Exhibit 10.1


 


FIFTH AMENDMENT TO THE


SECOND AMENDED AND RESTATED 


AGREEMENT OF LIMITED PARTNERSHIP OF


BLUEROCK RESIDENTIAL HOLDINGS, L.P.


 


DESIGNATION OF 7.625% SERIES C 


CUMULATIVE REDEEMABLE PREFERRED UNITS


 


July 15, 2016


 


Pursuant to Section 4.02 and Article XI
of the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P. (the “Partnership
Agreement”), the General Partner hereby amends the Partnership Agreement as follows in connection with the issuance of 2,300,000
shares of 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “Series C Preferred Stock”)
of Bluerock Residential Growth REIT, Inc. and the issuance to the General Partner of Series C Preferred Units (as defined below)
in exchange for the contribution by the General Partner of the net proceeds from the issuance and sale of the Series C Preferred
Stock:


 


1.            Designation
and Number. A series of Preferred Units (as defined below), designated the “7.625% Series C Cumulative Redeemable Preferred
Units” (the “Series C Preferred Units”), is hereby established. The number of authorized Series C Preferred Units
shall be 4,000,000.


 


2.            Defined
Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Partnership
Agreement. The following defined terms used in this Amendment to the Partnership Agreement shall have the meanings specified below:


 


“Articles Supplementary” means
the Articles Supplementary of the General Partner filed with the State Department of Assessments and Taxation of the State of Maryland
on July 15, 2016, designating the terms, rights and preferences of the Series C Preferred Stock.


 


“Base Liquidation Preference”
shall have the meaning provided in Section 6.


 


“Business Day” shall have the
meaning provided in Section 5(a).


 


“Common Stock” means shares
of the General Partner’s Class A common stock, par value $0.01 per share.


 


“Common Unit Economic Balance”
shall have the meaning provided in Section 10(g).


 


“Default Period” shall have
the meaning provided in Section 5(e).


 


“Default Rate” shall have the
meaning provided in Section 5(e).


 


“Distribution Period” hall have
the meaning provided in Section 5(a).


 


“Distribution Record Date” shall
have the meaning provided in Section 5(a).


 




     


     


    

  


“Economic Capital Account Balance”
shall have the meaning provided in Section 10(g).


 


“Initial Series C Preferred Return”
shall have the meaning provided in Section 5(a).


 


“Junior Units” shall have the
meaning provided in Section 4.


 


“Liquidating Gains” shall have
the meaning provided in Section 10(g).


 


“Loss” shall have the meaning
provided in Section 10(h).


 


“Net Operating Income” shall
have the meaning provided in Section 10(f).


 


“Parity Preferred Units” shall
have the meaning provided in Section 4.


 


“Partnership Agreement” shall
have the meaning provided in the recital above.


 


“Preferred Units” means all
Partnership Interests designated as preferred units by the General Partner from time to time in accordance with Section 4.02 of
the Partnership Agreement.


 


“Profit” shall have the meaning
provided in Section 10(h).


 


“Series C Preferred Return”
shall have the meaning provided in Section 5(a).


 


“Series C Preferred Distribution Payment
Date” shall have the meaning provided in Section 5(a).


 


“Series C Preferred Stock” shall
have the meaning provided in the recital above.


 


“Series C Preferred Units” shall
have the meaning provided in Section 1.


 


3.            Maturity.
The Series C Preferred Units have no stated maturity and will not be subject to any sinking fund or mandatory redemption.


 


4.            Rank.
The Series C Preferred Units will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to all classes or series of Common Units of the Partnership and any class or series of Preferred
Units expressly designated as ranking junior to the Series C Preferred Units as to distribution rights and rights upon liquidation,
dissolution or winding up of the Partnership (together with the Common Units, the “Junior Units”); (b) on a parity
with any class or series of Preferred Units issued by the Partnership expressly designated as ranking on a parity with the Series
C Preferred Units, including the Series A Preferred Units and Series B Preferred Units, as to distribution rights and rights upon
liquidation, dissolution or winding up of the Partnership (the “Parity Preferred Units”); and (c) junior to any
class or series of Preferred Units issued by the Partnership expressly designated as ranking senior to the Series C Preferred Units
with respect to distribution rights and rights upon liquidation, dissolution or winding up of the Partnership. The term “Preferred
Units” does not include convertible or exchangeable debt securities of the Partnership, which will rank senior to the Series
C Preferred Units prior to conversion or exchange. The Series C Preferred Units will also rank junior in right or payment to the
Partnership’s existing and future indebtedness.


