SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

BLUEROCK RESIDENTIAL HOLDINGS, L.P.
(a Delaware limited partnership)

TABLE OF CONTENTS

EXHIBITS

EXHIBIT A - Partners, Capital Contributions and Percentage Interests

EXHIBIT B - Notice of Exercise of Common Unit Redemption Right

EXHIBIT C-1 - Certification of Non-Foreign Status (For Redeeming Limited Partners That Are Entities)

EXHIBIT C-2 - Certification of Non-Foreign Status (For Redeeming Limited Partners That Are Individuals)

EXHIBIT D - Notice of Election by Partner to Convert LTIP Units into Common Units

EXHIBIT E - Notice of Election by Partnership to Force Conversion of LTIP Units into Common Units

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

BLUEROCK RESIDENTIAL HOLDINGS, L.P.

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BLUEROCK RESIDENTIAL HOLDINGS, L.P. (the “ Partnership ”), dated as of April 2, 2014, is made and entered into by and among Bluerock Residential Growth REIT, Inc., a Maryland corporation (together with its successors and assigns, the “ General Partner ”), and the Limited Partners set forth on the attached Exhibit A .

RECITALS

WHEREAS , the Partnership was formed as a limited partnership under the laws of the State of Delaware, pursuant to a Certificate of Limited Partnership filed with the Secretary of State of the State of Delaware effective as of August 8, 2008 and an Agreement of Limited Partnership, entered into as of August 8, 2008 (the “ Original Agreement ”), by and between the General Partner and Bluerock Enhanced Multifamily Advisor, LLC, a Delaware limited liability company as the initial limited partner (the “ Initial Limited Partner ”);

WHEREAS , Bluerock REIT Holdings, LLC (“ REIT Holdings ”) was formed to replace the Initial Limited Partner;

WHEREAS , the General Partner and REIT Holdings amended and restated the Original Agreement by entering into that certain Amended and Restated Limited Partnership Agreement of the Partnership dated as of June 2009 (the “ A & R Partnership Agreement ”);

WHEREAS , the Partners desire to amend and restate the A & R Partnership Agreement as set forth below; and

WHEREAS, capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in Article I.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between the parties, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINED TERMS

The following defined terms used in this Agreement shall have the following meanings:

“ Act ” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to time.

“ Additional Funds ” has the meaning set forth in Section 4.03.

“ Additional Securities ” has the meaning set forth in Section 4.02(a)(ii).

“ Adjustment Events ” has the meaning set forth in Section 4.04(a)(i).

“ Administrative Expenses ” means (i) all administrative and operating costs and expenses incurred by the Partnership, (ii) administrative costs and expenses of the General Partner, including any salaries or other payments to directors, officers or employees of the General Partner, and any accounting and legal expenses of the General Partner, which expenses, the Partners have agreed, are expenses of the Partnership and not the General Partner, and (iii) to the extent not included in clauses (i) or (ii), REIT Expenses; provided , however , that Administrative Expenses shall not include any administrative costs and expenses incurred by the General Partner that are attributable to Properties or interests in a Subsidiary that are owned by the General Partner other than through its ownership interest in the Partnership.

“ Affiliate ” means, (i) any Person that, directly or indirectly, controls or is controlled by or is under common control with such Person, (ii) any other Person that owns, beneficially, directly or indirectly, 10% or more of the outstanding capital stock, shares or equity interests of such Person, or (iii) any officer, director, employee, partner, member, manager or trustee of such Person or any Person controlling, controlled by or under common control with such Person (excluding directors and persons serving in similar capacities who are not otherwise an Affiliate of such Person). For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities or partnership interests or otherwise.

“ Agreed Value ” means the fair market value of a Partner’s non-cash Capital Contribution as of the date of contribution as agreed to by such Partner and the General Partner. The names and addresses of the Partners, number of Partnership Units issued to each Partner, and the Agreed Value of non-cash Capital Contributions as of the date of contribution is set forth on Exhibit A , as it may be amended or restated from time to time.

“ Agreement ” means this Second Amended and Restated Agreement of Limited Partnership, as it may be amended, supplemented or restated from time to time.

“ Board of Directors ” means the Board of Directors of the General Partner.

“ Capital Account ” has the meaning provided in Section 4.06.

“ Capital Account Limitation ” has the meaning set forth in Section 4.05(b).

“ Capital Contribution ” means the total amount of cash, cash equivalents, and the Agreed Value of any Property or other asset contributed or agreed to be contributed, as the context requires, to the Partnership by each Partner pursuant to the terms of the Agreement. Any reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Interest of such Partner.

“ Cash Amount ” means an amount of cash per Common Unit equal to the Value of the REIT Shares Amount on the date of receipt by the Partnership and the General Partner of a Notice of Redemption.

“Certificate” means any instrument or document that is required under the laws of the State of Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and sworn to by the Partners of the Partnership (either by themselves or pursuant to the power-of-attorney granted to the General Partner in Section 8.02) and filed for recording in the appropriate public offices within the State of Delaware or such other jurisdiction to perfect or maintain the Partnership as a limited partnership, to effect the admission, withdrawal or substitution of any Partner of the Partnership, or to protect the limited liability of the Limited Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.

“ Change of Control ” means, as to the General Partner, the occurrence of any of the following: (i) the sale, lease or transfer, in one or a series of related transactions, of 80% or more of the assets of the General Partner, taken as a whole, to any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than an Affiliate of the General Partner; or (ii) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than an Affiliate of the General Partner in a single transaction or in a related series of transactions, by way of merger, share exchange, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% of the total voting power of the voting capital securities of the General Partner.

“ Charter ” means the Second Articles of Amendment and Restatement of the General Partner filed on March 26, 2014 with the State Department of Assessments and Taxation of the State of Maryland, as amended, supplemented or restated from time to time.

“ Class A REIT Share ” means one share of the Class A common stock, par value $0.01 per share, of the General Partner (or Successor Entity, as the case may be).

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any particular provision of the Code means that provision in the Code on the date of this Agreement and any successor provision of the Code.

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

“ Common Partnership Unit Distribution ” has the meaning set forth in Section 4.04(a)(ii).

“ Common Redemption Amount ” means either the Cash Amount or the REIT Shares Amount, as selected by the General Partner pursuant to Section 8.04(b).

“ Common Unit ” means a Partnership Unit which is designated as a Common Unit of the Partnership.

“ Common Unit Economic Balance ” has the meaning set forth in Section 5.01(g).

“ Common Unit Redemption Right ” has the meaning provided in Section 8.04(a).

“ Common Unit Transaction ” has the meaning set forth in Section 4.05(f).

“ Constituent Person ” has the meaning set forth in Section 4.05(f).

“ Conversion Date ” has the meaning set forth in Section 4.05(b).

“ Conversion Factor ” means 1.0, provided, however, if the General Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares or (iii) combines its outstanding REIT Shares into a smaller number of REIT Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time), and the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on such date and, provided, however, if an entity other than an Affiliate of the General Partner shall become General Partner pursuant to any merger, consolidation or combination of the General Partner with or into another entity (the “ Successor Entity ”), the Conversion Factor shall be adjusted by multiplying the Conversion Factor by the number of shares of the Successor Entity into which one REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the date of such merger, consolidation or combination. Any adjustment to the Conversion Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event; provided, however, if the General Partner receives a Notice of Redemption after the record date, but before the effective date of such dividend, distribution, subdivision or combination, the Conversion Factor shall be determined as if the General Partner had received the Notice of Redemption immediately before the record date for such dividend, distribution, subdivision or combination. Notwithstanding the foregoing, no adjustment shall be made to the Conversion Factor if the number of outstanding Common Units is otherwise adjusted in the same manner and at the same time as the adjustment to the number of outstanding REIT Shares.

“ Conversion Notice ” has the meaning set forth in Section 4.05(b).

“ Conversion Right ” has the meaning set forth in Section 4.05(a).

“ Defaulting Limited Partner ” means a Limited Partner that has failed to pay any amount owed to the Partnership under a Partnership Loan within 15 days after demand for payment thereof is made by the Partnership.

“ Distributable Amount ” has the meaning set forth in Section 5.02(d).

“ Economic Capital Account Balances ” has the meaning set forth in Section 5.01(g).

“ Equity Incentive Plan ” means any equity incentive or compensation plan hereafter adopted by the Partnership or the General Partner, including, without limitation, the General Partner’s 2014 Equity Incentive Plan for Individuals and 2014 Equity Incentive Plan for Entities.

“ Event of Bankruptcy ” as to any Person means (i) the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978, as amended, or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed within 90 days); (ii) the insolvency or bankruptcy of such Person as finally determined by a court proceeding; (iii) the filing by such Person of a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial part of his assets; or (iv) the commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by such Person or by another, provided, that if such proceeding is commenced by another, such Person indicates his approval of such proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed within 90 days.

“ Excepted Holder Limit ” has the meaning set forth in the Charter.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Forced Conversion ” has the meaning set forth in Section 4.05(c).

“ Forced Conversion Notice ” has the meaning set forth in Section 4.05(c).

“ General Partner ” has the meaning set forth in the first paragraph of this Agreement.

“ General Partner Loan ” means a loan extended by the General Partner to a Defaulting Limited Partner in the form of a payment on a Partnership Loan by the General Partner to the Partnership on behalf of the Defaulting Limited Partner.

“ General Partnership Interest ” means the Partnership Interest held by the General Partner in its capacity as the general partner of the Partnership, which Partnership Interest is an interest as a general partner under the Act. The General Partnership Interest may be expressed as a number of Partnership Units. A number of Common Units held by the General Partner equal to one-tenth of one percent (0.1%) of all outstanding Partnership Units shall be deemed to be the General Partnership Interest. All other Partnership Units owned by the General Partner and any Partnership Units owned by any Affiliate or Subsidiary of the General Partner shall be considered to constitute a Limited Partnership Interest.

“ Indemnified Party ” has the meaning set forth in Section 8.05(e)

“ Indemnifying Party ” has the meaning set forth in Section 8.05(e).

“ Indemnitee ” means (i) any Person made a party to a proceeding by reason of its status as (A) the General Partner or (B) a director of the General Partner or an officer or employee of the Partnership or the General Partner, and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

“ Independent Director ” means a director of the General Partner who meets the NYSE requirements for an independent director as set forth from time to time.

“ Initial Limited Partner ” has the meaning set forth in the Recitals hereto.

“ Initial Redemption Shares ” has the meaning set forth in Section 8.05(a).

“ Initial Registration Statement ” has the meaning set forth in Section 8.05(a).

“ Investment Allocation Agreement ” means that certain Investment Allocation Agreement dated as of April 1, 2014, by and among the General Partner, the Partnership, the Manager and Bluerock Real Estate, L.L.C.

“ Limited Partner ” means any Person named as a Limited Partner on the attached Exhibit A , as it may be amended or restated from time to time, and any Person who becomes a Substitute Limited Partner or any additional Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.

“ Limited Partnership Interest ” means a Partnership Interest held by a Limited Partner at any particular time representing a fractional part of the Partnership Interest of all Limited Partners, and includes any and all benefits to which the holder of such a Limited Partnership Interest may be entitled as provided in this Agreement and in the Act, together with the obligations of such Limited Partner to comply with all the provisions of this Agreement and of such Act. Limited Partnership Interests may be expressed as a number of Common Units, LTIP Units or other Partnership Units.

“ Liquidating Gains ” has the meaning set forth in Section 5.01(g).

“LTIP Unit ” means a Partnership Unit which is designated as an LTIP Unit and which has the rights, preferences and other privileges designated in Section 4.04 and elsewhere in this Agreement in respect of holders of LTIP Units. The allocation of LTIP Units among the Partners shall be set forth on Exhibit A , as it may be amended or restated from time to time.

“ LTIP Unitholder ” means a Partner that holds LTIP Units.

“ Loss ” has the meaning provided in Section 5.01(h).

“ Majority in Interest ” means the Limited Partners holding more than fifty percent (50%) of the Percentage Interests of the Limited Partners.

“ Management Agreement ” means that certain Management Agreement dated as of April 1, 2014 by and among the General Partner, the Partnership and the Manager.

“ Manager ” means BRG Manager, LLC, Delaware limited liability company.

“ Notice of Redemption ” means the Notice of Exercise of Common Unit Redemption Right substantially in the form attached as Exhibit B .

“ NYSE ” means the New York Stock Exchange.

“ Offer ” has the meaning set forth in Section 7.01(c)(ii).

“ Offering ” means the underwritten initial public offering of Class A REIT Shares by the General Partner.

“ Original Agreement ” has the meaning set forth in the Recitals hereto.

“ Partner ” means any General Partner or Limited Partner, and “Partners” means the General Partner and the Limited Partners.

“ Partner Nonrecourse Debt Minimum Gain ” has the meaning set forth in Regulations Section 1.704-2(i). A Partner’s share of Partner Nonrecourse Debt Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(i)(5).

“ Partnership ” has the meaning set forth in the first paragraph of this Agreement.

“ Partnership Interest ” means an ownership interest in the Partnership held by either a Limited Partner or the General Partner, and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Partnership Interest may be expressed as a number of Common Units, LTIP Units or other Partnership Units.

“ Partnership Loan ” means a loan from the Partnership to the Partner on the day the Partnership pays over the excess of the Withheld Amount over the Distributable Amount to a taxing authority.

“ Partnership Minimum Gain ” has the meaning set forth in Regulations Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is determined by first computing, for each Partnership nonrecourse liability, any gain the Partnership would realize if it disposed of the property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains. A Partner’s share of Partnership Minimum Gain shall be determined in accordance with Regulations Section 1.704-2(g)(1).

“ Partnership Record Date ” means the record date established by the General Partner for the distribution of cash pursuant to Section 5.02, which record date shall be the same as the record date established by the General Partner for a distribution to its shareholders of some or its entire portion of such distribution.

“ Partnership Unit ” means a fractional, undivided share of the Partnership Interests of all Partners issued hereunder, and includes Common Units, LTIP Units and any other class or series of Partnership Units that may be established after the date of this Agreement. The number of Partnership Units outstanding and the Percentage Interests represented by such Partnership Units are set forth on Exhibit A , as it may be amended or restated from time to time. The ownership of Partnership Units may be evidenced by a certificate in a form approved by the General Partner.

“ Percentage Interest ” means the percentage determined by dividing the number of Common Units of a Partner by the aggregate number of Common Units of all Partners, treating LTIP Units as Common Units for this purpose in accordance with Section 4.04(a).

“ Person ” means any individual, partnership, corporation, limited liability company, joint venture, trust or other entity.

“ Profit ” has the meaning provided in Section 5.01(h).

“ Property ” means any property or other investment in which the Partnership, directly or indirectly, holds an ownership interest.

“ Redeeming Limited Partner ” has the meaning provided in Section 8.04(a).

“ Redemption Shares ” has the meaning provided in Section 8.05(a).

“ Registration Statement ” has the meaning provided in Section 8.05(a).

“ Regulations ” means the Federal Income Tax Regulations validly issued under the Code, as amended and as hereafter amended from time to time. Reference to any particular provision of the Regulations shall mean that provision of the Regulations on the date of this Agreement and any successor provision of the Regulations.

“ REIT ” means a real estate investment trust under Sections 856 through 860 of the Code.

“ REIT Expenses ” means (i) costs and expenses relating to the formation and continuity of existence and operation of the General Partner and any Subsidiaries thereof (which Subsidiaries shall, for these purposes, be included within the definition of the General Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer or employee of the General Partner, (ii) costs and expenses relating to any public offering and registration, or private offering, of securities by the General Partner, and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling commissions applicable to any such offering of securities, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iii) costs and expenses associated with any repurchase of any securities by the General Partner, (iv) costs and expenses associated with the preparation and filing of any periodic or other reports and communications by the General Partner under federal, state or local laws or regulations, including filings with the Commission, (v) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, including the Commission and any securities exchange, (vi) costs and expenses associated with any 401(k) plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the General Partner, (vii) costs and expenses incurred by the General Partner relating to any issuing or redemption of Partnership Interests and (viii) all other operating or administrative costs of the General Partner incurred in the ordinary course of its business on behalf of or in connection with the Partnership.

“ REIT Share ” means one share of common stock, par value $0.01 per share, of the General Partner (or Successor Entity, as the case may be), including without limitation the General Partner’s Class A REIT Shares and shares of the General Partner’s Class B common stock.

“ REIT Shares Amount ” means the number of Class A REIT Shares equal to the product of (X) the number of Common Units offered for redemption by a Redeeming Limited Partner, multiplied by (Y) the Conversion Factor as adjusted to and including the Specified Redemption Date; provided that in the event the General Partner issues to all holders of Class A REIT Shares rights, options, warrants or convertible or exchangeable securities entitling the holders of Class A REIT Shares to subscribe for or purchase additional Class A REIT Shares, or any other securities or property (collectively, the “ Rights ”), and such Rights have not expired at the Specified Redemption Date, then the Class A REIT Shares Amount shall also include such Rights issuable to a holder of the Class A REIT Shares on the record date fixed for purposes of determining the holders of Class A REIT Shares entitled to Rights.

“ Restriction Notice ” has the meaning set forth in Section 8.04(f).

“ Rights ” has the meaning set forth in the definition of “REIT Shares Amount” contained herein.

“ S-3 Eligible Date ” has the meaning provided in Section 8.05(a).

“ Safe Harbor ” has the meaning set forth in Section 10.05(d)

“ Safe Harbor Election ” has the meaning set forth in Section 10.05(d).

“ Safe Harbor Interests ” has the meaning set forth in Section 10.05(d).

“ Secondary Market Safe Harbors ” has the meaning set forth in Section 9.02(f).

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Service ” means the Internal Revenue Service.

“ Share Ownership Limit ” means the Aggregate Share Ownership Limit and the Common Share Ownership Limit, each as defined in the Charter.

“ Specified Redemption Date ” means the date that is three business days following the General Partner’s receipt of a Notice of Redemption.

“ Subsequent Redemption Shares ” has the meaning set forth in Section 8.05(a).

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

“ Subsidiary Partnership ” means any partnership or limited liability company in which the General Partner, the Partnership, or a wholly owned subsidiary of the General Partner or the Partnership owns a partnership or limited liability company interest.

“ Substitute Limited Partner ” means any Person admitted to the Partnership as a Limited Partner pursuant to Section 9.03.

“ Successor Entity ” has the meaning set forth in the definition of “Conversion Factor” contained herein.

“ Survivor ” has the meaning set forth in Section 7.01(d).

“ Tax Matters Partner ” has the meaning set forth within Section 6231(a)(7) of the Code.

“ Trading Day ” means a day on which the principal national securities exchange on which a security is listed or admitted to trading is open for the transaction of business or, if a security is not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

“ Transaction ” has the meaning set forth in Section 7.01(c).

“ Transfer ” has the meaning set forth in Section 9.02(a).

“ TRS ” means a taxable REIT subsidiary (as defined in Section 856(l) of the Code) of the General Partner.

“ Two Thirds Majority ” means the Limited Partners holding more than Sixty-Six and Sixty-Six Hundredths percent (66.66%) of the Percentage Interests of the Limited Partners.

“ Unvested LTIP Units ” has the meaning set forth in Section 4.04(c).

“ Value ” means, with respect to any security, the average of the daily market price of such security for the ten consecutive Trading Days immediately preceding the date of such valuation. The market price for each such Trading Day shall be: (i) if the security is listed or admitted to trading on the NYSE or any national securities exchange, the last reported sale price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices, regular way, on such day, (ii) if the security is not listed or admitted to trading on the NYSE or any national securities exchange, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or (iii) if the security is not listed or admitted to trading on the NYSE or any national securities exchange and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten days before the date in question) for which prices have been so reported; provided, that if there are no bid and asked prices reported during the ten days before the date in question, the value of the security shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. If security includes any Rights, then the value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.

“ Vested LTIP Units ” has the meaning set forth in Section 4.04(c).

“ Vesting Agreement ” means each or any, as the context implies, agreement or instrument entered into by an LTIP Unitholder upon acceptance of an award of LTIP Units under an Equity Incentive Plan.

“ Withheld Amount ” means any amount required to be withheld by the Partnership to pay over to any taxing authority as a result of any allocation or distribution of income to a Partner.

ARTICLE II

FORMATION OF PARTNERSHIP

2.01          Formation of the Partnership . The Partnership was formed as a limited partnership pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the Act shall govern the rights and obligations of the Partners and administration and termination of the Partnership. The Partnership Interest of each Partner shall be personal property for all purposes.

2.02          Name . The Name of the Partnership shall be “Bluerock Residential Holdings, LP” and the Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “LP,” “L.P.” or “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners.

2.03          Registered Office and Agent; Principal Office . The address of the registered office of the Partnership in the State of Delaware is located at 160 Greentree Drive, Suite 101, Dover, 19904 and the registered agent for service of process on the Partnership in the State of Delaware at such registered office is National Registered Agents, Inc., a Delaware corporation. The principal office of the Partnership is located at 712 Fifth Avenue, 9 ^th Floor, New York, New York 10019, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems necessary or desirable.

2.04          Term and Dissolution .

(a)            The term of the Partnership shall continue in full force and effect until dissolved upon the first to occur of any of the following events:

(i) the occurrence of an Event of Bankruptcy as to a General Partner or the dissolution, death, removal or withdrawal of a General Partner unless the business of the Partnership is continued pursuant to Section 7.03(b); provided, that if a General Partner is on the date of such occurrence a partnership, the dissolution of such General Partner as a result of the dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in such partnership shall not be an event of dissolution of the Partnership if the business of such General Partner is continued by the remaining partner or partners, either alone or with additional partners, and such General Partner and such partners comply with any other applicable requirements of this Agreement;

(ii) the passage of 90 days after the sale or other disposition of all or substantially all of the assets of the Partnership (provided, that if the Partnership receives an installment obligation as consideration for such sale or other disposition, the Partnership shall continue, unless sooner dissolved under the provisions of this Agreement, until such time as such installment obligations are paid in full);

(iii) the redemption of all Limited Partnership Interests (other than any such Limited Partnership Interests held by the General Partner or its subsidiaries), unless the General Partner determines to continue the term of the Partnership by the admission of one or more additional Limited Partners; or

(iv) the election by the General Partner that the Partnership should be dissolved.

(b)          Upon dissolution of the Partnership (unless the business of the Partnership is continued pursuant to Section 7.03(b)), the General Partner (or its director, receiver, successor or legal representative) shall amend or cancel the Certificate and liquidate the Partnership’s assets and apply and distribute the proceeds thereof in accordance with Section 5.06. Notwithstanding the foregoing, the liquidating General Partner may either (i) defer liquidation of, or withhold from distribution for a reasonable time, any assets of the Partnership (including those necessary to satisfy the Partnership’s debts and obligations), or (ii) distribute the assets to the Partners in kind.

2.05          Filing of Certificate and Perfection of Limited Partnership . The General Partner shall execute, acknowledge, record and file at the expense of the Partnership the Certificate and any and all amendments thereto and all requisite fictitious name statements and notices in such places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in which the Partnership conducts business.

2.06          Certificates Describing Partnership Units . At the request of a Limited Partner, the General Partner, at its option, may issue a certificate summarizing the terms of such Limited Partner’s interest in the Partnership, including the class or series and number of Partnership Units owned and the Percentage Interest represented by such Partnership Units as of the date of such certificate. Any such certificate (i) shall be in form and substance as determined by the General Partner, (ii) shall not be negotiable and (iii) shall bear a legend substantially similar to the following effect:

THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE ARE GOVERNED BY AND TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF BLUEROCK RESIDENTIAL HOLDINGS, LP AS AMENDED, SUPPLEMENTED OR RESTATED FROM TIME TO TIME.

ARTICLE III

BUSINESS OF THE PARTNERSHIP

The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act, provided, however, that such business shall be limited to and conducted in such a manner as to permit the General Partner at all times to qualify as a REIT, unless the General Partner otherwise ceases to, or the Board of Directors determines, pursuant to Section 7.7 of the Charter, that the General Partner shall no longer qualify as a REIT, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged in any of the foregoing and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, and without limiting the General Partner’s right in its sole and absolute discretion to cease qualifying as a REIT, the Partners acknowledge that the General Partner has elected REIT status and intends to continue to elect REIT status and the avoidance of income and excise taxes on the General Partner inures to the benefit of all the Partners and not solely to the General Partner. Notwithstanding the foregoing, the Limited Partners agree that the General Partner may terminate or revoke its status as a REIT under the Code at any time. The General Partner shall also be empowered to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” taxable as a corporation for purposes of Section 7704 of the Code.

ARTICLE IV

CAPITAL CONTRIBUTIONS AND ACCOUNTS

4.01          Capital Contributions . The General Partner and each Limited Partner has made a capital contribution to the Partnership in exchange for the Partnership Units set forth opposite such Partner’s name on Exhibit A , as it may be amended or restated from time to time by the General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units or similar events having an effect on a Partner’s ownership of Partnership Units.

4.02          Additional Capital Contributions and Issuances of Additional Partnership Units . Except as provided in this Section 4.02 or in Section 4.03, the Partners shall have no right or obligation to make any additional Capital Contributions or loans to the Partnership. The General Partner may contribute additional capital to the Partnership, which may be deemed Capital Contributions of REIT Holdings at the discretion of the General Partner, from time to time, and receive additional Partnership Interests, in the form of Partnership Units, in respect thereof, in the manner contemplated in this Section 4.02.

(a)           Issuances of Additional Partnership Units .

(i) General . As of the effective date of this Agreement, the Partnership shall have two classes of Partnership Units, entitled “Common Units” and “LTIP Units.” The General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose at any time or from time to time to the Partners (including the General Partner) or to other Persons for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partners. The General Partner’s determination that consideration is adequate shall be conclusive insofar as the adequacy of consideration relates to whether the Partnership Units are validly issued and fully paid. Any additional Partnership Units issued thereby may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to the then-outstanding Partnership Units held by the Limited Partners, all as shall be determined by the General Partner in its sole and absolute discretion and without the approval of any Limited Partner, subject to Delaware law, including, without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Units; (ii) the right of each such class or series of Partnership Units to share in Partnership distributions; and (iii) the rights of each such class or series of Partnership Units upon dissolution and liquidation of the Partnership; provided, however, that no additional Partnership Units shall be issued to the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) unless:

(1) (A) the additional Partnership Units are issued in connection with an issuance of REIT Shares of or other interests in the General Partner, which shares or interests have designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the additional Partnership Units issued to the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) by the Partnership in accordance with this Section 4.02 and (B) the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) shall make a Capital Contribution to the Partnership in an amount equal to the cash consideration received by the General Partner from the issuance of such REIT Shares or other interests in the General Partner;

(2) (A) the additional Partnership Units are issued in connection with an issuance of REIT Shares of or other interests in the General Partner pursuant to a taxable share dividend declared by the General Partner, which shares or interests have designations, preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the additional Partnership Units issued to the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) by the Partnership in accordance with this Section 4.02, (B) if the General Partner allows the holders of its REIT Shares to elect whether to receive such dividend in REIT Shares, other interests of the General Partner or cash, the Partnership will give the Limited Partners (excluding the General Partner or any direct or indirect Subsidiary of the General Partner) the same election to elect to receive (I) Partnership Units or cash or, (II) at the election of the General Partner, REIT Shares or cash, and (C) if the Partnership issues additional Partnership Units pursuant to this Section 4.02(a)(i)(2), then an amount of income equal to the value of the Partnership Units received will be allocated to those holders of Common Units that elect to receive additional Partnership Units;

(3) the additional Partnership Units are issued in exchange for property owned by the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) with a fair market value, as determined by the General Partner, in good faith, equal to the value of the Partnership Units; or

(4) Common Units are issued to all Partners owning Common Units or LTIP Units in proportion to their respective Percentage Interests.

Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units for less than fair market value, so long as the General Partner concludes in good faith that such issuance is in the best interests of the General Partner and the Partnership.

(ii) Upon Issuance of Additional Securities . The General Partner shall not issue any additional REIT Shares (other than (i) REIT Shares issued in connection with an exchange pursuant to Section 8.04, (ii) Class A REIT Shares issued upon a conversion in accordance with Section 5.2.6 of the Charter, (iii) REIT Shares issued in a taxable share dividend as described in Section 4.02(a)(i)(2)), or (iv) Rights (collectively, “ Additional Securities ”) other than to all holders of REIT Shares, unless (A) the General Partner shall cause the Partnership to issue to the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) Partnership Units or Rights having designations, preferences and other rights, all such that the economic interests are substantially similar to those of the Additional Securities, and (B) the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) contributes the proceeds from the issuance of such Additional Securities and from any exercise of Rights contained in such Additional Securities to the Partnership; provided, however, that the General Partner is allowed to issue Additional Securities in connection with an acquisition of Property to be held directly by the General Partner, but if and only if, such direct acquisition and issuance of Additional Securities have been approved by a majority of the Independent Directors. Without limiting the foregoing, the General Partner is expressly authorized to issue Additional Securities for less than fair market value, and the General Partner is authorized to cause the Partnership to issue to the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner) corresponding Partnership Units, so long as (x) the General Partner concludes in good faith that such issuance is in the best interests of the General Partner and the Partnership and (y) the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) contributes all proceeds from such issuance to the Partnership, including without limitation, the issuance of REIT Shares and corresponding Partnership Units pursuant to a share purchase plan providing for purchases of REIT Shares at a discount from fair market value or pursuant to share awards, including share options that have an exercise price that is less than the fair market value of the REIT Shares, either at the time of issuance or at the time of exercise , and restricted or other share awards approved by the Board of Directors. For example, in the event the General Partner issues REIT Shares for a cash purchase price and the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) contributes all of the proceeds of such issuance to the Partnership as required hereunder, the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) shall be issued a number of additional Partnership Units equal to the product of (A) the number of such REIT Shares issued by the General Partner, the proceeds of which were so contributed, multiplied by (B) a fraction, the numerator of which is 100%, and the denominator of which is the Conversion Factor in effect on the date of such contribution.

(b)           Certain Contributions of Proceeds of Issuance of REIT Shares . In connection with any and all issuances of REIT Shares, the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) shall make Capital Contributions to the Partnership of the proceeds therefrom, provided that if the proceeds actually received and contributed by the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) are less than the gross proceeds of such issuance as a result of any underwriter’s discount, commissions, placement fees or other expenses paid or incurred in connection with such issuance, then the General Partner (or any direct or indirect wholly owned Subsidiary of the General Partner, including without limitation REIT Holdings) shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the net proceeds of such issuance plus the amount of such underwriter’s discount, commissions, placement fees or other expenses paid by the General Partner and the Partnership shall be deemed simultaneously to have reimbursed such discount, commissions, placement fees and expenses as an Administrative Expense for the benefit of the Partnership for purposes of Section 6.05(b)).

(c)           Repurchases of General Partner Securities . If the General Partner shall repurchase shares of any class of its shares of beneficial interest, all costs incurred in connection with such repurchase shall be reimbursed to the General Partner by the Partnership pursuant to Section 6.05 and the General Partner simultaneously shall cause the Partnership to redeem an equivalent number of Partnership Units of the appropriate class or series held by the General Partner, or by the General Partner in its capacity as a Limited Partner, (which, in the case of REIT Shares, shall be a number equal to the quotient of the number of such REIT Shares divided by the Conversion Factor).

4.03          Additional Funding . If the General Partner determines that it is in the best interests of the Partnership to provide for additional Partnership funds (“ Additional Funds ”) for any Partnership purpose, the General Partner may (i) cause the Partnership to obtain such funds from outside borrowings, or (ii) elect to have the General Partner or any of its Affiliates provide such Additional Funds to the Partnership through loans or otherwise.

