply with all laws and
procedures relating to keeping the Project free of liens; preparation of a final
punch list, and supervising the completion of any punch list items of remaining
or defective work; coordination of inspections upon completion; securing
certificates of occupancy; obtaining final lien waivers; review, approval, and
submittal to Owner of all payment applications; ensuring that all contractors,
subcontractors, material men, suppliers and the like carry sufficient insurance;
and, such other services as are reasonable and necessary in connection with
completion of the work. Manager shall make available to Owner the advice,
consultation and expertise of Manager's technical staff, and render such
periodic progress reports to Owner as it shall reasonably request.

 

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2.9LICENSES AND PERMITS

Manager shall, in a timely manner, apply for, and thereafter use commercially
reasonable efforts to obtain and maintain in the name and at the expense of
Owner all licenses and permits (including deposits and bonds) required of Owner
or Manager in connection with the management and operation of the Project. Owner
agrees to execute and deliver any and all applications and other documents and
to otherwise cooperate to the fullest extent with Manager in applying for,
obtaining and maintaining such licenses and permits. Specifically, but without
limitation, Manager acknowledges that the Project is subject to brownfields
regulations, and agrees to comply with all environmental laws and regulations in
connection therewith, to the extent that such laws and regulations relate to
Manager's management, operation and maintenance obligations hereunder. Upon
obtaining knowledge of any violation of any such law, Manager shall promptly
notify Owner thereof in writing.

 

2.10COMPLIANCE WITH LAWS

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

 

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

 

2.11LEGAL PROCEEDINGS

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

 

2.12DEBTS OF OWNER

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

 

SECTION 3: MANAGEMENT FEES

 

3.1MANAGEMENT FEE

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

 

3.2PLACE OF PAYMENT

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

 

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SECTION 4 : PROCEDURE FOR HANDLING RECEIPTS AND OPERATING CAPITAL

 

4.1BANK DEPOSITS

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

 

4.2SECURITY DEPOSIT ACCOUNT

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

 

4.3OPERATING ACCOUNT

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

 

4.4DISBURSEMENT OF DEPOSITS

Manager shall disburse and pay all funds on deposit on behalf of and in the name
of Owner, in such amounts and at such times as the same are required in
connection with the ownership, maintenance and operation of the Project on
account of all taxes, assessments and charges of every kind imposed by any
governmental authority having jurisdiction over the Project, and all costs and
expenses of maintaining, operating and supervising the operation of the Project,
including, but not limited to, the Management Fees due hereunder, salaries,
fringe benefits and expenses of the Project employees, insurance premiums, debt
service, legal and accounting fees and the cost and expense of utilities,
services, marketing, advertising and concessions. To the extent there are
insufficient funds to pay all of such costs and expenses, Manager shall
immediately notify Owner upon first projection or awareness of a cash shortage
or pending cash storage. Manager shall pay such of the foregoing items in the
order and manner directed by Owner, and shall thereafter submit to Owner a
statement of all remaining unpaid bills except that Management Fees and payroll
shall not be deferred and shall be paid in accordance with the Agreement.
Nothing in this agreement shall require the Manager to advance money on the
Owner's behalf.

 

4.5AUTHORIZED SIGNATURES

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

 

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SECTION 5: ACCOUNTING

 

5.1BOOKS AND RECORDS

Manager, on behalf of Owner, shall keep all books and accounts pertaining to the
Project In accordance with Generally Accepted Accounting Principles in the U.S.
The cutoff date of the accounting period shall be the last day of each calendar
month. Manager, on behalf of Owner, shall also supervise and direct the keeping
of a comprehensive system of office records, books and accounts pertaining to
the Project. Such records shall be subject to examination at the office where
they are maintained by Owner or its authorized agents, attorneys and accountant
at all reasonable business hours and upon reasonable, advance notice to Manager.
Capitalization and expense policy of Bluerock to be adhered to.

 

On or about the end of each calendar quarter of each year, Manager shall cause
to be furnished to owner such information as reasonably requested in writing by
Owner as is necessary for any reporting requirements of the any direct or
indirect members of Owner or for any reporting requirements of any REIT Member
(as defined in the Owner's Operating Agreement) (whether a direct or indirect
owner) to determine its qualification as a real estate investment trust and its
compliance with REIT Requirements (as defined in the Owner's Operating
Agreement) as shall be reasonably requested by Owner. Further, the Manager shall
cooperate in a reasonable manner at the request of Owner and any direct or
indirect member of Owner to work in good faith with any designated accountants
or auditors of such party or its Affiliates so that such party or its Affiliate
is able to comply with its public reporting, attestation, certification and
other requirements under the Securities Exchange Act of 1934, as amended,
applicable to such entity, and to work in good faith with the designated
accountants or auditors of the such party or any of its Affiliates in connection
therewith, including for purposes of testing internal controls and procedures of
such party or its Affiliates.

