UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event
reported): December 17, 2015
Bluerock Residential Growth
REIT, Inc. |
(Exact Name of Registrant as Specified in Its
Charter) |
Maryland |
|
001-36369 |
|
26-3136483 |
(State
or other jurisdiction of incorporation
or organization) |
|
(Commission
File Number)
|
|
(I.R.S. Employer
Identification
No.) |
712 Fifth Avenue, 9th Floor
New York, NY 10019 |
(Address of principal executive offices) |
|
(212) 843-1601 |
(Registrant’s telephone number, including
area code) |
|
None. |
(Former name or former address, if changed since
last report) |
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01 |
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
Dealer
Manager Agreement
On
December 17, 2015, Bluerock Residential Growth REIT, Inc., a Maryland corporation, or the Company, and its operating partnership,
Bluerock Residential Holdings, L.P., a Delaware limited partnership, or the Operating Partnership, entered into a dealer manager
agreement, or the Dealer Manager Agreement, with Bluerock Capital Markets, LLC, a Delaware limited liability company, an affiliate
of the Company, or the Dealer Manager, whereby the Dealer Manager will serve as the Company’s exclusive dealer manager in
connection with the Company’s offering, or the Offering, of up to 150,000 shares of Series B redeemable preferred stock
of the Company, or the Series B Preferred Stock, and warrants, or the Warrants, to purchase a maximum of 3,000,000 shares of our
Class A common stock, or the Class A Common Stock, on a “reasonable best efforts” basis. The Series B Preferred Stock
is registered with the Securities and Exchange Commission, or the SEC, pursuant to a registration statement on Form S-3 (File
No. 333-200359), as the same may be amended and/or supplemented, or the Registration Statement, under the Securities Act
of 1933, or the Securities Act, and will be offered and sold pursuant to a prospectus supplement dated December 17, 2015, and
a base prospectus dated December 19, 2014 relating to the Registration Statement.
Under
the Dealer Manager Agreement, the Dealer Manager will provide certain
sales, promotional and marketing services to the Company in connection with the Offering,
and the Company will pay the Dealer Manager (i) selling commissions of 7.0% of the gross proceeds from
sales of Series B Preferred Stock in the Offering, or Selling
Commissions, and (ii) a dealer manager fee of 3.0% of the gross proceeds from sales of Series B Preferred Stock
in the Offering, or the Dealer Manager Fee. It is anticipated that substantially all of
the Selling Commissions and the Dealer Manager Fee will be reallowed by the Dealer Manager to participating broker-dealers and/or
applied by the Dealer Manager in support of the Offering.
The terms of the Dealer Manager Agreement
were approved by the Company’s board of directors, including all of its independent directors.
Pursuant to the Dealer Manager Agreement,
the Company has agreed to indemnify the Dealer Manager and participating
broker-dealers, and the Dealer Manager has agreed to indemnify the Company, against certain losses, claims, damages and
liabilities, including but not limited to those arising out of (i) untrue
statements of a material fact contained in the Registration Statement, prospectus or any supplement thereto, or blue
sky applications relating to the Offering, or (ii) the omission or alleged omission to state a material fact required to
be stated in the Registration Statement, prospectus or any supplement thereto,
or blue sky applications relating to the Offering.
The foregoing summary of the Dealer Manager
Agreement is qualified in its entirety by reference to the Dealer Manager Agreement, which is filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
The
foregoing description of the Dealer Manager Agreement is a summary
and is qualified in its entirety by the terms of Dealer Manager Agreement,
a copy of which is filed as Exhibit No. 10.1 to this Current Report on Form 8-K and incorporated by reference into this
Item 1.01. A copy of the opinion of Venable LLP relating to the legality of the issuance and sale of the Series B Preferred
Stock is attached as Exhibit 5.1 hereto, and a copy of the opinion of Hunton & Williams LLP with respect to tax matters concerning
the Series B Preferred Stock is attached as Exhibit 8.1 hereto.
Warrant Agreement
On December 17,
2015, the Company entered into a warrant agreement, or the Warrant Agreement, with American Stock Transfer & Trust Company,
LLC, a New York limited liability trust company, or the Warrant Agent, as agent for the Company in respect of the Warrants, which
governs the Warrants to be issued in the Offering. The Warrants will be issued either in certificated form or by “book-entry”
form, in either case to the Depository Trust Company, or DTC, and evidenced by one or more global warrants, a form of which
is attached as an exhibit to the Warrant Agreement. Those investors who will own beneficial interests in a global warrant will
do so through participants in DTC’s system, and the rights of these indirect owners will be governed solely by the applicable
procedures of DTC and its participants. The Warrant Agent does not have a material relationship with the Company.
Holders of Warrants
may exercise the Warrants at any time beginning one year from the date of issuance up to 5:00 p.m., New York City time, on the
date that is four years after the date of issuance. The Warrants are exercisable, at the option of each holder, in whole, but
not in part, by delivering to the Warrant Agent a duly executed exercise notice accompanied by payment in full for the number
of shares of Class A Common Stock purchased upon such exercise (except in the case of a cashless exercise in the circumstances
discussed below). Each Warrant is exercisable for 20 shares of Class A Common Stock (subject to adjustment, as discussed below).
The holder of Warrants does not have the right to exercise any portion of the Warrant if the holder would beneficially own in
excess of 9.8% of the number of shares of Class A Common Stock outstanding immediately after giving effect to such exercise.
If, on the date
of any exercise of any Warrant, a registration statement covering the issuance of the shares of Class A Common Stock issuable
upon exercise of the Warrant is not effective and an exemption from registration is not available for the resale of such shares
of our Class A common stock issuable upon exercise of the Warrant, the holder may satisfy its obligation to pay the exercise price
upon the exercise of its Warrant on a cashless basis in accordance with the terms of the Warrant Agreement. When exercised on
a cashless basis, a portion of the Warrant is cancelled in payment of the purchase price payable in respect of the number of shares
of Class A Common Stock purchasable upon such exercise. Any Warrant that is outstanding on the termination date of the Warrant
shall be automatically terminated.
The exercise
price of the Class A Common Stock purchasable upon exercise of the Warrants equals a 20% premium to the current market price per
share of Class A Common Stock on the date of issuance of such Warrant, subject to a minimum exercise price of $11.00 per share.
The current market price will be determined using the volume weighted average price per share of our Class A Common Stock for
the 20 trading days immediately prior to the date of the issuance of the Warrant. The exercise price and the number of shares
of Class A Common Stock issuable upon exercise of the Warrants is subject to appropriate adjustment in relation to certain events,
such as stock dividends, stock splits, stock combinations, reclassifications, recapitalizations or similar events affecting the
Class A Common Stock.
Subject to applicable
law, the Warrants may be transferred at the option of the holder upon surrender of the Warrants with the appropriate instruments
of transfer.
The Class A Common
Stock is listed on NYSE MKT. The Warrants are not listed on NYSE MKT, nor does the Company plan on making an application to list
the Warrants on NYSE MKT, any national securities exchange or other nationally recognized trading system.
Except as otherwise
provided in the Warrants or by virtue of such holder’s ownership of shares of Class A Common Stock, the holders of the Warrants
will not have the rights or privileges of holders of Class A Common Stock, including any voting rights, until they exercise their
Warrants.
No fractional
shares of Class A Common Stock will be issued upon the exercise of the Warrants. Rather, the Company shall, at its election, either
pay a cash adjustment in respect of such fraction in an amount equal to such fraction multiplied by the exercise price or round
up the number of shares of Class A Common Stock to be issued to the nearest whole number.
The Warrant Agreement
contains customary representations, warranties, and agreements by the Company, customary conditions, other obligations of the
parties and indemnification obligations of the Company.
The foregoing description
of the Warrant Agreement is a summary and is qualified in its
entirety by the terms of Warrant Agreement, a copy of which is
filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Escrow
Agreement
On
December 17, 2015, the Company entered into a subscription escrow agreement, or the Escrow Agreement, with the Dealer Manager
and UMB Bank, N.A, or the Escrow Agent, pursuant to which the Company will deposit all subscription payments from the
Offering in an escrow account, or the Escrow Account, held by the Escrow Agent, in trust for the subscriber’s benefit,
pending release to the Company pursuant to the Escrow Agreement. The Escrow Agent does not have a material relationship with
the Company.
The Escrow Agreement
contains customary representations, warranties and agreements by the Company and the Dealer Manager, and customary conditions
to the release of proceeds from the Escrow Account, indemnification obligations of the Company and the Dealer Manager, other obligations
of the parties and termination provisions.
The
foregoing description of the Escrow Agreement is a summary and
is qualified in its entirety by the terms of the Escrow Agreement, a
copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated by reference into this Item 1.01.
Second Amendment to Second Amended
and Restated Agreement of Limited Partnership of the Operating Partnership
On December 21, 2015,
in connection with the Offering, the Company entered into a Second Amendment to Second Amended and Restated Agreement
of Limited Partnership, or the Second Amendment, of its Operating Partnership. The Second Amendment
provides, among other things, for the designation of 150,000 Series B Redeemable Preferred Units of the Operating Partnership,
or the Series B Preferred Units, and the issuance of the Series B Preferred Units to the Company in exchange for the contribution
by the Company of the net proceeds of the Offering of the Series B Preferred Stock. The Series B Preferred Units will have substantially
similar rights and preferences as the Series B Preferred Stock, as described below in Item 3.03.
The foregoing
description of the Second Amendment is a summary and is qualified in its entirety by the terms of the
Second Amendment, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated
by reference into this Item 1.01.
ITEM 3.03. |
MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS |
On December 18,
2015, the Company filed Articles Supplementary, or the Articles Supplementary, with the Maryland State Department of Assessments
and Taxation to designate 150,000 shares of the Company’s authorized but unissued preferred stock, $0.01 par value per share,
as shares of Series B Redeemable Preferred Stock, with the powers, designations, preferences and other rights as set forth therein.
The Articles Supplementary became effective upon filing on December 18, 2015.
The Articles
Supplementary provide that, commencing on the date of original issuance, the Company will pay cumulative cash dividends on the
Series B Preferred Stock at an annual rate of 6.0% of the Stated Value, when and if authorized by the Board of Directors of the
Company. Dividends on each share of Series B Preferred Stock will begin accruing on, and will be cumulative from, the date of
issuance or the end of the most recent dividend period for which dividends on the Series B Redeemable Preferred Stock have been
paid, payable monthly in arrears on the 5th day of each month to holders of record on the 25th day
of the prior month.
The Series B Preferred Stock
will rank (i) senior to the Class A Common Stock, $0.01 par value per share, and Class B-3 common stock, $0.01 par value
per share, or the Class B Common Stock, and collectively with Class A Common Stock, the Common Stock, and (ii) on parity with
the Company’s 8.250% Series A cumulative redeemable preferred stock, or the Series A Preferred Stock, in each case with
respect to priority of dividend payments and rights upon the Company’s liquidation, dissolution or winding up.
The Series B
Preferred Stock is not redeemable by the Company prior to the third anniversary of the date of original issuance, except in limited
circumstances relating to the Company’s ability to preserve its qualification as a real estate investment trust (“REIT”).
On and after
the third anniversary of the date of original issuance of the shares of Series B Preferred Stock to be redeemed, the Company may,
at its option, redeem the Series B Preferred Stock, in whole or in part, at any time or from time to time, at a redemption price
of 100% of the Stated Value, plus an amount equal to all accumulated and unpaid dividends to and including the redemption date,
payable in cash or in equal value of shares of our Class A common stock based on the volume weighted average price per share of
our Class A common stock for the 20 trading days prior to the redemption.
Commencing on the date of original issuance
of the shares of Series B Preferred Stock to be redeemed, the holders of the Series B Preferred Stock may, at their option, elect
to cause the Company to redeem their shares at a redemption price equal to the Stated Value, less a 13.0% redemption fee, plus
an amount equal to any accrued but unpaid dividends, if any, to and including the redemption date. Commencing one year from the
date of original issuance, holders will have the right to require the Company to redeem such shares of Series B Preferred Stock
at a redemption price equal to the Stated Value, less a 10% redemption fee, plus an amount equal to any accrued but unpaid dividends.
Commencing three years from the date of original issuance, holders will have the right to require the Company to redeem such shares
of Series B Preferred Stock at a redemption price equal to the Stated Value, less a 5% redemption fee, plus an amount equal to
any accrued but unpaid dividends. Commencing four years from the date of original issuance, holders will have the right to require
the Company to redeem such shares of Series B Preferred Stock at a redemption price equal to the Stated Value, less a 3% redemption
fee, plus an amount equal to any accrued but unpaid dividends. Commencing five years from the date of original issuance, holders
will have the right to require the Company to redeem such shares of Series B Preferred Stock at a redemption price equal to 100%
of the Stated Value, plus an amount equal to any accrued but unpaid dividends.
If a holder of Series B Preferred Stock
causes the Company to redeem such shares of Series B Preferred Stock, the Company has the right, in its sole discretion, to pay
the redemption price in cash or in equal value of shares of its Class A Common Stock, based on the volume weighted average price
per share of the Class A Common Stock for the 20 trading days prior to the redemption.
Holders of shares of the Series B Preferred
Stock will have no voting rights. There are restrictions on ownership of the Series B Preferred Stock intended to preserve the
Company’s qualification as a REIT.
The foregoing description of the Articles
Supplementary is a summary and is qualified in its entirety by the terms of the Articles Supplementary, a copy of which is filed
as Exhibit No. 3.1 to this Current Report on Form 8-K and incorporated by reference into this Item 3.03.
ITEM 5.03 |
AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS;
CHANGE IN FISCAL YEAR |
The information
set forth above under Item 3.01 of this report is hereby incorporated by reference into this Item 5.03.
Press Release Announcing Pricing
of Offering
On December 18, 2015,
the Company issued a press release announcing the pricing of the Offering. The press release, a copy of which is filed as Exhibit
99.1 to this Current Report on Form 8-K, is incorporated by reference into this Item 8.01.
ITEM 9.01 |
FINANCIAL STATEMENTS AND EXHIBITS. |
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Articles Supplementary of the Company, dated December 16, 2015 |
|
|
|
5.1 |
|
Opinion of Venable LLP |
|
|
|
8.1 |
|
Opinion of Hunton & Williams LLP |
|
|
|
10.1 |
|
Dealer Manager Agreement by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential
Holdings, L.P. and Bluerock Capital Markets, LLC, dated December 17, 2015 |
|
|
|
10.2 |
|
Warrant Agreement by and between Bluerock Residential Growth REIT, Inc. and American Stock
Transfer & Trust Company, LLC, dated December 17, 2015 |
|
|
|
10.3 |
|
Subscription Escrow Agreement by and between Bluerock
Residential Growth REIT, Inc., Bluerock Capital Markets, LLC and UMB Bank, N.A., dated December 17, 2015 |
|
|
|
10.4 |
|
Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of
Bluerock Residential Holdings, L.P., dated December 21, 2015 |
|
|
|
99.1 |
|
Press Release, dated December 18, 2015 |
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
|
BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
|
|
|
|
|
Dated: December 21, 2015 |
By: |
/s/ Christopher J. Vohs |
|
|
|
Christopher J. Vohs |
|
|
|
Chief Accounting Officer and Treasurer |
|
Exhibit Index
Exhibit No. |
|
Description |
|
|
|
3.1 |
|
Articles Supplementary of the Company, dated December 16, 2015 |
|
|
|
5.1 |
|
Opinion of Venable LLP |
|
|
|
8.1 |
|
Opinion of Hunton & Williams LLP |
|
|
|
10.1 |
|
Dealer Manager Agreement by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential
Holdings, L.P. and Bluerock Capital Markets, LLC, dated December 17, 2015 |
|
|
|
10.2 |
|
Warrant Agreement by and between Bluerock Residential Growth REIT, Inc. and American Stock
Transfer & Trust Company, LLC, dated December 17, 2015 |
|
|
|
10.3 |
|
Subscription Escrow Agreement by and between Bluerock
Residential Growth REIT, Inc., Bluerock Capital Markets, LLC and UMB Bank, N.A., dated December 17, 2015 |
|
|
|
10.4 |
|
Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of
Bluerock Residential Holdings, L.P., dated December 21, 2015 |
|
|
|
99.1 |
|
Press Release, dated December 18, 2015 |
Exhibit 3.1
BLUEROCK RESIDENTIAL GROWTH REIT,
INC.
ARTICLES SUPPLEMENTARY
Bluerock Residential Growth REIT, Inc.,
a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation
of Maryland that:
FIRST: Under a power contained in
Article V of the charter of the Corporation (the “Charter”) and Section 2-105 of the Maryland General Corporation
Law, the Board of Directors of the Corporation (the “Board”), by duly adopted resolutions, classified 150,000
shares of authorized but unissued preferred stock, $0.01 par value per share, of the Corporation as shares of Series B Redeemable
Preferred Stock, with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends
and other distributions, qualifications, and terms and conditions of redemption (which, upon any restatement of the Charter, may
be made a part of Article V thereof, with any necessary or appropriate changes to the numeration or lettering of the sections or
subsections hereof). Capitalized terms used but not defined herein shall have the meanings given to them in the Charter.
1. Designation
and Number. A series of Preferred Shares, designated the Series B Redeemable Preferred Stock (the “Series B Preferred
Stock”), is hereby established. The number of authorized shares of Series B Preferred Stock shall be 150,000.
2. Definitions.
In addition to the capitalized terms elsewhere defined herein, the following terms, when used herein, shall have the meanings indicated:
(a) “NYSE
MKT” shall mean the NYSE MKT stock exchange or any successor exchange or exchange or automated quotation service upon
which the Class A Common Stock is listed.
(b) “Stated
Value” shall mean $1,000, subject to appropriate adjustment in relation to any recapitalizations, stock dividends, stock
splits, stock combinations, reclassifications or other similar events which affect the Series B Preferred Stock.
(c) “Trading
Day” shall mean, (i) if the Class A Common Stock is listed or admitted to trading on the NYSE MKT, a day on which the
NYSE MKT is open for the transaction of business, (ii) if the Class A Common Stock is not listed or admitted to trading on the
NYSE MKT but is listed or admitted to trading on another national securities exchange or automated quotation system, a day on which
the principal national securities exchange or automated quotation system, as the case may be, on which the Class A Common Stock
is listed or admitted to trading is open for the transaction of business, or (iii) if the Class A Common Stock is not listed or
admitted to trading on any national securities exchange or automated quotation system, 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.
(d) “VWAP”
shall mean, for any Trading Day, the volume-weighted average price, calculated by dividing the aggregate value of Class A Common
Stock traded on the NYSE MKT during regular hours (price per share multiplied by number of shares traded) by the total volume (number
of shares) of Class A Common Stock traded on the NYSE MKT for such Trading Day, or if such volume-weighted average price is unavailable,
the market value of one share of Class A Common Stock on such Trading Day as determined by the Board in a commercially reasonable
manner, using a volume-weighted average price method.
3. Rank.
The Series B Preferred Stock, with respect to priority of payment of dividends and other distributions and rights upon voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, will rank (a) senior to all classes
or series of Common Shares and to any other class or series of capital stock of the Corporation issued in the future, unless the
terms of such stock expressly provide that it ranks senior to, or on parity with, the Series B Preferred Stock with respect to
priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation (together with the Common Shares, the “Junior Stock”); (b) on parity
with any class or series of capital stock of the Corporation, the terms of which expressly provide that it ranks on parity with
the Series B Preferred Stock, including the Series A Preferred Stock, with respect to priority of payment of dividends and other
distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation
(the “Parity Preferred Stock”); and (c) junior to any class or series of capital stock of the Corporation,
the terms of which expressly provide that it ranks senior to the Series B Preferred Stock with respect to priority of payment of
dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation (the “Senior Stock”), and to all existing and future debt obligations of the Corporation.
The term “capital stock” does not include convertible or exchangeable debt securities.
4. Dividends.
(a) Subject
to the preferential rights of the holders of any class or series of capital stock of the Corporation ranking senior to the Series
B Preferred Stock with respect to priority of dividend payments, holders of shares of the Series B Preferred Stock are entitled
to receive, when and as authorized by the Board and declared by the Corporation, out of funds legally available for the payment
of dividends, preferential cumulative cash dividends. From the date of original issue of the Series B Preferred Stock (the “Original
Issue Date”) or the date of issue of any Series B Preferred Stock issued after the Original Issue Date (each, an “Issue
Date”), the Corporation shall pay cumulative cash dividends on the Series B Preferred Stock at the rate of 6.0% per
annum of the Stated Value. Dividends on the Series B Preferred Stock shall accrue and be cumulative from (and including) the date
of issuance or the end of the most recent Dividend Period (as defined below) for which dividends on the Series B Preferred Stock
have been paid and shall be payable monthly in arrears on the fifth day of each month or, if such date is not a Business Day (as
defined below), on the next succeeding Business Day, with the same force and effect as if paid on such date (each, a “Dividend
Payment Date”). A “Dividend Period” is the respective period commencing on and including the first
day of each month and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than
the initial Dividend Period and the Dividend Period during which any shares of Series B Preferred Stock shall be redeemed or otherwise
acquired by the Corporation). The term “Business Day” shall mean each day, other than a Saturday or Sunday,
which is not a day on which banks in the State of New York are required to close. Any dividend payable on the Series B Preferred
Stock for any Dividend Period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will
be payable to holders of record of the Series B Preferred Stock as they appear in the stock records of the Corporation at the close
of business on the 25th day of the month preceding the applicable Dividend Payment Date (each, a “Dividend
Record Date”).
(b) No
dividends on shares of Series B Preferred Stock shall be authorized by the Board or declared by the Corporation or paid or set
apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such authorization, declaration, payment or setting apart for payment or provides
that such authorization, declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder,
or if such authorization, declaration, payment or setting apart for payment shall be restricted or prohibited by law.
(c) Notwithstanding
the foregoing Section 4(b), dividends on the Series B Preferred Stock will accrue whether or not the Corporation has earnings,
whether there are funds legally available for the payment of such dividends and whether or not such dividends are authorized by
the Board or declared by the Corporation. No interest, or sum of money in lieu of interest, will be payable in respect of any dividend
payment or payments on the Series B Preferred Stock which may be in arrears. When dividends are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the Series B Preferred Stock and the shares of any class or series of Parity Preferred
Stock, all dividends declared upon the Series B Preferred Stock and any class or series of Parity Preferred Stock shall be declared
pro rata so that the amount of dividends declared per share of Series B Preferred Stock and such class or series of Parity Preferred
Stock shall in all cases bear to each other the same ratio that accumulated dividends per share on the Series B Preferred Stock
and such class or series of Parity Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior
dividend periods if such Parity Preferred Stock does not have a cumulative dividend) bear to each other.
(d) Except
as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series B Preferred Stock have been
or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment
for all past Dividend Periods that have ended, no dividends (other than dividends or other distributions in shares of Junior Stock
or in options, warrants or rights to subscribe for or purchase any such shares of Junior Stock) shall be declared and paid or declared
and set apart for payment nor shall any other distribution be declared and made upon the Junior Stock or the Parity Preferred Stock,
nor shall any shares of Junior Stock or Parity Preferred Stock be redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Class A Common Stock made for purposes of an equity incentive or benefit plan of the Corporation)
for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any shares of any such
stock), directly or indirectly, by the Corporation (except by conversion into or exchange for shares of Junior Stock, or options,
warrants or rights to subscribe for or purchase shares of Junior Stock).
(e) Notwithstanding
anything to the contrary set forth above, the Corporation shall not be prohibited from (i) declaring or paying or setting apart
for payment any dividend or other distribution on any shares of Junior Stock or Parity Preferred Stock, or (ii) redeeming, purchasing
or otherwise acquiring any Junior Stock or Parity Preferred Stock, in each case, if such declaration, payment, setting apart for
payment, redemption, purchase or other acquisition is necessary in order to maintain the continued qualification of the Corporation
as a REIT under Section 856 of the Code.
5. Liquidation
Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of shares of Series B Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for
distribution to its stockholders, after payment of or provision for the Corporation’s debts and other liabilities, a liquidation
preference equal to the Stated Value per share, plus an amount equal to any accrued and unpaid dividends (whether or not authorized
or declared) thereon to and including the date of payment, but without interest, before any distribution of assets is made to holders
of Junior Stock. If the assets of the Corporation legally available for distribution to stockholders are insufficient to pay in
full the liquidation preference on the Series B Preferred Stock and the liquidation preference on the shares of any class or series
of Parity Preferred Stock, all assets distributed to the holders of the Series B Preferred Stock and any class or series of Parity
Preferred Stock shall be distributed pro rata so that the amount of assets distributed per share of Series B Preferred Stock and
such class or series of Parity Preferred Stock shall in all cases bear to each other the same ratio that the liquidation preference
per share on the Series B Preferred Stock and such class or series of Parity Preferred Stock bear to each other. Written notice
of any distribution in connection with any such liquidation, dissolution or winding up of the affairs of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable,
shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein,
to each record holder of the Series B Preferred Stock at the respective addresses of such holders as the same shall appear on the
stock transfer records of the Corporation. After payment of the full amount of the liquidation distributions to which they are
entitled, the holders of Series B Preferred Stock will have no right or claim to any of the remaining assets of the Corporation.
The consolidation or merger of the Corporation with or into another entity, a consolidation or merger of another entity with or
into the Corporation, a statutory share exchange by the Corporation or a sale, lease, transfer or conveyance of all or substantially
all of the Corporation’s property or business shall not be deemed to constitute a liquidation, dissolution or winding up
of the affairs of the Corporation. In determining whether a distribution (other than upon voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation) by dividend, redemption or other acquisition of shares of stock of
the Corporation or otherwise is permitted under the Maryland General Corporation Law, no effect shall be given to amounts that
would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon
dissolution of holders of the Series B Preferred Stock.
6. Redemption
at Option of Holders.
