Document:

exh10_8.htm

Exhibit 10.8

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

(Effective February 1, 2011)

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of this 1st of February, 2011 (the “Effective Date”) by and between Pacific Office Management, Inc., a Delaware corporation (“POMI” or the “Company,” as may be applicable), Pacific Office Properties Trust, Inc., a Maryland corporation (“POPT”), Pacific Office Properties, L.P., a Delaware limited partnership (the “OP”) and James R. Ingebritsen (the “Executive”).

 

WHEREAS, POPT, the OP and the Executive previously entered into that certain Amendment, Assignment and Assumption Agreement dated as of January 3, 2011 (the “Assignment and Assumption Agreement”), under which POPT assigned, and the OP assumed, certain rights and obligations under this Agreement, and this Agreement was amended in certain respects;

 

WHEREAS, the Assignment and Assumption Agreement has been terminated in its entirety, retroactive to its effective date;

 

WHEREAS, POPT will become an internally-advised real estate investment trust and POMI will become a wholly-owned subsidiary of the OP (the “Internalization”);

 

WHEREAS, POMI has determined it to be in its best interests to secure the continued employment of the Executive and to enter into this Agreement pertaining to the continued employment of the Executive upon and following the Effective Date (as defined above);

 

WHEREAS, the Executive desires to continue to be so employed; and

 

WHEREAS, this Agreement shall become effective as of the Effective Date;

 

NOW THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:

 

1. Definitions.

 

(a) The term “Change in Control” shall mean any of the following:

 

(i) The consummation of the acquisition by any person (as such term is defined in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of (50%) or more of the combined voting power of the then outstanding voting securities of POPT;

 

(ii) Within any twelve (12) month period, the individuals who are members of the POPT Board at the beginning of such period cease for any reason to constitute a majority of the POPT Board, unless the election, or nomination for election by the stockholders, of any new director was approved by a vote of a majority of the POPT Board, and such new director shall, for purposes of this Agreement, be considered as a member of the Board; or

 

 

  

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(iii) Approval by the stockholders of POPT of: (A) a merger or consolidation if the POPT stockholders immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the voting securities of POPT outstanding immediately before such merger or consolidation; or (B) a complete liquidation or dissolution or an agreement for the sale or other disposition of 50% or more of the total assets of POPT.

 

Notwithstanding the foregoing, (i) a Change in Control shall not be deemed to occur if any of the foregoing transactions occurs with a subsidiary or affiliate of POPT and (ii) the Internalization does not constitute a Change in Control.

 

(b) The term “Change in Control Event” shall mean a Resignation for Good Reason by the Executive occurring within thirty (30) days prior to, or One Hundred Eighty (180) days after a Change in Control.

 

(c) The term “Company” means POMI.

 

(d) The term “Date of Termination” means the date upon which the Executive’s employment with the Company ceases, as specified in a notice of termination pursuant to Section 9 hereof, or if termination of employment is due to the Executive’s death, such date of death.

 

(e) The term “Disability” refers to the Executive’s inability, as a result of physical, mental or psychological incapacity or impairment, to substantially perform his duties for a period of either six (6) consecutive months or one hundred fifty (150) business days within a twelve (12) consecutive month period.

 

(f) The term “Resignation for Good Reason” means termination of employment by the Executive upon the occurrence of any one or more of the following events, absent the Executive’s prior written consent to such event:  (i) the removal of the Executive from, or the failure to re-elect the Executive to, or the requirement to share with another person, the office of President and Chief Executive Officer of the Company or POPT, (ii) the Company’s assignment of duties, responsibilities or reporting requirements that are materially inconsistent with the Executive’s position or that materially expand his duties, responsibilities or reporting requirements, (iii) a material reduction in the Company Salary or the Annual Performance Bonus opportunities, (iv) a material breach of this Agreement by the Company, (v) a change in the Executive’s work location to a new location that is more than fifty (50) miles from the current corporate office where the Executive works, or (vi) the Company’s intentional direction of the Executive to engage in unlawful conduct notwithstanding the Executive’s timely objection; provided, however, that in order for the Executive to terminate his employment for Good Reason pursuant to this Agreement, the Executive must give the Company written notice of the existence of any condition set forth above within ninety (90) days of such initial existence and the Company shall have thirty (30) days from the date of such notice in which to cure such condition, if curable.  If, during such thirty (30) day period, the Company cures the condition giving rise to grounds for Resignation for Good Reason, no benefits shall be due under Section 7(a) of this Agreement with respect to such occurrence.  If, during such thirty (30) day period, the Company fails or refuses to cure the condition giving rise to such grounds for Resignation for Good Reason, the Executive shall be entitled to benefits under Section 7(a) of this Agreement upon such termination.  The date of Resignation for Good Reason shall be the thirtieth (30th) day after the date that the Executive gave notice of the existence of a condition that constitutes Resignation for Good Reason under this section, if it has not been cured.

 

 

  

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(g) [Intentionally omitted]

 

(h) The term “Involuntary Termination” means the termination of the employment of the Executive (i) by the Company that is not a Termination for Cause; or (ii) by Resignation for Good Reason.

 

(i) The term “Pro Rata Bonus” means a payment equal to the most recently paid Annual Performance Bonus pro rated on a per diem basis (the number of days employed during the applicable calendar year divided by 365).

 

(j) The terms “Termination for Cause” and “Terminated For Cause” mean termination of the employment of the Executive with the Company and POPT because of (i) the Executive’s willful or repeated failure to perform or substantially perform his reasonable and customary duties under this Agreement, or the Executive’s material breach of his reasonable and customary obligations under this Agreement, including the restrictive covenants included herein, which failure or refusal is not cured, if curable, within thirty (30) days after written notice thereof is given to the Executive, (ii) habitual substance abuse by the Executive, (iii) the Executive’s commission of an act that disqualifies him (under any applicable Company document or law) from serving as an officer or director of either the Company or POPT, (iv) the Executive’s conviction of, or entry of a plea of guilty or nolo contendere with respect to, a felony crime or a crime involving fraud, forgery, embezzlement, or moral turpitude, or (v) it is determined by the Board of Directors, after providing the Executive with specific charges and an opportunity to respond thereto, that the Executive has committed serious misconduct through conducting himself in an unethical, illegal or fraudulent manner, such as theft or misappropriation of Company’s assets or engaging in unlawful discriminatory or harassing conduct.

 

(k) The term “Voluntary Termination” shall mean termination of employment by the Executive voluntarily as set forth in Section 7(c) of this Agreement.

 

2. Term.  The term of this Agreement shall be a period commencing on the Effective Date and ending on March 29, 2012 (the “Term”), subject to earlier termination as provided herein.

 

3. Employment; Directorships.  The Executive is hereby employed as the President and Chief Executive Officer of POMI, reporting to POMI’s board of directors and is hereby appointed as President and Chief Executive Officer of POPT, reporting to POPT’s board of directors (the “Board”). The Executive shall be slated for election to a three-year term as a Class II director of the Board at POPT’s annual meeting of stockholders in May 2010.  The Executive shall also render services to any subsidiary or subsidiaries of POPT as requested by the Company from time to time consistent with his executive position and experience and with the terms of this Agreement.  The Company shall provide the Executive with an office and administrative support commensurate with its other senior executives.  The Executive shall devote his best efforts and full time and attention to the business and affairs of the Company and its subsidiaries to the extent necessary to discharge his responsibilities hereunder.

 

 

  

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4. Compensation.

 

(a) Base Salary.  The Company agrees to pay the Executive during the Term a base salary (the “Company Salary”), the annualized amount of which shall be $375,000.  The Company Salary may be adjusted upwards annually based on the Executive’s performance after review by the Board Compensation Committee (the “Committee”).  The Company Salary shall be paid pursuant to the normal payroll practices of the Company and shall be subject to customary tax withholding.  If and to the extent that any other entities directly or indirectly controlled by the Company or POPT pay salary or other amounts or provide benefits to the Executive that the Company is otherwise obligated to pay or to provide to the Executive under this Agreement, the Company’s obligations to the Executive shall be reduced accordingly on a dollar for dollar basis.  Any amounts paid by any entity other than the Company shall be subject to all customary tax withholdings at that entity level.

 

(b) Annual Performance Bonus.

 

(i) Prior to or within sixty (60) days of the beginning of each calendar year during the Term (each a “Performance Period”), the Board’s Compensation Committee (the “Committee”) and the Executive shall agree on the objective performance criteria dashboard (with respect to the Executive and POPT) that will serve as the basis for determining an annual performance cash bonus (the “Annual Performance Bonus”).  The Executive shall have the opportunity to earn a maximum Annual Performance Bonus equal to 100% of the Company Salary; provided, that, with respect to Performance Period ending on December 31, 2011, the Executive shall be guaranteed an Annual Performance Bonus of not less than $375,000.  The Annual Performance Bonus earned by the Executive for any Performance Period shall be paid within sixty (60) days after the end of the applicable Performance Period, provided the Executive is employed on the last day of such Performance Period, except as provided in Sections 7(a) and (d) below.

 

(c) Termination of Employment.  With respect to any equity awards granted pursuant to this Agreement to the Executive, the Executive shall become fully and immediately vested in such awards in the event of a termination of employment pursuant to Sections 7(a) or 7(d) below.  Upon a Termination for Cause or a Voluntary Termination pursuant to Sections 7(b) or 7(c), respectively, all unvested equity awards shall be immediately forfeited and cancelled and the Executive shall have no right to any benefit in lieu thereof.  Any acceleration of vesting contemplated by this Section 4(c) shall be conditioned upon the Executive executing, and not revoking, a Release (as required pursuant to Section 7(a) below).

 

(d) Change in Control.  With respect to any equity awards granted to the Executive pursuant to this Agreement, the Executive shall become fully and immediately vested in such awards in the event of a Change in Control.

 

(e) Expenses.  The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services under this Agreement in accordance with the policies and procedures applicable to the executive officers of the Company, provided that the Executive accounts for such expenses as required under such policies and procedures.

 

 

  

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5. Benefits.

