Document:

ex_429257.htm

 

Exhibit 10.3

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this "Agreement") dated October 13, 2021, is by and between ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a Colorado corporation ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"). This Agreement amends, restates and supersedes in its entirety, and is given as a replacement for, and not in satisfaction of or as a novation with respect to, that certain Credit Agreement dated October 30, 2015 by and between Borrower and Bank, as such may have been amended from time to time prior to the date hereof.

 

RECITALS

 

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I 

CREDIT TERMS

 

SECTION 1.1.         LINE OF CREDIT.

 

(a)    Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including September 30, 2022, not to exceed at any time the aggregate principal amount of Five Million Dollars ($5,000,000.00) ("Line of Credit"), the proceeds of which shall be used to finance Borrower’s working capital requirements. Borrower's obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated October 13, 2021, as modified from time to time ("Line of Credit Note").

 

(b)    Borrowing and Repayment. Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth herein.

 

SECTION 1.2.         INTEREST/FEES.

 

(a)    Interest. The outstanding principal balance of each credit subject hereto shall bear interest at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.

 

(b)    Computation and Payment. Interest shall be computed on the basis set forth in each promissory note or other instrument or document required hereby. Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

 

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SECTION 1.3.         COLLECTION OF PAYMENTS. Except to the extent expressly specified otherwise in any Loan Document other than this Agreement, Borrower authorizes Bank to collect all amounts due to Bank from Borrower under this Agreement or any other Loan Document (whether for principal, interest or fees, or as reimbursement of drafts paid or other payments made by Bank under any credit subject to this Agreement) by debiting any deposit account maintained by Borrower with Bank for the full amount thereof. Should there be insufficient funds in Borrower's deposit accounts with Bank to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

 

SECTION 1.4.         COLLATERAL.

 

As security for all indebtedness and other obligations of Borrower to Bank, other than indebtedness that is excluded from such secured obligations by the terms of the security agreement(s) required hereunder, Borrower shall grant to Bank security interests of first priority in all Borrower's accounts receivable and other rights to payment, general intangibles, inventory and equipment.

 

All of the foregoing shall be evidenced by and subject to the terms of such security agreements, financing statements, deeds or mortgages, and other documents as Bank shall reasonably require, all in form and substance satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the full amount of all charges, costs and expenses (to include fees paid to third parties and all allocated costs of Bank personnel), expended or incurred by Bank in connection with any of the foregoing security, including without limitation, filing and recording fees and costs of appraisals, audits and title insurance.

 

SECTION 1.5.         GUARANTIES. The payment and performance of all indebtedness and other obligations of Borrower to Bank shall be guaranteed jointly and severally by ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a Delaware corporation (“Parent”), as evidenced by and subject to the terms of guaranties in form and substance satisfactory to Bank.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

 

Borrower makes the following representations and warranties to Bank, on the date hereof, on the date of Borrower’s execution hereof, and on the date of each subsequent request for any extension of credit hereunder (including, without limitation, the issuance of any product under any subfeature contained herein, to the extent applicable), which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.

 

SECTION 2.1.         LEGAL STATUS. (a) Borrower is a corporation, duly organized and existing and in good standing under the laws of Colorado, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower; and (b) no member of the Borrowing Group (as defined below) is a Sanctioned Target (as defined below) of economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes or restrictions and anti- terrorism laws imposed, administered or enforced from time to time by the United States of America, the United Nations Security Council, the European Union, the United Kingdom, any other governmental authority with jurisdiction over Borrower or any member of the Borrowing Group (collectively, “Sanctions”). As used herein, “Borrowing Group” means: (i) Borrower, (ii) any direct or indirect parent of Borrower, (iii) any affiliate or subsidiary of Borrower, (iv) any Third Party Obligor (as defined below), and (v) any officer, director or agent acting on behalf of any of the parties referred to in items (i) through and including (iv) with respect to the obligations hereunder, this Agreement or any of the other Loan Documents. “Sanctioned Target” means any target of Sanctions, including (i) persons on any list of targets identified or designated pursuant to any Sanctions, (ii) persons, countries, or territories that are the target of any territorial or country-based Sanctions program, (iii) persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (iv) persons otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program.

 

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SECTION 2.2.         AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the "Loan Documents") have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

 

SECTION 2.3.         NO VIOLATION. The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the organizational and governing documents of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

 

SECTION 2.4.         LITIGATION. There are no pending, or to the best of Borrower's knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5.         CORRECTNESS OF FINANCIAL STATEMENT AND OTHER INFORMATION. The annual financial statement of Borrower dated February 28, 2021, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied. Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing. All information provided from time to time by Borrower or any Third Party Obligor to Bank for the purpose of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes was complete and correct at the time such information was provided and, except as specifically identified to Bank in a subsequent writing, remains complete and correct today.

 

SECTION 2.6.         INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

 

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SECTION 2.7.         NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this Agreement to any other obligation of Borrower.

 

SECTION 2.8.         PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

 

SECTION 2.9.         ERISA. Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time ("ERISA"); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

 

SECTION 2.10.         OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

 

SECTION 2.11.         ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower's operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time. None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment. Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

 

SECTION 2.12         SANCTIONS, ANTI-MONEY LAUNDERING AND ANTI-CORRUPTION LAWS.         (a) each member of the Borrowing Group has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with Anti- Money Laundering Laws and Anti-Corruption Laws (each as defined below), and Sanctions; and (b)    to the best of Borrower’s knowledge, after due care and inquiry, no member of the Borrowing Group is under investigation for an alleged violation of any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws by a governmental authority that enforces such laws. As used herein:“Anti-Corruption Laws” means: (i) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (ii) the U.K. Bribery Act 2010, as amended; and (iii) any other anti-bribery or anti- corruption laws, regulations or ordinances in any jurisdiction in which the Borrower or any member of the Borrowing Group is located or doing business. “Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which the Borrower or any member of the Borrowing Group is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

 

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ARTICLE III

CONDITIONS

 

 

SECTION 3.1.         CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT. The effective date of this Agreement shall be (a) the date that each of the following conditions set forth in this Section 3.1 have been satisfied or waived, as determined by Bank, or (b) such alternative date to which Bank and Borrower may mutually agree, in each case as evidenced by Bank’s system of record. Notwithstanding the occurrence of the effective date of this Agreement, Bank shall not be obligated to extend credit under this Agreement or any other Loan Document until all conditions to each extension of credit set forth in Section 3.2 have been fulfilled to Bank's satisfaction.

 

(a)    Approval of Bank Counsel. All legal matters incidental to the effectiveness of this Agreement shall be satisfactory to Bank's counsel.

 

(b)    Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed by all parties:

 

	 	
			(i)

				
			This Agreement and each promissory note or other instrument or document required hereby.

			

	 	
			(ii)

				
			Corporate Resolutions and Certificate of Incumbency: Borrower.

			

	 	
			(iii)

				
			Corporate Resolutions and Certificate of Incumbency: Third Party.

			

	 	
			(iv)

				
			Security Agreement: Business Assets.

			

	 	
			(v)

				
			Continuing Guaranty from each guarantor listed herein.

			

	 	
			(vi)

				
			Certificate of Insurance.

			

	 	
			(vii)

				
			Such other documents as Bank may require under any other Section of this Agreement.

			

 

(c)    Satisfaction of Regulatory and Compliance Requirements. In addition to any requirements set forth above, and notwithstanding Borrower’s execution or delivery of this Agreement or any other Loan Document, all regulatory and compliance requirements, standards and processes shall be completed to the satisfaction of Bank.

 

SECTION 3.2.         CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank's satisfaction of each of the following conditions:

 

(a)    Compliance. The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.

 

(b)    Documentation. Bank shall have received all additional documents which may be required in connection with such extension of credit, including, but not limited to, an executed wire request form if requested by Bank.

 

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(c)    Payment of Fees. Bank shall have received payment in full of any fee required by any of the Loan Documents to be paid at the time such credit extension is made.

 

(d)    Financial Condition. There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or any Third Party Obligor hereunder, if any, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such Third Party Obligor, if any.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1.         PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

 

SECTION 4.2.         ACCOUNTING RECORDS. Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower. If at any time any change in generally accepted accounting principles would affect the computation of any covenant (including the computation of any financial covenant) and/or pricing grid set forth in this Agreement or any other Loan Document, Borrower and Bank shall negotiate in good faith to amend such covenant and/or pricing grid to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant and/or pricing grid shall continue to be computed in accordance with the application of generally accepted accounting principles prior to such change and (ii) Borrower shall provide to Bank a written reconciliation in form and substance reasonably satisfactory to Bank, between calculations of such covenant and/or pricing grid made before and after giving effect to such change in generally accepted accounting principles.

 

SECTION 4.3.         FINANCIAL STATEMENTS AND OTHER INFORMATION. Provide to Bank all of the following, in form and detail satisfactory to Bank:

 

(a)    not later than 90 days after and as of the end of each fiscal year, an unqualified audited financial statement of Parent, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flows; and

 

(b)    not later than 45 days after and as of the end of each fiscal quarter, a 10-Q financial statement (under the Exchange Act) of Parent, prepared by a certified public accountant acceptable to Bank, to include balance sheet, income statement and statement of cash flows; and

 

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(c)    not later than 90 days after and as of the end of each fiscal year, an annual budget projection report of Parent, prepared by Parent; and

 

(d)    contemporaneously with each quarterly financial statement of Parent required hereby, a certificate of the president or chief financial officer, a general partner or a member of Parent that said financial statements are accurate, that Parent is in compliance with all financial covenants in this Agreement (as evidenced by detailed calculations attached to such certificate), and that there exists no Event of Default nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default; and

 

(e)    from time to time such other financial and business information as Bank may reasonably request, including without limitation, copies of rent rolls and other information with respect to any real property collateral required hereby; and

 

(f)    from time to time such other information as Bank may request for the purpose of enabling Bank to fulfill its regulatory and compliance requirements, standards and processes.

 

SECTION 4.4.         COMPLIANCE.

 

(a)    Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence; comply with the requirements of all laws, rules, regulations and orders of any jurisdiction in which the Borrower is located or doing business, or otherwise is applicable to Borrower; and

 

(b)    comply with, and cause each member of the Borrowing Group to comply with, all Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws.

 

SECTION 4.5.         INSURANCE. (a) Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, commercial general liability, flood, and, if required by governmental regulation or Bank, hurricane, windstorm, seismic property damage, workers' compensation, marine cargo insurance, and specific hazards affecting any real property, including terrorism, with all such insurance carried in amounts satisfactory to Bank and where required by Bank, with replacement cost, mortgagee loss payable and lender loss payable endorsements in favor of Bank, and (b) deliver to Bank prior to the date hereof, and from time to time at Bank's request, schedules setting forth all insurance then in effect, together with a lender’s loss payee endorsement for all such insurance naming Bank as a lender loss payee. Such insurance may be obtained from an insurer or

through an insurance agent of Borrower’s choice, provided that any insurer chosen by Borrower is acceptable to Bank on such reasonable grounds as may be permitted under applicable law.

 

SECTION 4.6.         FACILITIES. Keep all properties useful or necessary to Borrower's business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

 

SECTION 4.7.         TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank's satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

 

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SECTION 4.8.         LITIGATION. Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower.

 

SECTION 4.9.         PARENT FINANCIAL CONDITION. Cause Parent to maintain its financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

 

(a)    Total Liabilities divided by Tangible Net Worth not greater than 2.0 to 1.0 at each fiscal quarter end, with “Total Liabilities” defined as the aggregate of current liabilities and non- current liabilities less subordinated debt, and with “Tangible Net Worth” defined as the aggregate of total stockholders' equity plus subordinated debt less any intangible assets; notwithstanding any language in this agreement to the contrary, the Total Liabilities divided by Tangible Net Worth Ratio shall be calculated using generally accepted accounting principles.