 




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5.            Distributions.


 


(a)          Subject
to the preferential rights of holders of any class or series of Preferred Units of the Partnership expressly designated as ranking
senior to the Series C Preferred Units as to distributions, the holders of Series C Preferred Units shall be entitled to receive,
when, as and if authorized by the General Partner and declared by the Partnership, out of funds of the Partnership legally available
for payment of distributions, cumulative cash distributions at the rate of 7.625% per annum of the Base Liquidation Preference
(as defined below) per unit (equivalent to a fixed annual amount of $1.90625 per unit) (the “Initial Series C Preferred
Return”) from and including the date of original issue of the Series C Preferred Units (or the first day following the end
of the most recent Distribution Period for which distributions on the Series C Preferred Units have been paid) to, but not including
July 19, 2023. Commencing July 19, 2023, the Partnership shall pay cumulative cash distributions on the Series C Preferred Units
at an annual rate equal to the Initial Series C Preferred Return increased by two percent of the Base Liquidation Preference per
Series C Preferred Unit, which shall increase by an additional two percent of the Base Liquidation Preference per Series C Preferred
Unit on each subsequent anniversary thereafter, subject to a maximum annual distribution rate of 14% (together with the Initial
Series C Preferred Return, the “Series C Preferred Return”). Distributions on the Series C Preferred Units shall accrue
and be cumulative from (and including) the date of original issue of any Series C Preferred Units or the first day following the
end of the most recent Distribution Period for which distributions have been paid, and shall be payable quarterly, in equal amounts,
in arrears, on or about the 5th day of each January, April, July and October of each year (or, if not a business day,
the immediately preceding Business Day (each a “Series C Preferred Distribution Payment Date”) for the period
ending on such Series C Preferred Distribution Payment Date, commencing on October 5, 2016. A “Distribution Period”
is the respective period commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including
the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period and the
Distribution Period during which any Series C Preferred Units shall be redeemed or otherwise acquired by the Partnership). The
term “Business Day” shall mean each day, other than a Saturday or Sunday, which is not a day on which banks in the
State of New York are required to close. The amount of any distribution payable on the Series C Preferred Units for any Distribution
Period will be computed on the basis of twelve 30-day months and a 360-day year. Distributions will be payable to holders of record
of the Series C Preferred Units as they appear on the records of the Partnership at the close of business on the 25th
day of the month preceding the applicable Series C Preferred Distribution Payment Date, i.e., December 25, March 25, June
25 and September 25 (each, a “Distribution Record Date”).


 


(b)          No
distributions on the Series C Preferred Units shall be authorized by the General Partner or declared, paid or set apart for payment
by the Partnership at such time as the terms and provisions of any agreement of the General Partner or the Partnership, including
any agreement relating to the indebtedness of either of them, prohibits such authorization, declaration, payment or setting apart
for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited by law.


 




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(c)          Notwithstanding
anything to the contrary contained herein, distributions on the Series C Preferred Units will accrue whether or not the restrictions
referred to in Section 5(b) exist, whether or not the Partnership has earnings, whether or not there are funds legally available
for the payment of such distributions and whether or not such distributions are authorized or declared. No interest, or sum of
money in lieu of interest, will be payable in respect of any distribution on the Series C Preferred Units which may be in arrears.
When distributions are not paid in full upon the Series C Preferred Units and any Parity Preferred Units (or a sum sufficient for
such full payment is not so set apart), all distributions declared upon the Series C Preferred Units and any Parity Preferred Units
shall be declared pro rata so that the amount of distributions declared per Series C Preferred Unit and such Parity Preferred Units
shall in all cases bear to each other the same ratio that accumulated distributions per Series C Preferred Unit and such Parity
Preferred Units (which shall not include any accrual in respect of unpaid distributions for prior distributions periods if such
Parity Preferred Units do not have a cumulative distribution) bear to each other.