 

(a) Participation in Benefit Plans.  While the Executive is employed by the Company, the Executive shall be entitled to participate to the same extent as executive officers of the Company generally, in all plans, programs and practices of the Company relating to pension, retirement, profit-sharing, savings, group or other life insurance, hospitalization, medical and dental coverage, travel and accident insurance, education, or other employee benefits or combination thereof as they may be in effect from time to time; provided, that nothing herein shall require the creation of such plans or programs by the Company.

 

(b) Fringe Benefits.  While the Executive is employed by the Company, the Executive shall be eligible to participate in, and receive benefits under, any other fringe benefit plans, programs and practices or perquisites which are or may become generally available to the Company’s similarly situated executive officers as they may be in effect from time to time.

 

(c) Auto Allowance.  The Executive shall receive a monthly automobile allowance in the amount of $1,500.

 

6. Vacations.  The Executive shall be entitled to accrue twenty (20) days of annual vacation at full pay, subject to the applicable vacation policies of the Company; provided, however, that the maximum amount of vacation that the Executive may accrue shall be subject to a “reasonable” cap permissible under California law.

 

7. Termination of Employment.

 

(a) Involuntary Termination.  If the Executive experiences an Involuntary Termination prior to the end of the Term or his employment terminates due to a Change in Control Event, such termination of employment shall be subject to the Company’s obligations under this Section 7(a).  If such Involuntary Termination or Change in Control Event occurs, the Company shall:

 

(i) pay to the Executive or the Executive’s beneficiary a cash payment equal to $375,000 (the “Severance Payment”);

 

(ii) continue medical and dental benefits at active employee rates for a period of twelve (12) months following the Date of Termination;

 

(iii) accelerate the vesting of any outstanding equity awards if so provided pursuant to the terms of such awards or as provided herein; and

 

(iv) pay to the Executive a Pro Rata Bonus, if any.

 

(v) In addition to the foregoing, in connection with an Involuntary Termination or Change in Control Event, the Executive shall be entitled to receive (A) any accrued but unpaid Company Salary and any accrued but unused vacation through the Date of Termination, (B) reimbursement of any expenses incurred through the Date of Termination in accordance with Section 4(e), and (C) all vested benefits and amounts under any plan, program or arrangement, the payment and other rights with respect to which shall be governed by the terms thereof (the benefits listed in this subparagraph collectively, the “Accrued Compensation”).

 

 

  

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Except as may be provided by Section 22(b), if applicable, the Severance Payment and Pro Rata Bonus provided herein, shall be paid in a single lump sum on the sixtieth (60th) day following the Date of Termination provided that the Executive executes, and does not revoke, a release and waiver, in the form attached hereto as Exhibit A (the “Release”), prior to such sixtieth (60th) day.  If the Release has not become irrevocable on or before such sixtieth (60th) day, the Executive shall forfeit any right to the Severance Payment and the benefits set forth in subparagraphs (ii) and (iii) above.  If the Executive should die after amounts become payable under this Section 7(a), such amounts shall thereafter be paid to the Executive’s estate.

 

(b) Termination for Cause.  In the event of Termination for Cause, the Company shall have no further obligation to the Executive under this Agreement after the Date of Termination except for any unpaid Accrued Compensation.

 

(c) Voluntary Termination.  The Executive may terminate his employment voluntarily at any time by a notice pursuant to Section 9 of this Agreement.  In the event that the Executive voluntarily terminates his employment other than pursuant to a Resignation for Good Reason or Change in Control Event (“Voluntary Termination”), the Company shall only be obligated to the Executive for the amount of any unpaid Accrued Compensation, awarded, but unpaid, Annual Performance Bonuses for previously completed Performance Periods, and the Company shall have no further obligation to the Executive under this Agreement.

 

(d) Death or Disability.  In the event of the death or Disability of the Executive during the Term and prior to any termination of employment, the Company shall pay to the Executive or his estate (i) the Accrued Compensation, (ii) any benefits payable on death or Disability, as applicable, under applicable benefit plans, (iii) accelerated vesting of any outstanding equity awards if so provided pursuant to the terms of such awards, and (iv) a Pro Rata Bonus, if any.  Following such payment, the Company shall have no further obligation to the Executive, or his beneficiaries under this Agreement.

 

(e) No Other Obligation to Mitigate Damages.  The Executive shall not be obligated to mitigate amounts payable or arrangements made under the provisions of this Section 7 and the obtaining of other employment shall in no event effect any reduction of the Company’s obligations under this Section 7.

 

(f) Effect of Termination.  If as of the Date of Termination, the Executive holds any position POMI and/or POPT, including any board positions, the Executive shall resign from all such positions as of the Date of Termination.

 

8. Section 280G Limitation.  If the value of any payment or other benefit the Executive would receive from the Company or otherwise in connection with a Change in Control or Change in Control Event (the “Benefit”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Benefit shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either:

 

 

  

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(i)           the largest portion of the Benefit that would result in no portion of the Benefit being subject to the Excise Tax; or

 

(ii)           the largest portion, up to and including the total, of the Benefit,

 

whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Benefit notwithstanding that all or some portion of the Benefit may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Benefit equals the Reduced Amount, reduction shall occur in the following order unless the Executive elects in writing a different order (provided, however, that such election shall be subject to the Company’s approval if made on or after the date on which the event that triggers the Benefit occurs):  reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits.  In the event that acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Executive’s stock awards unless the Executive elects in writing a different order for cancellation.

 

The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control or Change in Control Event, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.

 

The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Executive and the Company within fifteen (15) calendar days after the date on which the Executive’s right to a Benefit is triggered (if requested at that time by the Executive or the Company) or such other time as requested by the Executive or the Company.  If the accounting firm determines that no Excise Tax is payable with respect to a Benefit, it shall furnish the Executive and the Company with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to such Benefit.  Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Executive and the Company, except as set forth below.

 

If, notwithstanding any reduction described in this Section 8, the Internal Revenue Service (the “IRS”) determines that the Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then the Executive shall be obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in the event that the Executive challenges the final IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment Amount.”  The Repayment Amount with respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to the Company so that the Executive’s net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized.  The Repayment Amount with respect to the payment of benefits shall be zero if a Repayment Amount of more than zero would not result in the Executive’s net after-tax proceeds with respect to the payment of such benefits being maximized.  If the Excise Tax is not eliminated pursuant to this paragraph, the Executive shall pay the Excise Tax.

 

 

  

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Notwithstanding any other provision of this Section 8, if (i) there is a reduction in the payment of benefits as described in this Section, (ii) the IRS later determines that the Executive is liable for the Excise Tax, the payment of which would result in the maximization of the Executive’s net after-tax proceeds (calculated as if the Executive’s benefits had not previously been reduced), and (iii) the Executive pays the Excise Tax, then the Company shall pay to the Executive those benefits which were reduced pursuant to this Section contemporaneously or as soon as administratively possible after the Executive pays the Excise Tax so that the Executive’s net after-tax proceeds with respect to the payment of benefits is maximized.

 

9. Notice of Termination.  In the event that the Company, POPT or both, desire to terminate the employment of the Executive during the term of this Agreement, the Company or POPT shall deliver to the Executive a written notice of termination, stating whether such termination constitutes Termination for Cause, termination by the Company that is not a Termination for Cause, or termination due to the Executive’s Disability, setting forth in reasonable detail the facts and circumstances that are the basis for the termination, and specifying the date upon which employment shall terminate, which date shall be at least thirty (30) days after the date upon which the notice is delivered, except in the case of Termination for Cause.  In the event that the Executive determines in good faith that he has experienced circumstances that give rise to his right to a Resignation for Good Reason, he shall send a written notice to the Company stating the circumstances that constitute such good reason.  In the event that the Executive desires to affect a Voluntary Termination, he shall deliver a written notice to the Company, stating the date upon which employment shall terminate, which date shall be at least ninety (90) days after the date upon which the notice is delivered, unless the parties agree to a date sooner.  If the Executive gives written notice of Resignation for Good Reason pursuant to Paragraph 1(f) and the Company does not cure the condition giving rise to grounds for Resignation for Good Reason within thirty (30) days of that notice, the Executive’s employment shall terminate on the thirtieth (30th) date after the written notice he provided to the Company.

 

10. Restrictive Covenants.

 

(a) Confidentiality.  The Executive acknowledges that, during the course of his employment with the Company, the Executive may produce and have access to confidential and/or proprietary non-public information concerning POMI and/or POPT, including marketing materials, customers lists, records, data, trade secrets, proprietary business information, proposed transaction, possible acquisitions, pricing lists and policies, strategic planning, commitments, plans, procedures, litigation, pending litigation and other information not generally available to the public (collectively, “Confidential Information”).  The Executive agrees not to directly or indirectly use, disclose, copy or make lists of Confidential Information for the benefit of anyone other than the Company, either during or after his employment with the Company, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing by the Company, required by law or any competent administrative agency or judicial authority, or otherwise as reasonably necessary or appropriate in connection with performance by the Executive of his duties hereunder.  Confidential Information does not include any information which (1) The Executive was aware of or was in the Executive’s possession prior to becoming an employee of the Company, (2) is or becomes generally available to the public by acts other than those of the Executive after receiving it, or (3) has been received lawfully and in good faith by the Executive from a third party including, but not limited to OP, POP Venture, LLC, Shidler Hawaii Investment Partners, LLC, Shidler West Investment Partners, LP, Shidler Investment Corporation, and each of their affiliates (including, without limitation, each of their subsidiaries).  The Executive agrees that, if he receives a subpoena or other court order or is otherwise required by law to provide information to a governmental authority or other person concerning the activities of the Company, or his activities in connection with the business of the Company, the Executive will immediately notify the Company of such subpoena, court order or other requirement and deliver forthwith to the Company a copy thereof and any attachments and non-privileged correspondence related thereto.  The Executive shall take reasonable precautions to protect against the inadvertent disclosure of Confidential Information.  During his employment, the Executive agrees to abide by the Company’s reasonable policies, as in effect from time to time, respecting avoidance of interests conflicting with those of the Company.

 

 

  

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(b) Documents and Property.  All records, files, documents and other materials or copies thereof relating to the business of the Company, which the Executive shall prepare, receive, or use during his employment, shall be and remain the sole property of the Company and, other than in connection with performance by the Executive of his duties hereunder, shall not be removed from the Company premises without the Company’s prior written consent, and shall be promptly returned to the Company upon the Executive’s termination of employment together with all copies (including copies or recordings in electronic form), abstracts, notes or reproductions of any kind made from or about the records, files, documents, or other materials or information they contain.