 

(b)    EBITDA not less than $1,500,000.00 as of each fiscal quarter end, determined on a trailing 12-month basis, with “EBITDA” defined as net profit before tax plus interest expense (net of capitalized interest expense), depreciation expense, amortization expense, stock compensation expense and Non-Recurring Event Costs (as defined below), less PPP forgiveness income, distributions and stock buy backs. “Non-Recurring Event Costs” means costs in an aggregate amount not to exceed $2,500,000.00 associated with potential proxy fights, analysis of strategic reviews and asset impairment costs that are non-cash and non- recurring (other than in connection with any asset impairment that is related to the COVID-19 pandemic).

 

SECTION 4.10. BORROWER FINANCIAL CONDITION. Maintain Borrower's financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein):

 

(a)         the outstanding principal balance of the Line of Credit not at any time greater than an aggregate of 50% of Borrower’s eligible accounts receivable, plus 50% of the value of Borrower’s eligible inventory (exclusive of work in process and inventory which is obsolete, unsaleable or damaged), with all collateral values determined by Bank.

 

SECTION 4.10.         NOTICE TO BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter and in no event more than one (1) business day after the occurrence of each such event or matter described below with respect to Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws) give written notice to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower, including, by illustration, merger, conversion or division; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower's property; or (e) any breach of any covenant contained herein related to Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws or the Borrower’s inability to make the representations and warranties contained herein related to Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws on any date, or the failure of any representations and warranties contained herein related to Sanctions, Anti-Money Laundering Laws, and Anti-Corruption Laws to be true and correct in all respects on or as of any date.

 

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ARTICLE V

NEGATIVE COVENANTS

 

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank's prior written consent:

 

SECTION 5.1.         USE OF FUNDS. SOURCES OF REPAYMENT AND COLLATERAL.

 

(a)    Use, or permit any member of the Borrowing Group to use, any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof, or directly or indirectly use any such proceeds to fund, finance or facilitate any activities, business or transactions: (i) that are prohibited by Sanctions; (ii) that would be prohibited by Sanctions if conducted by Bank or any of Bank’s affiliates; or (iii) that would be prohibited by any Anti-Money Laundering Laws or Anti-Corruption Laws.

 

(b)    Fund any repayment of the obligations hereunder or under any other Loan Document with proceeds, or provide any property as collateral for any such obligations, or permit any third party to provide any property as collateral for any such obligations, that is directly or indirectly derived from any transaction or activity that is prohibited by any Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws, or that could otherwise cause Bank or any of Bank’s affiliates to be in violation of any Sanctions, Anti-Money Laundering Laws or Anti- Corruption Laws.

 

SECTION 5.2.         CAPITAL EXPENDITURES. Make any additional investment in any fixed or capital assets (including assets leased under capital leases) in any fiscal year in excess of an aggregate of $2,000,000.00.

 

SECTION 5.3.         OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, and (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof.

 

SECTION 5.4.         MERGER, CONSOLIDATION, TRANSFER OF ASSETS. (a) Merge

into or consolidate with any other entity; (b) make any substantial change in the nature of Borrower's business as conducted as of the date hereof; (c) acquire all or substantially all of the assets of any other entity; (d) sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower's assets except in the ordinary course of its business; nor (e) accomplish any of the above by virtue of a division or similar transaction.

 

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SECTION 5.5.         GUARANTIES. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except (a) any of the foregoing in favor of Bank; and (c) additional unsecured guaranties in amounts not to exceed an amount equal to the aggregate of $3,000,000.00 at any time outstanding minus any loans, advances or investments made pursuant to the Loans, Advances, Investments section below.

 

SECTION 5.6.         LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments in any person or entity, including any of the foregoing accomplished by a division or similar transaction, except any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof, and additional loans or advances in amounts not to exceed an aggregate of $3,000,000.00 outstanding at any one time minus any guaranties made pursuant to the Guaranties section above.

 

SECTION 5.7.         PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower's assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing prior to, the date hereof.

 

SECTION 5.8.         RESTRICTIONS ON ENCUMBRANCE AND TRANSFER OF REAL PROPERTY. Without in any way limiting the generality of Section 5.7. hereof, mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower’s real property located at 265 Turner Drive, Durango, CO 81303, whether now owned or hereafter acquired, except (a) security interests or liens on such real property existing as of, and disclosed to Bank in writing prior to, the date hereof, and (b) security interests or liens on such real property in favor of Bank; nor transfer, lease, sell, assign or in any manner dispose of all or any portion of such real property.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1.         The occurrence of any of the following shall constitute an "Event of Default" under this Agreement:

 

(a)    Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

 

(b)    Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

 

(c)    Any default in the performance of or compliance with: (1) any collateral value requirement set forth herein or in any other Loan Document; (2) any negative covenant set forth in Article V hereof; (3) any affirmative covenant set forth in Article IV hereof requiring the delivery of financial statements and other information to Bank; or (4) any obligation, agreement or other provision contained herein or in any other Loan Document related to Sanctions, Anti- Money Laundering Laws, or Anti-Corruption Laws.

 

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(d)    Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those defaults specifically described as constituting an “Event of Default” under any other subsection of this Section 6.1.), and with respect to such default(s) that by their nature can be cured (excluding any defaults specifically described as constituting an “Event of Default” under any other subsection of this Section 6.1., none of which shall be subject to a cure period), such default shall continue for a period of twenty (20) days from its occurrence.

 

(e)    Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder, the owner of any collateral securing the obligations hereunder or under any other Loan Document, or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, owner of pledged collateral, general partner and/or joint venturer referred to herein as a "Third Party Obligor") has incurred any debt or other liability to any person or entity, including Bank; provided, however, that with respect to a default under any obligation to any person or entity other than Bank, the amount of said obligation exceeds $25,000.00.

 

(f)    Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time ("Bankruptcy Code"), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

 

(g)    The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract or transcript of judgment against Borrower or any Third Party Obligor in any county or recording district in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor.

 

(h)    There shall exist or occur any event or condition that Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower, any Third Party Obligor, or the general partner of either if such entity is a partnership, of its obligations under any of the Loan Documents.

 

(i)    The death or incapacity of Borrower or any Third Party Obligor if an individual. The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any Third Party Obligor if a partnership. The dissolution, division, or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution, division, or liquidation of Borrower or such Third Party Obligor.

 

-11-

 

 

(j)    The withdrawal, resignation or expulsion of any one or more of the general partners in Borrower or any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members' equity or other ownership interest (other than a limited partnership interest).

 

(k)    The sale, transfer, hypothecation, assignment or encumbrance, whether voluntary, involuntary or by operation of law, without Bank's prior written consent, of all or any part of or interest in any real property collateral required hereby.

 

SECTION 6.2.         REMEDIES. Upon the occurrence of any Event of Default: (a) all principal, unpaid interest outstanding and other indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank's option and without notice (except as expressly provided in any mortgage or deed of trust pursuant to which Borrower has provided Bank a lien on any real property collateral) become immediately due and payable without presentment, demand, protest or any notices of any kind, including without limitation, notice of nonperformance, notice of protest, notice of dishonor, notice of intention to accelerate or notice of acceleration, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1.         NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

 

SECTION 7.2.         NOTICES. All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

 

	BORROWER:	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
	 	265 Turner Drive
	 	Durango, CO 81303

         

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	BANK:	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	MAC C7300-081
	 	1700 Lincoln Street, Suite 800
	 	Denver, CO 80203

         

or to such other address as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

 

SECTION 7.3.         COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including, to the extent permitted by applicable law, reasonable attorneys' fees (to include outside counsel fees and all allocated costs of Bank's in-house counsel to the extent permissible), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank's continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b)    the enforcement of Bank's rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, whether or not suit is brought, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity. Whenever in this Agreement and the other Loan Documents Borrower is obligated to pay for the attorneys' fees of Bank, or the phrase "reasonable attorneys' fees" or a similar phrase is used, it shall be Borrower's obligation to pay the attorneys' fees actually incurred or allocated, at standard hourly rates, without regard to any statutory interpretation, which shall not apply, Borrower hereby waiving the application of any such statute. Notwithstanding anything in this Agreement to the contrary, reasonable attorneys' fees shall not exceed the amount permitted by law.

 

SECTION 7.4.         SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank's prior written consent. Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank's rights and benefits under each of the Loan Documents. In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, if any, or any collateral required hereunder.

 

SECTION 7.5.         ENTIRE AGREEMENT; AMENDMENT. To the full extent permitted by law, this Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof. This Agreement may be amended or modified only in writing signed by each party hereto.

 

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SECTION 7.6.         NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

 

SECTION 7.7.         TIME. Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

 

SECTION 7.8.         SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

SECTION 7.9.         COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

 

SECTION 7.10.         GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Colorado (such State, Commonwealth or District is referred to herein as the “State”), but giving effect to federal laws applicable to national banks, without reference to the conflicts of law or choice of law principles thereof.

 

SECTION 7.11.         BUSINESS PURPOSE. Borrower represents and warrants that each credit subject hereto is made for (a) a business, commercial, investment, agricultural or other similar purpose, (b) the purpose of acquiring or carrying on a business, professional or commercial activity, or (c) the purpose of acquiring any real or personal property as an investment and not primarily for a personal, family or household use.

 

SECTION 7.12.         RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any time and from time to time, without notice, which is hereby expressly waived by Borrower, and whether or not Bank shall have declared any credit subject hereto to be due and payable in accordance with the terms hereof, to set off against, and to appropriate and apply to the payment of, Borrower's obligations and liabilities under the Loan Documents (whether matured or unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars or any other currency, whether matured or unmatured, and in the case of deposits, whether general or special (except trust and escrow accounts), time or demand and however evidenced), and (b) pending any such action, to the extent necessary, to hold such amounts as collateral to secure such obligations and liabilities and to return as unpaid for insufficient funds any and all checks and other items drawn against any deposits so held as Bank, in its sole discretion, may elect. Bank may exercise this remedy regardless of the adequacy of any collateral for the obligations of Borrower to Bank and whether or not the Bank is otherwise fully secured. Borrower hereby grants to Bank a security interest in all deposits and accounts maintained with Bank to secure the payment of all obligations and liabilities of Borrower to Bank under the Loan Documents.

 

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SECTION 7.13.         ARBITRATION.

 

(a)    Arbitration. The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit. In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in

that party’s right to demand arbitration being automatically terminated.

 

(b)    Governing Rules. Any arbitration proceeding will (i) proceed in a location in the State selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least

$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control. Any party who fails or refuses to submit to

arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12

U.S.C. §91 or any similar applicable state law.

 

(c)    No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

(d)    Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed in the State or a neutral retired judge of the state or federal judiciary of the State, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall resolve all disputes in accordance with the substantive law of the State and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the corresponding rules of civil practice and procedure applicable in the State or other applicable law. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

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(e)    Discovery. In any arbitration proceeding, discovery will be permitted in accordance with the Rules. All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

 

(f)    Class Proceedings and Consolidations. No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

(g)    Payment of Arbitration Costs and Fees. The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)    Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation. If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control. This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

 

(i)    Small Claims Court. Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction. Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

 

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SECTION 7.14.         GENERAL RELEASE. In consideration of the benefits provided to Borrower under the terms and provisions hereof, Borrower hereby agrees as follows ("General Release"):

 

(a)         Borrower, for itself and on behalf of its successors and assigns, does hereby release, acquit and forever discharge Bank, all of Bank's predecessors in interest, and all of Bank's past and present officers, directors, attorneys, affiliates, employees and agents, of and from any and all claims, demands, obligations, liabilities, indebtedness, breaches of contract, breaches of duty or of any relationship, acts, omissions, misfeasance, malfeasance, causes of action, defenses, offsets, debts, sums of money, accounts, compensation, contracts, controversies, promises, damages, costs, losses and expenses, of every type, kind, nature, description or character, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as though fully set forth herein at length (each, a "Released Claim" and collectively, the "Released Claims"), that Borrower now has or may acquire as of the later of: (i) the date this Agreement becomes effective through the satisfaction (or waiver by Bank) of all conditions hereto; or (ii) the date that Borrower has executed and delivered this Agreement to Bank (hereafter, the "Release Date"), including without limitation, those Released Claims in any way arising out of, connected with or related to any and all prior credit accommodations, if any, provided by Bank, or any of Bank's predecessors in interest, to Borrower, and any agreements, notes or documents of any kind related thereto or the transactions contemplated thereby or hereby, or any other agreement or document referred to herein or therein.

