Document:

Exhibit 10.1

 

AMENDED AND RESTATED

 

 

ADMINISTRATIVE SERVICES AGREEMENT

 

 

between

 

 

BLUE CAPITAL REINSURANCE HOLDINGS LTD.

 

 

and

 

 

BLUE CAPITAL MANAGEMENT LTD.

 

 

Dated as of November 13, 2014

 

 

TABLE OF CONTENTS

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    
	
 
    
	
Defined Terms
    
	
 
    	
 
    	
 
    
	
SECTION 1.01.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
The Services Manager
    
	
 
    	
 
    	
 
    
	
SECTION 2.01.
    	
Appointment and Acceptance of the Services Manager
    	
4
    
	
SECTION 2.02.
    	
Services to Be Rendered by the Services Manager
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
Covenants
    
	
 
    	
 
    	
 
    
	
SECTION 3.01.
    	
Covenants of Parent
    	
4
    
	
SECTION 3.02.
    	
Covenants of the Services Manager
    	
5
    
	
SECTION 3.03.
    	
Regulatory Matters
    	
5
    
	
SECTION 3.04.
    	
Cooperation
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
Representations and Warranties
    
	
 
    	
 
    	
 
    
	
SECTION 4.01.
    	
Representations and Warranties
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
Fees and Expenses
    
	
 
    	
 
    	
 
    
	
SECTION 5.01.
    	
Service Fees
    	
6
    
	
SECTION 5.02.
    	
Services Manager’s Expenses
    	
7
    
	
SECTION 5.03.
    	
Parent’s Expenses
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
 
    
	
Term and Termination
    
	
 
    	
 
    	
 
    
	
SECTION 6.01.
    	
Term
    	
8
    
	
SECTION 6.02.
    	
Termination of the Agreement
    	
8
    
	
SECTION 6.03.
    	
Non-Renewal
    	
9
    

 

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ARTICLE VII
    
	
 
    
	
Indemnification
    
	
 
    	
 
    	
 
    
	
SECTION 7.01.
    	
Indemnification of the Services Manager
    	
10
    
	
SECTION 7.02.
    	
Indemnification of Parent
    	
10
    
	
SECTION 7.03.
    	
Indemnification Procedure
    	
10
    
	
SECTION 7.04.
    	
Payment of Indemnified Amounts
    	
11
    
	
SECTION 7.05.
    	
Limit of Liability
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    
	
Conflicts of Interest and Exclusivity
    
	
 
    	
 
    	
 
    
	
SECTION 8.01.
    	
Non-Exclusivity of Services Rendered by the Services   Manager
    	
11
    
	
SECTION 8.02.
    	
Conflicts of Interest
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    
	
 
    
	
Miscellaneous
    
	
 
    	
 
    	
 
    
	
SECTION 9.01.
    	
Confidentiality
    	
12
    
	
SECTION 9.02.
    	
Non-Exclusivity
    	
13
    
	
SECTION 9.03.
    	
Specific Performance
    	
13
    
	
SECTION 9.04.
    	
Amendment
    	
13
    
	
SECTION 9.05.
    	
Delegation
    	
13
    
	
SECTION 9.06.
    	
Assignment
    	
13
    
	
SECTION 9.07.
    	
Counterparts
    	
14
    
	
SECTION 9.08.
    	
Entire Agreement; No Third-Party Beneficiaries
    	
14
    
	
SECTION 9.09.
    	
Arbitration
    	
14
    
	
SECTION 9.10.
    	
Governing Law
    	
15
    
	
SECTION 9.11.
    	
Waiver of Jury Trial
    	
15
    
	
SECTION 9.12.
    	
Notices
    	
16
    
	
SECTION 9.13.
    	
Severability
    	
16
    
	
SECTION 9.14.
    	
No Waiver/Cumulative Remedies
    	
16
    
	
SECTION 9.15.
    	
Relationship of Parties
    	
16
    
	
SECTION 9.16.
    	
Interpretation
    	
17
    

 

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AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated as of November 13, 2014, between BLUE CAPITAL REINSURANCE HOLDINGS LTD., an exempted company incorporated in Bermuda (registered number 47855) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (“Parent”), and BLUE CAPITAL MANAGEMENT LTD., an exempted company incorporated in Bermuda (registered number 38829) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda (the “Services Manager”).

 

WHEREAS, Parent and its subsidiaries have a continuing need for general, administrative and other services, including corporate finance and accounting, internal audit, risk management and policy wording, information technology, human resources, legal and administrative support;

 

WHEREAS, the Services Manager has entered into a shared services agreement with Montpelier Re Holdings Ltd. and certain of its direct and indirect subsidiaries and Affiliates (as defined below), as amended and restated July 31, 2012 (the “Shared Services Agreement”), pursuant to which the Services Manager has the relationships and expertise to provide to, or procure the Services (as defined below) on behalf of, Parent and its subsidiaries; and

 

WHEREAS, Parent, on behalf of itself and its subsidiaries, and the Services Manager collectively desire to enter into this Agreement in order to establish certain arrangements with respect to the provision of Services by the Services Manager and the allocation of associated costs;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent and the Services Manager (collectively, the “Parties” and each individually a “Party”) agree as follows:

 

ARTICLE I

 

Defined Terms

 

SECTION 1.01.                                   Definitions.  As used in this Agreement, the following terms have the meanings ascribed thereto below.

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person.  For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether

 

 

through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

 

“Applicable Requirements” means, with respect to any Person, all applicable laws, rules, regulations and requirements, including applicable laws, rules, regulations, requirements and binding requests of any Competent Regulatory Authority, and all applicable orders and decrees.

 

“Blue Capital Re” means Blue Capital Re Ltd., a wholly owned direct subsidiary of Parent and an exempted company incorporated in Bermuda (registered number 47922) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

 

“Blue Capital Re ILS” means Blue Capital Re ILS Ltd., a wholly owned direct subsidiary of Blue Capital Re and an exempted company incorporated in Bermuda (registered number 47964) whose registered office is at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which the SEC or banks in the City of New York or Bermuda are authorized or required by law to be closed.

 

“Change of Control” means the first of the following events to occur:

 

(a)                                 the consummation of (i) a merger, amalgamation, consolidation, scheme of arrangement, statutory share exchange or similar form of corporate transaction involving Parent (a “Reorganization”) or (ii) the sale or other disposition of all or substantially all the assets of Parent (determined on a consolidated basis) to another “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) (a “Sale”), unless, immediately following such Reorganization or Sale, (1) individuals and entities who were the “beneficial owners” (as such term is defined in Rules 13d-3 and 13d-5 under the Exchange Act) of the securities eligible to vote for the election of the board of directors of Parent (“Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale continue to beneficially own, directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of the corporation or other entity resulting from such Reorganization or Sale (including a corporation that, as a result of such transaction, owns Parent or all or substantially all the assets of Parent either directly or through one or more subsidiaries) (the “Continuing Parent”) and (2) no “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (excluding any employee benefit plan (or related trust) sponsored or maintained by the Continuing Parent or any corporation controlled by the Continuing Parent) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then-outstanding voting securities of the Continuing Parent; or

 

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(b)                                 any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, except that, for purposes of this definition, such term shall exclude Montpelier Re Holdings Ltd. and its subsidiaries) is or becomes the beneficial owner (as defined in clause (a) above, except that for purposes of this clause (b) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35%  of the total voting securities of Parent.

 

“Common Shares” means the common shares, par value $1.00 per share, of Parent.

 

“Competent Regulatory Authority” means, with respect to any Person, any regulatory authority or analogous Person responsible for regulating, or having jurisdiction over, that Person.

 

“Confidential Information” means information that:

 

(a)                                 has been disclosed to a Party, or that a Party has or may become aware of in connection with this Agreement, in both cases before or during the term of this Agreement; and

 

(b)                                 is marked as or otherwise indicated as confidential, or derives value to a Party from being confidential, or would be regarded as confidential by a reasonable business person,

 

except to the extent that such information is in the public domain (otherwise than by a breach of the confidentiality provisions of this Agreement).

 

“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations thereunder.

 

“Indemnified Person” has the meaning ascribed thereto in Section 7.03.

 

“Indemnifying Party” has the meaning ascribed thereto in Section 7.03.

 

“Interested Party” has the meaning ascribed thereto in Section 8.01.

 

“Offering” means the initial public offering of the Common Shares.

 

“Parent Indemnitees” has the meaning ascribed thereto in Section 7.02.

 

“Person” means any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or any other entity.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

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“Securities Act” means the Securities Act of 1933 and the rules and regulations thereunder.

 

“Services” means, subject to the provisions of Article II, the various services described in Schedule 1 together with such other services (if any) as may from time to time be agreed in writing between the Parties.

 

“Service Fees” means the fees payable for the provision of the Services determined and allocated to Parent and its subsidiaries in accordance with Schedule 1.

 

“Services Manager Indemnitees” has the meaning ascribed thereto in Section 7.01.

 

“Shared Services Agreement” has the meaning set forth in the recitals hereto.

 

“U.S. GAAP” means the generally accepted accounting principles used in the United States of America.

 

ARTICLE II

 

The Services Manager

 

SECTION 2.01.                                   Appointment and Acceptance of the Services Manager.  Subject to the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements, Parent, on behalf of itself and its subsidiaries, hereby appoints the Services Manager to provide or procure certain Services to or for Parent and its subsidiaries, and the Services Manager hereby accepts such appointment.

 

SECTION 2.02.                                   Services to Be Rendered by the Services Manager.  Subject to the terms and conditions of this Agreement, the oversight of the boards of directors of Parent and its subsidiaries and the Applicable Requirements, the Services Manager shall provide or procure the Services.

 

ARTICLE III

 

Covenants

 

SECTION 3.01.                                   Covenants of Parent.  During the term of this Agreement, Parent, on behalf of itself and its subsidiaries, agrees that Parent and its subsidiaries shall:

 

(a)                                 observe and comply with any Applicable Requirement;

 

(b)                                 not, directly or indirectly (including through any of its Affiliates), enter into any other administrative services agreement (or similar agreement) with any other entity;

 

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(c)                                  provide the Services Manager with access to the books and records of Parent and its subsidiaries as reasonably necessary to provide any of the Services (such access to be upon reasonable prior notice and during regular business hours), and otherwise take such action as is reasonably required to allow the Services Manager to fulfill its obligations hereunder, in each case in a manner that does not unreasonably interfere with the business operations of Parent and its subsidiaries;

 

(d)                                 compensate and reimburse the Services Manager for its expenses as provided in Article V hereof; and

 

(e)                                  not knowingly take any action that, in its sole judgment, would cause Parent or any of its subsidiaries to become an investment company under the Investment Company Act of 1940.

