Exhibit 10.1

 

EXECUTION VERSION

 

OPERATING AGREEMENT

OF BR-TBR WHETSTONE VENTURE, LLC

 

THIS OPERATING AGREEMENT (this “Agreement”) is made and entered into this 20th
day of May, 2015, by and between TRIBRIDGE CO-INVEST 27, LLC, a Georgia limited
liability company (the “TriBridge Member”) and BR WHETSTONE MEMBER, LLC, a
Delaware limited liability company (the “BR Member”).

 

BACKGROUND INFORMATION:

 

A.          BR-TBR Whetstone Venture, LLC (the “Company”) was formed effective
as of the 10th day of April, 2015 by the filing of its Certificate of Formation
with the Secretary of State of Delaware.

 

B.           The Company is the sole member of BR-TBR Whetstone Owner, LLC, a
Delaware limited liability company (the “Borrower”).

 

C.           The Borrower holds legal title to the Property (as defined below).

 

D.           The TriBridge Member and the BR Member desire to enter into this
Agreement to reflect the current business arrangement among the Members.

 

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

 

ARTICLE 1.
DEFINITIONS

 

In addition to terms defined in the body of this Agreement, the following terms
used in this Operating Agreement shall have the following meanings (unless
otherwise expressly provided herein);

 

“Act” means the Delaware Limited Liability Company Act, as amended from time to
time.

 

“Additional Member.” A member other than an Initial Member, who has acquired a
Membership Interest from the Company.

 

“Adjusted Capital Account Deficit” The deficit balance, if any, in the Member’s
Capital Account as of the end of the relevant taxable year, after giving effect
to the following adjustments: (a) the deficit shall be decreased by the amounts
which the Member is deemed obligated to restore pursuant to Regulation Section
1.704-1(b)(2)(ii)(c); and (b) the deficit shall be increased by the items
described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

 

“Additional Capital Contributions.” With respect to each Member, all additional
Capital Contributions made by such Member in excess of their Initial Capital
Contribution amounts.

 

 

 

 

“Additional Contribution Priority Return.” Repayment of a Member’s Additional
Capital Contributions at a sixteen percent (16%) Internal Rate of Return, except
that if the contribution is made as a Shortfall, then such contribution shall
instead earn a twenty percent (20%) Internal Rate of Return.

 

“Affiliate.” (i) In the case of an individual, any relative of such Person, (ii)
any officer, director, trustee, partner, manager, employee or holder of ten
percent (10%) or more of any class of the voting securities of or equity
interest in such Person; (iii) any corporation, partnership, limited liability
company, trust or other entity controlling, controlled by or under common
control with such Person; or (iv) any officer, director, trustee, partner,
manager, employee or holder of ten percent (10%) or more of the outstanding
voting securities of any corporation, partnership, limited liability company,
trust or other entity controlling, controlled by or under common control with
such Person.

 

“Available Cash.” The cash funds of the Company on hand as of a particular time
after payment of all current operating expenses of the Company as of such time,
less any Reserve(s) approved in accordance with this Agreement in order to
provide for the payment of the Company’s and Borrower’s outstanding and unpaid
obligations or for any other lawful purpose.

 

“Bankruptcy.” The filing by a Person of a voluntary petition or otherwise
initiating proceedings (a) to have the Person adjudicated insolvent; (b) seeking
an order for relief of the Person as debtor under the United States Bankruptcy
Code; (c) seeking any composition, reorganization, readjustment, liquidation,
dissolution, or similar relief under the present or any future federal
bankruptcy laws or any other present or future applicable federal, state, or
other statute or law relative to bankruptcy, insolvency, or other relief for
debtors with respect to the Person; or (d) seeking the appointment of any
trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator
(or other similar official) of the Person, or of all or any substantial part of
its property, or make any general assignment for the benefit of creditors of the
Person.

 

“Bridge Loan.” That certain bridge loan from KeyBank National Association in the
approximate principal amount of $25,147,500, which bridge loan will be used to
finance the acquisition of the Project by the Borrower.

 

“Capital Account.” A capital account maintained in accordance with the rules
contained in Treas. Reg. Section 1.704-1(b)(2) as maintained in accordance with
applicable rules under the Code and as set forth in Treas. Reg. Section
1-704-1(b)(2)(4) as amended from time to time.

 

“Capital Contribution.” The total amount of cash and the Gross Asset Value of
any property contributed or agreed to be contributed to the Company by each
Member pursuant to terms of this Agreement (minus any liabilities that the
Company assumes or takes subject to).

 

“Capital Percentage.” The Capital Percentage of each Member is set forth on
Exhibit A, except as otherwise adjusted under the Agreement.

 

“Capital Proceeds” means (a) the net proceeds of a Capital Transaction after (i)
payment of all expenses associated with the Capital Transaction, (ii) repayment
of all secured and unsecured Company debts (other than an obligation incurred in
order to effect a refinancing which is the applicable Capital Transaction)
required to be paid in connection with such Capital Transaction or that the
Managers determine should be paid in connection with such Capital Transaction,
and (iii) such amounts retained as Reserves and (b) any amounts included in
Reserves derived from Capital Contributions and/or Capital Transactions which
the Managers reasonably determine to distribute.

 

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“Capital Transaction” means (i) a transaction pursuant to which the indebtedness
secured by the Project is financed or refinanced by the Borrower; (ii) a sale,
condemnation, exchange or casualty not followed by reconstruction, or other
disposition, whether by foreclosure or otherwise, of the Project or any part
thereof by the Borrower; or (iii) an insurance recovery or any other transaction
with respect to the Borrower which, in accordance with generally accepted
accounting principles, is considered capital in nature.

 

“Certificate of Formation.” The certificate of formation of the Company filed
with the Delaware Secretary of State as required by the Act, as such certificate
of formation may be amended or amended and restated from time to time.

 

“Code.” The Internal Revenue Code of 1986, as amended from time to time.

 

“Cost-Sharing Agreement.” That certain Agreement Regarding Purchase and Sale
Contract & Acquisition Loan Fees and Deposits by and between Affiliates of the
Members and dated February 20, 2015.

 

“Cost Overrun” shall mean any cost overruns incurred in connection with the
construction of the Parking Improvements.

 

“Debt Service” means, for any period, scheduled principal, interest and other
required payments owing on the Bridge Loan or any other Loan of the Company or
the Borrower.

 

“Debt Service Shortfall” means for any period, the amount by which (i) Debt
Service exceeds (ii) the sum of (a) Available Cash for such period and (b)
amounts released from Reserves (including Reserves under the Bridge Loan or any
other Loan, as hereinafter defined, or any subsequent loan) during such period
for payment of Debt Service.

 

“Depreciation” means, for each fiscal year or other period, an amount equal to
the depreciation, amortization and other cost recovery deductions allowable with
respect to an asset for such fiscal year or other period, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such fiscal year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization and other cost
recovery deductions for such fiscal year or other period bears to such beginning
adjusted tax basis; provided, however, if the adjusted basis for federal income
tax purposes of an asset at the beginning of such fiscal year or other period is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Managers.

 

“Distributions.” The distributions payable (or deemed payable) to a Member.

 

“Economic Interest.” A Member’s or Economic Interest Owner’s share of one or
more of the Company’s Profits, Losses and distributions of the Company’s assets
pursuant to this Operating Agreement and the Act, but shall not include any
right to vote on, consent to or otherwise participate in any decision of the
Members or Managers.

 

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“Economic Interest Owner.” The owner of an Economic Interest who is not a
Member.

 

“Entity.” Any general partnership, limited partnership, limited liability
company, corporation, joint venture, trust, business trust, cooperative or
association or any foreign trust or foreign business organization.

 

“Fiscal Year.” The Company’s fiscal year, which shall be the calendar year.

 

“Foreign Corrupt Practices Act” shall mean the Foreign Corrupt Practices Act of
the United States, 15 U.S.C. Sections 78a, 78m, 78dd-1, 78dd-2, 78dd-3, and
78ff, as amended, if applicable, or any similar law of the jurisdiction where
the Property is located or where the Company or any of its Subsidiaries
transacts business or any other jurisdiction, if applicable.

 

“Gross Asset Value.” With respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:

 

(a)          The initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such asset on the date of
the contribution, as agreed to and set forth in Exhibit A and, otherwise, as
determined by the Managers;

 

(b)          The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g) (taking Code Section 7701(g) into account), as
determined by agreement of the Managers, as of the following times: (1) the
acquisition of an additional Membership Interest by any new or existing Member
in exchange for more than a de minimis Capital Contribution; (2) the
distribution by the Company to a Member of more than a de minimis amount of
property as consideration for a Membership Interest; (3) the grant of a
Membership Interest in the Company (other than a de minimis interest) as
consideration for the provision of services to or for the benefit of the Company
by a new or existing Member acting in a Member capacity or in anticipation of
being a Member; provided, however, that an adjustment pursuant to clauses (1),
(2) and (3) shall be made only if the Managers reasonably determine that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Members in the Company; and (4) the liquidation of the Company
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

 

(c)          The Gross Asset Value of any Company asset distributed to any
Member (taking Code Section 7701(g) into account) shall be adjusted to equal the
gross fair market value of such asset on the date of distribution as reasonably
determined by the Managers; and

 

(d)          The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 732(d), 734(b) or 743(b), but only to the extent that
the adjustment is taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), provided that Gross Asset Values will
not be adjusted under this paragraph (d) to the extent that the Managers
reasonably determine that an adjustment under paragraph (b) above is necessary
or appropriate in connection with a transaction that would otherwise result in
an adjustment under this paragraph (d).

 

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(e)          If the Gross Asset Value of an asset has been determined or
adjusted pursuant to paragraph (a), (b) (c) or (d) hereof, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

 

(f)          In all other cases, Gross Asset Value of any Company asset means
the adjusted basis of such asset for federal income tax purposes.

 

“Initial Capital Contribution.” The initial contribution to the capital of the
Company made by a Member pursuant to this Operating Agreement. The Initial
Capital Contributions of the Initial Members due upon execution of this
Agreement are set forth on Exhibit A.

 

“Initial Members.” Those persons identified on Exhibit A attached hereto and
made a part hereof by this reference, who have executed this Agreement.

 

“Internal Rate of Return” and “IRR.” As of any date, the internal rate of return
on the sum of the applicable Capital Contributions made by a Member (including
giving credit for the 3:1 multiplier on the Member’s Additional Capital
Contributions as may occur under Section 8.04(d)), to such date calculated to be
that discount rate (expressed on a per annum basis) which, when compounded
annually and applied to such Capital Contributions and the corresponding
Distributions with respect thereto, causes the net present value, as of such
date, of such Distributions and Capital Contributions to equal zero. For this
purpose, Capital Contributions and Distributions shall be assumed to have
occurred as of the first of the month nearest the actual date such Capital
Contribution or Distribution is made. The formula used to calculate IRR on
monthly cash flows shall be: (1+ IRR Hurdle) ^ (1/12)-1.

 

“Lender.” Any lender that makes a Bridge Loan or other Loan to Borrower.

 

“Loan.” The Permanent Loan or any subsequent mortgage loan obtained by Borrower
to refinance the Permanent Loan.

 

“Loan Guaranty” shall mean, collectively, any required guaranty or indemnity,
including, without limitation, any recourse-based, project completion or
repayment guaranties (each, a “Recourse Guaranty”) and any “bad boy”
non-recourse carveout guaranty and/or any environmental indemnification
agreement (each a “Non-Recourse Carveout Guaranty”) in connection with the
Bridge Loan or any other Loan.

 

“Managers.” The BR Member and the TriBridge Member, or any other Person(s) that
succeed such Persons in their capacities as Managers.

 

“Member.” Each of the parties who executes a counterpart of this Operating
Agreement as a Member and each of the parties who may hereafter become Members.
To the extent a Manager has purchased a Membership Interest in the Company, he
will have all the rights of a Member with respect to such Membership Interest,
and the term “Member” as used herein shall include a Manager to the extent he
has purchased such Membership Interest in the Company. If a Person is a Member
immediately prior to the purchase or other acquisition by such Person of an
Economic Interest, such Person shall have all the rights of a Member with
respect to such purchased or otherwise acquired Membership Interest or Economic
Interest, as the case may be. The initial Capital Percentages associated with
the Membership Interests of the Members are set forth on Exhibit A attached
hereto and incorporated herein by reference.

 

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“Membership Interest.” A Member’s entire interest in the Company including such
Member’s Economic Interest and the right to participate in the management of the
business and affairs of the Company, including the right to vote on, consent to,
or otherwise participate in any decision or action of or by the Members granted
pursuant to this Operating Agreement or the Act.

 

“Minimum Gain.” The same meaning set forth in Regulation Section 1.704-2(d).
Minimum Gain shall be computed separately for each Member in a manner consistent
with the Regulations under Code Section 704(b).

 

“Net Cash Flow” means, for any period, the total annual cash gross receipts
during such period derived from the Project and any and all sources, other than
Capital Contributions or as a result of a Capital Transaction during such
period, together with any amounts included in Reserves (other than Reserve
amounts derived from Capital Contributions or Capital Transactions) or working
capital from prior periods which the Managers reasonably determine to
distribute, less the (i) Debt Service, (ii) the Operating Expenses paid during
such period, and (iii) any increases or replacements in Reserves (other than
from Capital Contributions or Net Cash from a Capital Transaction) during such
period. For purposes hereof, Net Cash Flow determined at the Borrower level
shall be deemed to be the Net Cash Flow for the Company, without any
duplication.

 

“Nonrecourse Deductions.” The same meaning set forth in Regulation Section
1.704-2(b)(1). The amount of Nonrecourse Deductions for a taxable year of the
Company equals the net increase, if any, in the amount of Minimum Gain during
that taxable year, determined according to the provisions of Regulation Section
1.704-2(c).

 

“Operating Agreement.” This Operating Agreement as originally executed and as
amended from time to time, also referred to herein as the “Agreement,” from time
to time.

 

“Operating Expenses” for the purposes herein, means the cash expenditures made
by the Borrower in connection with owning and operating the Project or otherwise
conducting its business; provided, that, notwithstanding the foregoing,
Operating Expenses shall not include any cash or capital expenditures expended
out of established and accumulated cash Reserves of the Company or Borrower used
for the particular purpose for which such Reserves were established or not
otherwise allocated for specific purposes.

 

“Parking Improvements” shall mean the additional improvements to be constructed
by the Borrower with respect to the existing parking garage at the Project for
the construction of an additional level to the Project’s existing parking deck;
which addition is expected to increase the parking stalls in the parking deck by
approximately 65 stalls and which construction is expected to commence in late
2015 or early 2016 and take approximately 3 months to complete once commenced.
The anticipated costs for the construction of the Parking Improvements are the
subject of the Total Project Budget.

 

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“Permanent Loan” shall mean the Loan to refinance the Bridge Loan.

 

“Person.” Any individual or Entity, and the heirs, executors, administrators,
legal representatives, successors, and assigns of such “Person” where the
context so permits.

 

“Principals” mean Steve Broome, Lee Walker and Robert West.