 

(c) Mutual Non-Disparagement.  The Company and the Executive agree that, at all times following the Date of Termination, they shall use reasonable best efforts to ensure that neither party engages in any vilification of the other, and shall refrain from making any false, negative, critical or disparaging statements, implied or expressed, concerning the other, including, but not limited to, management style, methods of doing business, the quality of products and services, role in the community, or treatment of employees.  The parties further agree to do nothing that would damage the other’s business reputation or good will; provided, however, that nothing in this Agreement shall prohibit either party’s disclosure of information which is required to be disclosed in compliance with applicable laws or regulations or by order of a court or other regulatory body of competent jurisdiction.  The Executive acknowledges that the only persons whose statements may be attributed to the Company for purposes of this Agreement, other than his own, shall be the members of the Board and the POPT Board.

 

(d) Non-Solicitation.  The Executive hereby agrees that in the event his employment is Terminated For Cause or the Executive affects a Voluntary Termination, except with the express prior written consent of the Company, for a period of one (1) year following the Date of Termination, either during or following the Term, for any reason, he will not directly, or indirectly, in any manner solicit or induce, or attempt to solicit or induce, any employee of POMI or POPT to terminate employment and become employed by any company listed as a publicly traded office REIT or publicly traded Real Estate Operating Company in the Realty Stock Review, a Dow Jones & Co. Publication, (a “Peer Group Member”) as of the date of termination.

 

 

  

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(e) Remedies for Breach.  The Executive has reviewed the provisions of this Agreement with legal counsel and the Executive acknowledges and expressly agrees that the covenants contained in this Section 10 are reasonable with respect to their duration, geographical area and scope.  The Executive further acknowledges that the restrictions contained in Section 10 of this Agreement are reasonable and necessary for the protection of the legitimate business interests of the Company, that they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company and interests, that the Company would not have agreed to employ the Executive without receiving the Executive’s agreement to be bound by these restrictions and that such restrictions were a material inducement to the Company to hire the Executive.  In the event of any violation or threatened violation of these restrictions, the Company, in addition to and not in limitation of, any other rights, remedies or damages available to the Company under this Agreement or otherwise at law or in equity, shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by the Executive and any and all persons directly or indirectly acting for or with him, as the case may be.

 

11. No Assignments.

 

(a) This Agreement is personal to each of the parties hereto, and neither may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other party; provided, however, that the Company may assign any of its rights or obligations hereunder to an affiliate of the Company or POPT without the consent of the Executive, and provided, further, that this Agreement shall be binding upon and inure to the benefit of any successor of the Company and the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such an assumption prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation and benefits from the Company in the same amount and on the same terms as provided in Section 7(a).  For purposes of implementing the provisions of this Section 11, the date on which any such succession becomes effective shall be deemed the Date of Termination.

 

(b) This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

 

12. Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or five (5) days after the date that sent by certified mail, return receipt requested, postage prepaid, to the Company at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Company, or, if to the Executive, to such home or other address as the Executive has most recently provided in writing to the Company.

 

 

  

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13. Amendments.  No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties.

 

14. Partial Invalidity.  The various covenants and provisions of this Agreement are intended to be severable and to constitute independent and distinct binding obligations.  If any covenant or provision of this Agreement is determined to be void and unenforceable, in whole or in part, it shall not be deemed to affect or impair the validity of any other covenant or provision or part thereof, and such covenant or provision or part thereof shall be deemed modified to the extent required to permit enforcement.  Without limiting the generality of the foregoing, if the scope of any covenant contained in this Agreement is too broad to permit enforcement to its full extent, such covenant shall be enforced to the maximum extent permitted by law, and the Executive hereby agrees that such scope may be judicially modified accordingly.

 

15. Governing Law.  All questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be governed by the internal laws of the State of California applicable to agreements made and wholly to be performed in such state without regard to conflicts of laws.

 

16. Mandatory Arbitration.  Except as provided in Section 10(e) above, any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by JAMS/Endispute in San Diego, California in accordance with the then existing JAMS/Endispute Arbitration Rules and Procedures for Employment Disputes.  In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral arbitrator from among the JAMS/Endispute panel of arbitrators.  In the event the Executive and the Company cannot agree on an arbitrator, the Administrator of JAMS/Endispute will appoint an arbitrator.  Neither the Executive nor the Company nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties, except by the Company to the extent such disclosures are required pursuant to the securities laws, if applicable, or as otherwise required by law.  Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings.  The arbitrator shall be required to abide by the provisions of this Agreement and the arbitrator shall not modify or alter same.  Such arbitration shall be conducted under a “baseball arbitration” format, pursuant to which the arbitrator shall be required to adopt the position of one of the parties, and not any compromise position.  The Company shall be responsible for the arbitrator’s fees and costs.  Except as provided by statute, each party shall be responsible for its own attorneys’ fees.  The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the State of California, or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law.  The arbitrator shall be required by abide by the provisions of this Agreement and the arbitrator shall not modify or alter same.  The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.  The arbitrator shall render an award and a written, reasoned opinion in support thereof.  Judgment upon the award may be entered in any court having jurisdiction thereof.  Nothing herein contained shall preclude either party from seeking equitable or injunctive relief from a court of competent jurisdiction in order to prevent, terminate or reduce the likelihood of the infliction of irreparable harm on the petitioning party.  Nothing in this Agreement shall be construed as precluding Executive from filing a claim for workers’ compensation or unemployment compensation benefits.

 

 

  

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17. Third Party Beneficiaries.  It is the intent of the parties hereto that POPT and all of its subsidiaries and affiliates are expressly intended to be third party beneficiaries of the provisions of Section 10 and shall have the rights provided herein to enforce such provisions.

 

18. Guaranty.  In order to induce Executive to enter into this Agreement, POPT and OP hereby unconditionally and irrevocably guarantee to Executive and Executive’s heirs that it will cause the Company to perform each and all of its obligations under this Agreement in accordance with the terms hereof.

 

19. Indemnification; Insurance.

 

(a) Insurance.  The Company and POPT agree to provide, continue and maintain, at the Company’s expense, a directors’ and officers’ liability insurance policy covering the Executive (including his heirs, personal representatives, executors and administrators) both during the Term and, while potential liability exists, after the Term throughout all applicable limitations periods, that is consistent with standard industry practices for executive employees, directors and senior officers.

 

(b) Indemnification.  During the Term and thereafter, the Company and POPT agree to indemnify and hold the Executive (and his heirs, personal representatives, executors and administrators) harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses, including, but not limited to, judgments, court costs and the cost of reasonable settlements, and expenses (including reasonable attorneys’ fees), as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive by reason of his having been or his providing service as an officer, director or employee, as the case may be, of the Company or POPT, or the Executive’s service in any such capacity or similar capacity with an affiliate of the Company, POPT or any other entity at the request of the Company both prior to and after the Effective Date.

 

(c) Advance of Expenses.  In the event the Executive becomes a party, or is threatened to be made a party, to any action, suit or proceeding for which the Company or POPT has agreed to provide insurance coverage or indemnification under this Section 19, the Company or POPT, as the case may be, shall, to the maximum extent permitted by law, advance all expenses (including the reasonable attorneys’ fees of the attorneys selected by the advancing party and approved by the Executive for the representation of the Executive), judgments, fines and amounts paid in settlement (collectively “Expenses”) incurred by the Executive in connection with the investigation, defense, settlement, or appeal of any threatened, pending or completed action, suit or proceeding, subject to receipt by the advancing party of a written undertaking from the Executive covenanting:  (i) to reimburse the advancing party for all Expenses actually paid by the advancing party to or on behalf of the Executive in the event it shall be ultimately determined that the Executive is not entitled to indemnification by the advancing party for such Expenses; and (ii) to assign to the advancing party all rights of the Executive to insurance proceeds, under any policy of directors’ and officers’ liability insurance or otherwise, to the extent of the amount of Expenses actually paid by the advancing party to or on behalf of the Executive.

 

 

  

12

  

 

(d) Procedure.  If a claim under Section 19(b) is not paid in full by the Company or POPT within sixty (60) days after a written claim has been received by the Company or POPT, as the case may be, except in the case of a claim for an advancement of expenses under Section 19(c), in which case the applicable period shall be thirty (30) days, the Executive may initiate an action pursuant to Article VII, Section 7.02 of the Pacific Office Properties Trust, Inc. Amended and Restated Bylaws, (the “Procedure”).  The Procedure is incorporated herein by this reference.

 

20. Cooperation.  The Executive shall cooperate with the Company or POPT, to the extent reasonably requested by the Company, in any investigation or litigation in which the Company or POPT is a party and of which the Executive has relevant information by virtue of his employment with the Company or POPT.  The Company shall reimburse the Executive for reasonable expenses related to such cooperation.

 

21. Successors to Code Sections.  All provisions of this Agreement referring to sections of the U.S.C. (United State Code) or to the Code shall be deemed to refer to successor code sections in the event of renumbering of code sections.

 

22. Code Section 409A.

 

(a) General.  It is intended that this Agreement shall comply with the provisions of Code Section 409A and the Treasury regulations relating thereto so as not to subject the Executive to the payment of additional taxes and interest under Code Section 409A.  In furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions, and to the extent that any regulations or other guidance issued under Code Section 409A would result in the Executive being subject to payment of additional income taxes or interest under Code Section 409A, the parties agree to amend this Agreement to maintain to the maximum extent practicable the original intent of this Agreement while avoiding the application of such taxes or interest under Code Section 409A.

 

(b) Payments.  Notwithstanding any provision in this Agreement to the contrary if, as of the effective date of the Executive’s termination of employment, he is a “Specified Employee,” then, to the extent required pursuant to Section 409A(a)(2)(B)(i), payments due under Section 7, shall be subject to a six (6) month delay such that amounts otherwise payable during the six (6) month period following the Executive’s separation from service shall be accumulated and paid in a lump-sum catch-up payment as of the first day of the seventh (7th) month following separation from service (or, if earlier, the date of death of the Executive).  Any portion of the benefits hereunder that were not otherwise due to be paid during the six (6) month period following the termination shall be paid to the Executive in accordance with the payment schedule established herein.