 

(a)    Borrower hereby acknowledges, represents and warrants to Bank that it agrees to assume the risk of any and all unknown, unanticipated or misunderstood defenses and Released Claims which are released by the provisions of this General Release in favor of Bank, and Borrower hereby waives and releases all rights and benefits which it might otherwise have under any state or local laws or statutes with regard to the release of such unknown, unanticipated or misunderstood defenses and Released Claims.

 

(b)    Each person signing below on behalf of Borrower acknowledges that he or she has read each of the provisions of this General Release. Each such person fully understands that this General Release has important legal consequences, and each such person realizes that they are releasing any and all Released Claims that Borrower may have as of the Release Date. Borrower hereby acknowledges that it has had an opportunity to obtain a lawyer's advice concerning the legal consequences of each of the provisions of this General Release.

 

(c)    Borrower hereby specifically acknowledges and agrees that: (i) none of the provisions of this General Release shall be construed as or constitute an admission of any liability on the part of Bank; (ii) the provisions of this General Release shall constitute an absolute bar to any Released Claim of any kind, whether any such Released Claim is based on contract, tort, warranty, mistake or any other theory, whether legal, statutory or equitable; and

(iii) any attempt to assert a Released Claim barred by the provisions of this General Release shall subject Borrower to the provisions of applicable law setting forth the remedies for the bringing of groundless, frivolous or baseless claims or causes of action.

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be executed as of the effective date set forth above.

 

	ROCKY MOUNTAIN	 	WELLS FARGO BANK,	 
	CHOCOLATE FACTORY, INC.	 	NATIONAL ASSOCIATION	 
	 	 	 	 	 	 
	By:	/s/ Bryan Merryman	 	By:	/s/ Zane S. Way	 
	 	BRYAN MERRYMAN,	 	 	ZANE S. WAY,	 
	 	CEO, CFO	 	 	VICE PRESIDENT	 

                                  

-17-Exhibit 10.1

 

TAX MATTERS AGREEMENT

 

by and among

 

BLUEROCK RESIDENTIAL GROWTH REIT, INC.,

 

BADGER PARENT LLC

 

BADGER HOLDCO LLC,

 

BLUEROCK HOMES TRUST, INC.,

 

BLUEROCK REIT HOLDINGS, LLC

 

AND

 

BLUEROCK RESIDENTIAL HOLDINGS, L.P.

 

Dated as of October 5, 2022

 

     

     

    

 

TABLE OF CONTENTS

 

	Article 1. DEFINITIONS	2
	 	 
	Section 1.01	General	2
	Section 1.02	Additional Definitions	8
	 	 	 
	Article 2. AGREED UPON TAX CHARACTERIZATION OF CERTAIN TRANSACTIONS AND REPORTING WITH RESPECT THERETO	8
	 	 
	Section 2.01	Intended Income Tax Treatment of Certain Aspects of the Separation Transactions	8
	Section 2.02	Reporting of Transactions in a Manner Consistent with Intended Tax Treatment	10
	 	 	 
	Article 3. PREPARATION, FILING AND PAYMENT OF TAXES SHOWN DUE ON TAX RETURNS	10
	 	 
	Section 3.01	Combined Tax Returns	10
	Section 3.02	RemainCo Separate Tax Returns	10
	Section 3.03	SpinCo Separate Tax Returns	10
	Section 3.04	Restructuring Transfer Tax Returns	10
	 	 	 
	Article 4. TAX RETURN PROCEDURES	11
	 	 
	Section 4.01	Procedures Relating to Combined Tax Returns	11
	Section 4.02	Procedures Relating to RemainCo Separate Tax Returns	12
	Section 4.03	Procedures Relating to SpinCo Separate Tax Returns	13
	Section 4.04	Tax Returns Reflecting Restructuring Transfer Taxes	14
	 	 	 
	Article 5. TAX TIMING AND ALLOCATION	14
	 	 
	Section 5.01	Timing of Payments	14
	Section 5.02	Expenses	14
	 	 	 
	Article 6. INDEMNIFICATION	14
	 	 
	Section 6.01	Indemnification by RemainCo	14
	Section 6.02	Indemnification by SpinCo	14
	Section 6.03	Characterization of and Modifications to Payment Amounts	14
	Section 6.04	Timing of Indemnification Payments	15
	Section 6.05	Certain Tax Procedures	15
	Section 6.06	Survival of Indemnities	15
	 	 	 
	Article 7. REFUNDS AND DEDUCTIONS	15
	 	 
	Section 7.01	Refunds	15
	Section 7.02	Certain Deductions	16

 

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	Article 8. TAX PROCEEDINGS	16
	 	 
	Section 8.01	Notification of Tax Proceedings	16
	Section 8.02	Tax Proceedings	17
	 	 	 
	Article 9. COOPERATION	18
	 	 
	Section 9.01	General Cooperation	18
	Section 9.02	Retention of Records	19
	 	 	 
	Article 10. MISCELLANEOUS	19
	 	 
	Section 10.01	Dispute Resolution	19
	Section 10.02	Tax Sharing Agreements	20
	Section 10.03	Interest on Late Payments	20
	Section 10.04	Survival	20
	Section 10.05	Counterparts; Entire Agreement; Corporate Power	20
	Section 10.06	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	21
	Section 10.07	Assignability	23
	Section 10.08	Third-Party Beneficiaries	23
	Section 10.09	Notices	23
	Section 10.10	Severability	24
	Section 10.11	Force Majeure	24
	Section 10.12	No Set-Off	24
	Section 10.13	Headings	24
	Section 10.14	Waivers of Default	24
	Section 10.15	Specific Performance	25
	Section 10.16	Amendments and Consents	25
	Section 10.17	Interpretation	25
	Section 10.18	Limitations of Liability	26
	Section 10.19	Performance	26
	Section 10.20	Mutual Drafting	26
	Section 10.21	No Duplication; No Double Recovery	26
	Section 10.22	Effective Date	26

 

    -ii-

     

    

 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT
(this “Agreement”), dated as of October 5, 2022 is by and among Bluerock Residential Growth REIT, Inc.,
a Maryland corporation (“RemainCo”), Badger Parent LLC, a Delaware limited liability company (“Badger Parent”),
Badger Holdco LLC, a Delaware limited liability company (“RemainCo LLC”), Bluerock Homes Trust, Inc., a Maryland
corporation (“SpinCo”), Bluerock REIT Holdings, LLC, a Delaware limited liability company (“REIT Holdings”)
and Bluerock Residential Holdings, L.P., a Delaware limited partnership (the “OP”).  Each of RemainCo, RemainCo
LLC, SpinCo, REIT Holdings and the OP is sometimes referred to herein as a “Party” and, collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, RemainCo, Badger
Parent LLC and Badger Merger Sub LLC, a Delaware limited liability company (“Badger Merger Sub”), entered into an
Agreement and Plan of Merger, dated as of December 20, 2021 (as amended or supplemented from time to time, the “Merger
Agreement”), pursuant to which RemainCo will merge with and into Badger Merger Sub, a wholly owned subsidiary of Badger Parent
(the “Merger”), with Badger Merger Sub continuing as the surviving company of the Merger;

 

WHEREAS,
prior to the Distribution (as defined below), RemainCo, RemainCo LLC, SpinCo and the OP will, and will cause their respective Subsidiaries
to, consummate a series of reorganization and separation transactions to separate the SpinCo Business from the RemainCo Business
(the “Separation”) pursuant to the Separation and Distribution Agreement, dated as of October 5, 2022 (the “Separation
and Distribution Agreement”), by and among RemainCo, SpinCo, RemainCo LLC, the OP and Badger Parent, and in accordance with
the Separation Step Plan (the “Separation Step Plan”) set forth on Schedule 2.1(a) to the Separation and Distribution
Agreement pursuant to which, among other things: (a) the OP will contribute (or cause to be contributed) or otherwise transfer (or
cause to be transferred) to RemainCo LLC, a newly formed limited liability company and a direct wholly owned Subsidiary of the OP treated
as a disregarded entity for U.S. federal income tax purposes, or other designees as described in the Separation and Distribution Agreement,
the Parent Assets (as defined in the Separation and Distribution Agreement) held by it or its Subsidiaries (b) the OP will (following
the completion of the transactions described in clause (a)) distribute all of the equity interests in RemainCo LLC to RemainCo in exchange
for a redemption of 25,210,092 of RemainCo’s Common Units (as defined in the Partnership Agreement) and all of RemainCo’s
Preferred Units (as defined in the Partnership Agreement) (the “RemainCo OP Redemption”), (c) the OP will effect
a “unit split” pursuant to which the Common Units (as defined in the Partnership Agreement) will be recapitalized such that
the number of the Common Units (as defined in the Partnership Agreement) held by RemainCo following the RemainCo OP Redemption in clause
(b) will equal the number of outstanding Parent Common Shares (as defined in the Separation and Distribution Agreement) immediately
following the Distribution (the “OP Recapitalization”), and (d) RemainCo will contribute or cause to be contributed
all of its Partnership Interests (as defined in the Partnership Agreement) remaining after the RemainCo OP Redemption and the OP Recapitalization
in clauses (b) and (c), including its General Partnership Interest (as defined in the Partnership Agreement), to SpinCo in exchange
for (i) a number of additional SpinCo Common Shares (as defined in the Separation and Distribution Agreement) such that RemainCo
holds 1 SpinCo Common Share for each 8 issued and outstanding RemainCo Common Shares (as defined in the Separation and Distribution Agreement)
as of immediately prior to the Distribution and (ii) a number of additional SpinCo Class C Common Shares (as defined in the
Separation and Distribution Agreement) such that RemainCo holds 1 SpinCo Class C Common Share for each 8 issued and outstanding
RemainCo Class C Common Shares (as defined in the Separation and Distribution Agreement) as of immediately prior to the Distribution
(the “OP Contribution”);

 

     

     

    

 

WHEREAS,
pursuant to the Separation and Distribution Agreement, prior to the Merger and following the Separation, RemainCo will make a
distribution, on a pro rata basis, to the stockholders of RemainCo on the Record Date (as defined in the Separation and Distribution
Agreement) of all of the outstanding SpinCo Shares owned by RemainCo (the “Distribution,” and together with the Separation,
the “Separation Transactions”) and, as a result of the Distribution, SpinCo will cease to be a QRS of RemainCo and
commence operations as an independent publicly-traded UPREIT;

 

WHEREAS, SpinCo (a) will
make an election to be taxed as a REIT under Sections 856-860 of the Code for its taxable year commencing on the date of Distribution
and ending December 31, 2022 and (b) will jointly make a protective election with RemainCo to be treated as a TRS of RemainCo,
in the case of each of clause (a) and this clause (b), effective as of the date of the Distribution;

 

WHEREAS, the Parties have
completed certain preliminary actions in connection with the Separation and the Distribution, including the formation of SpinCo and the
formation of RemainCo LLC, in each case, in accordance with the Merger Agreement and the Separation and Distribution Agreement; and

 

WHEREAS, in conjunction with,
and to further implement, the Separation Transactions, contemplated by the Separation and Distribution Agreement, the Parties wish to
enter into this Agreement to (a) provide for the intended and agreed upon characterization of certain aspects of the Separation
Transactions for U.S. federal income tax purposes, (b) provide for the payment of Tax liabilities and entitlement to refunds thereof,
(c) allocate responsibility for, and cooperation in, the filing of Tax Returns, and (d) provide for certain other matters relating
to Taxes.