 

“Profits or Losses” means, for each Fiscal Year or other period, an amount equal
to the Company’s taxable loss or income, respectively, for such Fiscal Year or
period, determined in accordance with Section 703(a) of the Code (and for this
purpose, all items of income, gain, loss, or reduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:

 

(a)          Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses shall be
added to such taxable income or loss;

 

(b)          Any expenditures of the Company described in Section 705(a)(2)(B)
of the Code or treated as Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses shall be subtracted from such taxable income or
loss;

 

(c)          In the event the Gross Asset Value of any Company asset is adjusted
pursuant to paragraph (b) or (c) of the definition thereof, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Profits or Losses;

 

(d)          Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;

 

(e)          In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for the Fiscal Year or other period;

 

(f)          To the extent an adjustment to the tax basis of any Company asset
pursuant to Code Section 734(b) is required pursuant to Treasury Regulation
§1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than a complete liquidation of
Member’s interest in the Company, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Profits or
Losses; and

 

(g)          Any items which are specially allocated pursuant to Article 10
hereof shall not be taken into account in computing Profits or Losses but shall
be determined by applying rules analogous to those set forth in paragraphs (a)
through (d) of this definition.

 

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If the profit or loss for such Fiscal Year or other period, as adjusted in the
manner provided herein, is a positive amount, such amount shall be the Profits
for such Fiscal Year or other period; and if negative, such amount shall be the
Losses for such Fiscal Year or other period.

 

“Project” An existing 204-unit rental apartment complex located upon the
Property and commonly known as Whetstone Apartments.

 

“Project Stabilization” means the Project is at least 90% leased up by third
party tenants.

 

“Property.” That certain property located in Durham, North Carolina which is
more particularly described in Exhibit B attached hereto and incorporated herein
upon which the Project is located.

 

“REIT” shall mean a real estate investment trust as defined in Code Section 856.

 

“REIT Member” shall mean any Member, if such Member is a REIT or a direct or
indirect subsidiary of a REIT.

 

“REIT Requirements” shall mean the requirements for qualifying as a REIT under
the Code and Regulations.

 

“Reserves.” With respect to any fiscal period, funds set aside or amounts
allocated to reserves for the Project during such period which shall be
maintained in amounts deemed sufficient by the TriBridge Member for working
capital, capital expenditures, repairs, replacements and anticipated
expenditures for paying taxes, insurance, Debt Service or other costs or
expenses incident to the ownership or operation of the Company’s business;
provided that, BR Member shall have the right to reasonably approve the amount
of any such Reserves.

 

“Total Project Budget.” The Parking Improvement construction budget annexed
hereto as Exhibit D, as the same may be amended and updated from time to time by
the mutual consent of all of the Members and, to the extent required, approved
by the lender under the Bridge Loan.

 

“Transferring Member.” A Member or Economic Interest Owner who sells, assigns,
pledges, hypothecates or otherwise transfers for consideration or gratuitously
all or any portion of its Membership Interest or Economic Interest.

 

“Treasury Regulations” or “Regulations.” The Federal Income Tax Regulations,
including any temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

“TriBridge Change of Control” shall be deemed to have occurred if any two or
more of the three Principals should cease to be actively involved as principals
in the day to day operations and management of TriBridge Residential, LLC,
TriBridge Investments, LLC, TriBridge Residential Property Management Advisors
and the TriBridge Member.

 

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ARTICLE 2.

FORMATION OF COMPANY

 

2.01       Formation. On April 10, 2015, the Company was formed as a Delaware
limited liability company by executing and delivering the Certificate of
Formation to the Secretary of State of Delaware in accordance with the
provisions of the Act.

 

2.02       Name. The name of the Company is BR-TBR Whetstone Venture, LLC. The
Company may do business under that name and under any other name or names upon
which the Members select. If the Company does business under a name other than
that set forth in its Certificate of Formation, then the Company shall file a
trade name certificate as required by law.

 

2.03       Principal Place of Business. The principal place of business of the
Company is 1575 Northside Drive, Building 100, Suite 200, Atlanta, GA 30318. The
Company may locate its places of business at any other place or places as the
Managers may from time to time deem advisable.

 

2.04       Registered Office and Registered Agent. The Company’s initial
registered office and the name of its initial registered agent shall be as set
forth in the Certificate of Formation. The registered office and registered
agent may be changed from time to time by filing the address of the new
registered office and/or the name of the new registered agent with the Secretary
of State of Delaware pursuant to the Act and the applicable rules promulgated
thereunder.

 

2.05       Term. The term of the Company commenced on the date the Certificate
of Formation was filed with the Secretary of State of Delaware and shall
continue thereafter in perpetuity unless earlier dissolved in accordance with
the provisions of this Operating Agreement or the Act.

 

ARTICLE 3.

BUSINESS OF COMPANY

 

3.01       Permitted Businesses. The business of the Company shall be:

 

(a)          To directly, or indirectly through Borrower, acquire, develop,
sell, exchange, construct, improve, subdivide, mortgage, lease, maintain,
transfer, operate, own as an investment and/or otherwise engage in all general
business activities related or incidental to the ownership and renovation of the
Project, either directly or indirectly through ownership of one or more other
Entities engaged in the foregoing; and

 

(b)          To engage in all activities necessary, customary, convenient, or
incident to any of the foregoing.

 

ARTICLE 4.

NAMES AND ADDRESSES OF INITIAL MEMBERS

 

The names and addresses of the Initial Members are set forth on Exhibit A
attached hereto and by this reference made a part hereof.

 

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ARTICLE 5.          

RIGHTS AND DUTIES OF MANAGERS

 

5.01       Management. The business and affairs of the Company shall be managed
by its Managers. Except for situations in which the approval of the Members is
expressly required by this Operating Agreement or by nonwaivable provisions of
applicable law or as otherwise set forth in this Agreement, the Managers shall
have full and complete authority, power and discretion to manage and control the
business, affairs and properties of the Company, to make all decisions regarding
those matters and to perform any and all other acts or activities customary or
incident to the management of the Company’s business. In addition, so long as
the Management Company is an Affiliate of the TriBridge Member or the TriBridge
Member has not been removed as a Manager under Section 5.09, the Managers hereby
delegate to the TriBridge Member the authority to implement any Operating Budget
approved in accordance with the terms of this Operating Agreement.

 

5.02       Number, Tenure and Qualifications. The Company shall have two (2)
Managers, and the BR Member and the TriBridge Member shall serve as the initial
Managers. Subject to the foregoing, each Manager shall hold office until its
successor shall have been elected and qualified or until his earlier death,
resignation, or removal. Subject to the foregoing and Section 5.10, the Managers
shall be elected by the affirmative vote of all Members.

 

5.03       Certain Powers of Managers. Subject to the terms of Sections 5.04 and
7.07 below, either Manager shall have power and authority, on behalf of the
Company or in the Company’s capacity as a member of Borrower, as applicable:

 

(a)          To cause Borrower to acquire the Property and to renovate the
Project, including undertaking the Parking Improvements.

 

(b)          To invest any Company funds (by way of example but not limitation)
in time deposits, short-term governmental obligations, or other investments,
provided the funds in any such investment vehicle are insured by the Federal
Deposit Insurance Corporation (or its successor or replacement).

 

(c)          To execute all instruments and documents, including, without
limitation, checks; drafts; notes and other negotiable instruments; purchase and
sale agreements, mortgages or deeds of trust; security agreements; financing
statements; deeds, contracts, settlement statements, agreements, affidavits and
any other documents providing for the acquisition, mortgage or disposition of
the Company’s or Borrower’s property; assignments; bills of sale; leases;
partnership agreements; operating agreements of other limited liability
companies; and any other instruments or documents necessary, in the opinion of
the Managers, to the business of the Company.

 

(d)          To purchase liability and other insurance to protect employees,
officers, property and business.

 

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(e)          Subject to Section 5.13, to employ accountants, engineers,
architects, surveyors, attorneys, managing agents, leasing agents, and other
experts to perform services for the Company and to compensate them from Company
funds.

 

(f)          To enter into any and all other agreements on behalf of the
Company, with any other Person for any purpose, in such forms as the Managers
may approve.

 

(g)          To create offices and designate officers, who need not be Members.
Any such persons appointed to be officers of the Company may or may not be
employees of the Company, any Member, or any Affiliate thereof. Any officers so
appointed shall have such authority and perform such duties as the Managers may,
from time to time, expressly delegate to them in writing and the officers so
appointed shall serve at the pleasure of the Managers.

 

(h)          Subject to Section 6.05(a), to the extent permissible in connection
with the Bridge Loan or any subsequent Loan, to borrow money for the Company
from banks, other lending institutions, Managers, Members, or Affiliates of the
Managers or Members on such terms as the Managers deem appropriate, and in
connection therewith, to hypothecate, encumber and grant security interests in
the assets of the Company to secure repayment of the borrowed sums. No debt
shall be contracted or liability incurred by or on behalf of the Company except
by the Managers or by agents or employees of the Company expressly authorized by
the Managers to contract such debts or incur such liability by the Managers.

 

(i)          To cause Borrower to subdivide the Property or condominiumize the
Property, or portions thereof.

 

(j)          To do and perform all other acts as may be necessary or appropriate
to the conduct of the Company’s business, to the extent such acts are not
reserved unto the Members pursuant to Section 7.07 of this Agreement.

 

Unless authorized to do so by this Operating Agreement or by the Managers, no
attorney-in-fact, employee or other agent of the Company shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable pecuniary for any purpose. No Member shall have any power or authority to
bind the Company unless the Member has been authorized by the Managers or
Members to act as an agent of the Company in accordance with the previous
sentence.

 

5.04       Management Committee.

 

(a)          The Managers and Members hereby establish a management committee
(the “Management Committee”) for the Company for the purpose of the Managers
considering and approving actions pursuant to Section 5.03. The Management
Committee shall consist of four (4) individuals appointed to act as
“representatives” of the Manager and Member that appointed him or her (the
“Representatives”) as follows: (i) BR Member shall be entitled to designate two
(2) Representatives to represent the BR Member as Manager and Member; and (ii)
TriBridge Member shall be entitled to designate two (2) Representatives to
represent the TriBridge Member as Manager and Member. The initial members of the
Management Committee are set forth on Exhibit A.

 

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(b)          Each Representative as a member of the Management Committee,
subject to this Section 5.04(b), shall hold office until death, resignation or
removal at the pleasure of the Managers and Member that appointed him or her. If
a vacancy occurs on the Management Committee, the Manager with the right to
appoint and remove such vacating Representative shall appoint his or her
successor. A Manager shall lose its right to have its Representatives vote on
any item as of the date on which such Manager ceases to be a Manager, including
by means of removal under Section 5.09, or as otherwise provided in this
Agreement. If the BR Member transfers all or a portion of its membership
interest to a transferee permitted by Section 12.02(a), such transferee shall
automatically, and without any further action or authorization by any Manager or
Member, succeed to the rights and powers of the BR Member under this Section
5.04 as may be agreed to between the BR Member which is transferring the
membership interest, on the one hand, and the permitted transferee to which the
membership interest is being transferred, on the other hand, including the
shared or unilateral right to appoint the Representatives that the BR Member was
theretofore entitled to appoint pursuant to this Section 5.04. If the TriBridge
Member transfers all or a portion of its membership interest to a transferee
permitted pursuant to Section 12.02(b), such permitted transferee shall
automatically, and without any further action or authorization by any Manager or
Member, succeed to the rights and powers of the TriBridge Member under this
Section 5.04 as may be agreed to between the TriBridge Member which is
transferring the membership interest, on the one hand, and the permitted
transferee to which the membership interest is being transferred, on the other
hand, including the shared or unilateral right to appoint the Representatives
that the TriBridge Member was theretofore entitled to appoint pursuant to this
Section 5.04.

 

(c)          The Management Committee shall meet at least once every quarter
(unless waived by mutual agreement of the Managers) and as otherwise required.
The only Representatives required to constitute a quorum for a meeting of the
Management Committee shall be one (1) Representative appointed by BR Member and
one (1) Representative appointed by TriBridge Member; provided, however, if any
Representative fails to attend any meeting and as a result thereof the Company
is unable to obtain a quorum, and thereafter such Representative fails to agree
to reschedule and attend any such meeting within 15 days after receipt of
written notice that the Company was unable to obtain a quorum (the “Absent
Representative”), then a quorum can be obtained without the attendance of a
Representative of the Member who selected the Absent Representative.

 

(d)          Each of the two (2) Representatives appointed by BR Member shall be
entitled to cast two (2) votes on any matter that comes before the Management
Committee and each of the Representatives appointed by TriBridge Member shall be
entitled to cast one (1) vote on any matter that comes before the Management
Committee. Approval by the Management Committee of any matter (other than
matters which are Major Decisions under Section 7.07 or which may be made
unilaterally by a Member, but only as expressly set forth in this Agreement)
shall require the affirmative vote of at least a majority of the votes of the
Representatives then in office voting at a duly held meeting of the Management
Committee.

 

(e)          Any meeting of the Management Committee may be held by conference
telephone call, video conference or through similar communications equipment by
means of which all persons participating in the meeting can communicate with
each other. Participation in a telephonic and/or video conference meeting held
pursuant to this Section 5.04(e) shall constitute presence in person at such
meeting.

 

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(f)          Any action required or permitted to be taken at a meeting of the
Management Committee may be taken without a meeting, without prior notice and
without a vote if a consent or consents in writing, setting forth the action so
taken, shall be signed by Representatives having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Representatives entitled to vote thereon were present and
voted. All consents shall be filed with the minutes of the proceedings of the
Management Committee.

 

5.05       Limitation of Liability. No Manager has guaranteed nor shall have any
obligation with respect to the return of a Member’s Capital Contributions or
profits from the operation of the Company. Each Manager shall be entitled to
rely on information, opinions, reports or statements, including but not limited
to financial statements or other financial data prepared or presented in
accordance with the provisions of the Act. No Manager shall be liable to the
Company or to any Member for good faith negligence or for honest mistakes of
judgment or losses or liabilities due to such good faith mistakes or due to the
negligence, dishonesty, unlawful acts or bad faith of any employee, broker or
other agent, accountant, attorney, other professional or person employed by the
Company provided that such person was selected, engaged, retained and supervised
by such Manager with reasonable care. No Manager shall have any liability to the
Company or to any Member for any loss suffered by the Company which arises out
of any action or inaction of such Manager if, prior thereto, such Manager, in
good faith, determined that such course of conduct was in, and not opposed to,
the best interests of the Company and such course of conduct did not constitute
willful misconduct or a material breach of this Agreement or gross negligence.
It is the express intention of the parties that the Managers’ standard of care
be limited to acting in a manner reasonably believed by them in good faith to be
in accordance with their authority under this Agreement, that the Managers’
obligations be limited to those expressly provided in this Agreement, and that
any duties of loyalty or care and any and all other fiduciary duties arising at
law or in equity, if any, are hereby strictly limited to accord with the
provisions of this Section 5.05 and to the performance by the Managers of their
express obligations under this Agreement, and any broader duty is hereby waived
by the other Members.

 

5.06       Managers Have No Exclusive Duty to Company. A Manager shall not be
required to manage the Company as his or its sole and exclusive function and he
or it (or any Manager) may have other business interests and may engage in other
activities in addition to those relating to the Company. Neither the Company nor
any Member shall have any right, by virtue of this Operating Agreement, to share
or participate in such other investments or activities of a Manager or to the
income or proceeds derived therefrom. A Manager shall incur no liability to the
Company or to any of the Members as a result of engaging in any other business
or venture.

 

5.07       Bank Accounts. The Management Committee may from time to time open
bank accounts, brokerage accounts and other accounts in the name of the Company,
and the Managers shall be the sole signatories thereon, unless the Management
Committee determines otherwise.

 

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5.08       Resignation. Any Manager of the Company may resign at any time by
giving written notice to the Members of the Company. The resignation of any
Manager shall take effect upon receipt of notice thereof or at such later time
as shall be specified in such notice; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
The resignation of a Manager shall also constitute the resignation of such
Manager’s Representatives on the Management Committee. The resignation of a
Manager who is also a Member shall not affect the Manager’s rights as a Member
and shall not constitute a withdrawal of a Member.