 

SECTION 3.02.                                   Covenants of the Services Manager.  During the term of this Agreement, the Services Manager agrees that it shall:

 

(a)                                 observe and comply with any Applicable Requirement and the organizational documents and known contractual obligations of Parent and its subsidiaries;

 

(b)                                 act in good faith and with reasonable skill and care in respect of the provision of the Services; and

 

(c)                                  not carry on any business if by doing so the Services Manager shall knowingly cause Parent and its subsidiaries to become liable to pay any taxes that it would not otherwise be liable to pay.

 

SECTION 3.03.                                   Regulatory Matters.  Each Party agrees promptly to notify the other in writing upon receipt of any written or oral communication from any Competent Regulatory Authority pertaining to the services rendered or to be rendered pursuant to this Agreement. The Parties agree to cooperate with each other and to use their commercially reasonable efforts in jointly resolving any issue or matter raised by any Competent Regulatory Authority.

 

SECTION 3.04.                                   Cooperation.  The Parties shall cooperate with each other as may be reasonably necessary or appropriate to enable the Parties to carry out their respective responsibilities in full and to effectuate the purposes of this Agreement.  Each Party shall do and perform or cause to be done and performed all further acts and shall execute and deliver all other agreements, certificates, instruments and documents as the other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated by this Agreement.

 

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ARTICLE IV

 

Representations and Warranties

 

SECTION 4.01.                                   Representations and Warranties.  Each Party hereby represents and warrants to the other that (in respect of itself):

 

(a)                                 it is duly incorporated and validly existing under applicable laws, with full power and authority to conduct its business, and it has full power and authority to enter into, perform its duties under and exercise its rights under this Agreement;

 

(b)                                 assuming the due authorization, execution and delivery of the other Party, this Agreement constitutes its valid, lawful and binding obligations enforceable against itself in accordance with its terms (except insofar as enforceability may be limited by any bankruptcy laws or principles, or any similar laws or principles);

 

(c)                                  the execution and delivery of this Agreement and the performance of its obligations under this Agreement do not and shall not constitute a breach of or default under (i) its organizational documents, (ii) any agreement or instrument by which it is bound or (iii) any Applicable Requirement;

 

(d)                                 no material consent, approval, waiver, license, permit, order or authorization of, or registration, declaration or filing with, any Competent Regulatory Authority is required to be obtained or made by it in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement, other than, in the case of each Party, notification to the Bermuda Monetary Authority; and

 

(e)                                  no step, application, order, proceeding or appointment has been taken or made by or in respect of it for a distress, execution, composition or arrangement with creditors, winding-up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy, and it is able to pay its debts.

 

The representations and warranties in this Section 4.01 are made on a continuing basis, and shall remain in full force and effect throughout the duration of this Agreement.  If either Party becomes aware that any of the representations and warranties made by it in this Section 4.01 has ceased to be true, then it shall notify the other Party promptly.

 

ARTICLE V

 

Fees and Expenses

 

SECTION 5.01.                                   Service Fees.  (a)  With respect to each fiscal quarter commencing with the quarter in which this Agreement is executed, the Services Manager shall incur and be entitled to recharge Service Fees to each or all of Parent and its

 

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subsidiaries (as applicable).  Within 45 calendar days following the last day of each fiscal quarter, the Services Manager shall make available Schedule 1, a detailed listing of the Services provided and applicable Service Fees due with respect to such quarter to Parent, and Parent shall pay the Services Manager the Service Fees for such quarter in cash within 15 Business Days thereafter.

 

SECTION 5.02.                                   Services Manager’s Expenses.  The Services Manager will provide at its own expense:

 

(a)                                 such staff as may be necessary for the due performance of its duties; and

 

(b)                                 such office and other accommodation and relevant utilities as may be necessary for the due performance of its duties.

 

SECTION 5.03.                                   Parent’s Expenses.  Parent, on behalf of itself and its subsidiaries, is responsible and, to the extent that the Services Manager has paid the same on behalf of Parent and its subsidiaries, will reimburse the Services Manager for all reasonable out-of-pocket expenses (but not overhead costs) incurred by the Services Manager in connection with the performance of its obligations under this Agreement, including:

 

(a)                                 fees and expenses in respect of transactions carried out for Parent and its subsidiaries;

 

(b)                                 all bank charges and expenses of any kind incurred in connection with, or incidental to, deposits of cash;

 

(c)                                  any costs, including all travel, accommodation and other reasonable costs, incurred by the Services Manager at the express request of Parent;

 

(d)                                 the cost of faxes and telephone calls properly incurred in the course of carrying out its duties hereunder;

 

(e)                                  all legal and professional expenses (not included in the Services) incurred by the Services Manager in the furtherance of its duties under this Agreement and all legal and other professional expenses properly incurred, or to be incurred, in the preparation of any documents amending the terms and conditions of this Agreement; and

 

(f)                                   any costs and expenses properly incurred by Parent and its subsidiaries in the course of its business and not expressly the responsibility of the Services Manager (to the extent that such amounts have not already been paid).

 

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ARTICLE VI

 

Term and Termination

 

SECTION 6.01.                                   Term.  This Agreement shall remain in full force and effect until terminated or not renewed by Parent or the Services Manager in accordance with this Article VI, except that Section 6.01, Article VII and Article IX shall survive such termination or non-renewal.  This Agreement and the Services provided or procured hereunder shall renew automatically on the fifth anniversary of the completion of the Offering and upon every third anniversary thereafter, unless otherwise terminated or not renewed in accordance with this Article VI; provided that Parent may elect not to renew the services of the Chief Executive Officer and Chief Financial Officer by delivering a notice during the period specified in Section 6.03 and such notice shall not affect the automatic renewal of the other Services provided or procured hereunder.

 

SECTION 6.02.                                   Termination of the Agreement.  (a)  Termination by either Party.

 

(i)                                     If (A) the Underwriting and Insurance Management Agreement is terminated or not renewed in accordance with its terms or (B) the Investment Management Agreement is terminated or not renewed in accordance with its terms, this Agreement may be terminated by either Party upon 30 Business Days’ prior written notice.

 

(ii)                                  If Parent becomes regulated as an investment company under the U.S. Investment Company Act of 1940, this Agreement shall terminate automatically, with such termination deemed to occur immediately prior to such event.

 

(b)                                 Termination by the Services Manager.

 

(i)                                     If (A) there is a Change of Control of Parent, (B) Blue Capital Re ceases to be an Affiliate of Parent or (C) Blue Capital Re ILS ceases to be an Affiliate of Parent, this Agreement may be terminated by the Services Manager upon 30 Business Days’ prior written notice.

 

(ii)                                  If Parent breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 30 Business Days after giving written notice to Parent of such breach or failure, this Agreement may be terminated by the Services Manager (provided that the Services Manager is not then in material breach of any representations, warranties or covenants contained in this Agreement).

 

(iii)                               If the Services Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, this Agreement may be terminated by the Investment Manager upon 30 Business Days’ notice (provided that the Services Manager has used

 

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commercially reasonable efforts to obtain an approval, waiver or consent, as applicable, to remedy such breach).

 

(iv)                              If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of Parent for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy or (B) Parent is unable to pay its debts as they become due, this Agreement may be terminated by the Services Manager upon 60 Business Days’ notice.

 

(v)                                 If the Shared Services Agreement is terminated or the Services Manager ceases to be a party to the Shared Services Agreement, this Agreement may be terminated by the Services Manager upon 30 Business Days’ prior written notice (provided that the Services Manager has not entered into an agreement substantially similar to the Shared Services Agreement as a replacement for the Shared Services Agreement).

 

(c)                                  Termination by Parent.

 

(i)                                     If the Services Manager breaches or fails to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform has not been cured within 60 Business Days after giving written notice to the Services Manager of such breach or failure, this Agreement may be terminated by Parent (provided that Parent is not then in material breach of any representations, warranties or covenants contained in this Agreement).

 

(ii)                                  If the Services Manager’s performance of its services under this Agreement would result in a breach of Applicable Requirements, which breach has not been cured within 60 Business Days after giving written notice to the Services Manager of such breach, this Agreement may be terminated by Parent.

 

(iii)                               If (A) any step, application, order, proceeding or appointment has been taken or made by or in respect of the Services Manager for a distress, execution, composition or arrangement with creditors, winding up, dissolution, administration, receivership (administrative or otherwise) or bankruptcy or (B) the Services Manager is unable to pay its debts as they become due, this Agreement may be terminated by Parent upon 60 Business Days’ notice.

 

SECTION 6.03.                                   Non-Renewal.  The Services Manager or Parent may elect not to renew this Agreement at the expiration of the initial term or any renewal term for any or no reason, upon not less than nine, but not more than 12, months’ written notice to the other prior to the end of such initial term or renewal term, as applicable.

 

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ARTICLE VII

 

Indemnification

 

SECTION 7.01.                                   Indemnification of the Services Manager.  Subject to Section 7.05 hereof, Parent, on behalf of itself and its subsidiaries, unconditionally agrees to indemnify, defend and hold harmless the Services Manager and its Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “Services Manager Indemnitees”) from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur (i) on account of any third-party claim or proceeding arising out of the performance of this Agreement or (ii) from any breach of, or failure to perform, any covenant or obligation of Parent contained in this Agreement (unless caused by the Services Manager’s breach of, or failure to perform, its covenants or obligations under this Agreement), in each case, unless (a) a court or arbitral panel with appropriate jurisdiction shall have determined by a final judgment which is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Services Manager Indemnitees or (b) such Services Manager Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of Parent (such consent not to be unreasonably withheld or delayed).

 

SECTION 7.02.                                   Indemnification of Parent.  The Services Manager unconditionally agrees to indemnify, defend and hold harmless Parent and its subsidiaries and their Affiliates, directors, officers, employees, agents, successors and permitted assigns (the “Parent Indemnitees”), from and against, and pay or reimburse such parties for, any losses, claims, liabilities, damages, deficiencies, costs or expenses of any type which they may incur from any breach of, or failure to perform, any covenant or obligation of the Services Manager contained in this Agreement, unless (i) a court or arbitral panel of appropriate jurisdiction shall have determined by a final judgment that is not subject to appeal such losses, claims, liabilities, damages, costs or expenses are as a result of fraud, dishonesty, gross negligence or wilful misconduct of any of the Parent Indemnitees or (ii) such Parent Indemnitees shall have settled such losses, claims, liabilities, damages, costs or expenses without the consent of the Services Manager (such consent not to be unreasonably withheld or delayed).