 

NOW, THEREFORE, in consideration
of the foregoing and the terms, conditions, covenants and provisions of this Agreement, each of the Parties mutually covenants and agrees
as follows:

 

Article 1.

 

DEFINITIONS

 

Section 1.01         General.
As used in this Agreement, the following terms shall have the following meanings:

 

“Accounting
Firm” has the meaning set forth in Section 10.01(b).

 

“Adjustment”
means any change in the Tax liability of a taxpayer pursuant to a Final Determination, whether in connection with a Tax Proceeding, resulting
from a change in facts or subsequent transactions, pursuant to amendment or otherwise, determined issue-by-issue, transaction-by-transaction,
or with respect to a taxable period, as the case may be.

 

    -2-

     

    

 

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

 

“Ancillary Agreements”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Badger Merger Sub”
has the meaning set forth in the recitals.

 

“Badger Parent”
has the meaning set forth in the recitals.

 

“BBA Rules” means Subchapter
C of Chapter 63 of the Code (Sections 6221 et seq.), as enacted by the Bipartisan Budget Act of 2015, as amended from time to time, and
any Treasury Regulations and other guidance promulgated thereunder, and any similar state or local legislation, regulations or guidance.

 

“Benefited Party”
has the meaning set forth in Section 7.01(b).

 

“Chosen Courts”
has the meaning set forth in Section 10.06(a).

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Combined Tax Return”
means any consolidated, combined, unitary, affiliated or similar Tax Return that includes one or more members of the RemainCo Group,
on the one hand, together with one or more members of the SpinCo Group, on the other hand.

 

“Combined Tax Return
Non-Preparer” means, with respect to any Combined Tax Return and for any taxable period, (x) SpinCo, if RemainCo is the
Combined Tax Return Preparer with respect to such Combined Tax Return for such taxable period and (y) RemainCo, if SpinCo is the
Combined Tax Return Preparer with respect to such Combined Tax Return for such taxable period.

 

“Combined
Tax Return Preparer” means, with respect to any Combined Tax Return and for any taxable period, (x) SpinCo, if SpinCo
or a member of the SpinCo Group is the common parent of the group filing such Combined Tax Return for such taxable period or is required
to file such Combined Tax Return for such taxable period under applicable Law or (y) RemainCo, if RemainCo or a member of
the RemainCo Group is the common parent of the group filing such Combined Tax Return for such taxable period or is required to file such
Combined Tax Return for such taxable period under applicable Law.

 

“Distribution”
has the meaning set forth in the recitals.

 

“Due Date”
means (a) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required
to be filed under applicable Law and (b) with respect to a payment of Taxes, the date on which such payment is required to be made
to avoid the incurrence of interest, penalties and/or additions to Tax.

 

“Effective Time”
has the meaning set forth in the Separation and Distribution Agreement.

 

    -3-

     

    

 

“Final Determination”
means the final resolution of liability for any Tax or Tax Item, which resolution may be for a specific issue or adjustment or for a
taxable period, by or as a result of (i) IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance
by or on behalf of the taxpayer, or by a comparable form under the Laws of any Taxing Jurisdiction, except that an IRS Form 870
or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation
of law) the right of the taxpayer to file a claim for Refund or the right of the Taxing Authority to assert a further deficiency in respect
of such issue or adjustment or for such taxable period (as the case may be); (ii) a final decision, judgment, decree or other
order by any court of competent jurisdiction that can no longer be appealed; (iii) a final settlement with the IRS, a closing agreement
or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of any Taxing Jurisdiction;
(iv) any allowance of a Refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during
which such Refund or credit may be recovered by the jurisdiction imposing the Tax; or (v) any other final resolution, including
by reason of the expiration of the applicable statute of limitations, the execution of a pre-filing agreement with the IRS or other Taxing
Authority or by mutual agreement of the Parties.

 

“Indemnified
Party” means the Party which is entitled to seek indemnification from another Party pursuant to the provisions of Article 6.

 

“Indemnifying
Party” means the Party from which another Party is entitled to seek indemnification pursuant to the provisions of Article 6.

 

“Intended Tax Treatment”
has the meaning set forth in Section 2.01.

 

“IRS”
means the U.S. Internal Revenue Service.

 

“Law”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Merger”
has the meaning set forth in the recitals.

 

“Merger Agreement”
has the meaning set forth in the recitals.

 

“Merger Consideration”
has the meaning set forth in the Merger Agreement.

 

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

 

“OP Contribution”
has the meaning set forth in the recitals.

 

“OP Partner”
means any Person treated as a partner of the OP for U.S. federal income tax purposes other than RemainCo or REIT Holdings.

 

“OP Recapitalization”
has the meaning set forth in the recitals.

 

“OP Tax Return”
means any Separate Return required to be filed by the OP.

 

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

 

    -4-

     

    

 

“Partnership Agreement”
has the meaning set forth in the Separation and Distribution Agreement.

 

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

 

“Past Practice”
has the meaning set forth in Section 4.01(a).

 

“Person”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Preferred Stock
Redemption Amount” has the meaning set forth in the Merger Agreement.

 

“Prime Rate”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Proceedings”
has the meaning set forth in Section 10.06(a).

 

“QRS”
means a corporation that is treated for U.S. federal income tax purposes as a “qualified REIT subsidiary” (within the meaning
of Section 856(i)(2) of the Code) with respect to a REIT.

 

“Refund”
means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied
to other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided, however, that
for purposes of this Agreement, the amount of any Refund required to be paid to another Party shall be reduced by the net amount of any
Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund.

 

“REIT”
means a real estate investment trust within the meaning of Section 856(a) of the Code.

 

“REIT Holdings”
has the meaning set forth in the preamble.

 

“REIT Taxes”
means (i) any Taxes imposed as a result of the disqualification of RemainCo or SpinCo, as the case may be, as a REIT, (ii) any
Taxes imposed under Section 857(b)(5) of the Code, and (iii) any excise Taxes imposed under Section 4981 of the Code.

 

“RemainCo”
has the meaning set forth in the preamble. For all purposes of this Agreement, any reference to RemainCo shall include a reference to
Badger Merger Sub following the Merger as successor to Bluerock Residential Growth REIT, Inc. as a result of the Merger.

 

“RemainCo Business”
has the meaning ascribed to the term “Parent Business” in the Separation and Distribution Agreement.

 

“RemainCo Group”
has the meaning ascribed to the term “Parent Group” in the Separation and Distribution Agreement.

 

“RemainCo LLC”
has the meaning set forth in the preamble.

 

“RemainCo OP Redemption”
has the meaning set forth in the recitals.

 

    -5-

     

    

 

“RemainCo Separate
Tax Return” means any Separate Return required to be filed by any member of the RemainCo Group.

 

“RemainCo Tax Proceeding”
has the meaning set forth in Section 8.02(a).

 

“RemainCo Taxes”
means, without duplication, (a) any Taxes imposed with respect to any Combined Tax Return, (b) any Taxes imposed on any member
of the RemainCo Group for any taxable period, (c) any “imputed underpayment” within the meaning of Section 6225
of the Code (and any similar liability imposed under the BBA Rules) and any other related Taxes arising out of an adjustment to any Tax
Return of the OP pursuant to the BBA Rules, in each case, attributable to RemainCo or any member of the RemainCo Group for any taxable
period and (d) any Taxes resulting from any inaccuracy in or breach by RemainCo or any member of the RemainCo Group of any representation,
warranty or covenant made by RemainCo in the Separation Agreements, in the case of clauses (a) through (c) above, other than
(x) any Taxes resulting from any inaccuracy in or breach by SpinCo or any member of the SpinCo Group of any representation, warranty
or covenant made by SpinCo in the Separation Agreements or (y) any Taxes resulting from any breach by RemainCo or any other member
of the RemainCo Group prior to the Separation of an obligation to cause a member of the SpinCo Group to take or refrain from taking any
action set forth in the Separation Agreements.

 

“Representatives”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Responsible Party”
has the meaning set forth in Section 7.01(b).

 

“Restructuring Transfer
Taxes” means any Transfer Taxes imposed on, in connection with, or by reason of the Merger or any of the Separation Transactions.

 

“Separate Return”
means (i) in the case of any Tax Return required to be filed by any member of the RemainCo Group (including any consolidated, combined,
unitary or similar Tax Return), any such Tax Return that does not include any member of the SpinCo Group and (ii) in the case of
any Tax Return required to be filed by any member of the SpinCo Group (including any consolidated, combined, unitary or similar Tax Return),
any such Tax Return that does not include any member of the RemainCo Group.

 

“Separation”
has the meaning set forth in the recitals.

 

“Separation Agreements”
means the Separation and Distribution Agreement, this Agreement and the other Ancillary Agreements.

 

“Separation and
Distribution Agreement” has the meaning set forth in the recitals.

 

“Separation Step
Plan” has the meaning set forth in the recitals.

 

“Separation Transactions”
has the meaning set forth in the recitals and includes, for the avoidance of doubt, all transactions set forth in the Separation Step
Plan, including the Separation and the Distribution.

 

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

 

    -6-

     

    

 

“SpinCo Business”
has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo Group”
has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo Separate
Tax Return” means any Separate Return required to be filed by any member of the SpinCo Group (including, for the avoidance
of doubt, any OP Tax Return that is an income Tax Return).

 

“SpinCo Shares”
has the meaning set forth in the Separation and Distribution Agreement.

 

“SpinCo Tax Proceeding”
has the meaning set forth in Section 8.02(a).

 

“SpinCo Taxes”
means, without duplication, (a) any Taxes of or imposed on any member of the SpinCo Group for any taxable period other than any
RemainCo Taxes, and (b) any Taxes resulting from any inaccuracy in or breach by SpinCo of any representation, warranty or covenant
made by SpinCo in the Separation Agreements (or any breach by SpinCo or any other member of the SpinCo Group prior to the Separation
of an obligation to cause a member of the RemainCo Group to take or refrain from taking any action set forth in the Separation Agreements).

 

“Subsidiary”
has the meaning set forth in the Separation and Distribution Agreement.

 

“Tax”
means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or
local or foreign governmental authority, including, but not limited to, income, gross receipts, excise, property, sales, use, license,
capital stock, transfer, franchise, margin, payroll, withholding, social security, value added and other taxes, (ii) any interest,
penalties or additions attributable thereto and (iii) all liabilities in respect of any items described in clause (i) or (ii) payable
by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or
any predecessor or successor thereof or any analogous or similar provision under Law).

 

“Tax Item”
means, with respect to any income tax, any item of income, gain, loss, deduction or credit.

 

“Tax Matter”
has the meaning set forth in Section 9.01(a).

 

“Tax Package”
means all relevant Tax-related information relating to the operations of the business of the RemainCo Group or the SpinCo Group, as applicable,
that is reasonably necessary to prepare and file the applicable Tax Return.

 

“Tax Proceeding”
means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding
or litigation relating to Taxes or any claim for refund, whether administrative or judicial, including proceedings relating to competent
authority determinations.

 

“Tax Return”
means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule
attached thereto and any information return, or declaration of estimated Tax) supplied to, filed with or required to be supplied to or
filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration
of any Laws relating to any Tax and any amended Tax return or claim for refund and any amendment of any of the foregoing.

 

    -7-

     

    

 

“Taxing Authority”
means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having
jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

 

“Taxing Jurisdiction”
means the United States and every other government or governmental unit having jurisdiction to tax any member of the RemainCo Group or
any member of the SpinCo Group.

 

“Transfer Taxes”
means all sales, use, transfer, real property transfer (whether such transfer is direct or indirect), intangible, recordation, registration,
documentary, stamp or similar Taxes.

 

“Treasury Regulations”
means the income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

 

“TRS”
means any corporation that is treated for U.S. federal income tax purposes as “taxable REIT subsidiary” (within the meaning
of Section 856(l) of the Code) with respect to any REIT.

 

“UPREIT”
means an umbrella partnership real estate investment trust.

 

“U.S.”
means the United States of America.