 

5.2PERIODIC STATEMENTS

(a)   On or before five (5) business days following the end of each calendar
month, Manager shall deliver or cause to be delivered to Owner its standard
financial reports customarily provided the owners of properties it manages, a
list of which is set forth on Exhibit B. The reports are subject to change from
time to time by Owner or Manager provided Manager shall not substantively
decrease the quality of the information provided.

 

(b)   Within ten (10) business days but no later than the 151h of the month
after the end of such Fiscal Year, Manager will deliver to the Owner, an income
and expense statement as of Fiscal Year end, and the results of operation of the
Project during the preceding Fiscal Year (anything contained herein to the
contrary notwithstanding, however, Manager shall not be obligated to prepare any
of Owner's state or federal income tax returns).

 

(c)   Manager shall also prepare and provide to Owner such reports and
information as required by Owner to prepare the reports and tax returns required
under Owner's Operating Agreement including without limitation, the quarterly
reports that Owner may require under

 

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Section 5.01 hereof.

 

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

 

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

 

5.3EXPENSES

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

 

SECTION 6: GENERAL COVENANTS OFOWNER AND MANAGER

 

6.1OPERATING EXPENSES

The Owner shall be solely liable for, and shall pay, all costs and expenses of
managing and operating the Project that have been incurred by Owner or by
Manager in accordance with the provisions of this Agreement, and shall pay, or
Manager shall pay on Owner's behalf, all such costs and expenses, including,
without limitation, the salaries of all Project employees, provided however,
Owner shall have no direct obligations to Project Employees for salaries or
fringe benefits, as all Project Employees are employed solely by Manager and not
by Owner. Nothing in this Agreement shall require Manager to advance funds on
Owner's behalf, however if funds are advanced by Manager in the operation, or
management of the Project due to insufficient funds being from Gross Receipts,
these funds will be reimbursed by the Owner within thirty (30) days of
submitting itemized invoices to the Owner. Given Manager's purchasing power,
Manager is sometimes able to negotiate volume discounts which inure to the
benefit of its managed properties. Owner's obligation to pay all costs and
expenses of managing and operating the Property includes Owner's pro rata share
of purchases, contracts, sales or services purchased by Manager in bulk for
which Manager obtains for discount or convenience to benefit the Property. Owner
further recognizes that the Project may be operated in conjunction with other
projects and that costs may be allocated or shared between such projects. In
such regard, Owner consents to such allocation of costs and/or sharing of any
expenses in an effort to save costs and operate the Project in a more efficient
manner, so long as all such allocations are clearly indicated and approved in
the Budget and not otherwise detrimental to Owner.

 

6.2OWNER'S RIGHT OF INSPECTION AND REVIEW

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

 

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6.3INDEMNIFICATION BY OWNER

 

Except for the gross negligence, willful misconduct or criminal actions of
Manager (including Project Employees) in connection with its performance under
this Agreement, Owner shall indemnify, hold harmless, and defend Manager (and
Manager's partners, directors, shareholders, officers, employees, and agents),
from and against any and all liabilities, claims, causes of action, suits,
losses, demands and expenses whatsoever including, but not limited to reasonable
legal fees and expenses arising out of or in the connection with the ownership,
maintenance or operation of the Property or this Agreement or the performance of
Manager's agreements hereunder (collectively “Claims”), including but not
limited to, Claims alleging bodily injury or property damage, and/or the loss of
use of property following and resulting from damage or destruction, unless
caused by the gross negligence, willful misconduct or criminal actions of
Manager. The indemnification by Owner contained in this Section 6.03 is in
addition to any other indemnification obligations of Owner contained in this
Agreement, and is not limited by or to Owner's Liability Insurance. It is the
intent of the parties hereto, however, to look first to Owner's Liability
Insurance with respect to all Claims hereunder. Nothing herein shall be
construed to indemnify, defend or hold harmless the Manager from claims alleging
the gross negligence, willful misconduct or criminal actions of the Manager or
its employees, directors, officers, agents or representatives.