(a) Each
holder of shares of Series B Preferred Stock shall have the right, at such holder’s option, to require the Corporation to
redeem any or all of such holder’s shares of Series B Preferred Stock at a redemption price per share of Series B Preferred
Stock (the “Holder Redemption Price”) equal to (i) if the redemption occurs prior to the first anniversary of
the Issue Date of the applicable shares of Series B Preferred Stock (the “Redemption Shares”), the Stated Value,
less a 13.0% redemption fee, plus an amount equal to all accrued but unpaid dividends, if any, to and including the date fixed
for redemption (the “Holder Redemption Date”), (ii) if the redemption occurs on or after the first anniversary
of the Issue Date of the Redemption Shares and prior to the third anniversary of the Issue Date of the Redemption Shares, the Stated
Value, less a 10.0% redemption fee, plus an amount equal to all accrued but unpaid dividends, if any, to and including the Holder
Redemption Date, (iii) if the redemption occurs on or after the third anniversary of the Issue Date of the Redemption Shares and
prior to the fourth anniversary of the Issue Date of the Redemption Shares, the Stated Value, less a 5.0% redemption fee, plus
an amount equal to all accrued but unpaid dividends, if any, to and including the Holder Redemption Date, (iv) if the redemption
occurs on or after the fourth anniversary of the Issue Date of the Redemption Shares and prior to the fifth anniversary of the
Issue Date of the Redemption Shares, the Stated Value, less a 3.0% redemption fee, plus an amount equal to all accrued but unpaid
dividends, if any, to and including the Holder Redemption Date, or (v) if the redemption occurs on or after the fifth anniversary
of the Issue Date of the Redemption Shares, the Stated Value, plus an amount equal to all accrued but unpaid dividends, if any,
to and including the Holder Redemption Date.
(b) The
Corporation has the right, in its sole discretion, to pay the Holder Redemption Price in cash or in equal value of shares of Class
A Common Stock, calculated based on the VWAP of the Class A Common Stock for the 20 Trading Days prior to the Holder Redemption
Date.
(c) Redemption
of the Series B Preferred Stock shall be made at the option of the holder thereof, upon:
(i) delivery
to the Corporation’s transfer agent, in its capacity as redemption and paying agent (the “Redemption and Paying
Agent”) by such holder of a duly completed notice (the “Holder Redemption Notice”) in compliance with
the required procedures including those of the Corporation’s transfer agent and of The Depository Trust Company (“DTC”)
for tendering interests in global certificates (the “Stated Transfer Procedures”), and specifying the number
of shares of Series B Preferred Stock to be redeemed that are held by such holder as of the date of such Holder Redemption Notice,
prior to the close of business on the Business Day immediately preceding the Holder Redemption Date; and
(ii) transfer
of the Series B Preferred Stock in compliance with the Stated Transfer Procedures, such transfer being a condition to receipt by
the holder of the Holder Redemption Price therefor.
(d) Prior
to 11:00 a.m. (local time in the City of New York) on the Holder Redemption Date, the Corporation must deposit with the Redemption
and Paying Agent in trust sufficient funds (in immediately available funds if deposited on such Business Day) to pay the Holder
Redemption Price of all the shares of Series B Preferred Stock that are to be redeemed in cash as of the Holder Redemption Date.
If the Redemption and Paying Agent holds funds sufficient to pay the Holder Redemption Price of the Series B Preferred Stock for
which a Holder Redemption Notice has been tendered, then as of such Holder Redemption Date, (i) such shares of Series B Preferred
Stock shall cease to be outstanding and dividends shall cease to accrue thereon (whether or not transfer of such shares of Series
B Preferred Stock is made) and (ii) all other rights of the holders in respect thereof shall terminate (other than the right to
receive the Holder Redemption Price, in cash or in shares of Class A Common Stock, as applicable, upon transfer of such shares
of Series B Preferred Stock). To the extent that the aggregate amount of cash deposited by the Corporation to satisfy the Holder
Redemption Price exceeds the aggregate Holder Redemption Price of the shares of Series B Preferred Stock that the Corporation has
elected to redeem in cash as of the Holder Redemption Date, then, following the Holder Redemption Date, the Redemption and Paying
Agent must promptly return any such excess to the Corporation.
(e) Notwithstanding
any provision of this Section 6, no redemptions of shares of Series B Preferred Stock shall be made by the Corporation at such
time as the terms and provisions of any agreement of the Corporation prohibits such redemption or provides that such redemption
would constitute a breach thereof or a default thereunder, or if such redemption shall be restricted or prohibited by law.
7. Optional
Redemption by the Corporation.
(a) Beginning
on the third anniversary of the Original Issue Date, the Series B Preferred Stock shall be redeemable by the Corporation, at the
Corporation’s option, in whole or in part, at any time or from time to time (the “Corporation Redemption Right”),
at a redemption price per share of Series B Preferred Stock (the “Corporation Redemption Price”) equal to the
Stated Value plus an amount equal to all accrued but unpaid dividends, if any, to and including the date fixed for redemption (the
“Corporation Redemption Date”).
(b) If
fewer than all of the outstanding shares of Series B Preferred Stock are to be redeemed, the shares of Series B Preferred Stock
to be redeemed shall be redeemed pro rata (as nearly as may be practicable without creating fractional shares) by lot or by any
other equitable method that the Corporation determines will not violate the Series B Ownership Limit (as defined in Section 10
below). If redemption is to be by lot and, as a result, any holder of shares of Series B Preferred Stock, other than a holder of
shares of Series B Preferred Stock that has received an exemption from the Series B Ownership Limit, would have actual ownership
or Constructive Ownership of more than 9.8% of the issued and outstanding shares of Series B Preferred Stock by value or number
of shares, whichever is more restrictive, because such holder’s shares of Series B Preferred Stock were not redeemed, or
were only redeemed in part, then, except as otherwise provided in the Charter, the Corporation shall redeem the requisite number
of shares of Series B Preferred Stock of such holder such that no holder will own Series B Preferred Stock in excess of the Series
B Ownership Limit, subsequent to such redemption. Holders of Series B Preferred Stock to be redeemed shall surrender such Series
B Preferred Stock at the place, or in accordance with the procedures, designated in such notice and shall be entitled to the Corporation
Redemption Price payable upon such redemption following such surrender. If (i) notice of redemption of any shares of Series B Preferred
Stock has been given (in the case of a redemption of the Series B Preferred Stock other than to preserve the qualification of the
Corporation as a REIT), (ii) the funds necessary for such redemption have been set apart by the Corporation in trust for the benefit
of the holders of any shares of Series B Preferred Stock so called for redemption and (iii) irrevocable instructions have been
given to pay the Corporation Redemption Price, then from and after the Corporation Redemption Date, dividends shall cease to accrue
on such shares of Series B Preferred Stock, such shares of Series B Preferred Stock shall no longer be deemed outstanding, and
all rights of the holders of such shares of Series B Preferred Stock shall terminate, except the right to receive the Corporation
Redemption Price in cash or in shares of Class A Common Stock, as applicable, upon transfer of such shares of Series B Preferred
Stock. The Corporation has the right, in its sole discretion, to pay the Corporation Redemption Price in cash or in equal value
of shares of Class A Common Stock, calculated based on the VWAP of the Class A Common Stock for the 20 Trading Days prior to the
Redemption Date.
(c) Unless
full cumulative dividends on the Series B Preferred Stock for all past Dividend Periods that have ended shall have been or contemporaneously
are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment, no shares of Series
B Preferred Stock shall be redeemed pursuant to the Corporation Redemption Right unless all outstanding shares of Series B Preferred
Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares
of Series B Preferred Stock or any class or series of Junior Stock or Parity Preferred Stock (except (i) by conversion into or
exchange for Junior Stock, (ii) the purchase of shares of Junior Stock or Parity Preferred Stock pursuant to the Charter to the
extent necessary to ensure that the Corporation meets the requirements for qualification as a REIT for federal income tax purposes
or (iii) the purchase or other acquisition of shares of Series B Preferred Stock or Parity Preferred Stock pursuant to a purchase
or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock).
(d) Notice
of redemption pursuant to the Corporation Redemption Right shall be mailed by the Corporation, postage prepaid, 30 days prior to
the Corporation Redemption Date, addressed to the respective holders of record of all, but not less than all, of the Series B Preferred
Stock at their respective addresses as they appear on the transfer records maintained by the Corporation’s transfer agent.
No failure to give such notice or defect therein shall affect the validity of the proceedings for the redemption of any Series
B Preferred Stock except as to the holder to whom such notice was defective or not given; provided that notice given to
the last address of record shall be deemed to be valid notice. In addition to any information required by law or by the applicable
rules of any exchange upon which the Series B Preferred Stock may be listed or admitted to trading, each such notice shall state:
(i) the Corporation Redemption Date; (ii) the Corporation Redemption Price; (iii) the number of shares of Series B Preferred Stock
to be redeemed; (iv) the Stated Transfer Procedures for transfer of shares of Series B Preferred Stock for payment of the Corporation
Redemption Price; (v) that dividends on the shares of Series B Preferred Stock to be redeemed will cease to accrue on the Corporation
Redemption Date; and (vi) that payment of the Corporation Redemption Price will be made upon transfer of such Series B Preferred
Stock in compliance with Stated Transfer Procedures. If fewer than all of the shares of Series B Preferred Stock held by any holder
are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred Stock held by
such holder to be redeemed or the method for determining such number. Notwithstanding anything else to the contrary herein, the
Corporation shall not be required to provide notice to the holder of Series B Preferred Stock in the event such holder’s
Series B Preferred Stock is redeemed in order for the Corporation to qualify or to maintain the Corporation’s status as a
REIT.
(e) If a Corporation Redemption
Date falls after a Dividend Record Date and on or prior to the corresponding Dividend Payment Date, each holder of Series B Preferred
Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares on or prior to such Dividend Payment Date, and each holder
of Series B Preferred Stock that surrenders its shares on the Corporation Redemption Date shall be entitled to an amount equal
to the dividends accruing after the end of the Dividend Period to which such Dividend Payment Date relates, up to, but not including,
the Corporation Redemption Date. Except as provided herein, the Corporation shall make no payment or allowance for unpaid dividends,
whether or not in arrears, on Series B Preferred Stock for which a notice of redemption pursuant to the Corporation Redemption
Right has been given.
8. Optional
Redemption Following Death of a Holder.
(a) Subject
to Section 8(c), beginning on the Issue Date of the applicable shares of Series B Preferred Stock and ending on the second anniversary
of such Issue Date, the Corporation shall redeem shares of Series B Preferred Stock held by a natural person upon his or her death
(a “Deceased Holder”) at the written request of such Deceased Holder’s estate at a redemption price per
share of Series B Preferred Stock (the “Estate Redemption Price”) equal to the Stated Value, plus an amount
equal to all accrued but unpaid dividends, if any, to and including the Redemption Date, less all dividends previously paid to
such Deceased Holder or the Deceased Holder’s estate.
(b) The
Corporation has the right, in its sole discretion, to pay the Estate Redemption Price in cash or in equal value of shares of Class
A Common Stock, calculated on the VWAP of the Class A Common Stock for the 20 Trading Days prior to the Redemption Date.
(c) Notwithstanding
any provision of this Section 8, no redemptions of shares of Series B Preferred Stock shall be made by the Corporation at
such time as the terms and provisions of any agreement of the Corporation prohibits such redemption or provides that such
redemption would constitute a breach thereof or a default thereunder, or if such redemption shall be restricted or prohibited
by law.
9. Voting
Rights. Holders of the Series B Preferred Stock shall not have any voting rights.
10. Restrictions
on Ownership and Transfer.
(a) As
used herein, the following terms shall have the following meanings:
(i) “Prohibited
Series B Owner” shall mean, with respect to any purported Transfer or Non-Transfer Event, any Person who, but for the
provisions of Section 10(c), would beneficially own (determined under the principles of Section 856(a)(5) of the Code), Beneficially
Own or Constructively Own shares of Series B Preferred Stock and, if appropriate in the context, shall also mean any Person who
would have been the record owner of shares of Series B Preferred Stock that the Prohibited Owner would have so owned.
(ii) “Series
B Beneficiary” shall mean one or more beneficiaries of the Series B Trust as determined pursuant to Section 10(i), provided
that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
(iii) “Series
B Excepted Holder” shall mean a holder of Series B Preferred Stock for whom a Series B Excepted Holder Limit is created
by the Board pursuant to Section 10(n).
(iv) “Series
B Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with the requirements
established by the Board pursuant to Section 10(n) and subject to adjustment pursuant to Section 10(n), the percentage limit established
by the Board pursuant to Section 10(n).
(v) “Series
B Ownership Limit” shall mean 9.8% (in value or in number of shares, whichever is more restrictive) of the aggregate
of the outstanding shares of Series B Preferred Stock or such other percentage determined by the Board in accordance with Section
10(n).
(vi) “Series
B Trust” shall mean any trust provided for in Section 10(d).
(vii) “Series
B Trustee” shall mean the Person unaffiliated with the Corporation and any Prohibited Series B Owner that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code and is appointed by the Corporation to serve as trustee
of the Series B Trust. Until another Series B Trustee is otherwise appointed by the Corporation, the initial Series B Trustee shall
be Kaplan Voekler Cunningham & Frank, PLC.
(b) Prior
to the Restriction Termination Date but subject to Section 10(q), (i) no Person, other than a Series B Excepted Holder, shall Beneficially
Own or Constructively Own shares of Series B Preferred Stock in excess of the Series B Ownership Limit and (ii) no Series B Excepted
Holder shall Beneficially Own or Constructively Own shares of Series B Preferred Stock in excess of the Series B Excepted Holder
Limit for such Series B Excepted Holder.
(c) If
any Transfer or Non-Transfer Event occurs which, if effective or otherwise, would result in any Person Beneficially Owning or Constructively
Owning shares of Series B Preferred Stock in violation of Section 10(b), (i) then that number of shares of Series B Preferred Stock
the Beneficial or Constructive Ownership of which otherwise would cause such Person to violate Section 10(b) (rounded up to the
nearest whole share) shall be automatically transferred to a Series B Trust for the benefit of a Series B Beneficiary, as described
in Section 10(d) through (i) below, effective as of the close of business on the Business Day prior to the date of such Transfer
or Non-Transfer Event, and such Person (or, if different, the direct or Beneficial Owner of such shares) shall acquire no rights
in such shares (or shall be divested of its rights in such shares) or (ii) if the Transfer to the Series B Trust described in clause
(i) of this sentence would not be effective for any reason to prevent the violation of Section 10(b), then the Transfer of that
number of shares of Series B Preferred Stock that otherwise would cause any Person to violate Section 10(b) shall be void ab
initio, and the intended transferee shall acquire no rights in such shares.
(d) Upon
any purported Transfer or Non-Transfer Event described in Section 10(c) that would result in a Transfer of shares of Series B Preferred
Stock to a Series B Trust, such shares shall be deemed to have been Transferred to the Series B Trustee as trustee of a Series
B Trust for the exclusive benefit of one or more Series B Beneficiaries. Such Transfer to the Series B Trustee shall be deemed
to be effective as of the close of business on the Business Day prior to the purported Transfer or Non-Transfer Event that results
in the Transfer to the Series B Trust pursuant to Section 10(c). The Series B Trustee shall be appointed by the Corporation and
shall be a Person unaffiliated with the Corporation and any Prohibited Series B Owner. Each Series B Beneficiary shall be designated
by the Corporation as provided in Section 10(i) below.
(e) Shares
of Series B Preferred Stock held by the Series B Trustee shall continue to be issued and outstanding shares. The Prohibited Series
B Owner shall have no rights in the shares of Series B Preferred Stock held by the Series B Trustee. The Prohibited Series B Owner
shall not benefit economically from ownership of any shares of Series B Preferred Stock held in trust by the Series B Trustee,
shall have no rights to dividends or other Distributions on such shares and shall not possess any rights to vote or other rights
attributable to such shares.
(f) The
Trustee shall have all voting rights and rights to dividends or other Distributions with respect to shares of Series B Preferred
Stock held in the Series B Trust, which rights shall be exercised for the exclusive benefit of the Series B Beneficiary. Any dividend
or other Distribution paid prior to the discovery by the Corporation that shares of Series B Preferred Stock have been Transferred
to the Series B Trustee shall be paid with respect to such shares to the Series B Trustee upon demand and any dividend or other
Distribution authorized but unpaid shall be paid when due to the Series B Trustee. Any dividends or other Distributions so paid
over to the Series B Trustee shall be held in trust for the Series B Beneficiary. The Prohibited Series B Owner shall have no voting
rights with respect to shares of Series B Preferred Stock held in the Series B Trust and, subject to Maryland law, effective as
of the date that Shares have been Transferred to the Series B Trust, the Series B Trustee shall have the authority (at the Series
B Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Series B Owner prior to the discovery by the
Corporation that shares of Series B Preferred Stock have been Transferred to the Series B Trustee and (ii) to recast such vote
in accordance with the desires of the Series B Trustee acting for the benefit of the Series B Beneficiary; provided, however,
that if the Corporation has already taken irreversible corporate action, then the Series B Trustee shall not have the authority
to rescind and recast such vote. Notwithstanding the provisions of this Section 10, until the Corporation has received notification
that shares of Series B Preferred Stock have been Transferred into a Series B Trust, the Corporation shall be entitled to rely
on its share transfer and other stockholder records for purposes of preparing lists of holders of Series B Preferred Stock entitled
to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of holders of Series B Preferred
Stock.
(g) As
soon as reasonably practicable after receiving notice from the Corporation that shares of Series B Preferred Stock have been Transferred
to the Series B Trust (and no later than 20 days after receiving notice in the case of shares of Series B Preferred Stock that
are listed or admitted to trading on any national securities exchange), the Series B Trustee shall sell the shares held in the
Series B Trust to a Person, designated by the Series B Trustee, whose ownership of the shares will not violate Section 10(b). Upon
such sale, the interest of the Series B Beneficiary in the shares sold shall terminate and the Series B Trustee shall distribute
the net proceeds of the sale to the Prohibited Series B Owner and to the Series B Beneficiary as provided in this Section 10(g).
The Prohibited Series B Owner shall receive the lesser of (i) the price paid by the Prohibited Series B Owner for the shares or,
if the Prohibited Series B Owner did not give value for the shares in connection with the event causing the shares to be held in
the Series B Trust (e.g,, in the case of a gift, devise or other such transaction), the Market Price of the shares on the
day of the event causing the shares to be held in the Series B Trust and (ii) the sales proceeds received by the Series B Trustee
(net of any commissions and other expenses of sale) from the sale or other disposition of the shares held in the Series B Trust.
The Series B Trustee may reduce the amount payable to the Prohibited Series B Owner by the amount of dividends and other Distributions
which have been paid to the Prohibited Series B Owner and are owed by the Prohibited Series B Owner to the Series B Trustee pursuant
to Section 10(f). Any net sales proceeds in excess of the amount payable to the Prohibited Series B Owner shall be immediately
paid to the Series B Beneficiary. If, prior to the discovery by the Corporation that shares of Series B Preferred Stock have been
Transferred to the Series B Trustee, such shares are sold by a Prohibited Series B Owner, then (x) such shares shall be deemed
to have been sold on behalf of the Series B Trust and (y) to the extent that the Prohibited Series B Owner received an amount for
such shares that exceeds the amount that such Prohibited Series B Owner was entitled to receive pursuant to this Section 10(g),
such excess shall be paid to the Series B Trustee upon demand.
(h) Shares
of Series B Preferred Stock Transferred to the Series B Trustee shall be deemed to have been offered for sale to the Corporation,
or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such Transfer
to the Series B Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market
Price on the date the Corporation, or its designee, accepts such offer. The Corporation may reduce the amount payable to the Prohibited
Series B Owner by the amount of dividends and other Distributions which have been paid to the Prohibited Series B Owner and are
owed by the Prohibited Series B Owner to the Series B Trustee pursuant to Section 10(f). The Corporation may pay the amount of
such reduction to the Series B Trustee for the benefit of the Series B Beneficiary. The Corporation shall have the right to accept
such offer until the Series B Trustee has sold the shares held in the Series B Trust pursuant to Section 10(g). Upon such a sale
to the Corporation, the interest of the Series B Beneficiary in the shares sold shall terminate and the Series B Trustee shall
distribute the net proceeds of the sale to the Prohibited Series B Owner.
(i) By
written notice to the Series B Trustee, the Corporation may change the Series B Beneficiary by designating one or more nonprofit
organizations to be the Series B Beneficiary of the interest in the Series B Trust such that (i) shares of Series B Preferred Stock
held in the Series B Trust would not violate Section 10(b) in the hands of such Series B Beneficiary and (ii) each such organization
must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under
each of Sections l70(b)(1)(A) (other than clauses (vii) and (viii) thereof), 2055 and 2522 of the Code. Neither the failure of
the Corporation to make such designation nor the failure of the Corporation to appoint the Series B Trustee before the automatic
transfer provided for in Section 10(c) shall make such transfer ineffective, provided that the Corporation thereafter makes such
designation and appointment. The designation of a nonprofit organization as a Series B Beneficiary shall not entitle such nonprofit
organization to serve in such capacity and the Corporation may, in its sole discretion, designate a different nonprofit organization
as the Series B Beneficiary at any time and for any or no reason. Any determination by the Corporation with respect to the application
of this Section 10 shall be binding on each Series B Beneficiary.
(j) If
the Board or its designee (including any duly authorized committee of the Board) shall at any time determine in good faith that
a Transfer or Non-Transfer Event has taken place that results in a violation of Section 10(b) or that a Person intends to acquire
or has attempted to acquire Beneficial Ownership, Constructive Ownership or beneficial ownership (determined under the principles
of Section 856(a)(5) of the Code) of any shares of Series B Preferred Stock in violation of Section 10(b) (whether or not such
violation is intended), the Board or its designee shall take such action as it deems advisable to refuse to give effect to or to
prevent such Transfer or Non-Transfer Event or otherwise prevent such violation, including, without limitation, causing the Corporation
to redeem shares of Series B Preferred Stock, refusing to give effect to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer or Non-Transfer Event; provided, however, that any Transfers or attempted Transfers
in violation of Section 10(b) (or Non-Transfer Event that results in a violation of Section 10(b)) shall automatically result in
the Transfer to the Series B Trust described above, or, if applicable, shall be void ab initio as provided above
irrespective of any action (or non-action) by the Board or its designee.
(k) Any
Person who acquires or attempts or intends to acquire Beneficial Ownership, Constructive Ownership or beneficial ownership (determined
under the principles of Section 856(a)(5) of the Code) of shares of Series B Preferred Stock that will or may violate Section 10(b),
or any Person who held or would have owned shares of Series B Preferred Stock that resulted in a Transfer to the Series B Trust
pursuant to Section 10(c), shall immediately give written notice to the Corporation of such event, or in the case of such a proposed
or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information
as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation's qualification as
a REIT.
(l) Subject
to Section 10(q), nothing contained in this Section 10 shall limit the authority of the Board to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of the Stockholders in preserving the Corporation's qualification
as a REIT.
(m) The
Board shall have the power to determine the application of any provisions of this Section 10 and any definition in Section 10(a),
including in the case of an ambiguity in the application of any provisions of this Section 10 or any such definition, with respect
to any situation based on the facts known to it. In the event this Section 10 requires an action by the Board and the Charter fails
to provide specific guidance with respect to such action, the Board shall have the power to determine the action to be taken so
long as such action is not contrary to the provisions of Article V of the Charter or this Section 10.
(n) Subject
to clause (ii) below, the Board, in its sole discretion, may exempt (prospectively or retroactively) a Person from the Series B
Ownership Limit and establish or increase a Series B Excepted Holder Limit for such Person if (i) the Board obtains such representations
and undertakings from such Person as are reasonably necessary to ascertain that such Person’s Beneficial Ownership or Constructive
Ownership of shares of Series B Preferred Stock in excess of the Series B Ownership Limit will not now or in the future jeopardize
the Corporation’s ability to qualify as a REIT under the Code and (ii) such Person agrees that any violation or attempted
violation of such representations or undertakings (or other action which is contrary to the restrictions contained in this Section
10) will result in such shares being automatically Transferred to a Series B Trust in accordance with Section 10(d) through (i)
above. Prior to granting any exception or waiver or creating any Series B Excepted Holder Limit pursuant to this Section 10(n),
the Board may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance
satisfactory to the Board in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Corporation’s
qualification as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board may impose such conditions or restrictions
as it deems appropriate in connection with granting such exemption or waiver or creating any Series B Excepted Holder Limit. The
Board may only reduce the Series B Excepted Holder Limit for a Series B Excepted Holder (x) with the written consent of such Series
B Excepted Holder at any time or (y) pursuant to the terms and conditions of the agreements and undertakings entered into with
such Series B Excepted Holder in connection with the establishment of the Series B Excepted Holder Limit for that Series B Excepted
Holder. The Board may from time to time increase the Series B Ownership Limit for one or more Persons and decrease the Series B
Ownership Limit for all other Persons; provided, however, that any such decreased Series B Ownership Limit will not
be effective for any Person whose percentage ownership in shares of Series B Preferred Stock is in excess of the decreased Series
B Ownership Limit until such time as such Person’s percentage of shares of Series B Preferred Stock equals or falls below
the decreased Series B Ownership Limit, but any further acquisition of shares of Series B Preferred Stock in excess of such percentage
ownership of shares will be in violation of the Series B Ownership Limit; and provided, further, that the new Series
B Ownership Limit would not result in the Corporation being “closely held” within the meaning of Section 856(h) of
the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing
to qualify as a REIT.
(o) Subject
to Section 6.1.1(a)(iii) of the Charter, an underwriter, placement agent or initial purchaser in a Rule 144A transaction that participates
in a public offering, private placement or other private offering of Series B Preferred Stock may Beneficially Own or Constructively
Own shares of Series B Preferred Stock in excess of the Series B Ownership Limit, but only to the extent (i) necessary to facilitate
such public offering, private placement or other private offering and (ii) such Beneficial Ownership or Constructive Ownership
does not cause the Corporation to fail to satisfy the requirements of Section 856(a)(6) of the Code or cause a violation of Section
6.1.1(a)(iii) or (iv) of the Charter.