 

Section 1.02         Additional
Definitions. Capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Separation and Distribution
Agreement.

 

Article 2.

 

AGREED
UPON TAX CHARACTERIZATION OF

CERTAIN TRANSACTIONS AND REPORTING WITH RESPECT THERETO

 

Section 2.01         Intended
Income Tax Treatment of Certain Aspects of the Separation Transactions.

 

(a)           The
Parties intend that for U.S. federal and applicable state income tax purposes, the following aspects of the Separation Transactions shall
be treated as follows:

 

(i)           all
transactions comprising the Separation Transactions shall be considered to occur in the time and order and manner set forth in the Separation
Steps Plan;

 

(ii)          the
RemainCo OP Redemption shall be treated as a distribution by the OP to RemainCo in exchange for a part of RemainCo’s interest in
the OP in partial liquidation of RemainCo’s interest in the OP, and none of the OP, RemainCo and the OP Partners shall be treated
as recognizing any income or gain as a result of the RemainCo OP Redemption (except to the extent of any income or gain resulting from
an actual or deemed distribution of money to any such Person, including pursuant to Section 752(b) of the Code as a result
of a decrease in such Person’s share of the OP’s liabilities as determined after taking into account all related transactions);

 

    -8-

     

    

 

(iii)         the
OP Recapitalization shall be treated as a transaction that is described in Section 721 of the Code or that is disregarded or otherwise
treated as tax-free for U.S. federal income tax purposes;

 

(iv)        at
all times prior to immediately before the Effective Time, SpinCo shall be treated as a QRS of RemainCo;

 

(v)         as
a result of the Distribution, (A) SpinCo shall cease to be a QRS with respect to RemainCo and (B) pursuant to Section 856(i)(3) of
the Code, SpinCo shall be treated as a new corporation acquiring all of its assets and assuming all of its liabilities from RemainCo
(that it acquired and assumed as a result of the OP Contribution) immediately before ceasing to be a QRS, in a transaction governed by
Section 351(a) of the Code;

 

(vi)        the
Distribution shall be treated in accordance with clause (viii) below and not as a distribution subject to Section 301 of the
Code or a transaction described in Section 355 of the Code;

 

(vii)       the
Merger shall be treated as a taxable sale by RemainCo of all of its assets (for the avoidance of doubt, after taking into account the
Separation and Distribution) to Badger Merger Sub (or if Badger Merger Sub is a disregarded entity, its regarded owner for U.S. federal
income tax purposes) in exchange for the Merger Consideration, the Preferred Stock Redemption Amount, the assumption of all of RemainCo’s
liabilities (for the avoidance of doubt, after taking into account the Separation and Distribution) and any other applicable amounts,
immediately followed by the distribution of the Merger Consideration and the Preferred Stock Redemption Amount (and any other applicable
amounts) by RemainCo to its shareholders in complete liquidation of RemainCo (as further described in clause (h) below);

 

(viii)      the
Distribution, together with the receipt by the shareholders of RemainCo of the Merger Consideration and the Preferred Stock Redemption
Amount (and any other applicable amounts), shall be treated as a distribution by RemainCo to its shareholders in complete liquidation
of RemainCo pursuant to Revenue Ruling 69-6, 1969-1 C.B. 104, Section 331(a) of the Code and Section 562(b)(1) of
the Code, in full payment in exchange for RemainCo stock; and

 

(ix)         the
fair market value of the SpinCo Shares distributed in the Distribution shall be as reasonably determined by SpinCo in a manner consistent
with applicable Law.

 

Clauses (i) through (ix), collectively, are referred to herein
as the “Intended Tax Treatment”.

 

(b)           SpinCo
REIT Election. SpinCo (i) shall make an election to be taxed as a REIT under Sections 856-860 of the Code for its taxable year
commencing on the date of Distribution and ending December 31, 2022 and (ii) shall jointly make a protective election with
RemainCo to be treated as a TRS of RemainCo, in the case of each of clause (i) and this clause (ii), effective as of the date of
the Distribution.

 

    -9-

     

    

 

Section 2.02         Reporting
of Transactions in a Manner Consistent with Intended Tax Treatment. The Parties agree to treat the Separation Transactions in a manner
consistent with the Intended Tax Treatment. Without limiting the foregoing, and notwithstanding anything herein to the contrary, all
Tax Returns prepared by or on behalf of any Party shall be prepared in a manner consistent with the Intended Tax Treatment, and no Party
shall take any contrary or inconsistent position, whether in a Tax Return or otherwise, including any dealings involving the IRS (including,
without limitation, any audit, administrative appeal or any judicial proceeding involving the Tax Returns of the Party or the tax treatment
of any Party), except to the extent otherwise required by a Final Determination.

 

Article 3.

 

PREPARATION,
FILING AND PAYMENT OF

TAXES SHOWN DUE ON TAX RETURNS

 

Section 3.01         Combined
Tax Returns. In the case of any Combined Tax Return, the Combined Tax Return Preparer shall prepare and file (or cause to be prepared
and filed) such Combined Tax Return, and the Combined Tax Return Preparer shall pay (or cause to be paid) all Taxes shown to be due and
payable on such Combined Tax Return; provided, that in the case of any Combined Tax Return for which SpinCo is the Combined Tax
Return Preparer, RemainCo and RemainCo LLC shall reimburse (or cause to be reimbursed) SpinCo and the OP for any such Taxes.

 

Section 3.02         RemainCo
Separate Tax Returns. Subject to Section 3.04, RemainCo shall prepare and file (or cause to be prepared and filed) all
RemainCo Separate Tax Returns, and RemainCo and RemainCo LLC shall pay (or cause to be paid) all Taxes shown to be due and payable on
such Tax Returns.

 

Section 3.03         SpinCo
Separate Tax Returns.  Subject to Section 3.04, SpinCo shall prepare and file (or cause to be prepared and filed)
all SpinCo Separate Tax Returns, and SpinCo and the OP shall pay (or cause to be paid) any Taxes shown to be due and payable on such
Tax Returns; provided that RemainCo and RemainCo LLC shall reimburse (or cause to be reimbursed) SpinCo and the OP for any such
Taxes that are RemainCo Taxes.

 

Section 3.04         Restructuring
Transfer Tax Returns. Notwithstanding anything to the contrary in this Agreement, RemainCo shall prepare and file (or cause to be
prepared and filed) all Tax Returns required to be filed with respect to Restructuring Transfer Taxes and, if required by applicable
Law, SpinCo shall, and shall cause its respective Affiliates to, join in the execution of any such Tax Returns and other documentation.
RemainCo and RemainCo LLC shall pay (or cause to be paid) all Taxes shown as due and payable on such Tax Returns.

 

    -10-

     

    

 

Article 4.

 

TAX
RETURN PROCEDURES

 

Section 4.01         Procedures
Relating to Combined Tax Returns.

 

(a)           The
determination of the entities to be included in any Combined Tax Return shall be made in accordance with the past practices, accounting
methods, elections and conventions of RemainCo and its Subsidiaries (“Past Practice”). In connection with the preparation
of any Combined Tax Return pursuant to Section 3.01 by the Combined Tax Return Preparer that may include Tax Items relating
to the activities or assets of the Combined Tax Return Non-Preparer or any member of its Group (or the Combined Tax Return Non-Preparer’s
Business), the Combined Tax Return Non-Preparer will assist and cooperate with the Combined Tax Return Preparer by preparing and providing
to the Combined Tax Return Preparer such information and other documentation as may be reasonably requested by or reasonably necessary
to enable the Combined Tax Return Preparer, in such form as the Combined Tax Return Preparer may reasonably request, to prepare such
Combined Tax Return, with such information and other documentation to be delivered no later than thirty (30) days following the Combined
Tax Return Preparer’s request therefor, subject to reasonable delay.

 

(b)           In
the case of any Combined Tax Return in respect of which SpinCo is the Combined Tax Return Preparer, SpinCo shall, (1) except to
the extent otherwise required by applicable Law, Article 2 or Section 4.03(c), prepare and file such Combined
Tax Return in a manner consistent with Past Practice and (2) submit to RemainCo a draft of any such Tax Return (along with a statement
setting forth the calculation of the Tax shown due and payable on such Tax Return reimbursable by RemainCo under Article 3)
at least thirty (30) days prior to the Due Date for such Tax Return, subject to reasonable delay as communicated by SpinCo to RemainCo,
to enable RemainCo to analyze and comment on such Tax Return. RemainCo shall deliver any comments on any such Combined Tax Return to
SpinCo no later than fifteen (15) days following the receipt of the draft of such Combined Tax Return from SpinCo, subject to reasonable
delay as communicated by RemainCo to SpinCo. SpinCo shall revise (or cause to be revised) such Combined Tax Return prior to filing to
reflect any reasonable comments timely received from RemainCo; provided that, subject to the final sentence of this Section 4.01(b),
SpinCo shall not be required to reflect any such comments that are inconsistent with (x) Article 2, Section 4.03(c) or
applicable Law or (y) to the extent such items could have a more than a de-minimis effect on SpinCo Taxes for which SpinCo and the
OP may be responsible, Past Practice (to the extent Past Practice is not inconsistent with Article 2, Section 4.03(c) or
applicable Law); provided, further, that in the case of clause (y), SpinCo shall consider any such comments in good faith
and SpinCo and RemainCo shall attempt in good faith to resolve any issues arising out of such comments.  Notwithstanding the foregoing,
SpinCo shall not (and shall cause members of its Group not to) file any Combined Tax Return without the prior written consent of RemainCo,
which consent shall not be unreasonably withheld, conditioned or delayed.

 

(c)           In
the case of any Combined Tax Return in respect of which RemainCo is the Combined Tax Return Preparer, RemainCo shall, unless otherwise
required by applicable Law, Article 2 or Section 4.03(c), (1) prepare and file such Combined Tax Return
in a manner consistent with Past Practice to the extent such items could have a more than a de-minimis effect on SpinCo Taxes for which
SpinCo and the OP may be responsible pursuant to this Agreement, and (2) submit to SpinCo a draft of any such Tax Return at least
thirty (30) days prior to the Due Date for such Tax Return, subject to reasonable delay as communicated by RemainCo to SpinCo, to enable
SpinCo to analyze and comment on such Tax Return.  SpinCo shall deliver any comments on such Combined Tax Return to RemainCo no
later than fifteen (15) days following the receipt of the draft of such Combined Tax Return from RemainCo, subject to reasonable delay
as communicated by SpinCo to RemainCo. RemainCo shall consider any such comments timely received from SpinCo in good faith and SpinCo
and RemainCo shall attempt in good faith to resolve any issues arising out of such comments (it being understood that nothing herein
shall prevent RemainCo from timely filing (or causing to be filed) any such Tax Return). In the event SpinCo and RemainCo are not able
to resolve any such issues to the extent relating to SpinCo Taxes for which SpinCo and the OP would reasonably be expected to be liable
hereunder, such issues shall be resolved by the Accounting Firm pursuant to Section 10.01. In the event that any such dispute
is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the
filing of any such Combined Tax Return, such Tax Return shall be timely filed (or caused to be filed) by RemainCo as originally prepared
by RemainCo and reflecting any changes agreed to by RemainCo and SpinCo, and the Parties shall agree to amend such Tax Return as necessary
to reflect the resolution of such dispute in a manner consistent with such resolution.

 

    -11-

     

    

 

Section 4.02         Procedures
Relating to RemainCo Separate Tax Returns.

 

(a)           In
connection with the preparation of any RemainCo Separate Tax Return pursuant to Section 3.02 that may include Tax Items relating
to the activities or assets of SpinCo or any member of the SpinCo Group (or the SpinCo Business), SpinCo will assist and cooperate with
RemainCo by preparing and providing to RemainCo such information and other documentation as may be reasonably requested by or reasonably
necessary to enable RemainCo, in such form as RemainCo may reasonably request, to prepare such Tax Return, with such information and
other documentation to be delivered no later than thirty (30) days following RemainCo’s request therefor, subject to reasonable
delay.