 

6.4INDEMNIFICATION BY MANAGER

Manager shall indemnify Owner from and against all Claims for bodily injury and
property damage or for financial loss that (i) arise out of or are a result of
the gross negligence, willful misconduct or criminal actions of Manager except
where attributable to actions or policies approved in writing or required in
writing by Owner and (ii) result in a claim against Owner arising out of the
Manager's gross negligence, willful misconduct or criminal actions. Where Owner
is sued as a result of Manager's gross negligence, willful misconduct or
criminal actions, Manager shall indemnify, defend and hold harmless Owner. The
indemnification by Manager contained in this Section 6.04 is in addition to any
other indemnification obligations of Manager contained in this Agreement, and is
not limited by or to Manager's Insurance. It is the intent of the parties
hereto, however, to look first to Manager's Insurance, where applicable, as set
forth herein.

 

6.5SURVIVAL OF INDEMNITY OBLIGATIONS

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

 

SECTION 7:DEFAULTS AND TERMINATION RIGHTS

 

7.1DEFAULT BY MANAGER

Manager shall be deemed to be in default hereunder in the event Manager shall
fail to keep, observe or perform any material covenant, agreement, term or
provision of this Agreement to be kept, observed or performed by Manager, and
such default shall (i) result from Manager's grossly negligent acts or omissions
or willful misconduct; (ii) involve Manager's misappropriation or intentional
misapplication of funds received or held by Manager hereunder; or (iii) continue
for a period of ten (10) days after written notice thereof by Owner to Manager
as to any default in payment of money or thirty (30) days after written notice
thereof by Owner to Manager as to any non-monetary default, or, if such
non-monetary default cannot be cured within thirty (30) days, then such
additional period as shall be reasonable provided that Manager is capable of
curing same and has continuously attempted to cure such default. Manager shall
also be deemed to be in default hereunder if a petition for bankruptcy,
reorganization or rearrangement is filed under state or federal insolvency
statutes by Manager, or if any such petition is filed against Manager and not
removed or discharged within sixty (60) days thereafter.

 

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7.2REMEDIES OF OWNER

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

 

7.3DEFAULTS BY OWNER

Owner shall be deemed to be in default hereunder in the event Owner shall fail
to keep, observe or perform any material covenant, agreement, term or provision
of this Agreement to be kept, observed or performed by Owner, and such default
shall continue for a period of, in the case of any default which can be cured by
the payment of a liquidated sum of money, ten (10) days and, in the case of all
other defaults, thirty (30) days after notice thereof by Manager to Owner but,
if such non-monetary default cannot be cured within thirty (30) days, then such
additional period as shall be reasonable provided that Owner is capable of
curing same and has continuously attempted to cure such default.

 

7.4REMEDIES OF MANAGER

Upon the occurrence of an event of default by Owner as specified in Section 7.03
hereof, Manager shall be entitled to terminate this Agreement, and upon any such
termination by Manager pursuant to this Section 7.04, Manager shall have the
right to pursue any remedy it may have at law or in equity (provided that in no
event shall Owner ever be liable to Manager for, and Manager hereby waives all
rights to receive, punitive, consequential or exemplary damages).,

 

7.5EXPIRATION OF TERM

Upon the expiration of the Term hereof pursuant to Section 1.0 I hereof, unless
sooner terminated pursuant to the terms of this Agreement, Manager shall deliver
to Owner all funds, including tenant security deposits, books and records of
Owner then in possession or control of Manager, save and except such sums as are
then due and owing to Manager hereunder. In addition, within sixty (60) days
following expiration or termination, Manager shall deliver to Owner a final
accounting, in writing, with respect to the operations of the Project, which
obligation shall survive termination.

 

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7.6TERMINATION WITHOUT CAUSE

This Agreement shall be terminable by either party at any time without cause
upon thirty (30) days prior written notice from Owner to Manager and ninety (90)
days written notice from Manager to Owner. Additionally, this Agreement shall
automatically terminate upon Owner's sale or other disposition of the Project or
upon the condemnation of all or any material portion of the Project. Owner
acknowledges Manager shall incur substantial expenses in the initial set-up of
the management of the Project. In the event Owner terminates this Agreement
without cause for any reason, including but not limited to, the sale or transfer
of the Project's ownership or assignment of property management services to
another property manager within 120 days of commencement, in addition to
payments and reimbursable expenses due Manager through the date of termination,
Owner agrees to pay Manager an additional amount equal to one month's Base
Management Fee.