 

SECTION 7.03.                                   Indemnification Procedure.  Any person who is claiming indemnification from Parent pursuant to the provisions of Section 8.01, or from the Services Manager pursuant to the provisions of Section 8.02 (the “Indemnified Person”) shall promptly deliver a written notification of each claim for indemnification, accompanied by a copy of all papers served, if any, and specifying in detail the nature of, basis for and estimated amount of the claim for indemnification to Parent or the Services Manager, as applicable (the “Indemnifying Party”).  If an Indemnified Person fails to promptly notify the Indemnifying Party, then the obligation to indemnify shall be reduced by the amount of liability that is attributable to or becomes definite as a result of the delay in notification, if the delay in notification has resulted in a material increase in liability or actual prejudice to the Indemnifying Party.  The Indemnifying Party shall have the right to assume the defense of any matter for which a claim of indemnification is

 

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made against it with counsel it selects, at its own expense.  The Indemnifying Party in its sole discretion shall have the right to settle, compromise or defend until final adjudication any dispute or alleged liability for which a claim for indemnification has been made; provided, however, that the Indemnifying Party shall not, except with the consent of each Indemnified Person, which consent shall not be unreasonably withheld or delayed, consent to the entry of any judgment, or enter into any settlement, that does not include the giving by the claimant or plaintiff to the Indemnified Person of a release from all liability with respect to the claim or litigation.  Each Indemnified Person shall cooperate in providing information, formulating a defense or as otherwise reasonably requested by the Indemnifying Party.

 

SECTION 7.04.                                   Payment of Indemnified Amounts.  Each Indemnified Person shall provide written, detailed statements to the Indemnifying Party on a monthly basis, of any expenses, costs or other liabilities for which indemnification is claimed.  The Indemnifying Party shall reimburse such amounts within ten Business Days of receiving any such statement, or shall notify in writing the Indemnified Person claiming indemnification if it denies liability, and provide the reasons for the denial.

 

SECTION 7.05.                                   Limit of Liability.  Notwithstanding anything else in this Agreement to the contrary, the Service Manager’s aggregate liability during the term of this Agreement with respect to, arising from, or arising out of or attributable to this Agreement, or from all services rendered or omitted to be rendered under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed, the highest amount actually paid as Service Fees in any single calendar year during the term of this Agreement.

 

ARTICLE VIII

 

Conflicts of Interest and Exclusivity

 

SECTION 8.01.                                   Non-Exclusivity of Services Rendered by the Services Manager.  The services provided by the Services Manager under this Agreement are not exclusive.  None of the services to be provided under this Agreement nor any other matter shall give rise to any fiduciary or equitable duties (to the fullest extent permitted by Applicable Requirements) which would prevent or hinder the Services Manager, its Affiliates or their respective directors, officers, employees and agents (each an “Interested Party”) from providing services to or entering into transactions with or for Parent and its subsidiaries.  An Interested Party may, without prior notice to Parent and its subsidiaries, recommend, effect or enter into transactions or provide services (whether or not similar to the services provided under this Agreement) where an Interested Party has, directly or indirectly, a material interest or a relationship with another person which may involve a conflict with the Services Manager’s duty to Parent and its subsidiaries.

 

SECTION 8.02.                                   Conflicts of Interest.  The Services Manager shall take reasonable steps to ensure fair treatment for Parent and its subsidiaries, and shall ensure that any such transactions are effected on terms which are not materially less favorable to Parent and its subsidiaries than if the potential conflict had not existed.  However, neither

 

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the Services Manager nor any other Interested Party shall be liable to Parent and its subsidiaries for any profit, commission or remuneration made or received from or by reason of such transactions or any related transactions.  The Services Manager hereby notifies Parent and its subsidiaries, and Parent and its subsidiaries hereby acknowledge, that such potential conflicting interests or duties may arise as a result of, among other things:

 

(a)                                 an Interested Party undertakes other business for other clients;

 

(b)                                 the transaction relates to an Investment in respect of which an Interested Party may benefit from a commission, fee, mark-up or mark-down payable otherwise than by Parent or its subsidiaries, or the Interested Party may also be remunerated by the counterparty to any such transaction;

 

(c)                                  the Services Manager deals on behalf of Parent or its subsidiaries with or through another Interested Party; or

 

(d)                                 the Services Manager may act as agent for Parent and its subsidiaries in relation to transactions in which it is also acting as agent for the account of other clients or Interested Parties.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.                                   Confidentiality.  (a)No Party shall at any time use, divulge or communicate to any Person any Confidential Information, except:

 

(i)                                     as agreed by the other Party;

 

(ii)                                  where required to perform its duties or exercise its rights under this Agreement (including to its delegates or agents, if applicable);

 

(iii)                               to its professional representatives or advisers, or to insurance companies, insurance brokers or insurance agents, to the extent required by them to perform their duties, and provided that they are or agree to be bound by a duty of confidentiality;

 

(iv)                              (when the Services Manager is transacting business for Parent or its subsidiaries with a counterparty or broker) the identity of Parent and its subsidiaries and such details about Parent and its subsidiaries as the counterparty or broker may reasonably request (in accordance with market practice); or

 

(v)                                 to the extent required by Applicable Requirements or by any Competent Regulatory Authority (including for the purpose of filing tax returns),

 

12

 

(vi)                              and each Party shall use commercially reasonable efforts to prevent the publication or disclosure of any Confidential Information in breach of this Agreement.

 

(b)                                 The Services Manager is not required to disclose to Parent and its subsidiaries, or to take into account when providing or procuring the Services, any information:

 

(i)                                     the disclosure of which to Parent and its subsidiaries would or might be a breach of duty or confidence to any other Person; or

 

(ii)                                  which comes to the notice of an employee or agent of the Services Manager.

 

SECTION 9.02.                                   Non-Exclusivity.  This Agreement shall not restrict the rights or ability of the Services Manager to offer services similar to those contemplated hereby to third parties, including its own Affiliates, or of Parent and its subsidiaries to receive services not contemplated hereby from third party vendors.  Parent, on behalf of itself and its subsidiaries, waives any claim based on any conflict of interest on the part of the Services Manager or its employees arising from any Affiliate of the Services Manager carrying on business similar to that of Parent and its subsidiaries or providing similar services to any other Persons, including competitors of Parent or its subsidiaries.

 

SECTION 9.03.                                   Specific Performance.  Each of the Parties acknowledges and agrees that in the event of a breach of this Agreement, each non-breaching Party would be irreparably and immediately harmed and could not be made whole by monetary damages.  It is accordingly agreed that the Parties (a) will waive, in any action for specific performance, the defense of adequacy of a remedy at law, (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in respect thereof, and (c) will waive, for purposes of this Section 9.03 only, the requirement to submit any dispute arising out of, or related in any way to, this Agreement or the transactions hereunder to arbitration pursuant to Section 9.09.

 

SECTION 9.04.                                   Amendment.  This Agreement may be amended by the Parties at any time by an instrument in writing executed by each Party.

 

SECTION 9.05.                                   Delegation.  The Services Manager may, subject to any Applicable Requirement, delegate or sub-contract any of its functions under this Agreement (other than providing the services of the Chief Executive Officer or the Chief Financial Officer) but any such delegation or sub-contracting shall not affect the Services Manager’s liability under this Agreement.

 

SECTION 9.06.                                   Assignment.  Subject to Section 9.05, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise, by either of the Parties hereto without the prior written consent of the other Party hereto.  No assignment by either Party shall relieve such Party of any of its obligations hereunder.  Subject to the immediately

 

13

 

preceding two sentences, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.  Any purported assignment not permitted under this Section 9.06 shall be null and void.  All such assignments shall be subject to all necessary regulatory approvals.

 

SECTION 9.07.                                   Counterparts.  This Agreement may be executed in one or more counterparts (including by facsimile or e-mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party hereto and delivered to the other Party hereto.

 

SECTION 9.08.                                   Entire Agreement; No Third-Party Beneficiaries.  This Agreement constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the Parties and their Affiliates, or any of them, with respect to the subject matter hereof and thereof and is not intended to confer upon any Person other than the Parties any rights or remedies.  Each Party acknowledges and agrees that (i) it has not relied on or been induced to enter into this Agreement by any undertaking, promise, assurance, statement, representation, warranty, undertaking or understanding which is not expressly included in this Agreement and (ii) it shall have no claim or remedy in respect of any undertaking, promise, assurance, statement, representation, warranty, undertaking or understanding which is not expressly included in this Agreement.  Nothing in the immediately preceding sentence shall operate to limit or exclude any liability for fraud.

 

SECTION 9.09.                                   Arbitration.  (a)  Any dispute arising out of, or related in any way to, this Agreement or the transactions hereunder, including its formation and validity, shall be determined by arbitration in accordance with Bermuda law. The dispute shall be submitted to a panel of arbitrators and the seat of arbitration shall be in Bermuda.  The panel shall be composed of three arbitrators, one arbitrator shall be chosen by Parent, one arbitrator shall be chosen by the Services Manager and one arbitrator shall be chosen by the mutual agreement of the two arbitrators selected by each of Parent and the Services Manager.  The arbitrators shall be disinterested, active or retired executive officers of property or casualty insurance or reinsurance companies, not under the control or management of either Party to this Agreement.

 

(b)                                 Any Party requesting arbitration shall provide the other Party with a written notice that includes reasonable detail of the dispute such Party intends to submit for arbitration.  During the 45 days following receipt of such notice, the Parties shall use their respective commercially reasonable efforts to negotiate an amicable resolution of such dispute (provided that the use of commercially reasonable efforts shall not be deemed to require the Parties to agree to any resolution). If the Parties have not resolved such dispute in writing within 45 days of receipt of such written notice by the other Party, Parent and the Services Manager shall each select an arbitrator within 30 days after the expiration of such 45 day period.  If either Parent or the Services Manager fails to appoint its arbitrator within such 30 day period, the other shall also appoint such Party’s arbitrator.

 

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(c)                                  The panel shall make its decision in the context of the custom and usage of the insurance and reinsurance industry.  They shall interpret this Agreement as an honorable engagement, and shall settle any dispute under this Agreement according to an equitable, rather than strictly legal, interpretation of its terms with a view to effecting the general purpose of this Agreement.  The panel is relieved of all judicial formality and may abstain from following the strict rules of law.  The panel shall have the power to fix all procedural rules for the arbitration, including the discretionary power to make orders regarding any matters which it may consider proper under the circumstances of the case relating to pleadings, discovery, inspection of documents and examination of witnesses.  The panel shall have the power to receive and act upon such evidence, whether oral or written, as it in its sole discretion shall deem relevant to the dispute.