(p) Each
certificate representing shares of Series B Preferred Stock, if certificated, shall bear a legend that substantially describes
the foregoing restrictions on transfer and ownership or, instead of such legend, the certificate, if any, may state that the Corporation
will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.
(q) Nothing
in this Section 10 shall preclude the settlement of any transaction entered into through the facilities of the NYSE MKT or any
other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction
occurs shall not negate the effect of any other provision of this Section 10 and any transferee in such a transaction shall be
subject to all of the provisions and limitations set forth in this Section 10.
11. Conversion.
The Series B Preferred Stock is not convertible into or exchangeable for any other property or securities of the Corporation.
12. Term.
The Series B Preferred Stock has no stated maturity date and shall not be subject to any sinking fund and, except as otherwise
set forth herein, is not subject to mandatory redemption. The Corporation shall not be required to set aside funds to redeem the
Series B Preferred Stock.
13. Status
of Redeemed or Repurchased Series B Preferred Stock. All shares of Series B Preferred Stock redeemed, repurchased or otherwise
acquired in any manner by the Corporation shall be retired and shall be restored to the status of authorized but unissued Preferred
Shares, without designation as to series or class.
SECOND: The shares of Series B Preferred
Stock have been classified and designated by the Board under the authority contained in the Charter.
THIRD: These Articles Supplementary
have been approved by the Board in the manner and by the vote required by law.
FOURTH: The undersigned acknowledges
these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified
under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are
true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has
caused these Articles Supplementary to be signed in its name and on its behalf by its Chairman of the Board, Chief Executive Officer
and President and attested to by its Chief Operating Officer, Secretary and General Counsel on this 16th day of December,
2015.
ATTEST: |
BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
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/s/ Michael L. Konig |
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By: |
/s/ R. Ramin Kamfar |
(SEAL) |
Name: |
Michael L. Konig |
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Name: |
R Ramin Kamfar |
Title: |
Chief Operating Officer, Secretary and General |
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Title: |
Chairman of the Board, Chief |
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Counsel |
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Executive Officer and President |
Exhibit 5.1
![](http://www.sec.gov/Archives/edgar/data/1442626/000114420415072054/tex5-1logo1.jpg)
December 21, 2015
Bluerock Residential Growth REIT, Inc.
9th Floor
712 Fifth Avenue
New York, New York 10019
| Re: | Registration Statement on Form S-3 (File No. 333-200359) |
Ladies and Gentlemen:
We have served as Maryland
counsel to Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “Company”), in connection with certain
matters of Maryland law arising out of the registration of 150,000 shares (the “Shares”) of Series B Redeemable Preferred
Stock, $0.01 par value per share (the “Series B Preferred Stock”), of the Company, to be issued by the Company in a
public offering covered by the above-referenced Registration Statement, and all amendments thereto (the “Registration Statement”),
filed by the Company with the United States Securities and Exchange Commission (the “Commission”) under the Securities
Act of 1933, as amended (the “1933 Act”).
In connection with our representation
of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of the following documents (herein collectively referred to as the “Documents”):
1. The
Registration Statement;
2. The
Prospectus, dated December 19, 2014, as supplemented by a Prospectus Supplement, dated December 17, 2015 (the “Prospectus
Supplement”), filed with the Commission pursuant to Rule 424(b) of the General Rules and Regulations promulgated under the
1933 Act;
3. The
charter of the Company (the “Charter”), including, without limitation, the Articles Supplementary relating to the Series
B Preferred Stock (the “Articles Supplementary”), certified by the State Department of Assessments and Taxation of
Maryland (the “SDAT”);
4. The
Second Amended and Restated Bylaws of the Company, certified as of the date hereof by an officer of the Company;
![](http://www.sec.gov/Archives/edgar/data/1442626/000114420415072054/tex5-1logo2.jpg)
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 2
5. A
certificate of the SDAT as to the good standing of the Company, dated as of a recent date;
6. Resolutions
adopted by the Board of Directors of the Company or a duly authorized committee thereof relating to, among other matters, the sale,
issuance and registration of the Shares (the “Resolutions”), certified as of the date hereof by an officer of the Company;
7. A
certificate executed by an officer of the Company, dated as of the date hereof; and
8. Such
other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions,
limitations and qualifications stated herein.
In expressing the opinion
set forth below, we have assumed the following:
1. Each
individual executing any of the Documents, whether on behalf of such individual or another person, is legally competent to do so.
2. Each
individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so.
3. Each
of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the
Documents to which such party is a signatory, and such party’s obligations set forth therein are legal, valid and binding
and are enforceable in accordance with all stated terms.
4. All
Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts
do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All
Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all Documents
are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties,
statements and information contained in the Documents are true and complete. There has been no oral or written modification of
or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission
of the parties or otherwise.
![](http://www.sec.gov/Archives/edgar/data/1442626/000114420415072054/tex5-1logo2.jpg)
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 3
5. The
Shares will not be issued or transferred in violation of any restriction or limitation on transfer and ownership of shares of stock
of the Company contained in Article VI of the Charter or Section 10 of the Articles Supplementary.
Based upon the foregoing,
and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that:
1. The
Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good
standing with the SDAT.
2. The
issuance of the Shares has been duly authorized and, when and if issued and delivered against payment therefor in accordance with
the Registration Statement, the Prospectus Supplement and the Resolutions, the Shares will be validly issued, fully paid and nonassessable.
The foregoing opinion is
limited to the laws of the State of Maryland and we do not express any opinion herein concerning any other law. We express no opinion
as to compliance with any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal
or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be
governed by the laws of any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinion
expressed herein is subject to the effect of judicial decisions which may permit the introduction of parol evidence to modify the
terms or the interpretation of agreements.
The opinion expressed herein
is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated.
We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of
any fact that might change the opinion expressed herein after the date hereof.
![](http://www.sec.gov/Archives/edgar/data/1442626/000114420415072054/tex5-1logo2.jpg)
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 4
This opinion is being furnished
to you for submission to the Commission as an exhibit to the Company’s Current Report on Form 8-K relating to the Offering
(the “Current Report”), which is incorporated by reference in the Registration Statement. We hereby consent to the
filing of this opinion as an exhibit to the Current Report and the said incorporation by reference and to the use of the name of
our firm therein. In giving this consent, we do not admit that we are within the category of persons whose consent is required
by Section 7 of the 1933 Act.
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Very truly yours, |
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/s/ Venable LLP |
Exhibit 8.1
|
Hunton & Williams LLP |
|
Riverfront Plaza, East Tower |
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951 East Byrd Street |
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Richmond, Virginia 23219-4074 |
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Tel |
804 • 788 • 8200 |
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Fax |
804 • 788 • 8218 |
December
21, 2015
Bluerock Residential Growth REIT, Inc.
712 Fifth Avenue
9th Floor
New York, New York 10019
Bluerock Residential Growth REIT, Inc.
Qualification as
Real Estate Investment Trust
Ladies and Gentlemen:
We have acted as special tax counsel to Bluerock
Residential Growth REIT, Inc., a Maryland corporation (the “Company”), in connection with the preparation of a registration
statement on Form S-3 (File No. 333-200359) filed with the Securities and Exchange Commission on November 18, 2014 (the “Registration
Statement”), with respect to the offer and sale of up to an aggregate $500,000,000 of the shares of Class A common stock,
$0.01 par value per share, of the Company (the “Common Stock”), the shares of preferred stock, $0.01 par value per
share, of the Company (the “Preferred Stock”), debt securities of the Company (“Debt Securities”), depositary
shares representing Preferred Stock (“Depositary Shares”), warrants entitling the holders to purchase Common Stock,
Preferred Stock, Depositary Shares, or Debt Securities (“Warrants”), and units comprising one or more of the preceding
securities of the Company to be offered from time-to-time (“Units”), and the offer and sale of up to 150,000 Units
consisting of 150,000 shares of Series B Redeemable Preferred Stock and Warrants to purchase 3,000,000 shares of Common Stock pursuant
to a preliminary prospectus supplement filed on November 25, 2015 and a final prospectus supplement filed on December 17, 2015
(together, the “Prospectus Supplement”). You have requested our opinion regarding certain U.S. federal income tax matters.
In connection with the opinions rendered in
(a) and (b) below (together, the “Tax Opinion”), we have examined the following:
| 1. | the Registration Statement and the prospectus (the “Prospectus”) filed as part of the Registration Statement, and
the Prospectus Supplement; |
ATLANTA AUSTIN BANGKOK BEIJING BRUSSELS
CHARLOTTE DALLAS HOUSTON LONDON LOS ANGELES
McLEAN MIAMI NEW YORK NORFOLK RALEIGH RICHMOND
SAN FRANCISCO TOKYO WASHINGTON
www.hunton.com
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 2
| 2. | the Company’s Articles of Amendment and Restatement filed on September 24, 2009, the Company’s Articles of Amendment
filed on February 22, 2013, and November 18, 2013, the Company’s Second Articles of Amendment and Restatement filed on March
26, 2014, the Company’s First Articles of Amendment to the Second Articles of Amendment and Restatement filed on March 26,
2014, the Company’s Second Articles of Amendment to the Second Articles of Amendment and Restatement filed on March 26, 2014,
the Company’s Third Articles of Amendment to the Second Articles of Amendment and Restatement filed on March 31, 2014 and
the Company’s Fourth Articles of Amendment to the Second Articles of Amendment and Restatement filed on March 31, 2014 with
the Department of Assessments and Taxation of the State of Maryland, the Articles Supplementary designating the 8.250% Series A
Cumulative Redeemable Preferred Stock, and the Articles Supplementary designating the Series B Redeemable Preferred Stock; |
| 3. | the Amended and Restated Agreement of Limited Partnership and the Second Amended and Restated Agreement of Limited Partnership
of the Operating Partnership and the First and Second Amendments to the Second Amended and Restated Agreement of Limited Partnership
of the Operating Partnership; and |
| 4. | such other documents as we have deemed necessary or appropriate for purposes of this opinion. |
In connection with the Tax Opinion rendered
below, we have assumed, with your consent, that:
1. each of the documents referred to above has been
duly authorized, executed, and delivered; is authentic, if an original, or is accurate, if a copy; and has not been amended;
2. during its taxable year ending December 31, 2015, and
future taxable years, the Company will operate in a manner that will make the factual representations contained in a certificate,
dated the date hereof and executed by a duly appointed officer of the Company (the “Officer’s Certificate”),
true for such years;
3. the Company will not make any amendments to its organizational
documents or the organizational documents of the Operating Partnership after the date of this opinion that would affect its qualification
as a real estate investment trust (a “REIT”) for any taxable year; and
4. no action will be taken by the Company or the Operating
Partnership after the date hereof that would have the effect of altering the facts upon which the opinions set forth below are
based.
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 3
In connection with the opinions rendered below,
we also have relied upon the correctness of the factual representations contained in the Officer’s Certificate. No facts
have come to our attention that would cause us to question the accuracy and completeness of such factual representations. Furthermore,
where such factual representations involve terms defined in the Internal Revenue Code of 1986, as amended (the “Code”),
the Treasury regulations thereunder (the “Regulations”), published rulings of the Internal Revenue Service (the “Service”),
or other relevant authority, we have reviewed with the individuals making such representations the relevant provisions of the Code,
the applicable Regulations and published administrative interpretations thereof.
Based solely on the documents and assumptions
set forth above, the representations set forth in the Officer’s Certificate, and the discussions in the Prospectus under
the caption “Material Federal Income Tax Considerations” and in the Prospectus Supplement under the caption “Additional
Material Federal Income Tax Considerations” (which are incorporated herein by reference), we are of the opinion that:
(a) the Company qualified to be taxed as a REIT
pursuant to sections 856 through 860 of the Code for its taxable years ended December 31, 2010 through December 31, 2014, and the
Company’s organization and current and proposed method of operation will enable it to continue to qualify for taxation as
a REIT under the Code for its taxable year ending December 31, 2015 and thereafter; and
(b) the descriptions of the law and the legal conclusions
in the Prospectus under the caption “Material Federal Income Tax Considerations” and in the Prospectus Supplement under
the heading “Additional Material Federal Income Tax Considerations” are correct in all material respects.
We will not review on a continuing basis the
Company’s compliance with the documents or assumptions set forth above, or the representations set forth in the Officer’s
Certificate. Accordingly, no assurance can be given that the actual results of the Company’s operations for any given taxable
year will satisfy the requirements for qualification and taxation as a REIT. Although we have made such inquiries and performed
such investigations as we have deemed necessary to fulfill our professional responsibilities as counsel, we have not undertaken
an independent investigation of all of the facts referred to in this letter or the Officer’s Certificate. In particular,
we note that the Company has engaged in transactions in connection with which we have not provided legal advice and may not have
reviewed. Furthermore, we note that we did not represent the Company prior to July 11, 2012.
Moreover, we have not participated in the
preparation of the Registration Statement, except with respect to the section entitled “Material Federal Income Tax Considerations”
in the Prospectus and the section entitled “Additional Material Federal Income Tax Considerations” in the Prospectus
Supplement, and we do not assume any responsibility for, and make no representation that we have independently verified, the accuracy,
completeness, or fairness of the statements contained in the Registration Statement, except to the extent described above with
respect to the section entitled “Material Federal Income Tax Considerations” in the Prospectus and the section entitled
“Additional Material Federal Income Tax Considerations” in the Prospectus Supplement.
Bluerock Residential Growth REIT, Inc.
December 21, 2015
Page 4
The foregoing opinions are based on current
provisions of the Code, the Regulations, published administrative interpretations thereof, and published court decisions. The Service
has not issued Regulations or administrative interpretations with respect to various provisions of the Code relating to REIT qualification.
No assurance can be given that the law will not change in a way that will prevent the Company from qualifying as a REIT.
The foregoing opinions are limited to the
U.S. federal income tax matters addressed herein, and no other opinions are rendered with respect to other U.S. federal tax matters
or to any issues arising under the tax laws of any other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion letter speaks only as of the date hereof. Except as provided
in the next paragraph, this opinion letter may not be distributed, quoted in whole or in part or otherwise reproduced in any document,
or filed with any governmental agency without our express written consent.
We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement. We also consent to the reference to Hunton & Williams LLP under the captions “Additional
Material Federal Income Tax Considerations” and “Legal Matters” in the Prospectus Supplement and “Material
Federal Income Tax Considerations” and “Legal Matters” in the Prospectus. In giving this consent, we do not admit
that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder by the Securities and Exchange Commission.
|
Very truly yours, |
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|
|
/s/ Hunton & Williams LLP |
10510/14086
Exhibit 10.1
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
Up to $150,000,000 of Units, consisting
of 150,000 Shares of Series B Redeemable Preferred Stock, par value $.01 per share, and Warrants to Purchase 3,000,000 shares of
Class A Common Stock
DEALER MANAGER AGREEMENT
December 17, 2015
Bluerock Capital Markets, LLC
17900 Skypark Circle, Suite 260
Irvine, California 92614
Ladies and Gentlemen:
Bluerock Residential Growth REIT, Inc.
a Maryland corporation (the “Company”), has proposed to offer for public sale (the “Offering”)
a maximum of $150,000,000 of Units, consisting of 150,000 Shares of Series B Redeemable Preferred Stock, $0.01 par value per share
(the “Series B Redeemable Preferred Stock”), and Warrants to purchase 3,000,000 Shares of Class A Common Stock
(the “Warrants,” and together with the Series B Redeemable Preferred Stock, the “Units”). Each Unit consists
of (i) one share of Series B Redeemable Preferred Stock, with a liquidation preference of $1,000 per share, and (ii) one Warrant
to purchase 20 shares of Class A common stock, $0.01 par value per share (each a “Class A Share”). The Units are to
be issued and sold to the public on a “best efforts” basis through you (the “Dealer Manager”) as
the managing dealer and the broker-dealers participating in the Offering (the “Participating Broker-Dealers”)
at a price of $1,000.00 per Unit. The price at which Units will be offered and sold is subject in certain circumstances
to discounts based upon certain categories of purchasers.
The Company is the sole general partner
of Bluerock Residential Holdings, L.P., a Delaware limited partnership that serves as the Company’s operating partnership
subsidiary (the “Operating Partnership”). The Company and the Operating Partnership hereby jointly
and severally agree with you, the Dealer Manager, as follows:
1. Representations and
Warranties of the Company and the Operating Partnership.
The Company and the Operating Partnership
hereby jointly and severally represent and warrant to the Dealer Manager and each Participating Broker-Dealer with whom the Dealer
Manager has entered into or will enter into a Participating Broker-Dealer Agreement (the “Participating Broker-Dealer
Agreement”) substantially in the form attached as Exhibit A to this Agreement, as of the date hereof
and at all times during the Offering Period, as that term is defined in Section 5.1 below (provided that, to the extent such representations
and warranties are given only as of a specified date or dates, the Company and the Operating Partnership only make such representations
and warranties as of such date or dates as follows):
1.1 Compliance
with Registration Requirements. A registration statement on Form S-3 (Registration No. 333-200359), including a
preliminary prospectus, for the registration of the Units has been prepared by the Company in accordance with applicable requirements
of the Securities Act of 1933, as amended (the “Securities Act”), and the applicable rules and regulations of
the Securities and Exchange Commission (the “Commission”) promulgated thereunder (the “Securities Act
Regulations”), and was initially filed with the Commission on November 19, 2014 and first declared effective by the Commission
on December 19, 2014 (the “Registration Statement”). The Company has prepared and filed such amendments
thereto, if any, and such amended prospectuses, if any, as may have been required to the date hereof and will file such additional
amendments and supplements thereto as may hereafter be required. As used in this Agreement, the term “Registration
Statement” means the Registration Statement, as amended through the date hereof, except that, if the Company files any post-effective
amendments to the Registration Statement, “Registration Statement” shall refer to the Registration Statement as so
amended by the last post-effective amendment declared effective; the term “Effective Date” means the applicable date
upon which the Registration Statement or any post-effective amendment thereto is or was first declared effective by the Commission;
the term “Prospectus” means the base prospectus, as amended or supplemented, on file with the Commission at the Effective
Date of the Registration Statement (including financial statements, exhibits and all other documents related thereto filed as a
part thereof or incorporated therein), except that if the base prospectus is amended or supplemented after the Effective Date in
respect of the offering of the Units and the Class A Common Stock issuable upon exercise of the Warrants (and collectively, the
“Offered Securities”); the term “Prospectus” shall refer to the base prospectus as amended or supplemented
to date, collectively with any prospectus filed pursuant to either Rule 424(b) or 424(c) of the Securities Act Regulations in respect
of the Offering and the Offered Securities (each a “Takedown Supplement”), from and after the date on which it shall
have been filed with the Commission; the term “preliminary Prospectus” as used herein shall mean a preliminary prospectus
related to the Units as contemplated by Rule 430 or Rule 430A of the Securities Act Rules and Regulations included at any time
as part of the Registration Statement; and the term “Filing Date” means the applicable date upon which the base prospectus
or any Takedown Supplement is filed with the Commission. As of the date hereof, the Commission has not issued any stop order suspending
the effectiveness of the Registration Statement and no proceedings for that purpose have been instituted or are pending before
or threatened by the Commission under the Securities Act.
The Registration Statement
and the Prospectus, and any further amendments or supplements thereto, will, as of the applicable Effective Date or Filing Date,
as the case may be, comply in all material respects with the Securities Act and the Securities Act Regulations; the Registration
Statement does not, and any amendments thereto will not, in each case as of the applicable Effective Date, contain an untrue statement
of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements
therein not misleading; and the Prospectus does not, and any amendment or supplement thereto will not, as of the applicable Filing
Date, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however,
that the Company and the Operating Partnership make no warranty or representation with respect to any statement contained in the
Registration Statement or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with
information furnished in writing to the Company by the Dealer Manager or any Participating Broker-Dealer expressly for use in the
Registration Statement or the Prospectus, or any amendments or supplements thereto.
1.2 Documents
Incorporated by Reference. The documents incorporated or deemed to be incorporated by reference in the Prospectus (if any),
at the time they are hereafter filed with the Commission, will comply in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder
(the “Exchange Act Rules and Regulations”), and, when read together with the other information in the Prospectus,
at the time the Registration Statement became effective and as of the applicable Effective Date of each post-effective amendment
to the Registration Statement, did not and will not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
1.3 Compliance
with the Securities Act, Etc. (i) On (A) each applicable Effective Date, (B) the date of the preliminary Prospectus, (C) the
date of the Prospectus, and (D) the date any supplement to the Prospectus is filed with the Commission, the Registration Statement,
the Prospectus and any amendments or supplements thereto, as applicable, have complied, and will comply, in all material respects
with the Securities Act, the Securities Act Rules and Regulations, the Exchange Act and the Exchange Act Rules and Regulations,
as applicable; and (ii) the Registration Statement does not, and any amendment thereto will not, in each case as of the applicable
Effective Date, include any untrue statement of material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the
Prospectus does not, and any amendment or supplement thereto will not, as of the applicable filing date, include any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading; provided, however, that the foregoing
provisions of this Section 1.3 will not extend to any statements contained in, incorporated by reference in or
omitted from the Registration Statement, the Prospectus or any amendment or supplement thereto that are based upon written information
furnished to the Company by the Dealer Manager expressly for use therein.
1.4 Securities
Matters. There has not been (i) any request by the Commission for any further amendment to the Registration Statement or the
Prospectus or for any additional information, (ii) any issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or, to the Company’s knowledge, threat of any proceeding for that purpose,
or (iii) any notification with respect to the suspension of the qualification of the Units for sale in any jurisdiction or any
initiation or, to the Company’s knowledge, threat of any proceeding for such purpose. The Company is in compliance in all
material respects with all federal and state securities laws, rules and regulations applicable to it and its activities, including,
without limitation, with respect to the Offering and the sale of the Units.
1.5 Good
Standing of the Company and the Operating Partnership. The Company is a corporation duly organized and validly existing
under the laws of the State of Maryland, and is in good standing with the State Department of Assessments and Taxation of Maryland,
with full power and authority to conduct its business as described in the Prospectus and to enter into this Agreement and to perform
the transactions contemplated hereby; this Agreement has been duly authorized, executed and delivered by the Company and is a legal,
valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally,
and by general equitable principles, and except to the extent that the enforceability of the indemnity provisions and the contribution
provisions contained in Sections 7 and 8 of this Agreement, respectively, may be limited under applicable securities laws.
The Operating Partnership
is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, with full
power and authority to conduct its business as described in the Prospectus and to enter into this Agreement and to perform the
transactions contemplated hereby; as of the date hereof the Company is the sole general partner of the Operating Partnership; this
Agreement has been duly authorized, executed and delivered by the Operating Partnership and is a legal, valid and binding agreement
of the Operating Partnership enforceable against the Operating Partnership in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally,
and by general equitable principles, and except to the extent that the enforceability of the indemnity provisions and the contribution
provisions contained in Sections 7 and 8 of this Agreement, respectively, may be limited under applicable securities laws.
Each of the Company and
the Operating Partnership has qualified to do business and is in good standing in every jurisdiction in which the ownership or
leasing of its properties or the nature or conduct of its business, as described in the Prospectus, requires such qualification,
except where the failure to do so would not have a material adverse effect on the condition, financial or otherwise, results of
operations or cash flows of the Company and the Operating Partnership taken as a whole (a “Material Adverse Effect”).
1.6 Authorization
of Series B Redeemable Preferred Stock and Warrants. Series B Redeemable Preferred Stock and Warrants have been duly authorized
and, when issued and sold as contemplated by the Prospectus and upon payment therefor as provided in this Agreement and the Prospectus,
will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus. The
Class A Shares issuable on exercise of the Warrants or in redemption of the Series B Redeemable Preferred Stock have been duly
authorized and, when issued and sold (in the case of the Warrants) as contemplated by the Prospectus, will be validly issued, fully
paid and nonassessable and will conform to the description thereof contained in the Prospectus.
1.7 Absence
of Defaults and Conflicts. The Company is not in violation of its charter or its bylaws and the execution and delivery
of this Agreement, the issuance, sale and delivery of the Units or the Class A Shares issuable on exercise of the Warrants, the
consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Company will not violate
the terms of or constitute a breach or default under: (a) its charter or bylaws; or (b) any indenture, mortgage, deed of trust,
lease, or other material agreement to which the Company is a party or to which its properties are bound; or (c) any law, rule or
regulation applicable to the Company; or (d) any writ, injunction or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company except, in the cases of clauses (b), (c) and (d), for such violations
or defaults that, individually or in the aggregate, would not result in a Material Adverse Effect.
The Operating Partnership
is not in violation of its certificate of limited partnership or its partnership agreement and the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Operating
Partnership will not violate the terms of or constitute a breach or default under: (a) its certificate of limited partnership or;
(b) its partnership agreement; or (c) any indenture, mortgage, deed of trust, lease, or other material agreement to which the Operating
Partnership is a party or to which its properties are bound; or (d) any law, rule or regulation applicable to the Operating Partnership;
or (e) any writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Operating Partnership except, in the cases of clauses (b), (c), (d) and (e), for such violations or defaults that, individually
or in the aggregate, would not result in a Material Adverse Effect.
1.8 REIT
Compliance. The Company is organized in a manner that conforms with the requirements for qualification as a real
estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”),
and the Company’s intended method of operation, as set forth in the Prospectus, would enable it to meet the requirements
for taxation as a REIT under the Code. The Operating Partnership will be treated as a partnership for federal income
tax purposes and not as a corporation or association taxable as a corporation.
1.9 No
Operation as an Investment Company. The Company is not and does not currently intend to conduct its business so
as to be, an “investment company” as that term is defined in the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an “investment
company” within the meaning of the Investment Company Act of 1940.