 

7.7EFFECT OF TERMINATION

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

 

SECTION 8:INSURANCE

 

8.1 OWNER'S INSURANCE: Owner shall obtain and maintain the following insurance
(the specifications for which may be changed from time to time by Owner)
necessary to protect the interest of Owner as it relates to the Property, at
Owner's sole cost and expense, from authorized insurance companies with an AM
Best rating of A IX or higher.

 

a.PROPERTY INSURANCE: Hazard insurance in the amount of the full replacement
cost of the Property, and such other property insurance as Owner may elect, at
Owner's expense.

 

b.LIABILITY INSURANCE: Commercial general liability insurance including
contractual liability for insured contracts, on an "occurrence" basis, naming
Manager as an additional insured, with limits of not less than three Million
Dollars ($3,000,000.00) per occurrence (the "Owner's Liability Insurance"). This
limit may be satisfied by a combination of COL and umbrella/excess liability
insurance. The Owner's Liability Insurance shall include coverage for losses
arising from the ownership, management, and operation of the Property. This
insurance shall be primary for Owner and Manager with respect to the Project.

 

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

 

8.2   MANAGER'S INSURANCE: Manager shall obtain and maintain the following
insurance (the specifications for which may be changed from time to time by
Owner) necessary to protect the interest of Owner as it relates to Manager's
operations hereunder, at Manager's sole cost and expense, from authorized
insurance companies approved by Owner rated by Best's Rating at A IX or higher.

 

a.COMMERCIAL GENERAL LIABILITY INSURANCE: Commercial general liability insurance
for the benefit of Manager and Owner in the amount of $1,000,000 per occurrence
and $2,000,000 in the aggregate covering claims for bodily injury, property
damage, personal and advertising injury, products and completed operations (the
"Manager's Liability Insurance").

 

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1.Coverage on an occurrence form.

2.Contractual liability coverage covering the indemnification section of this
agreement.

3."Additional Insured - Owners, Lessees or Contractors - (FORM B), CG 20 10 11
85" or its equivalent providing coverage for both ongoing and completed
operations and naming Owner as an additional insured.

4.Manager's policy shall not include a Limitation of Coverage Real Estate
Operations (CG 22 60 07 98) endorsement, Real Estate Property Managed
Endorsement (CG 22 70 11 85) or similar endorsements excluding or limiting
coverage for bodily injury, property damage or personal and advertising injury.

5.Manager shall continue to name Owner as an additional insured for a period of
three

years following the termination of the Agreement. Manager shall provide Owner
with an original certificate of insurance not less than fifteen days prior to
each renewal date during this three-year period.

6.If the Manager utilizes the services of an employee leasing company, then it's
general liability policy must include ISO endorsement CG 04 24 10 93 Coverage
for Injury to Leased Workers.

7.The pollution exclusion must be modified to include coverage for pollution
claims related to a hostile fire as well as pollutants that are released from
the building's heating equipment or equipment used to heat water.

8.A separation of insured clause.

 

b.UMBRELLA OR EXCESS LIABILITY: limits of $5,000,000: Providing follow-form
coverage over the Commercial General Liability, Automobile Liability and
Employers' Liability policies.

 

c.AUTO LIABILITY INSURANCE: Manager, at its expense which is not reimbursable,
shall carry and maintain business auto liability insurance covering owned,
non-owned and hired vehicles with a limit of not less than $1,000,000 per
accident. If the Manager utilizes the services of an employee leasing company
then its Commercial Auto Liability policy must include ISO endorsement CA 23 25
07 97 Coverage for Injury to Leased Workers. Owner shall be named as additional
insured.

 

d.WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE:

 

1.Workers' compensation - Statutory limits of insurance covering employees,
including principals. In the event the principal has waived coverage for
himself/herself, it is hereby agreed by all parties that the principal may not
perform any work under this contract.

2.Employers' liability limits.

(A)$1,000,000 for bodily injury caused by accident, each accident.

(B)$1,000,000 for bodily injury caused by disease, each employee.

(C) $1,000,000 for bodily injury caused by disease, policy limit.

 

e.PROPERTY MANAGER' S ERRORS AND OMISSIONS LIABILITY:

1.Limits of Insurance:$1,000,000 per occurrence, $2,000,000 aggregate

2.If coverage is on a claims-made basis, the retroactive date must be a date
that is not later than the date on which Manager began performing services on
behalf of the Owner.

3.Contingent bodily injury and property damage coverage.

 

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4.Coverage shall be maintained for a period of three years after the termination
of services. Manager shall provide Owner with an original certificate of
insurance on or before each renewal date during this three-year period.