 

5.09       Removal of Managers. At a meeting called expressly for that purpose,
a Manager may be removed, by the affirmative vote of all Members (excluding the
Membership Interests of the BR Member or its permitted transferee in the event
the BR Member or its permitted transferee is the subject of such removal vote
and excluding the Membership Interests of the TriBridge Member or its permitted
transferee in the event the TriBridge Member or its permitted transferee is the
subject of such removal vote), only in the event of any of the following (each a
“Removal Event”): (a) a material breach of this Agreement on the part of such
Manager or its affiliated Member, which breach shall continue uncured for thirty
(30) calendar days after the giving of written notice thereof to such Manager
specifying the nature of such breach; (b) a Default Action by a Member (or an
Affiliate of such Member) affiliated with such Manager; or (c) gross negligence
or willful misconduct on the part of such Manager or any of its Affiliates
(including any Affiliated property manager); provided, however, with regard to
such acts by Affiliates, only to the extent such acts result in a material
adverse effect on the Project, Borrower or the Company. The removal of a Manager
shall also constitute the removal of such Manager’s Representatives on the
Management Committee. The removal of a Manager as a result of a Removal Event
who is also a Member shall not affect the Manager’s rights as a Member and shall
not constitute a withdrawal of a Member. In any instance where: (i) any Member
is removed as Manager (the “Removed Manager”), the other Member shall cause the
Member and/or any Affiliate affiliated with the Removed Manager that executed a
guaranty to be released in full from any Loan Guaranty; provided, however, that,
if the other Member is unable to obtain such release despite its commercially
reasonable efforts to do so, then the other Member (and certain Affiliates
reasonably acceptable to the Member Affiliated with the Removed Manager) shall
be obligated to jointly and severally indemnify and hold harmless the Member
and/or any Affiliate affiliated with the Removed Manager (each, a “Removed
Manager Indemnified Party”) pursuant to this Section 5.09 (and without prejudice
to any other indemnification right under Section 15) for actual losses and
expenses (including reasonable attorney’s fees and costs) incurred by a Removed
Manager Indemnified Party arising after the date of removal of the Manager, and
resulting from actions taken by the other Member after such date, pursuant to an
indemnification agreement in form and substance reasonably satisfactory to the
Member affiliated with the Removed Manager, except to the extent the amount
sought to be recovered would never be collectible from, or claimed against, the
Company but for the fraud, willful misconduct, gross negligence or willful
misappropriation of funds by the Removed Manager Indemnified Party; provided,
further, the other Member shall not be obligated to indemnify the Member
affiliated with the Removed Manager with respect to any action which the other
Member has expressly approved of or consented to in writing within two (2)
business days following the receipt of written notice from the Member affiliated
with the Removed Manager that it intends to take such action. If the other
Member has not affirmatively responded to the Member affiliated with the Removed
Manager by the end of such two (2) business day period, the other Member shall
be deemed to have expressly disagreed with the action. Unless removed from the
Loan Guaranty, the Removed Manager and its Affiliates shall remain protected
under any applicable Backstop Agreement.

 

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5.10       Vacancies. Any vacancy occurring for any reason in the number of
Managers of the Company may be filled by the affirmative vote of all Members
(excluding the Membership Interests of BR Member or its permitted transferee to
the extent the vacancy results from BR Member or its permitted transferee being
removed as Manager and excluding the Membership Interests of TriBridge Member or
its permitted transferee to the extent the vacancy results from TriBridge Member
or its permitted transferee being removed as Manager). A Manager elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office
and shall hold office until the expiration of such term and until his successor
shall be elected and shall qualify or until his earlier death, resignation or
removal.

 

5.11       Salaries. The salaries and other compensation of the Managers shall
be fixed from time to time by an affirmative vote of all the Members, and no
Manager shall be prevented from receiving such salary by reason of the fact that
he is also a Member of the Company.

 

5.12       Parking Garage Construction and Project Management Fee.

 

5.12.1     Project Manager. Subject to the Members agreeing upon whether to
proceed with the construction of the Parking Deck Improvements in accordance
with Section 7.07(s), the Company shall engage, or shall cause Borrower to
engage, TBR Whetstone Project Management, LLC (“Project Manager”), a North
Carolina limited liability company and an Affiliate of the TriBridge Member, to
manage the construction of the Parking Improvements (the “Parking Deck
Construction Project”). Project Manager’s duties shall involve engaging and
overseeing a general contractor for the Parking Deck Construction Project,
coordinating and monitoring the work of any other professionals involved in the
Parking Deck Construction Project, administering construction contracts for such
project, and causing the general contractor to complete the Parking Deck
Construction Project in accordance with final plans and specifications approved
and provided by Borrower and the Total Project Budget (for avoidance of doubt,
the Project Manager shall have no responsibility for Cost Overruns, which shall
be governed in accordance with Section 8.04(b) of this Agreement).

 

5.12.2     Fee. As compensation for the services to be rendered by Project
Manager pursuant to the terms of this Section 5.12, the Company shall pay to
Project Manager, or cause Borrower to pay to Project Manager, a project
management fee (the “Project Management Fee”) equal to five percent (5%) of
budgeted hard costs as set forth in the Total Project Budget for the Parking
Deck Construction Project as approved by Borrower. The Project Management Fee
shall be paid to Project Manager by wire transfer or other immediately available
funds as follows: One-half (1/2) of the Project Management Fee shall be paid
upon the date of this Agreement and the remaining one-half (1/2) shall be paid
upon the issuance of a certificate of substantial completion (or its reasonable
equivalent) by either the project architect or general contractor for the
Parking Deck Construction Project.

 

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5.12.3     General Contractor. Project Manager shall be responsible for
arranging with an arms-length, third-party general contractor a guaranteed
maximum price contract for construction of the Parking Improvements, which
shall, prior to the execution thereof by Borrower, be reviewed and approved by
the BR Member in its sole discretion (the “GMP Contract”); provided, that, the
pricing terms set forth in the GMP Contract must in all events comply with the
Total Project Budget. The BR Member acknowledges and agrees that the Project
Manager anticipates using Barnhill Construction as the general contractor, and
as such, the contract shall be arms-length with a GC Fee reasonably approved by
the BR Member.

 

5.12.4     Construction Information. During the construction process, Project
Manager will provide to Borrower, Company and BR Member copies of all
construction related information, including but not limited to construction
draws top sheets with budget-versus-actual information to Borrower, Company and
BR Member, plus full physical access to the Property and all documentation in
connection therewith.

 

5.12.5     Project Manager Contribution. Without limitation, and for no
additional charge or credit to the TriBridge Member’s Capital Account, the
TriBridge Member shall cause Project Manager to contribute to the Borrower all
of (a) the design and construction plans for the Parking Improvements (at
Project Manager’s actual cost, free and clear of all liabilities) and (b) all
other tangible and intangible rights associated with the Parking Improvements
and (c) all other items appurtenant to the construction of the Parking
Improvements (collectively, the “Project Manager’s Rights”).

 

5.12.6     Warranties. The TriBridge Member shall cause the Project Manager to
use commercially reasonable efforts to cause the general contractor to warrant
to the Borrower and the Company the construction of the Parking Improvements for
twelve (12) months after the Certificate of Occupancy is received for the
Parking Improvements such that the general contractor must promptly correct and
repair, at its sole cost and expense, all defects discovered during such period.
The Company may assign such warranty and any subcontractor warranties to any
third party who purchases the Project from the Borrower during such period.

 

5.12.7     Joinder. Project Manager has joined in the execution of this
Agreement for purposes of evidencing its consent and agreement to abide by the
provisions of this Section 5.12.

 

5.13       Acquisition Fee. At the Closing of the acquisition of the Property,
the TriBridge Member or its designee shall earn an acquisition fee equal to
$360,000.

 

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5.14       Operating Budget. The Borrower shall operate the Project under a
business plan and an annual operating budget (each, an “Operating Budget”)
commencing for the 12-month period beginning as of the date of closing of the
acquisition of the Property. A copy of the initial agreed upon Operating Budget
is annexed hereto as Exhibit C. The TriBridge Member shall deliver to BR Member
for their joint approval the subsequent proposed Operating Budget, for each
subsequent calendar year, beginning with calendar year 2016, by November 1st of
the preceding calendar year. After the Operating Budget has been approved, and
for so long as the TriBridge Member’s Affiliate is serving as the property
manager of the Project under the Management Agreement, the TriBridge Member
shall administratively implement it on behalf of the Borrower and may incur the
expenditures and obligations therein provided. No material changes or departures
from any item in an approved Operating Budget shall be made or permitted without
the prior written approval of BR Member. If an Operating Budget has not been
approved by January 1st of any subsequent year, the Borrower shall continue to
operate the Project under the Operating Budget for the previous year, with such
adjustments as may be necessary to reflect deletion of non-recurring expense
items set forth on the previous Operating Budget and positive or negative
adjustments in insurance costs, taxes, utility costs and Debt Service payments
(collectively “Uncontrollables”); provided, further, if the Members cannot agree
on an Operating Budget for the following year, the Management Committee shall
establish the Operating Budget for such year taking into account whether any
increases to the Operating Budget (other than with respect to Uncontrollables)
are reasonably required under the circumstances, and are consistent with the
prior use of the Project. The TriBridge Member shall promptly advise and inform
the BR Member of any transaction, notice, event or proposal directly relating to
the management and operation of the Project, other assets of the Company or
Borrower or the Company or the Borrower which does or is likely to significantly
affect, either adversely or favorably, the Project, other assets of the Company
or Borrower or is expected to cause a material deviation from the Operating
Budget.

 

5.15       Management Company. The Managers shall cause the Borrower to enter
into a management agreement, in a form approved by the TriBridge Member and BR
Member (the “Management Agreement”) with TriBridge Residential Property
Management Advisors, LLC (“Management Company”) to manage, lease-up and operate
the Property pursuant to the Management Agreement. The Management Agreement
shall require that Management Company operate the Project in a first class
manner, and in accordance with the standards and conditions for the type, style,
class, use and location of the Property, consistent with the Project’s Operating
Budget and providing for payment of a management fee in an amount not to exceed
the greater of (i) $5,000 per month and (ii) three percent (3%) of annual gross
cash revenues, payable monthly. Subject to the following sentence, the
Management Agreement shall be renewed annually, subject to the approval of the
Company. The BR Member shall act on behalf of the Company in regard to
enforcement of rights under the Management Agreement and with respect to
determining whether to renew the Management Agreement annually; provided,
however, so long as the Management Company has met lease-up, income, and
controllable expenses as projected (expressly excluding expenses of a capital
nature resulting from casualty or condemnation or relating to force majeure
events) under the Operating Budget for 2015, the Management Agreement will be
automatically renewed for 2016 (at all times subject to “cause” termination
rights).

 

5.16       Operation in Accordance with REOC/REIT Requirements.

 

5.16.1     The Members acknowledge that BR Member or one or more of its
Affiliates (an “BR Affiliate”) intends to qualify as a “real estate operating
company” or “venture capital operating company” within the meaning of U.S.
Department of Labor Regulation 29 C.F.R. §2510.3-101 (a “REOC”), and agree that
the Company and its Subsidiaries shall be operated in a manner that will enable
BR Member and such BR Affiliate to so qualify; provided, however, in no event
shall the foregoing require any loss of voting or decision rights to the
TriBridge Member or result in any adverse effect on the economic rights of the
TriBridge Member. Except as disclosed to BR Member, TriBridge Member (a) shall
not fund any Capital Contribution with the ‘plan assets’ of any ‘employee
benefit plan’ within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, or any ‘plan’ as defined by Section
4975 of the Internal Revenue Code of 1986, as amended.

 

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5.16.2     Except for the Property, neither the Company nor its Subsidiaries
shall hold any investment, incur any indebtedness or otherwise take any action
that would cause any Member of the Company (or any Person holding an indirect
interest in the Company through an entity or series of entities treated as
partnerships for U.S. federal income tax purposes) to realize any “unrelated
business taxable income” as such term is defined in Code Sections 511 through
514, unless specifically agreed to by the Members in writing. No Manager or
Member shall be liable for any income or other taxes, damages, costs or expenses
incurred by the Company or any Member by reason of the recognition by the
Company of UBTI, unless caused by its own willful misconduct or gross negligence
and not related to the Property.

 

5.16.3     The Company (and any direct or indirect Subsidiary of the Company)
may not engage in any activities or hold any assets that would constitute or
result in the occurrence of a REIT Prohibited Transaction as defined herein.
Notwithstanding anything to the contrary contained in this Agreement, during the
time a REIT Member is a Member of the Company, neither the Company, any direct
or indirect Subsidiary of the Company, nor any Member of the Company shall take
or refrain from taking any action which, or the effect of which, would
constitute or result in the occurrence of a REIT Prohibited Transaction by the
Company or any direct or indirect Subsidiary thereof, including without limiting
the generality of the foregoing, but in amplification thereof:

 

5.16.3.1Entering into any lease, license, concession or other agreement or
permitting any sublease, license, concession or other agreement that provides
for rent or other payment based in whole or in part on the income or profits of
any person, excluding for this purpose a lease that provides for rent based in
whole or in part on a fixed percentage or percentages of gross receipts or gross
sales of any person without reduction for any costs of the lessee (and in the
case of a sublease, without reduction for any sublessor costs);

 

5.16.3.2Leasing, as a lessor, personal property, excluding for this purpose a
lease of personal property that is entered into in connection with a lease of
real property where the rent attributable to the personal property is less than
15% of the total rent provided for under the lease;

 

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5.16.3.3Acquiring or holding any debt investments, excluding for these purposes
“debt” solely between wholly-owned Subsidiaries of the Company, unless (I) the
amount of interest income received or accrued by the Company under such loan
does not, directly or indirectly, depend in whole or in part on the income or
profits of any person, and (II) the debt is fully secured by mortgages on real
property or on interests in real property. Notwithstanding anything to the
contrary herein, in the case of debt issued to the Company by a Subsidiary which
is treated as a “taxable REIT subsidiary” of the REIT Member, such debt shall be
secured by a mortgage or similar security interest, or by a pledge of the equity
ownership of a subsidiary of such taxable REIT subsidiary;

 

5.16.3.4Acquiring or holding, directly or indirectly, more than 10% of the
outstanding securities of any one issuer (by vote or value) other than an entity
which either (i) is taxable as a partnership or a disregarded entity for United
States federal income tax purposes, (ii) has properly elected to be a taxable
REIT subsidiary of the REIT Member by jointly filing with REIT, IRS Form 8875,
or (iii) has properly elected to be a real estate investment trust for U.S.
federal income tax purposes;

 

5.16.3.5Entering into any agreement where the Company receives amounts, directly
or indirectly, for rendering services to the tenants of any property that is
owned, directly or indirectly, by the Company other than (i) amounts received
for services that are customarily furnished or rendered in connection with the
rental of real property of a similar class in the geographic areas in which the
Property is located where such services are either provided by (A) an
Independent Contractor (as defined in Section 856(d)(3) of the Code) who is
adequately compensated for such services and from which the Company or REIT
Member do not, directly or indirectly, derive revenue or (B) a taxable REIT
subsidiary of REIT Member who is adequately compensated for such services or
(ii) amounts received for services that are customarily furnished or rendered in
connection with the rental of space for occupancy only (as opposed to being
rendered primarily for the convenience of the Property’s tenants);

 

5.16.3.6Entering into any agreement where a material amount of income received
or accrued by the Company under such agreement, directly or indirectly, does not
qualify as either (i) “rents from real property” or (ii) “interest on
obligations secured by mortgages on real property or on interests in real
property,” in each case as such terms are defined in Section 856(c) of the Code;

 

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5.16.3.7Holding cash of the Company available for operations or distribution in
any manner other than a traditional bank checking or savings account;

 

5.16.3.8Selling or disposing of any property, subsidiary or other asset of the
Company prior to (i) the completion of a two (2) year holding period with such
period to begin on the date the Company acquires a direct or indirect interest
in such property and begins to hold such property, subsidiary or asset for the
production of rental income, and (ii) the satisfaction of any other requirements
under Section 857 of the Code necessary for the avoidance of a prohibited
transaction tax on the REIT; provided, that such restriction shall not affect,
restrict or be deemed to modify (i) either Member’s right to exercise its
buy-sell rights under Section 12.06; or (ii) BR Member’s rights pursuant to
Section 6.05(b); or

 

5.16.3.9Failing to make current cash distributions to REIT Member each year in
an amount which does not at least equal the taxable income allocable to REIT
Member for such year.