4.04          LTIP Units .

(a)             Issuance of LTIP Units . The General Partner may from time to time cause the Partnership to issue LTIP Units to Persons who provide services to the Partnership or the General Partner, for such consideration as the General Partner may determine to be appropriate, and admit such Persons as Limited Partners. Subject to the following provisions of this Section 4.04 and the special provisions of Sections 4.05 and 5.01(g), LTIP Units shall be treated as Common Units, with all of the rights, privileges and obligations attendant thereto. For purposes of computing the Partners’ Percentage Interests, holders of LTIP Units shall be treated as Common Unit holders and LTIP Units shall be treated as Common Units. In particular, the Partnership shall maintain at all times a one-to-one correspondence between LTIP Units and Common Units for conversion, distribution and other purposes, including, without limitation, complying with the following procedures:

(i) If an Adjustment Event occurs, then the General Partner shall make a corresponding adjustment to the LTIP Units to maintain a one-for-one conversion and economic equivalence ratio between Common Units and LTIP Units. The following shall be “ Adjustment Events ”: (A) the Partnership makes a distribution on all outstanding Common Units in Partnership Units, (B) the Partnership subdivides the outstanding Common Units into a greater number of units or combines the outstanding Common Units into a smaller number of units, or (C) the Partnership issues any Partnership Units in exchange for its outstanding Common Units by way of a reclassification or recapitalization of its Common Units. If more than one Adjustment Event occurs, the adjustment to the LTIP Units need be made only once using a single formula that takes into account each and every Adjustment Event as if all Adjustment Events occurred simultaneously. For the avoidance of doubt, the following shall not be Adjustment Events: (x) the issuance of Partnership Units in a financing, reorganization, acquisition or other similar business Common Unit Transaction, (y) the issuance of Partnership Units pursuant to any employee benefit or compensation plan or distribution reinvestment plan or (z) the issuance of any Partnership Units to the General Partner in respect of a capital contribution to the Partnership of proceeds from the sale of Additional Securities by the General Partner. If the Partnership takes an action affecting the Common Units other than actions specifically described above as “Adjustment Events” and in the opinion of the General Partner such action would require an adjustment to the LTIP Units to maintain the one-to-one correspondence described above, the General Partner shall have the right to make such adjustment to the LTIP Units, to the extent permitted by law and by any Equity Incentive Plan, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances. If an adjustment is made to the LTIP Units, as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall mail a notice to each LTIP Unitholder setting forth the adjustment to his or her LTIP Units and the effective date of such adjustment; and

(ii) The LTIP Unitholders shall, when, as and if authorized and declared by the General Partner out of assets legally available for that purpose, be entitled to receive distributions in an amount per LTIP Unit equal to the distributions per Common Unit (the “ Common Partnership Unit Distribution ”), paid to holders of Common Units on such Partnership Record Date established by the General Partner with respect to such distribution. So long as any LTIP Units are outstanding, no distributions (whether in cash or in kind) shall be authorized, declared or paid on Common Units, unless equal distributions have been or contemporaneously are authorized, declared and paid on the LTIP Units.

(b)           Priority . Subject to the provisions of this Section 4.04 and the special provisions of Sections 4.05 and 5.01(g), the LTIP Units shall rank pari passu with the Common Units as to the payment of regular and special periodic or other distributions and distribution of assets upon liquidation, dissolution or winding up. As to the payment of distributions and as to distribution of assets upon liquidation, dissolution or winding up, any class or series of Partnership Units which by its terms specifies that it shall rank junior to, on a parity with, or senior to the Common Units shall also rank junior to, or pari passu with, or senior to, as the case may be, the LTIP Units. Subject to the terms of any Vesting Agreement, an LTIP Unitholder shall be entitled to transfer his or her LTIP Units to the same extent, and subject to the same restrictions as holders of Common Units are entitled to transfer their Common Units pursuant to Article IX.

(c)           Special Provisions . LTIP Units shall be subject to the following special provisions:

(i) Vesting Agreements . LTIP Units may, in the sole discretion of the General Partner, be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of a Vesting Agreement. The terms of any Vesting Agreement may be modified by the General Partner from time to time in its sole discretion, subject to any restrictions on amendment imposed by the relevant Vesting Agreement or by the Equity Incentive Plan, if applicable. LTIP Units that have vested under the terms of a Vesting Agreement are referred to as “ Vested LTIP Units ”; all other LTIP Units shall be treated as “ Unvested LTIP Units .”

(ii) Forfeiture . Unless otherwise specified in the Vesting Agreement, upon the occurrence of any event specified in a Vesting Agreement as resulting in either the right of the Partnership or the General Partner to repurchase LTIP Units at a specified purchase price or some other forfeiture of any LTIP Units, then if the Partnership or the General Partner exercises such right to repurchase or forfeiture in accordance with the applicable Vesting Agreement, the relevant LTIP Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose. Unless otherwise specified in the Vesting Agreement, no consideration or other payment shall be due with respect to any LTIP Units that have been forfeited, other than any distributions declared with respect to a Partnership Record Date before the effective date of the forfeiture. In connection with any repurchase or forfeiture of LTIP Units, the balance of the portion of the Capital Account of the LTIP Unitholder that is attributable to all of his or her LTIP Units shall be reduced by the amount, if any, by which it exceeds the target balance contemplated by Section 5.01(g), calculated with respect to the LTIP Unitholder’s remaining LTIP Units, if any.

(iii)  Allocations . LTIP Unitholders shall be entitled to certain special allocations of gain under Section 5.01(g).

(iv) R edemption . The Common Unit Redemption Right provided to Limited Partners under Section 8.04 shall not apply with respect to LTIP Units unless and until they are converted to Common Units as provided in Section 4.04(c)(v)  and Section 4.05.

(v)  Conversion to Common Units . Vested LTIP Units are eligible to be converted into Common Units in accordance with Section 4.05.

(d)           Voting . LTIP Unitholders shall (a) have the same voting rights as the Limited Partners, with the LTIP Units voting as a single class with the Common Units and having one vote per LTIP Unit; and (b) have the additional voting rights that are expressly set forth below. So long as any LTIP Units remain outstanding, the Partnership shall not, without the affirmative vote of the holders of a majority of the LTIP Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal, whether by merger, consolidation or otherwise, the provisions of this Agreement applicable to LTIP Units so as to materially and adversely affect any right, privilege or voting power of the LTIP Units or the LTIP Unitholders as such, unless such amendment, alteration, or repeal affects equally, ratably and proportionately the rights, privileges and voting powers of the Limited Partners; but subject, in any event, to the following provisions:

(i) With respect to any Common Unit Transaction (as defined in Section 4.05(f)), so long as the LTIP Units are treated in accordance with Section 4.05(f), the consummation of such Common Unit Transaction shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the LTIP Units or the LTIP Unitholders as such; and

(ii) Any creation or issuance of any Partnership Units or of any class or series of Partnership Interest including without limitation additional Common Units or LTIP Units, whether ranking senior to, junior to, or on a parity with the LTIP Units with respect to distributions and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the LTIP Units or the LTIP Unitholders as such.

The foregoing voting provisions will not apply if, at or before the time when the act with respect to which such vote would otherwise be required will be effected, all outstanding LTIP Units shall have been converted into Common Units.

4.05          Conversion of LTIP Units .

(a)             Subject to the provisions of this section, an LTIP Unitholder shall have the right (the “ Conversion Right ”), at his or her option, at any time to convert all or a portion of his or her Vested LTIP Units into Common Units; provided, however, that a holder may not exercise the Conversion Right for less than one thousand (1,000) Vested LTIP Units or, if such holder holds less than one thousand Vested LTIP Units, all of the Vested LTIP Units held by such holder. LTIP Unitholders shall not have the right to convert Unvested LTIP Units into Common Units until they become Vested LTIP Units; provided, however, that when an LTIP Unitholder is notified of the expected occurrence of an event that will cause his or her Unvested LTIP Units to become Vested LTIP Units, such LTIP Unitholder may give the Partnership a Conversion Notice conditioned upon and effective as of the time of vesting and such Conversion Notice, unless subsequently revoked by the LTIP Unitholder, shall be accepted by the Partnership subject to such condition. The General Partner shall have the right at any time to cause a conversion of Vested LTIP Units into Common Units. In all cases, the conversion of any LTIP Units into Common Units shall be subject to the conditions and procedures set forth in this Section 4.05. 

(b)            A holder of Vested LTIP Units may convert such LTIP Units into an equal number of fully paid and non-assessable Common Units, giving effect to all adjustments (if any) made pursuant to Section 4.04. Notwithstanding the foregoing, in no event may a holder of Vested LTIP Units convert a number of Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of such Limited Partner, to the extent attributable to its ownership of LTIP Units, divided by (y) the Common Unit Economic Balance, in each case as determined as of the effective date of conversion (the “ Capital Account Limitation ”). To exercise such LTIP Unitholder’s Conversion Right, an LTIP Unitholder shall deliver a notice (a “ Conversion Notice ”) substantially in the form attached as Exhibit D to the Partnership (with a copy to the General Partner) not less than ten nor more than 60 days before a date (the “ Conversion Date ”) specified in such Conversion Notice; provided, however, that if the General Partner has not given to the LTIP Unitholders notice of a proposed or upcoming Common Unit Transaction (as defined in Section 4.05(f)) at least 30 days before the effective date of such Common Unit Transaction, then LTIP Unitholders shall have the right to deliver a Conversion Notice until the earlier of (x) the tenth day after such notice from the General Partner of a Common Unit Transaction or (y) the third business day immediately preceding the effective date of such Common Unit Transaction. A Conversion Notice shall be provided in the manner provided in Section 12.01. Each LTIP Unitholder covenants and agrees that all Vested LTIP Units to be converted pursuant to this Section 4.05(b) shall be free and clear of all liens. Notwithstanding anything herein to the contrary, a holder of LTIP Units may deliver a Notice of Redemption pursuant to Section 8.04(a) relating to those Common Units that will be issued to such holder upon conversion of such LTIP Units into Common Units in advance of the Conversion Date; provided , however , that the redemption of such Common Units by the Partnership shall in no event take place until after the Conversion Date. For clarity, it is noted that the objective of this paragraph is to put an LTIP Unitholder in a position where, if such LTIP Unitholder so wishes, the Common Units into which such LTIP Unitholder’s Vested LTIP Units will be converted can be redeemed by the Partnership simultaneously with such conversion, with the further consequence that, if the General Partner elects to assume the Partnership’s redemption obligation with respect to such Common Units under Section 8.04(b) by delivering to such holder Class A REIT Shares rather than cash, then such holder can have such Class A REIT Shares issued to him or her simultaneously with the conversion of his or her Vested LTIP Units into Common Units. The General Partner and LTIP Unitholder shall reasonably cooperate with each other to coordinate the timing of the events described in the foregoing sentence.

(c)             The Partnership, at any time at the election of the General Partner, may cause any number of Vested LTIP Units held by an LTIP Unitholder to be converted (a “ Forced Conversion ”) into an equal number of Common Units, giving effect to all adjustments (if any) made pursuant to Section 4.04; provided, however, that the Partnership may not cause Forced Conversion of any LTIP Units that would not at the time be eligible for conversion at the option of such LTIP Unitholder pursuant to Section 4.05(b). To exercise its right of Forced Conversion, the Partnership shall deliver a notice (a “ Forced Conversion Notice ”) in the form attached as Exhibit E to the applicable LTIP Unitholder not less than ten nor more than 60 days before the Conversion Date specified in such Forced Conversion Notice. A Forced Conversion Notice shall be provided in the manner provided in Section 12.01.

(d)            A conversion of Vested LTIP Units for which the LTIP Unitholder has given a Conversion Notice or the Partnership has given a Forced Conversion Notice shall occur automatically after the close of business on the applicable Conversion Date without any action on the part of such LTIP Unitholder, as of which time such LTIP Unitholder shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of Common Units issuable upon such conversion. After the conversion of LTIP Units as aforesaid, the Partnership shall deliver to such LTIP Unitholder, upon his or her written request, a certificate of the General Partner certifying the number of Common Units and remaining LTIP Units, if any, held by such person immediately after such conversion. The Assignee of any Limited Partner pursuant to Article IX may exercise the rights of such Limited Partner pursuant to this Section 4.05 and such Limited Partner shall be bound by the exercise of such rights by the Assignee.

(e)             For purposes of making future allocations under Section 5.01(g) and applying the Capital Account Limitation, the portion of the Economic Capital Account Balance of the applicable LTIP Unitholder that is treated as attributable to his or her LTIP Units shall be reduced, as of the date of conversion, by the product of the number of LTIP Units converted and the Common Unit Economic Balance.

(f)             If the Partnership or the General Partner shall be a party to any Common Unit Transaction (including without limitation a merger, consolidation, unit exchange, self-tender offer for all or substantially all Common Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any Common Unit Transaction which constitutes an Adjustment Event) in each case as a result of which Common Units shall be exchanged for or converted into the right, or the holders of such Units shall otherwise be entitled, to receive cash, securities or other property or any combination thereof (each of the foregoing being referred to herein as a “ Common Unit Transaction ”), then the General Partner shall, immediately before the Common Unit Transaction, exercise its right to cause a Forced Conversion with respect to the maximum number of LTIP Units then eligible for conversion, taking into account any allocations that occur in connection with the Common Unit Transaction or that would occur in connection with the Common Unit Transaction if the assets of the Partnership were sold at the Common Unit Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Units in the context of the Common Unit Transaction (in which case the Conversion Date shall be the effective date of the Common Unit Transaction).

In anticipation of such Forced Conversion and the consummation of the Common Unit Transaction, the Partnership shall use commercially reasonable efforts to cause each LTIP Unitholder to be afforded the right to receive in connection with such Common Unit Transaction in consideration for the Common Units into which such LTIP Units will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such Common Unit Transaction by a holder of the same number of Common Units, assuming such holder of Common Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “ Constituent Person ”), or an affiliate of a Constituent Person. In the event that holders of Common Units have the opportunity to elect the form or type of consideration to be received upon consummation of the Common Unit Transaction, before such Common Unit Transaction the General Partner shall give prompt written notice to each LTIP Unitholder of such election, and shall use commercially reasonable efforts to afford the LTIP Unitholders the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each LTIP Unit held by such holder into Common Units in connection with such Common Unit Transaction. If an LTIP Unitholder fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each LTIP Unit held him or her (or by any of his or her transferees) the same kind and amount of consideration that a holder of a Common Unit would receive if such Common Unit holder failed to make such an election.

Subject to the rights of the Partnership and the General Partner under any Vesting Agreement and any Equity Incentive Plan, the Partnership shall use commercially reasonable efforts to cause the terms of any Common Unit Transaction to be consistent with the provisions of this Section 4.05(f) and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any LTIP Unitholders whose LTIP Units will not be converted into Common Units in connection with the Common Unit Transaction that will (i) contain provisions enabling the holders of LTIP Units that remain outstanding after such Common Unit Transaction to convert their LTIP Units into securities as comparable as reasonably possible under the circumstances to the Common Units and (ii) preserve as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights set forth in this Agreement for the benefit of the LTIP Unitholders.

4.06          Capital Accounts . A separate capital account (a “ Capital Account ”) shall be established and maintained for each Partner in accordance with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner acquires an additional Partnership Interest in exchange for more than a de minimis Capital Contribution, (ii) the Partnership distributes to a Partner more than a de minimis amount of Partnership property as consideration for a Partnership Interest, (iii) the Partnership is liquidated within the meaning of Regulation Section 1.704-1(b)(2)(ii)( g ) or (iv) the Partnership grants a Partnership Interest (other than a de minimis Partnership Interest) as consideration for the provision of services to or for the benefit of the Partnership to an existing Partner acting in a Partner capacity, or to a new Partner acting in a Partner capacity or in anticipation of being a Partner, the General Partner shall revalue the property of the Partnership to its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)( f ); provided, that (i) the issuance of any LTIP Unit shall be deemed to require a revaluation pursuant to this Section 4.06 and (ii) the General Partner may elect not to revalue the property of the Partnership in connection with the issuance of additional Partnership Units pursuant to Section 4.02 to the extent it determines, in its sole and absolute discretion, that revaluing the property of the Partnership is not necessary or appropriate to reflect the relative economic interests of the Partners. When the Partnership’s property is revalued by the General Partner, the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Sections 1.704-1(b)(2)(iv)( f ) and ( g ), which generally require such Capital Accounts to be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Partners pursuant to Section 5.01 if there were a taxable disposition of such property for its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) on the date of the revaluation.

4.07          Percentage Interests . If the number of outstanding Common Units or LTIP Units increases or decreases during a taxable year, each Partner’s Percentage Interest shall be adjusted by the General Partner effective as of the effective date of each such increase or decrease to a percentage equal to the number of Common Units or LTIP Units held by such Partner divided by the aggregate number of Common Units and LTIP Units, as applicable, outstanding after giving effect to such increase or decrease. If the Partners’ Percentage Interests are adjusted pursuant to this Section 4.07, the Profits and Losses for the taxable year in which the adjustment occurs shall be allocated between the part of the year ending on the day when the Partnership’s property is revalued by the General Partner and the part of the year beginning on the following day either (i) as if the taxable year had ended on the date of the adjustment or (ii) based on the number of days in each part. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate Profits and Losses for the taxable year in which the adjustment occurs. The allocation of Profits and Losses for the earlier part of the year shall be based on the Percentage Interests before adjustment, and the allocation of Profits and Losses for the later part shall be based on the adjusted Percentage Interests.

4.08          No Interest on Contributions . No Partner shall be entitled to interest on its Capital Contribution.

4.09          Return of Capital Contributions . No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such Partner’s Capital Contribution for so long as the Partnership continues in existence.

4.10          No Third-Party Beneficiary . No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to return such money or property, such obligation shall be the obligation of such Limited Partner and not of the General Partner. Without limiting the generality of the foregoing, a deficit Capital Account of a Partner shall not be deemed to be a liability of such Partner nor an asset or property of the Partnership.

ARTICLE V

PROFITS AND LOSSES; DISTRIBUTIONS

5.01          Allocation of Profit and Loss .

(a)              Profit . Profit of the Partnership for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective Percentage Interests.

(b)             Loss . Loss of the Partnership for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective Percentage Interests.

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

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

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

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

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

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

5.02          Distribution of Cash .

(a)             Subject to Sections 5.02(c), (d) and (e), the Partnership shall distribute cash at such times and in such amounts as are determined by the General Partner in its sole and absolute discretion, to the Partners who are Partners on the Partnership Record Date with respect to such quarter (or other distribution period) in proportion with their respective Percentage Interests on the Partnership Record Date.

(b)             In accordance with Section 4.04(a)(ii), the LTIP Unitholders shall be entitled to receive distributions in an amount per LTIP Unit equal to the Common Partnership Unit Distribution.

(c)             If a new or existing Partner acquires additional Partnership Units in exchange for a Capital Contribution on any date other than a Partnership Record Date, the cash distribution attributable to such additional Partnership Units relating to the Partnership Record Date next following the issuance of such additional Partnership Units shall be reduced in the proportion to (i) the number of days that such additional Partnership Units are held by such Partner bears to (ii) the number of days between such Partnership Record Date and the immediately preceding Partnership Record Date.

(d)            Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal, state or local law including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is required to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to a Partner or assignee (including by reason of Section 1446 of the Code), either (i) if the actual amount to be distributed to the Partner (the “ Distributable Amount ”) equals or exceeds the Withheld Amount, the entire Distributable Amount shall be treated as a distribution of cash to such Partner, or (ii) if the Distributable Amount is less than the Withheld Amount, the excess of the Withheld Amount over the Distributable Amount shall be treated as a Partnership Loan from the Partnership to the Partner on the day the Partnership pays over such amount to a taxing authority. A Partnership Loan shall be repaid upon the demand of the Partnership or, alternatively, through withholding by the Partnership with respect to subsequent distributions to the applicable Partner or assignee. In the event that a Limited Partner fails to pay any amount owed to the Partnership with respect to the Partnership Loan within 15 days after demand for payment thereof is made by the Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may elect to make the payment to the Partnership on behalf of such Defaulting Limited Partner. In such event, on the date of payment, the General Partner shall be deemed to have extended a General Partner Loan to the Defaulting Limited Partner in the amount of the payment made by the General Partner and shall succeed to all rights and remedies of the Partnership against the Defaulting Limited Partner as to that amount. Without limitation, the General Partner shall have the right to receive any distributions that otherwise would be made by the Partnership to the Defaulting Limited Partner until such time as the General Partner Loan has been paid in full, and any such distributions so received by the General Partner shall be treated as having been received by the Defaulting Limited Partner and immediately paid to the General Partner.

Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to this Section 5.02(d) shall bear interest at the lesser of (i) 300 basis points above the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal , Eastern Addition , or (ii) the maximum lawful rate of interest on such obligation, such interest to accrue from the date the Partnership or the General Partner, as applicable, is deemed to extend the loan until such loan is repaid in full.

(e)             In no event may a Partner receive a distribution of cash with respect to a Partnership Unit if such Partner is entitled to receive a cash dividend as the holder of record of a Class A REIT Share for which all or part of such Partnership Unit has been or will be redeemed.

5.03          REIT Distribution Requirements . The General Partner shall use commercially reasonable efforts to cause the Partnership to distribute amounts sufficient to enable the General Partner to pay distributions to its shareholders that will allow the General Partner to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid any federal income or excise tax liability imposed by the Code, other than to the extent the General Partner elects to retain and pay income tax on its net capital gain.

5.04          No Right to Distributions in Kind . No Partner shall be entitled to demand property other than cash in connection with any distributions by the Partnership.

5.05          Limitations on Return of Capital Contributions . Notwithstanding any of the provisions of this Article V, no Partner shall have the right to receive, and the General Partner shall not have the right to make, a distribution that includes a return of all or part of a Partner’s Capital Contributions, unless after giving effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for the return of his Capital Contribution, does not exceed the fair market value of the Partnership’s assets.

5.06          Distributions Upon Liquidation .

(a)            Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, any remaining assets of the Partnership shall be distributed to all Partners with positive Capital Accounts in accordance with their respective positive Capital Account balances.

(b)            For purposes of Section 5.06(a), the Capital Account of each Partner shall be determined after all adjustments made in accordance with Sections 5.01 and 5.02 resulting from Partnership operations and from all sales and dispositions of all or any part of the Partnership’s assets.

(c)            Any distributions pursuant to this Section 5.06 shall be made by the end of the Partnership’s taxable year in which the liquidation occurs (or, if later, within 90 days after the date of the liquidation). To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.

5.07          Substantial Economic Effect . It is the intent of the Partners that the allocations of Profit and Loss under the Agreement have substantial economic effect (or be consistent with the Partners’ interests in the Partnership in the case of the allocation of losses attributable to nonrecourse debt) within the meaning of Section 704(b) of the Code as interpreted by the Regulations promulgated pursuant thereto. Article V and other relevant provisions of this Agreement shall be interpreted in a manner consistent with such intent.

ARTICLE VI

RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER

6.01          Management of the Partnership .

(a)            Except as otherwise expressly provided in this Agreement, the General Partner shall have full, complete and exclusive discretion to manage and control the business of the Partnership for the purposes herein stated, and shall make all decisions affecting the business and assets of the Partnership. Subject to the restrictions specifically contained in this Agreement, the powers of the General Partner shall include, without limitation, the authority to take the following actions on behalf of the Partnership:

(i) to acquire, purchase, own, operate, lease and dispose of any real property and any other property or assets including, but not limited to, notes and mortgages that the General Partner determines are necessary or appropriate in the business of the Partnership;

(ii) to construct buildings and make other improvements on the properties owned or leased by the Partnership;

(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Units or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any class or series of Partnership Units, or Rights relating to any class or series of Partnership Units) of the Partnership;

(iv) to borrow or lend money for the Partnership, issue or receive evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such indebtedness, and secure indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;

(v) to pay, either directly or by reimbursement, for all operating costs and general administrative expenses of the Partnership to third parties or to the General Partner or its Affiliates as set forth in this Agreement;

(vi) to guarantee or become a co-maker of indebtedness of any Subsidiary of the General Partner or the Partnership, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets; 

(vii) to use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including, without limitation, payment, either directly or by reimbursement, of all operating costs and general and administrative expenses of the General Partner, the Partnership or any Subsidiary of either, to third parties or to the General Partner as set forth in this Agreement;

(viii) to lease all or any portion of any of the Partnership’s assets, whether or not the terms of such leases extend beyond the termination date of the Partnership and whether or not any portion of the Partnership’s assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;

(ix) to prosecute, defend, arbitrate or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation with respect to the Partners, the Partnership or the Partnership’s assets;

(x) to file applications, communicate and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets or any other aspect of the Partnership’s business;

(xi) to make or revoke any election permitted or required of the Partnership by any taxing authority;

(xii) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types, as it shall determine from time to time;

(xiii) to determine whether or not to apply any insurance proceeds for any property to the restoration of such property or to distribute the same;

(xiv) to establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership, and to retain legal counsel, accountants, consultants, real estate brokers and such other persons as the General Partner may deem necessary or appropriate in connection with the Partnership business and to pay therefor such reasonable remuneration as the General Partner may deem reasonable and proper;

(xv) to retain other services of any kind or nature in connection with the Partnership business, and to pay therefor such remuneration as the General Partner may deem reasonable and proper;

(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner; 

(xvii) to maintain accurate accounting records and to file promptly all federal, state and local income tax returns on behalf of the Partnership;

(xviii) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;

(xix) to form or acquire an interest in, and contribute property to, any further limited or general partnerships, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any other Person in which it has an equity interest from time to time);

(xx) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities or any other valid Partnership purpose;

(xxi) to merge, consolidate or combine the Partnership with or into another Person;

(xxii) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” taxable as a corporation under Section 7704 of the Code or an "investment company" or a subsidiary of an investment company under the Investment Company Act of 1940; and

(xxiii) enter into and perform obligations under underwriting or other agreements in connection with issuances of securities by the Partnership or the General Partner or any affiliate thereof;

(xxiii)     to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the General Partner at all times to qualify as a REIT unless the General Partner voluntarily terminates or revokes its REIT status) and to possess and enjoy all of the rights and powers of a general partner as provided by the Act.

(b)           Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

6.02          Delegation of Authority . The General Partner may delegate any or all of its powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with any Person for the transaction of the business of the Partnership, which Person may, under supervision of the General Partner, perform any acts or services for the Partnership as the General Partner may approve.

6.03          Indemnification and Exculpation of Indemnitees .

(a)           The Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 6.03(a). The termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent, or an entry of an order of probation before judgment, creates a rebuttable presumption that the Indemnitee acted in a manner contrary to that specified in this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be made only out of the assets of the Partnership.

(b)          The Partnership shall reimburse an Indemnitee for reasonable expenses incurred by an Indemnitee who is a party to a proceeding in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 6.03 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

(c)           The indemnification provided by this Section 6.03 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity.

(d)           The Partnership may purchase and maintain insurance, as an expense of the Partnership, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

(e)           For purposes of this Section 6.03, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 6.03; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is not opposed to the best interests of the Partnership.

(f)           In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

(g)          An Indemnitee shall not be denied indemnification in whole or in part under this Section 6.03 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

(h)          The provisions of this Section 6.03 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(i)          Any amendment, modification or repeal of this Section 6.03 or any provision shall be prospective only and shall not in any way affect the indemnification of an Indemnitee by the Partnership under this Section 6.03 as in effect immediately before such amendment, modification or repeal with respect to matters occurring, in whole or in part, before such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.

6.04          Liability of the General Partner .

(a)            Notwithstanding anything to the contrary set forth in this Agreement, neither the General Partner, nor any of its Directors, officers, agents or employees shall be liable for monetary damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or mistakes of fact or law or of any act or omission if any such party acted in good faith. The General Partner shall not be in breach of any duty that the General Partner may owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity provided the General Partner, acting in good faith, abides by the terms of this Agreement.

(b)            The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership and the General Partner’s shareholders collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (including, without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all, of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the interests of the shareholders of the General Partner on the one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either the shareholders of the General Partner or the Limited Partners; provided , however , that any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either the shareholders of the General Partner or the Limited Partners shall be resolved in favor of the shareholders of the General Partner. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Limited Partners in connection with such decisions.

(c)            Subject to its obligations and duties as General Partner set forth in Section 6.01, the General Partner may exercise any of the powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.

(d)           Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the General Partner to continue to qualify as a REIT or (ii) to prevent the General Partner from incurring any taxes under Section 857, Section 4981 or any other provision of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

(e)            Any amendment, modification or repeal of this Section 6.04 or any provision shall be prospective only and shall not in any way affect the limitations on the General Partner’s or any of its officer’s, director’s, agent’s or employee’s liability to the Partnership and the Limited Partners under this Section 6.04 as in effect immediately before such amendment, modification or repeal with respect to matters occurring, in whole or in part, before such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.

6.05          Partnership Obligations .

(a)            Except as provided in this Section 6.05 and elsewhere in this Agreement (including the provisions of Articles V and VI regarding distributions, payments and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.

(b)           All Administrative Expenses shall be obligations of the Partnership, and the General Partner shall be entitled to reimbursement by the Partnership for any expenditure (including Administrative Expenses) incurred by it on behalf of the Partnership that shall be made other than out of the funds of the Partnership. All reimbursements hereunder shall be characterized for federal income tax purposes as expenses of the Partnership incurred on its behalf, and not as expenses of the General Partner.

6.06          Outside Activities . Subject to Section 6.08, the Charter and any agreements, including without limitation the Investment Allocation Agreement and the Management Agreement, entered into by the General Partner or its Affiliates with the Partnership or a Subsidiary, any officer, director, employee, agent, trustee, Affiliate or shareholder of the General Partner, the General Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. Neither the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement in any such business ventures, interest or activities. None of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any such business ventures, interests or activities, and the General Partner shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures, interests and activities to the Partnership or any Limited Partner, even if such opportunity is of a character that, if presented to the Partnership or any Limited Partner, could be taken by such Person.

6.07          Employment or Retention of Affiliates .

(a)            Any Affiliate of the General Partner may be employed or retained by the Partnership and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any compensation, price or other payment therefor that the General Partner determines to be fair and reasonable.

(b)            The Partnership may lend or contribute to its Subsidiaries or other Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.

(c)            The Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions as the General Partner deems are consistent with this Agreement and applicable law.

6.08          General Partner Activities . The General Partner agrees that, generally, all business activities of the General Partner, including activities pertaining to the acquisition, development, ownership of or investment in real properties or other property, shall be conducted through the Partnership or one or more Subsidiary Partnerships; provided, however, that the General Partner may make direct acquisitions or undertake business activities if such acquisitions or activities are made in connection with the issuance of Additional Securities by the General Partner or the business activity has been approved by a majority of the Independent Directors. If, at any time, the General Partner acquires material assets (other than Partnership Units or other assets on behalf of the Partnership), the definition of “REIT Shares Amount” may be adjusted, as reasonably determined by the General Partner, to reflect only the fair market value of a Class A REIT Share attributable to the General Partner’s Partnership Units and other assets held on behalf of the Partnership.

6.09          Title to Partnership Assets . Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided , however , that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

6.10          Restrictions on General Partner Authority . The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the written consent of a Two Thirds Majority (other than the General Partner or any Subsidiary of the General Partner), or such other percentage of the Limited Partners as may be specifically provided for under a provision of this Agreement, and may not perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any liability not contemplated herein or under the Act except with the written consent of such Limited Partner.

ARTICLE VII

CHANGES IN GENERAL PARTNER

7.01          Transfer of the General Partner’s Partnership Interest .

(a)            The General Partner shall not transfer all or any portion of its General Partnership Interests, and the General Partner shall not withdraw as General Partner, except as provided in or in connection with a transaction contemplated by Sections 7.01(c), (d) or (e).

(b)            The General Partner agrees that its General Partnership Interest will at all times be in the aggregate at least 0.1%.

(c)            Except as otherwise provided in Section 7.01(d) or (e), the General Partner shall not engage in any merger, consolidation or other combination with or into another Person or sale of all or substantially all of its assets (other than in connection with a change in the General Partner’s state of incorporation or organizational form), in each case which results in a Change of Control of the General Partner (a “ Transaction ”), unless at least one of the following conditions is met:

(i) the consent of a Majority in Interest (other than the General Partner or any Subsidiary of the General Partner) is obtained;

(ii) as a result of such Transaction, all Limited Partners (other than the General Partner and any Subsidiary of the General Partner) will receive, or have the right to receive, for each Partnership Unit an amount of cash, securities or other property equal in value to the product of the Conversion Factor and the greatest amount of cash, securities or other property paid in the Transaction to a holder of one Class A REIT Share in consideration of one Class A REIT Share, provided that if, in connection with such Transaction, a purchase, tender or exchange offer (“ Offer ”) shall have been made to and accepted by the holders of more than 50% of the outstanding REIT Shares, each holder of Partnership Units (other than the General Partner and any Subsidiary of the General Partner) shall be given the option to exchange its Partnership Units for the greatest amount of cash, securities or other property that such Limited Partner would have received had it (A) exercised its Common Unit Redemption Right pursuant to Section 8.04 and (B) sold, tendered or exchanged pursuant to the Offer the REIT Shares received upon exercise of the Common Unit Redemption Right immediately before the expiration of the Offer; or

(iii) the General Partner is the surviving entity in the Transaction and either (A) the holders of REIT Shares do not receive cash, securities or other property in the Transaction or (B) all Limited Partners (other than the General Partner or any Subsidiary of the General Partner) receive for each Partnership Unit an amount of cash, securities or other property (expressed as an amount per Class A REIT Share) that is no less in value than the product of the Conversion Factor and the greatest amount of cash, securities or other property (expressed as an amount per Class A REIT Share) received in the Transaction by any holder of Class A REIT Shares.