1.10 Absence
of Further Requirements. As of the date hereof, no filing with, or consent, approval, authorization, license, registration,
qualification, order or decree of any court, governmental authority or agency is required for the performance by the Company or
the Operating Partnership of their respective obligations under this Agreement or in connection with the issuance and sale by the
Company of the Units, except such as may be required under the Securities Act, Securities Act Regulations, the Exchange Act, the
Exchange Act Rules and Regulations, the rules of the Financial Industry Regulatory Authority (“FINRA”) or applicable
state securities laws or where the failure to obtain such consent, approval, authorization, license, registration, qualification,
order or decree of any court, governmental authority or agency would not have a Material Adverse Effect.
1.11 Absence
of Proceedings. Unless otherwise described in the Prospectus, there are no actions, suits or proceedings pending
or, to the knowledge of the Company or the Operating Partnership, threatened against either the Company or the Operating Partnership
at law or in equity or before or by any federal or state commission, regulatory body or administrative agency or other governmental
body, domestic or foreign, which would have a Material Adverse Effect.
1.12 Financial
Statements. The financial statements of the Company included in the Registration Statement and the Prospectus including
without limitation those financial statements incorporated by reference to the Company’s reports filed pursuant to the Exchange
Act, together with the related notes, present fairly the financial position of the Company, as of the date specified, in conformity
with generally accepted accounting principles applied on a consistent basis and in conformity with Regulation S-X of the Commission. No
other financial statements or schedules are required by Form S-3 or under the Securities Act Regulations to be included in the
Registration Statement, the Prospectus or any preliminary prospectus.
1.13 [Reserved].
1.14 Independent
Accountants. BDO USA, LLP, an independent registered public accounting firm, or such other independent accounting firm that
has audited and is reporting upon any financial statements included or to be included in the Registration Statement or the Prospectus
or any amendments or supplements thereto, shall be as of the applicable Effective Date or Filing Date, and shall have been during
the periods covered by their report included in the Registration Statement or the Prospectus or any amendments or supplements thereto,
independent public accountants with respect to the Company within the meaning of the Securities Act and the Securities Act Regulations.
1.15 No
Material Adverse Change in Business. Since the respective dates as of which information is provided in the Registration
Statement and the Prospectus or any amendments or supplements thereto, except as otherwise stated therein, (a) there has been no
material adverse change in the condition, financial or otherwise, or in the earnings or business affairs of the Company or the
Operating Partnership, whether or not arising in the ordinary course of business, and (b) there have been no transactions entered
into by the Company or the Operating Partnership which could reasonably result in a Material Adverse Effect.
1.16 Material
Agreements. There are no contracts or other documents required by the Securities Act or the Securities Act Regulations
to be described in or incorporated by reference into the Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement which have not been accurately described in all material respects in the Prospectus or incorporated
or filed as required. Each document incorporated by reference into the Registration Statement or the Prospectus complied,
as of the date filed, in all material respects with the requirements as to form of the Exchange Act, and the Exchange Act Rules
and Regulations.
1.17 Reporting
and Accounting Controls. Each of the Company and the Operating Partnership has implemented controls and other procedures
that are designed to ensure that information required to be disclosed by the Company in supplements to the Prospectus and amendments
to the Registration Statement under the Securities Act and the Securities Act Regulations, the reports that it files or submits
under the Exchange Act and the Exchange Act Rules and Regulations and the reports and filings that it is required to make under
the applicable state securities laws in connection with the Offering are recorded, processed, summarized and reported, within the
time periods specified in the applicable rules and forms and is accumulated and communicated to the Company’s management,
including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure; and the Company makes and keeps books, records and accounts which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company and the Operating Partnership. The
Company and the Operating Partnership maintain a system of internal accounting controls sufficient to provide reasonable assurances
that (a) transactions are executed in accordance with management’s general or specific authorization; (b) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets; (c) access to assets is permitted only in accordance with management’s general
or specific authorization; and (d) the recorded accountability for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. To the Company’s knowledge, neither the Company
nor the Operating Partnership, nor any employee or agent thereof, has made any payment of funds of the Company or the Operating
Partnership, as the case may be, or received or retained any funds, and no funds of the Company, or the Operating Partnership,
as the case may be, have been set aside to be used for any payment, in each case in material violation of any law, rule or regulation
applicable to the Company or the Operating Partnership.
1.18 Material
Relationships. No relationship, direct or indirect, exists between or among the Company, on the one hand, and the
directors, officers, security holders of the Company, the Operating Partnership, or their respective affiliates, on the other hand,
which is required to be described in the Prospectus and which is not so described.
1.19 Possession
of Licenses and Permits. The Company possesses adequate permits, licenses, approvals, consents and other authorizations
(collectively, “Governmental Licenses”) issued by the appropriate federal, state, local and foreign regulatory
agencies or bodies necessary to conduct the business now operated by it, except where the failure to obtain such Governmental Licenses,
singly or in the aggregate, would not have a Material Adverse Effect; the Company is in compliance with the terms and condition
of all such Governmental Licenses, except where the failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental
Licenses to be in full force and effect would not have a Material Adverse Effect; and, as of the date hereof, the Company has not
received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.
1.20 Subsidiaries. Each
“significant subsidiary” of the Company (as such term is defined in Rule 1-02 of Regulation S-X) and each other entity
in which the Company holds a direct or indirect ownership interest that is material to the Company (each a “Subsidiary”
and, collectively, the “Subsidiaries”) has been duly organized or formed and is validly existing as a corporation,
partnership, limited liability company or similar entity in good standing under the laws of the jurisdiction of its incorporation
or organization, has power and authority to own, lease and operate its properties and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to
be so qualified would not reasonably be expected to have a Material Adverse Effect. The only direct Subsidiaries of
the Company as of the date of the Registration Statement or the most recent amendment to the Registration Statement, as applicable,
are the Subsidiaries described or identified in the Registration Statement or such amendment to the Registration Statement.
1.21 Possession
of Intellectual Property. The Company and the Operating Partnership own or possess, have the right to use or can
acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the
business now operated by the Company and the Operating Partnership, respectively, except where the failure to have such ownership
or possession would not, singly or in the aggregate, have a Material Adverse Effect. Unless otherwise disclosed in the
Prospectus, neither the Company nor the Operating Partnership has received any notice or is not otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the interest of the Company and/or the Operating Partnership
therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.
1.22 Advertising
and Sales Materials. All advertising and supplemental sales literature prepared or approved by the Company or BRG
Manager, LLC, a Delaware limited liability company that serves as the Company’s manager pursuant to the terms of the Management
Agreement, as amended (the “Manager”), whether designated solely for “broker-dealer use only” or
otherwise, to be used or delivered by the Company, the Manager or the Dealer Manager in connection with the Offering (the “Authorized
Sales Materials”), will not contain any untrue statement of material fact or omit to state a material fact required to
be stated therein, in light of the circumstances under which they were made and in conjunction with the Prospectus delivered therewith,
not misleading. Furthermore, all such Authorized Sales Materials will have received all required regulatory approval,
which may include, but is not limited to, the Commission and state securities agencies, as applicable, prior to use, except where
the failure to obtain such approval would not, individually or in the aggregate, result in a Material Adverse Effect.
1.23 Compliance
with Privacy Laws and the USA PATRIOT Act. The Company complies in all material respects with applicable privacy
provisions of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) and applicable provisions of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001,
as amended (the “USA PATRIOT Act”).
1.24 Good
and Marketable Title to Assets. Except as otherwise disclosed in the Prospectus:
(a) the
Company and its Subsidiaries have good and insurable or good, valid and insurable title (either in fee simple or pursuant to a
valid leasehold interest) to all properties and assets described in the Prospectus as being owned or leased, as the case may be,
by them and to all properties reflected in the Company’s most recent consolidated financial statements included in the Prospectus,
and neither the Company nor any of its Subsidiaries has received notice of any claim that has been or may be asserted by anyone
adverse to the rights of the Company or any Subsidiary with respect to any such properties or assets (or any such lease) or affecting
or questioning the rights of the Company or any such Subsidiary to the continued ownership, lease, possession or occupancy of such
property or assets, except for such claims that could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(b) there
are no liens, charges, encumbrances, claims or restrictions on or affecting the properties and assets of the Company or any of
its Subsidiaries which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect;
(c) no
person or entity, including, without limitation, any tenant under any of the leases pursuant to which the Company or any of its
Subsidiaries leases (as a lessor) any of its properties (whether directly or indirectly through other partnerships, limited liability
companies, business trusts, joint ventures or otherwise) has an option or right of first refusal or any other right to purchase
any of such properties, except for such options, rights of first refusal or other rights to purchase which, individually or in
the aggregate, are not material with respect to the Company and its subsidiaries considered as one enterprise;
(d) to
the Company’s knowledge, each of the properties of the Company or any of its Subsidiaries has access to public rights of
way, either directly or through insured easements, except where the failure to have such access would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(e) to
the Company’s knowledge, each of the properties of the Company or any of its Subsidiaries is served by all public utilities
necessary for the current operations on such property in sufficient quantities for such operations, except where failure to have
such public utilities could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(f) to
the knowledge of the Company, each of the properties of the Company or any of its Subsidiaries complies with all applicable codes
and zoning and subdivision laws and regulations, except for such failures to comply which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(g) all
of the leases under which the Company or any of its Subsidiaries hold or use any real property or improvements or any equipment
relating to such real property or improvements are in full force and effect, except where the failure to be in full force and effect
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Affect, and neither the Company
nor any of its Subsidiaries is in default in the payment of any amounts due under any such leases or in any other default thereunder
and the Company knows of no event which, with the passage of time or the giving of notice or both, could constitute a default under
any such lease, except such defaults that could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(h) to
the knowledge of the Company, there is no pending or threatened condemnation, zoning change, or other proceeding or action that
could in any manner affect the size of, use of, improvements on, construction on or access to the properties of the Company or
any of its Subsidiaries, except such proceedings or actions that could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect; and
(i) neither
the Company nor any of its Subsidiaries nor any lessee of any of the real property improvements of the Company or any of its Subsidiaries
is in default in the payment of any amounts due or in any other default under any of the leases pursuant to which the Company or
any of its subsidiaries leases (as lessor) any of its real property or improvements (whether directly or indirectly through partnerships,
limited liability companies, joint ventures or otherwise), and the Company knows of no event which, with the passage of time or
the giving of notice or both, would constitute such a default under any of such leases, except such defaults as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
1.25 Registration
Rights. Except as otherwise disclosed in the Prospectus, there are no persons, other than the Company, with registration
or other similar rights to have any securities of the Company or the Operating Partnership registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act, or included in the Offering contemplated hereby.
1.26 Taxes. The
Company and the Operating Partnership have filed all federal, state and foreign income tax returns which have been required to
be filed on or before the due date (taking into account all extensions of time to file), and has paid or provided for the payment
of all taxes indicated by said returns and all assessments received by the Company and each of its Subsidiaries to the extent that
such taxes or assessments have become due, except where the Company is contesting such assessments in good faith and except for
such taxes and assessments the failure of which to pay would not reasonably be expected to have a Material Adverse Effect.
1.27 Authorized
Use of Trademarks. Any required consent and authorization has been obtained for the use of any trademark or service
mark in any advertising and supplemental sales literature or other materials delivered by the Company to the Dealer Manager or
approved by the Company for use by the Dealer Manager and, to the Company’s knowledge, its use does not constitute the unlicensed
use of intellectual property.
2. Covenants
of the Company and the Operating Partnership.
The Company and the Operating Partnership
hereby jointly and severally covenant and agree with the Dealer Manager that:
2.1 Compliance
with Securities Laws and Regulations. The Company will: (a) use commercially reasonable efforts to cause any subsequent
amendments to the Registration Statement thereto to become effective as promptly as possible; (b) promptly advise the Dealer Manager
of (i) the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) the time
and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to the Prospectus,
and (iii) the time and date that any post-effective amendment to the Registration Statement becomes effective; (c) timely file
every amendment or supplement to the Registration Statement or the Prospectus that may be required by the Commission or under the
Securities Act; and (d) if at any time the Commission shall issue any stop order suspending the effectiveness of the Registration
Statement, the Company will promptly notify the Dealer Manager and, to the extent the Company determines such action is in the
best interest of the Company, use its commercially reasonable efforts to obtain the lifting of such order at the earliest possible
time.
2.2 Delivery
of Registration Statement, Prospectus and Sales Materials. The Company will, at no expense to the Dealer Manager,
furnish the Dealer Manager with such number of printed copies of the Registration Statement, including all amendments and exhibits
thereto, and the Prospectus as the Dealer Manager may reasonably request. The Company will similarly furnish to the
Dealer Manager and others designated by the Dealer Manager as many copies as the Dealer Manager may reasonably request in connection
with the Offering of: (a) the Prospectus in preliminary and final form and every form of supplemental or amended Prospectus; and
(b) the Authorized Sales Materials.
2.3 Blue
Sky Qualifications. If required, the Company will use commercially reasonable efforts to qualify the Units and the
Class A Shares issuable upon exercise of the Warrants for offering and sale under the securities or blue sky laws of such jurisdictions
as the Dealer Manager and the Company shall mutually agree upon and to make such applications, file such documents and furnish
such information as may be reasonably required for that purpose. The Company will, at the Dealer Manager’s request, furnish
the Dealer Manager with a copy of such papers filed by the Company in connection with any such qualification. The Company will
promptly advise the Dealer Manager of the issuance by such securities administrators of any stop order preventing or suspending
the use of the Prospectus or of the institution of any proceedings for that purpose, and will use commercially reasonable efforts
to obtain the removal thereof as promptly as possible. The Dealer Manager will cause its outside counsel to furnish it and the
Company with a Blue Sky Survey dated as of the initial Effective Date, which will be supplemented to reflect changes or additions
to the information disclosed in such survey.
2.4 [Reserved]
2.5 Material
Disclosures. If at any time when a Prospectus is required to be delivered under the Securities Act any event occurs
as a result of which, in the opinion of the Company, the Prospectus would include an untrue statement of a material fact or omits
to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not
misleading, the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the
Dealer Manager) and the Dealer Manager and the Participating Broker-Dealers shall suspend the offering and sale of the Units in
accordance with Section 4.13 hereof until such time as the Company, in its sole discretion (a) instructs the Dealer Manager to
resume the offering and sale of the Units and (b) has prepared any required supplemental or amended Prospectus as shall be necessary
to correct such statement or omission and to comply with the requirements of the Securities Act.
2.6 Use
of Proceeds. The Company will apply the proceeds from the sale of the Units as stated in the Prospectus in all material
respects.
2.7 Transfer
Agent. The Company will engage and maintain, at its expense, a registrar and transfer agent for the Units.
3. Payment
of Expenses and Fees.
3.1 Company
Expenses. Subject to the limitations described below, the Company agrees to pay all costs and expenses incident
to the Offering, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including
expenses, fees and taxes in connection with: (a) the registration fee, the preparation and filing of the Registration Statement
(including, without limitation, financial statements, exhibits, schedules and consents), the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each thereof to the Dealer Manager and to Participating Broker-Dealers
(including costs of mailing and shipment); (b) the preparation, issuance and delivery of certificates, if any, for the Units and
the Series B Preferred Stock and Warrants compromising them, including any stock or other transfer taxes or duties payable upon
the sale of the Units; (c) all fees and expenses of the Company’s legal counsel, independent public or certified public accountants
and other advisors; (d) filing for review by FINRA of all necessary documents and information relating to the Offering and the
Units (including the reasonable legal fees and filing fees and other disbursements of counsel relating thereto); (e) the fees and
expenses of any transfer agent or registrar for the Units and miscellaneous expenses referred to in the Registration Statement;
(f) all costs and expenses incident to the travel and accommodation of the Manager’s personnel, in making road show presentations
and presentations to Participating Broker-Dealers and other broker-dealers and financial advisors with respect to the offering
of the Units; and (g) the performance of the Company’s other obligations hereunder. Notwithstanding the foregoing,
the Company shall not directly pay, or reimburse the Manager for, the costs and expenses described in this Section 3.1 if
the payment or reimbursement of such expenses would cause the aggregate of the Company’s “organization and offering
expenses” as defined by FINRA Rule 2310 (including the Company expenses paid or reimbursed pursuant to this Section 3.1,
all items of underwriting compensation including Dealer Manager expenses described in Section 3.2 and due diligence expenses described
in Section 3.3) to exceed 15% of the gross proceeds from the sale of the Units.
3.2 Dealer
Manager Expenses. In addition to payment of the Company expenses, the Company shall reimburse the Dealer Manager
as provided in the Prospectus for certain costs and expenses incident to the Offering, to the extent permitted pursuant to prevailing
rules and regulations of FINRA, including expenses, fees and taxes incurred in connection with: (a) attendance at broker-dealer
sponsored conferences, educational conferences sponsored by the Company, industry sponsored conferences and informational seminars;
(b) legal fees and expenses of counsel to the dealer manager; and (c) customary promotional items; provided, however, that,
no costs and expenses shall be reimbursed by the Company pursuant to this Section 3.2 which would cause the total underwriting
compensation paid in connection with the Offering to exceed 10% of the gross proceeds from the sale of the Units, excluding reimbursement
of bona fide due diligence expenses as provided under Section 3.3.
3.3 Due
Diligence Expenses. In addition to reimbursement as provided under Section 3.2, the Company shall also reimburse
the Dealer Manager, and any Participating Broker-Dealer, as appropriate, for reasonable bona fide due diligence expenses
incurred by the Dealer Manager or any Participating Broker-Dealer; provided, however, that no due diligence expenses
shall be reimbursed by the Company pursuant to this Section 3.3 which would cause the aggregate of (a) all Company expenses
described in Section 3.1, (b) all underwriting compensation paid to the Dealer Manager and any Participating Broker-Dealer and
(c) the bona fide due diligence expenses reimbursed pursuant to this Section 3.3 to exceed 15% of the gross
proceeds from the sale of the Units. Such due diligence expenses may include travel, lodging, meals and other reasonable out-of-pocket
expenses incurred by the Dealer Manager or any Participating Broker-Dealer and their personnel when visiting the Company’s
offices or properties to verify information relating to the Company or its properties. The Dealer Manager or any Participating
Broker-Dealer shall provide a detailed and itemized invoice to the Company for any such due diligence expenses.
4. Representations,
Warranties and Covenants of Dealer Manager.
The Dealer Manager hereby represents and
warrants to, and covenants and agrees with the Company and the Operating Partnership as of the date hereof and at all times during
the Offering Period as that term is defined below (provided that, to the extent representations and warranties are given only as
of a specified date or dates, the Dealer Manager only makes such representations and warranties as of such date or dates) as follows:
4.1 Good
Standing of the Dealer Manager. The Dealer Manager is a limited liability company duly organized and validly existing
under the laws of the Commonwealth of Massachusetts, with full power and authority to conduct its business and to enter into this
Agreement and to perform the transactions contemplated hereby; this Agreement has been duly authorized, executed and delivered
by the Dealer Manager and is a legal, valid and binding agreement of the Dealer Manager enforceable against the Dealer Manager
in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally, and by general equitable principles, and except to the extent that the
enforceability of the indemnity provisions and the contribution provisions contained in Sections 7 and 8 of this Agreement, respectively,
may be limited under applicable securities laws.
4.2 Compliance
with Applicable Laws, Rules and Regulations. The Dealer Manager represents to the Company that (i) it is a member
of FINRA in good standing, and (ii) it and its employees and representatives who will perform services hereunder have all required
licenses and registrations to act under this Agreement. With respect to its participation and the participation by each
Participating Broker-Dealer in the offer and sale of the Units (including, without limitation any resales and transfers of Units),
the Dealer Manager agrees, and, by virtue of entering into the Participating Broker-Dealer Agreement, each Participating Broker-Dealer
shall have agreed, to comply with any applicable requirements of the Securities Act and the Exchange Act, applicable state securities
or blue sky laws, and FINRA Rules, specifically including, but not in any way limited to, NASD Conduct Rules 2130, 2340 and 2420
and FINRA Rules 2310 and 5141 therein.
4.3 AML
Compliance. The Dealer Manager represents to the Company that it has established and implemented anti-money laundering
compliance programs in accordance with applicable law, including applicable FINRA Conduct Rules, Exchange Act Regulations and the
USA PATRIOT Act, specifically including, but not limited to, Section 352 of the International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001 (the “Money Laundering Abatement Act,” and together with the USA PATRIOT Act, the “AML
Rules”) reasonably expected to detect and cause the reporting of suspicious transactions in connection with the offering
and sale of the Units. The Dealer Manager further represents that it is currently in compliance with all AML Rules and
will require each Participating Broker-Dealer to comply with all AML Rules, specifically including, but not limited to, the Customer
Identification Program requirements under Section 326 of the Money Laundering Abatement Act, and the Dealer Manager hereby covenants
to remain in compliance with such requirements, and to require each Participating Broker-Dealer to remain in compliance with such
requirements, and shall, upon request by the Company, provide a certification to the Company that, as of the date of such certification
(i) each of the Dealer Manager’s and each Participating Broker-Dealer’s AML Program is consistent with the AML Rules
and (ii) each of the Dealer Manager and each Participating Broker-Dealer is currently in compliance with all AML Rules, specifically
including, but not limited to, the Customer Identification Program requirements under Section 326 of the Money Laundering Abatement
Act.
4.4 Accuracy
of Information. The Dealer Manager represents and warrants to the Company, the Operating Partnership and each person
that signs the Registration Statement that the information under the caption “Plan of Distribution” in the Prospectus
and all other information furnished to the Company by the Dealer Manager in writing expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus, or any amendment or supplement thereto, does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not
misleading.
4.5 Suitability. The
Dealer Manager will offer Units, and in its agreement with each Participating Broker-Dealer will require that the Participating
Broker-Dealer offer Units, only to Persons in the states in which it is advised in writing by its counsel that the Units are qualified
for sale or that such qualification is not required. In offering Units, the Dealer Manager will require that the Participating
Broker-Dealer comply, with the provisions of all applicable laws, rules and regulations relating to suitability of investors, including
without limitation the FINRA Conduct Rules. The Dealer Manager shall, and each Participating Broker-Dealer shall agree to, maintain,
for at least six years or a period of time not less than that required in order to comply with all applicable federal, state and
other regulatory requirements, whichever is later, a record of the information obtained to determine that an investor meets the
suitability standards imposed, if any, on the offer and sale of the Units (both at the time of the initial subscription and at
the time of any additional subscriptions) and a representation of the investor that the investor is investing for the investor’s
own account or, in lieu of such representation, information indicating that the investor for whose account the investment was made
met the suitability standards. Except to the extent that the Dealer Manager makes any direct sales to investors, the Company agrees
that the Dealer Manager can satisfy its obligation by contractually requiring such information to be maintained by the investment
advisers or banks referred to in Section 3(b) of the Participating Broker-Dealer Agreement.
4.6 Recordkeeping. The
Dealer Manager agrees to comply, and to require each Participating Broker-Dealer to comply, with the record keeping requirements
of the Exchange Act, including but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act. The Dealer
Manager further agrees to keep, and to require each Participating Broker-Dealer to keep, such records with respect to each customer
who purchases Units, the customer’s suitability and the amount of Units sold, and to retain such records for such period
of time as may be required by the Commission, any state securities commission, FINRA or the Company.
4.7 Customer
Information. The Dealer Manager shall:
(a) abide
by and comply with (i) the privacy standards and requirements of the GLB Act; (ii) the privacy standards and requirements of any
other applicable federal or state law; and (iii) its own internal privacy policies and procedures, each as may be amended from
time to time;
(b) refrain
from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out
of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law; and
(c) determine
which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary,
retrieving an aggregated list of such customers from the Participating Broker-Dealers (the “List”) to identify
customers that have exercised their opt-out rights. In the event either party uses or discloses nonpublic personal information
of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult
the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands
that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List
as having opted out of such disclosures.
4.8 Resale
of Series B Redeemable Preferred Stock and Warrants . The Dealer Manager agrees, and each Participating Broker-Dealer
shall have agreed, to comply with any applicable requirements with respect to its and each Participating Broker-Dealer’s
participation in any resales or transfers of the Series B Redeemable Preferred Stock or the Warrants. In addition, the
Dealer Manager agrees, and each Participating Broker-Dealer shall have agreed, that should it or they assist with the resale or
transfer of the Series B Redeemable Preferred Stock or the Warrants, it and each Participating Broker-Dealer will fully comply
with all applicable FINRA rules and any other applicable federal or state laws.
4.9 [Reserved]
4.10 Distribution
of Prospectuses. The Dealer Manager is familiar with Rule 15c2-8 under the Exchange Act, relating to the distribution
of preliminary and final Prospectuses, and confirms that it has complied and will comply therewith.
4.11 Authorized
Sales Materials. The Dealer Manager shall use and distribute in conjunction with the offer and sale of any Units
only the Prospectus and the Authorized Sales Materials.
4.12 Materials
for Broker-Dealer Use Only. The Dealer Manager represents and warrants to the Company that it will not use any sales
literature not authorized and approved by the Company or use any “broker-dealer use only” materials with members of
the public in connection with offers or sales of the Units.
4.13 Suspension
or Termination of Offering. The Dealer Manager agrees, and will require that each of the Participating Broker-Dealers
agree, to suspend or terminate the offering and sale of the Units upon request of the Company at any time and to resume offering
and sale of the Units upon subsequent request of the Company.
5. Sale
of Units.
5.1 Exclusive
Appointment of Dealer Manager. The Company hereby appoints the Dealer Manager as its exclusive agent and managing
dealer during the period commencing with the date hereof and ending on the termination date of the Offering (the “Termination
Date”) described in the Prospectus (the “Offering Period”) to solicit, and to cause Participating
Broker-Dealers to solicit, purchasers of the Units at the purchase price to be paid in accordance with, and otherwise upon the
other terms and conditions set forth in, the Prospectus, and the Dealer Manager agrees to use its best efforts to procure purchasers
of the Units during the Offering Period. The Units offered and sold through the Dealer Manager under this Agreement
shall be offered and sold only by the Dealer Manager and, at the Dealer Manager’s sole option, by any Participating Broker-Dealers
whom the Dealer Manager may retain, each of which shall be members of FINRA in good standing, pursuant to an executed Participating
Broker-Dealer Agreement with such Participating Broker-Dealer. The Dealer Manager hereby accepts such agency and agrees
to use its best efforts to sell the Units on said terms and conditions.