 

5.16.4Notwithstanding the foregoing provisions of Section 5.16.3, the Company
may enter into a REIT Prohibited Transaction if it receives the prior written
approval of the REIT Member specifically acknowledging that the REIT Member is
approving a REIT Prohibited Transaction pursuant to this Section 5.16.4. For
purposes of this Section 5.16.4, “REIT Prohibited Transactions” shall mean any
of the actions specifically set forth in Sections 5.16.3 (1) through (9).

 

5.17       FCPA. In compliance with the Foreign Corrupt Practices Act, each
Member will not, and will ensure that its officers, directors, employees,
shareholders, members, agents and Affiliates, acting on its behalf or on the
behalf of the Company or any of its Subsidiaries or Affiliates do not, for a
corrupt purpose, offer, directly or indirectly, promise to pay, pay, promise to
give, give or authorize the paying or giving of anything of value to any
official representative or employee of any government agency or instrumentality,
any political party or officer thereof or any candidate for office in any
jurisdiction, except for any facilitating or expediting payments to government
officials, political parties or political party officials the purpose of which
is to expedite or secure the performance of a routine governmental action by
such government officials or political parties or party officials. The term
“routine governmental action” for purposes of this provision shall mean an
action which is ordinarily and commonly performed by the applicable government
official in (i) obtaining permits, licenses, or other such official documents
which such Person is otherwise legally entitled to; (ii) processing governmental
papers; (iii) providing police protection, mail pick-up and delivery or
scheduling inspections associated with contract performance or inspections
related to transit of goods across country; (iv) providing phone service, power
and water supply, loading and unloading of cargo, or protecting perishable
products or commodities from deterioration; or (v) actions of a similar nature.
The term routine governmental action does not include any decision by a
government official whether, or on what terms, to award new business to or to
continue business with a particular party, or any action taken by an official
involved in the decision making process to encourage a decision to award new
business to or continue business with a particular party. Each Member agrees to
notify immediately the other Member of any request that such Member or any of
its officers, directors, employees, shareholders, members, agents or Affiliates,
acting on its behalf, receives to take any action that may constitute a
violation of the Foreign Corrupt Practices Act.

 

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ARTICLE 6.

RIGHTS AND OBLIGATIONS OF MEMBERS

 

6.01       Limitation on Liability. Each Members’ liability shall be limited as
set forth in this Operating Agreement, the Act and other applicable law.

 

6.02       No Liability for Company Obligations. No Member will have any
personal liability for any debts or losses of the Company beyond its respective
Capital Contributions, except as provided by law or otherwise provided by
separate agreement among the Members.

 

6.03       List of Members. Upon written request of any Member, the Company
shall provide a list showing the names, addresses and Membership Interest and
Economic Interest of all Members and any other information required by Section
18-305 of the Act and maintained pursuant to Section 11.02.

 

6.04       Dissenters’ Rights. No Member shall have appraisal or dissenters’
rights pursuant to Section 18-210 of the Act.

 

6.05       Refinancing Right With Respect to Bridge Loan; Special Rights to Call
for Capital to Avoid or Cure Imminent Loan Defaults; Backstop Agreement.

 

(a)          The Bridge Loan will be guaranteed by Bluerock Residential Growth
REIT, Inc., an Affiliate of the BR Member. The guarantor will be required to
meet and maintain certain financial covenants during the terms of the Bridge
Loan and failure to do so may result in a default under the Bridge Loan which,
for the avoidance of doubt, would be a 100% liability event on the part of the
guarantor pursuant to the Backstop Agreement (as defined below). Notwithstanding
the Major Decisions provisions of this Agreement, the BR Member shall have the
right to cause the Borrower to refinance the Bridge Loan on commercially
reasonable terms as approved by the TriBridge Member, which approval shall not
be unreasonably withheld, conditioned or delayed (as refinanced, the “Permanent
Loan”). Any subsequent refinancing of the Permanent Loan shall be as otherwise
governed under this Agreement.

 

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(b)          Notwithstanding anything contained in this Agreement to the
contrary, at any time and from time to time, either Member may unilaterally make
a call for Additional Capital Contributions to fund on a timely basis any Debt
Service Shortfall or any other payment that if unpaid would constitute a payment
default under the Bridge Loan or any subsequent Loan, and if the other Member
fails or refuses to timely contribute its proportional share of such Additional
Capital Contribution such that a resulting default would occur thereunder, then
(i) the provisions of Section 8.04 shall apply with regard to each Member’s
obligation to fund its share of the capital call and the consequences of failing
to do so; provided however, (ii) to the extent that the capital call is to (A)
pay for a balloon payment due in connection with a default thereunder or upon
maturity of the Bridge Loan or any subsequent Loan or (B) fund principal paydown
in connection with a restructuring or to fund “gap equity” that may be required
in order for the Borrower to qualify for or close a new Loan to pay off the
Permanent Loan or any subsequent Loan if it were to fall in default [i.e., the
Equity Gap funding obligations to refinance the Bridge Loan with the Permanent
Loan are governed by Section 8.04(e) but do not apply with respect to any
restructurings of the Permanent Loan or subsequent refinancing of it], then with
respect to any matter under subsection (ii), only the provisions of subsections
(iii) and (iv) below shall apply (not Section 8.04).

 

(iii)         If subsection (b)(ii) has been triggered (i.e., a payment in the
nature of principal is required to prevent or cure a default under the Bridge
Loan or any subsequent Loan), neither party shall be obligated under this
Agreement to fund its share of the called capital. Rather, the parties shall
instead undertake good faith negotiations to arrive at a commercially reasonable
solution but if they are unable to do so within 14 days, then, except as
provided in subsection (iv) below, either party may engage the Lender in
negotiations on behalf of the Borrower to address the default. If despite good
faith efforts no commercially reasonable and mutually satisfactory resolution
has been reached within 30 days, then either party may cause the Borrower to
sell the Project (in which case they shall jointly control the sale process) or
exercise the buy-sell contained in Section 12.06 below (notwithstanding the
“lockout” period therein).

 

(iv)         Notwithstanding the provisions of subsection (iii) above, if the
reason for the default was due to the actions solely of one Member or its
Affiliates (and the other Member and its Affiliates are not otherwise in default
under this Agreement or responsible for the default under any Loan Guaranty),
then subsection (iii) above shall not apply and the other Member shall have the
right, notwithstanding any other provision in this Agreement, to (1) control the
negotiations with the Lender to restructure and/or modify the Bridge Loan or any
subsequent Loan on commercially reasonable terms, (2) obtain commercially
reasonable supplemental loans secured by assets of the Borrower to cure the
default, (3) seek to refinance the Bridge Loan or any subsequent Loan on
commercially reasonable terms, (4) cause the Borrower to sell the Project (and
it shall control the sale process), or (5) exercise the buy-sell contained in
Section 12.06 below (notwithstanding the “lockout” period therein).

 

(c)          Upon execution of this Agreement, the Members will execute a
backstop agreement (the “Backstop Agreement”), pursuant to which the Members and
certain of their Affiliated credit parties (which credit party shall be, in the
case of the TriBridge Member, TriBridge Residential, LLC) will be
proportionately responsible for any Non-Recourse Carve-Out Guaranty liability,
unless either such Member or its Affiliates caused the liability to be incurred
as a result of its action or omission, in which case such party shall bear 100%
of the liability.

 

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6.06       Default. If any Member or its Affiliate commits any Default Action
(as defined below), then, provided the other Member and/or its Affiliate is not
in material breach or default hereunder and has not otherwise committed a
Default Action, in addition to any other legal or equitable remedy available to
the non-breaching Member (or pursuant to the terms of this Agreement, including
under Section 5.09), the non-breaching Member shall be entitled to recover its
actual damages, including reasonable attorney’s fees (but specifically excluding
special, consequential, punitive or exemplary damages) sustained by the
non-breaching Member as a result of such Default Action. The following actions
are collectively referred to as “Default Actions”: (1) Bankruptcy of a Member,
(2) willful misconduct or gross negligence, (3) willful misappropriation of
Company or Borrower funds, (4) the material breach or violation of this
Agreement (but expressly excluding a Member’s failure to make an Additional
Capital Contribution), (5) the transfer of a Membership Interest (or, in the
case of the TriBridge Member, the occurrence of a TriBridge Change of Control)
in violation of this Agreement; (6) any action or omission that, to the extent
caused solely by a Member’s (or its Affiliate’s) actions or omissions, results
in Lender asserting liability under a Non-Recourse Carveout Guaranty (but
expressly excluding therefrom, any liquidity based Non-Recourse Carveout
Guaranty provision), (7) withdrawal of a Member in violation of this Agreement;
(8) solely with respect to the TriBridge Member, the Bankruptcy of any Affiliate
of the TriBridge Member that triggers a default under the terms of the Bridge
Loan or any subsequent Loan or any Loan Guaranty and (9) solely with respect to
the BR Member, the Bankruptcy of Bluerock Residential Growth REIT, Inc.
following the date that it first acquires a direct or indirect common interest
in the Company or the Project; provided, that the non-defaulting Member shall
provide notice to the defaulting Member of the occurrence of any Default Action
under clauses (1), (4), (5), (6), (7), (8) or (9) and the defaulting Member
shall have thirty (30) days from the receipt of such notice to cure such Default
Action; provided, however, that if more than thirty (30) days is reasonably
required to cure such Default Action and if the defaulting Member has commenced
to cure within the original thirty (30) day cure period and diligently continues
to cure such default, then the defaulting Member shall receive such additional
time as is reasonably necessary to cure the Default Action (not to exceed an
additional thirty (30) days). For any Default Action under clause (3) caused by
an employee of the Member or its Affiliate, no Default Action shall be deemed to
exist if the Member (a) terminates the employment of said employee; and (b)
restores the misappropriated funds immediately.

 

ARTICLE 7.

MEETINGS OF MEMBERS

 

7.01       Meetings. Meetings of the Members, for any purpose or purposes, may
be called by the Managers or any Member.

 

7.02       Place of Meetings. The Persons calling any meeting may designate any
place in Atlanta, Georgia as the place of meeting for any meeting of the
Members. If no designation is made, the place of meeting shall be the principal
executive office of the Company in the State of Georgia.

 

7.03       Notice of Meetings. Written notice stating the place, day and hour of
the meeting and the purpose or purposes for which the meeting is called shall be
delivered not less than two (2) nor more than five (5) days before the date of
the meeting, either personally or by mail, by or at the direction of the
Managers or Person calling the meeting, to each Member entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered two (2) calendar
days after being deposited in the United States mail, addressed to the Member at
its address as it appears on the books of the Company, with postage thereon
prepaid. Notice provided in accordance with this Section shall be effective
notwithstanding anything in the Act to the contrary.

 

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7.04       Meeting of all Members. If all of the Members shall meet at any time
and place, either within or outside of the State of Georgia, and consent to the
holding of a meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting any lawful action may be taken.

 

7.05       Record Date. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members or any adjournment thereof, or
Members entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which such distribution is made, as the case
may be, shall be the record date for such determination of Members unless the
Managers shall otherwise specify another record date. When a determination of
Members entitled to vote at any meeting of Members has been made as provided in
this Section, such determination shall apply to any adjournment thereof.

 

7.06       Quorum. All of the Members, represented in person or by proxy, shall
constitute a quorum at any meeting of Members.

 

7.07       Manner of Acting. The affirmative vote of the TriBridge Member and
the BR Member shall be required to approve these actions (each, a “Major
Decision”):

 

(a)          do any act in contravention of, or amend, the Company’s Certificate
of Formation or this Operating Agreement or the Borrower’s organizational
documents;

 

(b)          do any act not specifically authorized herein which would make it
impossible or impractical to own the Project or to otherwise carry on the
ordinary business of the Company or the Borrower;

 

(c)          possess any property of the Company or assign the rights of the
Company in any specific property of the Company for other than a Company
purpose;

 

(d)          change or reorganize the Company or Borrower into any other legal
form or to cause any merger of the Company or Borrower with another entity;

 

(e)          commence, or respond to, or settle any litigation involving the
Company, the Borrower or the Property in amounts in excess of $25,000;

 

(f)           filing or initiating a Company or Borrower Bankruptcy;

 

(g)          permit or cause the Company or the Borrower to purchase or invest
in real property other than its interest in the Project;

 

(h)          make loans using funds of the Company or Borrower;

 

(i)           except as expressly provided in Section 12.02, the admission of
additional Members to the Company or to Borrower;

 

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(j)           enter into any transaction with a Member and/or any Affiliate
thereof (except as expressly authorized herein);

 

(k)          incur any indebtedness for borrowed money or grant a security
interest in the Company’s or Borrower’s property, except for the refinancing of
the Bridge Loan into a Permanent Loan, which shall be governed by Section
6.05(a);

 

(l)           subject to Sections 6.05(a) and (b), any sale, refinance or other
capital transaction with regard to the Project;

 

(m)         in the event of a fire, other casualty or partial condemnation of
the Property, a determination whether to construct or reconstruct improvements
located in the Property, where such construction or reconstruction would cost in
excess of One Hundred Thousand Dollars ($100,000) and is not required under the
terms and provisions of any lease, mortgage or deed of trust affecting the
damaged or condemned portion of the Property in question;

 

(n)          take any action which would cause a default under the Bridge Loan
or any subsequent Loan or that would otherwise reasonably be expected to expose
the TriBridge Member, BR Member or any Affiliate thereof to liability under any
Loan Guaranty;

 

(o)          subject to Section 5.14, approve any Operating Budget or make any
modifications thereto;

 

(p)          subject to Section 5.14, changes to the Company’s or Borrower’s
business plan, leasing strategy, rental rates (subject to approved use of daily
pricing software), etc.;

 

(q)          hiring or retaining any property manager (other than the hiring of
TriBridge Residential Property Management Advisors, LLC who has been approved by
the Members), disposition broker, insurance agent, or other vendors of the
Company or Borrower; although the form and terms of the Management Agreement
remain subject to the approval of the Members. For the avoidance of doubt, the
retention or termination of TriBridge Residential Property Management Advisors,
LLC as property manager may, subject to certain restrictions on terminating the
Management Agreement as set forth in Section 5.14, be decided solely by BR
Member. In the event TriBridge Residential Property Management Advisors, LLC is
properly terminated or not renewed by the Borrower under the Management
Agreement, the replacement property manager may be selected by BR Member in its
sole discretion;

 

(r)           enter into any one or more agreements or contractual commitments,
on behalf of the Company or the Borrower obligating the Company or Borrower, as
applicable, to make expenditures exceeding, in the aggregate for any one year,
$30,000 (except as authorization to do so is otherwise exercised under other
provisions of this Agreement);

 

(s)          decision as to whether to construct the Parking Improvements; and

 

(t)           modifications to the Total Project Budget.