 

(d)                                 The panel shall render a decision in writing within 60 days after the matter is finally submitted to it unless the Parties agree to an extension.  Any decision by a majority of the panel members shall be final and binding on the Parties.  If either Party fails to comply with the panel’s decision, the other may apply for its enforcement to a court of competent jurisdiction.

 

(e)                                  Unless ordered differently by the panel, each Party shall bear the expenses of its own arbitrator, and shall jointly and equally bear with the other Party the expenses of the third arbitrator.  In the event two or more arbitrators are chosen by one Party, the fees of all three arbitrators shall be equally divided between the Parties.  The remaining costs of the arbitration proceeding shall be allocated by the panel as part of its award.

 

SECTION 9.10.                                   Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of Bermuda applicable to contracts and made and performed entirely within Bermuda.

 

SECTION 9.11.                                   WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9.11.

 

15

 

SECTION 9.12.                                   Notices.  All notices, requests and other communications to either Party hereunder shall be in writing and shall be deemed given if delivered personally, facsimiled (which is confirmed) or sent by overnight courier (providing proof of delivery) to the Parties at the following addresses:

 

If to Parent, to:

 

Address:                                                 Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

Facsimile:                                         (441) 296-5551

 

If to the Services Manager, to:

 

Address:                                                 Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.

Facsimile:                                         (441) 296-5551

 

or such other address or facsimile number address as such Party may hereafter specify by like notice to the other Party hereto.  All such notices, requests and other communications shall be deemed received on the date of actual receipt by the recipient thereof if received prior to 5:00 p.m. local time in the place of receipt and such day is a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

SECTION 9.13.                                   Severability.  If any term, condition or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term, condition or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the terms of this Agreement are fulfilled to the extent possible.

 

SECTION 9.14.                                   No Waiver/Cumulative Remedies.  Any waiver of a breach of any of the terms of this Agreement or of any default under this Agreement shall not be deemed a waiver of any subsequent breach or default and shall in no way affect the other terms of this Agreement.  No failure on the part of a Party to exercise, and no delay on its part in exercising, any right or remedy under this Agreement shall operate as a waiver of that right or remedy, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of that right or remedy or the exercise of any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

SECTION 9.15.                                   Relationship of Parties.  The Services Manager shall perform its duties hereunder as an independent contractor.  Nothing in this Agreement shall be construed to create the relationship of employer or employee, partnership or any

 

16

 

type of joint venture relationship, between Parent, on the one hand, and the Services Manager, on the other hand.

 

SECTION 9.16.                                   Interpretation.  (a)  When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.  The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The words “date hereof” when used in this Agreement shall refer to the date of this Agreement.  The terms “or”, “any” and “either” are not exclusive.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful money of the United States.  References to a Person are also to its permitted assigns and successors.

 

(b)                                 The Parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties hereto and no presumption or burden of proof shall arise favoring or disfavoring either Party hereto by virtue of the authorship of any provision of this Agreement.

 

[signature page follows]

 

17

 

IN WITNESS WHEREOF, this Agreement has been entered into by the duly authorized representatives of the Parties on the day and year first above written.

 

	
 
    	
BLUE   CAPITAL REINSURANCE HOLDINGS LTD.,
    
	
 
    	
 
    
	
 
    	
 
    	
by
    	
 
    
	
 
    	
 
    	
 
    	
/s/   MICHAEL S. PAQUETTE
    
	
 
    	
 
    	
 
    	
Name:
    	
Michael   S. Paquette
    
	
 
    	
 
    	
 
    	
Title:
    	
Chief   Financial Officer
    

 

 

	
 
    	
BLUE   CAPITAL MANAGEMENT LTD.,
    
	
 
    	
 
    
	
 
    	
 
    	
by
    	
 
    
	
 
    	
 
    	
 
    	
/s/   WILLIAM POLLETT
    
	
 
    	
 
    	
 
    	
Name:
    	
William   Pollett
    
	
 
    	
 
    	
 
    	
Title:
    	
CEO and   President
    

 

 

SCHEDULE 1

 

	
Services to be provided
    	
 
    	
Service Fee
    
	
Executive   Officers Services:

·   Chief Financial Officer
    	
 
    	
$375,000   per annum
    
	
Information   Technology:

·   Licensing Fees
    	
 
    	
Cost
    
	
Other   professional and administrative services as requested by Parent and agreed by   the Parties hereto
    	
 
    	
As   negotiatedEX-10.1

 Exhibit 10.1 

FORM OF ADVISORY AGREEMENT 

This ADVISORY AGREEMENT (this “Agreement”) is entered into on this the     day of
[            ], 2014, by and among NEXPOINT MULTIFAMILY REALTY TRUST, INC., a Maryland corporation (the “Company”), NEXPOINT MULTIFAMILY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (the “Partnership”), and NEXPOINT REAL ESTATE ADVISORS II, L.P., a Delaware limited partnership (the “Advisor”). 

W I T N E S S E T H 

WHEREAS, the Company intends to issue shares of its common stock, par value $0.01 per share, to the public, upon registration of such
shares with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended; 
 WHEREAS, the Company
intends to qualify as a real estate investment trust and to invest its funds in investments permitted by the terms of the Company’s Articles of Incorporation and Sections 856 through 860 of the Internal Revenue Code of 1986, as amended; 

WHEREAS, the Company is the general partner of the Partnership and intends to conduct all of its business and make all of its
investments in Properties and other Assets through the Partnership; 
 WHEREAS, the Company and the Partnership desire to avail
themselves of the experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the
supervision of, the Board of Directors of the Company, all as provided herein; and 
 WHEREAS, the Advisor is willing to undertake to
render such services, subject to the supervision of the Board, on the terms and conditions hereinafter set forth. 
 NOW, THEREFORE,
in consideration of the foregoing and of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

ARTICLE I 

DEFINITIONS 
 Section 1.01 The
following defined terms used in this Agreement shall have the meanings specified below: 
 (a) Acquisition Expenses. Any and all
expenses incurred by the Company, the Partnership, the Advisor, or any Affiliate of either in connection with the selection, evaluation, acquisition or development of any Asset, whether or not acquired, including, without limitation, legal fees and
expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, and title insurance premiums. 

(b) Acquisition and Advisory Fees. The fees payable to the Advisor pursuant to Section 3.01(b) of this Agreement. 

 (c) Advisor. NexPoint Real Estate Advisors II, L.P., a Delaware limited partnership, any
successor advisor to the Company and the Partnership, or any Person to which NexPoint Real Estate Advisors II, L.P., or any successor advisor subcontracts all or substantially all of its functions. 

(d) Affiliate or Affiliated. As to any Person, (i) any Person directly or indirectly owning, controlling, or holding, with
the power to vote, 10% or more of the outstanding voting securities of such Person; (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other
Person; (iii) any Person, directly or indirectly, controlling, controlled by, or under common control with such Person; (iv) any executive officer, director, trustee or general partner of such Person; and (v) any legal entity for
which such Person acts as an executive officer, director, trustee or general partner. 
 (e) Appraised Value. Value according
to an appraisal made by an Independent Appraiser, which may take into consideration any factor deemed appropriate by such Independent Appraiser, including, but not limited to, current market and property conditions, any unique attributes of the
investment operations, current and anticipated income and expense trends, the terms and conditions of any lease of a relevant property, the quality of any lessee’s, borrower’s or other counter–party’s credit and the conditions of
the credit markets. The Appraised Value of a Property may be greater than the construction cost or the replacement cost of the Property. 

(f) Articles of Incorporation. The Articles of Incorporation of the Company filed with the Maryland State Department of
Assessments and Taxation in accordance with the Maryland General Corporation Law, as amended from time to time. 
 (g) Assets.
Properties, Mortgages and other direct or indirect investments in equity interests in, or loans secured by, Real Property (other than investments in bank accounts, money market funds or other current assets, whether with the proceeds from an
Offering or the sale of an Asset or otherwise) owned by the Company or the Partnership, directly or indirectly through one or more of its Affiliates. 

(h) Asset Management Fee. The fee payable to the Advisor for day-to-day professional management services in connection with the
Company and its investments in Assets pursuant to this Agreement. 
 (i) Average Invested Assets. For a specified period, the
average of the aggregate book value of the Assets, before deducting depreciation, bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period; provided, however, that during
such periods in which the Board is determining on a regular basis the current value of the Company’s net assets for purposes of enabling fiduciaries of employee benefit plan stockholders to comply with applicable Department of Labor reporting
requirements, and solely for such purpose, “Average Invested Assets” will equal the greater of (i) the amount determined pursuant to the foregoing or (ii) the most recent Assets’ aggregate valuation established by the
Board without reduction for depreciation, bad debts or other non-cash reserves. 
 (j) Board. The Board of Directors of
the Company. 
 (k) Bylaws. The bylaws of the Company, as the same are in effect as amended from time to time. 

(l) Change of Control. Any event (including, without limitation, issue, transfer or other disposition of Shares of capital stock
of the Company or equity interests in the Partnership, merger, share exchange or consolidation) after which any “person” (as that term is used in Sections 13(d) and 14(d) of 

  
 2 

 
the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d-j of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company or the Partnership representing greater than 50% or more of the combined voting power of the Company’s or the Partnership’s then outstanding securities, respectively; provided, that, a Change of
Control shall not be deemed to occur as a result of any widely distributed public offering of the Shares. 
 (m) Class B
Units. Subordinated profit interests in the Partnership designated as Class B units in accordance with the terms of the Limited Partnership Agreement of the Partnership, as may be amended from time to time. 

(n) Code. Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any
provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time. 

(o) Company. NexPoint Multifamily Realty Trust, Inc., a corporation organized under the laws of the State of Maryland. 

(p) Competitive Disposition Fee. A real estate or brokerage commission paid or, if no such commission is paid, the amount that
customarily would be paid, for the purchase or sale of a Property, which is reasonable, customary, and competitive in light of the size, type and location of the Property. 

(q) Contract Purchase Price. The amount actually paid or allocated in respect of the purchase, development, construction or
improvement of an Asset, or the amount of funds advanced with respect to a Mortgage, exclusive of Acquisition Expenses. 
 (r) Contract
Sales Price. The total consideration provided for in the sales contract for the sale of a Property. 
 (s) Dealer
Manager. Highland Capital Funds Distributors, Inc., an Affiliate of the Advisor, or such Person selected by the Board to act as the dealer manager for an Offering. 

(t) Director. A member of the Board. 