(d)          Notwithstanding Section 7.01(c), the General Partner may merge with or into or consolidate with another entity if immediately after such merger or consolidation (i) substantially all of the assets of the successor or surviving entity (the “ Survivor ”), other than Partnership Units held by the General Partner, are contributed, directly or indirectly, to the Partnership as a Capital Contribution in exchange for Partnership Units with a fair market value equal to the value of the assets so contributed as determined by the Survivor in good faith and (ii) the Survivor expressly agrees to assume all obligations of the General Partner hereunder. Upon such contribution and assumption, the Survivor shall have the right and duty to amend this Agreement as set forth in this Section 7.01(d). The Survivor shall in good faith arrive at a new method for the calculation of the Cash Amount, the REIT Shares Amount and Conversion Factor for a Partnership Unit after any such merger or consolidation so as to approximate the existing method for such calculation as closely as reasonably possible. Such calculation shall take into account, among other things, the kind and amount of securities, cash and other property that was receivable upon such merger or consolidation by a holder of Class A REIT Shares or options, warrants or other rights relating thereto, and which a holder of Partnership Units could have acquired had such Partnership Units been exchanged immediately before such merger or consolidation. Such amendment to this Agreement shall provide for adjustment to such method of calculation, which shall be as nearly equivalent as may be practicable to the adjustments provided for with respect to the Conversion Factor. The Survivor also shall in good faith modify the definition of Class A REIT Shares and make such amendments to Section 8.04 so as to approximate the existing rights and obligations set forth in Section 8.04 as closely as reasonably possible. The above provisions of this Section 7.01(d) shall similarly apply to successive mergers or consolidations permitted hereunder.

In respect of any transaction described in the preceding paragraph, the General Partner is required to use its commercially reasonable efforts to structure such transaction to avoid causing the Limited Partners (other than the General Partner or any Subsidiary) to recognize a gain for federal income tax purposes by virtue of the occurrence of or their participation in such transaction, provided such efforts are consistent with and subject in all respects to the exercise of the Board of Directors’ fiduciary duties to the shareholders of the General Partner under applicable law.

(e)           Notwithstanding anything in this Article VII:

(i) The General Partner may transfer all or any portion of its General Partnership Interest to (A) any wholly owned Subsidiary of the General Partner or (B) the owner of all of the ownership interests of the General Partner, and following a transfer of all of its General Partnership Interest, may withdraw as General Partner; and

(ii) the General Partner may engage in a transaction required by law or by the rules of any national securities exchange or over-the-counter interdealer quotation system on which the REIT Shares are listed or traded.

7.02          Admission of a Substitute or Additional General Partner . A Person shall be admitted as a substitute or additional General Partner of the Partnership only if the following terms and conditions are satisfied:

(a)            the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required or appropriate to effect the admission of such Person as a General Partner, and a certificate evidencing the admission of such Person as a General Partner shall have been filed for recordation and all other actions required by Section 2.05 in connection with such admission shall have been performed;

(b)            if the Person to be admitted as a substitute or additional General Partner is a corporation or a partnership, it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Person’s authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and

(c)            counsel for the Partnership shall have rendered an opinion (relying on such opinions from other counsel as may be necessary) that the admission of the Person to be admitted as a substitute or additional General Partner is in conformity with the Act, that none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause (i) the Partnership to be classified other than as a partnership for federal income tax purposes, or (ii) the loss of any Limited Partner’s limited liability.

7.03          Effect of Bankruptcy, Withdrawal, Death or Dissolution of General Partner .

(a)           Upon the occurrence of an Event of Bankruptcy as to the General Partner (and its removal pursuant to Section 7.04(a)) or the death, withdrawal, removal or dissolution of the General Partner (except that, if the General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall be deemed not to be a dissolution of the General Partner if the business of the General Partner is continued by the remaining partner or partners), the Partnership shall be dissolved and terminated unless the Partnership is continued pursuant to Section 7.03(b). The merger of the General Partner with or into any entity that is admitted as a substitute or successor General Partner pursuant to Section 7.02 shall not be deemed to be the withdrawal, dissolution or removal of the General Partner.

(b)           Following the occurrence of an Event of Bankruptcy as to the General Partner (and its removal pursuant to Section 7.04(a)) or the death, withdrawal, removal or dissolution of the General Partner (except that, if the General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner in, such partnership shall be deemed not to be a dissolution of the General Partner if the business of such General Partner is continued by the remaining partner or partners), the Limited Partners, within 90 days after such occurrence, may elect to continue the business of the Partnership for the balance of the term specified in Section 2.04 by selecting, subject to Section 7.02 and any other provisions of this Agreement, a substitute General Partner by consent of a Majority in Interest. If the Limited Partners elect to continue the business of the Partnership and admit a substitute General Partner, the relationship with the Partners and of any Person who has acquired an interest of a Partner in the Partnership shall be governed by this Agreement.

7.04          Removal of General Partner .

(a)            Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of, the General Partner, the General Partner shall be deemed to be removed automatically; provided, however, that if the General Partner is on the date of such occurrence a partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or removal of a partner in such partnership shall be deemed not to be a dissolution of the General Partner if the business of the General Partner is continued by the remaining partner or partners. The Limited Partners may not remove the General Partner, with or without cause.

(b)            If the General Partner has been removed pursuant to this Section 7.04 and the Partnership is continued pursuant to Section 7.03, the General Partner shall promptly transfer and assign its General Partnership Interest in the Partnership to the substitute General Partner approved by a Majority in Interest in accordance with Section 7.03(b) and otherwise be admitted to the Partnership in accordance with Section 7.02. At the time of assignment, the removed General Partner shall be entitled to receive from the substitute General Partner the fair market value of the General Partnership Interest of such removed General Partner as reduced by any damages caused to the Partnership by such General Partner. Such fair market value shall be determined by an appraiser mutually agreed upon by the General Partner and a Majority in Interest (excluding the General Partner and any Subsidiary of the General Partner) within ten days following the removal of the General Partner. In the event that the parties are unable to agree upon an appraiser, the removed General Partner and a Majority in Interest (excluding the General Partner and any Subsidiary of the General Partner) each shall select an appraiser. Each such appraiser shall complete an appraisal of the fair market value of the removed General Partner’s General Partnership Interest within 30 days of the General Partner’s removal, and the fair market value of the removed General Partner’s General Partnership Interest shall be the average of the two appraisals; provided, however, that if the higher appraisal exceeds the lower appraisal by more than 20% of the amount of the lower appraisal, the two appraisers, no later than 40 days after the removal of the General Partner, shall select a third appraiser who shall complete an appraisal of the fair market value of the removed General Partner’s General Partnership Interest no later than 60 days after the removal of the General Partner. In such case, the fair market value of the removed General Partner’s General Partnership Interest shall be the average of the two appraisals closest in value.

(c)           The General Partnership Interest of a removed General Partner, during the time after default until transfer under Section 7.04(b), shall be converted to that of a special Limited Partner; provided, however, such removed General Partner shall not have any rights to participate in the management and affairs of the Partnership, and shall not be entitled to any portion of the income, expense, profit, gain or loss allocations or cash distributions allocable or payable, as the case may be, to the Limited Partners. Instead, such removed General Partner shall receive and be entitled only to retain distributions or allocations of such items that it would have been entitled to receive in its capacity as General Partner, until the transfer is effective pursuant to Section 7.04(b).

(d)           All Partners shall have given and hereby do give such consents, shall take such actions and shall execute such documents as shall be legally necessary and sufficient to effect all the foregoing provisions of this Section 7.04.

ARTICLE VIII

RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS

8.01          Management of the Partnership . The Limited Partners shall not participate in the management or control of Partnership business nor shall they transact any business for the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being vested solely and exclusively in the General Partner, which shall act for the benefit of the Partnership, the Limited Partners and the General Partner’s stockholders, collectively.

8.02          Power of Attorney . Each Limited Partner hereby irrevocably appoints the General Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name, place and stead, and for its use and benefit, to sign, acknowledge, swear to, deliver, file or record, at the appropriate public offices, any and all documents, certificates and instruments as may be deemed necessary or desirable by the General Partner to carry out fully the provisions of this Agreement and the Act in accordance with their terms, including amendments, which power of attorney is coupled with an interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or the transfer by the Limited Partner of any part or all of its Partnership Interest.

8.03          Limitation on Liability of Limited Partners . No Limited Partner shall be liable for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as otherwise required by the Act, be required to make any further Capital Contributions or other payments or lend any funds to the Partnership.

8.04          Common Unit Redemption Right .

(a)            Subject to Sections 8.04(b), (c), (d), (e) and (f) and the provisions of any agreements between the Partnership and one or more Limited Partners with respect to Common Units (including any LTIP Units that are converted into Common Units) held by them, each Limited Partner (other than the General Partner or any Subsidiary of the General Partner, shall have the right (the “ Common Unit Redemption Right ”) to require the Partnership to redeem on a Specified Redemption Date all or a portion of the Common Units held by such Limited Partner at a redemption price equal to and in the form of the Common Redemption Amount to be paid by the Partnership, provided that such Common Units (or the LTIP Units converted into such Common Units) shall have been outstanding for at least one year (or such lesser time as determined by the General Partner in its sole and absolute discretion), and subject to any restriction agreed to in writing between the Redeeming Limited Partner and the Partnership or General Partner. The Common Unit Redemption Right shall be exercised pursuant to a Notice of Exercise of Redemption Right in the form attached hereto as Exhibit B delivered to the Partnership (with a copy to the General Partner) by the Limited Partner who is exercising the Common Unit Redemption Right (the “ Redeeming Limited Partner ”); provided, however, that the Partnership shall, in its sole and absolute discretion, have the option to deliver either the Cash Amount or the REIT Shares Amount; provided, further, that the Partnership shall not be obligated to satisfy such Common Unit Redemption Right if the General Partner elects to purchase the Common Units subject to the Notice of Redemption; and provided, further, that, subject to the terms of any agreement between the General Partner and a Limited Partner with respect to Common Units (or any LTIP Units converted into such Common Units) held by such Limited Partner, no Limited Partner may deliver more than two Notices of Redemption during each calendar year. A Limited Partner may not exercise the Common Unit Redemption Right for less than one thousand (1,000) Common Units or, if such Limited Partner holds less than one thousand (1,000) Common Units, all of the Common Units held by such Limited Partner. The Redeeming Limited Partner shall have no right, with respect to any Common Units so redeemed, to receive any distribution paid with respect to Common Units if the record date for such distribution is on or after the Specified Redemption Date.

(b)           Notwithstanding the provisions of Section 8.04(a), a Limited Partner that exercises the Common Unit Redemption Right shall be deemed to have offered to sell the Common Units described in the Notice of Redemption to the General Partner, and the General Partner may, in its sole and absolute discretion, elect to purchase directly and acquire such Common Units by paying to the Redeeming Limited Partner either the Cash Amount or the REIT Shares Amount, as elected by the General Partner (in its sole and absolute discretion), on the Specified Redemption Date, whereupon the General Partner shall acquire the Common Units offered for redemption by the Redeeming Limited Partner and shall be treated for all purposes of this Agreement as the owner of such Common Units. If the General Partner shall elect to exercise its right to purchase Common Units under this Section 8.04(b) with respect to a Notice of Redemption, it shall so notify the Redeeming Limited Partner within five Business Days after the receipt by the General Partner of such Notice of Redemption.

If the General Partner shall exercise its right to purchase Common Units with respect to the exercise of a Common Unit Redemption Right, the Partnership shall have no obligation to pay any amount to the Redeeming Limited Partner with respect to such Redeeming Limited Partner’s exercise of such Common Unit Redemption Right, and each of the Redeeming Limited Partner, the Partnership and the General Partner shall treat the transaction between the General Partner and the Redeeming Limited Partner for federal income tax purposes as a sale of the Redeeming Limited Partner’s Common Units to the General Partner. Each Redeeming Limited Partner agrees to execute such documents as the General Partner may reasonably require in connection with the issuance of Class A REIT Shares upon exercise of the Common Unit Redemption Right.

(c)           Notwithstanding the provisions of Section 8.04(a) and 8.04(b), a Limited Partner shall not be entitled to exercise the Common Unit Redemption Right if the delivery of Class A REIT Shares to such Limited Partner on the Specified Redemption Date by the General Partner pursuant to Section 8.04(b) (regardless of whether or not the General Partner would in fact exercise its rights under Section 8.04(b)) would (i) result in such Limited Partner or any other Person (as defined in the Charter) owning, directly or indirectly, REIT Shares in excess of the Share Ownership Limit or any Excepted Holder Limit and calculated in accordance therewith, except as provided in the Charter, (ii) result in REIT Shares being owned by fewer than 100 persons (determined without reference to any rules of attribution), (iii) result in the General Partner being “closely held” within the meaning of Section 856(h) of the Code, (iv) cause the General Partner to own, actually or constructively, 10% or more of the ownership interests in a tenant (other than a TRS) of the General Partner’s, the Partnership’s or a Subsidiary Partnership’s real property, within the meaning of Section 856(d)(2)(B) of the Code, (v) otherwise cause the General Partner to fail to qualify as a REIT under the Code or (vi) cause the acquisition of REIT Shares by such Limited Partner to be “integrated” with any other distribution of REIT Shares or Common Units for purposes of complying with the registration provisions of the Securities Act. The General Partner, in its sole and absolute discretion, may waive the restriction on redemption set forth in this Section 8.04(c).

(d)           Any Cash Amount to be paid to a Redeeming Limited Partner pursuant to this Section 8.04 shall be paid on the Specified Redemption Date. Any REIT Share Amount to be paid to a Redeeming Limited Partner pursuant to this Section 8.04 shall be paid on the Specified Redemption Date. 

(e)           Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal, state or local law that apply upon a Redeeming Limited Partner’s exercise of the Common Unit Redemption Right. If a Redeeming Limited Partner believes that it is exempt from such withholding upon the exercise of the Common Unit Redemption Right, such Partner must furnish the General Partner with a FIRPTA Certificate in substantially the form attached as Exhibit C and any similar forms or certificates required to avoid or reduce the withholding under state, local or foreign law. If the Partnership or the General Partner is required to withhold and pay over to any taxing authority any amount upon a Redeeming Limited Partner’s exercise of the Common Unit Redemption Right and if the Common Redemption Amount equals or exceeds the Withheld Amount, the Withheld Amount shall be treated as an amount received by such Partner in redemption of its Common Units. If, however, the Common Redemption Amount is less than the Withheld Amount, the Redeeming Limited Partner shall not receive any portion of the Common Redemption Amount, the Common Redemption Amount shall be treated as an amount received by such Partner in redemption of its Common Units, and the Partner shall contribute the excess of the Withheld Amount over the Common Redemption Amount to the Partnership before the Partnership is required to pay over such excess to a taxing authority.

(f)          Notwithstanding any other provision of this Agreement, the General Partner shall place appropriate restrictions on the ability of the Limited Partners to exercise their Common Unit Redemption Rights as and if deemed necessary or reasonable to ensure that the Partnership does not constitute a “publicly traded partnership” taxable as a corporation under Section 7704 of the Code. If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof (a “ Restriction Notice ”) to each of the Limited Partners, which notice shall be accompanied by a copy of an opinion of counsel to the Partnership that states that, in the opinion of such counsel, restrictions are necessary or reasonable to avoid the Partnership being treated as a “publicly traded partnership” under Section 7704 of the Code.

8.05 Registration . Subject to the terms of any agreement between the General Partner and a Limited Partner with respect to Common Units or LTIP Units held by such Limited Partner:

(a) Registration of the REIT Shares . One year following the date of this Agreement, or as soon as is practicable thereafter, the General Partner shall file with the Commission a continuous offering registration statement under Rule 415 of the Securities Act (a “ Registration Statement ”), or any similar rule that may be adopted by the Commission, on appropriate form as determined by the General Partner, covering the resale of REIT Shares issuable upon redemption of the Common Units or LTIP Units held by the Limited Partners as of the date of this Agreement, or their respective transferees and assigns (collectively, “ Qualifying Limited Partners ”), other than the REIT Shares covered by a separate registration statement under the Securities Act, including without limitation a registration statement on Form S-8 (“ Initial Redemption Shares ”). In connection therewith, the General Partner will:

(1) use commercially reasonable efforts to have such Registration Statement declared effective;

(2) register or qualify the Redemption Shares covered by a Registration Statement under the securities or blue sky laws of such jurisdictions within the United States as required by law, and do such other reasonable acts and things as may be required of it to enable such holders to consummate the sale or other disposition in such jurisdictions of the Initial Redemption Shares; provided , however , that the General Partner shall not be required to (i) qualify as a foreign corporation or consent to a general or unlimited service or process in any jurisdictions in which it would not otherwise be required to be qualified or so consent or (ii) qualify as a dealer in securities; and

(3) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission in connection with a Registration Statement.

The General Partner agrees to supplement or make amendments to the Registration Statement, if required by the rules, regulations or instructions applicable to the registration form utilized by the General Partner or by the Securities Act or rules and regulations thereunder for a Registration Statement. The General Partner further agrees that it shall, in its discretion, either (i) amend or supplement the Registration Statement filed with respect to the Initial Redemption Shares (the “ Initial Registration Statement ”) to cover the resale of any REIT Shares issuable upon redemption of Common Units or LTIP Units issued by the Partnership to the Qualifying Limited Partners after the Initial Registration Statement is declared effective, other than those Units covered by another registration statement under the Securities Act, including without limitation a registration statement on Form S-8 (“ Subsequent Redemption Shares ” and collectively with the Initial Redemption Shares, “ Redemption Shares ”); or (ii) file a new Registration Statement covering any Subsequent Redemption Shares. In connection with and as a condition to the General Partner’s obligations with respect to the filing of the Registration Statement pursuant to this Section 8.05, each Limited Partner agrees with the General Partner that:

(w) it will provide in a timely manner to the General Partner such information with respect to the Limited Partner as reasonably required to complete a Registration Statement, including without limitation the information required by Item 507 of Regulation S-K promulgated under the Securities Act, and file the Registration Statement and to have the Registration Statement declared effective by the Commission and cleared by the Financial Industry Regulatory Authority (if required), and take such other acts as otherwise required to comply with applicable securities laws and regulations;

(x) it will not offer or sell its Redemption Shares until (A) such Redemption Shares have been included in a Registration Statement and (B) it has received notice that the Registration Statement covering such Redemption Shares, or any post-effective amendment thereto, has been declared effective by the Commission, such notice to have been satisfied by the posting by the Commission on www.sec.gov of a notice of effectiveness;

(y) if the General Partner determines in its good faith judgment, after consultation with counsel, that the use of a Registration Statement, including any pre- or post-effective amendment thereto, or the use of any prospectus contained in such Registration Statement would require the disclosure of important information that the General Partner has a bona fide business purpose for preserving as confidential or the disclosure of which, in the judgment of the General Partner, would impede the General Partner’s ability to consummate a significant transaction, upon written notice of such determination by the General Partner (which notice shall be deemed sufficient if given through the issuance of a press release or filing with the Commission and, if such notice is not publicly distributed, the Limited Partner agrees to keep the subject information confidential and acknowledges that such information may constitute material non-public information subject to the applicable restrictions under securities laws), the rights of each Limited Partner to offer, sell or distribute its Redemption Shares pursuant to such Registration Statement or prospectus or to require the General Partner to take action with respect to the registration or sale of any Redemption Shares pursuant to a Registration Statement (including any action contemplated by this Section 8.05) will be suspended until the date upon which the General Partner notifies such Limited Partner in writing (which notice shall be deemed sufficient if given through the issuance of a press release or filing with the Commission and, if such notice is not publicly distributed, the Limited Partner agrees to keep the subject information confidential and acknowledges that such information may constitute material non-public information subject to the applicable restrictions under securities laws) that suspension of such rights for the grounds set forth in this paragraph is no longer necessary; provided , however , that the General Partner may not suspend such rights for an aggregate period of more than 180 days in any 12-month period; and

(z) in the case of the registration of any underwritten equity offering proposed by the General Partner (other than any registration by the General Partner on Form S-8, or a successor or substantially similar form, of an employee share option, share purchase or compensation plan or of securities issued or issuable pursuant to any such plan), each Limited Partner will agree, (i) if requested in writing by the General Partner, managing underwriter or underwriters administering such offering, not to effect any offer, sale or distribution of any REIT Shares or Redemption Shares (or any option or right to acquire REIT Shares or Redemption Shares) during the period commencing on the tenth day prior to the expected effective date (which date shall be stated in such notice) of the registration statement covering such underwritten primary equity offering or, if such offering shall be a “take-down” from an effective shelf registration statement, the tenth day prior to the expected commencement date (which date shall be stated in such notice) of such offering and ending on the date specified by such General Partner, managing underwriter, or underwriters administering such offering in such written request to the Limited Partners and (ii) to keep all information regarding any such offering, including without limitation the existence, timing, pricing and terms of any such offering, confidential until such time as the General Partner makes such information public; provided , however , that no Limited Partner shall be required to agree not to effect any offer, sale or distribution of its Redemption Shares for a period of time that is longer than the greater of 90 days or the period of time for which any senior executive of the General Partner is required so to agree in connection with such offering. Nothing in this paragraph shall be read to limit the ability of any Limited Partner to redeem its Common Units in accordance with the terms of this Agreement.

(b) Listing on Securities Exchange . If the General Partner lists or maintains the listing of REIT Shares on any securities exchange or national market system, it shall, at its expense and as necessary to permit the registration and sale of the Redemption Shares hereunder, list thereon, maintain and, when necessary, increase such listing to include such Redemption Shares.

(c) Allocation of Expenses . The Partnership shall pay all expenses in connection with the Registration Statement, including without limitation (i) all expenses incident to filing with the Financial Industry Regulatory Authority, Inc., (ii) registration fees, (iii) printing expenses, (iv) accounting and legal fees and expenses, except to the extent holders of Redemption Shares elect to engage accountants or attorneys in addition to the accountants and attorneys engaged by the General Partner or the Partnership, which fees and expenses for such accountants or attorneys shall be for the account of the holders of the Redemption Shares, (v) accounting expenses incident to or required by any such registration or qualification and (vi) expenses of complying with the securities or blue sky laws of any jurisdictions in connection with such registration or qualification; provided , however , neither the Partnership nor the General Partner shall be liable for, or pay (A) any discounts or commissions to any underwriter or broker attributable to the sale of Redemption Shares, or (B) any fees or expenses incurred by holders of Redemption Shares in connection with such registration that, according to the written instructions of any regulatory authority, the Partnership or the General Partner is not permitted to pay.

(d) Indemnification .

(i) In connection with the Registration Statement, the General Partner and the Partnership agree to indemnify each holder of Redemption Shares and each Person who controls any such holder of Redemption Shares within the meaning of Section 15 of the Securities Act, against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) caused by any untrue, or alleged untrue, statement of a material fact contained in a Registration Statement, preliminary prospectus or prospectus (as amended or supplemented if the General Partner shall have furnished any amendments or supplements thereto) or caused by any omission or alleged omission, to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by any untrue statement, alleged untrue statement, omission, or alleged omission based upon information furnished to the General Partner by the Limited Partner or the holder for use therein. The General Partner and each officer, director, stockholder, employee, agent, external advisor, investment adviser, and controlling Person of the General Partner and the Partnership shall be indemnified by each Limited Partner or holder of Redemption Shares covered by a Registration Statement for all such losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) caused by any untrue, or alleged untrue, statement or any omission, or alleged omission, based upon information furnished to the General Partner by the Limited Partner or the holder for use therein.

(ii) Promptly upon receipt by a party indemnified under this Section 8.05(d) of notice of the commencement of any action against such indemnified party in respect of which indemnity or reimbursement may be sought against any indemnifying party under this Section 8.05(d), such indemnified party shall notify the indemnifying party in writing of the commencement of such action, but the failure to so notify the indemnifying party shall not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 8.05(d) unless such failure shall materially adversely affect the defense of such action. In case notice of commencement of any such action shall be given to the indemnifying party as above provided, the indemnifying party shall be entitled to participate in and, to the extent it may wish, jointly with any other indemnifying party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such indemnified party. The indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the indemnified party unless (i) the indemnifying party agrees to pay the same, (ii) the indemnifying party fails to assume the defense of such action with counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that representation of such indemnified party and the indemnifying party by the same counsel would be inappropriate under applicable standards of professional conduct (in which case the indemnified party shall have the right to separate counsel and the indemnifying party shall pay the reasonable fees and expenses of such separate counsel, provided that, the indemnifying party shall not be liable for more than one separate counsel). No indemnifying party shall be liable for any settlement of any proceeding entered into without its consent.

(iii) The indemnification provided for in this Section 8.05(d) shall survive the termination of this Agreement and shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified party.

(e) Contribution .

(i) If for any reason the indemnification provisions contemplated by Section 8.05(d) hereof are either unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then the party that would otherwise be required to provide indemnification or the indemnifying party (in either case, for purposes of this Section 8.05(e), the “ Indemnifying Party ”) in respect of such losses, claims, damages or liabilities, shall contribute to the amount paid or payable by the party that would otherwise be entitled to indemnification or the indemnified party (in either case, for purposes of this Section 8.05(e), the “ Indemnified Party ”) as a result of such losses, claims, damages, liabilities or expense, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact related to information supplied by the Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party.

(ii) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8.05(e) were determined by pro rata allocation (even if the holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person or entity determined to have committed a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

(iii) The contribution provided for in this Section 8.05(e) shall survive the termination of this Agreement and shall remain in full force and effect regardless of any investigation made by or on behalf of any Indemnified Party.

ARTICLE IX

TRANSFERS OF PARTNERSHIP INTERESTS

9.01         Purchase for Investment .

(a)           Each Limited Partner, by its signature below or by its subsequent admission to the Partnership, hereby represents and warrants to the General Partner and to the Partnership that the acquisition of such Limited Partner’s Partnership Units is made for investment purposes only and not with a view to the resale or distribution of such Partnership Units.

(b)            Subject to the provisions of Section 9.02, each Limited Partner agrees that such Limited Partner will not sell, assign or otherwise transfer such Limited Partner’s Partnership Units or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations and warranties to the General Partner set forth in Section 9.01(a).

9.02         Restrictions on Transfer of Partnership Units .

(a)            Subject to the provisions of Sections 9.02(b), (c) and (d), no Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of such Limited Partner’s Partnership Units, or any of such Limited Partner’s economic rights as a Limited Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a “ Transfer ”) without the consent of the General Partner, which consent may be granted or withheld in its sole and absolute discretion. The General Partner may require, as a condition of any Transfer to which it consents, that the transferor assume all costs incurred by the Partnership in connection therewith.

(b)           No Limited Partner may withdraw from the Partnership other than as a result of a permitted Transfer ( i.e. , a Transfer consented to as contemplated by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.05) of all of such Limited Partner’s Partnership Units pursuant to this Article IX or pursuant to a redemption of all of such Limited Partner’s Common Units pursuant to Section 8.04. Upon the permitted Transfer or redemption of all of a Limited Partner’s Common Units, such Limited Partner shall cease to be a Limited Partner.

(c)           Subject to Sections 9.02(d), (e) and (g), a Limited Partner may Transfer, with the written consent of the General Partner, all or a portion of such Limited Partner’s Partnership Units to such Limited Partner’s (i) parent or parent’s spouse, (ii) spouse, (iii) natural or adopted descendant or descendants, (iv) spouse of such Limited Partner’s descendant, (v) brother or sister, (vi) trust created by such Limited Partner for the primary benefit of such Limited Partner and/or any such Person(s) described in (i) through (v) above, of which trust such Limited Partner or any such Person(s) or bank or other commercial entity in the business of acting as a fiduciary in its ordinary course of business and having an equity capitalization of at least $100,000,000 is a trustee, (vii) a corporation, partnership or limited liability company controlled by a Person or Persons named in (i) through (v) above, or (viii) if the Limited Partner is an entity, its beneficial owners.

(d)           No Limited Partner may effect a Transfer of its Partnership Units, in whole or in part, if, in the opinion of legal counsel for the Partnership, such proposed Transfer would require the registration of the Partnership Units under the Securities Act or would otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards).

(e)           No Transfer by a Limited Partner of its Partnership Units, in whole or in part, may be made to any Person if (i) in the opinion of legal counsel for the Partnership, such Transfer would result in the Partnership being treated as an association taxable as a corporation (other than a qualified REIT subsidiary within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal counsel for the Partnership, it would adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code or (iii) such Transfer is effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code.

(f)           The General Partner shall monitor the Transfers of Partnership Units (including any acquisition of Common Units by the Partnership or the General Partner) to determine (i) if such units could be treated as being traded on an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code and (ii) whether such Transfers could result in the Partnership being unable to qualify for the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the Service setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “ Secondary Market Safe Harbors ”). The General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion (i) to prevent any Transfer of Partnership Units which could cause the Partnership to become a “publicly traded partnership,” within the meaning of Code Section 7704 or (ii) to ensure that one or more of the Secondary Market Safe Harbors is met.

(g)           Any purported Transfer in contravention of any of the provisions of this Article IX shall be void ab initio and ineffectual and shall not be binding upon, or recognized by, the General Partner or the Partnership.

(h)           Before the consummation of any Transfer under this Article IX, the transferor and/or the transferee shall deliver to the General Partner such opinions, certificates and other documents as the General Partner shall reasonably request in connection with such Transfer.

9.03         Admission of Substitute Limited Partner .

(a)           Subject to the other provisions of this Article IX, an assignee of the Partnership Units of a Limited Partner (which shall be understood to include any purchaser, transferee, donee or other recipient of any disposition of such Partnership Units) shall be deemed admitted as a Limited Partner of the Partnership only with the consent of the General Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion, and upon the satisfactory completion of the following:

(i) The assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart or an amendment thereof, including a revised Exhibit A , and such other documents or instruments as the General Partner may require to effect the admission of such Person as a Limited Partner;

(ii) To the extent required, an amended Certificate evidencing the admission of such Person as a Limited Partner shall have been signed, acknowledged and filed in accordance with the Act;

(iii) The assignee shall have delivered a letter containing the representation set forth in Section 9.01(a) and the representations and warranties set forth in Section 9.01(b);

(iv) If the assignee is a corporation, partnership, limited liability company or trust, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of the assignee’s authority to become a Limited Partner under the terms and provisions of this Agreement;

(v) The assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 8.02;

(vi) The assignee shall have paid all legal fees and other expenses of the Partnership and the General Partner and filing and publication costs in connection with its substitution as a Limited Partner; and

(vii) The assignee shall have obtained the prior written consent of the General Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in the exercise of the General Partner’s sole and absolute discretion.

(b)           For the purpose of allocating Profits and Losses and distributing cash received by the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner upon the filing of the Certificate described in Section 9.03(a)(ii) or, if no such filing is required, the later of the date specified in the transfer documents or the date on which the General Partner has received all necessary instruments of transfer and substitution.

(c)           The General Partner and the Substitute Limited Partner shall cooperate with each other by preparing the documentation required by this Section 9.03 and making all required filings and publications. The Partnership shall take all such action as promptly as practicable after the satisfaction of the conditions in this Article IX to the admission of such Person as a Limited Partner of the Partnership.

9.04         Rights of Assignees of Partnership Units .

(a)            Subject to the provisions of Sections 9.01 and 9.02, except as required by operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of its Partnership Units until the Partnership has received notice.

(b)           Any Person who is the assignee of all or any portion of a Limited Partner’s Partnership Units, but does not become a Substitute Limited Partner and desires to make a further assignment of such Partnership Units, shall be subject to all the provisions of this Article IX to the same extent and in the same manner as any Limited Partner desiring to make an assignment of its Partnership Units.

9.05          Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner . The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) shall not cause the termination or dissolution of the Partnership, and the business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of his estate or, if such Limited Partner dies, such Limited Partner’s executor, administrator or trustee, or, if such Limited Partner is finally adjudicated incompetent, such Limited Partner’s committee, guardian or conservator, shall have the rights of such Limited Partner for the purpose of settling or managing such Limited Partner’s estate property and such power as the bankrupt, deceased or incompetent Limited Partner possessed to assign all or any part of such Limited Partner’s Partnership Units and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substitute Limited Partner.