 

(b)           In
the case of any RemainCo Separate Tax Return that reflects, relates to or could affect SpinCo Taxes for which SpinCo and the OP would
reasonably be expected to be liable hereunder, RemainCo shall (1) unless otherwise required by applicable Law, Article 2
or Section 4.03(c), prepare (or cause to be prepared) such Tax Return in a manner consistent with Past Practice to the
extent such items could have a more than a de-minimis effect on SpinCo Taxes for which SpinCo and the OP may be responsible pursuant
to this Agreement, and (2) submit to SpinCo a draft of any such Tax Return at least thirty (30) days prior to the Due Date for such
Tax Return, subject to reasonable delay as communicated by RemainCo to SpinCo, to enable SpinCo to analyze and comment on such Tax Return. 
SpinCo shall deliver any comments on any such Tax Return to RemainCo no later than fifteen (15) days following the receipt of the draft
of such Tax Return from RemainCo, subject to reasonable delay as communicated by SpinCo to RemainCo. RemainCo shall consider any such
comments timely received from SpinCo in good faith and SpinCo and RemainCo shall attempt in good faith to resolve any issues arising
out of the review of any such RemainCo Separate Tax Return (it being understood that nothing herein shall prevent RemainCo from timely
filing (or causing to be filed) any such Tax Return). In the event SpinCo and RemainCo are not able to resolve any such issues to the
extent relating to SpinCo Taxes for which SpinCo and the OP would reasonably be expected to be liable hereunder, such issues shall be
resolved by the Accounting Firm pursuant to Section 10.01. In the event that any such dispute is not resolved (whether pursuant
to good faith negotiations among the Parties or by the Accounting Firm) prior to the Due Date for the filing of any such RemainCo Separate
Tax Return, such Tax Return shall be timely filed (or caused to be filed) by RemainCo as originally prepared by RemainCo and reflecting
any changes agreed to by RemainCo and SpinCo, and the Parties shall agree to amend such Tax Return as necessary to reflect the resolution
of such dispute in a manner consistent with such resolution.

 

    -12-

     

    

 

Section 4.03         Procedures
Relating to SpinCo Separate Tax Returns.

 

(a)           In
connection with the preparation of any SpinCo Separate Tax Return pursuant to Section 3.03 that may include Tax Items relating
to the activities or assets of RemainCo or any member of the RemainCo Group (or the RemainCo Business), RemainCo will assist and cooperate
with SpinCo by preparing and providing to SpinCo such information and other documentation as may be reasonably requested by or reasonably
necessary to enable SpinCo, in such form as SpinCo may reasonably request, to prepare such Tax Return, with such information and other
documentation to be delivered no later than thirty (30) days following SpinCo’s request therefor, subject to reasonable delay.

 

(b)           In
the case of any SpinCo Separate Tax Return that reflects, relates to or could affect RemainCo Taxes for which RemainCo and RemainCo LLC
would reasonably be expected to be liable hereunder, SpinCo shall (1) unless otherwise required by applicable Law, Article 2
or Section 4.03(c), prepare (or cause to be prepared) such Tax Return in a manner consistent with Past Practice to the
extent such items could have a more than a de-minimis effect on RemainCo Taxes for which RemainCo and RemainCo LLC may be responsible
pursuant to this Agreement, and (2) submit to RemainCo a draft of any such Tax Return (along with a statement setting forth the
calculation of the Tax shown due and payable on such Tax Return reimbursable by RemainCo under Article 3) at least thirty
(30) days prior to the Due Date for such Tax Return, subject to reasonable delay as communicated by SpinCo to RemainCo, to enable RemainCo
to analyze and comment on such Tax Return.  RemainCo shall deliver any comments on any such Tax Return to SpinCo no later than fifteen
(15) days following the receipt of the draft of such Tax Return from SpinCo, subject to reasonable delay as communicated by RemainCo
to SpinCo. SpinCo shall consider any such comments timely received from RemainCo in good faith and RemainCo and SpinCo shall attempt
in good faith to resolve any issues arising out of the review of any such SpinCo Separate Tax Return (it being understood that nothing
herein shall prevent SpinCo from timely filing (or causing to be filed) any such Tax Returns). In the event SpinCo and RemainCo are not
able to resolve any such issues to the extent relating to RemainCo Taxes for which RemainCo and RemainCo LLC would reasonably be expected
to be liable hereunder, such issues shall be resolved by the Accounting Firm pursuant to Section 10.01. In the event that
any such dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Accounting Firm) prior to the
Due Date for the filing of any such SpinCo Separate Tax Return, such Tax Return shall be timely filed (or caused to be filed) by SpinCo
as originally prepared by SpinCo and reflecting any changes agreed to by RemainCo and SpinCo, and the Parties shall agree to amend such
Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.

 

(c)           Except
as otherwise required as a result of a Final Determination, neither RemainCo nor SpinCo shall (nor shall cause or permit any members
of the RemainCo Group and SpinCo Group, respectively, to), take any position inconsistent with the treatment of any of the Separation
Transactions as reported by the OP on an OP Tax Return as finally determined pursuant to Section 4.03(b).

 

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Section 4.04         Tax
Returns Reflecting Restructuring Transfer Taxes. Notwithstanding anything to the contrary in Articles 3, 4
and 5, any Tax Return required to be filed with respect to any Restructuring Transfer Taxes shall be prepared and approved by
RemainCo in the manner determined by RemainCo in its sole discretion, subject to the provisions of Section 2.01, 2.02
and 4.03(c). If required by applicable Law, SpinCo shall, and shall cause its respective Affiliates to, join in the execution
of any such Tax Returns and other documentation.

 

Article 5.

 

TAX
TIMING AND ALLOCATION

 

Section 5.01         Timing
of Payments. All Taxes required to be paid or caused to be paid pursuant to Article 3 or Article 4 by either
the RemainCo Group, or the SpinCo Group, as the case may be, to an applicable Taxing Authority or to be reimbursed by RemainCo and RemainCo
LLC or the OP and SpinCo to the other Party (or any member of its Group) pursuant to this Agreement, shall, in the case of a payment
to a Taxing Authority, be paid on or before the Due Date for the payment of such Taxes and, in the case of a payment to the other Party,
be paid at least two (2) business days before the Due Date for the payment of such Taxes by the other Party.

 

Section 5.02         Expenses.
Except as expressly provided herein, each Party shall bear its own expenses incurred in connection with Articles 3, 4
and 5.

 

Article 6.

 

INDEMNIFICATION

 

Section 6.01         Indemnification
by RemainCo. RemainCo and RemainCo LLC shall pay, and shall indemnify and hold the SpinCo Group harmless from and against, without
duplication, (i) all RemainCo Taxes, and (ii) any costs and expenses related to the foregoing (including reasonable fees of
attorneys and experts and out-of-pocket expenses).

 

Section 6.02         Indemnification
by SpinCo. SpinCo and the OP shall pay, and shall indemnify and hold the RemainCo Group harmless from and against, without duplication,
(i) all SpinCo Taxes, and (ii) any costs and expenses related to the foregoing (including reasonable fees of attorneys and
experts and out-of-pocket expenses).

 

Section 6.03         Characterization
of and Modifications to Payment Amounts.

 

(a)           For
all Tax purposes, the Parties agree to treat (and to cause their respective Affiliates to treat) (i) any payment required by this
Agreement (other than payments with respect to interest, pursuant to Section 7.01(b) or Section 10.03 hereof,
accruing after the Effective Time) as either a contribution by RemainCo to SpinCo or a distribution by SpinCo to RemainCo, as the case
may be, occurring immediately prior to the Distribution or as a payment of an assumed or retained Liability and (ii) any payment
of non-U.S. federal Taxes by or to a Taxing Authority or any payment of interest as taxable or deductible, as the case may be, to the
Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, except as otherwise
required by applicable Law.

 

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(b)           Any
indemnification payment under this Article 6 and under Article IV of the Separation and Distribution Agreement
shall be increased to take into account any Taxes resulting from any inclusion in income of the Indemnified Party arising from the receipt
of such indemnity payment (including, but not limited to, any additional REIT Taxes resulting therefrom) and shall be decreased to take
into account any reduction in Taxes resulting from any reduction in income of the Indemnified Party arising from such indemnified Liability
(including, but not limited to, any reduction in REIT Taxes resulting therefrom).

 

Section 6.04         Timing
of Indemnification Payments. Indemnification payments required pursuant to this Article 6 shall be paid by the Indemnifying
Party to the Indemnified Party within twenty (20) days of delivery by the Indemnified Party to the Indemnifying Party of an invoice for
the amount due, accompanied by evidence of payment and a reasonably satisfactory documentation setting forth the basis for the amount
of such indemnification payment.

 

Section 6.05         Certain
Tax Procedures. For the avoidance of doubt, Section 4.11 of the Separation and Distribution Agreement shall apply with respect
to any indemnification payments required to be made pursuant to this Agreement.

 

Section 6.06         Survival
of Indemnities. The rights and obligations of each Party under this Article 6 shall survive (a) the sale or other
transfer by a Party or any member of its Group of any assets or businesses or the assignment by it of any liabilities; or (b) any
merger, consolidation, business combination, sale of all or substantially all of its Assets, restructuring, recapitalization, reorganization
or similar transaction involving a Party or any of the members of its Group; it being understood that in any such case, the applicable
Party or Group member shall make proper provision so that the successor or acquiror, as applicable, expressly assumes the obligations
of such Party or Group member set forth in this Article 6.

 

Article 7.

 

REFUNDS
AND DEDUCTIONS

 

Section 7.01         Refunds.

 

(a)           RemainCo
and RemainCo LLC shall be entitled to all Refunds of Taxes for which RemainCo and RemainCo LLC are or may be responsible pursuant to
this Agreement, and SpinCo and the OP shall be entitled to all Refunds of Taxes for which SpinCo and the OP are or may be responsible
pursuant to this Agreement.  A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay
the amount to which such other Party is entitled within ten (10) days after the receipt of the Refund, less any reasonable costs
or expenses or Taxes incurred in procuring such Refund.

 

(b)           In
the event of an Adjustment for which one Party (the “Responsible Party”) is or may be responsible pursuant to this
Agreement which would have given rise to a Refund but for an offset against the Taxes for which a Party in the other Group (the “Benefited
Party”) is or may be liable pursuant to this Agreement, then the Benefited Party shall pay to the Responsible Party, within
ten (10) days of the Final Determination of such Adjustment an amount equal to the lesser of (i) the amount of such hypothetical
Refund or (ii) the amount of such reduction in the Taxes of the Benefited Party, in each case, solely to the extent the Benefited
Party actually realizes the benefit of applying such Refund in cash, and less any reasonable costs or expenses or Taxes incurred in applying
such Refund as an offset.

 

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(c)           Notwithstanding
Section 7.01(a), to the extent that a Party applies or causes to be applied an overpayment of Taxes as a credit toward or
a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of
Taxes, if received as a Refund, would have been payable by such Party to a Party in the other Group pursuant to this Section 7.01,
such first Party shall pay such amount to the other Party no later than the Due Date of the Tax Return for which such overpayment is
applied to reduce Taxes otherwise payable, in each case solely to the extent the Party applying (or causing to be applied) the overpayment
of Taxes actually realizes the benefit of applying such overpayment in cash, and less any reasonable costs or expenses or Taxes incurred
in applying such overpayment as a credit toward or reduction in Taxes otherwise payable.

 

(d)           To
the extent that the amount of any Refund under this Section 7.01 is later reduced pursuant to an Adjustment, such reduction
shall be allocated to the Party to which such Refund was allocated pursuant to this Section 7.01 and an appropriate adjusting
payment shall be made.