(u) Distributions. Any dividends or other distributions of money or other property by the Company to owners of Shares, including
distributions that may constitute a return of capital for federal income tax purposes. 
 (v) Gross Proceeds. The aggregate
purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Selling Commissions, volume discounts, dealer manager fees, or Organization and Offering Expenses. For the purpose of computing Gross
Proceeds, the purchase price of any Share for which reduced Selling Commissions or dealer manager fees are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full amount of
the Offering price per Share pursuant to the Prospectus for such Offering without reduction. 
 (w) Independent Appraiser. A
Person with no material current or prior business or personal relationship with the Advisor or the Directors and who is a qualified appraiser of Real Property of the type held by the Company or the Partnership or of other Assets as determined by the
Board. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification as to Real Property. 

  
 3 

 (x) Independent Director. A Director who is not, and within the last two years has
not been, directly or indirectly associated with the Sponsor or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, other than the Company, (ii) employment by the Sponsor, the
Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates, other than as a Director of the Company or as a director of any other real estate investment trust organized by
the Sponsor or advised by the Advisor, (iv) performance of services, other than as a Director, for the Company, (v) service as a director or trustee of more than three real estate investment trusts organized by the Sponsor or advised by
the Advisor or (vi) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. A business or professional relationship is considered “material” per se if the aggregate
gross revenue derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds 5.0% of either the Director’s annual gross revenue during either of the last two years or the Director’s net worth on a fair market value
basis. An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law, or brother- or sister-in-law is or has been
associated with the Sponsor, the Advisor, any of their Affiliates or the Company. 
 (y) Invested Capital. The amount
calculated by multiplying the total number of Shares purchased by Stockholders by the issue price at the time of such purchase, reduced by the portion of any Distribution that is attributable to Net Sales Proceeds and by any amounts paid by the
Company to repurchase Shares pursuant to the Company’s plan for the repurchase of Shares. 
 (z) Joint Ventures. The
joint venture or partnership arrangements in which the Company or the Partnership is a co-venturer or general partner which are established to acquire or hold Assets. 

(aa) Listing or Listed. The approval of the Company’s application to list the Shares by a national securities exchange and
the commencement of trading in the Shares on the respective national securities exchange. Upon such Listing, the Shares shall be deemed Listed. 

(bb) Market Value. Upon Listing, the market value of the outstanding Shares, measured by taking the average closing price for a
single Share over a period of 30 consecutive trading days, with such period beginning 180 days after Listing, and multiplying that number by the number of Shares outstanding on the date of measurement. 

(cc) Mortgages. In connection with mortgage financing provided, invested in or purchased by the Company, all of the notes, deeds
of trust, security interests or other evidences of indebtedness or obligations, which are secured or collateralized by Real Property owned by the borrowers under such notes, deeds of trust, security interests or other evidences of indebtedness or
obligations. 
 (dd) NASAA Guidelines. The Statement of Policy Regarding Real Estate Investment Trusts published by the North
American Securities Administrators Association, Inc. on May 7, 2007, and in effect on the date hereof. 
 (ee) NAV. Net
asset value, as calculated in accordance with the procedures described in the Prospectus. 
 (ff) Net Income. For any period,
the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad 

  
 4 

 
debts or other similar non-cash reserves and excluding any gain from the sale of the Assets. If the Advisor is paid a Subordinated Incentive Listing Distribution, “Net Income” for
purposes of calculating total Operating Expenses, shall exclude the gain from the Sale of any Assets. 
 (gg) Net Sales
Proceeds. In the case of a transaction described in clause (A) of the definition of Sale, the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company or the Partnership, including
all closing costs and legal fees and expenses. In the case of a transaction described in clause (B) of such definition, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf
of the Company or the Partnership, including any legal fees and expenses and other selling expenses incurred in connection with such transaction. In the case of a transaction described in clause (C) of such definition, Net Sales Proceeds means
the proceeds of any such transaction actually distributed to the Company from the Joint Venture less the amount of any selling expenses, including legal fees and expenses incurred by or on behalf of the Company or the Partnership (other than those
paid by the Joint Venture). In the case of a transaction or series of transactions described in clause (D) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction (including the aggregate of all payments under a
Mortgage or in satisfaction thereof other than regularly scheduled interest payments) less the amount of selling expenses incurred by or on behalf of the Company or the Partnership, including all commissions, closing costs and legal fees and
expenses. In the case of a transaction described in clause (E) of such definition, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company or the Partnership,
including any legal fees and expenses and other selling expenses incurred in connection with such transaction. In the case of a transaction described in the last sentence of the definition of Sale, Net Sales Proceeds means the proceeds of such
transaction or series of transactions less all amounts generated thereby which are reinvested in one or more Assets within 180 days thereafter and less the amount of any closing costs, and legal fees and expenses and other selling expenses incurred
by or allocated to the Company in connection with such transaction or series of transactions. Net Sales Proceeds shall also include any consideration (including non-cash consideration such as stock, notes, or other property or securities) that the
Company determines, in its discretion, to be economically equivalent to proceeds of a Sale, valued in the reasonable determination of the Company. Net Sales Proceeds shall not include any reserves established by the Company in its sole discretion.

 (hh) Offering. Any public offering and sale of Shares pursuant to an effective registration statement filed under the
Securities Act, other than a public offering of Shares under a distribution reinvestment plan and Shares offered under any employee benefit plan. 

(ii) Operating Expenses. All costs and expenses paid or incurred by the Company, as determined under generally accepted
accounting principles, which are in any way related to the operation of the Company or to Company business, including the Asset Management Fee, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal,
audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest
payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) the Subordinated Participation in Net Sales Proceeds, (vi) the Subordinated Distribution Upon Termination of the
Advisory Agreement, (vii) the Subordinated Incentive Listing Distribution, (viii) Acquisition Expenses and (ix) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests,
mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property). 

(jj) Organization and Offering Expenses. Any and all expenses (other than Selling Commissions, any distribution fees and any
fees or other expenses paid to the Dealer Manager) to be paid by the Company in connection with an Offering, including the Company’s legal, accounting, printing, 

  
 5 

 
mailing and filing fees, the charges of any escrow holder, due diligence expense reimbursements to soliciting dealers, reimbursements to the Advisor and its Affiliates, other costs in connection
with administrative oversight of an Offering, and marketing costs (including supplemental sales materials, educational conferences and retail seminars by soliciting dealers). 

(kk) Partnership. NexPoint Multifamily Operating Partnership, L.P., a Delaware limited partnership, through which the Company may own
Assets. 
 (ll) Person. An individual, corporation, business trust, estate, trust, partnership, limited liability company or other
legal entity. 
 (mm) Property or Properties. As the context requires, any, or all, respectively, of the Real Property acquired by
the Company or the Partnership, either directly or indirectly (whether through joint venture arrangements or other partnership or investment interests). 

(nn) Prospectus. Prospectus has the meaning set forth in Section 2(10) of the Securities Act, including a preliminary prospectus,
an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities
of the Company to the public. 
 (oo) Real Property. Land, rights in land (including leasehold interests), and any buildings,
structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land. 

(pp) REIT. A corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in
investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both in accordance with Sections 856 through 860 of the Code. 

(qq) Sale or Sales. Any transaction or series of transactions whereby: (A) the Company or the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including the lease of any Property consisting of a building only, and including any
event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company or the Partnership directly or indirectly (except as described in other subsections of this definition)
sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture directly or
indirectly (except as described in other subsections of this definition) in which the Company or the Partnership as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof,
including any event with respect to any Property which gives rise to insurance claims or condemnation awards; (D) the Company or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants,
conveys or relinquishes its interest in any Mortgage or portion thereof (including with respect to any Mortgage, all repayments thereunder or in satisfaction thereof other than regularly scheduled interest payments) and any event with respect to a
Mortgage which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the Company or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of any other Asset not previously described in this definition or any portion thereof. Notwithstanding the foregoing, “Sale” or “Sales” shall not include any transaction or series of
transactions specified in clause (A) through (D) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Assets within 180 days thereafter. 

  
 6 

 (rr) Securities Act. The Securities Act of 1933, as amended from time to time, or any
successor statute thereto. Reference to any provision of the Securities Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in
effect from time to time. 
 (ss) Selling Commissions. Any and all commissions payable to underwriters, dealer managers or other
broker-dealers in connection with the sale of the Shares, including, without limitation, commissions payable to Highland Capital Funds Distributors, Inc. 

(tt) Shares. Any shares of the Company’s common stock, par value $.01 per share. 

(uu) Soliciting Dealer. A broker-dealer that is a member of the Financial Industry Regulatory Authority, Inc., or that is exempt from
broker-dealer registration, and who, in either case, has executed participating broker-dealer or other agreements with the Dealer Manager to sell Shares. 

(vv) Sponsor. Highland Capital Management, L.P., a Delaware limited partnership. 

(ww) Stockholders. The record holders of the Shares as maintained in the books and records of the Company or its transfer agent. 

(xx) Stockholders’ 6.0% Return. As of any date, an aggregate amount equal to a 6.0% cumulative, pre-tax, non-compounded, annual
return on Invested Capital. 
 (yy) Subordinated Distribution Upon Termination of the Advisory Agreement. The fee payable to the
Advisor upon termination of this Agreement under certain circumstances if certain performance standards have been met pursuant to
 Section 4.03(b) of this Agreement. 

(zz) Subordinated Incentive Listing Distribution. The fee payable to the Advisor under certain circumstances if the Shares are Listed
pursuant to Section 3.01(c). 
 (aaa) Subordinated Participation in Net Sales Proceeds. The fee payable to the Advisor under
certain circumstances following receipt of Net Sales Proceeds pursuant to Section 3.01(b). 
 (bbb) Termination Date. The date
of termination of this Agreement. 
 (ccc) 2%/25% Guidelines. The requirement pursuant to the NASAA Guidelines that, in any
four consecutive fiscal quarters, total Operating Expenses not exceed the greater of 2% of Average Invested Assets during such period or 25% of Net Income over the same period. 