9.06          Joint Ownership of Partnership Units . A Partnership Unit may be acquired by two individuals as joint tenants with right of survivorship, provided, that such individuals either are married or are related and share the same home as tenants in common. The written consent or vote of both owners of any such jointly held Partnership Unit shall be required to constitute the action of the owners of such Partnership Unit; provided, however, that the written consent of only one joint owner will be required if the Partnership has been provided with evidence satisfactory to the counsel for the Partnership that the actions of a single joint owner can bind both owners under the applicable laws of the state of residence of such joint owners. Upon the death of one owner of a Partnership Unit held in a joint tenancy with a right of survivorship, the Partnership Unit shall become owned solely by the survivor as a Limited Partner and not as an assignee. The Partnership need not recognize the death of one of the owners of a jointly-held Partnership Unit until it shall have received notice of such death. Upon notice to the General Partner from either owner, the General Partner shall cause the Partnership Unit to be divided into two equal Partnership Units, which shall thereafter be owned separately by each of the former owners.

ARTICLE X

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

10.01          Books and Records . At all times during the continuance of the Partnership, the General Partner shall keep or cause to be kept at the Partnership’s specified office true and complete books of account in accordance with generally accepted accounting principles, including: (a) a current list of the full name and last known business address of each Partner, (b) a copy of the Certificate Limited Partnership and all certificates of amendment thereto, (c) copies of the Partnership’s federal, state and local income tax returns and reports, (d) copies of this Agreement and any financial statements of the Partnership for the three most recent years and (e) all documents and information required under the Act. Any Partner or its duly authorized representative, upon paying the costs of collection, duplication and mailing, shall be entitled to inspect or copy such records during ordinary business hours.

10.02       Custody of Partnership Funds; Bank Accounts .

(a)            All funds of the Partnership not otherwise invested shall be deposited in one or more accounts maintained in such banking or brokerage institutions as the General Partner shall determine, and withdrawals shall be made only on such signature or signatures as the General Partner may, from time to time, determine.

(b)           All deposits and other funds not needed in the operation of the business of the Partnership may be invested by the General Partner. The funds of the Partnership shall not be commingled with the funds of any other Person except for such commingling as may necessarily result from an investment in those investment companies permitted by this Section 10.02(b).

10.03       Fiscal and Taxable Year . The fiscal and taxable year of the Partnership shall be the calendar year unless otherwise required by the Code.

10.04       Annual Tax Information and Report . Within 75 days after the end of each fiscal year of the Partnership, the General Partner shall furnish to each person who was a Limited Partner at any time during such year the tax information necessary to file such Limited Partner’s individual tax returns as shall be reasonably required by law.

10.05      Tax Matters Partner; Tax Elections; Special Basis Adjustments .

(a)           The General Partner shall be the Tax Matters Partner of the Partnership. As Tax Matters Partner, the General Partner shall have the right and obligation to take all actions authorized and required, respectively, by the Code for the Tax Matters Partner. The General Partner shall have the right to retain professional assistance in respect of any audit of the Partnership by the Service and all out-of-pocket expenses and fees incurred by the General Partner on behalf of the Partnership as Tax Matters Partner shall constitute Partnership expenses. In the event the General Partner receives notice of a final Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner shall either (i) file a court petition for judicial review of such final adjustment within the period provided under Section 6226(a) of the Code, a copy of which petition shall be mailed to all Limited Partners on the date such petition is filed, or (ii) mail a written notice to all Limited Partners, within such period, that describes the General Partner’s reasons for determining not to file such a petition.

(b)           All elections required or permitted to be made by the Partnership under the Code or any applicable state or local tax law shall be made by the General Partner in its sole and absolute discretion.

(c)          In the event of a transfer of all or any part of the Partnership Interest of any Partner, the Partnership, at the option of the General Partner, may elect pursuant to Section 754 of the Code to adjust the basis of the Properties. Notwithstanding anything contained in Article V of this Agreement, any adjustments made pursuant to Section 754 shall affect only the successor in interest to the transferring Partner and in no event shall be taken into account in establishing, maintaining or computing Capital Accounts for the other Partners for any purpose under this Agreement. Each Partner will furnish the Partnership with all information necessary to give effect to such election.

(d)          The Partners, intending to be legally bound, hereby authorize the Partnership to make an election (the “ Safe Harbor Election ”) to have the “liquidation value” safe harbor provided in Proposed Treasury Regulation Section 1.83-3(1) and the Proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43, as such safe harbor may be modified when such proposed guidance is issued in final form or as amended by subsequently issued guidance (the “ Safe Harbor ”), apply to any interest in the Partnership transferred to a service provider while the Safe Harbor Election remains effective, to the extent such interest meets the Safe Harbor requirements (collectively, such interests are referred to as “ Safe Harbor Interests ”). The Tax Matters Partner is authorized and directed to execute and file the Safe Harbor Election on behalf of the Partnership and the Partners. The Partnership and the Partners (including any person to whom an interest in the Partnership is transferred in connection with the performance of services) hereby agree to comply with all requirements of the Safe Harbor (including forfeiture allocations) with respect to all Safe Harbor Interests and to prepare and file all U.S. federal income tax returns reporting the tax consequences of the issuance and vesting of Safe Harbor Interests consistent with such final Safe Harbor guidance. The Partnership is also authorized to take such actions as are necessary to achieve, under the Safe Harbor, the effect that the election and compliance with all requirements of the Safe Harbor referred to above would be intended to achieve under Proposed Treasury Regulation Section 1.83-3, including amending this Agreement.

ARTICLE XI

AMENDMENT OF AGREEMENT

11.01      Amendment of Agreement .

(a)           Amendments to this Agreement may be proposed by the General Partner or by Limited Partners forming a Two Thirds Majority (other than the General Partner or any Subsidiary of the General Partner). Following such proposal, the General Partner shall submit any proposed amendment to the Limited Partners. The General Partner shall seek the written vote of the Partners on the proposed amendment or shall call a meeting to vote thereon and to transact any other business that it may deem appropriate. For purposes of obtaining a written vote, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a vote which is consistent with the General Partner’s recommendation with respect to the proposal. Except as otherwise provided in this Agreement, a proposed amendment shall be adopted and be effective as an amendment hereto if it is approved by the General Partner and it receives the consent of a Two Thirds Majority (other than the General Partner or any Subsidiary of the General Partner).

(b)           Notwithstanding Section 11.01(a), the General Partner shall have the power, without the consent of the Limited Partners, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(i) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

(ii) to reflect the issuance of additional Partnership Units or the admission, substitution, termination, or withdrawal of Partners in accordance with this Agreement;

(iii) to set forth or amend the designations, rights (including redemption rights that differ from those specified in Section 8.04), powers, duties, and preferences of holders of any additional Partnership Units or other Partnership Interests issued pursuant to Section 4.02;

(iv) to reflect a change that is of an inconsequential nature and does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

(v) to reflect such changes as are reasonably necessary for the General Partner to maintain its qualification as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or a ruling of the Service;

(vi) to modify the manner in which Capital Accounts are computed;

(vii) to include provisions in this Agreement that may be referenced in any rulings, regulations, notices, announcements, or other guidance regarding the federal income tax treatment of compensatory partnership interests issued and made effective after the date hereof or in connection with any elections that the General Partner determines to be necessary or advisable in respect of any such guidance. Any such amendment may include, without limitation, (a) a provision authorizing or directing the General Partner to make any election under the such guidance, (b) a covenant by the Partnership and all of the Partners to agree to comply with the such guidance, (c) an amendment to the capital account maintenance provisions and the allocation provisions contained in this Agreement so that such provisions comply with (I) the provisions of the Code and the Regulations as they apply to the issuance of compensatory partnership interests and (II) the requirements of such guidance and any election made by the General Partner with respect thereto, including, a provision requiring “forfeiture allocations” as appropriate. Any such amendments to this Agreement shall be binding upon all Partners; and

(viii) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law.

The General Partner shall provide notice to the Limited Partners when any action under this Section 11.01(b) is taken.

(c)          Notwithstanding Sections 11.01(a) and (b), this Agreement shall not be amended without the consent of each Partner adversely affected if such amendment would (i) convert a Limited Partner’s interest in the Partnership into a General Partner Interest; (ii) modify the limited liability of a Limited Partner in a manner adverse to such Limited Partner; (iii) alter rights of such Partner to receive distributions pursuant to Article 5, or the allocations specified in Article 5 (except as permitted pursuant to Section 4.02 and Section 11.01(b)(iii)) in a manner adverse to such Partner; (iv) alter or modify the Common Unit Redemption Right and REIT Shares Amount as set forth in Section 8.04, and the related definitions, in a manner adverse to such Partner; (v) cause the termination of the Partnership prior to the time set forth in Section 2.04; or (vi) amend this Section 11.01(c); provided , however , that the consent of each Partner adversely affected shall not be required for any amendment or action that affects all Partners holding the same class or series of Partnership Units on a uniform or pro rata basis. Any amendment consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner.

(d)          Notwithstanding Sections 11.01(a) or (b), the General Partner shall not amend Sections 4.02(a), 6.06, 6.07 or 7.01 without the consent of a Two Thirds Majority (other than the General Partner or any Subsidiary of the General Partner).

ARTICLE XII

GENERAL PROVISIONS

12.01      Notices . All communications required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or upon deposit in the United States mail, registered, postage prepaid return receipt requested, to the Partners at the addresses set forth in the attached Exhibit A , as it may be amended or restated from time to time; provided, however, that any Partner may specify a different address by notifying the General Partner in writing of such different address. Notices to the General Partner and the Partnership shall be delivered at or mailed to its office address set forth in Section 2.03. The General Partner and the Partnership may specify a different address by notifying the Limited Partners in writing of such different address.

12.02      Survival of Rights . Subject to the provisions limiting transfers, this Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and their respective legal representatives, successors, transferees and assigns.  

12.03      Additional Documents . Each Partner agrees to perform all further acts and execute, swear to, acknowledge and deliver all further documents that may be reasonable, necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.

12.04      Severability . If any provision of this Agreement shall be declared illegal, invalid or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the remainder.

12.05      Entire Agreement . This Agreement and its attached Exhibits constitute the entire agreement of the Partners and supersede all prior written agreements and prior and contemporaneous oral agreements, understandings and negotiations with respect to the subject matter, including without limitation the Original Agreement.

12.06      Pronouns and Plurals . When the context in which words are used in the Agreement indicates that such is the intent, words in the singular number shall include the plural and the masculine gender shall include the neuter or female gender as the context may require.

12.07      Headings . The Article headings or sections in this Agreement are for convenience only and shall not be used in construing the scope of this Agreement or any particular Article.

12.08      Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original copy and all of which together shall constitute one and the same instrument binding on all parties, notwithstanding that all parties shall not have signed the same counterpart.

12.09      Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have hereunder affixed their signatures to this Second Amended and Restated Agreement of Limited Partnership, all as of the 2 ^nd day of April, 2014.

[Signature Page to Second Amended and Restated Agreement of Limited Partnership]

[Signature Page to Second Amended and Restated Agreement of Limited Partnership - Continued]

[Signature Page to Second Amended and Restated Agreement of Limited Partnership - Continued]

MANAGEMENT AGREEMENT

among

Bluerock Residential Growth REIT, Inc.

Bluerock Residential Holdings, L.P.

and

BRG Manager, LLC

Dated as of April 2, 2014

MANAGEMENT AGREEMENT, dated as of April 2, 2014, among Bluerock Residential Growth REIT, Inc., a Maryland corporation (“ BRG ”), Bluerock Residential Holdings, L.P., a Delaware limited partnership (the “ Operating Partnership ”) and BRG Manager, LLC, a Delaware limited liability company (the “ Manager ”).

W I T N E S S E T H :

WHEREAS, BRG intends to invest in Target Assets (as defined below) and has qualified as a real estate investment trust for federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “ Code ”) beginning with its taxable year ended December 31, 2010; and

WHEREAS, BRG is the general partner of the Operating Partnership, and BRG intends to conduct substantially all of its business and make all Investments (as defined below) through the Operating Partnership;

WHEREAS, BRG and the Operating Partnership desire to retain the Manager to administer the business activities and day-to-day operations of the Company (as defined below) and to perform services for the Company in the manner and on the terms set forth herein and the Manager wishes to be retained to provide such services, subject to the supervision of the Board (as defined below), on the terms and conditions hereinafter set forth;

WHEREAS, the Manager wishes to be retained to administer such business activities and day-to-day operations and to provide such services;

NOW THEREFORE, in consideration of the premises and agreements hereinafter set forth, the parties hereto hereby agree as follows:

Section 1. Definitions .

(a) The following terms shall have the meanings set forth in this Section 1(a) :

“ Above-Market Rates ” has the meaning set forth in Section 10(b) .

“ Acquisition Expenses” means any and all expenses incurred by the Company, the Manager or any of their respective Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Investment, whether or not acquired, including, but not limited to, legal fees and expenses, travel and communications expenses, property inspection expenses, third party brokerage or finder’s fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and expenses, survey expenses, closing costs and the costs of performing due diligence.

“ Affiliate ” means (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person, (ii) any executive officer or general partner of such other Person, (iii) any member of the board of directors or board of managers (or bodies performing similar functions) of such Person, and (iv) any legal entity for which such Person acts as an executive officer or general partner.

“ AFFO ” means adjusted funds from operations, calculated by adjusting FFO by adding back acquisition expenses, equity based compensation expenses, and any other non-recurring on non-cash expenses, and subtracting recurring capital expenditures (and, when calculating the Incentive Fee only, further adjusting FFO to include any realized gains or losses on the Company’s real estate investments).

“ Agreement ” means this Management Agreement, as amended, supplemented or otherwise modified from time to time.

“ Automatic Renewal Term ” has the meaning set forth in Section 10(a) hereof.

“ Bankruptcy ” means, with respect to any Person, (a) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other U.S. federal or state or foreign insolvency law, or such Person’s filing an answer consenting to or acquiescing in any such petition, (b) the making by such Person of any assignment for the benefit of its creditors, (c) the expiration of 60 days after the filing of an involuntary petition under Title 11 of the Unites States Code, an application for the appointment of a receiver for a material portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other U.S. federal or state or foreign insolvency law; provided , that the same shall not have been vacated, set aside or stayed within such 60-day period or (d) the entry against such Person of a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereinafter in effect.

“ Base Management Fee ” means the base management fee in an amount equal to the sum of (a) 0.25% of BRG’s Existing and Contributed Stockholders’ Equity, per annum, calculated and payable in quarterly installments in arrears in cash, and (b) 1.50% of BRG’s New Stockholders’ Equity, per annum, calculated and payable in quarterly installments in arrears in cash.

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

“ Board ” means the board of directors of BRG. In every instance herein requiring approval of the Board or referring to policies or directions of the Board, for purposes of this Agreement, the Board shall be deemed to include any duly appointed and constituted committee of the Board with respect to each and every act that under the Governing Instruments or applicable law may be taken with the approval of a duly appointed and constituted committee of the Board, and references herein to the Board shall be deemed to include references to each such committee.

“ Business Day ” means any day except a Saturday, a Sunday or a day on which banking institutions in New York, New York are not required to be open.

“ Cause Termination Notice ” has the meaning set forth in Section 11(a) .

“ Claim ” has the meaning set forth in Section 8(d) hereof.

“ Class A Common Stock ” means the Class A common stock, par value $0.01 per share, of BRG.

“ Class B Common Stock ” means, collectively, the Class B-1 common stock, Class B-2 common stock, and Class B-3 common stock, in each case, par value $0.01 per share, of BRG.

“ Closing Date ” means the date of closing of the Public Offering.

“ Code ” has the meaning set forth in the Recitals.

“ Common Stock Equivalents ” means shares of the Class A Common Stock issuable pursuant to outstanding rights, options or warrants to subscribe for, purchase or otherwise acquire shares of Class A Common Stock that are in-the-money on such date.

“ Company ” means, collectively, BRG and the Operating Partnership.

“ Company Entities ” means, collectively, BRG, the Operating Partnership and each of their respective subsidiaries.

“ Company Indemnified Party ” has meaning set forth in Section 8(c) hereof.

“ Conduct Policies ” has the meaning set forth in Section 2(l) hereof.

“ Confidential Information ” has the meaning set forth in Section 5 hereof.

“ Effective Termination Date ” has the meaning set forth in Section 10(b) hereof, and shall also mean the effective date of termination of this Agreement by any notice given pursuant to Sections 10(d), 11(a) or 11(b) hereof.

“ Equity Incentive Plans ” means the equity incentive plans adopted by BRG to provide incentive compensation to attract and retain qualified independent directors, executive officers and other key employees, including officers and employees of the Manager and Operating Partnership and their Affiliates and other service providers, including the Manager and its Affiliates.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Existing and Contributed Stockholders’ Equity ” means (a)  the net proceeds from (or equity value assigned to) all issuances of BRG’s equity and equity equivalent securities (including Class B Common Stock (including upon their conversion into shares of Class A Common Stock), Common Stock Equivalents, preferred stock and units of limited partnership interest in the Operating Partnership) since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), less (b) any amount that BRG has paid to repurchase BRG’s Common Stock since inception. Existing and Contributed Stockholders’ Equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in the Company’s financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Manager and the Independent Directors and approval by a majority of the Independent Directors.

“ FFO ” means funds from operations as such term is from time to time defined by the National Association of Real Estate Investment Trusts, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

“ Financing Transaction ” means any financing transaction with respect to any Investment involving any of the Company Entities incurring any mortgage or other indebtedness, including the entering into any line of credit, mezzanine financing, preferred equity financing, and any transaction involving the creation of any commercial mortgage-backed security.

“ GAAP ” means generally accepted accounting principles in effect in the United States on the date such principles are applied.

“ Governing Instruments ” means, with regard to any entity, the articles of incorporation or certificate of incorporation and bylaws in the case of a corporation, the partnership agreement in the case of a general partnership, the certificate of limited partnership and the partnership agreement in the case of a limited partnership, the certificate of formation and operating agreement in the case of a limited liability company, the trust instrument in the case of a trust, or similar governing documents, in each case as amended from time to time.

“ Incentive Fee ” means the incentive fee payable to the Manager, which shall be calculated and payable with respect to each calendar quarter (or part thereof that this Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) AFFO of BRG for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in the Public Offering and in future offerings and transactions of BRG, multiplied by the weighted average number of all shares of Class A Common Stock outstanding on a fully-diluted basis (including, for the avoidance of doubt, any restricted stock units, any restricted shares of Class A Common Stock, Equity Incentive Plan units, and other shares of common stock underlying other awards granted under one or more of BRG’s Equity Incentive Plans and units of limited partnership interest in the Operating Partnership) in the previous 12-month period, exclusive of equity securities issued prior to the Public Offering, and (B) 8%, and (2) the sum of any Incentive Fees paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no Incentive Fee is payable with respect to any calendar quarter unless AFFO is greater than zero for the four most recently completed calendar quarters, or the number of completed calendar quarters since the Closing Date of the Public Offering, whichever is less. For purposes of calculating the Incentive Fee during the first 12 months after completion of the Public Offering, AFFO will be determined by annualizing the applicable period following completion of the Public Offering.

If the Effective Termination Date does not correspond to the end of a calendar quarter, the Manager’s Incentive Fee shall be calculated for the period beginning on the day after the end of the calendar quarter immediately preceding the Effective Termination Date and ending on the Effective Termination Date, which Incentive Fee shall be calculated using AFFO for the 12-month period ending on the Effective Termination Date.

“ Indemnified Party ” has the meaning set forth in Section 8(c) hereof.

“ Independent Director ” means a member of the Board who is “independent” in accordance with BRG’s Governing Instruments and the rules of the Securities Exchange on which the shares of Class A Common Stock are listed.

“ Initial Term ” has the meaning set forth in Section 10(a) hereof.

“ Investment ” means any investment by the Company, directly or through a subsidiary, in a Target Asset.

“ Investment Allocation Agreement ” refers to the investment allocation agreement, dated April 2, 2014, by and among BRG, the Operating Partnership, the Manager and Bluerock Real Estate, L.L.C.

“ Investment Committee ” means the investment committee of the Board, which shall be composed of at least three members appointed by the Board, at least a majority of which shall be Independent Directors, formed for the primary purpose of (1) periodically reviewing the Company’s Investments and (2) pursuant to the Investment Guidelines, approving certain investments proposed to be made by the Company.

“ Investment Company Act ” means the Investment Company Act of 1940, as amended.

“ Investment Guidelines ” means the investment guidelines approved by the Board, a copy of which is attached hereto as Exhibit A , as the same may be amended, restated, modified, supplemented or waived pursuant to the approval of a majority of the entire Board (which must include a majority of the Independent Directors).

“ Investment Transaction ” means any purchase, acquisition, exchange, sale or disposition, merger or interest exchange that results in the acquisition or disposition of, or other transaction involving, an Investment.

“ Last Appraiser ” has the meaning set forth in Section 6(g) hereof.

“ Losses ” has the meaning set forth in Section 8(b) hereof.

“ LTIP Unit ” shall have the definition set forth in the partnership agreement of the Operating Partnership.

“ Manager ” has the meaning set forth in the Recitals.

“ Manager Change of Control ” means a change in the direct or indirect (i) beneficial ownership of more than fifty percent (50%) of the combined voting power of the Manager’s then outstanding equity interests, or (ii) power to direct or control the management policies of the Manager, whether through the ownership of beneficial equity interests, common directors or officers, by contract or otherwise. Manager Change of Control shall not include (i) public offerings of the equity interests of the Manager, (ii) any of the foregoing changes resulting from a transfer by R. Ramin Kamfar to a trust or other entity created for estate planning purposes primarily for the benefit of R. Ramin Kamfar, or (iii) any assignment of this Agreement by the Manager as permitted hereby and in accordance with the terms hereof.

“ Manager Indemnified Party ” has the meaning set forth in Section 8(a) hereof.

“ Manager Permitted Disclosure Parties ” has the meaning set forth in Section 5(a) hereof.

“ New Stockholders’ Equity ” means (a) the sum of (1) the net proceeds from (or equity value assigned to) all issuances of BRG’s equity and equity equivalent securities (including Class A Common Stock, Common Stock Equivalents, preferred stock and units of limited partnership interest in the Operating Partnership) in the Public Offering or any subsequent offering (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (2) BRG’s retained earnings at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that BRG has paid to repurchase BRG’s Class A Common Stock issued in the Public Offering or any subsequent offering. New Stockholders’ Equity also excludes (1) any unrealized gains and losses and other non-cash items (including depreciation and amortization) that have impacted stockholders’ equity as reported in the Company’s financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Manager and the Independent Directors and approval by a majority of the Independent Directors.

“ Notice of Proposal to Negotiate ” has the meaning set forth in Section 10(c) hereof.

“ NYSE ” means the New York Stock Exchange.

“ Person ” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting in such capacity on behalf of the foregoing.

“ Public Offering ” means BRG’s sale of Class A Common Stock to the public through underwriters pursuant to BRG’s Registration Statement on Form S-11 (No. 333-192610).

“ Regulation FD ” means Regulation FD as promulgated by the SEC.

“ REIT ” means a “real estate investment trust” as defined under the Code.

“ SEC ” means the United States Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Securities Exchange ” means the NYSE, NYSE MKT, and any other nationally recognized securities exchange on which BRG’s Class A Common Stock is traded.

“ Target Assets ” means the types of assets described under “Our Business and Properties” in the prospectus contained in BRG’s Registration Statement on Form S-11 (No. 333-192610) relating to the Public Offering, subject to, and including any changes to the Company’s Investment Guidelines that may be approved by the Board from time to time.

“ Termination Fee ” means a termination fee equal to three (3) times the sum of (i) the Base Management Fee and (ii) the Incentive Fee, in each case, earned by the Manager during the 12-month period immediately preceding the most recently completed fiscal quarter prior to the Effective Termination Date.

“ Termination Notice ” has the meaning set forth in Section 10(b) hereof.

“ Termination Without Cause ” has the meaning set forth in Section 10(b) hereof.

“ Valuation Notice ” has the meaning set forth in Section 6(g) hereof.

(b) As used herein, accounting terms relating to any Company Entity, if any, not defined in Section 1(a) and accounting terms partly defined in Section 1(a) , to the extent not defined, shall have the respective meanings given to them under GAAP. As used herein, “calendar quarters” shall mean the period from January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to December 31 of the applicable year.

(c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words include, includes and including shall be deemed to be followed by the phrase “without limitation.”

Section 2. Appointment and Duties of the Manager .

(a) BRG and the Operating Partnership hereby appoint the Manager to manage the investments and day-to-day operations of the Company Entities, subject at all times to the further terms and conditions set forth in this Agreement and to the supervision and direction of, and such further limitations or parameters as may be imposed from time to time by, the Board. The Manager hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein, provided that funds are made available by the Company for such purposes as set forth in Section 7 hereof, and further subject to Section 6 hereof. The appointment of the Manager shall be exclusive to the Manager, except to the extent that the Manager elects, in its reasonable discretion, subject to the terms of this Agreement, to cause the duties of the Manager as set forth herein to be provided by third parties.

(b) The Manager, in its capacity as manager of the Investments and the operations of the Company Entities, at all times will be subject to the supervision and direction of the Board and will use commercially reasonable efforts to present to the Company potential investment opportunities and will perform its duties hereunder, including managing the Company’s business affairs in conformity with the Investment Guidelines and other policies that are approved and monitored by the Board. BRG, the Operating Partnership and the Manager hereby acknowledge the recommendation by the Manager and the approval by the Board of the Investment Guidelines, including, but not limited to the Company’s investment strategy in the Target Assets. BRG, the Operating Partnership and the Manager hereby acknowledge and agree that, during the term of this Agreement, any proposed changes to the Company’s investment strategy that would modify or expand the Target Assets shall require a change in, or supplement to, the Investment Guidelines. The Company shall notify the Manager promptly of any amended, restated, supplemented or waived Investment Guidelines, including any modification or revocation of the Manager’s authority set forth in the Investment Guidelines; provided, however , that such modification or revocation shall not be applicable to Investment Transactions to which the Manager has committed any Company Entity prior to the date of receipt by the Manager of such notification.

(c) The Manager will be responsible for (1) the selection, purchase, sale and disposition of Investments, (2) the Company’s financing activities, and (3) providing the Company with advisory services. In addition, the Manager will be responsible for the day-to-day operations of the Company Entities (which, for purposes of the Manager’s responsibilities in this Agreement, includes their respective subsidiaries) and will perform (or cause to be performed) such services and activities relating to the Investments and operations of the Company Entities as may be appropriate, which may include, without limitation:

(i) serving as the Company’s consultant with respect to the periodic review of the Investment Guidelines and other parameters for the Company’s Investments, financing activities and operations, any modification to which will be approved by the Board (including a majority of the Independent Directors);

(ii) investigating, analyzing, and selecting possible Investment opportunities and acquiring, financing, retaining, selling, restructuring, exchanging or disposing of Investments consistent with the Investment Guidelines;

(iii) with respect to prospective Investment Transactions and Financing Transactions, conducting negotiations (including negotiation of definitive agreements) on the Company’s behalf with sellers, purchasers, and brokers and, if applicable, their respective agents and representatives;

(iv) negotiating and entering into, on the Company’s behalf, interest rate swap agreements and other agreements and instruments required for the Company to conduct the Company’s business;

  (v) effecting any private placement of interest in the Operating Partnership, tenancy-in-common or other interests in Investments as may be approved by the Board;

(vi) engaging and supervising, on the Company’s behalf and at the Company’s expense, independent contractors that provide investment banking, securities brokerage, mortgage brokerage, real estate brokerage, other financial services, due diligence services, underwriting review services, legal and accounting services, and all other services (including transfer agent and registrar services) as may be required relating to the Company’s operations and actual or potential Investments Investment Transactions or Financing Transactions;

(vii) coordinating and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the joint venture or co-investment partners;

(viii) providing executive and administrative personnel, office space and office services required in rendering services to the Company;

(ix) administering the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to the Company’s management as may be agreed upon by the Manager and the Board, including, without limitation, the collection of revenues and the payment of the Company’s debts and obligations and maintenance of appropriate computer services to perform such administrative functions;

(x) communicating on the Company’s behalf with the holders of any of the Company’s equity or debt securities of BRG or the Operating Partnership as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders;

(xi) counseling the Board and the Company in connection with policy decisions to be made by the Board;

(xii) evaluating and recommending to the Board hedging strategies and engaging in hedging activities on the Company’s behalf, consistent with such strategies as so modified from time to time, BRG’s qualification as a REIT and with the Investment Guidelines;

(xiii) counseling the Board and the Company regarding the maintenance of BRG’s qualification as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and Treasury Regulations thereunder and using commercially reasonable efforts to cause BRG to continue to qualify for taxation as a REIT;

(xiv) counseling the Company regarding the maintenance of the Company’s exemption from the status of an investment company required to register under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemption and using commercially reasonable efforts to cause the Company to maintain such exemption from such status;

(xv) furnishing reports and statistical and economic research to the Company regarding the Company’s activities and services performed for the Company by the Manager, including reports to the Board with respect to potential conflicts of interest involving the Manager or any of its Affiliates;

  (xvi) monitoring the operating performance of the Company’s Investments and providing periodic reports with respect thereto to the Board, including comparative information with respect to such operating performance and budgeted or projected operating results;

(xvii) investing and reinvesting any moneys and securities of the Company (including investing in short-term investments pending investment in other investments, payment of fees, costs and expenses, or payments of dividends or distributions to BRG’s stockholders and the Operating Partnership’s partners) and advising the Company as to its capital structure and capital raising;

(xviii) causing the Company to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures and systems, internal controls and other compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs and, if applicable, taxable REIT subsidiaries, and to conduct quarterly compliance reviews with respect thereto;

(xix) assisting the Company in qualifying to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

(xx) assisting the Company in complying with all regulatory requirements applicable to the Company in respect of the Company’s business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act, or by the applicable Securities Exchange;

(xxi) assisting the Company in taking all necessary action to enable the Company to make required tax filings and reports, including soliciting stockholders for required information to the extent required by the provisions of the Code applicable to REITs;

(xxii) handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject arising out of the Company’s day-to-day operations (other than with the Manager or its Affiliates), subject to such limitations or parameters as may be imposed from time to time by the Board;

(xxiii) using commercially reasonable efforts to cause expenses incurred by the Company or on the Company’s behalf to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines set by the Board from time to time;

(xxiv) serving as the Company’s consultant with respect to decisions regarding any of its financings, hedging activities, borrowings or joint venture arrangements undertaken by the Company, including (1) assisting the Company in developing criteria for debt and equity financing that is specifically tailored to its investment objectives, and (2) advising the Company with respect to obtaining appropriate financing for its investments;

(xxv) arranging marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships) and other promotional efforts designed to promote the Company’s business;

(xxvi) performing such other services as may be required from time to time for management and other activities relating to the Company’s assets and business as the Board shall reasonably request or the Manager shall deem appropriate under the particular circumstances; and

(xxvii) using commercially reasonable efforts to cause the Company to comply with all applicable laws.

(d)   The Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of the persons and firms referred to in Section 7(b) hereof as the Manager deems necessary or advisable in connection with the management and operations of the Company. In performing its duties under this Section 2 , the Manager shall be entitled to rely reasonably on qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers) hired by the Manager at the Company’s sole cost and expense.

(e)   The Manager shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment Guidelines, (ii) would adversely and materially affect the qualification of BRG as a REIT or the Operating Partnership as a partnership under the Code or the Company’s status as an entity exempted or excluded from investment company status under the Investment Company Act, or (iii) would conflict with or violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Company or of any exchange on which the securities of the Company may be listed or any applicable Governing Instruments. If the Manager is ordered to take any action by the Board, the Manager shall promptly notify the Board if it is the Manager’s judgment that such action would adversely and materially affect such status or conflict with or violate any such law, rule or regulation or Governing Instruments. Notwithstanding the foregoing, neither the Manager nor any of its Affiliates shall be liable to the Company, the Board, or the Company’s stockholders or partners, as applicable, for any act or omission by the Manager or any of its Affiliates, except as provided in Section 8 of this Agreement.