 

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7.08       Proxies. A Member may vote in person or by proxy executed in writing
by the Member or by a duly authorized attorney-in-fact. Such written proxy shall
be delivered to the Company.

 

7.09       Action by Members Without a Meeting. Action required or permitted to
be taken by the Members at a meeting may be taken without a meeting if the
action is evidenced by one or more written consents describing the action taken,
signed by all of the Members. Action take under this Section is effective when
the Members required to approve such action have signed the consent, unless the
consent specifies a different effective date. The record date for determining
Members entitled to take action without a meeting shall be the date the first
Member signs a written consent.

 

7.10       Waiver of Notice. Pursuant to Section 18-302(c) of the Act, when any
notice is required to be given to any Member, a waiver thereof in writing signed
by the person entitled to such notice, whether before, at, or after the time
stated therein, shall be equivalent to the giving of such notice.

 

7.11       Meeting by Telephone; Action by Consent. Pursuant to Section
18-302(d) of the Act, Members may also meet by conference telephone call if all
Members can hear one another on such call and the requisite notice is given or
waived.

 

ARTICLE 8.

CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS

 

8.01       Members’ Initial Capital Contributions. Contemporaneously with the
execution hereof, each Member has contributed such amount as is set forth in
Exhibit “A” hereto as its share of the Initial Capital Contribution. The amount
of the Initial Capital Contribution is anticipated to include sufficient capital
to complete the Parking Improvements based on the Total Project Budget.
Notwithstanding the foregoing, the Members agree that all costs related to the
pursuit of the Project under the Cost-Sharing Agreement previously incurred by a
Member or its Affiliate either (i) shall be deemed an Initial Capital
Contribution of such Member and reduce the amount otherwise to be contributed by
it to the Company or (ii) shall be refunded to such Member.

 

8.02       Additional Contributions. Except as set forth in this Article 8, no
Member shall be required to make any Capital Contributions to the Company.

 

8.03       Loans to Company. To the extent approved by the Managers and Members
pursuant to Section 7.07, any Member may make a secured or unsecured loan to the
Company or the Borrower.

 

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8.04       Additional Capital Contributions.

 

(a)          Additional Capital Contributions for Operating or Other Cash
Deficits. Except as otherwise provided in Section 6.05(b)(i), in the event the
Borrower is unable to pay its cash obligations as and when they become due, and
thus has or is expected to have an actual cash flow deficit (other than as a
result of a Cost Overrun or for a shortfall as discussed in Section
6.05(b)(ii)), and such funds cannot be obtained pursuant to Section 8.03 above,
the TriBridge Member as Manager shall in the first instance determine the amount
of required funds (but if it does not timely act, the BR Member as Manager may
do so), shall notify the Management Committee of same and shall recommend that
the Management Committee make a capital call for such funds pursuant to this
Section 8.04(a). Upon the receipt of the recommendation, the Management
Committee shall evaluate such recommendation in good faith and shall determine
whether such capital call is reasonably required under the circumstances, is
required for funding operating deficits and/or debt service shortfalls and is
consistent with the prior use and operation of the Project. In the event that
the Management Committee determines that it is appropriate to make such capital
call based on the standards set forth in the preceding sentence (or upon any
instance in which either Member has a right to call for capital pursuant to
Section 6.05(b), the Management Committee (or in the case of 6.05(b), the Member
making the call for an Additional Capital Contribution) shall so notify the
Members, and the TriBridge Member and the BR Member shall have thirty (30) days
to make Capital Contributions of its pro-rata share (i.e. based upon its Capital
Percentage) of the necessary funds (an “Additional Capital Contribution”). All
such Additional Capital Contributions shall be entitled to receive an Additional
Contribution Priority Return.

 

(b)          Additional Capital Contributions for Cost Overruns. In the event
the Borrower incurs a Cost Overrun with respect to the construction of the
Parking Improvements, and such Cost Overrun cannot be resolved pursuant to
Section 8.03 above, the TriBridge Member as Manager shall in the first instance
determine the amount of required funds necessary to satisfy the Cost Overrun
with respect to the Parking Improvements (but if it does not timely act, the BR
Member as Manager may do so), shall notify the Management Committee of same and
shall recommend that the Management Committee make a capital call for such funds
pursuant to this Section 8.04(b). Upon the receipt of the recommendation with
respect to any such Cost Overrun, the Management Committee shall evaluate such
recommendation in good faith and shall determine whether such capital call is
reasonably required under the circumstances. In the event that the Management
Committee elects to make such capital call, it shall so notify the Members, and
the TriBridge Member and the BR Member shall have thirty (30) days to make an
Additional Capital Contribution equal to its pro-rata share (i.e. based upon its
Capital Percentage) of the necessary funds. All such Additional Capital
Contributions shall be entitled to receive an Additional Contribution Priority
Return.

 

(c)          Failure to Make Additional Capital Contributions. In the event a
Member fails to make all of its Additional Capital Contribution (“Defaulting
Member”) as required in Section 6.05(b)(i), Section 8.04(a), Section 8.04 (b) or
Section 8.04(e) on the due date (the “Contribution Default Date”), the following
shall apply:

 

(i)          the Defaulting Member’s voting rights and rights to participate in
the management of the business of the Company (including but not limited to as a
Manager, for Management Committee participation and Major Decisions) shall
automatically be suspended; and

 

(ii)         the non-Defaulting Member(s) may (but shall not be obligated to)
contribute the unpaid portion of the Defaulting Member’s Additional Capital
Contribution (a “Shortfall”). If there is more than one non-Defaulting Member
desiring to make the Additional Capital Contribution on behalf of the Defaulting
Member to cover the Shortfall, then such non-Defaulting Members shall be
entitled to contribute the Defaulting Member’s Additional Capital Contribution
in such amounts as they may agree among each other, or, in the absence of such
agreement, in proportion to their respective Capital Percentages.

 

27

 

 

(d)          In addition to any other rights available under this Agreement, if,
as provided in Section 8.04(c)(ii) above, a non-Defaulting Member contributes a
Shortfall amount on behalf of a Defaulting Member solely in connection with a
Cost Overrun, then the amount so contributed shall be deemed an Additional
Capital Contribution pursuant to this Section 8.04(d), in which case the
non-Defaulting Member shall be credited with Additional Capital Contributions at
a 3:1 ratio for each such dollar of Shortfall/Additional Capital Contribution so
made on behalf of the Defaulting Member. For example, if the TriBridge Member
fails to fund its share of a Cost Overrun the BR Member shall have the right but
not the obligation to fund such amount to the Company as an Additional Capital
Contribution and, to the extent that it does, shall be credited at a 3:1 ratio
(meaning, for every $100,000 of Additional Capital Contribution made by the BR
Member for that purpose, the BR Member would be credited with having made
$300,000 of Additional Capital Contributions). For the sake of clarity, this
Section 8.04(d) shall not apply to Additional Capital Contributions required
pursuant to Sections 6.05(b)(i) or 8.04(a).

 

(e)          Notwithstanding the foregoing, if in connection with any
refinancing of the Bridge Loan, the amount of the Permanent Loan which has been
provided to refinance the Bridge Loan is insufficient to fully payoff the Bridge
Loan and/or the equity required to qualify for and close a Permanent Loan that
would be sufficient to fully payoff the Bridge Loan (any such deficiency, an
“Equity Gap”), then to the extent the aggregate Capital Contributions of the
TriBridge Member are equal to or have exceeded 1,007,640.61 to date, or to the
extent that the TriBridge Member’s share of the Equity Gap would result in the
TBR Member contributing (i.e. in addition to its Initial Capital Contribution),
in the aggregate, capital equal to or in excess of $1,007,640.61 (the “TriBridge
Cap”), then the BR Member shall be responsible for funding one hundred percent
(100%) of any such Equity Gap in excess of the TriBridge Cap (a “BR Equity Gap
Contribution”). In such instance, the respective Capital Percentages of the
TriBridge Member and BR Member shall be adjusted ratably so that the TriBridge
Member is diluted on a proportionate basis, by the amount by which BR Member
funds any BR Equity Gap Contribution. Amounts funded by either Member in
connection with any Equity Gap, including, without limitation, any BR Equity Gap
Contributions, shall not be treated as an Additional Capital Contribution and
shall not be repaid as an Additional Contribution Priority Return, but rather
shall be treated as part of the Member’s Initial Capital Contribution but
considered contributed as of the date actually made (for avoidance of doubt, IRR
shall not be calculated as if such amounts were contributed on the same date
that earlier Initial Capital Contributions were made). For example, if the
TriBridge Member’s aggregate Capital Contributions at the time of the refinance
are $800,000.00, and the TriBridge Member’s share of the Equity Gap is
$300,000.00, then the TBR Member shall be required to fund $200,000.000, which
amount shall be considered part of the TriBridge Member’s Initial Capital
Contribution, and the BR Member shall be required to fund $100,000 as a BR
Equity Gap Contribution, which amount shall be treated as a part of the BR
Member’s Initial Capital Contribution, and the Capital Percentage of the
TriBridge Member shall be reduced (and the Capital Percentage of the BR Member
shall be increased) by an amount equal to a fraction, the numerator of which is
$100,000.00 and the denominator of which is all Capital Contributions made by
the Members. For the avoidance of doubt, this Section 8.04(e) only applies to
Equity Gaps with respect to refinancing of the Bridge Loan, not with respect to
any shortfall in the event of a refinancing of the Permanent Loan.

 

28

 

 

(f)          The remedies provided in Sections 6.05(b) and 8.04 with respect to
any Member’s failure to make any Additional Capital Contribution shall be the
sole and exclusive remedies of the Non-Defaulting Member for such failure.

 

8.05       Withdrawal or Reduction of Members’ Contributions to Capital.

 

(a)          A Member shall not receive out of the Company’s property any part
of such Member’s Capital Contributions until all liabilities of the Company,
except liabilities to Members on account of their Capital Contributions, have
been paid or there remains property of the Company sufficient to pay them.

 

(b)          A Member, irrespective of the nature of such Member’s Capital
Contribution, has only the right to demand and receive cash in return for such
Capital Contribution.

 

8.06       Maintenance of Capital Accounts. The Company shall establish and
maintain a Capital Account for each Member and Economic Interest Owner. Each
Member’s Capital Account shall be increased by (a) the amount of any Capital
Contribution contributed by the Member to the Company, (b) the fair market value
of any property, as determined by the Company and the Member by arm’s length
agreement at the time of contribution (net of liabilities assumed by the Company
or subject to which the Company takes such property within the meaning of
Section 752 of the Code), and (c) the Member’s share of Profits and of any
separately allocated items of income or gain (including any gain or income
allocated to the Member to reflect the difference between the book value and tax
basis of assets contributed by such Member). Each Member’s Capital Account shall
be decreased by (a) the amount of any money distributed to the Member by the
Company (excluding payments received by a Member from the Company as repayment
of a loan by the Company to the Member), (b) the fair market value of any
property distributed to the Member (net of liabilities of the Company assumed by
the Member or subject to which the Member takes such property within the meaning
of Section 752 of the Code), and (c) the Member’s share of Losses and of any
separately allocated items of deduction or loss (including any loss or deduction
allocated to the Member to reflect the difference between the book value and tax
basis of assets contributed by the Member).

 

ARTICLE 9.

DISTRIBUTIONS

 

9.01       Distributions. Distributions of Net Cash Flow and Capital Proceeds
shall be distributed and applied by the Managers in the following order and
priority:

 

(a)          First, pari passu to each Member based on its Additional
Contribution Priority Return until paid in full;

 

(b)          Next, to the Members, pari passu, in accordance with their Capital
Percentages, until such time as the Members have received an Internal Rate of
Return of nine percent (9%) on all Initial Capital Contributions (including in
connection with any Equity Gap funding as provided under Section 8.04(e));

 

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(c)          Next, (i) 81.08% to the Members, pari passu, in accordance with
their Capital Percentages, and (ii) 18.92% to the TriBridge Member, until such
time as the BR Member has received an Internal Rate of Return of fifteen percent
(15%);

 

(d)          Next, (i) 70.27%, to the Members, pari passu, in accordance with
their Capital Percentages, and (ii) 29.73% to the TriBridge Member, until such
time as the BR Member has received an Internal Rate of Return of eighteen
percent (18%); and

 

(e)          Thereafter, 54.05%, to the Members, pari passu, in accordance with
their Capital Percentages, and (ii) 45.95% to the TriBridge Member.

 

9.02       Limitation Upon Distributions. No distribution shall be made to
Members if prohibited by Section 18-607 of the Act.

 

9.03       Interest On and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution, except as otherwise specifically provided for herein.

 

ARTICLE 10.

ALLOCATIONS OF NET PROFITS AND NET LOSSES

 

10.01     Allocation of Profits and Losses. Profits and Losses for any Fiscal
Year or other period of the Company will be allocated to the Members as follows:

 

(a)          Allocations of Profits and Losses for Capital Account Purposes.
After giving effect to the special allocations set forth in Sections 10.02 and
10.03, Profits and Losses of the Company for any Fiscal Year or portion thereof
shall be allocated among the Capital Accounts of the Members in such a manner
that would cause, to the extent possible, the Capital Accounts of the Members as
of the end of a Fiscal Year or portion thereof, after adjustment for all
contributions and distributions during the year, and after adjustment for the
special allocations set forth in Sections 10.02 and 10.03 (including the
allocations of such Members’ shares of the “partnership minimum gain” and
“partner nonrecourse debt minimum gain” (as such terms are used in Regulation
Section 1.704-2) not otherwise required to be taken into account during such
period), to equal the aggregate distributions that the Members would be entitled
to receive pursuant to Section 9.01, in each case determined as if (i) all
assets of the Company, including cash, were sold for their Gross Asset Values
(which, for the avoidance of doubt, shall not be “booked up” to fair market
value for this purpose outside of an actual liquidation), (ii) all Company
liabilities, including the Company’s share of any liability of any entity
treated as a partnership for U.S. federal income tax purposes in which the
Company is a partner, were satisfied in cash according to their terms (each
nonrecourse liability is limited to the book value of the assets securing such
liability) and (iii) the remaining proceeds were distributed in accordance with
Section 9.01. The Managers, based on the advice of the Company’s tax advisors,
shall have the authority to correct or adjust any allocation provision hereunder
as it determines to be necessary or appropriate (and not unfairly discriminatory
against any Member) for such allocations, in the aggregate, to be made in the
manner provided in the first sentence of this Section 10.01.

 

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(b)          Limitations on Losses for Capital Account Purposes. Notwithstanding
anything in Section 10.01(a) to the contrary, the Managers will not allocate any
item of loss or deduction to a Member that would cause or increase a deficit
balance in such Member’s Capital Account (as increased by such Member’s share of
“partnership minimum gain” and “partner nonrecourse debt minimum gain”, as such
terms are defined in Regulations Section 1.704-2 and applied to the Members of
the Company), and will make special allocations of the Profits or Losses of the
Company among the Members as necessary to cause the allocations under this
Section 10.01 to be respected under Code Section 704(b) and Regulations
Section 1.704 1(b)(1). The Managers shall, to the extent possible and in
whatever manner they deem appropriate, make subsequent curative allocations of
other items of income, gain, loss and deduction to offset any such special tax
allocations.