 

(c) Definitions.  “Specified Employee” shall mean any person who is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company based upon the twelve (12) month period ending on each December 31st (such twelve (12) month period is referred to below as the “identification period”).  If the Executive is determined to be key employee under Code Section 416(i) (without regard to paragraph (5) thereof) during the identification period he shall be treated as Specified Employees for purposes of this Agreement during the twelve (12) month period that begins on the April 1st following the close of such identification period.  For purposes of determining whether the Executive is individual is a key employee under Code Section 416(i), “compensation” shall mean the Executive’s W-2 compensation as reported by the Company for a particular calendar year.

 

 

  

13

  

 

23. No Conflicting Agreement.  The Executive hereby certifies that he is not subject to any existing non-competition or other restrictive agreements or arrangements, written or oral, that in any way prohibit or constrain his acceptance of and/or performance of duties pursuant to this Agreement, or that in any manner circumscribe the scope of activities or other business that he is entitled to pursue and consummate on behalf of the Company.  Without limitation of its other rights and remedies, the Company shall be entitled to terminate this Agreement, with such termination being treated as a termination for Cause, in the event that the Executive is precluded, enjoined or inhibited from fully performing his duties under this Agreement, or if a colorable threat of the above (determined in good faith by the Board) and/or legal action against POPT and/or any of its subsidiaries or affiliates is asserted by any party on the basis of a purportedly existing restrictive agreement or arrangement.

 

24. Entire Agreement.  This Agreement supersedes all prior agreements and understandings between the parties relating to the subject matter of this Agreement.  It binds and benefits the parties and their successors in interest, heirs, beneficiaries, legal representatives and assigns.

 

25. Survival.  The provisions of Section 7(f) and Section 10 shall survive the termination of this Agreement for any reason.

 

26. Counterparts.  This Agreement may be signed in several counterparts, each of which will be an original and all of which will constitute one agreement.

 

27. Construction.  In this Agreement, unless otherwise stated or the context otherwise requires, the following uses apply:  (a) “including” means “including, but not limited to;” (b) all references to sections are to sections in this Agreement unless otherwise specified; (c) all words used in this Agreement will be construed to be of such gender or number as the circumstances and context require; (d) the captions and headings of sections appearing in this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions; and (e) any reference to a document or set of documents in this Agreement, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof.

 

28. Withholding of Taxes.  The Company may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as may be required pursuant to any law, governmental regulation or ruling.

 

29. Counsel; Ambiguity.  Each party acknowledges that it has had the opportunity to be represented by counsel in connection with this Agreement.  Any rule of law or any legal doctrine that would require interpretation of any claimed ambiguities against the party that drafted it has no application and is expressly waived.

 

 

  

14

  

 

30. WAIVER.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY ACKNOWLEDGES THAT SUCH PARTY HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF SUCH PARTY’S OWN FREE WILL AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL, OR HAS HAD ADEQUATE OPPORTUNITY TO SEEK SUCH COUNSEL.  EACH PARTY FURTHER ACKNOWLEDGES THAT (i) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, AND (ii) THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE OTHER PARTIES TO ENTER INTO THIS AGREEMENT.

 

[Remainder of Page Intentionally Left Blank]

 

  

15

  

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

 

	 	PACIFIC OFFICE MANAGEMENT, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Kimberly F. Aquino	 
	 	 	Kimberly F. Aquino	 
	 	 	Secretary	 
	 	 	 	 

 

	 	PACIFIC OFFICE PROPERTIES TRUST, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Jay H. Shidler	 
	 	 	Jay H. Shidler	 
	 	 	Chairman of the Board	 
	 	 	 	 

 

	 	PACIFIC OFFICE PROPERTIES, L.P.	 
	 	 	
 

By:  PACIFIC OFFICE PROPERTIES TRUST, INC.,

    its general partner

 

	 
	
 

	
 

	By: /s/ Jay H. Shidler	 
	 	 	Jay H. Shidler	 
	 	 	Chairman of the Board	 
	 	 	 	 

 

	 	EXECUTIVE	 
	 	 	 
	
 

	/s/ James R. Ingebritsen	 
	 	James R. Ingebritsen	 
	 	 	 
	 	 	 

 

  

16

  

 

 

Exhibit A

 

 

AGREEMENT AND GENERAL RELEASE

 

THIS AGREEMENT AND GENERAL RELEASE (the “Release”) is made and entered into as of this ___ day of [______________, 20   ], by and between [_____________________] (“_____”) and its successors (collectively referred to herein as the “Company”), and James R. Ingebritsen (the “Executive”).

 

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1. Termination of Employment.  The Executive and the Company agree that the Executive's employment with the Company terminated effective _______________.

 

2. Severance Benefits.  In consideration for the promises made in this Release, the Company agrees to pay the Executive the sum of $_________ [to include all cash payments due under Section 7(a) of the Employment Agreement, if applicable], payable on the sixtieth (60th) day following the Date of Termination, after the execution by the Executive (without subsequent revocation) of this Release.  If the Executive elects to continue the Executive’s and/or the Executive’s family’s health insurance under the Company group health program pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company agrees to continue to pay the Company portion (as if Executive were still employed) of the Executive’s health insurance premium plus the COBRA administrative premium for twelve (12) months.  The Executive acknowledges that the severance payment and health insurance benefits are being provided by the Company as consideration for the Executive entering into this Agreement, including the release of claims and waiver of rights provided for in herein.  The Executive acknowledges that the severance payment and health insurance benefits shall be subject to all applicable withholding and reporting requirements.

 

3. General Release.  The Executive, with full understanding of the contents and legal effect of this Release and having the right and opportunity to consult with his counsel, releases and discharges the Company, its shareholders, officers, directors, supervisors, managers, employees, agents, representatives, attorneys, parent companies, divisions, subsidiaries and affiliates, and all related entities of any kind or nature, and its and their predecessors, successors, heirs, executors, administrators, and assigns (collectively, the “Company Released Parties”) from any and all claims, actions, causes of action, grievances, suits, charges, or complaints of any kind or nature whatsoever, that he ever had or now has, whether fixed or contingent, liquidated or unliquidated, known or unknown, suspected or unsuspected, and whether arising in tort, contract, statute, or equity, before any federal, state, local, or private court, agency, arbitrator, mediator, or other entity, regardless of the relief or remedy, arising prior to the execution of this Release.  Without limiting the generality of the foregoing, it being the intention of the parties to make this Release as broad and as general as the law permits, this Release specifically includes any and all subject matters and claims arising from any alleged violation by the Released Parties under the Age Discrimination in Employment Act of 1967, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1866, as amended by the Civil Rights Act of 1991 (42 U.S.C. § 1981); the Rehabilitation Act of 1973, as amended; the Executive Retirement Income Security Act of 1974, as amended; the Hawaii Employment Practices Act, and other similar state or local laws; the Americans with Disabilities Act; the Worker Adjustment and Retraining Notification Act; the Equal Pay Act; Executive Order 11246; Executive Order 11141; and any other statutory claim, employment or other contract or implied contract claim, claim for equity in the Company, or common law claim for wrongful discharge, breach of an implied covenant of good faith and fair dealing, defamation, or invasion of privacy arising out of or involving his employment with the Company, the termination of his employment with the Company, or involving any continuing effects of his employment with the Company or termination of employment with the Company; provided, however, that nothing herein waives or releases the Executive’s rights to any payments or benefits the Company is required to pay or provide pursuant to the terms of this Release.

 

  

A-1

  

THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

 

THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

4. Covenant Not to Sue.  The Executive agrees not to bring, file, charge, claim, sue or cause, assist, or permit to be brought, filed, charged or claimed any action, cause of action, or proceeding regarding or in any way related to any of the claims described in Paragraph 3 hereof, and further agrees that his Release is, will constitute and may be pleaded as, a bar to any such claim, action, cause of action or proceeding.  If any government agency or court assumes jurisdiction of any charge, complaint, or cause of action covered by this Release, the Executive will not seek and will not accept any personal equitable or monetary relief in connection with such investigation, civil action, suit or legal proceeding.

 

5. Severability.  If any provision of this Release shall be found by a court to be invalid or unenforceable, in whole or in part, then such provision shall be construed and/or modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Release, as the case may require, and this Release shall be construed and enforced to the maximum extent permitted by law, as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.  The parties further agree to seek a lawful substitute for any provision found to be unlawful; provided, that, if the parties are unable to agree upon a lawful substitute, the parties desire and request that a court or other authority called upon to decide the enforceability of this Release modify the Release so that, once modified, the Release will be enforceable to the maximum extent permitted by the law in existence at the time of the requested enforcement.

 

 

  

A-2

  

 

6. Non-Disclosure.  The Executive agrees that he will keep the terms and amounts set forth in this Release completely confidential and will not disclose any information concerning this Release's terms and amounts to any person other than his attorney, accountant, tax advisor, or immediate family.

 

7. Representation.  Executive hereby agrees that this release is given knowingly and voluntarily and acknowledges that:

 

(a) this Agreement is written in a manner understood by Executive;

 

(b) this release refers to and waives any and all rights or claims that he may have arising under the Age Discrimination in Employment Act, as amended;

 

(c) Executive has not waived any rights arising after the date of this Agreement;

 

(d) Executive has received valuable consideration in exchange for the release in addition to amounts Executive is already entitled to receive; and

 

(e) Executive has been advised to consult with an attorney prior to executing this Agreement.

 

8. Consideration and Revocation.  Executive is receiving this Agreement on _____________ __, 20____, and Executive shall be given twenty-one (21) days from receipt of this Agreement to consider whether to sign the Release.  Executive agrees that changes or modifications to this Agreement do not restart or otherwise extend the above twenty-one (21) day period.  Moreover, Executive shall have seven (7) days following execution to revoke this Agreement in writing to the Secretary of the Company and the Release shall not take effect until those seven (7) days have ended.

 

9. Amendment.  This Release may not be altered, amended, or modified except in writing signed by both the Executive and the Company.