ARTICLE II 
 THE
ADVISOR 
 Section 2.01 Appointment. The Company and the Partnership hereby appoint the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment. 
 Section 2.02
Duties of the Advisor. Subject to Section 2.07, the Advisor undertakes to use its commercially reasonable best efforts to present to the Company and the Partnership investment opportunities consistent with the investment
objectives and policies of the Company as determined and 

  
 7 

 adopted from time to time by the Board. In performance of this undertaking, subject to the supervision of the
Board and consistent with the provisions of the Company’s most recent Prospectus for Shares, Articles of Incorporation and Bylaws, the Advisor shall, either directly or by engaging a duly qualified and licensed Affiliate of the Advisor or other
duly qualified and licensed Person: 
 (a) find, evaluate, present and recommend to the Company investment opportunities consistent with the
Company’s investment policies and objectives; 
 (b) serve as the Company’s and Partnership’s investment and financial
advisor and provide research and economic and statistical data in connection with the Assets and the Company’s investment policies; 

(c) provide the daily management of the Company and Partnership and perform and supervise the various administrative functions reasonably
necessary for the management and operations of the Company and the Partnership; 
 (d) maintain and preserve the books and records of the
Company and the Partnership, including stock books and records reflecting a record of the Stockholders and their ownership of the Shares; 

(e) investigate, select, and, on behalf of the Company and the Partnership, engage and conduct business with such Persons as the Advisor deems
necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, property management companies, transfer agents and any and all agents for any of the foregoing, including
Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including but not limited to entering into contracts in the name and on behalf of
the Company and the Partnership with any of the foregoing; 
 (f) consult with the officers and the Board and assist the Board in the
formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the
Company and in connection with any borrowings proposed to be undertaken by the Company and the Partnership; 
 (g) review and analyze the
operating and capital budgets prepared and submitted by a third party for each property; 
 (h) subject to the provisions of
Section 2.02(i) and Section 2.03 hereof, (i) locate, analyze and select potential investments in Assets, (ii) structure and negotiate the terms and conditions of transactions pursuant to which investments in Assets will be made;
(iii) make investments in Assets on behalf of the Company or the Partnership in compliance with the investment objectives and policies of the Company; (iv) arrange for financing and refinancing and make other changes in the asset or
capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with the investments in, Assets; and (v) enter into leases of Property and service contracts for Assets and, to the extent necessary, perform all
other operational functions for the maintenance and administration of such Assets including the servicing of Mortgages; 
 (i) provide the
Board with periodic reports regarding prospective investments in Assets; 

  
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 (j) if a transaction requires approval by the Board, deliver to the Board all documents required
by them to properly evaluate the proposed transaction; 
 (k) obtain the prior approval of the Board (including a majority of all
Independent Directors) for any and all investments in Assets with a Contract Purchase Price equal to or greater than $50,000,000; 
 (l)
obtain the prior approval of a majority of the Independent Directors and a majority of the Board not otherwise interested in any transaction with the Advisor or its Affiliates; 

(m) negotiate on behalf of the Company and the Partnership with banks or lenders for loans to be made to the Company, negotiate on behalf of
the Company and the Partnership with investment banking firms and broker-dealers, and negotiate private sales of Shares and other securities of the Company or obtain loans for the Company and the Partnership, as and when appropriate, but in no event
in such a way so that the Advisor shall be acting as a broker-dealer or an underwriter; and provided further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of
the Company; 
 (n) obtain reports (which may be prepared by or for the Advisor or its Affiliates), where appropriate, concerning the value
of investments or contemplated investments of the Company and the Partnership in Assets; 
 (o) from time to time, or at any time reasonably
requested by the Board, make reports to the Board of its performance of services to the Company and the Partnership under this Agreement; 

(p) provide the Company and the Partnership with, or assist the Company and the Partnership in arranging for, all necessary cash management
services; 
 (q) deliver to or maintain on behalf of the Company and the Partnership copies of all appraisals obtained in connection with
the investments in Assets; 
 (r) upon request of the Company, act, or obtain the services of others to act, as attorney-in-fact or agent of
the Company and the Partnership in making, requiring and disposing of Assets, disbursing, and collecting the funds, paying the debts and fulfilling the obligations of the Company and the Partnership and handling, prosecuting and settling any claims
of the Company and the Partnership, including foreclosing and otherwise enforcing mortgage and other liens and security interests comprising any of the Assets; 

(s) supervise the preparation and filing and distribution of returns and reports to governmental agencies and to Stockholders and other
investors and act on behalf of the Company in connection with investor relations; 
 (t) provide office space, equipment and personnel as
required for the performance of the foregoing services as Advisor; 
 (u) assist the Company in preparing all reports and returns required
by the Securities and Exchange Commission, Internal Revenue Service and other state or federal governmental agencies; and 
 (v) do all
things necessary to assure its ability to render the services described in this Agreement. 

  
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 Section 2.03 Authority of Advisor. Pursuant to the terms of this Agreement, including the
duties set forth in Section 2.02 and the restrictions included in this Section 2.03 and in Section 2.06, and subject to the continuing and exclusive authority of the Board over the management of the Company, the Board hereby delegates
to the Advisor the authority to (a) locate, analyze and select investment opportunities for the Company and the Partnership, (b) structure the terms and conditions of transactions pursuant to which investments will be made or acquired for
the Company or the Partnership, (c) acquire Properties, make and acquire Mortgages and other loans and invest in other Assets in compliance with the investment objectives and policies of the Company, (d) arrange for financing and
refinancing of Assets, (e) enter into leases for the Properties and service contracts for the Assets with duly qualified and licensed non-affiliated and Affiliated Persons, including oversight of non-affiliated and Affiliated Persons that
perform property management, acquisition, advisory, disposition or other services for the Company and the Partnership, and (f) arrange for, or provide, accounting and other record-keeping functions at the Asset level. 

The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Section 2.03,
provided however, that such modification or revocation shall be effective upon receipt by the Advisor or such later date as is specified by the Board and included in the notice provided to the Company and such modification or
revocation shall not be applicable to investment transactions to which the Advisor has committed the Company and the Partnership prior to the date of receipt by the Advisor of such notification, or, if later, the effective date of such modification
or revocation specified by the Board. 
 Section 2.04 Bank Accounts. The Advisor may establish and maintain one or more bank accounts in
its own name for the account of the Company and the Partnership or in the name of the Company or in the name of the Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money
on behalf of the Company, under such terms and conditions as the Board may approve, provided that no funds of the Company or the Partnership shall be commingled with the funds of the Advisor; and the Advisor shall from time to time, upon request by
the Board, its Audit Committee or the auditors of the Company, render appropriate accountings of such collections and payments to the Board, its Audit Committee and the auditors of the Company. 

Section 2.05 Records; Access. The Advisor shall maintain appropriate records of all its activities hereunder and make such records
available for inspection by the Board and by counsel, auditors and authorized agents of the Company, at any time or from time to time, upon reasonable request, during normal business hours. At all reasonable times the Advisor shall have access to
the books and records of the Company and the Partnership. 
 Section 2.06 Limitations on Activities. Anything else in this Agreement to
the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT or of the Partnership as a partnership for federal
income tax purposes, (b) subject the Company or the Partnership to regulation under the Investment Company Act of 1940, as amended, (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having
jurisdiction over the Company or the Partnership, the Shares or its other securities, or (d) not be permitted by the Articles of Incorporation or Bylaws or agreement of limited partnership of the Partnership, except if such action shall be
ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions
from the Board. In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its directors, officers, employees and stockholders, and the
directors, officers, employees and stockholders of the Advisor’s Affiliates shall not be liable to the Company or to the Board or Stockholders for any act or 

  
 10 

 
omission by the Advisor, its directors, officers, employees or stockholders, or for any act or omission of any Affiliate of the Advisor, its directors, officers, employees or stockholders, except
as provided in Section 5.02 of this Agreement. 
 Section 2.07 Other Activities of the Advisor.  

(a) Nothing herein contained shall prevent the Advisor or its Affiliates from engaging in other activities, including, without limitation, the
rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer,
employee, or stockholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. With respect to any investment in which the Company or the Partnership is a participant, the Advisor
also may render advice and service to each and every other participant therein. The Advisor shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a
conflict of interest between the Advisor’s obligations to the Company or the Partnership and its obligations to or its interest in any other Person. The Advisor or its Affiliates shall promptly disclose to the Board knowledge of such condition
or circumstance. The Advisor shall inform the Board at least quarterly of the investment opportunities that were offered to other programs sponsored by the Sponsor, Advisor or any Director or their Affiliates with similar investment objectives as
the Company’s. If the Sponsor, Advisor, any Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, it shall be the duty
of the Board (including the Independent Directors) to approve the Advisor’s allocation policy set forth in the Company’s most recent Prospectus for its Shares or another reasonable method by which investments are to be allocated to the
competing investment entities. 
 (b) Once each quarter, senior representatives of the Advisor will meet with at least a majority of the
Independent Directors for the purpose of reviewing the Advisor’s compliance with the NASAA Guidelines with respect to all investments allocated among the Sponsor, the Company and each other REIT and investment program managed by an Affiliate of
the Sponsor (each, together with its Affiliates, an “Investment Entity,” and collectively, the “Investment Entities”) during the most recently completed fiscal quarter. The quarterly review will take place at
the regularly scheduled quarterly meeting of the Board, or at another time and place that are mutually determined by the Advisor and the Independent Directors, and may include representatives of other Investment Entities. The Advisor will use
its best efforts to distribute a report reasonably in advance of each quarterly review meeting containing a list of all investments allocated to the Investment Entities, the particular Investment Entity to which each investment was allocated, a
brief description of the investment, the purchase price of each investment and acquisition fees (if any) paid to the Advisor and its Affiliates in connection with each investment. Representatives of the Advisor shall be prepared to discuss each
investment and the reasons for its allocation to particular Investment Entities at the quarterly review meeting 

  
 11 

 ARTICLE III 

COMPENSATION 
 Section 3.01
Fees.  
 (a) Asset Management Fee. Subject to the approval of the Board, the Company shall pay to the Advisor an Asset
Management Fee equal to 1/12th of 0.75% of the Company’s gross Assets, including amounts borrowed and additional amounts used for improvements, monthly in arrears based on the Contract
Purchase Price, Acquisition Expenses and other capitalized costs.  
 The Advisor may choose, in its sole discretion, to take any
monthly Asset Management Fee in the form of Class B Units. In the event the Advisor chooses to be compensated for the Asset Management Fee in Class B Units and notifies the Company in writing of such election, then the Company shall, within 30 days
after the end of the applicable month (subject to the approval of the Board), issue a number of restricted Class B Units to the Advisor equal to: (i) the cost of the Assets multiplied by 0.0625% (or the lower of the cost of the Assets and the
applicable quarterly NAV multiplied by 0.0625%, once the Company begins calculating NAV) divided by (ii) the value of one Class A share of common stock of the Company as of the last day of such calendar month, which will be the offering
price per share of Class A shares less selling commissions and dealer manager fees until such time as the Company calculates NAV, when it will then be the per share NAV. 

(b) Acquisition and Advisory Fees. The Company will not pay the Advisor or its Affiliates Acquisition and Advisory Fees. The total of
all Acquisition Fees and any Acquisition Expenses shall be limited in accordance with the Articles of Incorporation and shall not exceed six percent (6%) of the Contract Purchase Price.