 

10.02     Special Allocations. The following special allocations shall be made
in the following order:

 

(a)          Minimum Gain Chargeback. Notwithstanding any other provision of
this Article 10, if there is a net decrease in Company Minimum Gain during any
Company Fiscal Year, each Member shall be specially allocated items of Company
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Section 1.704-2(f) of the
Regulations. This Section 10.02(a) is intended to comply with the minimum gain
chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith.

 

(b)          Member Minimum Gain Chargeback. Notwithstanding any other provision
of this Article 10, except Section 10.02(a), if there is a net decrease in
Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company
Fiscal Year, each Member who has a share of the Member Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Member’s share of the net decrease in Company Minimum Gain attributable to
such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Section 1.704-2(i)(4) of the Regulations. This Section 10.02(b)
is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.

 

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(c)          Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or Distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain
shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Adjusted
Capital Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 10.02(c) shall be made if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article 10 have been tentatively made as
if this Section 10.02(c) were not in the Agreement.

 

(d)          Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Company Fiscal Year that is in excess of the
sum of (i) the amount such Member is obligated to restore, and (ii) the amount
such Member is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Member shall be specially allocated items of Company income and gain in the
amount of such excess as quickly as possible, provided that an allocation
pursuant to this Section 10.02(d) shall be made if and only to the extent that
such Member would have a deficit Capital Account in excess of such sum after all
other allocations provided for in this Article 10 have been tentatively made as
if Section 10.02(c) hereof and this Section 10.02(d) were not in the Agreement.

 

(e)          Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other period shall be specially allocated to the Members in accordance with
their respective Capital Percentages.

 

(f)          Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any fiscal year or other period shall be specially allocated to the Member
who bears the economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).

 

(g)          Section 754 Adjustment. To the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.

 

10.03     Curative Allocations.

 

(a)          The allocations set forth in Sections 10.01(b) and 10.2 (the
“Regulatory Allocations”) are intended to comply with certain requirements of
the Regulations. It is the intent of the Members that, to the extent possible,
all Regulatory Allocations shall be offset either with other Regulatory
Allocations or with special allocations of other items of Company income, gain,
loss or deduction pursuant to this Section 10.03. Therefore, notwithstanding any
other provision of this Article 10 (other than the Regulatory Allocations), the
Managers shall make such offsetting special allocations of Company income, gain,
loss or deduction in whatever manner they determine appropriate so that, after
such offsetting allocations are made, each Member’s Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Member would
have had if the Regulatory Allocations were not part of the Agreement and all
Company items were allocated pursuant to Section 10.01.

 

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(b)          The Managers shall have reasonable discretion, with respect to each
Company Fiscal Year, to (i) apply the provisions of Section 10.03(a) hereof in
whatever manner is likely to minimize the economic distortions that might
otherwise result from the Regulatory Allocations, and (ii) divide all
allocations pursuant to Section 10.03(a) hereof among the Members in a manner
that is likely to minimize such economic distortions.

 

10.04     Tax Allocations.

 

(a)          Except as set forth in this Section 10.04, allocations for income
tax purposes of items of income, gain, loss, deduction, and credits, and basis
therefor, shall be made in the same manner as allocations for book purposes set
forth in Sections 10.01, 10.02 and 10.03 hereof. In applying this Section 10.04,
each item of income, gain, expense and loss for a period not specially allocated
shall be allocated in the same proportions as the allocation of Profits and
Losses for such period.

 

(b)          In the event of a contribution of property other than cash to the
Company, income, gain, loss and deduction with respect to such contributed
property shall be shared among the Members for tax purposes so as to take
account of the variation between the basis of the property to the Company and
its fair market value at the time of contribution in accordance with Code
Section 704(c) and the Regulations thereunder.

 

(c)          In the event the book value of any Company asset is adjusted to
equal its fair market value in accordance with Regulations Sections
1.704-1(b)(2)(iv)(d) and 1.704-1(b)(2)(iv)(f), subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take into account any
variation between the adjusted basis of such asset for federal income tax
purposes and its fair market value pursuant to Code Section 704(c) and the
Regulations thereunder.

 

(d)          In accordance with Sections 704(b) and 704(c) of the Code and
applicable Treasury Regulations, including Treasury Regulations
Section 1.704-1(b)(4)(i), items of income, gain, deduction and loss with respect
to any property that is properly reflected on the books of the Company at a book
value that differs from the adjusted tax basis of such property within the
meaning of the Regulation 1.704-1(b)(2)(iv)(g)(1) (“Book Property”) (and, if
necessary, any other property of the Company) shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of the Book Property to the Company for federal income tax
purposes and its book value.

 

(e)          To the extent of any recapture income resulting from the sale or
other taxable disposition of assets of the Company, the amount of any gain from
such disposition allocated to a Member (or a successor in interest) for federal
income tax purposes pursuant to the above provisions shall be deemed to be
recapture income to the extent that such Member has been allocated or has
claimed any deduction directly or indirectly giving rise to the treatment of
such gain as recapture income.

 

33

 

 

(f)          The items of income, gain, deduction and loss for tax purposes
allocated to the Members pursuant to this Section 10.04 shall not be reflected
in the Members’ Capital Accounts. Any elections or other decisions relating to
such allocations shall be made by the Managers in any manner that reasonably
reflects the purpose and intent of this Agreement and is consistent with the
economic arrangement among the Members.

 

(g)          Pursuant to Treasury Regulations Section 1.752-3(a)(3), the Members
hereby agree to allocate excess nonrecourse liabilities of the Company in
accordance with their respective Capital Percentages.

 

10.05     Varying Interest in Company. Allocations to any Member whose
Membership Interest changes during a Company Fiscal Year or to any Member who is
a Member for less than a full Company Fiscal Year, whether by reason of the
admission of a Member, the withdrawal of a Member, a non-pro rata contribution
of capital to the Company or any other event described in Section 706(d)(1) of
the Code and the Regulations issued thereunder, shall be made in accordance with
Section 706(d) of the Code and the Regulations promulgated thereunder to take
into account the varying Interests of the Members in the Company during the
Company Fiscal Year.

 

ARTICLE 11.

BOOKS AND RECORDS

 

11.01     Accounting Period. The Company’s accounting period shall be the
calendar year.

 

11.02     Records. Proper and complete records and books of accounts shall be
kept or shall be caused to be kept by the Managers in which shall be entered
fully and accurately all transactions and other matters relating to the
Company’s business in such detail and completeness as is customary and usual for
businesses of the type engaged in by the Company. The Company shall keep at its
principal place of business the following records:

 

(a)          A current list of the full name and last known address of each
Member, Economic Interest Owner and Manager;

 

(b)          Copies of records to enable a Member to determine the relative
voting rights, if any, of the Members;

 

(c)          A copy of the Certificate of Formation of the Company and all
amendments thereto;

 

(d)          Copies of the Company’s federal, state and local income tax returns
and reports, if any, for the three most recent years;

 

(e)          Copies of the Company’s written Operating Agreement, together with
any amendments thereto;

 

(f)          Copies of any financial statements of the Company for the three (3)
most recent years.

 

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The books and records shall at all times be maintained at the principal office
of the Company and shall be open to the reasonable inspection and examination of
the Members, Economic Interest Owners, or their duly authorized representatives
during reasonable business hours.

 

11.03     Reports and Financial Statements.

 

(a)          Within fifteen (15) days of the end of each Fiscal Year, the
TriBridge Member shall cause each Member to be furnished with the following
annual reports computed as of the last date of the Fiscal Year: (i) an unaudited
balance sheet of the Company; (ii) an unaudited statement of the Company’s
profit and loss; and (iii) a statement of the Members’ Capital Accounts and
changes therein in such Fiscal Year.

 

(b)          Within fifteen (15) days of the end of each quarter of each Fiscal
Year, the TriBridge Member shall cause to be furnished to the BR Member such
information as reasonably requested by the BR Member, and to the extent not
readily available, which may be reasonably prepared by the TriBridge Member at
the expense of the Company, as is necessary for any REIT Member (whether a
direct or indirect owner) to determine its qualification as a REIT and its
compliance with REIT Requirements as shall be requested by the BR Member.
Further, the TriBridge Member shall cooperate in a reasonable manner at the
request of any Member, at the expense of the Company, to work in good faith with
any designated accountants or auditors of such Member or its Affiliates so that
such Member or its Affiliate is able to comply with any public reporting,
attestation, certification and other requirements under the Securities Exchange
Act of 1934, as amended, applicable to such entity, and to work in good faith
with the designated accountants or auditors of the Member or any of its
Affiliates in connection therewith, including for purposes of testing internal
controls and procedures of such Member or its Affiliates.

 

11.04     Tax Returns. The BR Member shall cause the preparation and timely
filing of all tax returns required to be filed by the Company pursuant to the
Code and all other tax returns deemed necessary and required in each
jurisdiction in which the Company does business and shall submit such returns to
the Members for their review, comment and approval at least ten (10) days prior
to the due date or extended due date thereof and shall thereafter cause the same
to be filed in a timely manner (including extensions). No later than the due
date or extended due date, the BR Member shall deliver or cause to be delivered
to each Member a copy of the tax returns for the Company and such Subsidiaries
with respect to such Fiscal Year, together with such information with respect to
the Company and such Subsidiaries as shall be necessary for the preparation by
such Member of its U.S. federal and state income or other tax and information
returns.

 

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ARTICLE 12.

TRANSFERABILITY

 

12.01     General Prohibition. Except as provided in Sections 12.02 and 12.06
hereof, in which event no consent from any party shall be required to effectuate
the transfer(s) described therein, no Member or Economic Interest Owner may
assign, convey, sell, transfer, liquidate, encumber, or in any way alienate
(collectively a “Transfer”), all or any part of its Interest without the prior
written consent of the Members, which consent may be given or withheld in the
sole discretion of any Member; provided, however, that nothing contained herein
shall prohibit any transfers of direct or indirect equity interests in the
Members so long as, in the case of the TriBridge Member, such transfers do not
result in a TriBridge Change of Control. Any attempted Transfer of all or any
portion of an Interest without the necessary consent, or as otherwise permitted
hereunder, shall be null and void and shall have no effect whatsoever. Upon the
transfer of a Membership Interest in accordance with this Article 12, the
Capital Percentages of the transferring Member and of the transferee shall be
adjusted accordingly.

 

12.02     Affiliate Transfers. Notwithstanding anything to the contrary
contained in this Agreement, the following Transfers shall not require the
approval set forth in Section 12.01, to the extent otherwise permissible under
the Bridge Loan or any subsequent Loan:

 

(a)          Any Transfer by a BR Member or a Bluerock Transferee of up to one
hundred percent (100%) of its Interest to any Affiliate of Bluerock Real Estate,
L.L.C. that has sufficient capital to perform the obligations of the
transferring BR Member hereunder, including but not limited to (A) Bluerock
Residential Growth REIT, Inc. (“BR REIT”) or any Person that is directly or
indirectly owned by BR REIT; (B) Bluerock Special Opportunity + Income Fund, LLC
(“BR SOIF”) or any Person that is directly or indirectly owned by BR SOIF; (C)
Bluerock Special Opportunity + Income Fund II, LLC (“BR SOIF II”) or any Person
that is directly or indirectly owned by BR SOIF II, (D) Bluerock Special
Opportunity + Income Fund III, LLC (“BR SOIF III”) or any Person that is
directly or indirectly owned by BR SOIF III, (E) Bluerock Growth Fund, LLC (“BR
Growth”) or any Person that is directly or indirectly owned by BR Growth, and/or
(F) Bluerock Growth Fund II, LLC (“BR Growth II”) or any Person that is directly
or indirectly owned by BR Growth II (collectively, a “Bluerock Transferee”);
provided, that, following the date the BR REIT first acquires a direct or
indirect common interest in the Company or the Project, in all instances, BR
REIT shall either retain, direct or indirectly, more than fifty percent (50%) of
the ownership interests in the BR Member or otherwise retain the power to
control, directly or indirectly, the major activities of BR Member such that BR
REIT can consolidate the Project on its audited financial statements; and

 

(b)          Provided only that the Parking Improvements are complete and the
Project has reached Project Stabilization, any Transfer (other than a Transfer
that would result in a TriBridge Change of Control) by the TriBridge Member or a
TriBridge Transferee of up to one hundred percent (100%) of its Interest to any
Affiliate of the TriBridge Member that has sufficient capital to perform the
obligations of the TriBridge Member hereunder (a “TriBridge Transferee”).

 

12.03     Conditions of Transfer and Assignment. A transferee of an Interest
pursuant to 12.01 or 12.02 shall become a Member only if the following
conditions have been satisfied:

 

(a)          the transferor, his legal representative or authorized agent must
have executed a written instrument of transfer of such Interest in form and
substance satisfactory to the Managers;

 

(b)          the transferee must have executed a written agreement, in form and
substance satisfactory to the Managers, to assume all of the duties and
obligations of the transferor under this Operating Agreement with respect to the
transferred Interest and to be bound by and subject to all of the terms and
conditions of this Operating Agreement;

 

36

 

 

(c)          the transferor, his legal representative or authorized agent, and
the transferee must have executed a written agreement, in form and substance
satisfactory to the Managers to indemnify and hold the Company, the Managers and
the other Members harmless from and against any loss or liability arising out of
the transfer;

 

(d)          the transferee must have executed such other documents and
instruments as the Managers may deem necessary to effect the admission of the
transferee as a Member; and

 

(e)          unless waived by the Managers, the transferee or the transferor
must have paid the expenses incurred by the Company in connection with the
admission of the transferee to the Company.

 

12.04     Transfers of Economic Interest Only. A permitted transferee of an
Economic Interest who does not become a Member shall be an Economic Interest
Owner only and shall be entitled only to the transferor’s Economic Interest to
the extent assigned. Such transferee shall not be entitled to vote on any
question regarding the Company, and the Capital Percentage associated with the
transferred Economic Interest shall not be considered to be outstanding for
voting purposes.

 

12.05     Successors as to Economic Rights. References in this Operating
Agreement to Members shall also be deemed to constitute a reference to Economic
Interest Owners where the provision relates to economic rights and obligations.
By way of illustration and not limitation, such provisions would include those
regarding Capital Accounts, distributions, allocations, and contributions. A
transferee shall succeed to the transferor’s Capital Contributions and Capital
Account to the extent related to the Economic Interest transferred, regardless
of whether such transferee becomes a Member.

 

12.06     Buy/Sell.

 

(a)          In the event the TriBridge Member and BR Member are deadlocked and
are unable to agree unanimously on any Major Decision, and the TriBridge Member
and BR Member are unable through good faith and the exercise of their reasonable
efforts to break such deadlock for a period of fifteen (15) days following
notice from such Member to the other Member that a deadlock exists with regard
to a Major Decision, the deadlock may be broken by the invocation of the
provisions of this Section 12.06; provided, however, except as otherwise
provided in Section 6.05, this Section 12.06 may be invoked if and only if such
deadlock occurs after the second (2nd) anniversary of the first date upon which
the Project achieves Project Stabilization. Prior to invoking the provisions of
this Section, the TriBridge Member and BR Member shall in good faith meet within
fifteen (15) days of such deadlock, and use their reasonable efforts to resolve
any disagreements regarding any Major Decision. As used in this Section 12.06,
“deadlock” shall mean the inability of the TriBridge Member and BR Member to
unanimously agree with respect to a Major Decision.