 

10. Joint Participation.  The parties hereto participated jointly in the negotiation and preparation of this Release, and each party has had the opportunity to obtain the advice of legal counsel and to review and comment upon the Release.  Accordingly, it is agreed that no rule of construction shall apply against any party or in favor of any party.  This Release shall be construed as if the parties jointly prepared this Release, and any uncertainty or ambiguity shall not be interpreted against one party and in favor of the other.

 

11. Binding Effect; Assignment.  This Agreement and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon the parties and their respective successors, heirs, representatives and permitted assigns.  Neither party may assign its respective interests hereunder without the express written consent of the other party.

 

 

  

A-3

  

 

12. Applicable Law.  This Release shall be governed by, and construed in accordance with, the state laws as provided in the Employment Agreement.

 

13. Execution of Release.  This Release may be executed in several counterparts, each of which shall be considered an original, but which when taken together, shall constitute one Release.

 

PLEASE READ THIS AGREEMENT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT.  THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING THOSE UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT, AND OTHER FEDERAL, STATE AND LOCAL LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT.

 

If Executive signs this Agreement less than twenty-one (21) days after he receives it from the Company, he confirms that he does so voluntarily and without any pressure or coercion from anyone at the Company.

 

IN WITNESS WHEREOF, the Executive and the Company have voluntarily signed this Agreement and General Release on the date set forth above.

 

 

	 	[_______________________]	 
	 	 	 	 
	
Date

	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

 

	 	EXECUTIVE	 
	 	 	 	 
	
Date

	
By: 

	 	 
	 	 	James R. Ingebritsen	 
	 	 	 	 
	 	 	 	 

 

 

 

 

  

A-4ex103.htm

AMENDED AND RESTATED ADVISORY AGREEMENT

AMONG

BLUEROCK ENHANCED MULTIFAMILY TRUST, INC.,

 BLUEROCK ENHANCED MULTIFAMILY HOLDINGS, LP,

 AND BLUEROCK ENHANCED MULTIFAMILY ADVISOR, LLC

 

 

	  	  
	
TABLE OF CONTENTS

	
1. Definitions 

	
1 

	
2. Appointment 

	
7 

	
3. Duties of the Advisor 

	
7 

	
4. Authority of Advisor 

	
10 

	
5. Bank Accounts 

	
10 

	
6. Records; Access 

	
11 

	
7. Limitations on Activities 

	
11 

	
8. Relationship with Director 

	
11 

	
9. Fees 

	
11 

	
10. Expenses 

	
13 

	
11. Other Services 

	
14 

	
12. Reimbursement to the Advisor 

	
15 

	
13. Business Combination 

	
15 

	
14. Other Activities of the Advisor 

	
16 

	
15. The Bluerock Name 

	
16 

	
16. Term of Agreement 

	
17 

	
17. Termination by the Parties 

	
17 

	
18. Assignment to an Affiliate 

	
17 

	
19. Payments to and Duties of Advisor Upon Termination 

	
17 

	
20. Indemnification by the Company and the Operating Partnership 

	
18 

	
21. Indemnification by Advisor 

	
19 

	
22. Nonsolicitation 

	
19 

	
23. Notices 

	
19 

	
24. Modification 

	
20 

	
25. Severability 

	
20 

	
26. Construction 

	
20 

	
27. Entire Agreement 

	
20 

	
28. Indulgences, Not Waivers 

	
21 

	
29. Gender 

	
21 

	
30 . Titles Not to Affect Interpretation 

	
21 

	
31. Execution in Counterparts 

	
21 

  

1

  

 

AMENDED AND RESTATED ADVISORY AGREEMENT

     THIS AMENDED AND RESTATED ADVISORY AGREEMENT (this Agreement”), dated as of the __ day of March, 2011 (the Effective Date ”), is entered into by and among Bluerock Enhanced Multifamily Trust, Inc., a Maryland corporation (the Company ”), Bluerock Enhanced Multifamily Holdings, L.P., a Delaware limited partnership (the Operating Partnership ”), and Bluerock Enhanced Multifamily Advisor, LLC, a Delaware limited liability company (the Advisor ”). Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.

W I T N E S S E T H

    WHEREAS, the Company and the Advisor previously entered into that certain Advisory Agreement dated October 15, 2009;

 

    WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments permitted by the terms of Sections 856 through 860 of the Code;

     WHEREAS, the Company is the general partner, and its wholly owned subsidiary, Bluerock REIT Holdings, LLC, is the sole limited partner of the Operating Partnership, and the Company intends to conduct all of its business and make all Investments through the Operating Partnership;

     WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience, sources of information, advice, assistance and certain facilities of the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Directors of the Company, all as provided herein; and

     WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby amend and restate the Advisory Agreement dated October 15, 2009 as follows:

     1. DEFINITIONS. As used in this Agreement, the following terms have the definitions hereinafter indicated:

     Acquisition Expenses. Any and all expenses, exclusive of Acquisition Fees, incurred by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Investments, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums, and the costs of performing due diligence.

     Acquisition Fee. The term Acquisition Fee” shall mean the fees payable to the Advisor pursuant to Section 9(a).

     Advisor. Advisor shall mean Bluerock Enhanced Multifamily Advisor, LLC, a Delaware limited liability company, any successor advisor to the Company, the Operating Partnership or any Person to which Bluerock Enhanced Multifamily Advisor, LLC or any successor advisor subcontracts substantially all of its functions. Notwithstanding the foregoing, a Person hired or retained by Bluerock Enhanced Multifamily Advisor, LLC to perform property management and related services for the Company or the Operating Partnership that is not hired or retained to perform substantially all of the functions of Bluerock Enhanced Multifamily Advisor, LLC with respect to the Company or the Operating Partnership as a whole shall not be deemed to be an Advisor.

     Affiliate or Affiliated. With respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal 

 

  

2

  

 

entity for which such Person acts as an executive officer, director, trustee or general partner.

     Articles of Incorporation. The Articles of Incorporation of the Company, as amended from time to time.

     Asset Management Fee. The term Asset Management Fee” shall mean the fees payable to the Advisor pursuant to Section 9(e).

     Average Invested Assets. For a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Investments before deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of such values at the end of each month during such period.

     Board of Directors or Board. The individuals holding such office, as of any particular time, under the Articles of Incorporation, whether they be the Directors named therein or additional or successor Directors.

     Bylaws. The bylaws of the Company, as amended and as the same are in effect from time to time.

     Cause. With respect to the termination of this Agreement, fraud, criminal conduct, misconduct or negligent breach of fiduciary duty by the Advisor, or a material breach of this Agreement by the Advisor.

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

     Company. Company shall mean Bluerock Enhanced Multifamily Trust, Inc., a Maryland corporation.

     Competitive Real Estate Commission. A real estate or brokerage commission for the purchase or sale of property which is reasonable, customary, and competitive in light of the size, type, and location of the property.

     Contract Sales Price. The total consideration stated in an agreement for the sale of an Investment.

     Dealer Manager. Select Capital Corporation, or such other Person or entity selected by the Board to act as the dealer manager for the Offering.

     Dealer Manager Fee. 2.6% of Gross Proceeds from the sale of Shares in the Primary Offering, payable to the Dealer Manager for serving as the dealer manager of such Offering.

     Director. A member of the Board of Directors of the Company.

     Disposition Fee. The term Disposition Fee” shall mean the fees payable to the Advisor pursuant to Section 9(d).

     Distributions. Any distributions of money or other property by the Company to Stockholders, including distributions that may constitute a return of capital for federal income tax purposes.

     Effective Date. Effective Date shall have the meaning set forth in the preamble.

     Excess Amount. Excess Amount shall have the meaning set forth in Section 12.

     Expense Year. Expense Year shall have the meaning set forth in Section 12.

     Financing Fee. The term Financing Fee” shall mean the fees payable to the Advisor pursuant to Section 9(g).

     FINRA. The Financial Industry Regulatory Authority.

     Funds From Operations. As defined by the National Association of Real Estate Investment Trusts, Funds From Operations means net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures in which the REIT holds an interest.

     GAAP. Generally accepted accounting principles as in effect in the United States of America from time to time.

 

  

3

  

     Gross Proceeds. The aggregate purchase price of all Shares sold for the account of the Company through all Offerings, without deduction for any Organization and Offering Expenses or volume discounts. For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced Selling Commissions are paid to the Dealer Manager or a Participating Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full amount of the offering price per Share pursuant to the Prospectus for such Offering without reduction.

     Indemnitee. The terms Indemnitee” and Indemnitees” shall have the meaning set forth in Section 20.

     Independent Director. Independent Director shall have the meaning set forth in the Articles of Incorporation.

     Invested Capital. The original issue price paid for the Shares reduced by prior Distributions from the sale or financing of the Investments.

     Investments. Any investments by the Company or the Operating Partnership in Real Estate Assets, Real Estate-Related Loans or any other asset.

     Joint Ventures. The joint venture or partnership arrangements (other than with the Operating Partnership) in which the Company or any of its subsidiaries is a co-venturer or general partner which are established to own Investments.

     Listing. The listing of the Shares on a national securities exchange or the receipt by the Stockholders of cash and/or securities of an issuer that are listed on a national securities exchange in exchange for the Company’s common stock. Upon such Listing, the Shares shall be deemed Listed.”

     Loans. Any indebtedness or obligations in respect of borrowed money or evidenced by bonds, notes, debentures, deeds of trust, letters of credit or similar instruments, including mortgages and mezzanine loans.

     NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association on May 7, 2007, as may be amended from time to time.

     Net Income. For any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Company’s assets.

     Offering. The public offering of Shares pursuant to a Prospectus.

     Operating Partnership. Operating Partnership shall mean Bluerock Enhanced Multifamily Holdings, L.P., a Delaware limited partnership.

     Operating Partnership Agreement. The Operating Partnership Agreement between the Company and Bluerock REIT Holdings, LLC.

     OP Units. Units of limited partnership interest in the Operating Partnership.