(c) Subordinated Participation in Net Sales Proceeds. The Subordinated Participation in Net Sales Proceeds shall be payable to the
Advisor in an amount equal to 15.0% of Net Sales Proceeds remaining after the Stockholders have received Distributions equal to the sum of the Stockholders’ 6.0% Return and 100% of Invested Capital. The Company shall have the option to pay such
fee in the form of cash, Shares, a promissory note, or any combination of the foregoing. In no event will the Company pay a Subordinated Participation in Net Sales Proceeds, including any interest payable in connection with any promissory note
issued by the Company in payment of the Subordinated Participation in Net Sales Proceeds, in excess of the amount that would be presumptively reasonable under Section 8.7 of the Articles of Incorporation. 

(d) Subordinated Incentive Listing Distribution. Upon Listing, the Advisor shall be entitled to the Subordinated Incentive Listing
Distribution in an amount equal to 15.0% of the amount by which (i) the Market Value of the Company’s outstanding Shares plus distributions paid by the Company prior to Listing, exceeds (ii) the sum of (A) 100% of Invested
Capital and (B) the total Distributions required to be paid to the Stockholders in order to pay the Stockholders’ 6.0% Return from inception through the date that Market Value is determined. The Company shall have the option to pay such
fee in the form of cash, Shares, a promissory note, or any combination of the foregoing. If the Company pays such fee with a promissory note, payment in full shall be made from the Net Sales Proceeds of the first Sale completed by the Company after
Listing, and no interest will accrue. If the Net Sales Proceeds from the first Sale after Listing are insufficient to pay the promissory note in full, then the promissory note shall be paid in part with such Net Sales Proceeds, and in part from the
Net Sales Proceeds from the next successive Sales until the amount owing pursuant to such promissory note is paid in full. If the promissory note has not been paid in full within five years from the date of Listing, then the Advisor, or its
successors or assigns, 

  
 12 

 
may elect to convert the unpaid balance into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such
election. If the Shares are no longer Listed at such time as the promissory note becomes convertible into Shares as provided by this paragraph, then the price per Share, for purposes of conversion, shall equal the fair market value for the Shares as
determined by the Board based upon the Appraised Value of the Assets as of the date of election. Neither the Advisor nor any of its Affiliates can earn both the Subordinated Participation in Net Sales Proceeds and the Subordinated Incentive Listing
Distribution. Any Subordinated Participation in Net Sales Proceeds becoming due and payable to the Advisor or its assignees hereunder shall be reduced by the amount of any distribution made to the Advisor pursuant to the Partnership. Any portion of
the Subordinated Participation in Net Sales Proceeds that the Advisor receives prior to Listing will offset the amount otherwise due pursuant to the Subordinated Incentive Listing Distribution. 

(e) Changes to Fee Structure. In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee
structure appropriate for perpetual life entity. A majority of the Independent Directors must approve the new fee structure negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors may consider any of the
factors they deem relevant, including but not limited to: (a) the amount of compensation to the Advisor in relation to the size, composition and profitability of the Company’s portfolio; (b) the success of the Advisor in
generating opportunities that meet the investment objectives of the Company; (c) the rates charged to other REITs and to investors other than REITs by advisors performing similar services; (d) additional revenues realized by the Advisor
and its Affiliates through their relationship with the Company, including loan administration, servicing, inspection and other fees, whether paid by the Company or by others with whom the Company does business; (e) the quality and extent of
service and advice furnished by the Advisor; (f) the performance of the investment portfolio of the Company, including income, conservation or appreciation of capital, frequency of problem investments and competence in dealing with distress
situations; and (g) the quality of the portfolio of the Company in relationship to the investments generated by the Advisor for the account of other clients.

(f) Payment. For purposes of the payment of compensation to the Advisor in the form of Shares, the value of each Share shall be:
(i) the NAV per share as determined by the Board or an Independent Appraiser, or (ii) if an appraisal has not yet been performed, $10.00 per Class A share and $9.35 per Class T share. If shares are being offered to the public at the
time a fee is paid in Shares, the value shall be the price of the Shares without commissions. The NAV may be adjusted on a quarterly or other basis by the Board to account for significant capital transactions. 

Section 3.02 Expenses.  
 (a)
In addition to the compensation paid to the Advisor pursuant to Section 3.01 hereof, the Company or the Partnership shall pay directly or reimburse the Advisor, as applicable, for all of the expenses paid or incurred by the Advisor in
connection with the services it provides to the Company and the Partnership pursuant to this Agreement, including, but not limited to: 
 (i)
Organization and Offering Expenses, but only to the extent the reimbursement would not cause the Selling Commissions, the dealer manager fees and the other Organization and Offering Expenses borne by the Company to exceed 15% of the Gross Proceeds
raised in the completed Offering. Within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company for any Organization and Offering Expenses reimbursed by the Company to the Advisor to the extent
that such reimbursements exceed 15% of the Gross Proceeds raised in the completed Offering. The Advisor shall be responsible for the payment of the Organization and Offering Expenses in excess of 15% of the Gross Proceeds. In the event

  
 13 

 
the Company does not raise the minimum amount of the Offering as set forth in the Prospectus, the Advisor shall not be reimbursed for any Organization and Offering Expenses; 

(ii) Acquisition Expenses incurred in connection with the selection and acquisition of Assets in an amount estimated to be 0.75% of the
Contract Purchase Price, subject, however, to the aggregate six percent 6% cap on Acquisition Fees and Acquisition Expenses set forth in the NASAA Guidelines; 

(iii) the actual cost of goods, services and materials used by the Company and obtained from Persons not affiliated with the Advisor, other
than Acquisition Expenses, including brokerage fees paid in connection with the purchase and sale of Shares; 
 (iv) interest and other costs
for borrowed money, including discounts, points and other similar fees; 
 (v) taxes and assessments on income or property and taxes as an
expense of doing business; 
 (vi) costs associated with insurance required in connection with the business of the Company or by the Board;

 (vii) expenses of managing and operating Assets owned by the Company, whether payable to an Affiliate of the Company or a non-affiliated
Person; 
 (viii) all expenses in connection with payments to the Board for attendance at meetings of the Board and Stockholders; 

(ix) expenses associated with Listing or with the issuance and distribution of Shares and other securities of the Company, such as Selling
Commissions and fees, advertising expenses, taxes, legal and accounting fees, and Listing and registration fees; 
 (x) expenses connected
with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders; 
 (xi) expenses of
organizing, reorganizing, liquidating or dissolving the Company or amending the Articles of Incorporation or the Bylaws; 
 (xii) expenses of
any third party transfer agent for the Shares and of maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by
governmental entities; 
 (xiii) administrative service expenses, including all costs and expenses incurred by the Advisor in fulfilling its
duties hereunder. Such costs and expenses may include reasonable wages and salaries and other employee-related expenses of all employees and key personnel of the Advisor who are engaged in the management, administration, operations, and marketing of
the Company, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses which are directly related to their services provided hereunder; and 

  
 14 

 (xiv) audit, accounting and legal fees. 

No reimbursement shall be made for costs of personnel of the Advisor or its Affiliates to the extent that such personnel perform services in
connection with service for which the Advisor receives an Acquisition and Advisory Fee. 
 (b) Expenses incurred by the Advisor on behalf of
the Company and the Partnership and payable pursuant to this Section 3.02 shall be reimbursed no less than quarterly to the Advisor within 60 days after the end of each quarter. The Advisor shall prepare a statement documenting the expenses of
the Company and the Partnership during each quarter, and shall deliver such statement to the Company and the Partnership within 45 days after the end of each quarter. 

(c) Notwithstanding anything else in this Article 3 to the contrary, the expenses enumerated in this Article 3 shall not become reimbursable
to the Advisor unless and until the Company has raised $10,00,000 in Gross Proceeds from the sale of Shares in the Offering. 
 Section 3.03
Other Services. Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company and the Partnership other than set forth in Section 2.02, such services shall be separately
compensated at such rates and in such amounts as are agreed by the Advisor and the Board, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement. 

Section 3.04 Reimbursement to the Advisor. The Company shall not reimburse the Advisor, at the end of any fiscal quarter, for any
Operating Expenses to the extent that, in the four consecutive fiscal quarters then ended (the “Expense Year”) the Operating Expenses exceed (the “Excess Amount”) the greater of (i) 2% of Average Invested
Assets or (ii) 25% of Net Income (the “2%/25% Guidelines”) for that period of four consecutive quarters unless the Independent Directors determine that such excess was justified, based on unusual and nonrecurring factors which
the Independent Directors deem sufficient. If the Independent Directors do not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. 

ARTICLE IV 
 TERM AND
TERMINATION 
 Section 4.01 Term; Renewal. Subject to Section 4.02 hereof, this Agreement has a one-year term and shall
continue in force until the first anniversary of the date hereof. Thereafter, this Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. It is the Board’s duty to evaluate the
performance of the Advisor annually before renewing the Agreement, and each such renewal shall be for a term of no more than one year. 
 Section 4.02
Termination. This Agreement will automatically terminate upon Listing. This Agreement also may be terminated at the option of either party (i) immediately upon a Change of Control or (ii) upon 60 days written notice without
cause or penalty (in either case, if termination is by the Company, then such termination shall be upon the approval of a majority of the Independent Directors). Notwithstanding the foregoing, the provisions of this Agreement which provide for
payment to the Advisor of expenses, fees or other compensation following the date of termination (i.e., Sections 3.01(e) and 4.03) shall continue in full force and effect until all amounts payable thereunder to the Advisor are paid in full.
The provisions of Sections 2.05, 2.06 and 4.03 through 6.11 shall survive the termination of this Agreement. 

  
 15 

 Section 4.03 Payments to and Duties of Advisor upon Termination. 

(a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled
to and receive from the Company within 30 days after the effective date of such termination all unpaid reimbursements of expenses, subject to the provisions of Section 3.04 hereof, and all contingent liabilities related to fees payable to the
Advisor prior to termination of this Agreement, provided that the Subordinated Incentive Listing Distribution, if any, shall be paid in accordance with the provisions of Section 3.01(e). 