 

37

 

 

(b)          Either Member may initiate the buy/sell procedure by providing a
written notice (the “Value Notice”) to the other Member. The Member which
initiates the buy/sell procedure, is referred to herein as the “Offeror.” The
Member who receives the Value Notice is referred to herein as the “Offeree.” The
Value Notice shall include an offer by the Offeror to purchase all (and not less
than all) of the Membership Interest(s) owned by the Offeree and an offer by the
Offeror to sell all (and not less than all) of the Membership Interest(s) owned
by the Offeror to the Offeree, based upon an amount representing the Offeror’s
estimate of the gross sales price at which the Project would be sold (the
“Stated Amount”), and which shall be used in the calculations of the purchase
price of the Membership Interest(s) pursuant to Section 12.06(e).

 

(c)          The Offeree shall have thirty (30) days from its receipt of the
Value Notice to provide a written notice (the “Election Notice”) to the Offeror
stating either that the Offeree will sell all (and not less than all) its
Membership Interest(s) to the Offeror or that the Offeree will purchase all (and
not less than all) the Offeror’s Membership Interest(s) at the purchase price
referenced in Section 12.06(b) hereof. If the Offeree fails to give a timely
Election Notice, the Offeree shall be deemed to have elected to sell all (and
not less than all) its Membership Interest(s) to the Offeror. The Election
Notice shall specify the date of closing (the “Buy-Sell Closing Date”), which
date shall be at least thirty (30) days after the giving of the Election Notice,
but in any event not later than the ninetieth (90th) day after such notice. If
the Offeree fails to provide an Election Notice, the Buy-Sell Closing Date shall
be held on the first Business Day which is at least ninety (90) days after the
giving of the Value Notice.

 

(d)          The Member (or Members) that finally becomes obligated to sell its
or their Membership Interest(s) is sometimes referred to herein collectively as
the “Seller.” The Member that finally becomes obligated to purchase the other
Member’s or Members’ Membership Interest(s) is sometimes referred to herein as
the “Buyer.”

 

(e)          The aggregate purchase price for the Seller’s Membership
Interest(s) pursuant to this Section 12.06 shall be that amount which would be
distributed to the Seller pursuant to Section 9.01 above (after giving effect to
all applicable provisions of this Agreement, but after liquidating all Reserves
then existing and without establishing any additional Reserves) if all of the
property then held by the Borrower were sold on the Buy-Sell Closing Date for a
gross sales price equal to the Stated Amount and all liabilities and obligations
of the Borrower were satisfied from the proceeds from such sales price and any
remaining proceeds were distributed to the Members in accordance with Section
9.01. No Member shall be entitled to any sales fee or commission if either
Member exercises the buy/sell procedure set forth in this Section 12.06.

 

(f)           The closing of a purchase of Membership Interest(s) pursuant to
this Section 12.06 shall be held on the Buy-Sell Closing Date, subject to the
terms and conditions specified herein.

 

(g)          As of the effective date of any transfer of a Membership
Interest(s) pursuant to this Section 12.06, the Buyer shall assume all
obligations of the Seller with respect to the Membership Interest so
transferred, including any liability of the Seller or any Affiliate thereof with
respect to any Company liabilities. Upon such transfer, the Seller’s rights and
obligations under this Agreement shall terminate with respect to such
transferred Membership Interest, except as to indemnity rights of such Member
under this Agreement attributable to acts or events occurring prior to the
effective date of such transfer.

 

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12.07     Escrow and Closing of Buy-Sell.

 

(a)          Closing Time and Location. Except as otherwise provided for in this
Agreement, the closing of any offer of a Membership Interest between the Members
pursuant to Section 12.06 shall take place at a mutually agreed upon location in
Atlanta, Georgia.

 

(b)          Required Documents. Prior to or at the closing, Seller shall supply
to Buyer all documents customarily required (or reasonably required by Buyer) to
make a good and sufficient conveyance of such Membership Interest to the Buyer,
which documents shall be in form and substance reasonably satisfactory to the
Buyer and Seller. All payments shall be by wire transfer of immediately
available funds.

 

(c)          Conditions Precedent to Closing. The obligation of Buyer to pay the
purchase price shall be conditioned upon the Membership Interest being
transferred free and clear of all liens, claims and encumbrances. This condition
is for the sole benefit of Buyer and may be waived by Buyer in whole or in part
in its sole discretion.

 

(d)          Closing Costs. Each party shall pay its own attorneys’ fees and
expenses incurred in connection with the closing, and costs of the escrow or
closing, including, without limitation all premiums for title insurance and any
escrow fees, recording charges, and transfer taxes arising from the closing of
the buy-sell transaction, shall be borne or allocated in the manner customary in
the area in which the Project is located and, to the extent no custom exists,
shall be shared equally by Seller and Buyer. Unless previously deducted in
determining the price for the Membership Interest, the Buyer shall deduct from
the price otherwise payable to the Seller an amount equal to all liens, claims
and encumbrances of a definite or ascertainable amount, if any, which encumber
the Seller’s Membership Interest being transferred which are not released or
repaid on or prior to the closing (if Buyer elects to waive the conditions set
forth in Section 12.07(c)).

 

(e)          Warranty of Title. The Seller shall represent, warrant and agree
that its Membership Interest being sold hereunder is free of all liens, claims
and encumbrances (except liens, claims or encumbrances that were deducted in
determining the applicable price of the Membership Interest) and that the Seller
shall defend, indemnify and hold harmless the Buyer from any such liens, claims
and encumbrances.

 

(f)           Closing of Buy-Sell Transaction. At the closing of a sale of a
Membership Interest by one Member to the other Member pursuant to Section 12.06
hereof, the following shall occur:

 

(i)          The Seller shall convey and assign to the Buyer or its designee the
entire Membership Interest of the Seller, free and clear of all liens, claims
and encumbrances (other than liens, claims and encumbrances that were waived by
Buyer and deducted in determining the applicable price of the Membership
Interest), and the Seller and the Buyer shall execute all documents which may be
reasonably required to give effect to the sale and purchase of such Membership
Interest.

 

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(ii)         The Buyer shall pay or cause to be paid to the Seller the
applicable purchase price for the Membership Interest being purchased in cash or
by wire transfer at the closing.

 

(iii)        Notwithstanding any provision herein to the contrary, it shall be a
condition or requirement of any offer and the closing to obtain a release of the
Seller and the Seller’s Affiliates from any personal liability arising out of
any and all Loan Guaranties.

 

12.08     Default.

 

(a)          Events of Default. The failure of a Member to perform any of the
obligations set forth in Sections 12.06 or 12.07 with respect to an offer of its
Membership Interest or purchase of the other Member’s Membership Interest shall
constitute an event of default (“Event of Default”) on the part of the Member
with respect to whom such failure occurs.

 

(b)          Remedies. Upon the occurrence of an Event of Default, the
non-defaulting Member may exercise, in addition to all other rights and remedies
provided in this Agreement or available at law or in equity, any one or more of
the remedies provided for in Section 12.08 (c) below.

 

(c)          Remedies for Failure to Transfer Membership Interest.

 

(i)          Seller’s Failure. In the event that the Seller fails to make
conveyance of its Membership Interest pursuant to its obligations herein, then
the Buyer shall have the option: (A) to demand and receive specific performance
of the Seller’s obligations to convey its Membership Interest as provided for
herein; (B) to recover damages on account of the Seller’s failure to make
conveyance (which rights shall be in addition to the right granted under
subparagraph (A) above, if the Buyer so elects); or (C) to terminate the
obligations of the parties to proceed with the sale of the Membership Interest,
whereupon the position of the parties shall revert to the status quo ante as if
no notice to purchase from either party to the other had been given under the
provisions of this Agreement.

 

(ii)         Buyer’s Failure. In the event that the Buyer defaults in the
closing of a purchase of a Membership Interest as herein provided, then the
Seller shall have the option to: (A) elect to purchase the Buyer’s Membership
Interest on the terms and conditions otherwise set forth herein, by notice to
the Buyer of the Seller’s intention so to do, given within fifteen (15) days
after such default in which event the Seller shall become the Buyer and the
Buyer shall become the Seller, and all the applicable terms, conditions and
provisions of this Agreement with respect to such sales shall govern, except
that the closing thereof shall take place thirty (30) days after such date of
notice from the Seller (now the Buyer) to the Buyer (now the Seller) and except
that the purchase price shall be ten percent (10%) less than the price which the
Seller (now the Buyer) would have had to pay had such Buyer (now the Seller)
originally elected to sell its Membership Interest; (B) terminate the Seller’s
obligation to convey its Membership Interest to the Buyer by notice to the
Buyer, in which case the position of the parties shall revert to the status quo
ante as if no notice from either party to the other had been given under the
provisions of this Agreement; or (C) sue Buyer in the appropriate court for
specific performance.

 

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12.09     Specific Performance. It is expressly agreed that the remedy at law
for breach of any of the obligations set forth in this Article 12 is inadequate
in view of (i) the complexities and uncertainties in measuring the actual
damages that would be sustained by reason of the failure of a party to comply
fully with each of said obligations, and (ii) the uniqueness of each Member’s
business and assets and the relationship of the Members. Accordingly, each of
the aforesaid obligations and restrictions shall be, and is hereby expressly
made, enforceable by specific performance.

 

ARTICLE 13.

ISSUANCE OF ADDITIONAL MEMBERSHIP INTERESTS

 

Except as otherwise provided for herein, any Person approved by all of the
Members may become a Member in the Company by the issuance by the Company of
Membership Interests for such consideration as all of the Members shall
determine. No new Members shall be entitled to any retroactive allocation of
losses, income or expense deductions incurred by the Company. The Managers may,
upon the approval of all the existing Members, at the time a Member is admitted,
close the Company books (as though the Company’s tax year had ended) or make pro
rata allocations of loss, income and expense deductions to a new Member for that
portion of the Company’s tax year in which a Member was admitted in accordance
with the provisions of Section 706(d) of the Code and the Treasury Regulations
promulgated thereunder.

 

ARTICLE 14.

DISSOLUTION AND TERMINATION

 

14.01     Dissolution.

 

(a)          The Company shall be dissolved upon the occurrence of any of the
following events:

 

i.            by the unanimous written agreement of all Members; or

 

ii.           by a decree of judicial dissolution under the Act.

 

To the maximum extent permitted under the Act, the Company shall not dissolve
upon an event of dissociation with respect to the last remaining Member, but
instead the legal successor to such Member shall automatically become a Member
of the Company with all rights and obligations appurtenant thereto.

 

(b)          If a Member who is an individual dies or a court of competent
jurisdiction adjudges him to be incompetent to manage his person or his
property, the Member’s executor, administrator, guardian, conservator, or other
legal representative may exercise all of the Member’s rights for the purpose of
settling his estate or administering his property, but such person shall be a
holder of an Economic Interest and shall not have the rights of a Member.
Further, such Person shall be subject to the provisions of Article 12.

 

14.02     Effect of Dissolution. Upon dissolution, the Company shall cease to
carry on its business, except as permitted by Section 18-803 of the Act.

 

41

 

 

14.03     Winding Up, Liquidation and Distribution of Assets.

 

(a)          Upon dissolution, an accounting shall be made by the Company’s
independent accountants of the accounts of the Company and of the Company’s
assets, liabilities and operations, from the date of the last previous
accounting until the date of dissolution. The Managers or if none, the Person or
Persons selected by the Members (the “Liquidators”) shall immediately proceed to
wind up the affairs of the Company.

 

(b)          If the Company is dissolved and its affairs are to be wound up, the
Liquidators shall:

 

i.            Sell or otherwise liquidate all of the Company’s assets as
promptly as practicable;

 

ii.          Allocate any profit or loss resulting from such sales to the
Members and Economic Interest Owners in accordance with Article 10 hereof as if
the Company had distributed all distributable Capital Proceeds in accordance
with Article 9 hereof;

 

iii.         Discharge all liabilities of the Company, including liabilities to
Members and Economic Interest Owners who are creditors, to the extent otherwise
permitted by law, other than liabilities to Members and Economic Interest Owners
for distributions, and establish such Reserves as may be reasonably necessary to
provide for contingent liabilities of the Company; and

 

iv.         Distribute the remaining proceeds to the Members in accordance with
Section 9.01.

 

(c)          In the final Fiscal Year of the Company, before making the final
distributions provided for in Section 14.03(b)(iv), Profits and Losses shall be
credited or charged to Capital Accounts of the Members (which Capital Accounts
shall be first adjusted to take into account all distributions other than
liquidating distributions made during the Fiscal Year) in the manner provided in
Article 10. The allocations and distributions provided for in this Agreement are
intended to result in the Capital Account of each Member immediately prior to
the liquidation distributions of the Company’s assets pursuant to Section
14.03(b)(iv) being equal to the amount distributable to such Member pursuant to
Section 14.03(b)(iv). The Managers are authorized to make appropriate
adjustments in the allocation of Profits and Losses and, if necessary, items of
gross income and gross deductions of the Company, for the year of liquidation of
the Company (or, if earlier, the year in which all or substantially all of the
Company’s assets are sold, transferred or disposed of) as necessary to cause the
amount of each Member’s Capital Account immediately prior to the distribution of
the Company’s assets pursuant to Section 14.03(b)(iv) to equal the amount
distributable to such Member pursuant to Section 14.03(b)(iv). Notwithstanding
the foregoing, nothing in this Section 14.03(c) shall affect the amounts
distributable to the Members under Section 14.03(b)(iv).

 

42

 

 

(d)          Notwithstanding anything to the contrary in this Operating
Agreement, upon a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Treasury Regulations, if any Member has a deficit Capital Account (after
giving effect to all contributions, distributions, allocations and other Capital
Account adjustments for all taxable years, including the year during which such
liquidation occurs), such Member shall have no obligation to make any Capital
Contribution, and the negative balance of such Member’s Capital Account shall
not be considered a debt owed by such Member to the Company or to any other
Person for any purpose whatsoever.

 

(e)          Upon completion of the winding up, liquidation and distribution of
the assets, the Company shall be deemed terminated.

 

(f)           The Liquidators shall comply with any applicable requirements of
applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.

 

14.04     Certificate of Cancellation. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Members, a Certificate of Cancellation may be executed and filed with the
Secretary of State of Delaware in accordance with Section 18-203 of the Act.

 

14.05     Return of Contribution Nonrecourse to Other Members. Except as
provided by law or as expressly provided in this Operating Agreement, upon
dissolution, each Member shall look solely to the assets of the Company for the
return of its Capital Contribution. If the Company property remaining after the
payment or discharge of the debts and liabilities of the Company is insufficient
to return the cash contribution of one or more Members, such Member or Members
shall have no recourse against any other Member.

 

ARTICLE 15.

INDEMNIFICATION

 

15.01     Indemnification by Company. The Managers, the Members and their
respective members, managers, agents, employees and representatives (each, an
“Indemnitee”) shall be indemnified by the Company to the fullest extent
permitted by law, against any losses, judgments, liabilities, expenses and
amounts paid in settlement of any claims sustained by it or any of them in
connection with the Company (each, a “Claim”), provided that (i) such course of
conduct was, in good faith, intended to be in, and not opposed to, the best
interests of the Company and such liability or loss was not the result of
willful misconduct, or a material breach of this Agreement or gross negligence
on the part of such Indemnitee, and (ii) any such indemnification will only be
recoverable from the assets of the Company and the Members shall not have any
liability on account thereof except any obligations to return distributions
received from the Company that are required to be returned to the Company in
respect of such indemnification obligations under applicable law. No Member
shall be authorized to make a call for Additional Capital Contributions to
satisfy the Company’s indemnification obligations under this Section 15.01.