     Organization and Offering Expenses. Organization and Offering Expenses means all organization and offering expenses as defined by Rule 2810 promulgated by FINRA to be paid by the Company in connection with the Offering, including: (a) all actual, incurred issuer expenses, as defined by FINRA Rule 2810(b)(4)(C)(i), including legal, accounting, printing, mailing, technology, filing fees, charges of the escrow holder and transfer agent, charges of the Advisor or its Affiliates for administrative services related to the issuance of Shares in the Offering and amounts to reimburse costs in connection with preparing supplemental sales materials and reimbursements for actual costs incurred for travel, meals and lodging by employees of the Advisor and its Affiliates to attend retail seminars hosted by broker-dealers or  bona fide  training and education meetings hosted by the Advisor or its Affiliates; (b) and all items of underwriting compensation as defined by FINRA Rule 2310, including Selling Commissions, the Dealer Manager Fee and (i) amounts used to reimburse FINRA-registered personnel of the Dealer Manager for actual costs incurred for travel, meals and lodging to attend retail seminars sponsored by Participating Dealers; (ii) sponsorship fees for seminars sponsored by Participating Dealers, (iii) amounts used to reimburse FINRA-registered personnel of the Dealer Manager and Participating Dealers for the actual costs incurred for travel, meals and lodging in connection with attending  bona fide  training and education meetings hosted

 

  

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by the Company, the Advisor or its Affiliates, (iv) amounts used to reimburse the Dealer Manager for legal fees and expenses, and (v) customary promotional items, and (c) reimbursement of  bona fide  due diligence expenses to the Dealer Manager or a Participating Dealer that are supported by a detailed and itemized invoice.

     Origination Fee. The term Origination Fee” shall mean the fees payable to the Advisor pursuant to Section 9(b).

     Oversight Fee. The term Oversight Fee” shall mean the fees payable to the Advisor pursuant to Section 9(f).

     Participating Dealers. Securities broker-dealers who are registered with the Securities and Exchange Commission and members of FINRA, or who are exempt from broker-dealer registration, and who, in either case, have executed participating dealer or other agreements with the Dealer Manager to sell Shares.

     Person. An individual, corporation, partnership, trust, joint venture, limited liability company or other entity.

     Primary Offering. The portion of an Offering other than the Shares offered pursuant to the Company’s distribution reinvestment plan.

     Property Management Fee. The term Property Management Fee” shall mean the fees payable to the Advisor pursuant to Section 9(f).

     Prospectus. A Prospectus” under Section 2(10) of the Securities Act, including a preliminary Prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities to the public.

     Real Estate Assets. Any investment by the Company or the Operating Partnership in unimproved and improved Real Property (including, without limitation, fee or leasehold interests, options and leases) either directly or through a Joint Venture.

     Real Estate-Related Loans. Any investments in, or origination of, mortgage loans and other types of real estate-related debt financing, including, without limitation, mezzanine loans, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests and participations in such loans, by the Company or the Operating Partnership.

     Real Property. Real property owned from time to time by the Company or the Operating Partnership, either directly or through joint venture arrangements or other partnerships, which consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only or (iv) such investments the Board and the Advisor mutually designate as Real Property to the extent such investments could be classified as Real Property.

     REIT. A real estate investment trust” under Sections 856 through 860 of the Code.

     Sale or Sales. Any transaction or series of transactions whereby: (A) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property, Loan or other Investment or portion thereof, including the lease of any Real Property consisting of a building only, and including any event with respect to any Real Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture directly or indirectly (except as described in other subsections of this definition) in which the Company or the Operating Partnership as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Real Property or portion thereof, including any event with respect to any Real Property which gives rise to insurance claims or condemnation awards; or (D) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any Real Estate-Related Loans or portion thereof (including with respect to any Real Estate-Related Loan, all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments) and any event which gives rise to a 

 

  

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significant amount of insurance proceeds or similar awards; or (E) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other asset not previously described in this definition or any portion thereof, but not including any transaction or series of transactions specified in clauses (A) through (E) above in which the proceeds of such transaction or series of transactions are reinvested by the Company in one or more assets within 180 days thereafter.

     Securities Act. The Securities Act of 1933, as amended.

     Selling Commission. 7.0% of Gross Proceeds from the sale of Shares in the Primary Offering payable to the Dealer Manager and reallowable to Participating Dealers with respect to Shares sold by them.

     Shares. The shares of the Company’s capital stock, par value $0.01 per share.

     Special Committee. The term Special Committee” shall have the meaning as provided in Section 13(a).

     Sponsor. Sponsor shall mean Bluerock Real Estate, L.L.C, a Delaware limited liability company.

     Stockholders. The registered holders of the Shares.

     Termination Date. The date of termination of this Agreement.

     Total Operating Expenses. All costs and expenses paid or incurred by the Company, as determined under GAAP, that are in any way related to the operation of the Company or its business, including asset management fees and other fees paid to the Advisor, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and Listing, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines, (vi) Acquisition Fees, Origination Fees and Acquisition Expenses and (vii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgages or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property). The definition of Total Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as Total Operating Expenses under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as part of Total Operating Expenses for purposes hereof.

     2%/25% Guidelines. 2%/25% Guidelines shall have the meaning set forth in Section 12.

     2. APPOINTMENT. The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

     3. DUTIES OF THE ADVISOR. As of the Effective Date, the Advisor undertakes to use its best efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. In performance of this undertaking, subject to the supervision of the Board and consistent with the provisions of the Articles of Incorporation and Bylaws of the Company and the Operating Partnership Agreement, the Advisor shall, either directly or by engaging an Affiliate:

     (a) serve as the Company’s and the Operating Partnership’s investment and financial advisor;

     (b) provide the daily management for the Company and the Operating Partnership and perform and supervise the various administrative functions reasonably necessary for the management of the Company and the Operating Partnership;

     (c) investigate, select, and, on behalf of the Company and the Operating Partnership, engage and conduct business with and supervise the performance of such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including, but not limited to, consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, 

 

  

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insurers, insurance agents, banks, builders, developers, property owners, real estate management companies, real estate operating companies, securities investment advisors, mortgagors, registrar and transfer agent and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including, but not limited to, entering into contracts in the name of the Company and the Operating Partnership with any of the foregoing;

     (d) consult with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company or the Operating Partnership;

     (e) subject to the provisions of Section 4 hereof, (i) participate in formulating an investment strategy and asset allocation framework, (ii) locate, analyze and select potential Investments, (iii) structure and negotiate the terms and conditions of transactions pursuant to which acquisitions and dispositions of Investments will be made; (iv) research, identify, review and recommend acquisitions and dispositions of Investments to the Board and make Investments on behalf of the Company and the Operating Partnership in compliance with the investment objectives and policies of the Company; (v) arrange for financing and refinancing and make other changes in the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with, Investments; (vi) enter into leases and service contracts for Real Estate Assets and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Real Estate Assets; (vii) actively oversee and manage Investments for purposes of meeting the Company’s investment objectives and reviewing and analyzing financial information for each of the Investments and the overall portfolio; (viii) select Joint Venture partners, structure corresponding agreements and oversee and monitor these relationships; (ix) oversee, supervise and evaluate Affiliated and non-Affiliated property managers who perform services for the Company or the Operating Partnership; (x) oversee Affiliated and non-Affiliated Persons with whom the Advisor contracts to perform certain of the services required to be performed under this Agreement; (xi) manage accounting and other record-keeping functions for the Company and the Operating Partnership, including reviewing

and analyzing the capital and operating budgets for the Real Estate Assets and generating an annual budget for the Company; (xii) recommend various liquidity events to the Board when appropriate and (xiii) source and structure Real Estate-Related Loans;

     (f) upon request, provide the Board with periodic reports regarding prospective investments;

     (g) make investments in, and dispositions of, Investments within the discretionary limits and authority as granted by the Board;

     (h) negotiate on behalf of the Company and the Operating Partnership with banks or lenders for Loans to be made to the Company and the Operating Partnership, and negotiate on behalf of the Company and the Operating Partnership with investment banking firms and broker-dealers or negotiate private sales of Shares or obtain Loans for the Company and the Operating Partnership, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company or the Operating Partnership;

     (i) obtain reports (which may, but are not required to, be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of Investments or contemplated investments of the Company and the Operating Partnership;

     (j) from time to time, or at any time reasonably requested by the Board, make reports to the Board of its performance of services to the Company and the Operating Partnership under this Agreement, including reports with respect to potential conflicts of interest involving the Advisor or any of its Affiliates;

     (k) provide the Company and the Operating Partnership with all necessary cash management services;

     (l) do all things necessary to assure its ability to render the services described in this Agreement;

     (m) deliver to, or maintain on behalf of, the Company copies of all appraisals obtained in connection with the investments 

 

  

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in any Real Estate Assets as may be required to be obtained by the Board;

 

      (n) notify the Board of all proposed material transactions before they are completed;

      (o) effect any private placement of OP Units, tenancy-in-common (TIC) or other interests in Investments as may be approved by the Board;

      (p) perform investor-relations and Stockholder communications functions for the Company; and

      (q) maintain the Company’s accounting and other records and assist the Company in filing all reports required to be filed by it with the Securities and Exchange Commission, the Internal Revenue Service and other regulatory agencies.

     Notwithstanding the foregoing, the Advisor may delegate any of the foregoing duties to any Person so long as the Advisor or any Affiliate remains responsible for the performance of the duties set forth in this Section 3.

4. AUTHORITY OF ADVISOR.

     (a) Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 7), and subject to the continuing and exclusive authority of the Board over the management of the Company, the Board hereby delegates to the Advisor the authority to perform the services described in Section 3.

     (b) Notwithstanding the foregoing, any investment in Real Estate Assets, including any financing thereof, will require the prior approval of the Board, any particular Directors specified by the Board or any committee of the Board, as the case may be.

     (c) If a transaction requires approval by the Independent Directors, the Advisor will deliver to the Independent Directors all documents and other information required by them to properly evaluate the proposed transaction.

     (d) The prior approval of a majority of the Independent Directors not otherwise interested in the transaction and a majority of the Board not otherwise interested in the transaction will be required for each transaction to which the Advisor or its Affiliates is a party.

     (e) The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Section 4; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company or the Operating Partnership prior to the date of receipt by the Advisor of such notification.

     5. BANK ACCOUNTS. The Advisor may establish and maintain one or more bank accounts in its own name for the account of the Company or the Operating Partnership or in the name of the Company and the Operating Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and to the auditors of the Company.

     6. RECORDS; ACCESS. The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time or from time to time during

normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company and the Operating Partnership.

     7. LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT unless the Board has determined that REIT, qualification is not in the best interests of the Company and its Stockholders, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the 

 

  

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Company or its Shares, or otherwise not be permitted by the Articles of Incorporation or Bylaws of the Company, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its directors, officers, employees and members, and the partners, directors, officers, members and stockholders of the Advisor’s Affiliates shall not be liable to the Company or to the Directors or Stockholders for any act or omission by the Advisor, its directors, officers, employees, or members, and the partners, directors, officers, members or stockholders of the Advisor’s Affiliates taken or omitted to be taken in the performance of their duties under this Agreement except as provided in Section 20 of this Agreement.

     8. RELATIONSHIP WITH DIRECTORS. Subject to Section 7 of this Agreement and to restrictions advisable with respect to the qualification of the Company as a REIT, directors, officers and employees of the Advisor or an Affiliate of the Advisor or any corporate parent of an Affiliate, may serve as a Director and as officers of the Company, except that no director, officer or employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the Company for serving as a Director or officer other than reasonable reimbursement for travel and related expenses incurred in attending meetings of the Board and no such Director shall be deemed an Independent Director for purposes of satisfying the Director independence requirement set forth in the Articles of Incorporation.

      9. FEES.

     (a)Acquisition Fees. The Advisor shall receive an Acquisition Fee payable by the Company as compensation for services rendered in connection with the investigation, selection, sourcing, due diligence and acquisition (by purchase, investment or exchange) of Real Estate Assets or investments. The total Acquisition Fees payable to the Advisor or its Affiliates shall equal 1.75% of the purchase price. The purchase price of an Investment shall equal the amount paid or allocated to the purchase, development, construction or improvement of a property, inclusive of expenses related thereto, and the amount of debt associated with such Real Estate Asset or investment. The purchase price allocable for a joint venture investment shall equal the product of (i) the purchase price in the underlying Real Estate Asset and (ii) the Company’s ownership percentage in the joint venture. For purposes of this section, ownership percentage” shall be the percentage of capital stock (or equivalent indicia of ownership) owned by the Company,

without regard to classification of such capital stock. With respect to investments in and originations of Real Estate-Related Loans, the Company will pay the Advisor an Origination Fee in lieu of the Acquisition Fee. The Advisor shall submit an invoice to the Company following the closing or closings of each Real Estate Asset or Investment, accompanied by a computation of the Acquisition Fee. The Company shall pay the Acquisition Fee promptly following receipt of the invoice.

     (b)Origination Fees. As compensation for the investigation, selection, sourcing, due diligence and acquisition or origination of Real Estate-Related Loans, the Company shall pay an Origination Fee to the Advisor for each such acquisition or origination equal to 1.75% of the greater of (i) the amount funded by the Company to originate the Real Estate-Related Loan or (ii) the purchase price of any Real Estate-Related Loan that the Company acquires, including third-party expenses. The Company will not pay an Acquisition Fee with respect to any such Real Estate-Related Loan. The Company will not pay an Origination Fee to the Advisor with respect to any transaction pursuant to which the Company is required to pay the Advisor an Acquisition Fee. Notwithstanding anything herein to the contrary, the payment of Origination Fees by the Company shall be subject to the limitations on Acquisition Fees contained in the Company’s Articles of Incorporation. The Advisor shall submit an invoice to the Company following the closing or closings of each Real Estate-Related Loan, accompanied by a computation of the Origination Fee. The Company shall pay the Origination Fee to the Advisor promptly following receipt of the invoice.

     (c)Limitation on Total Acquisition Fees, Origination Fees and Acquisition Expenses. Pursuant to the NASAA REIT Guidelines, the total of all Acquisition Fees, Origination Fees and Acquisition Expenses payable in connection with any Investment shall not exceed 6.0% of the contract purchase price,” as defined in the Articles of Incorporation, of the Investment acquired.

     (d)Disposition Fee. In connection with a Sale of an Investment (except for such Investments that are traded on a national securities exchange) in which the Advisor or any Affiliate of the Advisor provides a substantial amount of services, 

 

  

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as determined by the Independent Directors, the Company shall pay to the Advisor or its Affiliate a Disposition Fee equal to the lesser of (i) one-half of a Competitive Real Estate Commission or (ii) 1.5% of the Contract Sales Price of such Investment. Any Disposition Fee payable under this Section 9(d) may be paid in addition to real estate commissions paid to non-Affiliates, provided that the total real estate commissions (including such Disposition Fee) paid to all Persons by the Company for the Sale of each Investment shall not exceed 6.0% of the Contract Sales Price. Substantial assistance in connection with a Sale may include the preparation of an investment package (for example, for a Sale, a package including a new investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report and exhibits) or other such substantial services performed in connection with a Sale.

     (e)Asset Management Fee. The Advisor shall receive the Asset Management Fee as compensation for services rendered in connection with the day-to-day management of the Company’s assets and operations. The Asset Management Fee shall be equal to a monthly fee of one-twelfth of 1%, of the higher of (A) the aggregate cost of each Investment the Company acquires, excluding Acquisition Fees and Acquisition Expenses but including any debt attributable to the asset (including debt encumbering the asset after its acquisition) and the outstanding principal amount of the Real Estate-Related Loans acquired or originated and other Investments, provided that, with respect to any Real Estate Assets developed, constructed or improved by the Company, cost for purposes herein shall include the amount expended by the company for such development, construction or improvement and (B) the fair market value of each Investment (before non-cash reserves, bad debt and depreciation) as determined by an independent valuation report, if available; provided, however, that 50% of the Asset Management Fee payable hereunder will not be paid until Stockholders have received Distributions in an amount equal to at least a 6.0% per annum cumulative, non-compounded return on Invested Capital, at which time all unpaid portions of the Asset Management Fee shall become due and payable). The Asset Management Fee will be based only on the portion of the cost or value attributable to the Company’s investment in an asset if the Company does not own all of an asset. The amount of the Asset Management Fee for each calendar month hereunder shall be calculated as of the last day of such month and shall be prorated for any partial month.

     (f)Property Management Fee. The Advisor or its Affiliate shall receive a Property Management Fee equal to 4.0% of the monthly gross revenues from any Real Property it manages, payable monthly. In the alternative, should the Company contract property management services for certain Real Properties to non-Affiliated third parties, the Advisor shall receive an Oversight Fee equal to 1.0% of monthly gross revenues of such Real Properties so managed.

     (g)Financing Fee. The Advisor shall receive a Financing Fee equal to 1.0% of the amount made available to the Company under any Loan made available to it. The Advisor may reallow some or all of this Financing Fee to reimburse third parties with whom it may subcontract to procure any such Loan.

     (h)Exclusion of Certain Transactions. In the event the Company or the Operating Partnership shall propose to enter into any transaction in which the Advisor, any Affiliate of the Advisor or any of the Advisor’s directors or officers has a direct or indirect interest, then such transaction shall be approved by a majority of the members of the Board not otherwise interested in such transaction, including a majority of the Independent Directors.

10. EXPENSES.

     (a) In addition to the compensation paid to the Advisor pursuant to Section 9 hereof, the Company or the Operating Partnership shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor or its Affiliates in connection with the services it provides to the Company and the Operating Partnership pursuant to this Agreement, including, but not limited to:

     (i) Organization and Offering Expenses other than the Selling Commission and the Dealer Manager Fee; provided, however, that the Company shall not reimburse the Advisor to the extent such reimbursement would cause the total amount of Organization and Offering Expenses paid by the Company and the Operating Partnership to exceed 15.0% of the Gross Proceeds raised as of the date of the reimbursement;

     (ii) Acquisition Expenses incurred in connection with the selection and acquisition of Investments subject to the aggregate 6.0% cap on Acquisition Fees, Origination Fees and Acquisition Expenses set forth in Section 9(c);

 

  

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      (iii) the actual cost of goods and services used by the Company and obtained from entities not affiliated with the Advisor;

 

      (iv) interest and other costs for borrowed money, including discounts, points and other similar fees;

      (v) taxes and assessments on income of the Company or Investments;

      (vi) costs associated with insurance required in connection with the business of the Company or by the Board;

      (vii) expenses of managing and operating Investments owned by the Company, whether payable to an Affiliate of the Company or a non-affiliated Person;

      (viii) all expenses in connection with payments to the Directors for attending meetings of the Board and Stockholders;

      (ix) expenses associated with a Listing, if applicable, or with the issuance and distribution of Shares, such as selling commissions and fees, advertising expenses, taxes, legal and accounting fees, listing and registration fees, and other Organization and Offering Expenses;

      (x) expenses connected with payments of Distributions;

     (xi) expenses of organizing, revising, amending, converting, modifying, or terminating the Company or any subsidiary thereof or the Articles of Incorporation or governing documents of any subsidiary;

     (xii) expenses of maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;

     (xiii) administrative service expenses (including (a) personnel costs; provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Advisor receives Acquisition Fees, Origination Fees or Disposition Fees, and (b) the Company’s allocable share of other overhead of the Advisor such as rent and utilities); and

     (xiv) audit, accounting and legal fees.

     (b) Expenses incurred by the Advisor on behalf of the Company and the Operating Partnership and payable pursuant to this Section 10 shall be reimbursed no less than monthly to the Advisor.

     (c) The Advisor shall prepare a statement documenting the expenses of the Company and the Operating Partnership during each quarter, and shall deliver such statement to the Company and the Operating Partnership within 45 days after the end of each quarter.

     11. OTHER SERVICES. Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company and the Operating Partnership other than set forth in Section 3, such services shall be separately compensated at such rates and in such amounts as are agreed upon by the Advisor and the Board, including a majority of the Independent Directors, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.

     12. REIMBURSEMENT TO THE ADVISOR. The Company shall not reimburse the Advisor at the end of any fiscal quarter in which Total Operating Expenses for the four consecutive fiscal quarters then ended (the Expense Year ”) exceed (the Excess Amount ”) the greater of 2% of Average Invested Assets or 25% of Net Income (the 2%/25% Guidelines ”) for such year. Any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company or, at the option of the Company, subtracted from the Total Operating Expenses reimbursed during the subsequent fiscal quarter. If there is an Excess Amount in any Expense Year and the Independent Directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, then the Excess Amount may be reimbursed to the Advisor at such time as the Advisor, in its sole discretion, requests, provided that there shall be sent to the Stockholders a written disclosure of such determination, together with an explanation of the factors the Independent Directors considered in determining that such excess expenses were justified. Such determination shall be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a 

 

  

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consistent basis.

      13. BUSINESS COMBINATION.

     (a)Business Combination with Advisor. The Company shall consider becoming a self-administered REIT once the Company’s assets and income are, in the view of the Board, of sufficient size such that internalizing the management functions performed by the Advisor is in the best interests of the Company and the Stockholders. If the Board should make this determination in the future, the Company shall pay one-half, and the Advisor shall pay the other one-half, of the cost of an independent investment banking firm, which shall jointly advise the Company and the Advisor on the value of the Advisor. After the investment banking firm completes its analyses, the Company shall require it to prepare a written report and make a formal presentation to the Board. Following the presentation by the investment banking firm, the Board shall form a special committee (the Special Committee ”) comprised entirely of Independent Directors to consider a possible business combination with the Advisor. The Board shall, subject to applicable law, delegate all of its decision-making power and authority to the Special Committee with respect to matters relating to a possible business combination with the Advisor. The Special Committee also shall be authorized to retain its own financial advisors and legal counsel to, among other things, negotiate with representatives of the Advisor regarding a possible business combination with the Advisor.

     (b)Conditions to Completion of Business Combination with Advisor. Before the Company may complete any business combination with the Advisor in accordance with this Section 13, the following conditions shall be satisfied:

         (i) the Special Committee formed in accordance with Section 13(a) hereof receives an opinion from a qualified investment banking firm, separate and distinct from the firm jointly retained by the Company and the Advisor to provide a valuation analysis in accordance with Section 13(a) hereof, concluding that the consideration to be paid to acquire the Advisor is fair to the Stockholders from a financial point of view;

         (ii) the Board determines that such business combination is advisable and in the best interests of the Company and the Stockholders; and

         (iii) such business combination is approved by the Stockholders entitled to vote thereon in accordance with the Company’s Articles of Incorporation and Bylaws.

     14. OTHER ACTIVITIES OF THE ADVISOR. Nothing herein contained shall prevent the Advisor or any of its Affiliates from engaging in or earning fees from other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, member, partner, employee, or stockholder of the Advisor or its Affiliates to engage in or earn fees from any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association and earn fees for rendering such services; provided, however, that the Advisor must devote sufficient resources to the Company’s business to discharge its obligations to the Company under this Agreement. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein, and earn fees for rendering such advice and service. Specifically, it is contemplated that the Company may enter into joint ventures or other similar co-investment arrangements with certain Persons, and pursuant to the agreements governing such joint ventures or arrangements, the Advisor may be engaged to provide advice and service to such Persons, in which case the Advisor will earn fees for rendering such advice and service.

     The Advisor shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association. The Advisor or its Affiliates shall promptly disclose to the Board knowledge of such condition or circumstance. If the Advisor, Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, the Advisor shall inform the Board of the method to be applied by the Advisor in allocating investment opportunities among the Company and competing investment entities and shall provide regular updates to the Board of the investment opportunities provided by the Advisor to competing programs in order for the Board (including the Independent Directors) to fulfill its duty to ensure that the Advisor and its Affiliates use their best efforts 

 

  

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to apply such method fairly to the Company.

     15. THE BLUEROCK NAME. The Advisor and its Affiliates have a proprietary interest in the name Bluerock.” The Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive, royalty-free right and license to use the name Bluerock” during the term of this Agreement. Accordingly, and in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Advisor, cease to conduct business under or use the name Bluerock” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does not contain the name Bluerock” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any its Affiliates. At such time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to the word Bluerock.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service organizations having Bluerock” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.

     16. TERM OF AGREEMENT. This Agreement shall continue in force until October 14, 2011, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties.

     17. TERMINATION BY THE PARTIES. This Agreement may be terminated upon 60 days written notice without Cause and without penalty by the Independent Directors of the Company or the Advisor. The provisions of Sections 18 through 31 of this Agreement survive termination of this Agreement.

     18. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Directors (including a majority of the Independent Directors). The Advisor may assign any rights to receive fees or other payments under this Agreement to any Person without obtaining the approval of the Directors. This Agreement shall not be assigned by the Company or the Operating Partnership without the consent of the Advisor, except in the case of an assignment by the Company or the Operating Partnership to a corporation, limited partnership or other organization which is a successor to all of the assets, rights and obligations of the Company or the Operating Partnership, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company and the Operating Partnership are bound by this Agreement.

      19. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

     (a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company or the Operating Partnership within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.

      (b) The Advisor shall promptly upon termination:

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

 

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

       (iii) deliver to the Board all assets, including all Investments, and documents of the Company and the Operating Partnership then in the custody of the Advisor; and

       (iv) cooperate with the Company and the Operating Partnership to provide an orderly management transition.

     20. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the Operating Partnership shall indemnify and hold harmless the Advisor and its Affiliates, including their respective directors (the Indemnitees ,” and each an Indemnitee ”), from all liability, claims, damages or losses arising in the performance of their 

 

  

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duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, and to the extent that such indemnification would not be inconsistent with the laws of the State of Maryland, the Articles of Incorporation or the provisions of Section II.G of the NASAA REIT Guidelines. Notwithstanding the foregoing, the Company and the Operating Partnership shall not provide for indemnification of an Indemnitee for any loss or liability suffered by such Indemnitee, nor shall they provide that an Indemnitee be held harmless for any loss or liability suffered by the Company and the Operating Partnership, unless all of the following conditions are met:

     (a) the Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interest of the Company and the Operating Partnership;

     (b) the Indemnitee was acting on behalf of, or performing services for, the Company or the Operating Partnership;

     (c) such liability or loss was not the result of negligence or misconduct by the Indemnitee; and

     (d) such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from the Stockholders.

     Notwithstanding the foregoing, an Indemnitee shall not be indemnified by the Company and the Operating Partnership for any losses, liabilities or expenses arising from or out of an alleged violation of federal or state securities laws by such Indemnitee unless one or more of the following conditions are met:

     (a) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the Indemnitee;

 

     (b) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Indemnitee; or

     (c) a court of competent jurisdiction approves a settlement of the claims against the Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company or the Operating Partnership were offered or sold as to indemnification for violation of securities laws.

     In addition, the advancement of the Company’s or the Operating Partnership’s funds to an Indemnitee for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought is permissible only if all of the following conditions are satisfied:

     (a) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company or the Operating Partnership;

     (b) the legal action is initiated by a third party who is not a Stockholder or the legal action is initiated by a Stockholder acting in such Stockholder’s capacity as such and a court of competent jurisdiction specifically approves such advancement; and

     (c) the Indemnitee undertakes to repay the advanced funds to the Company or the Operating Partnership, together with the applicable legal rate of interest thereon, in cases in which such Indemnitee is found not to be entitled to indemnification.

     21. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless the Company and the Operating Partnership from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud, intentional misconduct, gross negligence or reckless disregard of its duties; provided, however, that the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.

     22. NON-SOLICITATION. During the period commencing on the Effective Date and ending one year following the 

 

  

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Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or indirectly (a) solicit or encourage any person to leave the employment or other service of the Advisor or its Affiliates; or (b) hire any person within the one year period following the termination of such person’s employment with the Advisor or its Affiliates. During the period commencing on the date hereof through and ending one year following the Termination Date, the Company will not, whether for its own account or for the account of any other Person, intentionally interfere with the relationship of the Advisor or its Affiliates with, or endeavor to entice away from the Advisor or its Affiliates, any person who during the term of the Agreement is, or during the preceding one-year period, was a tenant, co-investor, co-developer, joint venturer or other customer of the Advisor or its Affiliates.

     23. NOTICES. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand, by facsimile transmission, by courier or overnight carrier or by registered or certified mail to the addresses set forth herein:

	  	  
	
To the Directors and to the Company:

	
Bluerock Enhanced Multifamily Trust, Inc.

 680 Fifth Avenue, 16th Floor

 New York, New York 10019

 Telephone: (212) 843-1601

 Facsimile: (646) 278-4220

 Attention: R. Ramin Kamfar, 

      Chief Executive Officer

	  
	
To the Operating Partnership:

	
Bluerock Enhanced Multifamily Holdings, L.P.

 c/o Bluerock Enhanced Multifamily Trust, Inc.

 680 Fifth Avenue, 16th Floor

 New York, New York 10019

 Telephone: (212) 843-1601

 Facsimile: (646) 278-4220

 Attention: R. Ramin Kamfar, 

      Chief Executive Officer

	  
	
To the Advisor:

	
Bluerock Enhanced Multifamily Advisor, LLC

 680 Fifth Avenue, 16th Floor

 New York, New York 10019

 Telephone: (212) 843-1601

 Facsimile: (646) 278-4220

 Attention: R. Ramin Kamfar, 

      Chief Executive Officer

      Any party may at any time give notice in writing to the other parties of a change in its address for the purposes of this Section 22.

     24. MODIFICATION. This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.

     25. SEVERABILITY. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

     26. CONSTRUCTION. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Maryland.

 

  

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

     28. INDULGENCES, NOT WAIVERS. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

     29. GENDER. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

     30. TITLES NOT TO AFFECT INTERPRETATION. The titles of Sections and Subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

     31. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

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

	  	  	  
	  	
Bluerock Enhanced Multifamily Trust, Inc. 

	  	  
	  	
By: 

	  
	  	
Name: 

	
R. Ramin Kamfar 

	  	
Title: 

	
Chief Executive Officer 

	  	  
	  	
Bluerock Enhanced Multifamily Holdings, L.P. 

	  	  
	  	
By: 

	
Bluerock Enhanced Multifamily Trust, Inc. its 

	  	  	
General Partner 

	  	  
	  	
By: 

	  
	  	
Name:

	
R. Ramin Kamfar 

	  	
Title: 

	
Chief Executive Officer 

	  	  
	  	
Bluerock Enhanced Multifamily Advisor, LLC 

	  	  
	  	
By: 

	
Bluerock Real Estate, L.L.C. 

	  	  
	  	
By: 

	  
	  	
Name: 

	
  R. Ramin Kamfar

	  	
Title: 

	
  Chief Executive Officer

 

 

17

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