(b) Upon termination of this Agreement, the Advisor shall be entitled to receive a payment of the Subordinated Distribution Upon Termination
of the Advisory Agreement equal to 15.0% of the amount, if any, by which (i) the Appraised Value of the Assets on the Termination Date, less the amount of all indebtedness secured by the Assets, plus the total distributions paid to Stockholders
from the Company’s inception through the Termination Date less any amounts distributable as of the Termination Date to limited partners of the Partnership who receive Partnership units, including Class B units distributable to the Advisor,
exceeds (ii) Invested Capital plus an amount equal to the Stockholders’ 6.0% Return from inception through the Termination Date. The Company shall pay such Subordinated Distribution Upon Termination of the Advisory Agreement, with no
interest, at such time as the Company completes the first Sale after the Termination Date provided, however, the Advisor may elect to defer its right to receive the Subordinated Distribution Upon Termination of the Advisory Agreement until either a
Listing or other liquidity event for the Company. Payment shall be made from the Net Sales Proceeds of such Sale. The Company shall have the option to pay such fee in the form of cash, Shares, a non-interest bearing promissory note, or any
combination of the foregoing. If the Net Sales Proceeds from the first Sale after the Termination Date are insufficient to pay the Subordinated Distribution Upon Termination of the Advisory Agreement in full, then the Subordinated Distribution Upon
Termination of the Advisory Agreement shall be paid in part with such Net Sales Proceeds, and in part from the Net Sales Proceeds from the next successive Sales until the Subordinated Distribution Upon Termination of the Advisory Agreement is paid
in full. If the Subordinated Distribution Upon Termination of the Advisory Agreement has not been paid in full within five years from the Termination Date, then the Advisor, its successors or assigns, may elect to convert the balance of the fee into
Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election if the Shares are Listed at such time. If the Shares are not Listed at such time, the Advisor, its
successors or assigns, may elect to convert the balance of the fee into Shares at a price per Share equal to the fair market value for the Shares as determined by the Board based upon the Appraised Value of the Assets on the date of election. 

(c) In the event that the Advisor disagrees with the valuation of Shares pursuant to Section 4.03(b) where the Shares are not Listed for
purposes of determining the number of Shares to be issued to the Advisor following the Advisor’s election to convert the balance of the Subordinated Distribution Upon Termination of the Advisory Agreement owed to the Advisor, then the fair
market value of such Shares shall be determined by an Independent Appraiser of equity value selected by the Advisor. 
 (d) Notwithstanding
section 4.03 (b), in the event the Subordinated Incentive Listing Distribution is paid to the Advisor following Listing, no Subordinated Distribution Upon Termination of the Advisory Agreement will be paid to the Advisor. 

(e) The Advisor shall promptly upon termination: 

(i) pay over to the Company all money collected and held for the account of the Company or the Partnership pursuant to this Agreement, after
deducting any accrued compensation and reimbursement for its expenses to which it is then entitled; 

  
 16 

 (ii) deliver to the Board a full accounting, including a statement showing all payments collected
by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board; 
 (iii)
deliver to the Board all assets, including the Assets, and documents of the Company then in the custody of the Advisor; and 
 (iv) cooperate
with, and take all reasonable actions requested by, the Company or the Partnership to provide an orderly management transition. 
 ARTICLE
V 
 INDEMNIFICATION 

Section 5.01 (a) The Company shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners
and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related
expenses are not fully reimbursed by insurance, subject to any limitations imposed by the laws of the State of Maryland, the Articles of Incorporation and the NASAA Guidelines under the Articles of Incorporation. The Company shall not indemnify or
hold harmless the Advisor or its Affiliates, including their respective officers, directors, partners and employees, for any liability or loss suffered by the Advisor or its Affiliates, including their respective officers, directors, partners and
employees, nor shall it provide that the Advisor or its Affiliates, including their respective officers, directors, partners and employees, be held harmless for any loss or liability suffered by the Company, unless all of the following conditions
are met: (i) the Advisor or its Affiliates, including their respective officers, directors, partners and employees, have determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Advisor or its Affiliates, including their respective officers, directors, partners and employees, were acting on behalf of or performing services of the Company; (iii) such liability or loss was not the result of
negligence or misconduct by the Advisor or its Affiliates, including their respective officers, directors, partners and employees; and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company’s net
assets and not from Stockholders. Notwithstanding the foregoing, the Advisor and its Affiliates, including their respective officers, directors, partners and employees, shall not be indemnified by the Company for any losses, liability or expenses
arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; and (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of
the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws. 

(b) The Articles of Incorporation provide that the advancement of Company funds to the Advisor or its Affiliates, including their respective
officers, directors, partners and employees, for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought is permissible only if all of the following conditions are satisfied: (i) the
legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (ii) the legal 

  
 17 

 
action is initiated by a third-party who is not a Stockholder or the legal action is initiated by a Stockholder acting in his or her capacity as such and a court of competent jurisdiction
specifically approves such advancement; (iii) the advisor or its Affiliates provides the Company with a written affirmation of their good faith belief that they have met the standard of conduct necessary for indemnification; and (iv) the
Advisor or its Affiliates, including their respective officers, directors, partners and employees, undertake to repay the advanced funds to the Company together with the applicable legal rate of interest thereon, in cases in which such Advisor or
its Affiliates, including their respective officers, directors, partners and employees, are found not to be entitled to indemnification. 

(c) Notwithstanding the provisions of this Section 5.01, the Advisor shall not be entitled to indemnification or be held harmless
pursuant to this Section 5.01 for any activity which the Advisor shall be required to indemnify or hold harmless the Company pursuant to Section 5.02. 

Section 5.02 Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company from contract or other liability,
claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that (i) such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and (ii) are incurred
by reason of the Advisor’s bad faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its duties. The Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or
recommendation given by the Advisor. 
 ARTICLE VI 

MISCELLANEOUS 
 Section 6.01
Assignment to an Affiliate. This Agreement may be assigned by the Advisor to an Affiliate of the Advisor with the approval of a majority of the Board (including a majority of the Independent Directors). The Advisor may assign any
rights to receive fees or other payments under this Agreement without obtaining the approval of the Board. This Agreement shall not be assigned by the Company or the Partnership without the consent of the Advisor, except in the case of an assignment
by the Company or the Partnership to a corporation or other organization which is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said
assignment in the same manner as the Company and the Partnership are bound by this Agreement. This Agreement shall be binding on successors to the Company and the Partnership resulting from a Change of Control or sale of all or substantially all the
assets of the Company or the Partnership, and shall likewise be binding upon any successor to the Advisor. 
 Section 6.02 Relationship of
Advisor and Company. The Company, the Partnership and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as
such on either of them. The Advisor and its Affiliates have or may have a proprietary interest in the name “NexPoint Multifamily.” The Advisor hereby grants to the Company, to the extent of any proprietary interest the Advisor may have in
the name “NexPoint Multifamily,” a non-transferable, non-assignable, non-exclusive, royalty-free right and license to use the name “NexPoint Multifamily” during the term of this Agreement. The Company agrees that the Advisor and
its Affiliates will have the right to approve of any use by the Company of the name “NexPoint Multifamily,” such approval not to be unreasonably withheld or delayed. Accordingly, and in recognition of this right, if at any time the Company
ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Advisor, cease to conduct business under or use the name “NexPoint
Multifamily” or any derivative thereof and the Company shall change its name and the names of any of its 

  
 18 

 
subsidiaries to a name that does not contain the name “NexPoint Multifamily” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of
indication of some form of relationship between the Company and the Advisor or any its Affiliates. At such time, the Company will also make any changes to any trademarks, service marks or other marks necessary to remove any references to the word
“NexPoint Multifamily.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment
vehicles (including vehicles for investment in real estate) and financial and service organizations having “NexPoint Multifamily” as a part of their name, all without the need for any consent (and without the right to object thereto) by
the Company. Neither the Advisor nor any of its Affiliates makes any representation or warranty, express or implied, with respect to the name “NexPoint Multifamily” licensed hereunder or the use thereof (including without limitation as to
whether the use of the name “NexPoint Multifamily” will be free from infringement of the intellectual property rights of third parties. Notwithstanding the preceding, the Advisor represents and warrants that it is not aware of any pending
claims or litigation or of any claims threatened in writing regarding the use or ownership of the name “NexPoint Multifamily.” 

Section 6.03 Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other
overnight delivery service to the addresses set forth herein: 
  

			
	To the Directors and to the Company:	  	 NexPoint Multifamily Realty Trust, Inc.
 300
Crescent Court, Suite 700
 Dallas, Texas 75201
 Attention:
Chief Executive Officer

		
	To the Advisor:	  	 NexPoint Real Estate Advisors II, L.P.
 300
Crescent Court, Suite 700
 Dallas, Texas 75201
 Attention:
Chief Executive Officer

		
	To the Partnership:	  	 NexPoint Multifamily Operating Partnership, L.P.

300 Crescent Court, Suite 700
 Dallas, Texas 75201

Attention: Chief Executive Officer of NexPoint Multifamily Realty Trust, Inc., its General Partner

 Either party shall, as soon as reasonably practicable, give notice in writing to the other party of a change in its address
for the purposes of this Section 6.03. 
 Section 6.04 Modification. This Agreement shall not be changed, modified, or amended, in
whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees. 
 Section 6.05
Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of
them may be invalid or unenforceable in whole or in part. 

  
 19 

 Section 6.06 Choice of Law; Venue. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Texas, and venue for any action brought with respect to any claims arising out of this Agreement shall be brought exclusively in Dallas County, Texas. 

Section 6.07 Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing signed by each of the parties hereto.

 Section 6.08 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is
signed by the party asserted to have granted such waiver. 
 Section 6.09 Gender; Number. Words used herein regardless of the number and
gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 

Section 6.10 Headings. The titles and headings of sections and subsections contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof. 
 Section 6.11 Execution in
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when the counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 

Section 6.12 Initial Investment. The Advisor or one of its Affiliates has contributed $200,000 (the “Initial Investment”)
in exchange for the initial issuance of Shares of Class A common stock of the Company. The Advisor or its Affiliates may not sell any of the Shares purchased with the Initial Investment while the Advisor acts in an advisory capacity to the
Company. The restrictions included above shall not apply to any Shares acquired by the Advisor or its Affiliates other than the Shares acquired through the Initial Investment. Neither the Advisor nor its Affiliates shall vote any Shares they now
own, or hereafter acquires, in any vote for the election of Directors or any vote regarding the approval or termination of any contract with the Advisor or any of its Affiliates. 

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 

  
 20 

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

			
	 NEXPOINT MULTIFAMILY REALTY TRUST, INC.

a Maryland corporation

		
	By:	 	  

	Name:	 	
	Title:	 	
	
	 NEXPOINT REAL ESTATE ADVISORS II, L.P.

a Delaware limited partnership

		
	By:	 	  

	Name:	 	
	Title:	 	
	
	NEXPOINT MULTIFAMILY OPERATING PARTNERSHIP, L.P.
		
	By:	 	NexPoint Multifamily Realty Trust, Inc.,
a Maryland corporation, its General Partner
		
	By:	 	  

	Name:	 	
	Title:	 	

  
 21

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