 


(d)          Except
as provided in the immediately preceding paragraph, unless full cumulative distributions on the Series C Preferred Units have been
or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment
for all past Distribution Periods that have ended, no distributions (other than a distribution in Junior Units or in options, warrants
or rights to subscribe for or purchase any such Junior Units) shall be declared and paid or declared and set apart for payment
nor shall any other distribution be declared and made upon the Junior Units or the Parity Preferred Units, nor shall any Junior
Units or Parity Preferred Units be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or
made available for a sinking fund for the redemption of any such Units) by the Partnership (except (i) by conversion into or exchange
for Junior Units, (ii) the purchase of Series C Preferred Units, Junior Units or Parity Preferred Units in connection with a redemption
of stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT or (iii) the
purchase of Parity Preferred Units pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding
Series C Preferred Units). Holders of the Series C Preferred Units shall not be entitled to any distribution, whether payable in
cash, property or units, in excess of full cumulative distributions on the Series C Preferred Units as provided above. Any distribution
made on the Series C Preferred Units shall first be credited against the earliest accrued but unpaid distribution due with respect
to such units which remains payable. Accrued but unpaid distributions on the Series C Preferred Units will accrue as of the Series
C Preferred Distribution Payment Date on which they first become payable.


 


(e)          Notwithstanding
anything to the contrary set forth above, the applicable distribution rate for each day during a Default Period (as defined below)
shall be equal to the then-current Series C Preferred Return plus two percent of the Base Liquidation Preference, or $0.50 per
annum (the “Default Rate”). Subject to the cure provision set forth in the next sentence, a “Default Period”
with respect to the Series C Preferred Units shall commence on a date the Partnership fails to make payment of distributions as
required in connection with a Series C Preferred Distribution Payment Date or date of redemption and shall end on the Business
Day on which, by 12:00 noon, New York City time, an amount equal to all unpaid distributions and any unpaid redemption price has
been paid. No Default Period shall be deemed to commence if the amount of any distribution or any redemption price due (if such
default is not solely due to the Partnership’s willful failure) is paid not later than three Business Days after the applicable
Series C Preferred Distribution Payment Date or redemption date.


 




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(f)          For
the avoidance of doubt, in determining whether a distribution (other than upon voluntary or involuntary liquidation) by distribution,
redemption or other acquisition of the Partnership Units is permitted under Delaware law, no effect shall be given to the amounts
that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the preferential rights
upon distribution of holders of Partnership Units whose preferential rights are superior to those receiving the distribution.


 


6.            Liquidation
Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the
holders of Series C Preferred Units are entitled to be paid out of the assets of the Partnership legally available for distribution
to its partners, after payment of or provision for the Partnership’s debts and other liabilities, a liquidation preference
of $25.00 per unit (the “Base Liquidation Preference”), plus an amount equal to any accrued and unpaid distributions
(whether or not authorized or declared) thereon to and including the date of payment, but without interest, before any distribution
of assets is made to holders of Junior Units. If the assets of the Partnership legally available for distribution to partners are
insufficient to pay in full the liquidation preference on the Series C Preferred Units and the liquidation preference on any Parity
Preferred Units, all assets distributed to the holders of the Series C Preferred Units and any Parity Preferred Units shall be
distributed pro rata so that the amount of assets distributed per Series C Preferred Units and such Parity Preferred Units shall
in all cases bear to each other the same ratio that the liquidation preference per Series C Preferred Unit and such Parity Preferred
Units bear to each other. Written notice of any distribution in connection with any such liquidation, dissolution or winding up
of the affairs of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable
in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60
days prior to the payment date stated therein, to each record holder of the Series C Preferred Units at the respective addresses
of such holders as the same shall appear on the records of the Partnership. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred Units will have no right or claim to any of the remaining
assets of the Partnership. The consolidation or merger of the Partnership with or into another entity, a merger of another entity
with or into the Partnership, a statutory exchange by the Partnership or a sale, lease, transfer or conveyance of all or substantially
all of the Partnership’s property or business shall not be deemed to constitute a liquidation, dissolution or winding up
of the affairs of the Partnership.