5.The policy shall include a separation of insureds clause.

 

f.COMMERCIAL CRIME INSURANCE:

1.Limits of Insurance: $1,000,000 employee dishonesty, $1,000,000 forgery or
alteration, $1,000,000 computer fraud, $1,000,000 wire funds transfer fraud,

$1,000,000 money and securities on and off premises

2.Third party coverage.

3.No limitation or exclusion related to acts of collusion.

4.Owner shall be included as Loss Payees as its interest may appear.

5.Coverage shall be included for theft of Owner's property by Manager's owners,
directors and officers.

6.The definition of employee shall include leased employees if the Manager
utilizes the services of an employee leasing firm.

 

g.EMPLOYMENT PRACTICES LIABILTIY INSURANCE:

Employment Practices Liability insurance with limits of $1,000,000 per
occurrence/aggregate, including third party coverage for sexual harassment,
discrimination and other coverable employment-related torts.

 

h.CERTIFICATES OF INSURANCE: Manager shall not begin performing services
hereunder until original certificates of insurance showing evidence of the
coverages outlined below have been furnished to and approved by Owner. Each
policy shall provide for thirty (30) days' advance written notice of
cancellation or material change by mail to Owner from the insurance company, and
this provision shall be evidenced on the certificates. Evidence of renewal or
replacement coverages shall be furnished to the Owner and Manager not less than
ten (10) days prior to expiration but in no event later than the renewal date
itself.

 

8.4OWNER'S LIABILITY INSURANCE PRIMARY AND NON-CONTRIBUTORY

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

 

8.5RENTER' S INSURANCE

If at the direction of the Owner, Manager implements a renter's insurance
program at the Project whether it is a limited liability, or limited liability
and personal contents coverage policy, any such policy held by the resident
shall not remove, replace, reduce, or in any way modify the parties'
indemnification obligations herein or the requirements of Owner or Manager to
provide insurance and indemnification in accordance with Sections 6 and 8.
Manager agrees to use best efforts to insure compliance on the part of Project
residents. Manager assumes no responsibility, liability or reduction in payment
of its Management Fee as a result of any expense incurred by Owner, including
but not limited to payment by Owner of any insurance deductible amount, cause by
the failure of a resident to have renter's insurance in place. This exclusion of
liability on Manager's part applies whether the resident failed to procure
renter's insurance at the time of initial lease signing, at the time the
resident' s renter's insurance policy came up for renewal, or at any other time.

 

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8.6VENDOR INSURANCE COMPLIANCE

At no cost to the Owner, Owner agrees to utilize a Vendor Compliance Management
Services Company to establish and manage vendor's insurance agreeable to Owner
and Manager and approved by Manager. Utilizing such a company to manage vendor
Liability Insurance Certificates and provide related services shall not remove,
replace, reduce, or in any way modify the parties' indemnification obligations
herein or the requirements of Owner or Manager to provide insurance and
indemnification in accordance with Sections 6 and 8. Manager assumes no
responsibility, liability or reduction in payment of its Management Fee, for
property loss, personal injury (including death) or denial of claims based on
the status of a vendor's policy whether its policy is amended, changed or
lapsed. Further, Manager assumes no responsibility for the Vendor Compliance
Management Services Company beyond that required under this Agreement.

 

8.6WAIVER OF SUBROGATION

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

 

8.7HANDLING CLAIMS

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

 

8.8AUTOMOBILE INSURANCE. INTENTIONALLY OMITTED

 

8.9WORKERS'COMPENSATION INSURANCE. INTENTIONALLY OMITTED

 

8.10DISHONESTY INSURANCE. INTENTIONALLY OMITTED

 

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8.11ENVIRONMENTAL INDEMNIFICATION

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

 

SECTION 9: MISCELLANEOUS PROVISIONS

 

9.1GOVERNING LAW

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

 

9.2NOTICES

All notices, demands, requests or other communications required or permitted to
be given hereunder must be sent by (i) personal delivery, (ii) FedEx or a
similar nationally recognized overnight courier service, or (iii) certified
mail, return receipt requested. Any such notice, request, demand, tender or
other communication shall be deemed to have been duly given:

(a) if served in person, when served; (b) if by overnight courier, on the first
Business Day after delivery to the courier; or (c) if by certified mail, return
receipt requested, upon receipt. Rejection or other refusal to accept, or
inability to deliver because of changed address or facsimile number of which no
notice was given, shall be deemed to be receipt of such notice, request, demand,
tender or other communication. Any party hereto may at any time by giving ten
(10) days written notice to the other party hereto designate any other address
in substitution of the foregoing address to which such notice or communication
shall be given.