(f)   The Manager shall notify the Board in advance of all proposed Investment Transactions before they are completed. The Manager shall seek and obtain Board approval of any Investment Transaction that does not meet the Investment Guidelines. Subject to this Section 2(f) , the Manager may execute without Board approval (but, in all cases, with advance notice to the Board) any Investment Transaction that fits within the Investment Guidelines, if then permitted by the Investment Guidelines. If any proposed Investment Transaction requires approval by the Independent Directors, the Manager will deliver to the Independent Directors all documents and other information reasonably required by them to evaluate properly the proposed transaction. With respect to Investment Transactions for which Board approval is not required but advance notice is required, the Manager shall provide to the Board a summary of its investment analysis with respect to the proposed Investment Transaction. The Board may, at any time upon the giving of notice to the Manager, modify or revoke the authority set forth in this Section 2(f) ; provided, however , that such modification or revocation shall be effective upon receipt by the Manager and shall not be applicable to Investment Transactions to which the Manager has committed the Company prior to the date of receipt by the Manager of such notification.

(g) The Company (including the Board) agrees to take all actions reasonably required to permit and enable the Manager to carry out its duties and obligations under this Agreement, including, without limitation, all steps reasonably necessary to allow the Manager to file any registration statement or other filing required to be made under the Securities Act, Exchange Act, the applicable Securities Exchange’s Listed Company Manual, the Code or other applicable law, rule or regulation on behalf of the Company in a timely manner. The Company further agrees to use commercially reasonable efforts to make available to the Manager all resources, information and materials reasonably requested by the Manager to enable the Manager to satisfy its obligations hereunder, including its obligations to deliver financial statements and any other information or reports with respect to the Company.

(h) As frequently as the Manager may deem reasonably necessary or advisable, or at the direction of the Board, the Manager shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, any reports and other information relating to any proposed or consummated Investment as may be reasonably requested by the Company.

(i) The Manager shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all reports, financial or otherwise, with respect to the Company reasonably required by the Board in order for the Company Entities to comply with their respective Governing Instruments or as otherwise reasonably requested by the Board, or any other materials required to be filed with any governmental body or agency, and shall prepare, or, at the sole cost and expense of the Company, cause to be prepared, all materials and data necessary to complete such reports and other materials, including, without limitation, an annual audit of BRG’s consolidated financial statements by a nationally recognized independent accounting firm.

(ii) The Manager shall prepare, or, at the sole cost and expense to the Company, cause to be prepared, regular reports for the Board to enable the Board to review the Company’s acquisitions, portfolio composition and characteristics, performance and compliance with the Investment Guidelines and policies approved by the Board.

(i)   Officers, employees and agents of the Manager and its Affiliates may serve as directors, officers, agents, nominees or signatories for any Company Entity, to the extent permitted by their respective Governing Instruments or by any resolutions duly adopted by the Board, the Operating Partnership or such Company Entity. When executing documents or otherwise acting in such capacities for any Company Entity, such Persons shall indicate in what capacity they are executing on behalf of such Company Entity. Without limiting the foregoing, while this Agreement is in effect, the Manager will provide the Company with a management team, including a Chief Executive Officer, President, Chief Accounting Officer, and Chief Operating Officer, along with appropriate support personnel, to provide the management services to be provided by the Manager to the Company Entities hereunder, who shall devote such of their time to the management of the Company as necessary and appropriate, commensurate with the level of activity of the Company from time to time.

(j)   The Manager, at its sole cost and expense, shall at all times during the term of this Agreement maintain reasonable and customary “errors and omissions” insurance coverage and other customary insurance coverage in respect to its obligations and activities under, or pursuant to, this Agreement, naming BRG and the Operating Partnership as additional insureds.

(k)   The Manager, at its sole cost and expense, shall provide such third party internal audit, compliance and control services as may be required for the Company to comply with applicable law (including the Securities Act and Exchange Act), regulation (including SEC regulations) and the rules and requirements of the applicable Securities Exchange and as otherwise reasonably requested by the Company or the Board from time to time.

(l)   The Manager acknowledges receipt of BRG’s Code of Business Conduct and Ethics and Policy on Insider Trading (the “ Conduct Policies ”) and agrees to require any Persons who provide services to the Company to comply with such Conduct Policies in the performance of such services hereunder or such comparable policies as shall in substance hold such Persons to at least the standards of conduct set forth in the Conduct Policies.

(m) The Manager, at its sole cost and expense, shall maintain any required registration of the Manager or any Affiliate with the SEC under the Investment Advisers Act of 1940, as amended, or with any state securities authority in any state in which the Manager or its Affiliate is required to be registered as an investment advisor under applicable state securities laws.

Section 3. Additional Activities of the Manager; Non-Solicitation; Restrictions.

(a)   Except as provided in the last sentence of this Section 3(a) , the Investment Allocation Agreement and/or the Investment Guidelines, nothing in this Agreement shall (i) prevent the Manager or any of its Affiliates, officers, directors or employees, from engaging in other businesses or from rendering services of any kind to any other Person or entity, whether or not the investment objectives or policies of any such other Person or entity are similar to those of the Company; provided, however , that the Manager shall devote sufficient resources to the Company’s business to discharge its obligations to the Company Entities under this Agreement; or (ii) in any way bind or restrict the Manager or any of its Affiliates, officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Manager or any of its Affiliates, officers, directors or employees may be acting. While information and recommendations supplied to the Company shall, in the Manager’s reasonable and good faith judgment, be appropriate under the circumstances and in light of the investment objectives and policies of the Company, they may be different from the information and recommendations supplied by the Manager or any Affiliate of the Manager to others. The Company shall be entitled to equitable treatment under the circumstances in receiving information, recommendations and any other services, but the Company recognizes that it is not entitled to receive preferential treatment as compared with the treatment given by the Manager or any Affiliate of the Manager to others. The Company shall have the benefit of the Manager’s best judgment and effort in rendering services hereunder and, in furtherance of the foregoing, the Manager shall not undertake activities that, in its good faith judgment, will adversely affect the performance of its obligations under this Agreement.

(b) The Manager shall report to the Board any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Manager’s obligations to the Company and its obligations to or its interest in any other Person. If the Manager or any of its Affiliates sponsored any other investment program with similar investment objectives to the Company that has investment funds available at the same time as the Company, the Manager shall inform the Board of the method to be applied by the Manager 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 Manager to competing programs in order for the Board (including the Independent Directors) to evaluate that the Manager is allocating such opportunities in accordance with such method.

Section 4. Bank Accounts .

At the direction of the Board, the Manager may establish and maintain one or more bank accounts in the name of any Company Entity, and may collect and deposit into any such account or accounts, and disburse funds from any such account or accounts, under such terms and conditions as the Board may approve; and the Manager shall from time to time render appropriate accountings of such collections and payments to the Board and, upon request, to the Company’s auditors.

Section 5. Records; Confidentiality .

(a) The Manager shall maintain appropriate books of accounts and records relating to services performed hereunder, and such books of account and records shall be accessible for inspection by representatives of the Company Entities at any time during normal business hours. The Manager shall keep confidential any and all non-public information, written or oral, obtained by it in connection with the services rendered hereunder (“ Confidential Information ”) and shall not use Confidential Information except in furtherance of its duties under this Agreement or disclose Confidential Information, in whole or in part, to any Person other than (i) to its Affiliates, officers, directors, employees, agents, representatives or advisors who need to know such Confidential Information for the purpose of rendering services hereunder, (ii) to appraisers, financing sources and others in the ordinary course of the Company’s business ((i) and (ii) collectively, “ Manager Permitted Disclosure Parties ”), (iii) in connection with any governmental or regulatory filings of the Company or filings with the NYSE or other applicable Securities Exchange or market, or disclosure or presentations to Company investors (subject to compliance with Regulation FD), (iv) to governmental officials having jurisdiction over the Company, (v) as requested by law or legal process to which the Manager or any Person to whom disclosure is permitted hereunder is a party, or (vi) with the consent of the Company. The Manager agrees to inform each of its Manager Permitted Disclosure Parties of the non-public nature of the Confidential Information and to obtain agreement from such Persons to treat such Confidential Information in accordance with the terms hereof.

(b) Nothing herein shall prevent the Manager from disclosing Confidential Information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of, or pursuant to any law or regulation to, any regulatory agency or authority, (iii) to the extent reasonably required in connection with the exercise of any remedy hereunder, or (iv) to its legal counsel or independent auditors; provided, however that with respect to clauses (i) and (ii), it is agreed that, so long as not legally prohibited, the Manager will provide the Company with prompt written notice of such order, request or demand so that the Company may seek, at its sole expense, an appropriate protective order and/or waive the Manager’s compliance with the provisions of this Agreement. If, failing the entry of a protective order or the receipt of a waiver hereunder, the Manager is required to disclose Confidential Information, the Manager may disclose only that portion of such information that is legally required without liability hereunder; provided , that the Manager agrees to exercise its reasonable best efforts to obtain reliable assurance that confidential treatment will be accorded such information.

(c) Notwithstanding anything herein to the contrary, each of the following shall be deemed to be excluded from the provisions of this Section 5: any Confidential Information that (A) is available to the public from a source other than the Manager, (B) is released in writing by the Company to the public (except to the extent exempt under Regulation FD) or to persons who are not under similar obligation of confidentiality to the Company, or (C) is obtained by the Manager from a third party where such disclosure, to the best of the Manager’s knowledge, does not constitute a breach by such third party of an obligation of confidence with respect to the Confidential Information disclosed.

(d) The provisions of this Agreement shall survive the expiration or earlier termination of this Agreement for a period of one (1) year; provided that the parties will maintain trade secrets of the other party identified in writing as trade secrets, and which in fact constitute trade secrets, for a period of no longer than five (5) years thereafter.

Section 6. Compensation .

(a) For the services rendered under this Agreement, the Company shall pay the Base Management Fee and the Incentive Fee to the Manager. The Manager will not receive any compensation for the period prior to the Closing Date other than expenses incurred and reimbursed pursuant to Section 7 hereof.

(b) The parties acknowledge that the Base Management Fee is intended to compensate the Manager for advisory services and certain general management services rendered under this Agreement.

(c) The Base Management Fee shall be payable in arrears in cash, in quarterly installments commencing with the quarter in which this Agreement is executed. If applicable, the initial and final installments of the Base Management Fee shall be pro-rated based on the number of days during the initial and final quarters, respectively, that this Agreement is in effect. The Base Management Fee shall be calculated within 30 days after the end of each quarter and such calculation shall be promptly delivered to the Company. The Company will be obligated to pay each quarterly installment of the Base Management Fee calculated for that quarter in cash within five (5) Business Days after delivery to the Company of the written statement of the Manager setting forth the computation of the Base Management Fee for such quarter.

(d )  The Incentive Fee shall be payable in arrears, in quarterly installments commencing with the quarter in which this Agreement is executed. The Manager shall compute each quarterly installment of the Incentive Fee within forty-five (45) days after the end of the calendar quarter with respect to which such installment is payable. A copy of the computations made by the Manager to calculate such installment shall thereafter promptly be delivered to the Board and, upon such delivery, payment of such installment of the Incentive Fee shown therein shall be due and payable no later than the date which is five (5) Business Days after the date of delivery to the Board of such computations.

(e)   Each quarterly installment of the Incentive Fee shall be allocated and payable as follows:

(i) fifty percent (50%) of the Incentive Fee will be payable in LTIP Units; and

(ii) the remainder will be payable in cash or in LTIP Units, at the election of the Board.

(f)   The number of LTIP Units payable as the Incentive Fee to be issued to the Manager will be equal to the dollar amount of the portion of the quarterly installment of the Incentive Fee payable in such LTIP Units, divided by a value determined as follows:

(i) if the Class A Common Stock is traded on a Securities Exchange, the value shall be deemed to be the average of the closing prices of the Class A Common Stock on such exchange on the five (5) Business Days prior to the date on which the quarterly installment of the Incentive Fee is paid;

(ii) if the Class A Common Stock is not traded on a Securities Exchange but is actively traded over-the-counter, the value shall be deemed to be the average of the closing bids or sales prices, as applicable, on the five (5) Business Days prior to the date on which the quarterly installment of the Incentive Fee is paid; and

(iii) if the Class A Common Stock is neither traded on a Securities Exchange nor actively traded over-the-counter, the value shall be the fair market value thereof, as reasonably determined in good faith by the Board (including a majority of the Independent Directors) .

(g)   If at any time the Manager shall, in connection with a determination of the value of the Class A Common Stock made by the Board pursuant to Section 6(f)(iii) hereof, (i) dispute such determination in good faith by more than five percent (5%), and (ii) such dispute cannot be resolved between the Independent Directors and the Manager within ten (10) Business Days after the Manager provides written notice to the Company of such dispute (the “ Valuation Notice ”), then the matter shall be resolved by an independent appraiser of recognized standing selected jointly by the Independent Directors and the Manager within not more than twenty (20) days after the Valuation Notice. In the event the Independent Directors and the Manager cannot agree with respect to such selection within the aforesaid twenty (20) day time-frame, the Independent Directors shall select one such independent appraiser and the Manager shall select one independent appraiser within five (5) Business Days after the expiration of the twenty (20) day period, with one additional such appraiser (the “ Last Appraiser ”) to be selected by the appraisers so designated within five (5) Business Days after their selection. Any valuation decision made by the Last Appraiser shall be deemed final and binding upon the Board and the Manager and shall be delivered to the Manager and the Board within not more than fifteen (15) days after the selection of the Last Appraiser. The expenses of the appraisal shall be paid by the party with the estimate that deviated the furthest from the final valuation decision made by the independent appraisers.

Section 7. Expenses of the Company .

(a)   Except as otherwise set forth in Section 7(b)(iv) hereof with respect to the costs of legal services rendered for the Company by providers retained by the Manager, which costs shall be the expense of the Company, the Manager shall be responsible for the expenses related to any and all personnel of the Manager and its Affiliates who provide services to the Company Entities pursuant to this Agreement (including, without limitation, each of the officers of the Company and any directors of BRG who are also directors, officers, employees or agents of the Manager or any of its Affiliates), including, without limitation, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of such personnel, and costs of insurance with respect to such personnel. For the avoidance of doubt, any Equity Incentive Plan of BRG or the Operating Partnership in which any person referred to above participates shall be excluded from the operation of this Section 7(a) .

(b)   The Company shall pay (or cause to be paid) all of the costs and expenses of each Company Entity and shall reimburse the Manager or its Affiliates for documented expenses of the Manager and its Affiliates incurred on behalf of any Company Entity that are reasonably necessary for the performance by the Manager of its duties and functions hereunder, which may include the Company’s pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Manager and its Affiliates required for the Company’s operations, provided , that such expenses are in amounts no greater than those that would be payable to third-party professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis, and excepting only those expenses that are specifically the responsibility of the Manager pursuant to Section 7(a) of this Agreement. Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Company Entities shall be paid by the Company and shall not be paid by the Manager or Affiliates of the Manager:

(i) Acquisition Expenses incurred in connection with the selection and acquisition of Investments;

(ii) general and administrative expenses of the Company Entities;

(iii) expenses in connection with the issuance of securities of the Company, any Financing Transaction and other costs incident to the acquisition, development, redevelopment, construction, repositioning, leasing, disposition and financing of the Investments;

(iv) costs of legal, tax, accounting, consulting, auditing and other similar services rendered for the Company by providers retained by the Manager or, if provided by the Manager’s personnel, in amounts which are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis;

(v) the compensation and expenses of BRG’s directors and the cost of liability insurance to indemnify the Company and its directors and officers;

(vi) costs associated with the establishment and maintenance of any of the Company’s credit facilities, other financing arrangements, or other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing and other similar costs) or any of BRG’s securities offerings;

(vii) expenses connected with communications to holders of the securities of any Company Entity and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the SEC, the costs payable by the Company to any transfer agent and registrar in connection with the listing and/or trading of BRG’s securities on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing, printing and mailing BRG’s annual report to its stockholders or the Operating Partnership’s partners, as applicable, and proxy materials with respect to any meeting of BRG’s stockholders or the Operating Partnership’s partners, as applicable;

(viii) costs associated with any computer software or hardware, electronic equipment or purchased information technology services from third-party vendors that is used for the Company Entities;

(ix) expenses incurred by managers, officers, personnel and agents of the Manager for travel on the Company’s behalf and other out-of-pocket expenses incurred by managers, officers, personnel and agents of the Manager in connection with the acquisition, development, redevelopment, construction, repositioning, leasing, financing, refinancing, sale or other disposition of an Investment or establishment of any of BRG’s securities offerings, or in connection with any Financing Transaction;

(x) costs and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement, clearing and custodial fees and expenses;

(xi) compensation and expenses of BRG’s custodian and transfer agent, if any;

(xii) the costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency;

(xiii) all taxes and license fees;

(xiv) all insurance costs incurred in connection with the operation of the Company’s business except for the costs attributable to the insurance that the Manager elects to carry for itself and its personnel;

(xv) costs and expenses incurred in contracting with third parties;

(xvi) all other costs and expenses relating to the Company’s business and investment operations, including, without limitation, the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of Investments, including appraisal, reporting, audit and legal fees;

(xvii) expenses relating to any office(s) or office facilities, including, but not limited to, disaster backup recovery sites and facilities, maintained for any Company Entity or their Investments separate from the office or offices of the Manager;

(xviii) expenses connected with the payments of interest, dividends or distributions in cash or any other form authorized or caused to be made by the Board to or on account of holders of the securities of any Company Entity, including, without limitation, in connection with any dividend reinvestment plan;

(xix) any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against any Company Entity, or against any trustee, director, partner, member or officer of such Company Entity in his capacity as such for which any Company Entity is required to indemnify such trustee, director, partner, member or officer pursuant to the applicable Governing Instruments or any agreement or other instrument or by any court or governmental agency; and

  (xx) all other expenses actually incurred by the Manager (except as otherwise specified herein) that are reasonably necessary for the performance by the Manager of its duties and functions under this Agreement.

(c)   Costs and expenses incurred by the Manager on behalf of the Company shall be reimbursed monthly to the Manager. The Manager shall prepare a written statement in reasonable detail documenting the costs and expenses of the Company and those incurred by the Manager on behalf of the Company during each month, and shall deliver such written statement to the Company within thirty (30) days after the end of each month. The Company shall pay all amounts payable to the Manager pursuant to this Section 7(c) within five (5) Business Days after the receipt of the written statement without demand, deduction, offset or delay. Cost and expense reimbursement to the Manager shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company. The provisions of this Section 7 shall survive the expiration or earlier termination of this Agreement to the extent such expenses have previously been incurred or are incurred in connection with such expiration or termination.

Section 8. Limits of the Manager’s Responsibility .

(a)   The Manager assumes no responsibility under this Agreement other than to render the services called for hereunder in good faith and shall not be responsible for any action of the Board in following or declining to follow any advice or recommendations of the Manager, including as set forth in the Investment Guidelines. The Manager, its officers, members, managers, directors, personnel, Affiliates, and any Person providing sub-advisory services to the Manager (each, a “ Manager Indemnified Party ”), will not be liable to any Company Entity or any of the stockholders, partners, members or other holders of equity interests of any Company Entity for any acts or omissions by any Manager Indemnified Party performed in accordance with and pursuant to this Agreement, except by reason of any act or omission on the part of such Manager Indemnified Party constituting bad faith, willful misconduct, gross negligence or reckless disregard of their duties under the Management Agreement as determined by a final, non-appealable order of a court of competent jurisdiction.

(b) The Company shall, to the full extent lawful, reimburse, indemnify and hold harmless each Manager Indemnified Party, of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees) (collectively, “ Losses ”) in respect of or arising from any acts or omissions of such Manager Indemnified Party performed in good faith under this Agreement and not constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties of such Manager Indemnified Party under this Agreement as determined by a final, non-appealable order of a court of competent jurisdiction. In addition, the Company shall advance funds to a Manager Indemnified Party for legal fees and other costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought pursuant to the terms of this Agreement, provided , that such Manager Indemnified Party undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, if it shall ultimately be determined that such Manager Indemnified Party is not entitled to be indemnified by the Company as provided herein in connection with such claim, suit, action or proceeding.

(c)   The Manager shall, to the full extent lawful, reimburse, indemnify and hold harmless the Company, its directors and officers, personnel, agents and Affiliates (each, a “ Company Indemnified Party ,” and collectively with a Manager Indemnified Party, each an “ Indemnified Party ”) of and from any and all Losses in respect of or arising from (i) any acts or omissions of the Manager constituting bad faith, willful misconduct, gross negligence or reckless disregard of the duties of the Manager under this Agreement, or (ii) any claims by the Manager’s personnel relating to the terms and conditions of their employment by the Manager.

(d) In case any such claim, suit, action or proceeding (a “ Claim ”) is brought against any Indemnified Party in respect of which indemnification may be sought by such Indemnified Party pursuant hereto, the Indemnified Party shall give prompt written notice thereof to the indemnifying party, which notice shall include all documents and information in the possession of or under the control of such Indemnified Party reasonably necessary for the evaluation and/or defense of such Claim and shall specifically state that indemnification for such Claim is being sought under this Section 8 ; provided, however , that the failure of the Indemnified Party to so notify the indemnifying party shall not limit or affect such Indemnified Party’s rights other than pursuant to this Section 8 . Upon receipt of such notice of Claim (together with such documents and information from such Indemnified Party), the indemnifying party shall, at its sole cost and expense, in good faith defend any such Claim with counsel reasonably satisfactory to such Indemnified Party, which counsel may, without limiting the rights of such Indemnified Party pursuant to the next sentence of this Section 8(c) , also represent the indemnifying party in such investigation, action or proceeding. In the alternative, such Indemnified Party may elect to conduct the defense of the Claim, if (i) such Indemnified Party reasonably determines that the conduct of its defense by the indemnifying party could be materially prejudicial to its interests, (ii) the indemnifying party refuses to assume such defense (or fails to give written notice to the Indemnified Party within ten (10) days of receipt of a notice of Claim that the indemnifying party assumes such defense), or (iii) the indemnifying party shall have failed, in such Indemnified Party’s reasonable judgment, to defend the Claim in good faith. The indemnifying party may settle any Claim against such Indemnified Party without such Indemnified Party’s consent, provided (i) such settlement is without any Losses whatsoever to such Indemnified Party, (ii) the settlement does not include or require any admission of liability or culpability by such Indemnified Party and (iii) the indemnifying party obtains an effective written release of liability for such Indemnified Party from the party to the Claim with whom such settlement is being made, which release must be reasonably acceptable to such Indemnified Party, and a dismissal with prejudice with respect to all claims made by the party against such Indemnified Party in connection with such Claim. The applicable Indemnified Party shall reasonably cooperate with the indemnifying party, at the indemnifying party’s sole cost and expense, in connection with the defense or settlement of any Claim in accordance with the terms hereof. If such Indemnified Party is entitled pursuant to this Section 8 to elect to defend such Claim by counsel of its own choosing and so elects, then the indemnifying party shall be responsible for any good faith settlement of such Claim entered into by such Indemnified Party. Except as provided in the immediately preceding sentence, no Indemnified Party may pay or settle any Claim and seek reimbursement therefor under this Section 8 .

(e) Any Indemnified Party entitled to indemnification hereunder shall seek recovery under any insurance policies by which such Indemnified Party is covered and any Indemnified Party shall obtain the written consent of the indemnifying party prior to entering into any compromise or settlement which would result in an obligation of such indemnifying party to indemnify such Indemnified Party; provided, however, that the possibility of recovery under any such insurance policies shall not preclude an Indemnified Party from seeking indemnification pursuant to this Agreement. If such Indemnified Party shall actually recover any amounts under any applicable insurance policies, it shall offset the net proceeds so received against any amounts owed by the indemnifying party by reason of the indemnity provided hereunder or, if all such amounts shall have been paid by the indemnifying party in full prior to the actual receipt of such net insurance proceeds, it shall pay over such proceeds (up to the amount of indemnification paid by the indemnifying party to such Indemnified Party) to the indemnifying party. If the amounts in respect of which indemnification is sought arise out of the conduct of the business and affairs of the Company or any Subsidiary and also of any other Person or entity for which the Indemnified Party hereunder was then acting in a similar capacity, the amount of the indemnification to be provided by the Company may be limited to the Company Parties’ proportionate share thereof if so determined by the Company in good faith.

(f)   The provisions of this Section 8 shall survive the expiration or earlier termination of this Agreement.

Section 9. No Joint Venture .

The parties to this Agreement are not partners or joint venturers with each other and nothing herein shall be construed to make them such partners or joint venturers or impose any liability as such on any of them.

Section 10. Term; Renewal; Termination Without Cause; Internalization .

(a)   This Agreement shall become effective on the Closing Date and shall continue in operation, unless terminated in accordance with the terms hereof, until the third anniversary of the Closing Date (the “ Initial Term ”). After the Initial Term, this Agreement shall be deemed renewed automatically each year for an additional one-year period (an “ Automatic Renewal Term ”) unless the Company or the Manager elects not to renew this Agreement in accordance with Section 10(b) or Section 10(d) , respectively.

(b) Notwithstanding any other provision of this Agreement to the contrary, upon the expiration of the Initial Term or any Automatic Renewal Term and upon 180 days’ prior written notice to the Manager (the “ Termination Notice ”), the Company may, without cause, in connection with the expiration of the Initial Term or the then current Automatic Renewal Term, decline to renew this Agreement (any such nonrenewal, a “ Termination Without Cause ”) upon the affirmative vote of at least two-thirds of the Independent Directors that (1) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company Entities taken as a whole or (2) the Base Management Fee and Incentive Fee under this Agreement payable to the Manager are not, taken as a whole, in accordance with then-current market rates charged by asset management companies rendering services similar to those rendered by the Manager (“ Above-Market Rates ”), subject to Section 10(c) and only after reasonable investigation by the Independent Directors as to the market rates charged by similarly situated managers. In the event of a Termination Without Cause, the Company shall pay the Manager the Termination Fee before or on the last day of the Initial Term or such Automatic Renewal Term, as the case may be (the “ Effective Termination Date ”). The Company may terminate this Agreement for cause pursuant to Section 11 hereof even after a Termination Notice and, in such case, no Termination Fee shall be payable.

(c)   Notwithstanding the provisions of subsection (b) above, if the reason for nonrenewal specified in the Company’s Termination Notice is that two-thirds of the Independent Directors have determined that the Base Management Fee or the Incentive Fee payable to the Manager are, taken as a whole, at Above-Market Rates, the Company shall not have the foregoing nonrenewal right in the event the Manager agrees that it will continue to perform its duties hereunder during the Automatic Renewal Term that would commence upon the expiration of the Initial Term or then current Automatic Renewal Term at rates that at least two-thirds of the Independent Directors determine to be at or below market rates, taken as a whole; provided, however , the Manager shall have the right to renegotiate the Base Management Fee and/or the Incentive Fee, by delivering to the Company, not less than 120 days prior to the pending Effective Termination Date, written notice (a “ Notice of Proposal to Negotiate ”) of its intention to renegotiate the Base Management Fee and/or the Incentive Fee. Thereupon, the Company and the Manager shall endeavor to negotiate the Base Management Fee and/or the Incentive Fee in good faith. Provided that the Company and the Manager agree to a revised Base Management Fee, Incentive Fee or other compensation structure within sixty (60) days following the Company’s receipt of the Notice of Proposal to Negotiate, the Termination Notice from the Company shall be deemed of no force and effect, and this Agreement shall continue in full force and effect on the terms stated herein, except that the Base Management Fee, the Incentive Fee or other compensation structure shall be the revised Base Management Fee, Incentive Fee or other compensation structure effective as of the date as then agreed upon by the Company and the Manager. The Company and the Manager agree to execute and deliver an amendment to this Agreement setting forth such revised Base Management Fee, Incentive Fee, or other compensation structure promptly upon reaching an agreement regarding same. In the event that the Company and the Manager are unable to agree to a revised Base Management Fee, Incentive Fee, or other compensation structure during such sixty (60) day period, this Agreement shall terminate on the Effective Termination Date and the Company shall be obligated to pay the Manager the Termination Fee upon the Effective Termination Date as a condition of such termination action being effective.

(d)   No later than 180 days prior to the expiration of the Initial Term or the then current Automatic Renewal Term, the Manager may deliver written notice to the Company informing it of the Manager’s intention to decline to renew this Agreement, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary date of this Agreement next following the delivery of such notice. The Company is not required to pay to the Manager the Termination Fee if the Manager terminates this Agreement pursuant to this Section 10(d) .

(e)   Except as set forth in this Section 10 , a nonrenewal of this Agreement pursuant to this Section 10 shall be without any further liability or obligation of either party to the other, except as provided in Section 5 , Section 7 , Section 8 and Section 14 of this Agreement.

(f) (i) Notwithstanding any other provision of this Agreement, at the earlier of (1) the date of the end of the Initial Term and (2) the date on and after which the total of (a) BRG’s Existing and Contributed Stockholders’ Equity, and (b) BRG’s New Stockholders’ Equity, exceeds $250,000,000, and continuing thereafter, the Company may terminate this Agreement upon 30 days’ prior written notice, provided that , two-thirds of the Independent Directors have determined in good faith to pursue an internalization of the management functions of the Company provided by the Manager. To the extent the Company elects to terminate this Agreement pursuant to this Section 10(f)(i) , the Company shall pay the Termination Fee to the Manager within thirty (30) days of the effective date of such termination, subject to clause (ii) hereof.

(ii) If the Company elects to terminate this Agreement pursuant to Section 10(f)(i) , then either the Manager or the Company may further elect to structure such internalization as an acquisition of all of the membership interests in the Manager for which the acquisition consideration shall be equal to the amount of the Termination Fee (and no separate Termination Fee would be paid), which may include a contribution of the Manager’s assets in exchange for units of limited partnership interest in the Operating Partnership or other tax-efficient transaction. To the extent of an election under this Section 10(f)(ii) , the parties shall negotiate in good faith to prepare an acquisition agreement and related documents containing customary, standard and commercially reasonable representations, warranties, covenants and indemnities. The consummation of an acquisition of the Manager pursuant to Section 10(f)(ii) shall be subject to the prior approval of (1) a majority of the Independent Directors, and (2) the Company’s stockholders as required under Maryland law or the rules of the applicable Securities Exchange.

Section 11. Termination for Cause .

(a)   The Company may terminate this Agreement effective upon 30 days’ prior written notice of termination from the Company to the Manager (a “ Cause Termination Notice ”), without payment of any Termination Fee, if (i)  the Manager, its agents or assignees breaches any material provision of this Agreement and such breach shall continue for a period of 30 days after written notice thereof specifying such breach and requesting that the same be remedied in such 30-day period (or 45 days after written notice of such breach if the Manager takes steps to cure such breach within 30 days of the written notice), (ii) there is a commencement of any proceeding relating to the Manager’s Bankruptcy or insolvency, including an order for relief in an involuntary bankruptcy case or the Manager authorizing or filing a voluntary bankruptcy petition, (iii) any Manager Change of Control which a majority of the Independent Directors determines is materially detrimental to the Company Entities taken as a whole, (iv) the Manager is unable to perform its obligations under this Agreement; (v) the dissolution of the Manager, or (vi) the Manager commits fraud against the Company, misappropriates or embezzles funds of the Company, or acts, or fails to act, in a manner constituting gross negligence, or acts in a manner constituting bad faith or willful misconduct, in the performance of its duties under this Agreement; provided, however , that if any of the actions or omissions described in this clause (vi) are caused by an employee and/or officer of the Manager or one of its Affiliates and the Manager takes all necessary and appropriate action against such person and cures the damage caused by such actions or omissions within 30 days of the Manager actual knowledge of its commission or omission, the Company shall not have the right to terminate this Agreement pursuant to this Section 11(a)(vi) and any Cause Termination Notice previously given in reliance on this clause (vi) automatically shall be deemed to have been rescinded and nugatory.

(b)   The Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to the Company in the event that the Company shall default in the performance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 30 days after written notice thereof specifying such default and requesting that the same be remedied in such 30-day period. The Company is required to pay to the Manager the Termination Fee if the termination of this Agreement is made pursuant to this Section 11(b) .

(c)   The Manager may terminate this Agreement if the Company becomes required to register as an investment company under the Investment Company Act, with such termination deemed to occur immediately before such event, in which case the Company shall not be required to pay the Termination Fee.

Section 12. Action Upon Termination .