5.2 Compensation.
(a) Selling
Commissions. Subject to volume discounts and other special circumstances described in or otherwise provided in the
“Plan of Distribution” section of the Prospectus or this Section 5.2, the Company will pay to the Dealer Manager selling
commissions in the amount up to 7.0% of the gross proceeds of the Units sold, which commissions may be reallowed in whole or in
part to the Participating Broker-Dealer who sold the Units giving rise to such commissions, as described more fully in the Participating
Broker-Dealer Agreement entered into with such Participating Broker-Dealer; provided, however, that no commissions
described in this clause (a) shall be payable in respect of the purchase of Units sold: (i) through an investment advisor representative
who is paid on a fee-for-service basis by the investor; (ii) by a Participating Broker-Dealer (or such Participating Broker-Dealer’s
registered representative), in its individual capacity, or by a retirement plan of such Participating Broker-Dealer (or such Participating
Broker-Dealer’s registered representative), or (iii) by an officer, director or employee of the Company, the Manager or their
respective affiliates.
(b) Dealer
Manager Fee. The Company will pay to the Dealer Manager a dealer manager fee in the amount of 3.0% of the gross
proceeds from the sale of the Units (the “Dealer Manager Fee”), a portion of which may be reallowed to Participating
Broker-Dealers (as described more fully in the Participating Broker-Dealer Agreement entered into with such Participating Broker-Dealer),
which reallowance, if any, shall be determined by the Dealer Manager in its discretion based on factors including, but not limited
to, the number of shares sold by such Participating Broker-Dealer, the assistance of such Participating Broker-Dealer in marketing
the Offering, and the extent to which similar fees are reallowed to participating broker-dealers in similar offerings being conducted
during the Offering Period.
5.3 Obligations
to Participating Broker-Dealers. The Company will not be liable or responsible to any Participating Broker-Dealer
for direct payment of commissions or any reallowance of the Dealer Manager Fee to such Participating Broker-Dealer, it being the
sole and exclusive responsibility of the Dealer Manager for payment of commissions or any reallowance of the Dealer Manager Fee
to Participating Broker-Dealers. Notwithstanding the above, the Company, in its sole discretion, may act as agent of
the Dealer Manager by making direct payment of commissions or reallowance of the Dealer Manager Fee to such Participating Broker-Dealers
without incurring any liability therefor.
6. Submission
of Orders.
Each
Investor desiring to purchase Units in the Offering will be required to represent and warrant they have received a copy of the
Prospectus and have had sufficient time to review it. Each Investor will be required to provide either the Dealer Manager or a
Participating Broker-Dealer the minimal initial investment of at least $5,000, at the price of $1,000 per Unit.
The Company is providing
two closing services provided by DTC through which investors can purchase Units. The first service is DTC Settlement. Investors
purchasing through DTC Settlement will coordinate with their registered representatives to pay the full purchase price for their
Units by the settlement date, and such payments will not be held in escrow. The second service is DRS Settlement. Investors permitted
to purchase through DRS Settlement must complete and sign subscription agreements, which will be delivered to the escrow agent,
[________]. In addition, Investors utilizing the DRS Settlement service must pay the full purchase price for their Units to the
escrow agent, to be held in trust for the investor’s benefit pending release to the Company.
(a) The
methods of delivery of the Investors’ subscription to the Company are detailed as follows:
| (i) | DRS Settlement. Subject to compliance with Rule 15c2-4 of the Exchange Act, in connection
with the purchases using DRS Settlement, the Dealer Manager or Participating Broker-Dealer, as applicable, will promptly deposit
any checks received from subscribers in an escrow account maintained by [___________] by the end of the next business day following
receipt of the subscriber’s subscription documents and check. Where the subscription review procedures are more lengthy than
customary or pursuant to a Participating Broker-Dealer’s internal supervising review procedures, a subscriber’s check
shall be transmitted by the end of the next business day following receipt by the review office. Any subscription payments received
by the escrow agent will be deposited into a special non-interest bearing account in the Company’s name until such time as
the Company has either accepted or rejected the subscription and will be held in trust for the Investor’s benefit, pending
the acceptance of the subscription. Subscriptions will be accepted or rejected within 10 business days of receipt by the Company,
and, if rejected, all funds shall be returned to the rejected subscribers within 10 business days. If accepted, the funds will
be transferred into the Company’s general account on the next closing date. The Company will provide Investors a confirmation
of their purchase subsequent to closing, and will generally admit stockholders on a semimonthly basis. |
| (ii) | DTC Settlement. Registered representatives whose clients are investing through DTC Settlement
must coordinate with their clients to pay the full purchase price for the Units by the settlement date. Investor payments under
the DTC Settlement option will not be held in escrow. Investors must warrant and represent to the registered representative that
they have received a copy of the Prospectus and have had time to review it. |
(b) Subscription Procedure.
Each Person desiring to purchase Units through the Dealer Manager, or any other Participating Broker- Dealer, must comply with
the subscription procedure applicable to them, as described in the Prospectus.
(c) Completed
Sale. A sale of a Unit shall be deemed by the Company to be completed for purposes of Section 5.2 if
and only if (i) the Company has received payment of the full purchase price of each purchased Unit, from an investor who satisfies
the minimum purchase requirements set forth in the Registration Statement as determined by the Participating Broker-Dealer, or
the Dealer Manager, as applicable, in accordance with the provisions of this Agreement, (ii) the Company has accepted such subscription,
and, if using DRS Settlement, a properly completed and executed Subscription Agreement, and (iii) such investor has been admitted
as a stockholder of the Company. In addition, no sale of Units shall be completed until at least five business days after the date
on which the subscriber receives a copy of the Prospectus. The Dealer Manager hereby acknowledges and agrees that the Company,
in its sole and absolute discretion, may accept or reject any subscription, in whole or in part, for any reason whatsoever or no
reason, and no commission or Dealer Manager Fee will be paid to the Dealer Manager with respect to that portion of any subscription
which is rejected. As used in this Agreement, “business day” means any day other than a Saturday, 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.
7. Indemnification.
7.1 Indemnified
Parties Defined. For the purposes of this Section 7, an entity’s “Indemnified Parties”
shall include such entity’s officers, directors, employees, members, partners, affiliates, agents and representatives, and
each person, if any, who controls such entity within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act.
7.2 Indemnification
of the Dealer Manager and Participating Broker-Dealers. The Company and the Operating Partnership, jointly and severally,
will indemnify, defend (subject to Section 7.6) and hold harmless the Dealer Manager and the Participating Broker-Dealers, and
their respective Indemnified Parties, from and against any losses, claims (including the reasonable cost of investigation), damages
or liabilities, joint or several, to which such Participating Broker-Dealers or the Dealer Manager, or their respective Indemnified
Parties, may become subject, under the Securities Act or the Exchange Act, or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon (a) in whole or in part, any material inaccuracy
in a representation or warranty contained herein by either the Company or the Operating Partnership, any material breach of a covenant
contained herein by either the Company or the Operating Partnership, or any material failure by either the Company or the Operating
Partnership to perform its obligations hereunder or to comply with state or federal securities laws applicable to the Offering,
or (b) any untrue statement or alleged untrue statement of a material fact contained (i) in any Registration Statement or any post-effective
amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus or (ii) in any Authorized Sales Materials
or (iii) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of
qualifying any or all of the Units or the Class A Shares issuable on exercise of the Warrants for sale under the securities laws
of any jurisdiction or based upon written information furnished by the Company or the Operating Partnership under the securities
laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”),
or (c) the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective
amendment thereof or in the Prospectus or any amendment or supplement to the Prospectus or necessary to make the statements therein
not misleading, and the Company and the Operating Partnership will reimburse each Participating Broker-Dealer or the Dealer Manager,
and their respective Indemnified Parties, for any legal or other expenses reasonably incurred by such Participating Broker-Dealer
or the Dealer Manager, and their respective Indemnified Parties, in connection with investigating or defending such loss, claim,
damage, liability or action; provided, however, that the Company or the Operating Partnership will not be liable in
any such case to the extent that any such loss, claim, damage or liability arises out of, or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished
either (x) to the Company or the Operating Partnership by the Dealer Manager or (y) to the Company, the Operating Partnership or
the Dealer Manager by or on behalf of any Participating Broker-Dealer, in each case expressly for use in the Registration Statement
or any post-effective amendment thereof, or the Prospectus or any such amendment thereof or supplement thereto. This
indemnity agreement will be in addition to any liability which either the Company or the Operating Partnership may otherwise have.
7.3 Dealer
Manager Indemnification of the Company and the Operating Partnership. The Dealer Manager will indemnify, defend
and hold harmless the Company and the Operating Partnership, their respective Indemnified Parties and each person who has signed
the Registration Statement, from and against any losses, claims, damages or liabilities to which any of the aforesaid parties may
become subject, under the Securities Act or the Exchange Act, or otherwise, insofar as such losses, claims (including the reasonable
cost of investigation), damages or liabilities (or actions in respect thereof) arise out of or are based upon (a) in whole or in
part, any material inaccuracy in a representation or warranty contained herein by the Dealer Manager, any material breach of a
covenant contained herein by the Dealer Manager, or any material failure by the Dealer Manager to perform its obligations hereunder
or (b) any untrue statement or any alleged untrue statement of a material fact contained (i) in any Registration Statement or any
post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus or (ii) in any Authorized
Sales Materials or (iii) any Blue Sky Application, or (c) the omission or alleged omission to state a material fact required to
be stated in the Registration Statement or any post-effective amendment thereof or in the Prospectus or any amendment or supplement
to the Prospectus or necessary to make the statements therein not misleading, provided, however, that in each case
described in clauses (b) and (c) to the extent, but only to the extent, that such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the Company or the Operating Partnership by the Dealer Manager specifically
for use with reference to the Dealer Manager in the preparation of the Registration Statement or any such post-effective amendments
thereof or the Prospectus or any such amendment thereof or supplement thereto, or (d) any use of sales literature by the Dealer
Manager not authorized or approved by the Company or any use of “broker-dealer use only” materials with members of
the public concerning the Units by the Dealer Manager, or (e) any untrue statement made by the Dealer Manager or its representatives
or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which
they were made, not misleading in connection with the offer and sale of the Units, or (f) any material violation by the Dealer
Manager of this Agreement, or (g) any failure by the Dealer Manager to comply with applicable laws governing money laundry abatement
and anti-terrorist financing efforts in connection with the Offering, including applicable FINRA Rules, Exchange Act Regulations
and the USA PATRIOT Act, or (h) any other failure by the Dealer Manager to comply with applicable FINRA or Exchange Act Regulations. The
Dealer Manager will reimburse the aforesaid parties in connection with investigation or defense of such loss, claim, damage, liability
or action. This indemnity agreement will be in addition to any liability which the Dealer Manager may otherwise have.
7.4 Participating
Broker-Dealer Indemnification of the Company and the Operating Partnership. By virtue of entering into the Participating
Broker-Dealer Agreement, each Participating Broker-Dealer severally will agree to indemnify, defend and hold harmless the Company,
the Operating Partnership, the Dealer Manager, each of their respective Indemnified Parties, and each person who signs the Registration
Statement, from and against any losses, claims, damages or liabilities to which the Company, the Operating Partnership, the Dealer
Manager, or any of their respective Indemnified Parties, or any person who signed the Registration Statement, may become subject,
under the Securities Act or otherwise, as more fully described in the Participating Broker-Dealer Agreement.
7.5 Action
Against Parties; Notification. Promptly after receipt by any indemnified party under this Section 7 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 7, promptly notify the indemnifying party of the commencement thereof; provided, however, the failure
to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been
prejudiced by such failure. In case any such action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying
party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not
relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses (subject
to Section 7.6) incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying
party has deposited funds sufficient to effect the settlement, with prejudice, of the claim in respect of which indemnity is sought. Any
such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected
without the consent of such indemnifying party.
7.6 Reimbursement
of Fees and Expenses. An indemnifying party under Section 7 of this Agreement shall be obligated to reimburse an
indemnified party for reasonable legal and other expenses as follows:
(a) In
the case of the Company and/or the Operating Partnership indemnifying the Dealer Manager, the advancement of Company funds to the
Dealer Manager for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought
shall be permissible only if all of the following conditions are satisfied: (i) the legal action relates to acts or omissions with
respect to the performance of duties or services on behalf of the Company; (ii) the legal action is initiated by a third party
who is not a stockholder of the Company or the legal action is initiated by a stockholder of the Company acting in his or her capacity
as such and a court of competent jurisdiction specifically approves such advancement; and (iii) the Dealer Manager undertakes to
repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which the Dealer
Manager is found not to be entitled to indemnification.
(b) In
any case of indemnification other than that described in Section 7.6(a) above, the indemnifying party shall pay all legal
fees and expenses reasonably incurred by the indemnified party in the defense of such claims or actions; provided, however,
that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with
the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that
such actions or claims are alleged or brought by one or more parties against more than one indemnified party. If such
claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged
to reimburse the expenses and fees of the one law firm that has been participating by a majority of the indemnified parties against
which such action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm
for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of
record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent
of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed
by another law firm.
8. Contribution.
If the indemnification
provided for in Section 7 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (a)
in such proportion as is appropriate to reflect the relative benefits received by the Company and the Operating Partnership, the
Dealer Manager and the Participating Broker-Dealer, respectively, from the offering of the Units pursuant to this Agreement and
the relevant Participating Broker-Dealer Agreement or (b) if the allocation provided by clause (a) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (a) above but also the
relative fault of the Company and the Operating Partnership, the Dealer Manager and the Participating Broker-Dealer, respectively,
in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations.
The relative benefits
received by the Company and the Operating Partnership, the Dealer Manager and the Participating Broker-Dealer, respectively, in
connection with the offering of the Units pursuant to this Agreement and the relevant Participating Broker-Dealer Agreement shall
be deemed to be in the same respective proportion as the total net proceeds from the offering of the Units pursuant to this Agreement
and the relevant Participating Broker-Dealer Agreement (before deducting expenses), received by the Company, and the total selling
commissions and Dealer Manager Fees received by the Dealer Manager and the Participating Broker-Dealer, respectively, in each case
as set forth on the cover of the Prospectus bear to the aggregate initial public offering price of the Units as set forth on such
cover.
The relative fault of
the Company and the Operating Partnership, the Dealer Manager and the Participating Broker-Dealer, respectively, shall be determined
by reference to, among other things, whether any such 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 Company or the Operating Partnership, or by the Dealer
Manager or by the Participating Broker-Dealer, respectively, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Operating
Partnership, the Dealer Manager and the Participating Broker-Dealer (by virtue of entering into the Participating Broker-Dealer
Agreement) agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable contributions referred to above in
this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission or alleged omission.
Notwithstanding the provisions
of this Section 8, the Dealer Manager and the Participating Broker-Dealer shall not be required to contribute any amount by which
the total amount of selling commissions and Dealer Manager Fees paid to them pursuant to Section 5 above exceeds the amount of
any damages which the Dealer Manager and the Participating Broker-Dealer have otherwise been required to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission.
No party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any party
who was not guilty of such fraudulent misrepresentation.
For the purposes of this
Section 8, the Dealer Manager’s officers, directors, employees, members, partners, agents and representatives, and each person,
if any, who controls the Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution of the Dealer Manager, and each of the officers, directors, employees, members,
partners, agents and representatives of the Company and the Operating Partnership, respectively, each officer of the Company who
signed the Registration Statement and each person, if any, who controls the Company or the Operating Partnership, within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Company
and the Operating Partnership, respectively. The Participating Broker-Dealers’ respective obligations to contribute
pursuant to this Section 8 are several in proportion to the number of Units sold by each Participating Broker-Dealer and not joint.
9. Survival
of Provisions.
The respective agreements, representations
and warranties of the Company, the Operating Partnership, and the Dealer Manager set forth in this Agreement shall remain operative
and in full force and effect until the Termination Date regardless of: (a) any investigation made by or on behalf of the Dealer
Manager or any Participating Broker-Dealer or any person controlling the Dealer Manager or any Participating Broker-Dealer or by
or on behalf of the Company, the Operating Partnership or any person controlling the Company; and (b) the delivery of payment for
the Units. Following the termination of this Agreement, this Agreement will become void and there will be no liability
of any party to any other party hereto, except for obligations under Sections 7, 8, 9, 10, 12, 13, 14 and 16, all of which will
survive the termination of this Agreement.
10. Applicable
Law; Venue.
This Agreement was executed and delivered
in, and its validity, interpretation and construction shall be governed by the laws of, the State of New York; provided
however, that causes of action for violations of federal or state securities laws shall not be governed by this Section 10. Venue
for any action brought hereunder shall lie exclusively in New York, New York.
11.
Counterparts.
This Agreement may be executed in any number
of counterparts. Each counterpart, when executed and delivered, shall be an original contract, but all counterparts,
when taken together, shall constitute one and the same Agreement.
12. Entire
Agreement.
This Agreement and the Exhibit attached
hereto constitute the entire agreement among the parties and supersede any prior understanding, whether written or oral, prior
to the date hereof with respect to the Offering.
13. Successors
and Amendment.
13.1 Successors. This
Agreement shall inure to the benefit of and be binding upon the Dealer Manager and the Company and the Operating Partnership and
their respective successors and permitted assigns and shall inure to the benefit of the Participating Broker-Dealers to the extent
set forth in Sections 1 and 5 hereof. Nothing in this Agreement is intended or shall be construed to give to any other
person any right, remedy or claim, except as otherwise specifically provided herein.
13.2 Assignment. Neither
the Company or Operating Partnership, nor the Dealer Manager may assign or transfer any of such party’s rights or obligations
under this Agreement without the prior written consent of the Dealer Manager, on the one hand, or the Company and the Operating
Partnership, acting together, on the other hand.
13.3 Amendment. This
Agreement may be amended only by the written agreement of the Dealer Manager, the Company and the Operating Partnership.
14. Term
and Termination.
14.1 Termination;
General. This Agreement may be terminated by the Company upon ten (10) calendar days’ written notice to the
other party in accordance with Section 16 below. In any case, this Agreement shall expire at the close of business on
the Termination Date.
14.2 Dealer
Manager Obligations Upon Termination. The Dealer Manager, upon the expiration or termination of this Agreement,
shall (a) promptly deposit any and all funds, if any, in its possession which were received from investors for the sale of Units
into the appropriate account designated by the Company for the deposit of investor funds, (b) promptly deliver to the Company all
records and documents in its possession which relate to the Offering and are not designated as dealer copies, (c) provide a list
of all purchasers and broker-dealers with whom the Dealer Manager has initiated oral or written discussions regarding the Offering,
and (d) notify Participating Broker-Dealers of such termination. The Dealer Manager, at its sole expense, may make and
retain copies of all such records and documents, but shall keep all such information confidential. The Dealer Manager
shall use its best efforts to cooperate with the Company to accomplish an orderly transfer of management of the Offering to a party
designated by the Company.
14.3 Company
Obligations Upon Termination. Upon expiration or termination of this Agreement, the Company shall pay to the Dealer
Manager all compensation to which the Dealer Manager is or becomes entitled under Section 5 hereof at such time as such compensation
becomes payable.
15. Confirmation.
The Company hereby agrees and assumes the
duty to confirm on its behalf and on behalf of dealers or brokers who sell the Units all orders for purchase of Units accepted
by the Company. Such confirmations will comply with the rules of the Commission and FINRA, and will comply with applicable
laws of such other jurisdictions to the extent the Company is advised of such laws in writing by the Dealer Manager.
16. Notices.
Any notice, approval, request, authorization,
direction or other communication under this Agreement shall be deemed given (a) when delivered personally, (b) on the first business
day after delivery to a national overnight courier service, (c) upon receipt of confirmation if sent via facsimile, or (d) on the
fifth business day after deposited in the United States mail, properly addressed and stamped with the required postage, registered
or certified mail, return receipt requested, in each case to the intended recipient at the address set forth below:
If to the Company: |
|
Bluerock Residential Growth REIT, Inc. |
|
|
712 Fifth Avenue, 9th Floor |
|
|
New York, New York 10019 |
|
|
Facsimile: [ (646) 278-4220] |
|
|
Attention: R. Ramin Kamfar |
|
|
|
With a copy to: |
|
Kaplan Voekler Cunningham & Frank, PLC |
|
|
1401 East Cary Street |
|
|
Richmond, VA 23219 |
|
|
Facsimile: (804) 823-4099 |
|
|
Attention: Richard P. Cunningham, Esq. |
|
|
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If to the Operating Partnership: |
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Bluerock Residential Holdings, L.P |
|
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c/o Bluerock Residential Growth REIT, Inc. |
|
|
General Partner |
|
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712 Fifth Avenue, 9th Floor |
|
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New York, New York 10019 |
|
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Facsimile: [(646) 278-4220] |
|
|
Attention: R. Ramin Kamfar |
|
|
|
With a copy to: |
|
Kaplan Voekler Cunningham & Frank, PLC |
|
|
1401 East Cary Street |
|
|
Richmond, VA 23219 |
|
|
Facsimile: (804) 823-4099 |
|
|
Attention: Richard P. Cunningham, Esq. |
If to the Dealer Manager: |
|
Bluerock Capital Markets, LLC |
|
|
17900 Skypark Circle, Suite 260 |
|
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Irvine, California 92614 |
|
|
Facsimile: [(953) 346-3979] |
|
|
Attention: Kevin Boyle |
|
|
|
With a copy to:: |
|
Kaplan Voekler Cunningham & Frank, PLC |
|
|
1401 East Cary Street |
|
|
Richmond, VA 23219 |
|
|
Facsimile: (804) 823-4099 |
|
|
Attention: Richard P. Cunningham, Esq. |
Any party may change its address specified
above by giving the other party notice of such change in accordance with this Section 16.
[SIGNATURES ON FOLLOWING PAGE]
If the foregoing correctly
sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us as of the date first above written.
|
Very truly yours, |
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“COMPANY” |
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BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
|
|
|
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By: |
/s/ R. Ramin Kamfar |
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R. Ramin Kamfar |
|
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President and Chief Executive Officer |
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|
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“OPERATING PARTNERSHIP” |
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BLUEROCK RESIDENTIAL HOLDINGS, L.P |
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By: |
Bluerock Residential Growth REIT, Inc. |
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its General Partner |
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By: |
/s/ R. Ramin Kamfar |
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R. Ramin Kamfar |
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President and Chief Executive Officer |
Accepted and agreed as of the date first above written:
“DEALER MANAGER”
BLUEROCK CAPITAL MARKETS, LLC
By: |
/s/ Paul E. Dunn |
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Name: Paul Dunn |
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Title: Senior Managing Director |
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EXHIBIT A
FORM OF PARTICIPATING BROKER-DEALER AGREEMENT
Exhibit 10.2
Bluerock Residential Growth REIT,
Inc.
and
American Stock Transfer & Trust Company,
LLC,
as
Warrant Agent
Warrant Agreement
Dated as of December 17, 2015
TABLE OF CONTENTS
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Page |
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Section 1. |
Certain Definitions |
1 |
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Section 2. |
Appointment of Warrant Agent |
2 |
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Section 3. |
Issuance and Form of Global Warrant Certificate |
3 |
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Section 4. |
[RESERVED] |
3 |
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Section 5. |
Transfer and Exchange of Warrants |
3 |
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Section 6. |
Exercise of Warrants; Mechanics of Exercise |
4 |
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Section 7. |
Adjustment of Exercise Price |
6 |
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Section 8. |
Certain Representations; Reservation and Availability of Shares of Common Stock or Cash |
7 |
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Section 9. |
Fractional Shares of Common Stock. |
8 |
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Section 10. |
Warrant Holder Not Deemed a Stockholder |
8 |
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Section 11. |
The Warrant Agent |
9 |
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Section 12. |
Purchase or Consolidation or Change of Name of Warrant Agent |
10 |
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Section 13. |
Duties of Warrant Agent |
11 |
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Section 14. |
Change of Warrant Agent |
12 |
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Section 15 |
. Issuance of New Global Warrant Certificates |
13 |
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Section 16. |
Notices |
13 |
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Section 17. |
Supplements and Amendments |
14 |
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Section 18. |
Successors |
14 |
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Section 19. |
Benefits of this Agreement |
14 |
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Section 20. |
Governing Law |
14 |
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Section 21. |
Counterparts |
14 |
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Section 22. |
Captions |
14 |
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Section 23. |
Information |
15 |
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Section 24. |
Force Majeure |
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Exhibit A - Form
of Global Warrant Certificate |
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of December 17,
2015 (this “Agreement”), between Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “Company”),
and American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (the “Warrant Agent”).
WITNESSETH
WHEREAS, the Company proposes to issue
up to 150,000 units (the “Units”) in connection with the Company’s public offering (the “Series
B Offering”), with each unit comprised of (i) one share of Series B Redeemable Preferred Stock (the “Series
B Preferred Stock”), and (ii) one warrant (each, a “Warrant,” and collectively, the “Warrants”)
to purchase 20 shares of Class A common stock of the Company, par value $0.01 (the “Common Stock”). The Units
will not be certificated. The shares of Series B Preferred Stock and the Warrants are immediately detachable and will be issued
separately;
WHEREAS, the Company desires that the
Warrant Agent act on behalf of the Company in connection with the issuance, transfer, exchange, exercise and replacement of the
Warrants, and this Agreement sets forth, among other things, the form and provisions of the Warrants and the terms and conditions
on which they may be issued, transferred, exchanged, exercised and replaced;
NOW, THEREFORE, in consideration of the
premises and the mutual agreements herein set forth, the receipt and sufficiency of which hereby are acknowledged, the parties
hereto hereby agree this Agreement hereby is stated in its entirety to read as follows:
Section 1
Certain Definitions
For purposes of this Agreement, the following
terms have the meanings indicated:
“Affiliate” has the meaning
ascribed to it in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
“Business Day” means
any day other than a Saturday, Sunday or a day on which the New York Stock Exchange is authorized or obligated by law or executive
order to close.