 

OWNER: BR Park & Kingston Charlotte, LLC   c/o Bluerock Real Estate   712 Fifth
Avenue, 9th Floor   New York, NY 10019   Attention: Jordan Ruddy     COPY TO:
Bluerock Real Estate   712 Fifth Avenue, 9th Floor   New York, NY 10019  
Attention: Michael L. Konig, Esq.     MANAGER: Bell Partners Inc.   300 N.
Greene Street, Suite 1000   Greensboro, NC 27401   Attn: Gwyneth Cote', COO

 

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9.3SEVERABILITY

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

 

9.4NO JOINT VENTURE OR PARTNERSHIP

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

 

9.5MODIFICATION TERMINATION

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

 

9.6ATTORNEYS' FEES

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

 

9.7TOTAL AGREEMENT

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

 

9.8APPROVALS AND CONSENTS

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

 

9.9CASUALTY

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

 

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9.10SPECIAL AGREEMENTS

Notwithstanding Manager's review of and recommendations in respect to capital
repairs and replacements for the Property, Owner acknowledges that Manager is
not an architect or engineer, and that all capital repairs, replacements and
other construction in the Property will be designed and performed by independent
architects, engineers and contractors. Accordingly, Manager does not guarantee
or warrant that the construction documents for such work will comply with
Applicable Law or will be free from errors or omissions, nor that any such work
will be free from defects, and Manager will have no liability therefor. 1n the
event of such errors, omissions, or defects, Manager will use reasonable efforts
to cooperate in any action Owner desires to bring against such parties.
Notwithstanding any contrary provision hereof, (i) Owner agrees that no partner,
agent, director, member, officer, shareholder, or affiliate of Manager shall be
personally liable to Owner or anyone claiming by, through or under Owner, by
reason of any default by Manager under this Agreement, any obligation of Manager
to Owner, or for any amount that may become due to Owner by Manager under the
terms of this Agreement otherwise, and (ii)Manager agrees that no partner,
agent, director, member, officer, shareholder, or affiliate of Owner shall be
personally liable to Manager or anyone claiming by, through or under Manager, by
reason of any default by Owner under this Agreement, any obligation of Owner to
Manager, or for any amount that may become due to Manager by Owner under the
terms of this Agreement otherwise.

 

9.11COMPETITIVE PROJECTS

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

 

9.12SUCCESSORS AND ASSIGNS

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

 

9.13WAIVER OF JURY TRIAL.

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

 

9.14HUD AMENDMENT

In the event Owner secures new financing or refinances the Project, Owner and
Manager agree to amend this Agreement as may be reasonably required to satisfy
any requirements of Owner's HUD financing, including but not limited to,
Manager' s Base Management Fee.

 

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SECTION 11: SIGNATURES

 

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

 

MANAGER: Bell Partners Inc., a North Carolina corporation

 

By: /s/ Gwyneth Cote'       Name:     Gwyneth Cote'       Tide: Chief Operating
Officer  

 

OWNER: BR Park & Kingston Charlotte, LLC, a North Carolina limited liability
company

 

By:         Name:      Jordan Ruddy       Tide: Authorized Signatory  

 

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SECTION 11:SIGNATURES

 

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

 

MANAGER: Bell Partners Inc., a North Carolina corporation

 

By:         Name:       E. Durant Bell       Title: Executive Vice President  

 

OWNER: BR Park & Kingston Charlotte, LLC, a North Carolina limited liability
company

 

By: /s/ Jordan Ruddy       Name:      Jordan Ruddy       Title: Authorized
Signatory  

 

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EXHIBIT A

 

2015 BUDGET

 

To be inserted

 

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EXHIBIT B

 

I.MONTHLY REPORTS

 

1.Balance Sheet, including monthly comparison and comparison to year end (if
applicable).

2.Budget Comparison (1), including month-to-date and year-to-date variances.

3.Detailed Income Statement, including prior 12 months.

4.Profit and loss statement compared to Budget with narrative for any large
fluctuations compared to Budget.

5.Trial Balance that includes mapping of the accounts to the financial
statements.

6.Account reconciliations for each balance sheet account within the trial
balance.