 

15.02     Indemnification by Members for Misconduct. In addition to any rights
that may exist in the Backstop Agreement:

 

43

 

 

(a)          The TriBridge Member hereby indemnifies, defends and holds harmless
the Company, the BR Member, each Bluerock Transferee and each of their
subsidiaries and their officers, directors, members, managers, partners,
shareholders, employees, agents and appointees from and against all losses,
costs, expenses, damages, claims and liabilities (including reasonable
attorneys’ fees) incurred to the extent arising out of any fraud, gross
negligence or willful misconduct on the part of, or by, the TriBridge Member or
its Affiliates.

 

(b)          The BR Member hereby indemnifies, defends and holds harmless the
Company, the TriBridge Member, each TriBridge Transferee and each of their
subsidiaries and their officers, directors, members, managers, partners,
shareholders, employees, agents and appointees from and against all losses,
costs, expenses, damages, claims and liabilities (including reasonable
attorneys’ fees) incurred to the extent arising out of any fraud, gross
negligence or willful misconduct on the part of, or by, BR Member or its
Affiliates.

 

ARTICLE 16.

MISCELLANEOUS PROVISIONS

 

16.01     Application of Delaware Law. This Operating Agreement, and the
application and interpretation thereof, shall be governed exclusively by its
terms and by the laws of the State of Delaware, and specifically the Act.

 

16.02     No Action for Partition. No Member or Economic Interest Owner has any
right to maintain any action for partition with respect to the property of the
Company.

 

16.03     Construction. Whenever the singular number is used in this Operating
Agreement and when required by the context, the same shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa.

 

16.04     Headings. The headings in this Operating Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Operating Agreement or any provision
hereof.

 

16.05     Waivers. The failure of any party to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
Operating Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.

 

16.06     Rights and Remedies Cumulative. The rights and remedies provided by
this Operating Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right not to use any or all other
remedies. Such rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance or otherwise.

 

16.07     Severability. If any provision of this Operating Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Operating Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law.

 

44

 

 

16.08     Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this Operating
Agreement, their respective heirs, legal representatives, successors and
assigns.

 

16.09     Creditors. None of the provisions of this Operating Agreement shall be
for the benefit of or enforceable by any creditors of the Company or by any
Person not a party hereto.

 

16.10     Counterparts. This Operating Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

 

16.11     Federal Income Tax Elections. All elections required or permitted to
be made by the Company under the Code shall be made by the Members.

 

16.12     Certification of Non-Foreign Status. In order to comply with Section
1445 of the Code and the applicable Treasury Regulations thereunder, in the
event of the disposition by the Company of a United States real property
interest as defined in the Code and Treasury Regulations, each Member shall
provide to the Company, an affidavit stating, under penalties of perjury, (i)
the Member’s address, (ii) United States taxpayer identification number, and
(iii) that the Member is not a foreign person as that term is defined in the
Code and Treasury Regulations. Failure by any Member to provide such affidavit
by the date of such disposition shall authorize the Managers to withhold ten
percent (10%) of each such Member’s distributive share of the amount realized by
the Company on the disposition.

 

16.13     Notices. Any and all notices, offers, demands or elections required or
permitted to be made under this Agreement (“Notices”) shall be in writing and
shall be delivered either by personally delivering it by hand or Federal Express
or similar commercial courier service to the person to whom Notice is directed,
or by electronic mail, or by depositing it with the United States Postal
Service, certified mail, return receipt requested, with adequate postage
prepaid, addressed to the appropriate party (and marked to a particular
individual’s attention). Notice shall be deemed given and effective (i) when
hand-delivered if by personal delivery or Federal Express or similar commercial
courier service, (ii) as of the date and time it is transmitted by electronic
mail if there is a written or electronic record of the date, time and email
address to which the Notice was sent, or (iii) on the third (3rd) business day
(which term means a day when the United States Postal Service, or its legal
successor (“Postal Service”) is making regular deliveries of mail on all of its
regularly appointed week-day rounds in Dover, Delaware) following the day (as
evidenced by proof of mailing) upon which such Notice is deposited, postage
pre-paid, certified mail, return receipt requested, with the Postal Service.
Rejection or other refusal by the addressee to accept the Notice shall be deemed
to be receipt of the Notice. In addition, the inability to deliver the Notice
because of a change of address of the party of which no Notice was given to the
other party as provided on Exhibit A hereof shall be deemed to be the receipt of
the Notice sent. The addresses to which Notice is to be sent shall be those set
forth below on Exhibit A or such other address as shall be designated in writing
to Managers. Managers shall keep a list of all designated addresses and such
list shall be available to any Member upon request thereof. Such addresses may
be changed by designating the change of address to the Managers in writing.

 

45

 

 

16.14     Amendments. Any amendment to this Agreement shall be made in writing
and signed by Members holding all of the Capital Percentages; provided, however,
the Managers shall have the right upon any transfer of Membership Interests or
admission of any new Member in accordance herewith to unilaterally amend this
Agreement without a writing signed by all Members to substitute Exhibit “A”
attached hereto with an updated Exhibit “A” reflecting all of the current
Members and their respective Capital Percentages.

 

16.15     Invalidity. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted. If any particular provision herein is
construed to be in conflict with the provisions of the Act, the Act shall
control and such invalid or unenforceable provisions shall not affect or
invalidate the other provisions hereof, and this Agreement shall be construed in
all respects as if such conflicting provision were omitted.

 

16.16     Captions. Titles and captions are inserted for convenience only and in
no way define, limit, extend or describe the scope or intent of this Agreement
or any of its provisions and in no way are to be construed to affect the meaning
or construction of this Agreement or any of its provisions.

 

16.17     Banking. All funds of the Company shall be deposited in its name in an
account or accounts as shall be designated from time to time by the Managers.
All funds of the Company shall be used solely for the business of the Company.
All withdrawals from the Company bank accounts shall be made only upon check
signed by the Managers or by such other persons as the Managers may designate
from time to time.

 

16.18     Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. The parties
hereto agree that any suit brought to enforce this Agreement shall be venued
only in any court of competent jurisdiction in the State of New York, Borough of
Manhattan, and, by execution and delivery of this Agreement, each of the parties
to this Agreement hereby irrevocably accepts and waives all objection to, the
exclusive jurisdiction of the aforesaid courts in connection with any suit
brought to enforce this Agreement, and irrevocably agrees to be bound by any
judgment rendered thereby. Each of the parties hereto hereby agrees that service
of process in any such proceeding may be made by giving notice to such party in
the manner and at the place set forth in 16.13 herein. The parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of
any claim arising under this Agreement.

 

16.19     Further Assurances. The Members each agree to cooperate, and to
execute and deliver in a timely fashion any and all additional documents or
instruments necessary to effectuate the purposes of the Company and this
Agreement or necessary to comply with any laws, rules or regulations.

 

16.20     Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND TO ANY PAYMENTS,
ALLOCATIONS AND DISTRIBUTIONS SPECIFIED UNDER THIS AGREEMENT.

 

46

 

 

16.21     Investment Representations and Indemnity Agreement. In addition to the
restrictions on transfer set forth above, each Member understands that Members
must bear the economic risk of this investment for an indefinite period of time
because the Membership Interests are not registered under the Securities Act of
1933, as amended (the “1933 Act”) or the securities laws of any state or other
jurisdiction. Each Member has been advised that there is no public market for
the Membership Interests and that the Membership Interests are not being
registered under the 1933 Act upon the basis that the transactions involving its
sale are exempt from such registration requirements and that reliance by the
Company on such exemption is predicated in part on the Member’s representations
set forth in this Agreement. Each Member acknowledges that no representations of
any kind concerning the Property or the future intent or ability to offer or
sell the Membership Interest in a public offering or otherwise have been made to
the Member by the Company or any other Person or entity. Each Member understands
that the Company makes no covenant, representation or warranty with respect to
the registration of securities under the Securities Exchange Act of 1933, as
amended, or its dissemination to the public of any current financial or other
information concerning the Company. Accordingly, each Member acknowledges that
there is no assurance that there will ever by any public market for the
Membership Interests, and that the Member may not be able to publicly offer or
sell any thereof. Furthermore, each Member (and his/her/its assignees and
transferees) agrees to indemnify the other Members, the Managers, the Company
and any director, officer, employee, affiliate or legal counsel of such parties,
from any and all losses, damage, liability, claims and expenses incurred,
suffered or sustained by any of them in any manner because of the falsity of any
representation contained in this Section including, without limitation,
liability for violation of the Securities Laws of the United States or of any
state which violation would not have occurred had such representation been true.

 

16.22     No Partnership Interest for Non-Tax Purposes. The Members have formed
the Company under the Act and expressly disavow any intention to form a
partnership under Delaware’s Uniform Partnership Act, Delaware’s Uniform Limited
Partnership Act, or the Partnership Act or laws of any other state. The Members
do not intend to be partners one to another or partners as to any third party.
To the extent any Member, by word or action, represents to another person that
any other Member is a partner or that the Company is a partnership, the Member
making such wrongful representations shall be liable to any other Member who
incurs personal liability by reason of such wrongful representation.

 

16.23     Entire Agreement. This Agreement, along with the Cost-Sharing
Agreement, contains the entire understanding among the parties hereto with
respect to the subject matter hereof. This Agreement supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except for the Cost-Sharing Agreement,
which shall survive in accordance with its terms.

 

(Signatures on following page)

 

47

 

 

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

 

  BR MEMBER:       BR WHETSTONE MEMBER, LLC           By: Bluerock Special
Opportunity + Income Fund III,
LLC, its Manager             By BR SOIF Manager III, LLC, its
Manager

 

  By: /s/ Jordan Ruddy   Name: Jordan Ruddy   Title: Authorized Signatory

 

  TRIBRIDGE MEMBER:       TRIBRIDGE CO-INVEST 27, LLC,   a Georgia limited
liability company           By: TriBridge Investments II, LLC,     a Georgia
limited liability company,     its Managing Member             By: TBR 2015,
LLC,       a Georgia limited liability company,       its Managing Member

 

  By: /s/ Robert H. West   Name: Robert H. West   Title: Authorized Signatory

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

48

 

 

  PROJECT MANAGER:      

TBR WHETSTONE PROJECT
MANAGEMENT, LLC,

a North Carolina limited liability company

          By:

TriBridge Investments II, LLC,

a Georgia limited liability company,

its sole member

            By: TBR 2015, LLC, a Georgia limited
liability Company, its managing
member

 

  By: /s/ Lee Walker   Name: Lee Walker   Title: Authorized Signatory

 

49

 

 

List of Exhibits:

 

Exhibit A Information Regarding Members Exhibit B Property Exhibit C Initial
Operating Budget Exhibit D Total Project Budget

 

 

 

50

 

 

Exhibit A

 

INFORMATION REGARDING MEMBERS

 

Member Name
and Address  Initial
Capital Contribution   Capital
Percentage           

BR WHETSTONE MEMBER, LLC

c/o Bluerock Real Estate, LLC

712 Fifth Avenue, 9th Floor

New York, NY 10019

  $12,427,567.55    92.5%             TriBridge Co-Invest 27, LLC
1575 Northside Drive
Building 100, Suite 200
Atlanta, GA 30318   $1,007,640.61    7.5%             Total  $13,435,208.16  
 100%

 

MANAGEMENT COMMITTEE:

 

TriBridge Member

 

1.Steve Broome

2.Bobby West

 

BR Member

 

1.James Babb

2.Michael Konig

 

51

 

 

Exhibit B

 

LEGAL DESCRIPTION OF PROPERTY

 

FEE TRACK

 

All of the following land, with the buildings and improvements thereon, lying
and being situate in Durham County, North Carolina, and being more particularly
described as follows:

 

BEING all of that certain parcel containing approximately 2.0994 acres as shown
on a map entitled “Exempt Final Recombination Plat 300 Jackson Street & 501
Willard St” recorded in Plat Book 192, Page 3, Durham County Registry which is
more fully described as:

 

Beginning at a PK nail on the eastern right of way of Willard Street; thence
with a curve turning to the right with an are length of 31.04’, with a radius of
20.00’, with a chord bearing of N 45°11 ’ 41” E, with a chord length of 28.02’
to an existing iron pipe; thence N 89°41’27” E a distance of 185.08’ to an
existing iron pipe; thence with a curve turning to the right with an arc length
of 114.62’, with a radius of 190.37’, with a chord bearing of S 73°14’22” E,
with a chord length of 112.90’ to an existing iron pipe; thence S 59°12’33” E a
distance of 111.39’ to an existing iron pipe; thence S 30°47’27” W a distance of
90.76’ to an existing iron pipe; thence S 27°33’27” W a distance of 158.72’ to
an existing iron pipe; thence N 59°12’33“W a distance of 113.65’ to an existing
iron pipe; thence N 89°21’33“W a distance of 193.78’ to an existing iron pipe;
thence N 00°38’27“E a distance of 227.18’ to an existing iron pipe; which is the
point of Beginning, having an area of 91,449.07 square feet or 2.099 acres as
shown on plat prepared by Coulter Jewell Thames PA recorded in the Durham County
Registry in Book 192 Page 3.

 

EASEMENT TRACK

 

TOGETHER WITH easements contained or conveyed in that certain Temporary Easement
Agreement by and between BR-TBR Whetstone Owner, LLC, TriBridge Residential,
LLC, University Ford, Inc., and University Properties of N.C., L.L.C. being
recorded in Durham County Registry prior to the Deed of Trust from BR-TBR
Whetstone Owner, LLC to KeyBank National Association.

 

 

 

 

Exhibit C

 

INITIAL OPERATING BUDGET

 

Whetstone Stabilized Operating Budget           G&A  $62,000  Advertising 
 60,000  Salaries & Rel.   320,000  M&R   51,600  Water/Sewer   82,000 
Utilities   59,000  Cable Contract   125,500  Turnkey   33,000 
Grounds/Pest/Trash   70,500  Insurance   49,200  Taxes   395,000  CapEx Reserve 
 42,000  Management Fee (3%)   105,000  Operating Expenses Budget Total 
$1,454,800 

 

 

 

 

Exhibit D

 

TOTAL PROJECT BUDGET

 

Total Project Budget                     Purchase Price       $35,625,000 
Parking Gate Purchase Price Credit        (37,500) Legal        192,926 
Insurance        49,173  Title        35,978  Survey        2,400  ZumBrunnen
(Equity PCA)        19,508  Blackstone (Lender PCA, ESA, and ADA)        13,100 
TBR File Audit (including BR Travel)        15,000  Appraisal        4,915 
Other Closing Costs        1,693  Thalhimer        300,000  TBR fee      
 360,000  Key Bank bridge Loan Fee        88,016              Parking
Improvements           Hard Costs (incl. Gen. Cond.)  $850,000      
Contingency   127,857       Design   65,000       Permitting   35,000       Gen.
Contractor Fee   65,000       Project Mgmt Fee (5%) (Half funded at closing) 
 57,143       Staging Easement ($25k funded at closing)   100,000       Parking
Gate Installation   37,500                   Parking Addition       $1,337,500 
            Lease-Up Budget           Collateral and additional marketing 
$20,000       Dog Park   5,000       Common Area Speakers   4,500      
Interactive Leasing touch screen   9,500       Security Cameras   16,000      
Lease-Up Bonuses   26,000       Pool Area Improvements   29,000       Replace
kitchen faucets   40,000       Lease-Up Budget       $150,000             
Reserves / Contingency       $425,000  Total Project Budget       $38,582,708