 


7.            Redemption.
In connection with any redemption by the General Partner of any shares of Series C Preferred Stock pursuant to Sections 5, 6, 7,
8 or 9 of the Articles Supplementary, the Partnership shall redeem, on the date of such redemption, an equal number of Series C
Preferred Units held by the General Partner. As consideration for the redemption of such Series C Preferred Units, the Partnership
shall deliver to the General Partner (i) an amount of cash equal to the amount of cash, if any, paid by the General Partner to
the holder of such shares of Series C Preferred Stock in connection with the redemption thereof and (ii) a number of Common Units
equal to the number of shares of Common Stock, if any, issued by the General Partner to the holder of such shares of Series C Preferred
Stock in connection with the redemption thereof.


 




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8.            Voting
Rights. Holders of the Series C Preferred Units will not have any voting rights.


 


9.            Conversion.
The Series C Preferred Units are not convertible or exchangeable for any other property or securities, except as provided herein.


 


10.          Allocation
of Profit and Loss.


 


Article V, Section 5.01 of the Partnership
Agreement is hereby deleted in its entirety and the following new Section 5.01 is inserted in its place:


 


(a)          Profit.
After giving effect to the special allocations set forth in Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f),
Profit of the Partnership for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective
Percentage Interests.


 


(b)          Loss.
After giving effect to the special allocations set forth in Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f),
Loss of the Partnership for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective
Percentage Interests.


 


(c)          Minimum
Gain Chargeback. Notwithstanding any provision to the contrary, (i) any expense of the Partnership that is a “nonrecourse
deduction” within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’
respective Percentage Interests, (ii) any expense of the Partnership that is a “partner nonrecourse deduction” within
the meaning of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that bears the “economic risk of loss”
of such deduction in accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum
Gain within the meaning of Regulations Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the exceptions
set forth in Regulations Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be allocated among the Partners
in accordance with Regulations Section 1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j), and (iv)
if there is a net decrease in Partner Nonrecourse Debt Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for
any Partnership taxable year, then, subject to the exceptions set forth in Regulations Section 1.704(2)(g), items of gain and income
shall be allocated among the Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering rules contained in
Regulations Section 1.704-2(j). The manner in which it is reasonably expected that the deductions attributable to nonrecourse liabilities
will be allocated for purposes of determining a Partner’s share of the nonrecourse liabilities of the Partnership within
the meaning of Regulations Section 1.752-3(a)(3) shall be in accordance with a Partner’s Percentage Interest.


 


(d)          Qualified
Income Offset. If a Partner receives in any taxable year an adjustment, allocation or distribution described in subparagraphs
(4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partner’s
Capital Account that exceeds the sum of such Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain, as determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income and gain in an amount and manner sufficient to eliminate
such deficit Capital Account balance as quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), items of expense or loss shall be allocated to such Partner in an amount necessary to offset the
income or gain previously allocated to such Partner under this Section 5.01(d).


 




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(e)          Capital
Account Deficits. Loss shall not be allocated to a Limited Partner to the extent that such allocation would cause a deficit
in such Partner’s Capital Account (after reduction to reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain. Any Loss in excess of that limitation shall be allocated to the General Partner. After the occurrence of an allocation of
Loss to the General Partner in accordance with this Section 5.01(e), to the extent permitted by Regulations Section 1.704-1(b),
Profit shall be allocated to such Partner in an amount necessary to offset the Loss previously allocated to each Partner under
this Section 5.01(e).


 


(f)          Priority
Allocations With Respect To Preferred Units. After giving effect to the allocations set forth in Sections 5.01(c), (d), and
(e) hereof, but before giving effect to the allocations set forth in Sections 5.01(a) and 5.01(b), Net Operating Income shall be
allocated to the General Partner until the aggregate amount of Net Operating Income allocated to the General Partner under this
Section 5.01(f) for the current and all prior years equals the aggregate amount of the Series A Preferred Return, Series B Preferred
Return, and Series C Preferred Return paid to the General Partner for the current and all prior years; provided, however,
that the General Partner may, in its discretion, allocate Net Operating Income based on accrued Series A Preferred Return, Series
B Preferred Return, and Series C Preferred Return with respect to the January Series A Preferred Distribution Payment Date, Series
B Preferred Distribution Payment Date, or Series C Preferred Distribution Payment Date if the General Partner sets the Distribution
Record Date for such Series A Preferred Distribution Payment Date, Series B Preferred Distribution Payment Date, or Series C Preferred
Distribution Payment Date on or prior to December 31 of the previous year. For purposes of this Section 5.01(f), “Net Operating
Income” means the excess, if any, of the Partnership’s gross income over its expenses (but not taking into account
depreciation, amortization, or any other noncash expenses of the Partnership), calculated in accordance with the principles of
Section 5.01(h) hereof.