 

Section 7.02         Certain
Deductions. Except as otherwise required by applicable Law or a Final Determination, (x) RemainCo and RemainCo LLC shall be
entitled to any Tax deduction associated with any liabilities for which RemainCo and RemainCo LLC are responsible pursuant to Section 2.3(b)(iii) of
the Separation and Distribution Agreement and (y) SpinCo and the OP (and not RemainCo and RemainCo LLC) shall be entitled to any
Tax deduction associated with any liabilities for which SpinCo and SpinCo LP are responsible pursuant to Sections 2.3(a)(vi), 2.3(a)(vii) and
2.3(a)(viii) of the Separation and Distribution Agreement.

 

Article 8.

 

TAX
PROCEEDINGS

 

Section 8.01         Notification
of Tax Proceedings. Within thirty (30) days after an Indemnified Party receives written notice of the commencement of a Tax Proceeding
that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article 6, such Indemnified Party
shall notify the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying
Party copies of notices and communications relating to such Tax Proceeding.  The failure of the Indemnified Party to notify the
Indemnifying Party of the commencement of any such Tax Proceeding within such thirty (30)-day period or promptly forward any further
notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under
this Agreement except to the extent that the Indemnifying Party is actually prejudiced by such failure.

 

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Section 8.02         Tax
Proceedings.

 

(a)           Generally. 
Except as provided in Section 8.02(c)(i), RemainCo (or such member of the RemainCo Group as RemainCo shall designate) shall
have the sole right to control any Tax Proceeding and represent the interests of the members of the RemainCo Group and the members of
the SpinCo Group and to employ counsel of its choice at its expense in any Tax Proceeding relating to (i) any Combined Tax Return
and (ii) any RemainCo Separate Tax Return (each, a “RemainCo Tax Proceeding”).  Except as provided in Section 8.02(c)(ii),
SpinCo (or such member of the SpinCo Group as SpinCo shall designate) shall have the sole right to represent the interests of the members
of the SpinCo Group and the members of the RemainCo Group and to employ counsel of its choice at its expense in any Tax Proceeding relating
to any SpinCo Separate Tax Return (each, a “SpinCo Tax Proceeding”).

 

(b)           Power
of Attorney.  SpinCo shall (and shall cause the members of the SpinCo Group to) execute and deliver to RemainCo (or such member
of the RemainCo Group as RemainCo shall designate) any power of attorney or other document requested by RemainCo (or such designee) in
connection with any RemainCo Tax Proceeding. RemainCo shall (and shall cause the members of the RemainCo Group to) execute and deliver
to SpinCo (or such member of the SpinCo Group as SpinCo shall designate) any power of attorney or other document requested by SpinCo
(or such designee) in connection with any SpinCo Tax Proceeding.

 

(c)           Participation
Rights.

 

(i)           RemainCo
Tax Proceedings.  In the event of any RemainCo Tax Proceeding the resolution of which could reasonably be expected to give rise
to an indemnification obligation of SpinCo and the OP pursuant to Article 6, (A) RemainCo shall consult with SpinCo
reasonably in advance of taking any significant action in connection with such Tax Proceeding, (B) RemainCo shall consult with SpinCo
and offer SpinCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with
such Tax Proceeding, (C) RemainCo shall defend such Tax Proceeding diligently and in good faith as if it were the only party in
interest in connection with such Tax Proceeding, and (D) RemainCo shall provide SpinCo copies of any written materials relating
to such Tax Proceeding received from the relevant Taxing Authority.  Notwithstanding anything in the preceding sentence to the contrary,
the final determination of the positions taken, including with respect to settlement or other disposition, in any RemainCo Tax Proceeding
which could not reasonably be expected to give rise to an indemnification obligation of SpinCo and the OP pursuant to Article 6
in excess of $150,000, shall be made in the sole discretion of RemainCo, acting reasonably and in good faith, and shall be final
and not subject to the dispute resolution provisions of Section 10.01 (or Article VII of the Separation and Distribution
Agreement).  With respect to any RemainCo Tax Proceeding which could reasonably be expected to give rise to an indemnification obligation
of SpinCo and the OP pursuant to Article 6 in excess of $150,000, SpinCo shall be entitled to participate in such Tax Proceeding
at its own expense, and RemainCo shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior written
consent of SpinCo, which consent shall not be unreasonably withheld, conditioned or delayed.

 

(ii)          SpinCo
Tax Proceedings.  In the event of any SpinCo Tax Proceeding the resolution of which could reasonably be expected to give rise
to an indemnification obligation of RemainCo and RemainCo LLC pursuant to Article 6, (A) SpinCo shall consult with RemainCo
reasonably in advance of taking any significant action in connection with such Tax Proceeding, (B) SpinCo shall consult with RemainCo
and offer RemainCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with
such Tax Proceeding, (C) SpinCo shall defend such Tax Proceeding diligently and in good faith as if it were the only party in interest
in connection with such Tax Proceeding, and (D) SpinCo shall provide RemainCo copies of any written materials relating to such Tax
Proceeding received from the relevant Taxing Authority.  Notwithstanding anything in the preceding sentence to the contrary, the
final determination of the positions taken, including with respect to settlement or other disposition, in any SpinCo Tax Proceeding which
could not reasonably be expected to give rise to an indemnification obligation of RemainCo and RemainCo LLC pursuant to Article 6
in excess of $150,000, shall be made in the sole discretion of SpinCo, acting reasonably and in good faith, and shall be final and
not subject to the dispute resolution provisions of Section 10.01 (or Article VII of the Separation and Distribution
Agreement).  With respect to any SpinCo Tax Proceeding which could reasonably be expected to give rise to an indemnification obligation
of RemainCo and RemainCo LLC pursuant to Article 6 in excess of $150,000, RemainCo shall be entitled to participate in such
Tax Proceeding at its own expense, and SpinCo shall not settle, compromise or abandon any such Tax Proceeding without obtaining the prior
written consent of RemainCo, which consent shall not be unreasonably withheld, conditioned or delayed.

 

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Article 9.

 

COOPERATION

 

Section 9.01         General
Cooperation.

 

(a)           The
Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests
in writing from another Party hereto, or from an agent or Representative of such Party, in connection with the preparation and filing
of Tax Returns (including the preparation of Tax Packages), claims for Refunds, Tax Proceedings, and calculations of amounts required
to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with tax reporting requirements
or Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required
in connection with any financial reporting (a “Tax Matter”).  Such cooperation shall include the provision of
any information reasonably necessary or helpful in connection with a Tax Matter and shall include, without limitation, at each Party’s
own cost:

 

(i)          the
provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership
and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related
work papers, and documents relating to rulings or other determinations by Taxing Authorities;

 

(ii)         the
execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective
Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;

 

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(iii)        the
use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter; and

 

(iv)        the
use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and
documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or
their Subsidiaries.

 

(b)           Each
Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in
connection with the foregoing matters.

 

Section 9.02         Retention
of Records. RemainCo and SpinCo shall retain or cause to be retained all Tax Returns, schedules and work papers, and all material
records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute
of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate
or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records
or documents.  A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance
notice and the opportunity to copy or take possession of such records and documents.  The Parties hereto will notify each other
in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records
or other documents must be retained.

 

Article 10.

 

MISCELLANEOUS

 

Section 10.01       Dispute
Resolution.

 

(a)           In
the event of any dispute between the Parties as to any matter covered by this Agreement (other than any dispute that is required to be
resolved by the Accounting Firm pursuant to this Agreement), the Parties shall cooperate in good faith to resolve such dispute and, if
the Parties cannot resolve such dispute within thirty (30) days from the time such dispute arises, the Parties shall agree as to whether
such dispute shall be governed by the procedures set forth in Section 10.01(b) of this Agreement or in Article VII
of the Separation and Distribution Agreement.  If the Parties cannot agree within thirty (30) days from the time such dispute
arises as to which procedure will govern such dispute, such disagreement shall be resolved pursuant to Article VII of the
Separation and Distribution Agreement.

 

(b)           With
respect to any dispute governed by this Section 10.01(b), the Parties shall mutually appoint a nationally recognized “Big
Four” independent public accounting firm (other than the current auditing firm of either RemainCo or SpinCo) (the “Accounting
Firm”) to resolve such dispute.  The Parties shall cooperate in good faith in jointly selecting the Accounting Firm. 
In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made
by RemainCo and SpinCo and their respective Representatives, and not by independent review, and shall function only as an expert and
not as an arbitrator and shall be required to make a determination in favor of one Party only.  The Parties shall require the Accounting
Firm to resolve all disputes no later than fifteen (15) days after the submission of such dispute to the Accounting Firm, but in no event
later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable and to the extent possible,
and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. 
The Accounting Firm shall resolve all disputes in a manner consistent with the terms of this Agreement (including the Intended Tax Treatment)
and, to the extent not inconsistent with the terms of this Agreement (including the Intended Tax Treatment) or applicable Law, in a manner
consistent with the Past Practices of RemainCo and the OP and the members of the SpinCo Group or RemainCo and its Subsidiaries, as applicable. 
The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis
for such determination.  The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.

 

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Section 10.02       Tax
Sharing Agreements.  All Tax sharing, indemnification and similar agreements, written or unwritten, as between any member of
the RemainCo Group, on the one hand, and any member of the SpinCo Group, on the other hand (other than this Agreement, the Separation
and Distribution Agreement, any other Ancillary Agreement, the Merger Agreement, and any agreement entered into after the Distribution),
shall be or shall have been terminated no later than the Effective Time and, after the Effective Time, none of the RemainCo Group and
the SpinCo Group shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.

 

Section 10.03       Interest
on Late Payments.  With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth
in this Agreement for such payment (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within
forty-five (45) days of such bill, invoice or other demand), the outstanding amount shall accrue interest at a rate per annum equal to
the Prime Rate plus two percent (2%).

 

Section 10.04       Survival. 
Except as otherwise contemplated by this Agreement, all covenants, representations, warranties and agreements of the Parties contained
in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms; provided,
however, that all indemnification for Taxes shall survive until sixty (60) days following the expiration of the applicable statute
of limitations (taking into account all extensions thereof), if any, for assessment of the Tax that gave rise to the indemnification;
provided, further, that, in the event that notice for indemnification has been given within the applicable survival period,
such indemnification shall survive until such time as such claim is finally resolved.

 

Section 10.05       Counterparts;
Entire Agreement; Corporate Power.

 

(a)           This
Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. Each Party acknowledges
that it and each other Party is executing this Agreement by facsimile, stamp or mechanical signature, and that delivery of an executed
counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by
e-mail in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly
adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier,
by facsimile or by e-mail in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in
person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if
it were signed manually and delivered in person.

 

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(b)           This
Agreement, the other Ancillary Agreements, the Separation and Distribution Agreement, the Merger Agreement and the exhibits, schedules
and appendices hereto and thereto contain the entire agreement among the Parties with respect to the subject matter hereof, supersede
all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject
matter, and there are no agreements or understandings among the Parties with respect to such subject matter other than those set forth
or referred to herein or therein. This Agreement, the other Ancillary Agreements, the Separation and Distribution Agreement and the Merger
Agreement together govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.
Except as otherwise provided in this Agreement, in the event and to the extent that there shall be a conflict between the provisions
of (a) this Agreement and the provisions of the Merger Agreement (excluding the Separation Principles (as defined therein)), at
or prior to the Closing (as defined in the Merger Agreement), the Merger Agreement shall control, and following the Closing (as defined
in the Merger Agreement), the provisions of this Agreement shall control and (b) this Agreement and the provisions of the Separation
and Distribution Agreement (or any other Ancillary Agreement), with respect to matters addressed herein, the provisions of this Agreement
shall control.

 

(c)           RemainCo
represents on behalf of itself and each other member of the RemainCo Group and SpinCo represents on behalf of itself and each other member
of the SpinCo Group, as follows:

 

(i)           each
such Person is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization;

 

(ii)          each
such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary to execute,
deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

 

(iii)         this
Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with
the terms thereof.

 

Section 10.06       Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial.