7.Detailed support for each account reconciliation including the following:

a          Detail Accounts Payable Aging Listing: 0-30 days,31-60 days, 61-90
days and over 90 days.

b.         Detail Accounts Receivable/Delinquency Aging Report: 0-30 days, 31-60
days, 61-90 days, over 90 days and prepayments.

c.         Fixed asset roll-forward and support (invoices and checks) for any
new acquisition/additions and/or support for any disposals to fixed assets.
Purchases will be accounted for using Bluerock's capitalization policy.

8.Security Deposit Activity

9.Mortgage Statement

10.Monthly Management Fee Calculation

11.Monthly Distribution Calculation

12.General Ledger, with description and balance detail

13.Monthly Check Register including copies of all checks disbursed and copies of
cancelled checks.

14.Market Survey, including property comparison trends, and concessions.

15.Rent Roll

16.Monthly Reporting and evidence of withdrawal, if any, of the Property
Enhancement Reserves, and any other operating reserve accounts and capital
expense reserve accounts, including, but not limited to, any calculations
evidencing shortfalls payable thereunder.

17.Variance Report, including the following:

a.Cap Ex Summary and Commentary

b.Monthly Income/Expense Variance with notes

c.Yearly Income/Expense Variance with notes

d.Occupancy Commentary

e.Market/Competition Commentary

f.Rent Movement/Concessions Commentary

g.Crime Commentary

h.Staffing Commentary

i.Operating Summary, with leasing and traffic reporting

j.Other reasonable reporting, as requested (e.g. Renovation/Rehab report)

 

I.QUARTERLY REPORTS

 

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18.Within ten (10) business days of the end of each quarter of each year but no
longer than the 15th of the month at the end of each quarter, Manager shall
furnish to Owner such information as requested by Owner or its Members or
affiliates as is necessary for any REIT Member of Owner (whether a direct or
indirect owner) to determine its qualification as a real estate investment trust
(a "REIT") and its compliance with any requirements for qualifying as a REIT
(the "REIT Requirements") as shall be requested by Owner or its Members.
Further, Manager shall cooperate in a reasonable manner at the request of any
Member to work in good faith with any designated accountants or auditors of such
Member or its Affiliates so that such Member or its Affiliate is able to comply
with its public reporting, attestation, certification and other requirements
under the Securities Exchange Act of 1934, as amended, applicable to such
entity, and to work in good faith with the designated accountants or auditors of
the Member or any of its Affiliates in connection therewith, including for
purposes of testing internal controls and procedures of such Member or its
Affiliates. The requesting Member shall bear the cost of any information or
reports provided to such Member pursuant to this Exhibit.

 

III. OTHER REPORTS

 

19.Other reasonable reporting at Owner's expense, as requested and approved in
writing by Owner at Owner's expense.

 

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

 

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EXHIBIT C

 

Minimum Technology Standards

 

Infrastructure Services -Hardware and Software

a.Leasing office computers must meet current minimum technical requirements and

standards. The current standard is a minimum of an Intel i3 processor (or
equivalent) and 4 GB of RAM. On an annual basis, Manager's Information
Technology Department will identify all computers that do not meet the then
current minimum technical requirements and standards. Those computers that do
not meet the minimum requirements or are greater than 3 years of age will be
budgeted for replacement in the following budget year.

b.All computers for community associates must be a part of Manager's Microsoft
licensing program. Every associate will be provided an Active Directory network
account and a BellPartnerslnc.com e-mail address. The licenses include Microsoft
Windows, Office, Exchange, SharePoint, Lync, Active Directory, Terminal
Services, etc. These services will be provided through Manager's internal
infrastructure or may run as a cloud service (such as Microsoft Office 365).

c.Each leasing office is required to supply a high-speed internet connection
with a minimum of l0 Meg download / 1 Meg upload and a dedicated IP address.

d.Each leasing office or maintenance office internet connection must have a
standard firewall in place. The current standard is a Meraki MX-60 firewall
device.

e.Mobile devices such as smartphones and tablets must be supported by Manager's
Information Technology Department which currently includes Apple and Android
devices. All mobile devices connected to Manager's network for e-mail or other
applications must be managed by the Manager's Mobile Device Management system.

f.Owner agrees to use and pay associated fees for Manager's standard telecom
management platform.

g.Other security software and hardware that Manager deems necessary to protect
the privacy of Residents, Employees & Reputation -Classes of solutions fall into
the following areas:

i.Web Filtering

ii.Configuration Management

iii.Virus and Malware Protection

iv.E-mail Filtering

v.E-mail Archiving

vi.Intrusion Detection and Prevention

vii.Firewall and VPN Access

viii.Mobile Device Management

ix.Single Sign-on

x.Backup and Disaster Recovery.

h.Software vendors may perform periodic license audits or true-ups. Owner will
reimburse Manager for any additional charges from software vendors that may
result from audits or true-ups.