 


(g)          Special
Allocations Regarding LTIP Units. Notwithstanding the provisions of Sections 5.01(a) and (b) hereof, Liquidating Gains shall
first be allocated to the LTIP Unitholders until their Economic Capital Account Balances, to the extent attributable to their ownership
of LTIP Units, are equal to (i) the Common Unit Economic Balance, multiplied by (ii) the number of their LTIP Units.
For this purpose, “Liquidating Gains” means net capital gains realized in connection with the actual or hypothetical
sale of all or substantially all of the assets of the Partnership, including but not limited to net capital gain realized in connection
with an adjustment to the value of Partnership assets under Section 704(b) of the Code. The “Economic Capital Account
Balance” of the LTIP Unit holders will be equal to their respective Capital Account balance to the extent attributable to
their ownership of LTIP Units. Similarly, the “Common Unit Economic Balance” shall mean (i) the Capital Account
balance of the General Partner, plus the amount of the General Partner’s share of any Partner Nonrecourse Debt Minimum Gain
or Partnership Minimum Gain, in either case to the extent attributable to the General Partner’s direct or indirect ownership
of Common Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation
is made under this Section 5.01(g), divided by (ii) the number of Common Units directly or indirectly owned by the General
Partner. Any such allocations shall be made among the LTIP Unitholders in proportion to the amounts required to be allocated to
each under this Section 5.01(g). The parties agree that the intent of this Section 5.01(g) is to make the Capital Account
balance associated with each LTIP Unit be economically equivalent to the Capital Account balance associated with Common Units directly
or indirectly owned by the General Partner (on a per-Unit basis).


 




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(h)          Definition
of Profit and Loss. “Profit” and “Loss” and any items of income, gain, expense or loss
referred to in this Agreement shall be determined in accordance with federal income tax accounting principles, as modified by Regulations
Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not include items of income, gain and expense that are specially allocated
pursuant to Sections 5.01(c), 5.01(d), 5.01(e), or 5.01(f) hereof. All allocations of income, Profit, gain, Loss and expense (and
all items contained therein) for federal income tax purposes shall be identical to all allocations of such items set forth in this
Section 5.01, except as otherwise required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). With respect to
properties acquired by the Partnership, the General Partner shall have the authority to elect the method to be used by the Partnership
for allocating items of income, gain and expense as required by Section 704(c) of the Code with respect to such properties, and
such election shall be binding on all Partners.


 


(i)          Allocations
Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Interest, the distributive shares
of the various items of Profit and Loss allocable among the Partners during such fiscal year of the Partnership shall be allocated
between the transferor and the transferee Partner either (i) as if the Partnership’s fiscal year had ended on the date
of the transfer, or (ii) based on the number of days of such fiscal year that each was a Partner without regard to the results
of Partnership activities in the respective portions of such fiscal year in which the transferor and the transferee were Partners.
The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate the distributive
shares of the various items of Profit and Loss between the transferor and the transferee Partner.


 


11.          Except
as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and confirms.


 




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IN WITNESS WHEREOF,
the undersigned has executed this Amendment as of the date first set forth above.


 


	 	GENERAL PARTNER:
	 	 
	 	BLUEROCK RESIDENTIAL GROWTH REIT, INC.
	 	a Maryland corporation
	 	 	 
	 	By:	/s/ R. Ramin Kamfar
	 	Name:	R. Ramin Kamfar
	 	Title:	Chief Executive Officer and President


 


[Signature page for Amendment re: Series
C Preferred Units – July 2016]