From and after the effective date of termination of this Agreement pursuant to Sections 10 or 11 of this Agreement, the Manager shall not be entitled to compensation for further services hereunder, but shall be paid all compensation accruing to the date of termination and, if (x) terminated pursuant to Section 11(b) hereof or (y) not renewed pursuant to (i) Section 10(b) hereof (subject to Section 10(c) hereof) or (ii) Section 10(f) (subject to Section 10(f)(ii) hereof), the Termination Fee. Upon any such termination, the Manager shall forthwith:

(a)   after deducting any accrued compensation and reimbursement for its expenses that have been submitted to the Company prior to the effective date of termination, pay over to each Company Entity all money collected and held for the account of such Company Entity pursuant to this Agreement;

(b)   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 with respect to the Company Entities;

(c)   deliver to the Board all property and documents of the Company Entities then in the custody of the Manager; and

(d) cooperate with the Company Entities to provide an orderly management transition, including, but not limited to, the transition to a new manager of control of the assets of the Company Entities.

Section 13. Assignments .

(a)   Assignments by the Manager. This Agreement shall terminate automatically without payment of the Termination Fee in the event of its assignment, in whole or in part, by the Manager, unless such assignment is consented to in writing by BRG with the consent of a majority of the Independent Directors and the Operating Partnership. Any such permitted assignment shall bind the assignee under this Agreement in the same manner as the Manager is bound, and the Manager shall be liable to the Company for all acts or omissions of the assignee under any such assignment. In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as the Manager. Notwithstanding the foregoing, the Manager may, without the approval of the Company’s Independent Directors, (i) assign this Agreement to an Affiliate of the Manager, conditioned on such Affiliate becoming a party to, or becoming subject to the rights and obligations of, the Investment Allocation Agreement, and (ii) delegate to one or more of its Affiliates the performance of any of its responsibilities hereunder so long as it remains liable for any such Affiliate’s performance. Nothing contained in this Agreement shall preclude any pledge, hypothecation or other transfer of any amounts payable to the Manager under this Agreement.

(b)   Assignments by the Company. This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation, purchase of assets, or other transaction) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement.

Section 14. Release of Money or Other Property Upon Written Request.

The Manager agrees that any money or other property of the Company Entities held by the Manager shall be held by the Manager as custodian for the Company, and the Manager’s records shall be appropriately and clearly marked to reflect the ownership of such money or other property by the Company. Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company requesting the Manager to release to the Company any money or other property then held by the Manager for the account of the Company under this Agreement, then subject to the Manager’s right to offset pursuant to Section 12(a) hereof, the Manager shall release such money or other property to the Company within a reasonable period of time, but in no event later than 60 days following such request. Upon delivery of such money or other property to the Company, the Manager shall not be liable to the Company, the Board, BRG’s stockholders or Operating Partnership’s partners or any of the directors or equity holders of any subsidiary of the Company for any acts or omissions by the Company in connection with the money or other property released to the Company in accordance with this Section 14 . The Company shall indemnify the Manager Indemnified Parties against any and all Losses which arise in connection with the Manager’s proper release of such money or other property to the Company in accordance with the terms of this Section 14 . Indemnification pursuant to this provision shall be in addition to any right of the Manager Indemnified Parties to indemnification under Section 8 of this Agreement.

Section 15. Representations and Warranties .

(a)   BRG hereby represents and warrants to the Manager as follows:

(i) BRG is duly organized, validly existing and in good standing under the laws of the State of Maryland, has the corporate power and authority and the legal right to own and operate its assets, to lease any property it may operate as lessee and to conduct the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Company Entities, taken as a whole.

(ii) BRG has the corporate power and authority and the legal right to make, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary corporate action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person, including stockholders and creditors of BRG, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by BRG in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of BRG, and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally valid and binding obligation of BRG enforceable against BRG in accordance with its terms.

(iii) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing law or regulation binding on BRG, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on BRG, or the Governing Instruments of, or any securities issued by BRG or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which BRG is a party or by which BRG or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Company Entities, taken as a whole, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(b)   The Operating Partnership hereby represents and warrants to the Manager as follows:

(i) The Operating Partnership is duly organized, validly existing and in good standing under the laws of the State of Delaware, has the limited partnership power and authority and the legal right to own and operate its assets, to lease any property it may operate as lessee and to conduct the business in which it is now engaged and is duly qualified as a foreign limited partnership and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Company Entities, taken as a whole.

(ii) The Operating Partnership has the limited partnership power and authority and the legal right to make, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary limited partnership action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person, including partners and creditors of the Operating Partnership, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Operating Partnership in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of the Operating Partnership, and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Operating Partnership enforceable against the Operating Partnership in accordance with its terms.

(iii) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing law or regulation binding on the Operating Partnership, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Operating Partnership, or the Governing Instruments of, or any securities issued by the Operating Partnership or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Operating Partnership is a party or by which the Operating Partnership or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Company Entities, taken as a whole, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(c) The Manager hereby represents and warrants to the Company as follows:

(i) The Manager is duly organized, validly existing and in good standing under the laws of the State of Delaware, has the limited liability company power and authority and the legal right to own and operate its assets, to lease the property it operates as lessee and to conduct the business in which it is now engaged and is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of the Manager.

(ii) The Manager has the limited liability company power and authority and the legal right to make, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary limited liability company action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other Person, including members and creditors of the Manager, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Manager in connection with this Agreement or the execution, delivery, performance, validity or enforceability of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of the Manager, and this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the legally valid and binding obligation of the Manager enforceable against the Manager in accordance with its terms.

(iii) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing law or regulation binding on the Manager, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on the Manager, or the Governing Instruments of, or any securities issued by the Manager or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which the Manager is a party or by which the Manager or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of the Manager, and will not result in, or require, the creation or imposition of any lien or any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

Section 16. Miscellaneous .

(a) Notices . All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties hereto in accordance with this Section 16 ):

(b)   Binding Nature of Agreement; Successors and Assigns; No Third Party Beneficiaries . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns as provided herein. Except as provided in this Agreement with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any Person other than the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.

(c)   Integration . This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

(d)   Amendments . This Agreement, nor any terms hereof, may not be amended, supplemented or modified except in an instrument in writing executed by the parties hereto.

(e)   GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH ACTION OR JUDGMENT IN SUCH COURTS, AND IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(f)   WAIVER OF JURY TRIAL. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(g)  Survival of Representations and Warranties . All representations and warranties made hereunder, and in any document, certificate or statement delivered pursuant hereto or in connection herewith, shall survive the execution and delivery of this Agreement.

(h)   No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

(i)   Costs and Expenses . Each party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiations and preparation of and the closing under this Agreement, and all matter incident thereto.

(j) Section Headings . The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.

(k)   Counterparts . This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

(l)   Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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IN WITNESS WHEREOF, each of the parties hereto has executed this Management Agreement as of the date first written above.

Exhibit A

Investment Guidelines

1. No investment shall be made that would cause BRG to fail to qualify as a REIT under the Code.

2. No investment shall be made that would cause BRG or the Operating Partnership to be regulated as an investment company under the Investment Company Act.

3. The Company’s investments shall be in the Target Assets.

4.   Until appropriate investments in the Target Assets are identified, the Manager may invest the proceeds of the Public Offering and any future offerings of BRG’s or the Operating Partnership’s securities for cash in interest-bearing, short-term investment-grade investments, subject to the requirements for BRG’s qualification as a REIT under the Code.

5. The Manager shall have the authority to approve any Investment Transaction involving an Investment less than five percent (5%) of the Company’s current total assets at the time of the Manager’s consideration (but exclusive of such project).

6.  The approval of the Investment Committee shall be required for any Investment Transaction involving an Investment equal to or in excess of five percent (5%) and up to ten percent (10%) of the Company’s current total assets at the time of the Investment Committee’s consideration (but exclusive of such project).

7. The approval of the full Board shall be required for any Investment Transaction involving an Investment equal to or in excess of ten percent (10%) of the Company’s current total assets at the time of the Board’s consideration (but exclusive of such project).

These Investment Guidelines may be amended, restated, modified, supplemented or waived by the Board (which must include a majority of the Independent Directors) without the approval of BRG’s stockholders.

INVESTMENT ALLOCATION AGREEMENT

This INVESTMENT ALLOCATION AGREEMENT (this “ Agreement ”) is dated as of April 2, 2014, by and among Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “ Company ”), Bluerock Residential Holdings, LP, a Delaware limited partnership (the “ Operating Partnership ”), BRG Manager, LLC, a Delaware limited liability company (the “ Manager ”), and Bluerock Real Estate, L.L.C., a Delaware limited liability company (“ Bluerock ”). Capitalized terms used herein and not otherwise defined are as defined on Schedule I hereto.

WHEREAS, the Company intends to invest in the Target Assets;

WHEREAS, pursuant to a Management Agreement, dated the date hereof (the “ Management Agreement ”), by and among the Company, Operating Partnership and the Manager, the Company will be externally managed and advised by the Manager, which is an Affiliate of Bluerock;

WHEREAS, an Affiliate of Bluerock is the manager of the SOIF II, the purpose of which is to invest in certain of the Target Assets in addition to investments in certain other types of real estate related assets;

WHEREAS, an Affiliate of Bluerock is the manager of the SOIF III, the purpose of which is to invest in certain of the Target Assets in addition to investments in certain other types of real estate related assets;

WHEREAS, an Affiliate of Bluerock is the manager of the BGF, the purpose of which is to invest in certain of the Target Assets in addition to investments in certain other types of real estate related assets;

WHEREAS, an Affiliate of Bluerock is the manager of the BGF II, the purpose of which is to invest in certain of the Target Assets in addition to investments in certain other types of real estate related assets;

WHEREAS, the Manager and Bluerock wish to provide the Company and the Operating Partnership with certain rights to invest in Target Assets; and

WHEREAS, the Manager and Bluerock have agreed to the additional sponsorship and management restrictions as set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements herein made and intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE I

INVESTMENT OPPORTUNITIES

1.1 Other Investment Vehicles .

(a) Each of the Manager and Bluerock represent and warrant to the Company and the Operating Partnership that none of the Manager, Bluerock or any Affiliate of Bluerock currently sponsor or manage any Potential Competing Investment Vehicle with Uncommitted Capital other than the Company and the Bluerock Private Real Estate Funds.

(b) Each of the Manager and Bluerock agree that during the term of this Agreement, none of the Manager, Bluerock or any Affiliate of Bluerock will sponsor or manage a Potential Competing Investment Vehicle, unless Bluerock causes such vehicle to become a party hereto and bound by the terms hereof as apply to the Bluerock Private Real Estate Funds.

1.2 Co-Investment Rights.

(a) Subject to paragraph (b) of this Section 1.2, the parties hereto agree that Company shall have following co-investment rights during the Co-Investment Period:

(i) Of the equity capital proposed to be invested by any of the Bluerock Private Real Estate Funds, any Potential Competing Investment Vehicle or the Company in any Bluerock Target Asset Opportunity, the Company (including through its Operating Partnership) shall have the right, but not the obligation, to invest at least seventy-five percent (75.0%) of such equity capital (the “ Bluerock Investment Equity ”), subject to the discretion of the Company’s board of directors;

(ii) To the extent that any or all of the Bluerock Private Real Estate Funds and any Potential Competing Investment Vehicle elect to invest less than twenty-five percent (25.0%) of the Bluerock Investment Equity in any Bluerock Target Asset Opportunity, the Company shall also have the right, but not the obligation, to invest an additional percentage of equity capital in such Bluerock Target Asset Opportunity equal to the percentage of the Bluerock Investment Equity not so invested by any or all of Bluerock Private Real Estate Funds and any Potential Competing Investment Vehicle.

(iii) To the extent that the Company does not have sufficient capital to invest at least seventy-five percent (75.0%) of the Bluerock Investment Equity, Bluerock shall allocate the opportunity to invest the Bluerock Investment Equity on a fair and equitable basis among the Company, the Bluerock Private Real Estate Funds and Potential Competing Vehicles taking into account the suitability of the investment opportunity for the particular Bluerock investment vehicle and the Company (in consideration of the Investment Guidelines) and the capital available for investment by each such Bluerock investment vehicle and the Company.

(iv) Any portion of a Bluerock Target Asset Opportunity that the Company elects not to invest in pursuant to clauses (i) or (ii) of paragraph (b) of this Section 1.2 may be thereafter offered to, and purchased by, any investment vehicle sponsored or managed by the Manager, Bluerock or their respective Affiliates.

(b) The Company’s rights set forth in paragraph (a) of this Section 1.2 are subject to the following conditions:

(i) the availability of the Company’s cash to make investments;

(ii) the Manager’s determination that the proposed investment opportunity referred to in paragraph (a) of this Section 1.2 (x) is consistent with the Investment Guidelines, (y) would not violate any of the Investment Guidelines, and (z) will be made pursuant to the requirements of the Investment Guidelines;

(iii) the determination by the Manager that the proposed investment opportunity referred to in paragraph (a) of this Section 1.2 permits the Company, taking into account the composition of the Company’s portfolio at the time and any other relevant factors, to maintain its status as a real estate investment trust; and

(iv) the determination by Bluerock that such investment opportunity permits the Company, any Bluerock Private Real Estate Fund and any Potential Competing Vehicle to maintain its exemption from registration under the Investment Company Act of 1940, as amended.

(c) For purposes of this Section 1.2, the Bluerock Target Asset Opportunities shall also include opportunities to invest in a portfolio of assets including both Target Assets and real estate related equity investments if the Manager determines that more than 50% of the aggregate anticipated investment returns from the portfolio is expected to come from the Target Assets. 

ARTICLE II

MISCELLANEOUS 

2.1 Termination . This Agreement shall terminate on the earlier of the date (i) on which the Management Agreement terminates or expires in accordance with its terms, and (ii) the Manager and Bluerock are no longer under common control.

2.2 Notices . All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by facsimile transmission with telephonic confirmation or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties hereto in accordance with this Section 2.2):

2.3 Binding Nature of Agreement; Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns as provided herein.

2.4 Integration . This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.

2.5 Amendments; Waivers . This Agreement may not be amended, supplemented or modified except in an instrument in writing executed by the parties hereto; provided, however, a Potential Competing Investment Vehicle may be added as a party hereto for purposes of Section 1.1(b) without any written execution by a party hereunder. No waiver of any term or condition hereof or obligation hereunder shall be valid unless made in writing and signed by the parties to this Agreement.

2.6 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

2.7 WAIVER OF JURY TRIAL . EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

2.8 No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

2.9 Costs and Expenses . Each party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiations and preparation of and the closing under this Agreement and all matter incident thereto.

2.10 Section Headings . The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.

2.11 Counterparts . This Agreement may be executed by the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

2.12 Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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

Signature Page to Investment Allocation Agreement

Schedule I  

“ Affiliate ” means, with respect to a specified Person, any Person directly or indirectly controlling, controlled by, or under common control with the specified Person.

“ BGF ” means Bluerock Growth Fund, LLC, a Delaware limited liability company.

“ BGF II ” means Bluerock Growth Fund II, LLC, a Delaware limited liability company.

“ Bluerock Private Real Estate Funds ” means SOIF II, SOIF III, BGF and BGF II.

“ Bluerock Target Asset Opportunities ” means investment opportunities in Target Assets that are identified by Bluerock, the Manager or one of their respective Affiliates.

“ Co-Investment Period ” means the period during which the Management Agreement is in effect and any of the Bluerock Private Real Estate Funds have Uncommitted Capital.

“ Investment Guidelines ” means the Investment Guidelines attached to the Management Agreement, subject to any amendments to the Investment Guidelines from time to time adopted by the board of directors of the Company.

“ IPO Prospectus ” means the Company’s prospectus, dated March 28, 2014, forming a part of the Company’s Registration Statement on Form S-11 (No. 333-192610).

“ Person ” means any individual, general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative or association and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits.

“ Potential Competing Investment Vehicle ” means an investment vehicle that invests in the Target Assets, whether primarily or not primarily but as part of a general real estate strategy.

“ SOIF II ” means Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company.

“ SOIF III ” means Bluerock Special Opportunity + Income Fund III, LLC, a Delaware limited liability company.

“ Target Assets ” means the types of assets described under “Our Business and Properties — Our Business and Growth Strategies” in the IPO Prospectus, subject to, and including any changes to the Company’s Investment Guidelines that may be approved by the board of directors of the Company from time to time.

“ Uncommitted Capital ” means the capital of an investment vehicle (including in the form of unfunded capital commitments) that has not been (i) invested, or reserved for, in any investment in accordance with the terms of the investment vehicle’s operative documents, or (ii) allocated to a particular investment opportunity pursuant to a definitive agreement or a binding or non-binding letter of intent, in each case between such investment vehicle and a proposed seller of an investment.

Pledge Agreement

THIS PLEDGE AGREEMENT (this “ Agreement ”), dated as of April 2, 2014, is entered into by and between BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation (the “ Pledgee ”), and Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company (the “ Pledgor ”). Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Contribution Agreement (as defined below).

WHEREAS, pursuant to that certain Contribution Agreement, dated as of March 10, 2014, by and between the Pledgee and the Pledgor (the “ Contribution Agreement ”), the Pledgor is contributing the Oak Crest Interests to the Pledgee in exchange for the REIT Shares;

WHEREAS, pursuant to the Contribution Agreement, the Pledgor has agreed to indemnify the Pledgee, its successors, assigns and Affiliates, including, but not limited to, BRG Oak Crest (each, an “ Indemnified Party ” and, together, the “ Indemnified Parties ”), for certain losses described in Section 8.1 of the Contribution Agreement (but subject to the limitations expressed in Section 8.2 of the Contribution Agreement) (the “ Losses ”) and asserted during the Survival Period (as hereinafter defined). The Pledgor’s obligations (i) so to indemnify the Indemnified Parties for Losses in accordance with Section 8.1 of the Contribution Agreement, and (ii) to perform its obligations hereunder are referred to herein collectively as the “ Secured Obligations ”; and

WHEREAS, in order to secure the full and timely performance of the Secured Obligations pursuant to the Contribution Agreement, the Pledgor has agreed to pledge and grant to the Pledgee, as security for the Secured Obligations, a lien and security interest in, to and under the REIT Shares having a value equal to ten percent (10%) of the Consideration (as defined) under the Contribution Agreement (collectively the “ Pledged Interests ”), such pledge, lien and security interest to remain in effect during the Pledge Period (as defined below) subject to the terms hereof.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Grant of Security Interest . As collateral security for the payment, performance and observance of the Secured Obligations, now existing or hereafter arising, absolute or contingent, the Pledgor pledges to the Pledgee, for its own benefit and for the benefit of each Indemnified Party subject to the limitations set forth herein, and grants to the Pledgee, for its own benefit and the benefit of each Indemnified Party subject to the limitations set forth herein, a security interest in the following property (collectively, the “ Collateral ”):

(a)          the Pledged Interests, as more particularly described in Exhibit A attached hereto;

(b)          any equity securities of the Pledgee (“ Additional Interests ”) and/or obligations of the Pledgee in respect of the Pledged Interests that may hereafter be acquired by the Pledgor during the Pledge Period and, if any, the certificates or other instruments or documents evidencing the same;

(c)          all rights of Pledgor in and to all distributions in kind declared in respect of any or all of the foregoing during the Pledge Period;

(d)          any cash received by Pledgee pursuant to Section 8 below during the Pledge Period;

(e)          any cash or cash equivalent (the “ Cash Collateral ”) substituted by Pledgor for the Pledged Interests and/or the Additional Interests (or any portion thereof) pursuant to the terms hereof; and

(f)          all proceeds and profits of any or all of the foregoing.

Pledgor and Pledgee do hereby acknowledge and agree that Pledgor shall be entitled, at any time during the Pledge Period, to substitute Cash Collateral for all or any portion of the Pledged Interests and/or the Additional Interests. Any Cash Collateral shall be held in a segregated account in the name of both Pledgor and Pledgee (at an institution designated by Pledgee) and shall be released from such account only upon instructions given by Pledgor and Pledgee, which instructions shall conform with the provisions of this Agreement.

2.            Delivery of Certificates and Instruments . The Pledgor shall deliver to the Pledgee: (a) the original certificates or other instruments or documents evidencing the Pledged Interests, if any, concurrently with the execution and delivery of this Agreement, and (b) the original certificates or other instruments or documents evidencing all other Collateral (except for Collateral that this Agreement specifically permits the Pledgor to retain) within ten (10) days after Pledgor’s receipt thereof. All Collateral that is certificated securities shall be in bearer form or, if in registered form, shall be reflected as being subject to this Agreement on the books of the transfer agent.

3.           Pledgor Remain Liable . Notwithstanding anything herein to the contrary: (a) the Pledgor shall remain obligated, to the extent set forth in the agreements (including, without limitation, the Pledgee’s Charter Documents) under which it has received, or has rights or obligations in respect of its ownership of, the REIT Shares (“ Related Agreements ”) to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Pledgee of any of its rights hereunder shall not release the Pledgor from any of its duties or obligations under the Related Agreements, except to the extent that such duties and obligations may have been terminated by reason of a sale, transfer or other disposition of the Collateral pursuant hereto; and (c) the Pledgee shall not by reason of this Agreement have any obligations or liabilities under the Related Agreements (beyond those imposed directly on the Pledgee by the express terms therein), nor shall the Pledgee be obligated to perform any of the obligations or duties of the Pledgor under the Related Agreements or to take any action to collect or enforce any claim for payment assigned hereunder.

4.            Representations, Warranties and Covenants .

(a)          The Pledgor represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows:

(1)         Set forth on Exhibit A attached hereto is a complete and accurate list and description of all Pledged Interests delivered by Pledgor. Pledgor owns, directly or indirectly, all of such Pledged Interests, free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever created (or allowed to be created) by Pledgor, except in favor of the Pledgee. All other Collateral hereafter delivered by the Pledgor to the Pledgee will be owned, directly or indirectly, by the Pledgor free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever, except in favor of the Pledgee.

(2)         With respect to the Pledgor, the address of its chief executive office and principal place of business, and the location of its books and records relating to the Collateral, is set forth in Section 21 hereof. Pledgor will not change said address or location, or merge or consolidate with any person or change its name during the Pledge Period, without at least fifteen (15) days’ prior written notice to the Pledgee, and with respect to any such change in address or name or merger or consolidation, Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Collateral.

(3)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgor will not create, incur, assume or permit to exist any security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral (as defined below)) other than the security interest created pursuant to this Agreement or sell, transfer, assign, pledge or grant a security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person other than the Pledgee (provided that Pledgor shall be entitled to consent to the sale of the Pledged Interests or the Additional Interests during the Pledge Period (and, if and to the extent applicable, the Extended Pledge Period) so long as such sale is not binding or consummated until the Pledge Period has expired). 

(4)         The Pledged Interests that are Collateral hereunder are fully paid and are not subject to any options to purchase or similar rights of any kind granted by the Pledgor in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(5)         The Pledgor has the power and authority to own its properties and to carry on its business as currently conducted.

(6)         The Pledgor has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(7)         This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(8)         The Pledgor’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgor, or any provision of the Pledgor’s Charter Documents, or any securities issued by, the Pledgor, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgor is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgor pursuant to the provisions of any of the foregoing.

(9)         No consent of any other Person (including, without limitation, as applicable, members and creditors of the Pledgor) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

(10)        The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in such Collateral to the extent a security interest can be created therein pursuant to the New York Uniform Commercial Code, subject to any filings, agreements or actions required pursuant to the New York Uniform Commercial Code or otherwise.

(11)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take commercially reasonable actions to defend the Pledgee’s security interest in the Collateral (or, during such Extended Pledge Period, the Retained Collateral) against the claims and demands of all Persons whomsoever (other than Affiliates of Pledgee).

(12)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take any and all commercially reasonable actions necessary to maintain its status as a stockholder of the Pledgee and the shares of Pledgee’s Class “A” common stock represented by the Pledged Interests.

(13)        During the Pledge Period, the Pledgor will not enter into or assume any other agreement containing a negative pledge with respect to the Collateral (or, during any Extended Pledge Period, if and to the extent applicable, with respect to the Retained Collateral).

(b)          The Pledgee represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows: 

(1)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgee will not sell, transfer, assign or the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person or allow any lien to be placed on or otherwise encumber the Collateral.

(2)         The Pledged Interests and the Additional Interests that are Collateral hereunder will not be made subject to any options to purchase or similar rights of any kind granted by the Pledgee in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(3)         The Pledgee has the power and authority to own its properties and to carry on its business as currently conducted.

(4)         The Pledgee has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(5)         This Agreement constitutes the legal, valid and binding obligation of the Pledgee, enforceable against the Pledgee in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(6)         The Pledgee’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgee, or any provision of the Pledgee’s Charter Documents, or any securities issued by, the Pledgee, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgee is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgee pursuant to the provisions of any of the foregoing.

(7)         No consent of any other Person (including, without limitation, as applicable, stockholders and creditors of the Pledgee) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

5.           Registration . If any Claim (as defined below) remains unresolved thirty (30) days after the date of issuance of the applicable Claim Notice (as defined below), and provided Pledgee has notified Pledgor in writing of its intention to take any of the actions specified in this Section 5 and further provided Pledgor has not within three (3) business days from receipt of such written notification substituted Cash Collateral in the amount of such Outstanding Claim (as defined below) for all (or an applicable portion) of the Pledged Interests (and/or the Additional Interests), then Pledgee may cause all or any of the Collateral to be transferred to or registered in its name or the name of its nominee or nominees. Notwithstanding anything contained herein to the contrary, Pledgee shall not be entitled to take any action under this Agreement with respect to the Pledged Interests (or the Additional Interests) that is prohibited by the terms, or would cause a breach or violation, of the Lock-Up Agreement or the Registration Rights Agreement.

6.           Claims; Value of Collateral .

(a)          Any claims by an Indemnified Party for indemnification under the Contribution Agreement shall be made in accordance with Section 8.1 of the Contribution Agreement. On or prior to the first (1st) anniversary of the Closing (the “ Survival Period ”), an Indemnified Party may give written notice (each a “ Claim Notice ”) to the Pledgor of any Loss that is subject to indemnification under Section 8.1 of the Contribution Agreement (each a “ Claim ”). Pledgor and Pledgee shall use commercially reasonable efforts to resolve any Claim within thirty (30) days of issuance of the applicable Claim Notice. Any Claim that has not been resolved to the mutual satisfaction of Pledgor and Pledgee shall be referred to hereunder as an “ Outstanding Claim ”. The amount required to satisfy any Claim shall be disclosed in the Claims Notice, as estimated by the Independent Directors (as defined below) in their reasonable discretion, and same shall be binding on Pledgor unless manifestly erroneous (such amount(s) being referred to, individually and collectively, as the “ Estimated Claims Amount ”).

(b)          The value of Collateral (the “ Value ”) shall be determined as follows: (i) with respect to Collateral consisting of the REIT Shares, an amount equal to ten percent (10%) of the aggregate monetary value of the REIT Shares (determined by the Share Price on the Closing Date); (ii) for all other non-cash (or non-cash equivalent) Collateral, the fair market value of such Collateral as determined by the independent directors of the Pledgee who meet the New York Stock Exchange standards of independence for directors, as determined by the board of directors of the Pledgee (the “ Independent Directors ”).

7.            Voting Rights and Certain Payments Prior to Occurrence of Secured Obligations and Other Events .

(a)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to exercise, in its sole discretion but not inconsistent with the terms hereof, the voting power with respect to any such Collateral, and for that purpose the Pledgee shall (if such Collateral shall be registered in the name of the Pledgee or its nominee in strict compliance with the terms hereof) execute, or cause to be executed, from time to time such proxies or other instruments in favor of the Pledgor or its nominee in such form and for such purposes as shall be reasonably required and specified in writing by the Pledgor, to enable the Pledgor to exercise such voting power with respect to such Collateral. If a Claim Notice has been properly issued by Pledgee, then the rights granted under this Paragraph 7(a) shall be exercisable by Pledgee, rather than Pledgor, with respect to Collateral having a Value equal to the Estimated Claims Amount (the “ Claims Pending Collateral ”), with Pledgor retaining the rights granted hereunder relating to all other Collateral.

(b)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to receive and retain for its own account any and all regular cash distributions (but not distributions in the form of Additional Interests or other securities, distributions in kind or liquidating distributions, all of which shall be delivered and applied in accordance with Section 8 hereof) and interest at any time and from time to time paid upon any of such Collateral, and the Pledgee shall have no rights in or to same by virtue of this Agreement. Any of such regular cash distributions or interest paid while any Outstanding Claim exists shall be deemed part of the Collateral under this Agreement and thereafter subject to the terms hereof relating to such Collateral.

8.            Extraordinary Payments and Distributions . In case, upon the dissolution or liquidation (in whole or in part) of the Pledgee, any sum shall be paid as a liquidating distribution or otherwise upon or with respect to any of the Collateral during the Pledge Period, such sum shall be paid over to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder and all of the same shall constitute Collateral for all purposes hereof. Any such payment made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such payment applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral. In case, during the Pledge Period, any distribution of Additional Interests shall be made with respect to the Collateral, or Additional Interests or fractions thereof shall be issued pursuant to any split involving any of the Collateral, or any distribution of capital shall be made on any of the Collateral, or any shares, obligations or other property shall be distributed upon or with respect to the Collateral pursuant to a recapitalization or reclassification of the capital of the Pledgee, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of the Pledgee, or pursuant to the merger or consolidation of the Pledgee with or into another entity, the shares, obligations or other property so distributed shall be delivered to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder, and all of the same shall constitute Collateral for all purposes hereof. Any such distribution made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such distribution applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral.

9.            Pledgor Obligations Not Affected . The obligations of the Pledgor hereunder shall remain in full force and effect and shall not be impaired by:

(a)          any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Pledgor;

(b)          any amendments to or modifications of any instrument (other than this Agreement) securing any of the Secured Obligations provided that the Pledgor has consented to same (such consent not to be unreasonably conditioned, delayed or denied);

(c)          the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations; or

(d)          the lack of enforceability of any of the Secured Obligations against the Pledgor or any other person, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

10.          Voting Rights and Certain Payments After Occurrence of Claim Notice and Certain Other Events .

(a)          From and after the issuance of any Claim Notice, all rights of the Pledgor to exercise, or refrain from exercising, all voting power with respect to, and to otherwise exercise all ownership rights arising from, the Claims Pending Collateral shall cease, and thereupon the Pledgee shall be entitled to exercise all voting power with respect to such Claims Pending Collateral and otherwise exercise such ownership rights as though the Pledgee were the outright owner of such Claims Pending Collateral (Pledgor shall retain such voting power with respect to all other Collateral). If the Independent Directors of the Pledgee reasonably determine that the Estimated Claims Amount equals or exceeds the Value of the Collateral then available to satisfy such Outstanding Claims, then the Pledgor shall no longer be the owner of such Collateral for tax purposes and all rights of the Pledgor to receive and retain the distributions and interest which it would otherwise be authorized to receive and retain pursuant to Section 7 hereof shall cease, and thereupon the Pledgee shall be entitled to receive and retain, as additional Collateral hereunder, any and all distributions and interest at any time and from time to time paid upon any of such Collateral, provided that, concurrent with making such determination, the Pledgee gives notice thereof to the Pledgor.

(b)          All payments, distributions or other property or assets that are received by the Pledgor contrary to the provisions of paragraph (a) of this Section 10 shall be received and held in trust for the benefit of the Pledgee, shall be segregated from other funds of the Pledgor and shall be forthwith paid over to the Pledgee.

11.          Application of Cash Collateral . Any cash received and retained by the Pledgee as additional Collateral pursuant to Section 8 hereof may at any time and from time to time be applied (in whole or in part) by the Pledgee, at its option, in strict accordance with the terms and conditions hereof, to the payment of the Secured Obligations which such Collateral secures (in the order described in paragraph 12 below), but only if and to the extent any such payment is required hereunder.

12.          Application of Proceeds . Except as otherwise expressly provided herein, any cash received and retained pursuant to Section 8 hereof shall be applied by the Pledgee: first to the payment in full of the Secured Obligations, but only if and to the extent any such payment is required hereunder; and then, to the payment to the Pledgor, or its successors or assigns or as a court of competent jurisdiction may direct, of any surplus then remaining.

13.          Remedies With Respect to the Collateral .

(a)          If any Claim remains unresolved thirty (30) days after the date of receipt of the applicable Claim Notice, then Pledgee, without obligation to resort to other security, shall have the right at any time and from time to time thereafter to apply, after three (3) business days’ prior written notice to Pledgor (each an “ Application Notice ”), Collateral with a Value equal to the Estimated Claims Amount, in one or more parcels at the same or different times, and to receive all right, title and interest, claim and demand therein and right of redemption thereof, same to be applied by Pledgee to payment of such Outstanding Claims.

(b)          Notwithstanding anything to the contrary in this Agreement or the Contribution Agreement, the sole recourse of the Pledgee against the Pledgor for the Secured Obligations is limited to the rights of the Pledgor in any Collateral that is applied by the Pledgee in strict accordance with the terms and conditions hereof to satisfy such Secured Obligations.