 

2.Reporting Tools and Business Intelligence Products

a.Prorated license and access charges for data extracts from vendor sources for
management reporting -ex: RealPage, Yardi, etc.

b.License costs for applicable User Reporting tools such as IBM Cognos, SAP
Business Objects, SAP Crystal Reports etc.

 

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3.Vendor Partnership and Product coats for what we have validated and integrated
RealPage, Yardi. OpsTechnology etc.)

a.Owner agrees to use and pay associated software costs for Manager's standard
business application platform for property management (e.g. RealPage),
financials (e.g. Yardi), and other business applications (e.g. HR/Payroll
-Workday). Manager has the right to evaluate, test, and implement platform
products that will best meet the business needs of Owner and Manager. The
current standard business application platform includes:

i.Yardi Voyager (Financials, General Ledger, Accounts Payable, Construction, Job
Cost Accounting, Fixed Assets)

ii.RealPage OneSite Leasing and Rents

iii.RealPage SOE- Site Data Exchange Services

iv.RealPage OpsTechnology

v.RealPage Yield Star

vi.RealPage Payment Solutions

vii.RealPage Resident Screening

viii.RealPage Resident Portal

ix.RealPage Online Renewals

x.RealPage Online Leasing

xi.Community marketing websites

xii.Workday (HR and Payroll)

 

4.Integration Services between various suppliers

a.ETL products

b.Directory Management and Authentication

 

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EXHIBIT D

BROWNFIELDS ADDENDUM TO

RENTAL CONTRACT

(North Carolina)

 

Community Name:     Unit:  

 

Resident(s):     Lease Date  

 

This Brownfields Addendum to Rental Contract (this “Brownfields Addendum") is
made and entered into as or the same date as the Rental Contract (the "Lease")
to which this Brownfields Addendum is attached and made a part thcRar by and
between the Owner of the above referenced Community and Resident named above.
The term "Lease" shall include this Addendum and any other addenda executed by
the Resident. The terms of this Brownfields Addendum shall be in addition to the
terms of the Lease. In the event the terms of this Brownfields Addendum are
inconsistent or conflict with the provisions of the Lease, the terms of this
Brown fields Addendum shall control

 

For and In consideration of the mutual promises contained herein and in the
Lease and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by all parties, the parties agree as follows:

 

l.Brownfields Property. The following shall be added as paragraph of the Lease
and entitled "Brownfields Property":

 

Resident acknowledges and agrees that the Unit, any common area and other
improvements and real property comprising the Community (collectively, the
"Property") have: been classified as a "Brownfields Property" by the North
Carolina Department of Environment and Natural Resources ("DENR"). The Property
that the subject of this instrument is subject to the Brownfields Agreement
attached as Exhibit A to the Notice of Brownfield Property recorded in the
Mecklenburg County land records, Book 28491, Page: 249. The: Brownfield
Agreement placed land use restrictions in the chain of title for the Property
that must be complied with by Resident and Occupant at the Property, as well as
their guests and invitees. A complete copy of the Brownfields Agreement is
available for review from the property manager by Resident, and the land use
restrictions applicable to the Property are incorporated into this Brownfields
Addendum by reference (the "Restrictions"). Several or the Restrictions include,
but are not limited to:

 

1)Underground water at the Property may not be used for any purpose;

 

2)Soil disturbances must be handled in accordance with a DENR approved Soil
Management Plan, as subsequently modified by DENR;

 

3)No mining may be conducted on the Property;

 

4)No constituents in environmental media at the Property, including those listed
in Paragraph 6 of the Brownfields Agreement, shall be used or stored at the
Property, except in de minimis amounts for cleaning and other routine
housekeeping activities.

 

Resident agrees to strictly comply with the Restrictions at the Property and use
his/her/their best efforts to ensure other Occupants, as well as invitees,
comply with the Restrictions. Upon pining knowledge or any violation of the
Restrictions by any party, Resident shall immediately notify Owner in accordance
with paragraph of the Lease.

 

The terms of this Brownfields Addendum are agreed to and accepted by:

 

OWNER: RESIDENT(S):  

    Signature:  

[Add proper signature lines] Name Printed:  

  Date:  

  Signature:  

  Name Printed:  

  Date:  

 

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