 

(a)           This
Agreement and all disputes, causes of action, controversies or claims that may be based upon, arise out of or relate to this Agreement
or the negotiation, execution or performance hereof or thereof, shall be governed by and construed in accordance with the laws of the
State of Maryland, without giving effect to any choice or conflict of law provision or rule (whether of the State of Maryland or
any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Maryland. Subject to
Section 10.01, each of the Parties, on behalf of itself and the members of its Group (as applicable) irrevocably agrees that
it shall bring any Action in respect of any claim arising out of or related to this Agreement and the rights and obligations arising
in connection herewith, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by any other Party or its successors or assigns (“Proceedings”), exclusively in (i) the
Circuit Court for Baltimore City, Maryland, (ii) in the event (but only in the event) that such court does not have subject matter
jurisdiction over such Proceeding, the United States District Court for the District of Maryland, Baltimore Division or (iii) in
the event (but only in the event) that such courts identified in clauses (i) and (ii) do not have subject matter jurisdiction
over such Proceeding, any other state or federal court located within the State of Maryland (the “Chosen Courts”),
and solely in connection with Proceedings (A) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (B) irrevocably
waives any claim that it is not personally subject to the jurisdiction of the Chosen Courts for any reason other than the failure to
serve in accordance with this Section 10.06 and any claim that it or its property is exempt or immune from the jurisdiction
of any such court or from any legal process commenced in the Chosen Courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise), (C) irrevocably submits to the exclusive venue
of any such Proceeding in the Chosen Courts and waives any objection to laying venue in any such Proceeding in the Chosen Courts and
(D) waives any objection that the Chosen Courts are an inconvenient forum, do not have jurisdiction over any Party or that this
Agreement, or the subject matter hereof, may not be enforced in or by such courts. In the case of any Proceeding in the Circuit Court
for Baltimore City, Maryland or any other state court located in the State of Maryland, each of the Parties irrevocably agrees to request
and/or consent to the assignment of any such Proceeding to such court’s Business and Technology Case Management Program. Each Party
agrees that a final judgment in any Proceeding brought in the Chosen Courts shall be conclusive and binding upon each of the Parties
and may be enforced in any other courts the jurisdiction of which each of the Parties is or may be subject, by suit upon such judgment.
Each Party irrevocably consents to service of process in the manner provided for notices in Section 10.11 in accordance with
applicable Law and agrees that service made in such manner shall have the same legal force and effect as if served upon such Party personally
within the State of Maryland. Nothing in this Agreement shall affect the right of any Party to serve process in any other manner permitted
by Law.

 

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(b)           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 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 AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS
VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 10.06(b).

 

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Section 10.07       Assignability.
This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors (including, for the avoidance
of doubt, Badger Merger Sub LLC as successor to RemainCo as a result of the Merger) and permitted assigns; provided, however,
that no Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the
other Parties. Any attempt to assign any rights or obligations arising under this Agreement in violation of this Section 10.07
shall be null and void ab initio. Notwithstanding the foregoing, no such consent shall be required for the assignment of a
Party’s rights and obligations under this Agreement in whole (i.e., the assignment of a Party’s rights and obligations
under this Agreement all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee
Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance
reasonably satisfactory to the other Parties.

 

Section 10.08       Third-Party
Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and their respective Groups (as applicable)
and are not intended to confer upon any Person except the Parties and their respective Groups (as applicable) any rights or remedies
hereunder, and there are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any Third Party with any
remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

 

Section 10.09       Notices.
All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (a) upon
personal delivery to the Party to be notified; (b) when sent by email to the Party to be notified (provided that no automated notice
of delivery failure is received by the sender); or (c) when delivered by a courier (with confirmation of delivery); in each case,
to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in
accordance with this Section 10.09):

 

If to RemainCo or RemainCo LLC (prior to the Effective
Time), to:

 

Bluerock Residential Growth REIT, Inc.

1345 Avenue of the Americas, 32nd Floor

New York, NY 10105

Attention: Michael Konig

E-mail: mkonig@bluerock.com

 

If to RemainCo or RemainCo LLC (from and after the Effective
Time), to:

 

c/o Blackstone Inc.

345 Park Avenue

New York, NY 10154

Attention: Jacob Werner

Email:      realestatenotices@blackstone.com

Werner@Blackstone.com

 

    -23-

     

    

 

If to SpinCo or the OP, to:

 

Bluerock Homes Trust, Inc.

1345 Avenue of the Americas, 32nd Floor

New York, NY 10105

Attention: Jason Emala

E-mail: jemala@bluerock.com

 

A Party may, by notice to the other Parties, change
the address to which such notices are to be given.

 

Section 10.10       Severability.
If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances
or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an
effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

 

Section 10.11       Force
Majeure. No Party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation (other than a payment
obligation) hereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented,
frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time
for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason
of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such
Force Majeure, (a) provide written notice to the other Parties of the nature and extent of any such Force Majeure; and (b) use
commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.

 

Section 10.12       No
Set-Off. Except as otherwise mutually agreed to in writing by the Parties, no Party or any member of such Party’s Group (as
applicable) shall have any right of set-off or other similar rights with respect to amounts owed to any other Party or any member of
such Party’s Group (as applicable) pursuant to this Agreement on account of any obligation owed by such other Party or any member
of its Group (as applicable) to the first Party or any member of its Group (as applicable).

 

Section 10.13       Headings.
The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

Section 10.14       Waivers
of Default. Waiver by a Party of any default by another Party of any provision of this Agreement shall not be deemed a waiver by
the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by
a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial
exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

 

    -24-

     

    

 

Section 10.15       Specific
Performance. Subject to the provisions of Section 10.01, in the event of any actual or threatened default in, or breach
of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall
have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its
or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages,
may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be
adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

 

Section 10.16       Amendments
and Consents. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver,
amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought
to enforce such waiver, amendment, supplement or modification; provided, that notwithstanding anything to the contrary in this
Agreement, prior to the Closing (as defined in the Merger Agreement), any waiver, amendment, supplement or modification of this Agreement,
in each case, that is adverse (other than in a de minimis respect) to the RemainCo Group or, after giving effect to the consummation
of the Merger, Badger Parent, shall require the prior written consent of Badger Parent (not to be unreasonably withheld, delayed or conditioned).

 

Section 10.17       Interpretation.
In this Agreement, (a) definitions 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 terms; (b) the terms “hereof,” “herein” and “hereunder”
and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the
Schedules, Exhibits and Appendices hereto and thereto, as applicable) and not to any particular provision of this Agreement, unless the
context otherwise requires; (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections,
Schedules, Exhibits and Appendices to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to
any agreement (including this Agreement) shall be deemed to include the exhibits, schedules and annexes (including all Schedules, Exhibits
and Appendixes) to such agreement; (e) the word “include”, “includes” and “including” when used
in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or”
shall not be exclusive; (g) unless expressly specified in a particular case, the word “days” refers to calendar days;
(h) references to “business day” shall mean any day other than a Saturday, a Sunday or any other day on which commercial
banks in New York, New York are authorized or required by Law to remain closed; (i) references to this Agreement or any other agreement
contemplated herein shall be deemed to refer to this Agreement or such other agreement as it may be amended, modified or supplemented
from time to time, unless otherwise specified; (j) 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”; (k) unless expressly
stated to the contrary in this Agreement, all references to “the date hereof” or “the date of this Agreement”
and words of similar import shall all be references to October 5, 2022; (l) references to “$” or “dollars”
shall be to U.S. dollars; (m) references to “written” or “in writing” include in electronic form; (n) all
terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant thereto
unless otherwise defined therein; (o) a reference to any Person includes such Person’s successors and permitted assigns; (p) when
calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement,
the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a business
day, the period shall end on the next succeeding business day; (q) to the extent that any covenant or agreement in this Agreement
requires a controlled Affiliate of any Party to take or omit to take any action, such covenant or agreement includes the obligation of
such Party to cause such controlled Affiliate to take or omit to take such action, whether or not such covenant or agreement expressly
so states; and (r) references in this Agreement to the “transactions contemplated hereby,” the “transactions contemplated
by this Agreement” and words or phrases of similar import shall include the Separation or the Distribution and the transactions
contemplated thereby.

 

    -25-

     

    

 

Section 10.18       Limitations
of Liability. Notwithstanding anything in this Agreement to the contrary, neither SpinCo or any member of the SpinCo Group (including
the OP), on the one hand, nor RemainCo or any member of the RemainCo Group (including RemainCo LLC), on the other hand, shall be liable
under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory
damages of the other arising in connection with the transactions contemplated by this Agreement (other than any such damages to the extent
awarded to a Third Party with respect to a Third-Party Claim).

 

Section 10.19       Performance.
Badger Parent will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth
in this Agreement or in any Ancillary Agreement to be performed by RemainCo or any other member of the RemainCo Group after the Closing
(as defined in the Merger Agreement) and RemainCo will cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth in this Agreement to be performed by any member of the RemainCo Group. SpinCo will cause to be performed,
and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any
member of the SpinCo Group. Each Party (including its permitted successors and assigns) further agrees that it will (a) give timely
notice of the terms, conditions and continuing obligations contained in this Agreement to all of the other members of its Group (as applicable)
and (b) as applicable, cause all of the other members of its Group not to take any action or fail to take any such action inconsistent
with such Party’s obligations under this Agreement or the transactions contemplated hereby.

 

Section 10.20       Mutual
Drafting. This Agreement shall be deemed to be the joint work product of the Parties, and any rule of construction that a document
shall be interpreted or construed against a drafter of such document shall not be applicable.

 

Section 10.21       No
Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right,
entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances (including with respect
to the rights, entitlements, obligations and recoveries that may arise out of Article 6).

 

Section 10.22       Effective
Date. This Agreement shall become effective upon the occurrence of the Distribution.

 

    -26-

     

    

 

[The remainder of this page is intentionally
left blank.]

 

    -27-

     

    

 

IN WITNESS WHEREOF, the Parties
have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.

 

	 	Bluerock Residential
    Growth REIT, Inc.
	 	 	 	 
	 	 	 	 
	 	By:	/s/
    Jordan Ruddy
	 	 	Name:	Jordan Ruddy
	 	 	Title:	Chief Operating Officer and President 
	 	 	 	 
	 	 	 	 
	 	Badger Parent
    LLC
	 	 	 	 
	 	 	 	 
	 	By:	/s/
    Asim Hamid
	 	 	Name:	Asim Hamid
	 	 	Title:	Senior Managing Director and Vice President
	 	 	 	
	 	 	 	 
	 	Badger Holdco
    LLC
	 	 
	 	By:	BLUEROCK RESIDENTIAL HOLDINGS, L.P., its
    Sole Member
	 	 	 
	 	By:	BLUEROCK RESIDENTIAL GROWTH REIT, INC.,
    its General Partner
	 	 	 
	 	 	 	 
	 	By:	/s/
    Jordan B. Ruddy
	 	 	Name:	Jordan B. Ruddy
	 	 	Title:	Chief Operating Officer and President 
	 	 	 	 
	 	 	 	 
	 	Bluerock Homes
    Trust, Inc.
	 	 	 	 
	 	By:	/s/
    Jordan Ruddy
	 	 	Name:	Jordan Ruddy
	 	 	Title:	President

 

[Signature Page to Tax Matters Agreement]

 

     

     

    

 

	 	Bluerock REIT
    Holdings, LLC
	 	 
	 	By:	BLUEROCK RESIDENTIAL GROWTH REIT, INC.,
    its Sole Member
	 	 	 
	 	By:	/s/
    Jordan Ruddy
	 	 	Name:	Jordan Ruddy
	 	 	Title:	Chief Operating Officer and President 
	 	 	 	 
	 	Bluerock Residential
    Holdings, L.P.
	 	 
	 	By:	BLUEROCK RESIDENTIAL GROWTH REIT, INC.,
    its General Partner
	 	 	 
	 	By:	/s/
    Jordan Ruddy
	 	 	Name:	Jordan Ruddy
	 	 	Title:	Chief Operating Officer and President 

 

[Signature Page to Tax Matters Agreement]

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