(c)          No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with any transfer of Collateral to the Pledgee in strict accordance with the terms and conditions of this Agreement.

(d)          Subject to the provisions of Section 13(b) above, the remedies provided herein in favor of the Pledgee relating to the Collateral shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Pledgee relating to the Collateral existing at law or in equity.

14.          Care of Collateral . The Pledgee shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody of any thereof actually in its possession. With respect to any maturities, calls, conversions, exchanges, redemptions, offers, tenders or similar matters relating to any of the Collateral (herein called “events”), the Pledgee’s duty shall be fully satisfied if (i) the Pledgee exercises reasonable care to ascertain the occurrence and to give reasonable written notice to the Pledgor of any events applicable to any Collateral which are registered and held in the name of the Pledgee or its nominee, (ii) the Pledgee gives the Pledgor reasonable written notice of the occurrence of any events, of which the Pledgee has actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Pledgee or its nominee (the Pledgor agreeing to give the Pledgee reasonable written notice of the occurrence of any events applicable to any securities Collateral in the possession of the Pledgor of which the Pledgor has received knowledge), and (iii) (a) the Pledgee endeavors to take such action with respect to any of the events as the Pledgor may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Pledgee reasonably determines that the action requested might adversely affect the value of the Collateral, the collection of the Secured Obligations, or otherwise prejudice the interests of the Pledgee, the Pledgee gives reasonable written notice to the Pledgor that any such requested action will not be taken and if the Pledgee makes such determination or if the Pledgor fails to make such timely request, the Pledgee takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Pledgee shall have no further obligation, under this Agreement only, to ascertain the occurrence of, or to notify the Pledgor with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Pledgee of any internal procedures with respect to any Collateral in its possession.

15.          Power of Attorney . The Pledgor hereby appoints the Pledgee to act during the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period) as the Pledgor’s attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Pledgee reasonably may deem necessary or advisable to accomplish the purposes hereof, provided that Pledgee has given Pledgor prior reasonable written notice of Pledgee’s intention to exercise such attorney-in-fact rights. Without limiting the generality of the foregoing, at any time while an Outstanding Claim exists, the Pledgee shall have the right and power (a) with respect to any Claims Pending Collateral to satisfy a Secured Obligation in strict accordance with the terms and conditions herein, to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any interest or other distribution payable in respect of such Claims Pending Collateral or any part thereof and to give full discharge for the same, and (b) to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Claims Pending Collateral; provided, that the Pledgee shall provide reasonable written notice to the Pledgor prior to taking any such action under the foregoing clauses (a) and (b). For purposes of this Section 15 and Section 14 above, “reasonable written notice” shall mean written notice given within five (5) days of the occurrence of the event, issue or at least five (5) days prior to the date on which such requisite action will be taken.

16.          Further Assurances . The Pledgor shall, at its sole cost and expense, upon reasonable request of the Pledgee, duly execute and deliver, or cause to be duly executed and delivered, to the Pledgee such further instruments and documents and take and cause to be taken such further actions as may be necessary or proper in the reasonable opinion of the Pledgee to carry out more effectually the provisions and purposes of this Agreement; provided that none of the same will materially affect Pledgor’s or Pledgee’s rights hereunder or materially increase their obligations hereunder.

17.          No Waiver . No failure on the part of the Pledgee to exercise, and no delay on the part of the Pledgee in exercising, any of its options, powers, rights or remedies hereunder during the Pledge Period, or partial or single exercise thereof, shall constitute a waiver thereof or preclude any other or further exercise thereof or the exercise of any other option, power, right or remedy during the Pledge Period.

18.          Security Interest Absolute . All rights of the Pledgee hereunder, grant of a security interest in the Collateral and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Contribution Agreement, any of the Secured Obligations or any other agreement or instrument relating thereto, (b) any change in any term of all or any of the Secured Obligations or any other amendment or waiver of, or any consent to any departure from, the Contribution Agreement or any other agreement or instrument or (c) any other circumstance that might otherwise constitute a defense available to, or a discharge of the Pledgor in respect of the Secured Obligations or in respect of this Agreement.

19.          Expenses . Pledgor agrees to pay the Pledgee all reasonable out-of-pocket expenses of the Pledgee (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any provisions of this Agreement. Pledgee agrees to pay the Pledgor all reasonable out-of-pocket expenses of the Pledgor (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any obligations of Pledgee hereunder.

20.          End of Pledge Period; Return of Collateral .

(a)          For purposes of this Agreement, the “ Pledge Period ” means the period beginning on the date hereof and ending on the six (6) month anniversary of the date hereof; provided , that, if there are any Outstanding Claims at the time of termination of the Pledge Period, the Pledgee shall have the right to retain, pending resolution of such Outstanding Claim(s) pursuant to Section 8.1 of the Contribution Agreement, and at all times subject to the terms hereof, Collateral equal in Value to the Estimated Claims Amount (“ Retained Collateral ”). Solely with respect to such Retained Collateral, the Pledge Period shall be deemed to continue (an “ Extended Pledge Period ”) until the earlier to occur of (i) the ten (10) month anniversary of the date hereof or (ii) the resolution pursuant to Section 8.1 of the Contribution Agreement, of the Outstanding Claim(s) to which such Retained Collateral relates; provided, however, if any Outstanding Claims remain in existence on the ten (10) month anniversary of the date hereof, then Pledgor shall be required to deliver Replacement Collateral (as defined below) to Pledgee before the Extended Pledge Period may end. Following the expiration of the Pledge Period, the Pledgor shall be required to maintain for the balance of the Survival Period a minimum net worth of not less than $10,000,000.00.

(b)          Upon the termination of the Pledge Period (or the Extended Pledge Period, if and to the extent applicable), the Pledgor shall be entitled to, and the Pledgee promptly shall effect, the return to the Pledgor of all of the Collateral (and all other cash or other items held as additional Collateral hereunder) that has not been used or applied toward the payment of the Secured Obligations in strict accordance with the terms hereof (it being understood, for the sake of clarity, that Collateral not so used or applied shall become subject to the foregoing return obligation on and as of the last day of the Pledge Period, except for any Retained Collateral, which shall become subject to the foregoing return obligation on and as of the date determined in accordance with Section 20(a) above). The Pledgee shall take all necessary actions to effect and evidence the return of Collateral under this Section 20, including, without limitation, the filing of UCC termination statements with respect to, and the return to the Pledgor of certificates, if any, representing the Pledged Interests (or Additional Interests) comprising, such Collateral.

(c)          The assignment by the Pledgee to the Pledgor of such Collateral shall be without representation or warranty of any nature whatsoever except as otherwise provided in Paragraph 4(b) above. Pledgor shall be entitled to exercise any and all rights or remedies available to it at law or in equity concerning Pledgee’s performance of its obligations hereunder (or any breach of the representations or warranties made by Pledgee hereunder).

(d)          Notwithstanding anything to the contrary in this Agreement, the Pledgor shall have the right to substitute Cash Collateral for (i) any Pledged Interests or Additional Interests that are subject to application by Pledgee following issuance of an Application Notice or (ii) any Pledged Interests (or Additional Interests) constituting Retained Collateral (“ Replacement Collateral ”) by depositing such Replacement Collateral with the Pledgee (same to be held subject to the Cash Collateral provisions set forth in Section 1 and elsewhere herein) and instructing the Pledgee to release the Pledged Interests (or Additional Interests) for which they are substituted; provided , that as of the date of such substitution, the Value of the Replacement Collateral shall be equal to or greater than the Estimated Claims Amount. Upon replacement of the Pledged Interests (or Additional Interests) with Replacement Collateral meeting the requirements stated above, the Pledgee’s security interest in the replaced Pledged Interests (or Additional Interests) shall terminate and be released and the Pledgee shall take all necessary actions to effect and evidence the return of the Pledged Interests (or Additional Interests), including, without limitation, the filing of UCC termination statements with respect to such Pledged Interests (or Additional Interests), and the prompt delivery of the original certifications, if any, or other instruments or documents evidencing the Pledged Interests (or Additional Interests). The continuing lien and perfected security interest granted by the Pledgor to the Pledgee shall automatically apply and attach to and be granted with respect to the Replacement Collateral and Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Replacement Collateral.

21.          Notices . All notices and other communications in connection with this Agreement shall be made in writing and delivered by hand, recognized overnight delivery service or by certified or registered mail, postage prepaid, with return receipt requested:

22.          Amendments and Waivers . No amendment or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the Pledgee and the Pledgor.

23.          Governing Law . This Agreement and the rights and obligations of the Pledgee and the Pledgor hereunder shall be construed in accordance with and governed by the law of the State of New York (without giving effect to the conflict-of-laws principles thereof).

24.          [Reserved] .

25.          Transfer or Assignment . Except with respect to any assignment or transfer by the Pledgee to an Affiliate (which shall not require the Pledgor’s consent, but as to which the Pledgee will give prior written notice to the Pledgor), none of the Pledgor or Pledgee may assign or transfer any of their respective rights under and interests in this Agreement without the prior written consent of the Pledgor (if the assignor/transferee is the Pledgee) or of the Pledgee (if the assignor/transferee is the Pledgor), which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that no consent of the Pledgor is required hereunder for (a) the assignment or transfer by the Pledgee of any of its rights under and interests in the Contribution Agreement to any permitted assignee under the Contribution Agreement or (b) the Pledgee to act hereunder as agent on behalf of any Person who becomes a Indemnified Party. Upon receipt of such consent (if required under this Section 25), the Pledgee may deliver the Collateral or any portion thereof to its assignee/transferee who shall thereupon, to the extent provided in the instrument of assignment, have all of the rights and obligations of the Pledgee hereunder with respect to the Collateral, and the Pledgee shall thereafter be fully discharged from any responsibility with respect to the Collateral so delivered to such assignee/transferee provided that such assignee/transferee has expressly assumed in writing all duties and obligations of the Pledgee hereunder to the reasonable satisfaction of Pledgor. However, no such assignment or transfer shall relieve such assignee/transferee of those duties and obligations of the Pledgee specified hereunder.

26.          Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of the Pledgor and the Pledgee and their respective successors and permitted assigns, and all subsequent holders of the Secured Obligations.

27.          Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original and all of which shall together constitute one and the same agreement.

28.          Captions . The captions of the sections of this Agreement have been inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

29.          Complete Agreement . This Agreement and the Contribution Agreement, as applicable, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all other understandings, oral or written, with respect to the subject matter hereof.

30.          Severability . In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired provided that the parties retain all of the material rights afforded to them herein notwithstanding the removal of such invalid, illegal or unenforceable provision.

31.          No Third-Party Beneficiaries . Except as may be expressly provided or incorporated by reference herein, no provision of this Agreement is intended, nor shall it be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any customer, affiliate, stockholder, partner, member, director, officer or employee of any party hereto or any other Person or entity.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement on the day and year written below. 

Dated: April 2, 2014 

Dated: April 2, 2014

Pledge Agreement

THIS PLEDGE AGREEMENT (this “ Agreement ”), dated as of April 2, 2014, is entered into by and between BLUEROCK RESIDENTIAL HOLDINGS, L.P., a Delaware limited partnership (the “ Pledgee ”), and BR-NPT Springing Entity, LLC, a Delaware limited liability company (the “ Pledgor ”). Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Contribution Agreement (as defined below).

WHEREAS, pursuant to that certain Contribution Agreement, dated as of March 10, 2014, by and between the Pledgee and the Pledgor (the “ Contribution Agreement ”), the Pledgor is contributing the Property to the Pledgee in exchange for the OP Units;

WHEREAS, pursuant to the Contribution Agreement, the Pledgor has agreed to indemnify the Pledgee, its successors, assigns and Affiliates, including, but not limited to, BRG North Park Towers (each, an “ Indemnified Party ” and, together, the “ Indemnified Parties ”), for certain losses described in Section 8.1 of the Contribution Agreement (but subject to the limitations expressed in Section 8.2 of the Contribution Agreement) (the “ Losses ”) and asserted during the Survival Period (as hereinafter defined). The Pledgor’s obligations (i) so to indemnify the Indemnified Parties for Losses in accordance with Section 8.1 of the Contribution Agreement, and (ii) to perform its obligations hereunder are referred to herein collectively as the “ Secured Obligations ”; and

WHEREAS, in order to secure the full and timely performance of the Secured Obligations pursuant to the Contribution Agreement, the Pledgor has agreed to pledge and grant to the Pledgee, as security for the Secured Obligations, a lien and security interest in, to and under the OP Units having a value equal to ten percent (10%) of the Consideration (as defined) under the Contribution Agreement (collectively the “ Pledged Interests ”), such pledge, lien and security interest to remain in effect during the Pledge Period (as defined below) subject to the terms hereof.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Grant of Security Interest . As collateral security for the payment, performance and observance of the Secured Obligations, now existing or hereafter arising, absolute or contingent, the Pledgor pledges to the Pledgee, for its own benefit and for the benefit of each Indemnified Party subject to the limitations set forth herein, and grants to the Pledgee, for its own benefit and the benefit of each Indemnified Party subject to the limitations set forth herein, a security interest in the following property (collectively, the “ Collateral ”):

(a)          the Pledged Interests, as more particularly described in Exhibit A attached hereto;

(b)          any equity securities of the Pledgee (“ Additional Interests ”) and/or obligations of the Pledgee in respect of the Pledged Interests that may hereafter be acquired by the Pledgor during the Pledge Period and, if any, the certificates or other instruments or documents evidencing the same;

(c)          all rights of Pledgor in and to all distributions in kind declared in respect of any or all of the foregoing during the Pledge Period;

(d)          any cash received by Pledgee pursuant to Section 8 below during the Pledge Period;

(e)          any cash or cash equivalent (the “ Cash Collateral ”) substituted by Pledgor for the Pledged Interests and/or the Additional Interests (or any portion thereof) pursuant to the terms hereof; and

(f)          all proceeds and profits of any or all of the foregoing.

Pledgor and Pledgee do hereby acknowledge and agree that Pledgor shall be entitled, at any time during the Pledge Period, to substitute Cash Collateral for all or any portion of the Pledged Interests and/or the Additional Interests. Any Cash Collateral shall be held in a segregated account in the name of both Pledgor and Pledgee (at an institution designated by Pledgee) and shall be released from such account only upon instructions given by Pledgor and Pledgee, which instructions shall conform with the provisions of this Agreement.

2.           Delivery of Certificates and Instruments . The Pledgor shall deliver to the Pledgee: (a) the original certificates or other instruments or documents evidencing the Pledged Interests, if any, concurrently with the execution and delivery of this Agreement, and (b) the original certificates or other instruments or documents evidencing all other Collateral (except for Collateral that this Agreement specifically permits the Pledgor to retain) within ten (10) days after Pledgor’s receipt thereof. All Collateral that is certificated securities shall be in bearer form or, if in registered form, shall be reflected as being subject to this Agreement on the books of the transfer agent.

3.           Pledgor Remain Liable . Notwithstanding anything herein to the contrary: (a) the Pledgor shall remain obligated, to the extent set forth in the agreements (including, without limitation, the Pledgee’s Charter Documents) under which it has received, or has rights or obligations in respect of its ownership of, the REIT Shares (“ Related Agreements ”) to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Pledgee of any of its rights hereunder shall not release the Pledgor from any of its duties or obligations under the Related Agreements, except to the extent that such duties and obligations may have been terminated by reason of a sale, transfer or other disposition of the Collateral pursuant hereto; and (c) the Pledgee shall not by reason of this Agreement have any obligations or liabilities under the Related Agreements (beyond those imposed directly on the Pledgee by the express terms therein), nor shall the Pledgee be obligated to perform any of the obligations or duties of the Pledgor under the Related Agreements or to take any action to collect or enforce any claim for payment assigned hereunder.

4.           Representations, Warranties and Covenants .

(a)          The Pledgor represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows:

(1)         Set forth on Exhibit A attached hereto is a complete and accurate list and description of all Pledged Interests delivered by Pledgor. Pledgor owns, directly or indirectly, all of such Pledged Interests, free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever created (or allowed to be created) by Pledgor, except in favor of the Pledgee. All other Collateral hereafter delivered by the Pledgor to the Pledgee will be owned, directly or indirectly, by the Pledgor free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever, except in favor of the Pledgee.

(2)         With respect to the Pledgor, the address of its chief executive office and principal place of business, and the location of its books and records relating to the Collateral, is set forth in Section 21 hereof. Pledgor will not change said address or location, or merge or consolidate with any person or change its name during the Pledge Period, without at least fifteen (15) days’ prior written notice to the Pledgee, and with respect to any such change in address or name or merger or consolidation, Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Collateral.

(3)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgor will not create, incur, assume or permit to exist any security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral (as defined below)) other than the security interest created pursuant to this Agreement or sell, transfer, assign, pledge or grant a security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person other than the Pledgee (provided that Pledgor shall be entitled to consent to the sale of the Pledged Interests or the Additional Interests during the Pledge Period (and, if and to the extent applicable, the Extended Pledge Period) so long as such sale is not binding or consummated until the Pledge Period has expired).

(4)         The Pledged Interests that are Collateral hereunder are fully paid and are not subject to any options to purchase or similar rights of any kind granted by the Pledgor in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(5)         The Pledgor has the power and authority to own its properties and to carry on its business as currently conducted.

(6)         The Pledgor has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(7)         This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(8)         The Pledgor’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgor, or any provision of the Pledgor’s Charter Documents, or any securities issued by, the Pledgor, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgor is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgor pursuant to the provisions of any of the foregoing.

(9)         No consent of any other Person (including, without limitation, as applicable, members and creditors of the Pledgor) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

(10)        The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in such Collateral to the extent a security interest can be created therein pursuant to the New York Uniform Commercial Code, subject to any filings, agreements or actions required pursuant to the New York Uniform Commercial Code or otherwise.

(11)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take commercially reasonable actions to defend the Pledgee’s security interest in the Collateral (or, during such Extended Pledge Period, the Retained Collateral) against the claims and demands of all Persons whomsoever (other than Affiliates of Pledgee).

(12)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take any and all commercially reasonable actions necessary to maintain its status as a stockholder of the Pledgee and the shares of Pledgee’s Class “A” common stock represented by the Pledged Interests.

(13)        During the Pledge Period, the Pledgor will not enter into or assume any other agreement containing a negative pledge with respect to the Collateral (or, during any Extended Pledge Period, if and to the extent applicable, with respect to the Retained Collateral).

(b)          The Pledgee represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows:

(1)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgee will not sell, transfer, assign or the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person or allow any lien to be placed on or otherwise encumber the Collateral.

(2)         The Pledged Interests and the Additional Interests that are Collateral hereunder will not be made subject to any options to purchase or similar rights of any kind granted by the Pledgee in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(3)         The Pledgee has the power and authority to own its properties and to carry on its business as currently conducted.

(4)         The Pledgee has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(5)         This Agreement constitutes the legal, valid and binding obligation of the Pledgee, enforceable against the Pledgee in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(6)         The Pledgee’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgee, or any provision of the Pledgee’s Charter Documents, or any securities issued by, the Pledgee, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgee is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgee pursuant to the provisions of any of the foregoing.

(7)         No consent of any other Person (including, without limitation, as applicable, stockholders and creditors of the Pledgee) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

5.              Registration . If any Claim (as defined below) remains unresolved thirty (30) days after the date of issuance of the applicable Claim Notice (as defined below), and provided Pledgee has notified Pledgor in writing of its intention to take any of the actions specified in this Section 5 and further provided Pledgor has not within three (3) business days from receipt of such written notification substituted Cash Collateral in the amount of such Outstanding Claim (as defined below) for all (or an applicable portion) of the Pledged Interests (and/or the Additional Interests), then Pledgee may cause all or any of the Collateral to be transferred to or registered in its name or the name of its nominee or nominees. Notwithstanding anything contained herein to the contrary, Pledgee shall not be entitled to take any action under this Agreement with respect to the Pledged Interests (or the Additional Interests) that is prohibited by the terms, or would cause a breach or violation, of the Lock-Up Agreement or the Registration Rights Agreement.

6.              Claims; Value of Collateral .

(a)          Any claims by an Indemnified Party for indemnification under the Contribution Agreement shall be made in accordance with Section 8.1 of the Contribution Agreement. On or prior to the first (1st) anniversary of the Closing (the “ Survival Period ”), an Indemnified Party may give written notice (each a “ Claim Notice ”) to the Pledgor of any Loss that is subject to indemnification under Section 8.1 of the Contribution Agreement (each a “ Claim ”). Pledgor and Pledgee shall use commercially reasonable efforts to resolve any Claim within thirty (30) days of issuance of the applicable Claim Notice. Any Claim that has not been resolved to the mutual satisfaction of Pledgor and Pledgee shall be referred to hereunder as an “ Outstanding Claim ”. The amount required to satisfy any Claim shall be disclosed in the Claims Notice, as estimated by the Independent Directors (as defined below) in their reasonable discretion, and same shall be binding on Pledgor unless manifestly erroneous (such amount(s) being referred to, individually and collectively, as the “ Estimated Claims Amount ”).

(b)          The value of Collateral (the “ Value ”) shall be determined as follows: (i) with respect to Collateral consisting of the REIT Shares, an amount equal to ten percent (10%) of the aggregate monetary value of the REIT Shares (determined by the Share Price on the Closing Date); (ii) for all other non-cash (or non-cash equivalent) Collateral, the fair market value of such Collateral as determined by the independent directors of the Pledgee who meet the New York Stock Exchange standards of independence for directors, as determined by the board of directors of the Pledgee (the “ Independent Directors ”).

7.             Voting Rights and Certain Payments Prior to Occurrence of Secured Obligations and Other Events .

(a)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to exercise, in its sole discretion but not inconsistent with the terms hereof, the voting power with respect to any such Collateral, and for that purpose the Pledgee shall (if such Collateral shall be registered in the name of the Pledgee or its nominee in strict compliance with the terms hereof) execute, or cause to be executed, from time to time such proxies or other instruments in favor of the Pledgor or its nominee in such form and for such purposes as shall be reasonably required and specified in writing by the Pledgor, to enable the Pledgor to exercise such voting power with respect to such Collateral. If a Claim Notice has been properly issued by Pledgee, then the rights granted under this Paragraph 7(a) shall be exercisable by Pledgee, rather than Pledgor, with respect to Collateral having a Value equal to the Estimated Claims Amount (the “ Claims Pending Collateral ”), with Pledgor retaining the rights granted hereunder relating to all other Collateral.

(b)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to receive and retain for its own account any and all regular cash distributions (but not distributions in the form of Additional Interests or other securities, distributions in kind or liquidating distributions, all of which shall be delivered and applied in accordance with Section 8 hereof) and interest at any time and from time to time paid upon any of such Collateral, and the Pledgee shall have no rights in or to same by virtue of this Agreement. Any of such regular cash distributions or interest paid while any Outstanding Claim exists shall be deemed part of the Collateral under this Agreement and thereafter subject to the terms hereof relating to such Collateral.

8.           Extraordinary Payments and Distributions . In case, upon the dissolution or liquidation (in whole or in part) of the Pledgee, any sum shall be paid as a liquidating distribution or otherwise upon or with respect to any of the Collateral during the Pledge Period, such sum shall be paid over to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder and all of the same shall constitute Collateral for all purposes hereof. Any such payment made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such payment applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral. In case, during the Pledge Period, any distribution of Additional Interests shall be made with respect to the Collateral, or Additional Interests or fractions thereof shall be issued pursuant to any split involving any of the Collateral, or any distribution of capital shall be made on any of the Collateral, or any shares, obligations or other property shall be distributed upon or with respect to the Collateral pursuant to a recapitalization or reclassification of the capital of the Pledgee, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of the Pledgee, or pursuant to the merger or consolidation of the Pledgee with or into another entity, the shares, obligations or other property so distributed shall be delivered to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder, and all of the same shall constitute Collateral for all purposes hereof. Any such distribution made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such distribution applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral.

9.           Pledgor Obligations Not Affected . The obligations of the Pledgor hereunder shall remain in full force and effect and shall not be impaired by:

(a)          any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Pledgor;

(b)          any amendments to or modifications of any instrument (other than this Agreement) securing any of the Secured Obligations provided that the Pledgor has consented to same (such consent not to be unreasonably conditioned, delayed or denied);

(c)          the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations; or

(d)          the lack of enforceability of any of the Secured Obligations against the Pledgor or any other person, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

10.          Voting Rights and Certain Payments After Occurrence of Claim Notice and Certain Other Events .

(a)          From and after the issuance of any Claim Notice, all rights of the Pledgor to exercise, or refrain from exercising, all voting power with respect to, and to otherwise exercise all ownership rights arising from, the Claims Pending Collateral shall cease, and thereupon the Pledgee shall be entitled to exercise all voting power with respect to such Claims Pending Collateral and otherwise exercise such ownership rights as though the Pledgee were the outright owner of such Claims Pending Collateral (Pledgor shall retain such voting power with respect to all other Collateral). If the Independent Directors of the Pledgee reasonably determine that the Estimated Claims Amount equals or exceeds the Value of the Collateral then available to satisfy such Outstanding Claims, then the Pledgor shall no longer be the owner of such Collateral for tax purposes and all rights of the Pledgor to receive and retain the distributions and interest which it would otherwise be authorized to receive and retain pursuant to Section 7 hereof shall cease, and thereupon the Pledgee shall be entitled to receive and retain, as additional Collateral hereunder, any and all distributions and interest at any time and from time to time paid upon any of such Collateral, provided that, concurrent with making such determination, the Pledgee gives notice thereof to the Pledgor.

(b)          All payments, distributions or other property or assets that are received by the Pledgor contrary to the provisions of paragraph (a) of this Section 10 shall be received and held in trust for the benefit of the Pledgee, shall be segregated from other funds of the Pledgor and shall be forthwith paid over to the Pledgee.

11.          Application of Cash Collateral . Any cash received and retained by the Pledgee as additional Collateral pursuant to Section 8 hereof may at any time and from time to time be applied (in whole or in part) by the Pledgee, at its option, in strict accordance with the terms and conditions hereof, to the payment of the Secured Obligations which such Collateral secures (in the order described in paragraph 12 below), but only if and to the extent any such payment is required hereunder.

12.          Application of Proceeds . Except as otherwise expressly provided herein, any cash received and retained pursuant to Section 8 hereof shall be applied by the Pledgee: first to the payment in full of the Secured Obligations, but only if and to the extent any such payment is required hereunder; and then, to the payment to the Pledgor, or its successors or assigns or as a court of competent jurisdiction may direct, of any surplus then remaining.

13.          Remedies With Respect to the Collateral .

(a)          If any Claim remains unresolved thirty (30) days after the date of receipt of the applicable Claim Notice, then Pledgee, without obligation to resort to other security, shall have the right at any time and from time to time thereafter to apply, after three (3) business days’ prior written notice to Pledgor (each an “ Application Notice ”), Collateral with a Value equal to the Estimated Claims Amount, in one or more parcels at the same or different times, and to receive all right, title and interest, claim and demand therein and right of redemption thereof, same to be applied by Pledgee to payment of such Outstanding Claims.

(b)          Notwithstanding anything to the contrary in this Agreement or the Contribution Agreement, the sole recourse of the Pledgee against the Pledgor for the Secured Obligations is limited to the rights of the Pledgor in any Collateral that is applied by the Pledgee in strict accordance with the terms and conditions hereof to satisfy such Secured Obligations.

(c)          No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with any transfer of Collateral to the Pledgee in strict accordance with the terms and conditions of this Agreement.

(d)          Subject to the provisions of Section 13(b) above, the remedies provided herein in favor of the Pledgee relating to the Collateral shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Pledgee relating to the Collateral existing at law or in equity.

14.          Care of Collateral . The Pledgee shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody of any thereof actually in its possession. With respect to any maturities, calls, conversions, exchanges, redemptions, offers, tenders or similar matters relating to any of the Collateral (herein called “events”), the Pledgee’s duty shall be fully satisfied if (i) the Pledgee exercises reasonable care to ascertain the occurrence and to give reasonable written notice to the Pledgor of any events applicable to any Collateral which are registered and held in the name of the Pledgee or its nominee, (ii) the Pledgee gives the Pledgor reasonable written notice of the occurrence of any events, of which the Pledgee has actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Pledgee or its nominee (the Pledgor agreeing to give the Pledgee reasonable written notice of the occurrence of any events applicable to any securities Collateral in the possession of the Pledgor of which the Pledgor has received knowledge), and (iii) (a) the Pledgee endeavors to take such action with respect to any of the events as the Pledgor may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Pledgee reasonably determines that the action requested might adversely affect the value of the Collateral, the collection of the Secured Obligations, or otherwise prejudice the interests of the Pledgee, the Pledgee gives reasonable written notice to the Pledgor that any such requested action will not be taken and if the Pledgee makes such determination or if the Pledgor fails to make such timely request, the Pledgee takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Pledgee shall have no further obligation, under this Agreement only, to ascertain the occurrence of, or to notify the Pledgor with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Pledgee of any internal procedures with respect to any Collateral in its possession.

15.          Power of Attorney . The Pledgor hereby appoints the Pledgee to act during the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period) as the Pledgor’s attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Pledgee reasonably may deem necessary or advisable to accomplish the purposes hereof, provided that Pledgee has given Pledgor prior reasonable written notice of Pledgee’s intention to exercise such attorney-in-fact rights. Without limiting the generality of the foregoing, at any time while an Outstanding Claim exists, the Pledgee shall have the right and power (a) with respect to any Claims Pending Collateral to satisfy a Secured Obligation in strict accordance with the terms and conditions herein, to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any interest or other distribution payable in respect of such Claims Pending Collateral or any part thereof and to give full discharge for the same, and (b) to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Claims Pending Collateral; provided, that the Pledgee shall provide reasonable written notice to the Pledgor prior to taking any such action under the foregoing clauses (a) and (b). For purposes of this Section 15 and Section 14 above, “reasonable written notice” shall mean written notice given within five (5) days of the occurrence of the event, issue or at least five (5) days prior to the date on which such requisite action will be taken.

16.          Further Assurances . The Pledgor shall, at its sole cost and expense, upon reasonable request of the Pledgee, duly execute and deliver, or cause to be duly executed and delivered, to the Pledgee such further instruments and documents and take and cause to be taken such further actions as may be necessary or proper in the reasonable opinion of the Pledgee to carry out more effectually the provisions and purposes of this Agreement; provided that none of the same will materially affect Pledgor’s or Pledgee’s rights hereunder or materially increase their obligations hereunder.

17.          No Waiver . No failure on the part of the Pledgee to exercise, and no delay on the part of the Pledgee in exercising, any of its options, powers, rights or remedies hereunder during the Pledge Period, or partial or single exercise thereof, shall constitute a waiver thereof or preclude any other or further exercise thereof or the exercise of any other option, power, right or remedy during the Pledge Period.

18.          Security Interest Absolute . All rights of the Pledgee hereunder, grant of a security interest in the Collateral and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Contribution Agreement, any of the Secured Obligations or any other agreement or instrument relating thereto, (b) any change in any term of all or any of the Secured Obligations or any other amendment or waiver of, or any consent to any departure from, the Contribution Agreement or any other agreement or instrument or (c) any other circumstance that might otherwise constitute a defense available to, or a discharge of the Pledgor in respect of the Secured Obligations or in respect of this Agreement.

19.          Expenses . Pledgor agrees to pay the Pledgee all reasonable out-of-pocket expenses of the Pledgee (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any provisions of this Agreement. Pledgee agrees to pay the Pledgor all reasonable out-of-pocket expenses of the Pledgor (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any obligations of Pledgee hereunder.

20.          End of Pledge Period; Return of Collateral .

(a)          For purposes of this Agreement, the “ Pledge Period ” means the period beginning on the date hereof and ending on the six (6) month anniversary of the date hereof; provided , that, if there are any Outstanding Claims at the time of termination of the Pledge Period, the Pledgee shall have the right to retain, pending resolution of such Outstanding Claim(s) pursuant to Section 8.1 of the Contribution Agreement, and at all times subject to the terms hereof, Collateral equal in Value to the Estimated Claims Amount (“ Retained Collateral ”). Solely with respect to such Retained Collateral, the Pledge Period shall be deemed to continue (an “ Extended Pledge Period ”) until the earlier to occur of (i) the ten (10) month anniversary of the date hereof or (ii) the resolution pursuant to Section 8.1 of the Contribution Agreement, of the Outstanding Claim(s) to which such Retained Collateral relates; provided, however, if any Outstanding Claims remain in existence on the ten (10) month anniversary of the date hereof, then Pledgor shall be required to deliver Replacement Collateral (as defined below) to Pledgee before the Extended Pledge Period may end. Following the expiration of the Pledge Period, the Pledgor shall be required to maintain for the balance of the Survival Period a minimum net worth of not less than $10,000,000.00.