“Close of Business” on
any given date means 5:00 p.m., New York City time, on such date; provided, however, that if such date
is not a Business Day, it means 5:00 p.m., New York City time, on the next succeeding Business Day.
“Exercise Price”, for
any particular Warrant, means the Initial Exercise Price, as adjusted from time to time pursuant to Section 7.
“Holder” means a holder
of beneficial interest in a Warrant.
“Initial Exercise Price”,
for any particular Warrant, means the greater of (i) $11.00 and (ii) 120% of the VWAP for the consecutive 20 Trading Days immediately
prior to the date of issuance of such Warrant.
“NYSE MKT” means the
NYSE MKT exchange.
“OP Units” means units
of limited partnership interest in Bluerock Residential Holdings, L.P., a Delaware limited partnership, which is a subsidiary of
the Company.
“Person” means an individual,
corporation, association, partnership, limited liability company, joint venture, trust, unincorporated organization, government
or political subdivision thereof or governmental agency or other entity.
“Securities Act” means
the Securities Act of 1933, as amended.
“Trading Day” means,
(i) if the Common Stock is listed or admitted to trading on the NYSE MKT, a day on which the NYSE MKT is open for the transaction
of business, (ii) if the Common Stock is not listed or admitted to trading on the NYSE MKT but is listed or admitted to trading
on another national securities exchange or automated quotation system, a day on which the principal national securities exchange
or automated quotation system, as the case may be, on which the Common Stock is listed or admitted to trading is open for the transaction
of business, or (iii) if the Common Stock is not listed or admitted to trading on any national securities exchange or automated
quotation system, 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.
“VWAP” means, for any
Trading Day, the volume-weighted average price, calculated by dividing the aggregate value of Common Stock traded on the NYSE MKT
or on another national securities exchange or automated quotation system during regular hours (price per share multiplied by number
of shares traded) by the total volume (number of shares) of Common Stock traded on the NYSE MKT for such Trading Day, or if such
volume-weighted average price is unavailable, the market value of one share of Common Stock on such Trading Day as determined by
the Board of Directors of the Company in a commercially reasonable manner, using a volume-weighted average price method.
“Warrant Shares” means
shares of Common Stock issuable upon exercise of Warrants. Initially, the number of shares of Common Stock with respect to which
a Warrant may be exercised is 20.
Section 2
Appointment of Warrant Agent
The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Warrant Agent hereby accepts
such appointment. The Company may from time to time appoint such Co-Warrant Agents as it may, in its sole discretion, deems necessary
or desirable.
Section 3
Issuance and Form of Global Warrant Certificate
(a) The Company shall execute and the Warrant
Agent shall countersign and deliver one or more global certificates (each, a “Global Warrant Certificate”),
evidencing the Warrants, and each such Global Warrant Certificate (i) shall be registered in the name of The Depository Trust Company
(the “Depository”) or of the nominee of the Depository, and (ii) shall be delivered by the Warrant Agent to
the Depository or pursuant to the Depository’s instructions or held by the Warrant Agent as custodian for the Depository.
Each Global Warrant Certificate shall evidence such number of Warrants as is set forth therein.
(b) Each Global Warrant
Certificate shall be substantially in the form set forth in Exhibit A attached hereto. The Global Warrant Certificate
may bear such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement,
and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required
to comply with the rules and regulations of the Depository, any law or with any rules made pursuant thereto or with any rules of
any securities exchange or as may, consistently herewith, be determined by the officers of the Company executing such Global Warrant
Certificate, as evidenced by their execution of the Global Warrant Certificate, which shall be reasonably acceptable to the Warrant
Agent.
(c) The Company shall
supply the Warrant Agent with an opinion of counsel indicating that the Warrants and any shares of Common Stock issued upon exercise
thereof were registered under the Securities Act or issued pursuant to an exemption from the registration requirements of the Securities
Act and that the Warrants and any shares of Common Stock issued upon exercise thereof will be, when issued, validly issued, fully
paid and non-assessable.
Section 4
[RESERVED]
Section 5
Transfer and Exchange of Warrants
(a) The registration
of the transfer and exchange of Warrants or beneficial interests therein shall be effected through the Depository in accordance
with this Agreement and the procedures and requirements of the Depository. Such requirements shall include, inter alia,
a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities
Transfer Association. The Company may instruct the Warrant Agent from time to time that certain Warrants are subject to restrictions
on transfer, in which case the Warrant Agent shall not permit the transfer of such Warrants without the consent of the Company.
A Global Warrant Certificate may only be transferred as a whole, and not in part, and only by (i) the Depository to a nominee of
the Depository, (ii) a nominee of the Depository to the Depository or another nominee of the Depository, or (iii) the Depository
or any such nominee to a successor Depository or its nominee.
(b) To permit registrations
of transfers and exchanges, the Company shall execute and the Warrant Agent shall countersign, by either manual or facsimile or
other electronic submission, each Global Warrant Certificate. No service charge shall be made for any registration of transfer
or exchange. Any transfer tax, assessments, or similar governmental charge payable in connection with any registration of transfer
or exchange shall be paid by the Holder. All Warrants issued upon any transfer or exchange pursuant to the terms of this Agreement
shall be valid obligations of the Company, entitled to the same benefits under this Agreement as the Warrants surrendered upon
such transfer or exchange.
(c) If any Global
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company shall issue, and the Warrant Agent shall countersign
and deliver, in exchange and substitution for, and upon cancellation of the mutilated Global Warrant Certificate, or in lieu of
and substitution for the Global Warrant Certificate lost, stolen or destroyed, a new Global Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence reasonably satisfactory to the Warrant Agent of
the loss, theft or destruction of such Global Warrant Certificate and an affidavit and the posting of an indemnity or bond satisfactory
to it. Applicants for such substitute Global Warrant Certificates shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Warrant Agent may prescribe and as required by Section 8-405 of the Uniform Commercial
Code as in effect in the State of New York.
(d) Notwithstanding anything to the contrary
contained herein, no Person may Beneficially Own or Constructively Own more than 9.8% of the outstanding Warrants, or such other
percentage as determined by the Board of Directors in its sole and absolute discretion. Any Transfer of Warrants in violation of
the foregoing restriction will be subject to the provisions in Section 6.1.1(b) of the Company’s charter as though such
Transfer of Warrants were a Transfer of Shares that violated the Ownership Limits. For purposes of the foregoing restriction, Warrants
will be treated as though they are Shares for purposes of the definitions and other provisions in Article VI of the Company’s
charter, including for purposes of the definitions of Beneficial Ownership and Constructive Ownership therein. Defined terms used
in this Section 5(d) that are not otherwise defined in this Agreement shall have the meaning provided for in the Company’s
charter.
Section 6
Exercise of Warrants; Mechanics of Exercise
(a) Subject to the
terms and conditions set forth herein and set forth in each Global Warrant Certificate, each Warrant shall be exercisable for 20
shares of Common Stock at the Exercise Price (subject to any adjustment pursuant to Section 7) commencing one year
from the date of issuance thereof (the “Initial Exercise Date”). Such Warrant shall cease to be exercisable
and shall terminate and become void, and all rights thereunder and under this Agreement shall cease, at the Close of Business on
the third anniversary of the Initial Exercise Date (the “Expiration Date”).
(b) A Holder may
exercise a Warrant in whole, but not in part, by delivering, not later than 5:00 p.m. New York time, on any Business Day to the
Warrant Agent at its office: (i) the exercise notice set forth in Exhibit A to the Global Warrant Certificate (the “Exercise
Notice”) and (ii) payment, for the account of the Company, of an amount equal to the product of (A) the Exercise Price
and (B) 20. Such payment shall be made in United States dollars by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for such purpose. Any Holder shall effect compliance
with the requirements in clauses (i) and (ii) above through the relevant members of the Depository in accordance with the procedures
of the Depository. If the Exercise Notice or the Exercise Price is received by the Warrant Agent after the Close of Business, the
Warrant will be deemed to be received and exercised on the next Business Day. If the Warrant is received or deemed to be received
after the Expiration Date, the exercise thereof will be null and void and any funds delivered to the Warrant Agent will be returned
to the Holder as soon as practicable. In no event will interest accrue on funds deposited with the Warrant Agent in respect of
an exercise or attempted exercise of a Warrant.
(c) Notwithstanding
any provision herein to the contrary, if on the date of any exercise of any Warrant a registration statement covering the Warrant
Shares is not effective and an exemption from registration is not available for the resale of such Warrant Shares, the Holder may
satisfy its obligation to pay the Exercise Price through a “cashless exercise,” in which event the Warrant Agent shall
issue to the Holder, subject to confirmation by the Company, the number of Warrant Shares as follows (the “Cashless Exercise
Ratio”):
X = Y [(A-B)/A]
where:
X = the number of shares of Common Stock
to be issued to the Holder
Y = the number of shares of Common Stock with respect
to which the Warrant is being exercised
A = the Fair Market Value of one share
of Common Stock
B = the Exercise Price
For the purpose of computation of the Cashless Exercise Ratio,
the “Fair Market Value” per share of Common Stock at any date shall be deemed to be the closing price of the Common
Stock on the Trading Day immediately preceding the date as of which the Fair Market Value is being determined.
(d) No payment or
adjustment shall be made on account of any distributions or dividends on the Warrant Shares. The Company shall calculate and transmit
to the Warrant Agent, and the Warrant Agent shall have no obligation under this section to calculate, the Cashless Exercise Ratio.
(e) If less than
all the Warrants evidenced by a Global Warrant Certificate surrendered are exercised, a new Global Warrant Certificate shall be
issued for the remaining number of Warrants evidenced by the Global Warrant Certificate so surrendered, and the Warrant Agent is
hereby authorized to countersign the new Global Warrant Certificate pursuant to the provisions of Section 3 and
this Section 6.
(f) The Warrant Agent
shall not effect any exercise of any Warrant, and a Holder shall not have the right to exercise a Warrant to the extent that after
giving effect to such issuance, the Holder would Beneficially Own or Constructively Own outstanding shares of Common Stock in excess
of the Ownership Limits or Excepted Holder Limit. Defined terms used in this Section 6(f) that are not otherwise defined shall
have the meaning provided for in the Company’s charter. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 6 to correct this paragraph (or
any portion hereof) which may be defective or inconsistent with the intended Ownership Limits herein contained or to make changes
or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor Holder.
(g) As soon as reasonably
practicable after the exercise of any Warrant, the Company shall issue, or otherwise deliver, in authorized denominations to or
upon the order of the Holder of such by same-day or next-day credit to the Depository for the account of such Holder or for the
account of a participant in the Depository the Warrant Shares to which such Holder is entitled, in each case registered in such
name and delivered to such account as directed in the Exercise Notice by such Holder or by the direct participant in the Depository
through which such Holder is acting.
(h) The Company
acknowledges that the bank accounts maintained by Warrant Agent in connection with the services provided under this Agreement will
be in its name and that Warrant Agent may receive investment earnings in connection with the investment with Warrant Agent for
the benefit of funds held in those accounts from time to time. Neither the Company nor the Holders will receive interest on any
deposits or Exercise Price.
Section 7
Adjustment of Exercise Price
The Exercise Price and the Warrant Shares
are subject to adjustment from time to time as set forth in this Section 7.
(a) In case the Company
shall, while any Warrants remain outstanding and unexpired, (i) declare a dividend or make a distribution on its outstanding Common
Stock in Common Stock, (ii) subdivide or reclassify its outstanding Common Stock into a greater number of shares, (iii) combine
or reclassify its outstanding Common Stock into a smaller number of shares, or (iv) enter into any transaction whereby the outstanding
shares of Common Stock are at any time changed into or exchanged for a different number or kind of shares or other securities of
the Company or of another entity through reorganization, merger, consolidation, liquidation or recapitalization, then an appropriate
adjustment in the number of shares of Common Stock (or other securities for which such shares of Common Stock have previously been
exchanged or converted) purchasable under the Warrants shall be made and the Exercise Price in effect at the time of the record
date for such dividend or distribution or of the effective date of such subdivision, combination, reclassification, reorganization,
merger, consolidation, liquidation or recapitalization shall be proportionately adjusted so that the Holder of the warrant exercised
after such date shall be entitled to receive the aggregate number and kind of shares or other securities which, if the Warrant
had been exercised by such Holder immediately prior to such date, the Holder would have been entitled to receive upon such dividend,
distribution, subdivision, combination, reclassification, reorganization, merger, consolidation, liquidation or recapitalization.
For example, if the Company declares a two-for-one stock subdivision (split) and the Exercise Price hereof immediately prior to
such event was $20.00 and the number of shares of Common Stock issuable upon exercise of the Warrant was 20, the adjusted Exercise
Price immediately after such event would be $10.00 and the adjusted number of shares of Common Stock issuable upon exercise of
the Warrant would be 40. Any such adjustment shall be made successively whenever any event listed above shall occur.
(b) No adjustment
in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%)
in the number of shares of Common Stock purchasable upon the exercise of each Warrant; provided, however,
that any adjustments which by reason of this Section 7(b) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment(s). All calculations shall be made to the nearest one hundredth (1/100) of
a share.
(c) When a specified
event requiring an adjustment occurs, the Company shall promptly prepare a certificate setting forth, as applicable: (i) the Exercise
Price of each Warrant, and (ii) the number of Warrant Shares covering each Warrant, each as adjusted, and a brief statement of
the facts accounting for such adjustment. The Company shall promptly file with the Warrant Agent and with each transfer agent for
the Common Stock a copy of such certificate and instruct the Warrant Agent to mail a brief summary thereof to each Holder.
Section 8
Certain Representations; Reservation
and
Availability of Shares of Common Stock
(a) This Agreement
has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery hereof
by the Warrant Agent, constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance
with its terms, and the Warrants have been duly authorized, executed and issued by the Company and, assuming due authentication
thereof by the Warrant Agent pursuant hereto, constitute valid and legally binding obligations of the Company enforceable against
the Company in accordance with their terms and entitled to the benefits hereof; in each case except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally
or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(b) As of the date
hereof, the authorized capital stock of the Company consists of (i) 747,586,185 shares of common stock, of which (A) 19,202,112
shares of Common Stock are issued and outstanding, (B) 353,629 shares of Class B-3 common stock are issued and outstanding, (C)
3,000,000 shares of Common Stock are reserved for issuance upon exercise of the Warrants, and (D) 475,000 shares of Common Stock
are authorized for issuance upon exercise of an award made under an equity incentive plan, and (ii) 250,000,000 shares of preferred
stock, $0.01 par value per share, of which 5,000,000 shares have been classified as shares of Series A Preferred Stock, of which
2,875,000 shares are issued and outstanding. As of the date hereof, there are no other outstanding obligations, warrants, options
or other rights to subscribe for or purchase from the Company any class of capital stock of the Company, other than the rights
of holders of OP Units to convert their OP Units into shares of Common Stock.
(c) The Company covenants
and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Common Stock or its
authorized and issued shares of Common Stock held in its treasury, free from preemptive rights, the number of shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding Warrants.
(d) The Company further
covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Global Warrant Certificate or the Warrant Shares. The Company shall
not, however, be required to pay any tax or governmental charge which may be payable in respect of any transfer involved in the
transfer or delivery of a Global Warrant Certificate or the issuance of Warrant Shares in a name other than that of the Holder
until any such tax or governmental charge shall have been paid (any such tax or governmental charge being payable by the Holder
at the time of surrender) or until it has been established to the Company’s reasonable satisfaction that no such tax or governmental
charge is due.
Section 9
Fractional Shares of Common Stock
(a) The Company shall
not issue fractions of Warrant Shares. Whenever any fraction of Warrant Shares would otherwise be required to be issued or distributed,
(i) a cash adjustment shall be paid in respect of such fraction in an amount equal to such fraction multiplied by the Exercise
Price, or (ii) the actual issuance or distribution made shall reflect a rounding of such fraction to the nearest whole share (up
or down), with half shares or less being rounded down and fractions in excess of half of a share being rounded up.
(b) The Holder, by
the acceptance of the Warrant, expressly waives his right to receive any fractional Warrant Share.
Section 10
Holder Not Deemed a Stockholder
No Holder or record holder of a Global Warrant
Certificate shall be entitled to vote, receive dividends or distributions on, or be deemed for any purpose the holder of Common
Stock or any other securities of the Company which may at any time be issuable on the exercise of the Warrants represented thereby,
nor shall anything contained herein or in any Global Warrant Certificate be construed to confer upon the Holder or record holder
of a Global Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting stockholders, or to receive dividends or distributions or subscription
rights, or otherwise, until such Warrant(s) evidenced by such Global Warrant Certificate shall have been exercised in accordance
with the provisions hereof.
Section 11
The Warrant Agent
(a) The Company agrees
to pay to the Warrant Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand
of the Warrant Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties hereunder, as set forth in the Fee Schedule provided to the Company
and attached hereto as Schedule 1.
(b) The Company covenants
and agrees to indemnify and to hold the Warrant Agent harmless against any costs, expenses (including reasonable fees of its legal
counsel), losses or damages, which may be paid, incurred or suffered by or to which it may become subject, arising from or out
of, directly or indirectly, any claims or liability resulting from its actions as Warrant Agent pursuant hereto; provided, that
such covenant and agreement does not extend to, and the Warrant Agent shall not be indemnified with respect to, such costs, expenses,
losses and damages incurred or suffered by the Warrant Agent as a result of, or arising out of, its gross negligence, bad faith,
or willful misconduct.
(c) Promptly after
the receipt by the Warrant Agent of notice of any demand or claim or the commencement of any action, suit, proceeding or investigation,
the Warrant Agent shall, if a claim in respect thereof is to be made against the Company, notify the Company thereof in writing.
The Company shall be entitled to participate at its own expense in the defense of any such claim or proceeding, and, if it so elects
at any time after receipt of such notice, it may assume the defense of any suit brought to enforce any such claim or of any other
legal action or proceeding. For the purposes of this Section 11, the term “expense or loss” means any amount
paid or payable to satisfy any claim, demand, action, suit or proceeding settled with the express written consent of the Warrant
Agent, and all reasonable costs and expenses, including, but not limited to, reasonable counsel fees and disbursements, paid or
incurred in investigating or defending against any such claim, demand, action, suit, proceeding or investigation.
(d) The Warrant Agent
shall be responsible for and shall indemnify and hold the Company harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or attributable to the Warrant Agent’s refusal or
failure to comply with the terms of this Agreement, or which arise out of Warrant Agent’s negligence or willful misconduct
or which arise out of the breach of any representation or warranty of the Warrant Agent hereunder, for which the Warrant Agent
is not entitled to indemnification under this Agreement; provided, however, that Warrant Agent’s aggregate liability during
any term of this Agreement with respect to, arising from, or arising in connection with this Agreement, or from all services provided
or omitted to be provided under this Agreement, whether in contract, or in tort, or otherwise, is limited to, and shall not exceed,
the amounts paid under this Agreement by the Company to Warrant Agent as fees and charges, but not including reimbursable expenses.
(e) Promptly after
the receipt by the Company of notice of any demand or claim or the commencement of any action, suit, proceeding or investigation,
the Company shall, if a claim in respect thereof is to be made against the Warrant Agent, notify the Warrant Agent thereof in writing.
The Warrant Agent shall be entitled to participate at its own expense in the defense of any such claim or proceeding, and, if it
so elects at any time after receipt of such notice, it may assume the defense of any suit brought to enforce any such claim or
of any other legal action or proceeding. For the purposes of this Section 11, the term “expense or loss”
means any amount paid or payable to satisfy any claim, demand, action, suit or proceeding settled with the express written consent
of the Company, and all reasonable costs and expenses, including, but not limited to, reasonable counsel fees and disbursements,
paid or incurred in investigating or defending against any such claim, demand, action, suit, proceeding or investigation.
(f) Neither party
to this Agreement shall be liable to the other party for any consequential, indirect, special or incidental damages under any provisions
of this Agreement or for any consequential, indirect, penal, special or incidental damages arising out of any act or failure to
act hereunder even if that party has been advised of or has foreseen the possibility of such damages.
Section 12
Purchase or Consolidation or Change of
Name of Warrant Agent
(a) Any corporation
into which the Warrant Agent or any successor Warrant Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent or any successor Warrant Agent shall be party, or any corporation
succeeding to the corporate trust business of the Warrant Agent or any successor Warrant Agent, shall be the successor to the Warrant
Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 14.
In case at the time such successor Warrant Agent shall succeed to the agency created by this Agreement any of the Global Warrant
Certificates shall have been countersigned but not delivered, any such successor Warrant Agent may adopt the countersignature of
the predecessor Warrant Agent and deliver such Global Warrant Certificates so countersigned; and in case at that time any of the
Global Warrant Certificates shall not have been countersigned, any successor Warrant Agent may countersign such Global Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such
cases such Global Warrant Certificates shall have the full force provided in the Global Warrant Certificates and in this Agreement.
(b) If at any time
the name of the Warrant Agent shall be changed and at such time any of the Global Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Global Warrant Certificates
so countersigned; and in case at that time any of the Global Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Global Warrant Certificates either in its prior name or in its changed name; and in all such cases such
Global Warrant Certificates shall have the full force provided in the Global Warrant Certificates and in this Agreement.
Section 13
Duties of Warrant Agent
The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the Holders,
by their acceptance thereof, shall be bound:
(a) The Warrant Agent
may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Warrant Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the
performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate
signed by the Chairman, President or any Vice President of the Company and by the Treasurer or any Assistant Treasurer or the Secretary
of the Company and delivered to the Warrant Agent; and such certificate shall be full authentication to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Warrant Agent
shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct pursuant to Section 11.
(d) The Warrant Agent
shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Global
Warrant Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent
shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Global Warrant Certificate (except
its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Global Warrant Certificate; nor shall it be responsible for the adjustment of the Exercise Price or
the making of any change in the number of Warrant Shares required under the provisions of Section 7 or responsible
for the manner, method or amount of any such change or the ascertaining of the existence of facts that would require any such adjustment
or change (except with respect to the exercise of Warrants evidenced by a Global Warrant Certificate after actual notice of any
adjustment of the Exercise Price); nor shall it by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Global Warrant Certificate
or as to whether any shares of Common Stock will, when issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees
that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Agreement.
(g) The Warrant Agent
is hereby authorized to accept instructions with respect to the performance of its duties hereunder from the Chairman or the President
or any Vice President or the Secretary of the Company, and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable and shall be indemnified and held harmless for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer, provided Warrant Agent carries out such instructions without
gross negligence, bad faith or willful misconduct.
(h) The Warrant Agent
and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities
of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.
(i) The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through
its attorney or agents, and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct
of any such attorney or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment thereof.
Section 14
Change of Warrant Agent
The Warrant Agent may resign and be discharged
from its duties under this Agreement upon 30 days’ notice in writing mailed to the Company and to each transfer agent of
the Common Stock by registered or certified mail, and to the Holders by first-class mail. The Company may remove the Warrant Agent
or any successor Warrant Agent upon 30 days’ notice in writing, mailed to the Warrant Agent or successor Warrant Agent, as
the case may be, and to each transfer agent of the Common Stock by registered or certified mail, and to the Depository by first-class
mail. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after such removal
or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by
the Depository, then the Depository may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent.
Any successor Warrant Agent appointed hereunder shall execute, acknowledge and deliver to the Warrant Agent and to the Company
an instrument accepting such appointment hereunder and thereupon such new warrant agent without any further act or deed shall become
vested with all the rights, powers, duties and responsibilities of the Warrant Agent hereunder with like effect as if it had been
named as warrant agent; but if for any reason it becomes necessary or expedient to have the former warrant agent execute and deliver
any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly
executed and delivered by the former warrant agent. Not later than the effective date of any such appointment, the Company shall
file notice thereof with the former Warrant Agent and each transfer agent for the Common Stock, and shall forthwith mail notice
thereof to the registered Holders at their addresses as they appear on the registry books. Failure to file or mail such notice,
or any defect therein, shall not affect the legality or validity of the appointment of the successor Warrant Agent.
Section 15
Issuance of New Global Warrant Certificates
Notwithstanding any of the provisions of
this Agreement or of the Warrants to the contrary, the Company may, at its option, issue new Global Warrant Certificate(s) evidencing
the Warrants in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price
per share and the number or kind or class of shares of stock or other securities or property purchasable under Global Warrant Certificate(s)
made in accordance with the provisions of this Agreement.
Section 16
Notices
All notices, demands, approvals, consents
and other communications provided for or permitted hereunder (each a “Notice”) shall be in writing and shall
be sent by (a) registered or certified first-class mail (return receipt requested), (b) courier service, (c) personal
delivery, or (d) telecopier (provided that, in the case of this clause (d), such Notice also is sent concurrently by another means
specified above) as follows:
(a) If to the
Company, to:
Bluerock Residential Growth REIT, Inc.
c/o Bluerock Real Estate, L.L.C.
712 Fifth
Avenue, 9th Floor
New York,
NY 10019
(b) If to the
Warrant Agent, to:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Any notice required to be delivered by the
Company to the registered holder of any Global Warrant Certificate may be given by the Warrant Agent on behalf of the Company.
Each Notice shall be deemed to have been
duly given and effective upon actual receipt (or refusal of receipt). Any party may by Notice to the other parties given in accordance
with this Section 16 designate another address or person for receipt of Notices hereunder. If the address of a
party has changed, then such party promptly shall by Notice to the other parties given in accordance with this Section
16 designate a new address for receipt of Notices hereunder. For the avoidance of doubt, if a Notice given in accordance
with this Section 16 to a party is returned to the sender as being refused or undeliverable (or having a similar status),
then such Notice to such party shall be deemed to have been duly given and effective on the date that such Notice was originally
sent.
Section 17
Supplements and Amendments
The Company and the Warrant Agent may from
time to time supplement or amend this Agreement without the approval of any Holders in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make
any other provisions with regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary
or desirable and which shall not adversely affect the interests of the Holders.
Section 18
Successors
All covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 19
Benefits of this Agreement
Nothing in this Agreement shall be construed
to give any Person other than the Company and the Warrant Agent any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the Holders.
Section 20
Governing Law
This Agreement and each Global Warrant Certificate
issued hereunder shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect
to the conflicts of law principles thereof.
Section 21
Counterparts
This Agreement may be executed (including
by facsimile or other electronic transmission) with counterpart signature pages or in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 22
Captions
The captions of the sections of this Agreement
have been inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.
Section 23
Information
The Company agrees to promptly provide the
Holders the information it is required to provide to the holders of the Common Stock, which information may be provided via the
Securities and Exchange Commission's EDGAR filing system.
Section 24
Force Majeure
Notwithstanding anything to the contrary
contained herein, Warrant Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable
control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions
or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage
or retrieval systems, labor difficulties, war, or civil unrest.
[Remainder of Page Intentionally
Left Blank. Signature Page Follows.]
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed as of the day and year first above written.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
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/s/ R. Ramin Kamfar |
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R. Ramin Kamfar |
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Chairman of the Board, Chief Executive Officer and President |
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AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC |
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/s/ Michael
A. Nespoli |
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Michael
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Executive Director |
Exhibit A
Form of Global Warrant Certificate
FORM OF GLOBAL WARRANT CERTIFICATE
FORM OF FACE OF GLOBAL WARRANT CERTIFICATE
VOID AFTER 5:00 P.M., NEW YORK CITY TIME,
ON [ ], 20[ ]
THE SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, EXCHANGE OR OTHER
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF THE WARRANT AGREEMENT DATED AS OF[ ],
20[ ] (THE “WARRANT AGREEMENT”), BETWEEN THE ISSUER OF THIS CERTIFICATE AND THE WARRANT AGENT NAMED THEREIN.
BY ACCEPTING ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE, THE RECIPIENT OF SUCH SECURITIES SHALL BE DEEMED TO
AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF THE WARRANT AGREEMENT. A COPY OF THE WARRANT AGREEMENT MAY
BE OBTAINED UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY OF THE ISSUER OF THIS CERTIFICATE.
NO. [ ] |
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WARRANTS TO PURCHASE [ ]
SHARES OF COMMON STOCK |
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
WARRANT TO PURCHASE COMMON STOCK, PAR
VALUE $0.01 PER SHARE
CUSIP # [ ]
DISTRIBUTION DATE: [ ],
20[ ]
This Global Warrant Certificate (this
“Global Warrant Certificate”) certifies that Cede & Co., or its registered assigns, is the registered holder
of the number of warrants (each a “Warrant”) of BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland
corporation (the “Company”), set forth above to purchase the number of shares of Class A common stock, par value
$0.01 per share (“Common Stock”), of the Company set forth above (as adjusted from time to time in accordance
with the terms of the Warrant Agreement). This Global Warrant Certificate is exercisable beginning on [ ],
20[ ] (the “Initial Exercise Date”), which is one year from the date of issuance, and expires at 5:00
p.m., New York City time on [ ], 20[ ] (the “Expiration
Date”) and entitles the holder upon exercise at any time, and from time to time, in whole or in part, on or after the
Initial Exercise Date and prior to the Expiration Date to purchase from the Company up to the number of fully paid and nonassessable
shares of Common Stock set forth above at an exercise price equal to $[ ] per share of Common Stock (the
“Exercise Price”). Each Warrant may be exercised in whole (and not in part) to purchase 20 shares
of Common Stock. The Exercise Price and the number of shares of Common Stock purchasable upon exercise of a Warrant
are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS GLOBAL
WARRANT CERTIFICATE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
THOUGH FULLY SET FORTH AT THIS PLACE.
This Global Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
All capitalized terms used herein and not defined herein shall
have the respective meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused
this Global Warrant Certificate to be signed by its duly authorized officer as of the date set forth below.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
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Acknowledged and Agreed to |
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as of the date first written above: |
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AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC |
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[Signature Page to Global Warrant Certificate]
FORM OF REVERSE SIDE OF GLOBAL WARRANT
CERTIFICATE
Each Warrant evidenced by this Global Warrant Certificate
is a part of a duly authorized issue of Warrants. The Warrant Agreement is hereby incorporated by reference herein and
made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties
and immunities thereunder of the Warrant Agent, the Company and the registered holders of Global Warrant Certificates.
Upon due presentment for registration of transfer and surrender
of the Warrants at the office of the Warrant Agent designated for such purpose, a new Global Warrant Certificate or Global
Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee
in exchange for this Global Warrant Certificate, subject to the limitations set forth in the Warrant Agreement, without charge
except for any applicable tax or other charge.
Subject to Section 9 of the Warrant Agreement, the Company shall
not be required to issue fractional shares of Common Stock.
No Warrants may be sold, exchanged or otherwise transferred
in violation of the Securities Act of 1933, as amended, state securities laws or other applicable law. The Warrants do not entitle
the registered holder hereof or the Holders to any of the rights of a stockholder of the Company.
The Company and Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Global Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone other than the Company or the Warrant Agent) for the purpose of any exercise hereof and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
This Global Warrant Certificate is held by The Depository
Trust Company (the “Depository”) or its nominee in custody for the benefit of the beneficial owners hereof,
and is not transferable to any Person under any circumstances except that (i) this Global Warrant Certificate may be transferred
pursuant to Section 5 of the Warrant Agreement, and (ii) this Global Warrant Certificate may be delivered to the Warrant Agent
for cancellation pursuant to Section 6(d) of the Warrant Agreement.
Unless this Global Warrant Certificate is presented by
an authorized representative of the Depository to the Company or the Warrant Agent for registration of transfer, exchange or payment
and any certificate issued is registered in the name of Cede & Co., or such other entity as is requested by an authorized representative
of the Depository (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative
of the Depository), any transfer, pledge or other use hereof for value or otherwise by or to any Person is wrongful because the
registered owner hereof, Cede & Co., has an interest herein.
No registration or transfer of the securities issuable pursuant
to the Warrants will be recorded on the books and records of the Company or the Warrant Agent until the provisions set forth in
the Warrant Agreement have been complied with.
In the event of any conflict or inconsistency between this Global
Warrant Certificate and the Warrant Agreement, the Warrant Agreement shall control.
EXHIBIT A
TO GLOBAL WARRANT CERTIFICATE
EXERCISE NOTICE FORM FOR HOLDERS
HOLDING WARRANTS THROUGH THE DEPOSITORY
TRUST COMPANY
TO BE COMPLETED BY DIRECT PARTICIPANT
IN THE DEPOSITORY TRUST COMPANY
To be executed upon exercise of the Warrant(s)
The undersigned hereby irrevocably elects to exercise the right,
represented by Global Warrant Certificate No. ___ held for its benefit through the book-entry facilities of The Depository
Trust Company (the “Depository”), to purchase shares of Class A Common Stock (“Common Stock”)
of Bluerock Residential Growth REIT, Inc. and (check one or both):
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herewith tenders in payment for such shares an amount of $ by certified or official bank check made payable to the order of Bluerock Residential Growth REIT, Inc. or by wire transfer in immediately available funds to an account arranged with Bluerock Residential Growth REIT, Inc.; and/or |
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herewith tenders Warrant(s) for shares of Common Stock pursuant to the cashless exercise provision of Section 6(c) of the Warrant Agreement. |
The undersigned requests that the shares of Common Stock issuable
upon exercise of the Warrant(s) be in registered form in the authorized denominations, registered in such names and delivered,
all as specified in accordance with the instructions set forth below; provided, however, that if the shares
of Common Stock are evidenced by global securities, the shares of Common Stock shall be registered in the name of the Depository
or its nominee.
Dated: _________, 20___
THIS EXERCISE NOTICE MUST BE DELIVERED TO THE WARRANT AGENT,
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. THE WARRANT AGENT SHALL NOTIFY YOU OF (A) THE WARRANT AGENT’S
ACCOUNT AT THE DEPOSITORY TO WHICH YOU MUST DELIVER YOUR WARRANT(S) ON THE EXERCISE DATE, AND (B) THE ADDRESS, PHONE NUMBER AND
FACSIMILE NUMBER WHERE YOU CAN CONTACT THE WARRANT AGENT AND TO WHICH WARRANT EXERCISE NOTICES ARE TO BE SUBMITTED.
ALL CAPITALIZED TERMS USED HEREIN BUT NOT DEFINED HEREIN SHALL
HAVE THE MEANINGS ASSIGNED TO THEM IN THE WARRANT AGREEMENT.
NAME OF DIRECT PARTICIPANT IN THE DEPOSITORY:
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Social Security Number or Other Taxpayer Identification Number
(if applicable): ___________________
Account from which Warrant(s) are Being Delivered: ___________________
Depository Account Number: ___________________
FILL IN IF YOUR PRIME BROKER IS PICKING UP COMMON STOCK ON
YOUR BEHALF:
Exact Name that your shares of Common Stock are to be registered in: |
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Name of DTC
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WARRANT HOLDER DELIVERING WARRANT(S), IF OTHER THAN THE DIRECT
PARTICIPANT:
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Account from which the shares of Common Stock are to be Credited:
___________________
Depository Account Number: ___________________
FILL IN FOR DELIVERY OF THE SHARES OF COMMON STOCK, IF OTHER
THAN TO THE PERSON DELIVERING THIS WARRANT EXERCISE NOTICE:
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Social Security Number or Other Taxpayer Identification Number
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Schedule 1
Warrant Agent Proposal For
Bluerock Residential Growth REIT, Inc.
Exhibit 10.3
SUBSCRIPTION ESCROW AGREEMENT
THIS SUBSCRIPTION ESCROW AGREEMENT dated
as of December 17, 2015 (this “Agreement”), is entered into among Bluerock Capital Markets, LLC (the “Dealer
Manager”), Bluerock Residential Growth REIT, Inc. (the “Company”) and UMB Bank, National Association,
a national banking association, as escrow agent (the “Escrow Agent”).
WHEREAS, the Company intends to raise
cash funds from Investors (as defined below) pursuant to a public offering (the “Offering”) of not more than
150,000 units consisting of (i) 150,000 shares of Series B Redeemable Preferred Stock, and (ii) warrants to purchase up to 3,000,000
shares of Class A common stock, par value $0.01 per share, of the Company (collectively, the “Securities”),
pursuant to the registration statement on Form S-3 of the Company (No. 333- 200359)
(as amended, the “Offering Document”) a copy of which is attached as Exhibit A hereto.
WHEREAS, the Escrow Agent is willing
to accept appointment as escrow agent only for the express duties set forth herein.
NOW, THEREFORE, in consideration
of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Proceeds
to be Escrowed. On or before the date the Offering Document is declared effective by the Securities and Exchange Commission
(the “SEC”), the Company shall establish an escrow account with the Escrow Agent to be invested in accordance
with Section 7 hereof entitled “ESCROW ACCOUNT FOR THE BENEFIT OF INVESTORS OF UNITS OF BLUEROCK RESIDENTIAL GROWTH
REIT INC” (including such abbreviations as are required for the Escrow Agent’s systems) (the “Escrow Account”).
All checks, wire transfers and other funds received from subscribers of Securities (“Investors”) in payment
for the Securities (“Investor Funds”) will be delivered to the Escrow Agent within one business day following
the day upon which such Investor Funds are received by the Company or its agents, and shall, upon receipt by the Escrow Agent,
be retained in escrow by the Escrow Agent and invested as stated herein. During the term of this Agreement, the Company or its
agents shall cause all checks received by and made payable to it for payment for the Securities to be endorsed in favor of the
Escrow Agent and delivered to the Escrow Agent for deposit in the Escrow Account.
The Escrow Agent shall have no duty to make
any disbursement, investment or other use of Investor Funds until and unless it has good and collected funds. If any checks deposited
in the Escrow Account are returned or prove uncollectible after the funds represented thereby have been released by the Escrow
Agent, then the Company shall promptly reimburse the Escrow Agent for any and all costs incurred for such, upon request, and the
Escrow Agent shall deliver the returned checks to the Company. The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder.
2. Investors.
Investors will be instructed by the Dealer Manager or any soliciting dealers retained by the Dealer Manager (the “Soliciting
Dealers”) to remit the purchase price in the form of checks (hereinafter “instruments of payment”) payable
to the order of, or funds wired in favor of, “UMB BANK, NATIONAL ASSOCIATION, ESCROW AGENT FOR BLUEROCK RESIDENTIAL GROWTH
REIT, INC.” Any checks made payable to a party other than the Escrow Agent shall be returned to the Dealer Manager or Soliciting
Dealer that submitted the check. By 12:00 p.m. (EST) the next business day after receipt of instruments of payment from the Offering,
the Company or the Dealer Manager shall furnish the Escrow Agent with a list of the Investors who have paid for the Securities
showing the name, address, tax identification number, the amount of Securities subscribed for purchase and the amount paid. The
information comprising the identity of Investors shall be provided to the Escrow Agent in substantially the format set forth in
the “List of Investors” attached hereto as Exhibit B.
When a Soliciting Dealer’s internal
supervisory procedures are conducted at the site at which the subscription agreement and check were initially received by Soliciting
Dealer from the subscriber, such Soliciting Dealer shall transmit the subscription agreement and check for the purchase of Securities
to the Escrow Agent by the end of the next business day following receipt of the check and subscription agreement for the purchase
of Securities. When, pursuant to such Soliciting Dealer’s internal supervisory procedures, such Soliciting Dealer’s
final internal supervisory procedures are conducted at a different location (the “Final Review Office”), such
Soliciting Dealer shall transmit the check and subscription agreement to the Final Review Office by the end of the next business
day following Soliciting Dealer’s receipt of the subscription agreement and check for the purchase of Securities. The Final
Review Office will, by the end of the next business day following its receipt of the subscription agreement and check for the purchase
of Securities, forward both the subscription agreement and check to the Escrow Agent. If any subscription agreement for the purchase
of Securities solicited by a Soliciting Dealer is rejected by the Dealer Manager or the Company, then the subscription agreement
and check for the purchase of Securities will be returned to the rejected subscriber within ten business days from the date of
rejection.
All Investor Funds deposited in the Escrow
Account shall not be subject to any liens or charges by the Company or the Escrow Agent, or judgments or creditors’ claims
against the Company, until and unless released to the Company as hereinafter provided. The Company understands and agrees that
the Company shall not be entitled to any Investor Funds on deposit in the Escrow Account and no such funds shall become the property
of the Company, or any other entity except as released to the Company pursuant to Section 3. The Escrow Agent will not use
the information provided to it by the Company for any purpose other than to fulfill its obligations as Escrow Agent hereunder.
The Company and the Escrow Agent will treat all Investor information as confidential. The Escrow Agent shall not be required to
accept any Investor Funds which are not accompanied by the information on the List of Investors.
3. Disbursement
of Funds. Once the Offering has closed, the Company shall notify the Escrow Agent of the same in writing. Further, if the Minimum
Amount has not been sold on or prior to the Termination Date, the Company shall notify the Escrow Agent in writing of such. Additionally,
at the end of the third business day following the Termination Date (as defined in Section 4), the Escrow Agent shall notify
the Company of the amount of the Investor Funds received. The Escrow Agent agrees that funds in the Escrow Account shall not be
released to the Company until and unless the Escrow Agent receives written instructions to release the funds from the Company’s
Chief Executive Officer, President or Chief Accounting Officer.
If the Company notifies the Escrow Agent
in writing that the Minimum Amount has not been sold prior to the Termination Date, the Escrow Agent shall, promptly following
the Termination Date, but in no event more than 30 days after the Termination Date, refund to each Investor by check, funds deposited
in the Escrow Account, or shall return the instruments of payment delivered to Escrow Agent if such instruments have not been processed
for collection prior to such time, directly to each Investor at the address provided on the List of Investors. Included in the
remittance shall be a proportionate share of the income earned in the account allocable to each Investor’s investment in
accordance with the terms and conditions specified herein, except that in the case of Investors who have not provided an executed
Form W-9 or substitute Form W-9 (or the applicable substitute Form W-8 for foreign investors), the Escrow Agent shall withhold
the applicable percentage of the earnings attributable to those Investors in accordance with Internal Revenue Service (“IRS”)
regulations. Notwithstanding the foregoing, the Escrow Agent shall not be required to remit any payments until funds represented
by such payments have been collected by the Escrow Agent.
If the Escrow Agent receives written notice
from the Company that the Company intends to reject an Investor’s subscription, the Escrow Agent shall pay to the applicable
Investor, within a reasonable time not to exceed ten business days after receiving notice of the rejection, by first class United
States Mail at the address provided on the List of Investors, or at such other address as shall be furnished to the Escrow Agent
by the Investor in writing, all collected sums paid by the Investor for Securities and received by the Escrow Agent, together with
the interest earned on such Investor Funds (determined in accordance with the terms and conditions specified herein).
4. Term
of Escrow. The “Termination Date” shall be the earliest of: (a) the close of business on December 19, 2017
as such date may be extended until June 17, 2018 upon written notice to the Escrow Agent by the Company; (b) the date that all
funds held in the Escrow Account are distributed to the Company or to Investors pursuant to Section 3 and the Company has
informed the Escrow Agent in writing to close the Escrow Account; (c) the date all the Securities are sold; (d) the date the Escrow
Agent receives written notice from the Company that it is abandoning the sale of the Securities; and (e) the date the Escrow Agent
receives notice from the Securities and Exchange Commission or any other federal or state regulatory authority that a stop or similar
order has been issued with respect to the Offering Document and has remained in effect for at least 20 days. After the Termination
Date the Company and its agents shall not deposit, and the Escrow Agent shall not accept, any additional amounts representing payments
by prospective Investors.
5. Duty
and Liability of the Escrow Agent. The sole duty of the Escrow Agent shall be to receive Investor Funds and hold them subject
to release, in accordance herewith, and the Escrow Agent shall be under no duty to determine whether the Company or any Dealer
Manager is complying with requirements of this Agreement, the Offering or applicable securities or other laws in tendering the
Investor Funds to the Escrow Agent. No other agreement entered into between the parties, or any of them, shall be considered as
adopted or binding, in whole or in part, upon the Escrow Agent notwithstanding that any such other agreement may be referred to
herein or deposited with the Escrow Agent or the Escrow Agent may have knowledge thereof, including specifically but without limitation
the Offering Document or any other document related to the Offering (including the subscription agreement and exhibits thereto),
and the Escrow Agent’s rights and responsibilities shall be governed solely by this Agreement. The Escrow Agent shall not
be responsible for or be required to enforce any of the terms or conditions of the Offering Document or any other document related
to the Offering (including the subscription agreement and exhibits thereto) or other agreement between the Company and any other
party. The Escrow Agent may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request,
consent, order or other document believed by it to be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall have no duty or liability to verify any such statement, certificate, notice, request, consent, order or
other document, and its sole responsibility shall be to act only as expressly set forth in this Agreement. Concurrent with the
execution of this Agreement, the Company and the Dealer Manager shall each deliver to the Escrow Agent an authorized signers form
in the form of Exhibit C or Exhibit C-1 to this Agreement, as applicable. The Escrow Agent shall be under no obligation
to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified to its satisfaction.
The Escrow Agent may consult counsel of its own choice with respect to any question arising under this Agreement and the Escrow
Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel. The Escrow Agent shall not
be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines
that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of loss. The Escrow Agent is acting
solely as escrow agent hereunder and owes no duties, covenants or obligations, fiduciary or otherwise, to any other person by reason
of this Agreement, except as otherwise stated herein, and no implied duties, covenants or obligations, fiduciary or otherwise,
shall be read into this Agreement against the Escrow Agent. If any disagreement between any of the parties to this Agreement,
or between any of them and any other person, including any Investor, resulting in adverse claims or demands being made in connection
with the matters covered by this Agreement, or if the Escrow Agent is in doubt as to what action it should take hereunder, the
Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder,
so long as such disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable
in any way or to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain
from acting until (a) the rights of all interested parties shall have been fully and finally adjudicated by a court of competent
jurisdiction, or (b) all differences shall have been adjudged and all doubt resolved by agreement among all of the interested persons,
and the Escrow Agent shall have been notified thereof in writing signed by all such persons. Notwithstanding the foregoing, the
Escrow Agent may in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction
and the Escrow Agent is hereby authorized in its sole discretion to comply with and obey any such orders, judgments, decrees or
levies. If any controversy should arise with respect to this Agreement the Escrow Agent shall have the right, at its option, to
institute an interpleader action in any court of competent jurisdiction to determine the rights of the parties. IN NO EVENT SHALL
THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER
(INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES
AND REGARDLESS OF THE FORM OF ACTION. The parties hereto agree that the Escrow Agent has no role in the preparation of the Offering
Documents (including the subscription agreement and exhibits thereto) and makes no representations or warranties with respect to
the information contained therein or omitted therefrom. The Escrow Agent shall have no obligation, duty or liability with respect
to compliance with any federal or state securities, disclosure or tax laws concerning the Offering Documents or any other document
related to the Offering (including the subscription agreement and exhibits thereto) or the issuance, offering or sale of the Securities.
The Escrow Agent shall have no duty or obligation to monitor the application and use of the Investor Funds once transferred to
the Company, that being the sole obligation and responsibility of the Company.
6. Escrow
Agent’s Fee. The Escrow Agent shall be entitled to compensation for its services as stated in the fee schedule attached
hereto as Exhibit D, which compensation shall be paid by the Company. The fee agreed upon for the services rendered hereunder
is intended as full compensation for the Escrow Agent’s services as contemplated by this Agreement; provided, however, that
if (a) the conditions for the disbursement of funds under this Agreement are not fulfilled, (b) the Escrow Agent renders any material
service not contemplated in this Agreement, (c) there is any assignment of interest in the subject matter of this Agreement, (d)
there is any material modification hereof, e) any material controversy arises hereunder, or (f) the Escrow Agent is made a party
to any litigation pertaining to this Agreement or the subject matter hereof, then the Escrow Agent shall be reasonably compensated
for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorney’s fees, occasioned
by any delay, controversy, litigation or event, and the same shall be recoverable from the Company. The Company’s obligations
under this Section 6 shall survive the resignation or removal of the Escrow Agent and the assignment or termination of this
Agreement.
7. Investment
of Investor Funds. The Investor Funds shall be deposited in the Escrow Account in accordance with Section 1 and held
un-invested in the Escrow Account, which shall be non-interest bearing.
8. Notices.
All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have
been duly given (a) on the date of service if served personally on the party to whom notice is to be given, (b) on the day of transmission
if sent by facsimile/email transmission bearing an authorized signature to the facsimile number/email address given below, and
written confirmation of receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal
Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service, or (d) on the
fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed, return receipt requested, to the party as follows:
If to the Company:
Bluerock Residential Growth REIT, Inc.
712 Fifth Avenue, 9th Floor
New York, NY 10019
Attn: Michael L. Konig
With a copy to:
Kaplan Voekler Cunningham & Frank, PLC
1401 E. Cary St.
Richmond, VA 23219
Attn: Richard P. Cunningham, Jr., Esq.
If to the Dealer Manager:
Bluerock Capital Markets, LLC
17900 Sky Part Circle, Suite 260
Irvine, CA 92614
Attn: Paul Dunn
If to the Escrow Agent:
UMB Bank, National Association
Attn: Lara Stevens
Corporate Trust & Escrow Services
1010 Grand Blvd. 4th Floor
Mail Stop: 1020409
Kansas City, Missouri 64106
Telephone: (816) 860-3017
Fax: (816) 860-3029
Email: lara.stevens@umb.com
Any party may change its address for purposes of this Section
by giving the other party written notice of the new address in the manner set forth above.
9. Indemnification
of Escrow Agent. The Company and the Dealer Managers hereby agree to, jointly and severally, indemnify, defend and hold harmless
the Escrow Agent from and against, any and all losses, liabilities, costs, damages and expenses, including, without limitation,
reasonable counsel fees and expenses, which the Escrow Agent may suffer or incur by reason of any action, claim or proceeding brought
against the Escrow Agent arising out of or relating in any way to this Agreement or any transaction to which this Agreement relates
unless such loss, liability, cost, damage or expense is finally determined by a court of competent jurisdiction to have been primarily
caused by the gross negligence or willful misconduct of the Escrow Agent. The terms of this Section shall survive the termination
of this Agreement and the resignation or removal of the Escrow Agent.
10. Successors
and Assigns. Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto. Any corporation or association into which the Escrow Agent may be converted or merged,
or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale,
merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor Escrow Agent under this
Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution
or filing of any instrument or paper or the performance of any further act.
11. Governing
Law; Jurisdiction. This Agreement shall be construed, performed, and enforced in accordance with, and governed by, the internal
laws of the State of New York, without giving effect to the principles of conflicts of laws thereof.
12. Severability.
If any provision of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable,
said provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect.
13. Amendments;
Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties, or conditions
hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation, or warranty
contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as further or continuing waiver
of any such condition, or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement.
The Company and the Dealer Managers agree that any requested waiver, modification or amendment of this Agreement shall be consistent
with the terms of the Offering.
14. Entire
Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the escrow
contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with
regard to such escrow.
15. Section
Headings. The section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
16. Counterparts.
This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same instrument. The parties hereto agree that the
transactions described herein may be conducted and related documents may be stored by electronic means. Copies, telecopies, facsimilies,
electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts
of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.
17. Resignation.
The Escrow Agent may resign upon 30 days’ advance written notice to the parties hereto. If a successor escrow agent is
not appointed by the Company within the 30-day period following such notice, the Escrow Agent may petition any court of competent
jurisdiction to name a successor escrow agent, or may interplead the Investor Funds with such court, whereupon the Escrow Agent’s
duties hereunder shall terminate.
18. References
to Escrow Agent. Other than the Offering Document, any of the other documents related to the Offering (including the subscription
agreement and exhibits thereto) and any amendments thereof or supplements thereto, no printed or other matter in any language (including,
without limitation, notices, reports and promotional material) which mentions the Escrow Agent’s name or the rights, powers,
or duties of the Escrow Agent shall be issued by the Company or the Dealer Manager, or on the Company’s or the Dealer Manager’s
behalf, unless the Escrow Agent shall first have given its specific written consent thereto. Notwithstanding the foregoing, any
amendment or supplement to the Offering Document or any other document related to the Offering (including the subscription agreement
and exhibits thereto) that revises, alters, modifies, changes or adds to the description of the Escrow Agent or its rights, powers
or duties hereunder shall not be issued by the Company or the Dealer Manager, or on the Company’s or the Dealer Manager’s
behalf, unless the Escrow Agent has first given specific written consent thereto.
19. Patriot
Act Compliance. The Company shall provide to the Escrow Agent upon the execution of this Agreement any documentation requested
and any information reasonably requested by the Escrow Agent to comply with the USA Patriot Act of 2001, as amended from time to
time.
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the date and year first set forth above.
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BLUEROCK RESIDENTIAL GROWTH REIT, INC. |
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By: |
/s/ R. Ramin Kamfar |
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Name: |
R. Ramin Kamfar |
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Title: |
President and CEO |
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BLUEROCK CAPITAL MARKETS, LLC |
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By: |
/s/ Paul E. Dunn |
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Name: |
Paul Dunn |
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Title: |
Senior Managing Director |
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UMB BANK, N.A., as Escrow Agent |
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By: |
/s/ Lara L. Stevens |
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Name: |
Lara L. Stevens |
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Title: |
Vice President |
Exhibit A
Copy of Offering Document
Exhibit B
List of Investors
Pursuant to the Escrow Agreement dated as
of December 17, 2015, among Bluerock Capital Markets, LLC, Bluerock Residential Growth REIT, Inc. (the “Company”),
and UMB Bank, National Association (the “Escrow Agent”), the Company or its agent hereby certifies that the
following Investors have paid money for the purchase of shares of the Company’s units (“Securities”),
and the money has been deposited with the Escrow Agent:
Address:
Tax Identification Number:
Amount of Securities subscribed for:
Amount of money paid and deposited with Escrow Agent:
Address:
Tax Identification Number:
Amount of Securities subscribed for:
Amount of money paid and deposited with Escrow Agent:
Exhibit C
Certificate
as to Authorized Signatures
The specimen signatures shown below are
the specimen signatures of the individuals who have been designated as Authorized Representatives of Bluerock Residential Growth
REIT, Inc. and are authorized to initiate and approve transactions of all types for the above-mentioned account on behalf of Bluerock
Residential Growth REIT, Inc.
Name/Title |
Specimen Signature |
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/s/ R. Ramin Kamfar |
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Signature |
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/s/ Michael Konig |
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Signature |
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/s/ Jordan Ruddy |
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Signature |
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Signature |
Exhibit C-1
Certificate
as to Authorized Signatures
The specimen signatures shown below are
the specimen signatures of the individuals who have been designated as Authorized Representatives of Bluerock Capital Markets,
LLC and are authorized to initiate and approve transactions of all types for the above-mentioned account on behalf of Bluerock
Capital Markets, LLC.
Name/Title |
Specimen Signature |
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Paul Dunn |
/s/ Paul E. Dunn |
Senior Managing Director |
Signature |
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Signature |
Exhibit D
ESCROW FEES AND EXPENSES
Acceptance Fee
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Draft/Review document, establish account |
$3,000 |
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Annual Fees
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Annual Escrow Agent |
$3,000 |
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Transactional Fees |
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Outgoing Wire Transfers |
$35 each |
Overnight Delivery/Mailings |
$16.50 each |
Expense Reimbursement* |
6% of Annual Fee |
Acceptance will be payable at the initiation of the escrow.
The annual fees and transactional fees, if any, will be billed quarterly in arrears. Other fees and expenses will be billed as
incurred.
*In addition to the specified fees, all expenses related to
the administration of the Escrow Agreement, such as, but not limited to, travel, postage, shipping, courier, telephone, facsimile,
supplies, legal fees, accounting fees, etc., will be reimbursable.
Fees specified are for the regular, routine services contemplated
by the Escrow Agreement, and any additional or extraordinary services, including, but not limited to disbursements involving a
dispute or arbitration, or administration while a dispute, controversy or adverse claim is in existence, will be charged based
upon time required at the then standard hourly rate.
Exhibit 10.4
SECOND AMENDMENT TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
BLUEROCK RESIDENTIAL HOLDINGS, L.P.
DESIGNATION OF SERIES B
REDEEMABLE PREFERRED UNITS
December 21, 2015
Pursuant to Section 4.02 and Article XI
of the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., as amended by the First
Amendment thereto, (the “Partnership Agreement”), the General Partner hereby amends the Partnership Agreement as follows
in connection with the offer and sale of up to 150,000 units (the “REIT Units”), consisting of 150,000 shares of Series
B Redeemable Preferred Stock (the “Series B Preferred Stock”) of Bluerock Residential Growth REIT, Inc., and warrants
entitling holders to purchase 3,000,000 shares of Common Stock (as defined below), and the issuance to the General Partner
of Series B Preferred Units (as defined below) in exchange for the contribution by the General Partner of the net proceeds from
the issuance and sale of the REIT Units attributable to the Series B Preferred Stock:
1. Designation
and Number. A series of Preferred Units (as defined below), designated the Series B Preferred Units (the “Series B Preferred
Units”), is hereby established. The number of authorized Series B Preferred Units shall be 150,000.
2. Defined
Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Partnership
Agreement. The following defined terms used in this Amendment to the Partnership Agreement shall have the meanings specified below:
“Articles Supplementary” means
the Articles Supplementary of the General Partner filed with the State Department of Assessments and Taxation of the State of Maryland
on December 18, 2015, designating the terms, rights and preferences of the Series B Preferred Stock.
“Base Liquidation Preference”
shall have the meaning provided in Section 6.
“Business Day” shall have the
meaning provided in Section 5(a).
“Common Stock” means shares
of the General Partner’s Class A common stock, par value $0.01 per share.
“Common Unit Economic Balance”
shall have the meaning provided in Section 10(g).
“Default Period” shall have
the meaning provided in Section 5(e).
“Default Rate” shall have the
meaning provided in Section 5(e).
“Distribution Period” hall have
the meaning provided in Section 5(a).
“Distribution Record Date” shall
have the meaning provided in Section 5(a).
“Economic Capital Account Balance”
shall have the meaning provided in Section 10(g).
“Junior Units” shall have the
meaning provided in Section 4.
“Liquidating Gains” shall have
the meaning provided in Section 10(g).
“Loss” shall have the meaning
provided in Section 10(h).
“Net Operating Income” shall
have the meaning provided in Section 10(f).
“Parity Preferred Units” shall
have the meaning provided in Section 4.
“Partnership Agreement” shall
have the meaning provided in the recital above.
“Preferred Units” means all
Partnership Interests designated as preferred units by the General Partner from time to time in accordance with Section 4.02 of
the Partnership Agreement.
“Profit” shall have the meaning
provided in Section 10(h).
“Series B Preferred Return”
shall have the meaning provided in Section 5(a).
“Series B Preferred Distribution Payment
Date” shall have the meaning provided in Section 5(a).
“Series B Preferred Stock” shall
have the meaning provided in the recital above.
“Series B Preferred Units” shall
have the meaning provided in Section 1.
“Stated Value” shall mean $1,000,
subject to appropriate adjustment in relation to any recapitalizations, distributions, unit splits, unit combinations, reclassifications
or other similar events which affect the Series B Preferred Units.
3. Maturity.
The Series B Preferred Units have no stated maturity and will not be subject to any sinking fund or mandatory redemption.
4. Rank.
The Series B Preferred Units will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to all classes or series of Common Units of the Partnership and any class or series of Preferred
Units expressly designated as ranking junior to the Series B Preferred Units as to distribution rights and rights upon liquidation,
dissolution or winding up of the Partnership (together with the Common Units, the “Junior Units”); (b) on a parity
with any class or series of Preferred Units issued by the Partnership expressly designated as ranking on a parity with the Series
B Preferred Units, including the Series A Preferred Units, as to distribution rights and rights upon liquidation, dissolution or
winding up of the Partnership (the “Parity Preferred Units”); and (c) junior to any class or series of Preferred
Units issued by the Partnership expressly designated as ranking senior to the Series B Preferred Units with respect to distribution
rights and rights upon liquidation, dissolution or winding up of the Partnership. The term “Preferred Units” does not
include convertible or exchangeable debt securities of the Partnership, which will rank senior to the Series B Preferred Units
prior to conversion or exchange. The Series B Preferred Units will also rank junior in right or payment to the Partnership’s
existing and future indebtedness.
5. Distributions.
(a) Subject
to the preferential rights of holders of any class or series of Preferred Units of the Partnership expressly designated as ranking
senior to the Series B Preferred Units as to distributions, the holders of Series B Preferred Units shall be entitled to receive,
when, as and if authorized by the General Partner and declared by the Partnership, out of funds of the Partnership legally available
for payment of distributions, cumulative cash distributions at the rate of 6.00% per annum of the Stated Value per unit (equivalent
to a fixed annual amount of $6.00 per unit) (the “Series B Preferred Return”) from the date of original issue of the
Series B Preferred Units (the “Original Issue Date”) (or the date of issue of any Series B Preferred Units issued after
the Original Issue Date) the Partnership shall pay cumulative cash distributions on the Series B Preferred Units at an annual rate
equal to the Series B Preferred Return. Distributions on the Series B Preferred Units shall accrue and be cumulative from (and
including) the date of issuance of any Series B Preferred Units or the end of the most recent Distribution Period for which distributions
have been paid, and shall be payable monthly, in equal amounts, in arrears, on or about the 5th day of each month of
each year (or, if not a business day, the next succeeding business day (each a “Series B Preferred Distribution Payment
Date”) for the period ending on such Series B Preferred Distribution Payment Date, commencing on the first day of each month.
A “Distribution Period” is the respective period commencing on and including the first day of each month and ending
on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution
Period and the Distribution Period during which any Series B Preferred Units shall be redeemed or otherwise acquired by the Partnership).
The term “Business Day” shall mean each day, other than a Saturday or Sunday, which is not a day on which banks in
the State of New York are required to close. The amount of any distribution payable on the Series B Preferred Units for any Distribution
Period will be computed on the basis of twelve 30-day months and a 360-day year. Distributions will be payable to holders of record
of the Series B Preferred Units as they appear on the records of the Partnership at the close of business on the 25th
day of the month preceding the applicable Series B Preferred Distribution Payment Date, (each, a “Distribution Record Date”).
(b) No
distributions on the Series B Preferred Units shall be authorized by the General Partner or declared, paid or set apart for payment
by the Partnership at such time as the terms and provisions of any agreement of the General Partner or the Partnership, including
any agreement relating to the indebtedness of either of them, prohibits such authorization, declaration, payment or setting apart
for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted or prohibited by law.
(c) Notwithstanding
anything to the contrary contained herein, distributions on the Series B Preferred Units will accrue whether or not the restrictions
referred to in Section 5(b) exist, whether or not the Partnership has earnings, whether or not there are funds legally available
for the payment of such distributions and whether or not such distributions are authorized or declared. No interest, or sum of
money in lieu of interest, will be payable in respect of any distribution on the Series B Preferred Units which may be in arrears.
When distributions are not paid in full upon the Series B Preferred Units and any Parity Preferred Units (or a sum sufficient for
such full payment is not so set apart), all distributions declared upon the Series B Preferred Units and any Parity Preferred Units
shall be declared pro rata so that the amount of distributions declared per Series B Preferred Unit and such Parity Preferred Units
shall in all cases bear to each other the same ratio that accumulated distributions per Series B Preferred Unit and such Parity
Preferred Units (which shall not include any accrual in respect of unpaid distributions for prior distributions periods if such
Parity Preferred Units do not have a cumulative distribution) bear to each other.
(d) Except
as provided in the immediately preceding paragraph, unless full cumulative distributions on the Series B Preferred Units have been
or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment
for all past Distribution Periods that have ended, no distributions (other than a distribution in Junior Units or in options, warrants
or rights to subscribe for or purchase any such Junior Units) shall be declared and paid or declared and set apart for payment
nor shall any other distribution be declared and made upon the Junior Units or the Parity Preferred Units, nor shall any Junior
Units or Parity Preferred Units be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or
made available for a sinking fund for the redemption of any such Units) by the Partnership (except by conversion into or exchange
for options, warrants or rights to subscribe for or purchase Junior Units.
(e) Notwithstanding
anything to the contrary set forth above, the Partnership shall not be prohibited from (i) declaring or paying or setting
apart for payment any distribution on Junior Units or Series B Preferred Units, or (ii) redeeming, purchasing or otherwise
acquiring any Junior Units or Parity Preferred Units, in each case, if such declaration, payment, setting apart for payment, redemption,
purchase or other acquisition is necessary in order to maintain the continued qualification of the General Partner as a REIT under
Section 856 of the Code.
(f) For
the avoidance of doubt, in determining whether a distribution (other than upon voluntary or involuntary liquidation) by distribution,
redemption or other acquisition of the Partnership Units is permitted under Delaware law, no effect shall be given to the amounts
that would be needed, if the Partnership were to be dissolved at the time of the distribution, to satisfy the preferential rights
upon distribution of holders of Partnership Units whose preferential rights are superior to those receiving the distribution.
6. Liquidation
Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Partnership, the
holders of Series B Preferred Units are entitled to be paid out of the assets of the Partnership legally available for distribution
to its partners, after payment of or provision for the Partnership’s debts and other liabilities, a liquidation preference
equal to the Stated Value per unit, plus an amount equal to any accrued and unpaid distributions (whether or not authorized or
declared) thereon to and including the date of payment, but without interest, before any distribution of assets is made to holders
of Junior Units. If the assets of the Partnership legally available for distribution to partners are insufficient to pay in full
the liquidation preference on the Series B Preferred Units and the liquidation preference on any Parity Preferred Units, all assets
distributed to the holders of the Series B Preferred Units and any Parity Preferred Units shall be distributed pro rata so that
the amount of assets distributed per Series B Preferred Units and such Parity Preferred Units shall in all cases bear to each other
the same ratio that the liquidation preference per Series B Preferred Unit and such Parity Preferred Units bear to each other.
Written notice of any distribution in connection with any such liquidation, dissolution or winding up of the affairs of the Partnership,
stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date
stated therein, to each record holder of the Series B Preferred Units at the respective addresses of such holders as the same shall
appear on the records of the Partnership. After payment of the full amount of the liquidating distributions to which they are entitled,
the holders of Series B Preferred Units will have no right or claim to any of the remaining assets of the Partnership. The consolidation
or merger of the Partnership with or into another entity, a consolidation or merger of another entity with or into the Partnership,
a statutory exchange by the Partnership or a sale, lease, transfer or conveyance of all or substantially all of the Partnership’s
property or business shall not be deemed to constitute a liquidation, dissolution or winding up of the affairs of the Partnership.
7. Redemption.
In connection with any redemption by the General Partner of any shares of Series B Preferred Stock pursuant to Sections 6, 7 or
8 of the Articles Supplementary, the Partnership shall redeem, on the date of such redemption, an equal number of Series B Preferred
Units held by the General Partner. As consideration for the redemption of such Series B Preferred Units, the Partnership shall
deliver to the General Partner (i) an amount of cash equal to the amount of cash, if any, paid by the General Partner to the holder
of such shares of Series B Preferred Stock in connection with the redemption thereof and (ii) a number of Common Units equal to
the number of shares of Common Stock, if any, issued by the General Partner to the holder of such shares of Series B Preferred
Stock in connection with the redemption thereof.
8. Voting
Rights. Holders of the Series B Preferred Units will not have any voting rights.
9. Conversion.
The Series B Preferred Units are not convertible or exchangeable for any other property or securities, except as provided herein.
10. Allocation
of Profit and Loss.
Article V, Section 5.01 of the Partnership
Agreement is hereby deleted in its entirety and the following new Section 5.01 is inserted in its place:
(a) Profit. After giving effect
to the special allocations set forth in Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f), Profit of the Partnership
for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective Percentage Interests.
(b) Loss.
After giving effect to the special allocations set forth in Section 5.01(c), (d), and (e) hereof, and subject to Section 5.01(f),
Loss of the Partnership for each fiscal year of the Partnership shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(c) Minimum Gain Chargeback.
Notwithstanding any provision to the contrary, (i) any expense of the Partnership that is a “nonrecourse deduction”
within the meaning of Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’ respective Percentage
Interests, (ii) any expense of the Partnership that is a “partner nonrecourse deduction” within the meaning of Regulations
Section 1.704-2(i)(2) shall be allocated to the Partner that bears the “economic risk of loss” of such deduction in
accordance with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in Partnership Minimum Gain within the meaning
of Regulations Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income shall be allocated among the Partners in accordance with Regulations
Section 1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership taxable year, then, subject
to the exceptions set forth in Regulations Section 1.704(2)(g), items of gain and income shall be allocated among the Partners
in accordance with Regulations Section 1.704-2(i)(4) and the ordering rules contained in Regulations Section 1.704-2(j). The manner
in which it is reasonably expected that the deductions attributable to nonrecourse liabilities will be allocated for purposes of
determining a Partner’s share of the nonrecourse liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be in accordance with a Partner’s Percentage Interest.
(d) Qualified
Income Offset. If a Partner receives in any taxable year an adjustment, allocation or distribution described in subparagraphs
(4), (5) or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partner’s
Capital Account that exceeds the sum of such Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain, as determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner shall be allocated specially
for such taxable year (and, if necessary, later taxable years) items of income and gain in an amount and manner sufficient to eliminate
such deficit Capital Account balance as quickly as possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with this Section 5.01(d), to the extent permitted by
Regulations Section 1.704-1(b), items of expense or loss shall be allocated to such Partner in an amount necessary to offset the
income or gain previously allocated to such Partner under this Section 5.01(d).
(e) Capital
Account Deficits. Loss shall not be allocated to a Limited Partner to the extent that such allocation would cause a deficit
in such Partner’s Capital Account (after reduction to reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain. Any Loss in excess of that limitation shall be allocated to the General Partner. After the occurrence of an allocation of
Loss to the General Partner in accordance with this Section 5.01(e), to the extent permitted by Regulations Section 1.704-1(b),
Profit shall be allocated to such Partner in an amount necessary to offset the Loss previously allocated to each Partner under
this Section 5.01(e).
(f) Priority Allocations With Respect
To Preferred Units. After giving effect to the allocations set forth in Sections 5.01(c), (d), and (e) hereof, but before giving
effect to the allocations set forth in Sections 5.01(a) and 5.01(b), Net Operating Income shall be allocated to the General Partner
until the aggregate amount of Net Operating Income allocated to the General Partner under this Section 5.01(f) for the current
and all prior years equals the aggregate amount of the Series A Preferred Return and the Series B Preferred Return paid to the
General Partner for the current and all prior years; provided, however, that the General Partner may, in its discretion,
allocate Net Operating Income based on accrued Series A Preferred Return and Series B Preferred Return with respect to the January
Series A Preferred Distribution Payment Date or Series B Preferred Distribution Payment Date if the General Partner sets the Distribution
Record Date for such Series A Preferred Distribution Payment Date or Series B Preferred Distribution Payment Date on or prior to
December 31 of the previous year. For purposes of this Section 5.01(f), “Net Operating Income” means the excess, if
any, of the Partnership’s gross income over its expenses (but not taking into account depreciation, amortization, or any
other noncash expenses of the Partnership), calculated in accordance with the principles of Section 5.01(h) hereof.
(g) Special
Allocations Regarding LTIP Units. Notwithstanding the provisions of Sections 5.01(a) and (b) hereof, Liquidating Gains shall
first be allocated to the LTIP Unitholders until their Economic Capital Account Balances, to the extent attributable to their ownership
of LTIP Units, are equal to (i) the Common Unit Economic Balance, multiplied by (ii) the number of their LTIP Units.
For this purpose, “Liquidating Gains” means net capital gains realized in connection with the actual or hypothetical
sale of all or substantially all of the assets of the Partnership, including but not limited to net capital gain realized in connection
with an adjustment to the value of Partnership assets under Section 704(b) of the Code. The “Economic Capital Account
Balance” of the LTIP Unit holders will be equal to their respective Capital Account balance to the extent attributable to
their ownership of LTIP Units. Similarly, the “Common Unit Economic Balance” shall mean (i) the Capital Account
balance of the General Partner, plus the amount of the General Partner’s share of any Partner Nonrecourse Debt Minimum Gain
or Partnership Minimum Gain, in either case to the extent attributable to the General Partner’s direct or indirect ownership
of Common Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation
is made under this Section 5.01(g), divided by (ii) the number of Common Units directly or indirectly owned by the General
Partner. Any such allocations shall be made among the LTIP Unitholders in proportion to the amounts required to be allocated to
each under this Section 5.01(g). The parties agree that the intent of this Section 5.01(g) is to make the Capital Account
balance associated with each LTIP Unit be economically equivalent to the Capital Account balance associated with Common Units directly
or indirectly owned by the General Partner (on a per-Unit basis).
(h) Definition
of Profit and Loss. “Profit” and “Loss” and any items of income, gain, expense or loss
referred to in this Agreement shall be determined in accordance with federal income tax accounting principles, as modified by Regulations
Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not include items of income, gain and expense that are specially allocated
pursuant to Sections 5.01(c), 5.01(d), 5.01(e), or 5.01(f) hereof. All allocations of income, Profit, gain, Loss and expense (and
all items contained therein) for federal income tax purposes shall be identical to all allocations of such items set forth in this
Section 5.01, except as otherwise required by Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). With respect to
properties acquired by the Partnership, the General Partner shall have the authority to elect the method to be used by the Partnership
for allocating items of income, gain and expense as required by Section 704(c) of the Code with respect to such properties, and
such election shall be binding on all Partners.
(i) Allocations
Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Interest, the distributive shares
of the various items of Profit and Loss allocable among the Partners during such fiscal year of the Partnership shall be allocated
between the transferor and the transferee Partner either (i) as if the Partnership’s fiscal year had ended on the date
of the transfer, or (ii) based on the number of days of such fiscal year that each was a Partner without regard to the results
of Partnership activities in the respective portions of such fiscal year in which the transferor and the transferee were Partners.
The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate the distributive
shares of the various items of Profit and Loss between the transferor and the transferee Partner.
11. Except
as modified herein, all terms and conditions of the Partnership Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and confirms.
IN WITNESS WHEREOF,
the undersigned has executed this Amendment as of the date first set forth above.
|
GENERAL PARTNER: |
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|
|
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BLUEROCK RESIDENTIAL GROWTH REIT, INC., |
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a Maryland corporation |
|
|
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By: |
/s/ R. Ramin Kamfar |
|
Name: |
R. Ramin Kamfar |
|
Title: |
President and Chief Executive Officer |
[Signature page for Amendment re: Series
B Preferred Units - December 2015]
Exhibit
99.1
![](http://www.sec.gov/Archives/edgar/data/1442626/000114420415072054/tex99-1logo.jpg)
Corporate Headquarters
712 Fifth Avenue
New York, NY 10019
877.826.BLUE (2583)
www.bluerockresidential.com
PRESS RELEASE
For Immediate
Release
Bluerock
Residential Growth REIT (BRG) Files for
Public Offering
of up to $150 million of Units of Series B Redeemable
Preferred Stock and Warrants
to Purchase Class A Common Stock
New York,
NY (December 18, 2015) – Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) (the “Company”) announced
today that it has filed a final prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”)
for a public offering of up to 150,000 Units consisting of 150,000 shares of Series B Redeemable
Preferred Stock and Warrants to purchase 3,000,000 shares of the Company's Class A common stock, for a gross aggregate
offering price of $150 million. The initial Stated Value per share of Series B Redeemable Preferred Stock is $1,000, and the annual
dividend yield on the Series B Redeemable Preferred Stock is 6.0% of the Stated Value.
The offering
is being made pursuant to the Company’s effective shelf registration statement filed with the SEC, which became effective
on December 19, 2014. Copies of the preliminary prospectus supplement and accompanying prospectus may be obtained from the SEC’s website
at www.sec.gov or by contacting: Bluerock Capital Markets, LLC, 17900 Skypark Circle, Suite 260, Irvine, California
92614, Attention: Josh Hoffman, or by email at jhoffman@bluerockre.com.
This press
release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these shares
or any other securities in any state in which such offer, solicitation or sale would be unlawful, prior to registration or qualification
under the securities laws of any state.
About Bluerock
Residential Growth REIT, Inc.
Bluerock Residential
Growth REIT, Inc. (NYSE MKT: BRG) is a real estate investment trust that focuses on acquiring a diversified portfolio of Class
A institutional-quality apartment properties in demographically attractive growth markets to appeal to the renter by choice. The
Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through
improvements to operations and properties. The Company generally invests with strategic regional partners, including some of the
best-regarded private owner-operators in the United States, enabling the Company to operate as a local sharpshooter in each of
its markets while enhancing its off-market sourcing capabilities. The Company’s Class
A common stock is included in the Russell 2000 and Russell 3000 Indexes. The Company has elected to be taxed
as a real estate investment trust (REIT) for U.S. federal income tax purposes.
Forward
Looking Statements
This press
release contains statements that are “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 and other federal securities laws. Forward looking statements are statements that are not historical, including
statements regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future,
and are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “may,” “will,” “should” and “could.” Because such statements
include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward
looking statements. These forward-looking statements are based upon the Company’s present expectations, but these statements
are not guaranteed to occur, including, without limitation, with respect to the completion of the proposed public offering on
the terms described or at all, and the Company's proposed use of net proceeds. Furthermore, the Company disclaims any obligation
to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information,
data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For
further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the preliminary
prospectus supplement and accompanying prospectus filed by the Company with the SEC on November 25, 2015, and the documents incorporated
therein by reference, and in the Company’s annual and periodic reports and other documents filed with the SEC, copies of
which are available on the SEC’s website, www.sec.gov.
Contact
(Media)
Josh Hoffman
(208) 475.2380
jhoffman@bluerockre.com
##
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