(b)          Upon the termination of the Pledge Period (or the Extended Pledge Period, if and to the extent applicable), the Pledgor shall be entitled to, and the Pledgee promptly shall effect, the return to the Pledgor of all of the Collateral (and all other cash or other items held as additional Collateral hereunder) that has not been used or applied toward the payment of the Secured Obligations in strict accordance with the terms hereof (it being understood, for the sake of clarity, that Collateral not so used or applied shall become subject to the foregoing return obligation on and as of the last day of the Pledge Period, except for any Retained Collateral, which shall become subject to the foregoing return obligation on and as of the date determined in accordance with Section 20(a) above). The Pledgee shall take all necessary actions to effect and evidence the return of Collateral under this Section 20, including, without limitation, the filing of UCC termination statements with respect to, and the return to the Pledgor of certificates, if any, representing the Pledged Interests (or Additional Interests) comprising, such Collateral.

(c)          The assignment by the Pledgee to the Pledgor of such Collateral shall be without representation or warranty of any nature whatsoever except as otherwise provided in Paragraph 4(b) above. Pledgor shall be entitled to exercise any and all rights or remedies available to it at law or in equity concerning Pledgee’s performance of its obligations hereunder (or any breach of the representations or warranties made by Pledgee hereunder).

(d)          Notwithstanding anything to the contrary in this Agreement, the Pledgor shall have the right to substitute Cash Collateral for (i) any Pledged Interests or Additional Interests that are subject to application by Pledgee following issuance of an Application Notice or (ii) any Pledged Interests (or Additional Interests) constituting Retained Collateral (“ Replacement Collateral ”) by depositing such Replacement Collateral with the Pledgee (same to be held subject to the Cash Collateral provisions set forth in Section 1 and elsewhere herein) and instructing the Pledgee to release the Pledged Interests (or Additional Interests) for which they are substituted; provided , that as of the date of such substitution, the Value of the Replacement Collateral shall be equal to or greater than the Estimated Claims Amount. Upon replacement of the Pledged Interests (or Additional Interests) with Replacement Collateral meeting the requirements stated above, the Pledgee’s security interest in the replaced Pledged Interests (or Additional Interests) shall terminate and be released and the Pledgee shall take all necessary actions to effect and evidence the return of the Pledged Interests (or Additional Interests), including, without limitation, the filing of UCC termination statements with respect to such Pledged Interests (or Additional Interests), and the prompt delivery of the original certifications, if any, or other instruments or documents evidencing the Pledged Interests (or Additional Interests). The continuing lien and perfected security interest granted by the Pledgor to the Pledgee shall automatically apply and attach to and be granted with respect to the Replacement Collateral and Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Replacement Collateral.

21.          Notices . All notices and other communications in connection with this Agreement shall be made in writing and delivered by hand, recognized overnight delivery service or by certified or registered mail, postage prepaid, with return receipt requested:

22.          Amendments and Waivers . No amendment or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the Pledgee and the Pledgor.

23.          Governing Law . This Agreement and the rights and obligations of the Pledgee and the Pledgor hereunder shall be construed in accordance with and governed by the law of the State of New York (without giving effect to the conflict-of-laws principles thereof).

24.          [Reserved] .

25.          Transfer or Assignment . Except with respect to any assignment or transfer by the Pledgee to an Affiliate (which shall not require the Pledgor’s consent, but as to which the Pledgee will give prior written notice to the Pledgor), none of the Pledgor or Pledgee may assign or transfer any of their respective rights under and interests in this Agreement without the prior written consent of the Pledgor (if the assignor/transferee is the Pledgee) or of the Pledgee (if the assignor/transferee is the Pledgor), which consent shall not be unreasonably withheld, conditioned or delayed; provided , however , that no consent of the Pledgor is required hereunder for (a) the assignment or transfer by the Pledgee of any of its rights under and interests in the Contribution Agreement to any permitted assignee under the Contribution Agreement or (b) the Pledgee to act hereunder as agent on behalf of any Person who becomes a Indemnified Party. Upon receipt of such consent (if required under this Section 25), the Pledgee may deliver the Collateral or any portion thereof to its assignee/transferee who shall thereupon, to the extent provided in the instrument of assignment, have all of the rights and obligations of the Pledgee hereunder with respect to the Collateral, and the Pledgee shall thereafter be fully discharged from any responsibility with respect to the Collateral so delivered to such assignee/transferee provided that such assignee/transferee has expressly assumed in writing all duties and obligations of the Pledgee hereunder to the reasonable satisfaction of Pledgor. However, no such assignment or transfer shall relieve such assignee/transferee of those duties and obligations of the Pledgee specified hereunder.

26.          Benefit of Agreement . This Agreement shall be binding upon and inure to the benefit of the Pledgor and the Pledgee and their respective successors and permitted assigns, and all subsequent holders of the Secured Obligations.

27.          Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original and all of which shall together constitute one and the same agreement.

28.          Captions . The captions of the sections of this Agreement have been inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

29.          Complete Agreement . This Agreement and the Contribution Agreement, as applicable, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all other understandings, oral or written, with respect to the subject matter hereof.

30.          Severability . In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired provided that the parties retain all of the material rights afforded to them herein notwithstanding the removal of such invalid, illegal or unenforceable provision.

31.          No Third-Party Beneficiaries . Except as may be expressly provided or incorporated by reference herein, no provision of this Agreement is intended, nor shall it be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any customer, affiliate, stockholder, partner, member, director, officer or employee of any party hereto or any other Person or entity.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement on the day and year written below.

Dated: April 2, 2014

Pledge Agreement

THIS PLEDGE AGREEMENT (this “ Agreement ”), dated as of April 2, 2014, is entered into by and between BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation (the “ Pledgee ”), and Bluerock Special Opportunity + Income Fund, LLC, a Delaware limited liability company (the “ Pledgor ”). Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Contribution Agreement (as defined below).

WHEREAS, pursuant to that certain Contribution Agreement, dated as of March 10, 2014, by and between the Pledgee and the Pledgor (the “ Contribution Agreement ”), the Pledgor is contributing the Springhouse Interests to the Pledgee in exchange for cash;

WHEREAS, pursuant to the Contribution Agreement, the Pledgor has agreed to indemnify the Pledgee, its successors, assigns and Affiliates, including, but not limited to, BEMT Springhouse (each, an “ Indemnified Party ” and, together, the “ Indemnified Parties ”), for certain losses described in Section 8.1 of the Contribution Agreement (but subject to the limitations expressed in Section 8.2 of the Contribution Agreement) (the “ Losses ”) and asserted during the Survival Period (as hereinafter defined). The Pledgor’s obligations (i) so to indemnify the Indemnified Parties for Losses in accordance with Section 8.1 of the Contribution Agreement, and (ii) to perform its obligations hereunder are referred to herein collectively as the “ Secured Obligations ”; and

WHEREAS, in order to secure the full and timely performance of the Secured Obligations pursuant to the Contribution Agreement, the Pledgor has agreed to pledge and grant to the Pledgee, as security for the Secured Obligations, a lien and security interest in, to and under the cash having a value equal to ten percent (10%) of the Consideration (as defined) under the Contribution Agreement (collectively the “ Pledged Interests ”), such pledge, lien and security interest to remain in effect during the Pledge Period (as defined below) subject to the terms hereof.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.            Grant of Security Interest . As collateral security for the payment, performance and observance of the Secured Obligations, now existing or hereafter arising, absolute or contingent, the Pledgor pledges to the Pledgee, for its own benefit and for the benefit of each Indemnified Party subject to the limitations set forth herein, and grants to the Pledgee, for its own benefit and the benefit of each Indemnified Party subject to the limitations set forth herein, a security interest in the following property (collectively, the “ Collateral ”):

(a)          the Pledged Interests, as more particularly described in Exhibit A attached hereto;

(b)          any equity securities of the Pledgee (“ Additional Interests ”) and/or obligations of the Pledgee in respect of the Pledged Interests that may hereafter be acquired by the Pledgor during the Pledge Period and, if any, the certificates or other instruments or documents evidencing the same;

(c)          all rights of Pledgor in and to all distributions in kind declared in respect of any or all of the foregoing during the Pledge Period;

(d)          any cash received by Pledgee pursuant to Section 8 below during the Pledge Period;

(e)          any cash or cash equivalent (the “ Cash Collateral ”) substituted by Pledgor for the Pledged Interests and/or the Additional Interests (or any portion thereof) pursuant to the terms hereof; and

(f)          all proceeds and profits of any or all of the foregoing.

Pledgor and Pledgee do hereby acknowledge and agree that Pledgor shall be entitled, at any time during the Pledge Period, to substitute Cash Collateral for all or any portion of the Pledged Interests and/or the Additional Interests. Any Cash Collateral shall be held in a segregated account in the name of both Pledgor and Pledgee (at an institution designated by Pledgee) and shall be released from such account only upon instructions given by Pledgor and Pledgee, which instructions shall conform with the provisions of this Agreement.

2.            Delivery of Certificates and Instruments . The Pledgor shall deliver to the Pledgee: (a) the original certificates or other instruments or documents evidencing the Pledged Interests, if any, concurrently with the execution and delivery of this Agreement, and (b) the original certificates or other instruments or documents evidencing all other Collateral (except for Collateral that this Agreement specifically permits the Pledgor to retain) within ten (10) days after Pledgor’s receipt thereof. All Collateral that is certificated securities shall be in bearer form or, if in registered form, shall be reflected as being subject to this Agreement on the books of the transfer agent.

3.            Pledgor Remain Liable . Notwithstanding anything herein to the contrary: (a) the Pledgor shall remain obligated, to the extent set forth in the agreements (including, without limitation, the Pledgee’s Charter Documents) under which it has received, or has rights or obligations in respect of its ownership of, the REIT Shares (“ Related Agreements ”) to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Pledgee of any of its rights hereunder shall not release the Pledgor from any of its duties or obligations under the Related Agreements, except to the extent that such duties and obligations may have been terminated by reason of a sale, transfer or other disposition of the Collateral pursuant hereto; and (c) the Pledgee shall not by reason of this Agreement have any obligations or liabilities under the Related Agreements (beyond those imposed directly on the Pledgee by the express terms therein), nor shall the Pledgee be obligated to perform any of the obligations or duties of the Pledgor under the Related Agreements or to take any action to collect or enforce any claim for payment assigned hereunder.

4.            Representations, Warranties and Covenants .

(a)          The Pledgor represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows:

(1)         Set forth on Exhibit A attached hereto is a complete and accurate list and description of all Pledged Interests delivered by Pledgor. Pledgor owns, directly or indirectly, all of such Pledged Interests, free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever created (or allowed to be created) by Pledgor, except in favor of the Pledgee. All other Collateral hereafter delivered by the Pledgor to the Pledgee will be owned, directly or indirectly, by the Pledgor free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever, except in favor of the Pledgee.

(2)         With respect to the Pledgor, the address of its chief executive office and principal place of business, and the location of its books and records relating to the Collateral, is set forth in Section 21 hereof. Pledgor will not change said address or location, or merge or consolidate with any person or change its name during the Pledge Period, without at least fifteen (15) days’ prior written notice to the Pledgee, and with respect to any such change in address or name or merger or consolidation, Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Collateral.

(3)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgor will not create, incur, assume or permit to exist any security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral (as defined below)) other than the security interest created pursuant to this Agreement or sell, transfer, assign, pledge or grant a security interest in the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person other than the Pledgee (provided that Pledgor shall be entitled to consent to the sale of the Pledged Interests or the Additional Interests during the Pledge Period (and, if and to the extent applicable, the Extended Pledge Period) so long as such sale is not binding or consummated until the Pledge Period has expired).

(4)         The Pledged Interests that are Collateral hereunder are fully paid and are not subject to any options to purchase or similar rights of any kind granted by the Pledgor in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(5)         The Pledgor has the power and authority to own its properties and to carry on its business as currently conducted.

(6)         The Pledgor has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(7)         This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(8)         The Pledgor’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgor, or any provision of the Pledgor’s Charter Documents, or any securities issued by, the Pledgor, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgor is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgor pursuant to the provisions of any of the foregoing.

(9)         No consent of any other Person (including, without limitation, as applicable, members and creditors of the Pledgor) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

(10)        The pledge of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in such Collateral to the extent a security interest can be created therein pursuant to the New York Uniform Commercial Code, subject to any filings, agreements or actions required pursuant to the New York Uniform Commercial Code or otherwise.

(11)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take commercially reasonable actions to defend the Pledgee’s security interest in the Collateral (or, during such Extended Pledge Period, the Retained Collateral) against the claims and demands of all Persons whomsoever (other than Affiliates of Pledgee).

(12)        During the Pledge Period (and any Extended Pledge Period, if and to the extent applicable), the Pledgor will take any and all commercially reasonable actions necessary to maintain its status as a stockholder of the Pledgee and the shares of Pledgee’s Class “A” common stock represented by the Pledged Interests.

(13)        During the Pledge Period, the Pledgor will not enter into or assume any other agreement containing a negative pledge with respect to the Collateral (or, during any Extended Pledge Period, if and to the extent applicable, with respect to the Retained Collateral).

(b)          The Pledgee represents, warrants and covenants, as of the date hereof (for itself and not jointly or jointly and severally with any other Person), as follows:

(1)         During the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period (as defined below)), the Pledgee will not sell, transfer, assign or the Collateral (or during such Extended Pledge Period, the Retained Collateral) to any Person or allow any lien to be placed on or otherwise encumber the Collateral.

(2)         The Pledged Interests and the Additional Interests that are Collateral hereunder will not be made subject to any options to purchase or similar rights of any kind granted by the Pledgee in favor of any Person, except pursuant to the terms of the Pledgee’s Charter Documents.

(3)         The Pledgee has the power and authority to own its properties and to carry on its business as currently conducted.

(4)         The Pledgee has the requisite power and authority to execute and deliver, and to perform its obligations under, this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.

(5)         This Agreement constitutes the legal, valid and binding obligation of the Pledgee, enforceable against the Pledgee in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by the application of general equitable principles.

(6)         The Pledgee’s execution, delivery and performance of this Agreement will not violate (as applicable) any law or regulation, or any order or decree of any court or governmental instrumentality binding on Pledgee, or any provision of the Pledgee’s Charter Documents, or any securities issued by, the Pledgee, and will not conflict with, or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, agreement or other instrument to which the Pledgee is a party or by which it is bound, and will not result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Pledgee pursuant to the provisions of any of the foregoing.

(7)         No consent of any other Person (including, without limitation, as applicable, stockholders and creditors of the Pledgee) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental instrumentality is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement, except for (x) any of same necessary to issue, certificate or register the REIT Shares or (y) the filing of any financing statements required or contemplated hereunder.

5.            Registration . If any Claim (as defined below) remains unresolved thirty (30) days after the date of issuance of the applicable Claim Notice (as defined below), and provided Pledgee has notified Pledgor in writing of its intention to take any of the actions specified in this Section 5 and further provided Pledgor has not within three (3) business days from receipt of such written notification substituted Cash Collateral in the amount of such Outstanding Claim (as defined below) for all (or an applicable portion) of the Pledged Interests (and/or the Additional Interests), then Pledgee may cause all or any of the Collateral to be transferred to or registered in its name or the name of its nominee or nominees. Notwithstanding anything contained herein to the contrary, Pledgee shall not be entitled to take any action under this Agreement with respect to the Pledged Interests (or the Additional Interests) that is prohibited by the terms, or would cause a breach or violation, of the Lock-Up Agreement or the Registration Rights Agreement.

6.           Claims; Value of Collateral .

(a)          Any claims by an Indemnified Party for indemnification under the Contribution Agreement shall be made in accordance with Section 8.1 of the Contribution Agreement. On or prior to the first (1st) anniversary of the Closing (the “ Survival Period ”), an Indemnified Party may give written notice (each a “ Claim Notice ”) to the Pledgor of any Loss that is subject to indemnification under Section 8.1 of the Contribution Agreement (each a “ Claim ”). Pledgor and Pledgee shall use commercially reasonable efforts to resolve any Claim within thirty (30) days of issuance of the applicable Claim Notice. Any Claim that has not been resolved to the mutual satisfaction of Pledgor and Pledgee shall be referred to hereunder as an “ Outstanding Claim ”. The amount required to satisfy any Claim shall be disclosed in the Claims Notice, as estimated by the Independent Directors (as defined below) in their reasonable discretion, and same shall be binding on Pledgor unless manifestly erroneous (such amount(s) being referred to, individually and collectively, as the “ Estimated Claims Amount ”).

(b)          The value of Collateral (the “ Value ”) shall be determined as follows: (i) with respect to Collateral consisting of the REIT Shares, an amount equal to ten percent (10%) of the aggregate monetary value of the REIT Shares (determined by the Share Price on the Closing Date); (ii) for all other non-cash (or non-cash equivalent) Collateral, the fair market value of such Collateral as determined by the independent directors of the Pledgee who meet the New York Stock Exchange standards of independence for directors, as determined by the board of directors of the Pledgee (the “ Independent Directors ”).

7.            Voting Rights and Certain Payments Prior to Occurrence of Secured Obligations and Other Events .

(a)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to exercise, in its sole discretion but not inconsistent with the terms hereof, the voting power with respect to any such Collateral, and for that purpose the Pledgee shall (if such Collateral shall be registered in the name of the Pledgee or its nominee in strict compliance with the terms hereof) execute, or cause to be executed, from time to time such proxies or other instruments in favor of the Pledgor or its nominee in such form and for such purposes as shall be reasonably required and specified in writing by the Pledgor, to enable the Pledgor to exercise such voting power with respect to such Collateral. If a Claim Notice has been properly issued by Pledgee, then the rights granted under this Paragraph 7(a) shall be exercisable by Pledgee, rather than Pledgor, with respect to Collateral having a Value equal to the Estimated Claims Amount (the “ Claims Pending Collateral ”), with Pledgor retaining the rights granted hereunder relating to all other Collateral.

(b)          Unless and until a Claim Notice has been properly issued, the Pledgor shall be entitled to receive and retain for its own account any and all regular cash distributions (but not distributions in the form of Additional Interests or other securities, distributions in kind or liquidating distributions, all of which shall be delivered and applied in accordance with Section 8 hereof) and interest at any time and from time to time paid upon any of such Collateral, and the Pledgee shall have no rights in or to same by virtue of this Agreement. Any of such regular cash distributions or interest paid while any Outstanding Claim exists shall be deemed part of the Collateral under this Agreement and thereafter subject to the terms hereof relating to such Collateral.

8.            Extraordinary Payments and Distributions . In case, upon the dissolution or liquidation (in whole or in part) of the Pledgee, any sum shall be paid as a liquidating distribution or otherwise upon or with respect to any of the Collateral during the Pledge Period, such sum shall be paid over to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder and all of the same shall constitute Collateral for all purposes hereof. Any such payment made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such payment applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral. In case, during the Pledge Period, any distribution of Additional Interests shall be made with respect to the Collateral, or Additional Interests or fractions thereof shall be issued pursuant to any split involving any of the Collateral, or any distribution of capital shall be made on any of the Collateral, or any shares, obligations or other property shall be distributed upon or with respect to the Collateral pursuant to a recapitalization or reclassification of the capital of the Pledgee, or pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or reorganization of the Pledgee, or pursuant to the merger or consolidation of the Pledgee with or into another entity, the shares, obligations or other property so distributed shall be delivered to the Pledgee promptly, and in any event within ten (10) days after receipt thereof, to be held by the Pledgee as additional Collateral hereunder, and all of the same shall constitute Collateral for all purposes hereof. Any such distribution made following the expiration of the Pledge Period shall belong solely to the Pledgor, and the Pledgee shall have no rights in or to same by virtue of this Agreement, except to the extent any Retained Collateral remains held by Pledgee, in which case any such distribution applicable to such Retained Collateral shall be deemed part of such Retained Collateral under this Agreement and thereafter subject to the terms hereof relating to such Retained Collateral.

9.            Pledgor Obligations Not Affected . The obligations of the Pledgor hereunder shall remain in full force and effect and shall not be impaired by:

(a)          any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of the Pledgor;

(b)          any amendments to or modifications of any instrument (other than this Agreement) securing any of the Secured Obligations provided that the Pledgor has consented to same (such consent not to be unreasonably conditioned, delayed or denied);

(c)          the taking of additional security for, or any guaranty of, any of the Secured Obligations or the release or discharge or termination of any security or guaranty for any of the Secured Obligations; or

(d)          the lack of enforceability of any of the Secured Obligations against the Pledgor or any other person, whether or not the Pledgor shall have notice or knowledge of any of the foregoing.

10.          Voting Rights and Certain Payments After Occurrence of Claim Notice and Certain Other Events .

(a)          From and after the issuance of any Claim Notice, all rights of the Pledgor to exercise, or refrain from exercising, all voting power with respect to, and to otherwise exercise all ownership rights arising from, the Claims Pending Collateral shall cease, and thereupon the Pledgee shall be entitled to exercise all voting power with respect to such Claims Pending Collateral and otherwise exercise such ownership rights as though the Pledgee were the outright owner of such Claims Pending Collateral (Pledgor shall retain such voting power with respect to all other Collateral). If the Independent Directors of the Pledgee reasonably determine that the Estimated Claims Amount equals or exceeds the Value of the Collateral then available to satisfy such Outstanding Claims, then the Pledgor shall no longer be the owner of such Collateral for tax purposes and all rights of the Pledgor to receive and retain the distributions and interest which it would otherwise be authorized to receive and retain pursuant to Section 7 hereof shall cease, and thereupon the Pledgee shall be entitled to receive and retain, as additional Collateral hereunder, any and all distributions and interest at any time and from time to time paid upon any of such Collateral, provided that, concurrent with making such determination, the Pledgee gives notice thereof to the Pledgor.

(b)          All payments, distributions or other property or assets that are received by the Pledgor contrary to the provisions of paragraph (a) of this Section 10 shall be received and held in trust for the benefit of the Pledgee, shall be segregated from other funds of the Pledgor and shall be forthwith paid over to the Pledgee.

11.          Application of Cash Collateral . Any cash received and retained by the Pledgee as additional Collateral pursuant to Section 8 hereof may at any time and from time to time be applied (in whole or in part) by the Pledgee, at its option, in strict accordance with the terms and conditions hereof, to the payment of the Secured Obligations which such Collateral secures (in the order described in paragraph 12 below), but only if and to the extent any such payment is required hereunder.

12.          Application of Proceeds . Except as otherwise expressly provided herein, any cash received and retained pursuant to Section 8 hereof shall be applied by the Pledgee: first to the payment in full of the Secured Obligations, but only if and to the extent any such payment is required hereunder; and then, to the payment to the Pledgor, or its successors or assigns or as a court of competent jurisdiction may direct, of any surplus then remaining.

13.          Remedies With Respect to the Collateral .

(a)          If any Claim remains unresolved thirty (30) days after the date of receipt of the applicable Claim Notice, then Pledgee, without obligation to resort to other security, shall have the right at any time and from time to time thereafter to apply, after three (3) business days’ prior written notice to Pledgor (each an “ Application Notice ”), Collateral with a Value equal to the Estimated Claims Amount, in one or more parcels at the same or different times, and to receive all right, title and interest, claim and demand therein and right of redemption thereof, same to be applied by Pledgee to payment of such Outstanding Claims.

(b)          Notwithstanding anything to the contrary in this Agreement or the Contribution Agreement, the sole recourse of the Pledgee against the Pledgor for the Secured Obligations is limited to the rights of the Pledgor in any Collateral that is applied by the Pledgee in strict accordance with the terms and conditions hereof to satisfy such Secured Obligations.

(c)          No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with any transfer of Collateral to the Pledgee in strict accordance with the terms and conditions of this Agreement.

(d)          Subject to the provisions of Section 13(b) above, the remedies provided herein in favor of the Pledgee relating to the Collateral shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Pledgee relating to the Collateral existing at law or in equity.

14.          Care of Collateral . The Pledgee shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody of any thereof actually in its possession. With respect to any maturities, calls, conversions, exchanges, redemptions, offers, tenders or similar matters relating to any of the Collateral (herein called “events”), the Pledgee’s duty shall be fully satisfied if (i) the Pledgee exercises reasonable care to ascertain the occurrence and to give reasonable written notice to the Pledgor of any events applicable to any Collateral which are registered and held in the name of the Pledgee or its nominee, (ii) the Pledgee gives the Pledgor reasonable written notice of the occurrence of any events, of which the Pledgee has actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Pledgee or its nominee (the Pledgor agreeing to give the Pledgee reasonable written notice of the occurrence of any events applicable to any securities Collateral in the possession of the Pledgor of which the Pledgor has received knowledge), and (iii) (a) the Pledgee endeavors to take such action with respect to any of the events as the Pledgor may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Pledgee reasonably determines that the action requested might adversely affect the value of the Collateral, the collection of the Secured Obligations, or otherwise prejudice the interests of the Pledgee, the Pledgee gives reasonable written notice to the Pledgor that any such requested action will not be taken and if the Pledgee makes such determination or if the Pledgor fails to make such timely request, the Pledgee takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Pledgee shall have no further obligation, under this Agreement only, to ascertain the occurrence of, or to notify the Pledgor with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Pledgee of any internal procedures with respect to any Collateral in its possession.

15.          Power of Attorney . The Pledgor hereby appoints the Pledgee to act during the Pledge Period (and, if and to the extent applicable, any Extended Pledge Period) as the Pledgor’s attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Pledgee reasonably may deem necessary or advisable to accomplish the purposes hereof, provided that Pledgee has given Pledgor prior reasonable written notice of Pledgee’s intention to exercise such attorney-in-fact rights. Without limiting the generality of the foregoing, at any time while an Outstanding Claim exists, the Pledgee shall have the right and power (a) with respect to any Claims Pending Collateral to satisfy a Secured Obligation in strict accordance with the terms and conditions herein, to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any interest or other distribution payable in respect of such Claims Pending Collateral or any part thereof and to give full discharge for the same, and (b) to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Claims Pending Collateral; provided, that the Pledgee shall provide reasonable written notice to the Pledgor prior to taking any such action under the foregoing clauses (a) and (b). For purposes of this Section 15 and Section 14 above, “reasonable written notice” shall mean written notice given within five (5) days of the occurrence of the event, issue or at least five (5) days prior to the date on which such requisite action will be taken.

16.          Further Assurances . The Pledgor shall, at its sole cost and expense, upon reasonable request of the Pledgee, duly execute and deliver, or cause to be duly executed and delivered, to the Pledgee such further instruments and documents and take and cause to be taken such further actions as may be necessary or proper in the reasonable opinion of the Pledgee to carry out more effectually the provisions and purposes of this Agreement; provided that none of the same will materially affect Pledgor’s or Pledgee’s rights hereunder or materially increase their obligations hereunder.

17.          No Waiver . No failure on the part of the Pledgee to exercise, and no delay on the part of the Pledgee in exercising, any of its options, powers, rights or remedies hereunder during the Pledge Period, or partial or single exercise thereof, shall constitute a waiver thereof or preclude any other or further exercise thereof or the exercise of any other option, power, right or remedy during the Pledge Period.

18.          Security Interest Absolute . All rights of the Pledgee hereunder, grant of a security interest in the Collateral and all obligations of the Pledgor hereunder, shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Contribution Agreement, any of the Secured Obligations or any other agreement or instrument relating thereto, (b) any change in any term of all or any of the Secured Obligations or any other amendment or waiver of, or any consent to any departure from, the Contribution Agreement or any other agreement or instrument or (c) any other circumstance that might otherwise constitute a defense available to, or a discharge of the Pledgor in respect of the Secured Obligations or in respect of this Agreement.

19.          Expenses . Pledgor agrees to pay the Pledgee all reasonable out-of-pocket expenses of the Pledgee (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any provisions of this Agreement. Pledgee agrees to pay the Pledgor all reasonable out-of-pocket expenses of the Pledgor (including reasonable expenses for legal services of every kind) of, or incident to the enforcement of, any obligations of Pledgee hereunder.

20.          End of Pledge Period; Return of Collateral .

(a)          For purposes of this Agreement, the “ Pledge Period ” means the period beginning on the date hereof and ending on the six (6) month anniversary of the date hereof; provided , that, if there are any Outstanding Claims at the time of termination of the Pledge Period, the Pledgee shall have the right to retain, pending resolution of such Outstanding Claim(s) pursuant to Section 8.1 of the Contribution Agreement, and at all times subject to the terms hereof, Collateral equal in Value to the Estimated Claims Amount (“ Retained Collateral ”). Solely with respect to such Retained Collateral, the Pledge Period shall be deemed to continue (an “ Extended Pledge Period ”) until the earlier to occur of (i) the ten (10) month anniversary of the date hereof or (ii) the resolution pursuant to Section 8.1 of the Contribution Agreement, of the Outstanding Claim(s) to which such Retained Collateral relates; provided, however, if any Outstanding Claims remain in existence on the ten (10) month anniversary of the date hereof, then Pledgor shall be required to deliver Replacement Collateral (as defined below) to Pledgee before the Extended Pledge Period may end. Following the expiration of the Pledge Period, the Pledgor shall be required to maintain for the balance of the Survival Period a minimum net worth of not less than $10,000,000.00.

(b)          Upon the termination of the Pledge Period (or the Extended Pledge Period, if and to the extent applicable), the Pledgor shall be entitled to, and the Pledgee promptly shall effect, the return to the Pledgor of all of the Collateral (and all other cash or other items held as additional Collateral hereunder) that has not been used or applied toward the payment of the Secured Obligations in strict accordance with the terms hereof (it being understood, for the sake of clarity, that Collateral not so used or applied shall become subject to the foregoing return obligation on and as of the last day of the Pledge Period, except for any Retained Collateral, which shall become subject to the foregoing return obligation on and as of the date determined in accordance with Section 20(a) above). The Pledgee shall take all necessary actions to effect and evidence the return of Collateral under this Section 20, including, without limitation, the filing of UCC termination statements with respect to, and the return to the Pledgor of certificates, if any, representing the Pledged Interests (or Additional Interests) comprising, such Collateral.

(c)          The assignment by the Pledgee to the Pledgor of such Collateral shall be without representation or warranty of any nature whatsoever except as otherwise provided in Paragraph 4(b) above. Pledgor shall be entitled to exercise any and all rights or remedies available to it at law or in equity concerning Pledgee’s performance of its obligations hereunder (or any breach of the representations or warranties made by Pledgee hereunder).

(d)          Notwithstanding anything to the contrary in this Agreement, the Pledgor shall have the right to substitute Cash Collateral for (i) any Pledged Interests or Additional Interests that are subject to application by Pledgee following issuance of an Application Notice or (ii) any Pledged Interests (or Additional Interests) constituting Retained Collateral (“ Replacement Collateral ”) by depositing such Replacement Collateral with the Pledgee (same to be held subject to the Cash Collateral provisions set forth in Section 1 and elsewhere herein) and instructing the Pledgee to release the Pledged Interests (or Additional Interests) for which they are substituted; provided , that as of the date of such substitution, the Value of the Replacement Collateral shall be equal to or greater than the Estimated Claims Amount. Upon replacement of the Pledged Interests (or Additional Interests) with Replacement Collateral meeting the requirements stated above, the Pledgee’s security interest in the replaced Pledged Interests (or Additional Interests) shall terminate and be released and the Pledgee shall take all necessary actions to effect and evidence the return of the Pledged Interests (or Additional Interests), including, without limitation, the filing of UCC termination statements with respect to such Pledged Interests (or Additional Interests), and the prompt delivery of the original certifications, if any, or other instruments or documents evidencing the Pledged Interests (or Additional Interests). The continuing lien and perfected security interest granted by the Pledgor to the Pledgee shall automatically apply and attach to and be granted with respect to the Replacement Collateral and Pledgor shall execute and deliver to the Pledgee such documents and take such actions as the Pledgee reasonably deems necessary to perfect and protect the Pledgee’s security interests in and to the Replacement Collateral.

21.          Notices . All notices and other communications in connection with this Agreement shall be made in writing and delivered by hand, recognized overnight delivery service or by certified or registered mail, postage prepaid, with return receipt requested: