Exhibit 10.53

 

 

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

BR CARROLL LANSBROOK JV, LLC

 

A DELAWARE LIMITED LIABILITY COMPANY

 

DATED AS OF FEBRUARY 12, 2014

  

 

 

 

 

  

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

BR CARROLL LANSBROOK JV, LLC

 

THIS LIMITED LIABILITY COMPANY AGREEMENT of BR CARROLL LANSBROOK JV, LLC ("JV"
or "Company") is made and entered into and is effective as of February 12, 2014,
by and between BR Lansbrook JV Member, LLC, a Delaware limited liability company
("Bluerock") and Carroll Lansbrook JV Member, LLC, a Georgia limited liability
company ("Carroll") (this "Agreement"). Capitalized terms used herein shall have
the meanings ascribed to such terms in this Agreement.

 

Effective as of February 12, 2014, the Members, by execution of this Agreement,
hereby form the Company as a limited liability company pursuant to and in
accordance with the Delaware Limited Liability Company Act (6 Del. C. §18-101 et
seq.), as amended from time to time (the "Act"), and this Agreement; and the
Members hereby agree as follows:

 

Section 1.          Definitions. As used in this Agreement:

 

"Act" shall mean the Delaware Limited Liability Company Act (currently Chapter
18 of Title 6 of the Delaware Code), as amended from time to time.

 

"Additional Condo Units" shall have the meaning provided in Section 5.1(b).

 

"Adjusted Capital Account Deficit" shall mean, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
applicable Fiscal Year after (i) crediting such Capital Account with any amounts
which such Member is deemed to be obligated to restore pursuant to Regulations
Sections 1.704-2(g)(l) and 1.704-2(i)(5), and (ii) debiting such Capital Account
by the amount of the items described in Regulations Sections
1.704-l(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Regulations
Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

"Advisor” shall mean any accountant, attorney or other advisor retained by a
Member.

 

“Affiliate" shall mean with respect to any Person (i) more than ten percent
(10%) of the issued and outstanding stock of which, or more than ten percent
(10%) of the ownership interests of which, is owned, directly or indirectly, by
a Person, including a Member, (ii) that now or hereafter owns, directly or
indirectly, more than a ten percent (10%) ownership interest in a Person,
including the Company or in any Member, (iii) any agent, trustee, officer,
director, employee, partner, member, manager or shareholder or member of the
family of such Person (or any member of the family of any such agent, trustee,
officer, director, employee, partner, member, manager or shareholder) or (iv)
any corporation, partnership, limited liability company, trust or other entity
that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person. The term
"control" (including the terms "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. The term "family"
shall be deemed to include spouses, children, parents, brothers and sisters, and
the spouse, children, parents, brothers and sisters of such spouse's children,
parents, brothers and sisters.

 

 

 

  

"Agreed Upon Value" shall mean the fair market value (net of any debt) agreed
upon pursuant to a written agreement between the Members of property contributed
by a Member to the capital of the Company, which shall for all purposes
hereunder be deemed to be the amount of the Capital Contribution applicable to
such property contributed.

 

"Agreement" shall mean this Limited Liability Company Agreement, as amended from
time to time.

 

"Annual Business Plan" shall mean the business plan for a Fiscal Year of the
Company prepared by Property Manager and approved by the Members as further
described in Section 9.3.

 

"Applicable Adjustment Percentage" shall have the meaning set forth in Section
5.2(b)(3).

 

"Backstop Agreement" shall mean that certain agreement providing for the
allocation of liability and contribution for losses arising from any "bad boy"
guaranties constituting part of the Loan Documents.

 

"Bankruptcy Code" shall mean Title 11 of the United States Code, as amended or
any other applicable bankruptcy or insolvency statute or similar law.

 

"Bankruptcy/Dissolution Event" shall mean, with respect to the affected party,
(i) the entry of an Order for Relief under the Bankruptcy Code, (ii) the
admission by such party of its inability to pay its debts as they mature, (iii)
the making by it of an assignment for the benefit of creditors generally, (iv)
the filing by it of a petition in bankruptcy or a petition for relief under the
Bankruptcy Code or any other applicable federal or state bankruptcy or
insolvency statute or any similar law, (v) the expiration of sixty (60) days
after the filing of an involuntary petition under the Bankruptcy Code without
such petition being vacated, set aside or stayed during such period, (vi) an
application by such party for the appointment of a receiver for the assets of
such party, (vii) an involuntary petition seeking liquidation, reorganization,
arrangement or readjustment of its debts under any other federal or state
insolvency law, provided that the same shall not have been vacated, set aside or
stayed within sixty (60) days after filing, (viii) the imposition of a judicial
or statutory lien on all or a substantial part of its assets unless such lien is
discharged or vacated or the enforcement thereof stayed within sixty (60) days
after its effective date, (ix) an inability to meet its financial obligations as
they accrue, or (x) a dissolution or liquidation.

 

"Beneficial Owner" shall have the meaning provided in Section 5.7.

 

“Bluerock” shall have the meaning provided in the first paragraph of this
Agreement.

 

"Bluerock Transferee" shall have the meaning set forth in Section 12.2(b)(2).

 

“BR REIT” shall mean Bluerock Residential Growth REIT, Inc., a Maryland
corporation.

 

"BR Growth" shall mean Bluerock Growth Fund, LLC, a Delaware limited liability
company.

 

"BR SOIF II" shall mean Bluerock Special Opportunity + Income Fund II, LLC, a
Delaware limited liability company.

 

"BR SOIF III" shall mean Bluerock Special Opportunity + Income Fund III, LLC, a
Delaware limited liability company.

 

 

 

 

"Capital Account" shall have the meaning provided in Section 5.6.

 

"Capital Contribution" shall mean, with respect to any Member, the aggregate
amount of (i) cash, and (ii) the Agreed Upon Value of other property contributed
by such Member to the capital of the Company net of any liability secured by
such property that the Company assumes or takes subject to.

 

“Carroll” shall have the meaning provided in the first paragraph of this
Agreement.

 

"Carroll Parent" shall mean MPC Partnership Holdings LLC, a Georgia limited
liability company.

 

"Carroll Change Event" shall mean (i) gross negligence, willful misconduct,
fraud or bad faith by Carroll or any of its Affiliates in connection with or
relating to the Company or the Property; (ii) a Bankruptcy/Dissolution Event
shall have occurred with respect to Carroll or Property Manager; or (iii)
failure to satisfy the Carroll Ownership/Control Requirement.

 

"Carroll Ownership/Control Requirement" as of any particular date means that
each of the following conditions is satisfied: (i) at least one of the Key
Individuals is not then dead, insane as determined by a qualified physician,
incapacitated as determined by a qualified physician, or the subject of a
Bankruptcy/Dissolution Event; and (ii) at least one of the Key Individuals is
actively involved in the operation and management of (a) Carroll or Carroll
Parent and (b) CMG.

 

"Carroll Transferee" shall have the meaning set forth in Section 12.2(b)(l).

 

"Cash Flow" shall mean, for any period for which Cash Flow is being calculated,
gross cash receipts of the Company (but excluding Capital Contributions), less
the following payments and expenditures: (i) all payments of operating expenses
of the Company (or the Subsidiary owning the Property) including, but not
limited to, any charges, assessments, reserve requirements or pass-throughs of
any kind originated by the Project's condominium home owners association, (ii)
all payments of principal of, interest on and any other amounts due with respect
to indebtedness, leases or other commitments or obligations of the Company (or
the Subsidiary owning the Property) (including on loans by Members to the
Company), (iii) all sums expended by the Company (or any Subsidiary owning the
Property) for capital expenditures, (iv) all prepaid expenses of the Company (or
any Subsidiary owning the Property), and (v) all sums expended by the Company
(or any Subsidiary owning the Property) which are otherwise capitalized.

 

"Cause" shall mean gross negligence, willful misconduct, fraud, bad faith or a
Bankruptcy/Dissolution Event, or a termination of the Management Agreement by or
at the behest of a third-party lender under an applicable Collateral Agreement.

 

"Certificate of Formation" shall mean the Certificate of Formation of the
Company, as amended from time to time.

 

“CMG” shall mean Carroll Management Group, LLC, a Georgia limited liability
company.

 

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, including the corresponding provisions of any successor law.

 

"Collateral Agreement" shall mean any agreement, instrument, document or
covenant concurrently or hereafter made or entered into under, pursuant to, or
in connection with this Agreement and any certifications made in connection
therewith or amendment or amendments made at any time or times heretofore or
hereafter to any of the same (including, without limitation, the Management
Agreement).

 

 

 

  

"Company" shall mean BR Carroll Lansbrook JV, LLC a Delaware limited liability
company organized under the Act.

 

"Company Minimum Gain" shall have the meaning given to the term "partnership
minimum gain" in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

 

"Confidential Information" shall have the meaning provided in Section 10.01.
"Controllable Expenses" shall mean all expenses, other than Uncontrollable
Expenses, incurred by the Company or any Subsidiary of the Company with respect
to the Property.

 

"Default Amount" shall have the meaning provided in Section 5.2(b).

 

"Default Loan" shall have the meaning provided in Section 5.2(b)(1).

 

"Default Loan Rate" shall have the meaning provided in Section 5.2(b)(1).

 

"Defaulting Member" shall have the meaning provided in Section 5.2(b).

 

"Delaware UCC" shall mean the Uniform Commercial Code as in effect in the State
of Delaware from time to time.

 

"Dissolution Event" shall have the meaning provided in Section 13.2.

 

"Distributable Funds" with respect to any month or other period, as applicable,
shall mean an amount equal to the Cash Flow of the Company for such month or
other period, as applicable, as reduced by reserves for anticipated capital
expenditures, future working capital needs and operating expenses, contingent
obligations and other purposes of the Company or any Subsidiary, the amounts of
which shall be reasonably determined from time to time by the Management
Committee.

 

"Distributions" shall mean the distributions payable (or deemed payable) to a
Member (including, without limitation, its allocable portion of Distributable
Funds).

 

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

"Fiscal Year" shall mean each calendar year ending December 31. "Flow Through
Entity" shall have the meaning provided in Section 5.7.

 

"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.

 

"Imputed Closing Costs" means an amount (not to exceed one and one quarter
percent (1.25%) of the purchase price) that would normally be incurred by the
Company or a Subsidiary if the Property were sold for an amount specified in
Section 15.1 or Section 15.2 (as applicable), for title insurance premiums,
survey costs, brokerage commissions, legal fees, and other commercially
reasonable closing costs.

 

 

 

  

"Income" shall mean the gross income of the Company for any month, Fiscal Year
or other period, as applicable, including gains realized on the sale, exchange
or other disposition of the Company's assets.

 

"Indemnified Party" shall have the meaning provided in Section 14.4(a).

 

"Indemnifying Party" shall have the meaning provided in Section 14.4(a).

 

"Inducement Agreements" shall have the meaning provided in Section 14.4(a).

 

"Initiating Member" shall have the meaning provided in Section 15.2(a).

 

"Interest" of any Member shall mean the entire limited liability company
interest of such Member in the Company, which includes, without limitation, any
and all rights, powers and benefits accorded a Member under this Agreement and
the duties and obligations of such Member hereunder.

 

"Internal Rate of Return" and "IRR" shall mean, as of any date, the internal
rate of return on the Total Investment of a Member to such date, calculated to
be that discount rate (expressed on a percent per annum basis) which, when
divided by twelve (12), compounded annually and applied to such Total Investment
and the corresponding Distributions with respect thereto, causes the net present
value, as of such date, of such Distributions and Total Investment to equal zero
(calculated with the "XIRR" function in Microsoft Excel and using the latest
version Microsoft Excel available as of the date hereof). For this purpose,
Capital Contributions and Distributions shall be assumed to have occurred as of
the end of the month in which such Capital Contribution or Distributions take
place. For purposes of determining the Internal Rates of Return hereunder,
calculations shall be on a portfolio-wide basis (crossed) and denominated and
calculated in US Dollars.

 

"Key Individual" shall mean Patrick Carroll and Joshua Champion.

 

"Loan" shall mean the acquisition loan in the initial principal amount of Forty
Two Million and No/100 Dollars ($42,000,000.00) originally made by General
Electric Capital Corporation, which is secured by the Property, which Loan is
subject to periodic increases, in connection with the acquisition by the Company
or any Subsidiary of the Company of additional condominium units, to the maximum
principal amount of Forty Seven Million Five Hundred Thousand and No/100 Dollars
($47,500,000.00).

 

"Loss" shall mean the aggregate of losses, deductions and expenses of the
Company for any month, Fiscal Year or other period, as applicable, including
losses realized on the sale, exchange or other disposition of the Company's
assets.

 

"Major Decision" means any decision for the Company to take, or refrain from
taking, any action or incurring any obligation with respect to the following
matters (or the effectuation of any such action or obligation):

 

(i)any merger, conversion or consolidation involving the Company or any
Subsidiary or the sale, lease, transfer, exchange or other disposition of all or
substantially all of the Company's assets or all of the Interests of the Members
in the Company, in one or a series of related transactions;

 

(ii)except as expressly provided in Section 12 with respect to Transfers by
Bluerock or a Bluerock Transferee to a Bluerock Transferee and with respect to
Transfers by Carroll as permitted thereunder, the admission or removal of any
Member or the Company's issuance to any third party of any equity interest in
the Company (including interests convertible into, or exchangeable for, equity
interests in the Company);

 

 

 

  

(iii)except upon the occurrence of any Dissolution Event, any liquidation,
dissolution or termination of the Company or any Subsidiary;

 

(iv)giving, granting or undertaking any options, rights of first refusal, deeds
of trust, mortgages, pledges, ground leases, security or other interests in or
encumbering the Property, any portion thereof or any other material assets;

 

(v)selling, conveying or effecting any other direct or indirect transfer of the
Property, any Subsidiary or other material asset of the Company or any portion
thereof or the entering into of any agreement, commitment or assumption with
respect to any of the foregoing;

 

(vi)acquiring, directly or through any Subsidiaries, by purchase, ground lease
or otherwise, any real property or other material asset or the entry into of any
agreement, commitment or assumption with respect to any of the foregoing, or the
making or posting of any deposit (refundable or non-refundable);

 

(vii)taking any action by the Company or any Subsidiary that is reasonably
likely to result in any Member or any of its Affiliates having individual
liability under any so called "bad boy" guaranties or similar agreements
provided to third party lenders in respect of financings relating to the
Company, the Subsidiaries or any of their assets which provide for recourse as a
result of willful misconduct, fraud or gross negligence or failure to comply
with the covenants or any other provisions of such "bad boy" guaranties;

 

(viii)institute or settle any Company or Subsidiary legal claims in excess of
$50,000;

 

(ix)employ, enter into any contract with (or materially modify any contract
with), or otherwise compensate, directly or indirectly, the Manager or any
Affiliate of the Manager;

 

(x)amend, modify, recast, refinance or replace any financing to which the
Company or a Subsidiary is a party or which encumbers the Property;

 

(xi)incur on behalf of the Company or a Subsidiary during any year any capital
expenditures in excess of $50,000 in the aggregate unless pursuant to the Annual
Business Plan approved by the Members;

 

(xii)make any loan to any Member, except as expressly provided for in this
Agreement;

 

(xiii)cause or permit the Company or a Subsidiary to file for or fail to contest
a bankruptcy proceeding, or seek or permit a receivership or make an assignment
for the benefit of its creditors;

 

(xiv)terminate the Management Agreement or issue a notice of default pursuant to
the Management Agreement; provided, however, that (A) such termination shall be
subject to the terms of the Management Agreement and (B) in the event of a
default by CMG under the Management Agreement, which default is not cured in any
available cure period, only Bluerock shall be authorized to take any action with
respect to any remedies on behalf of the Company or any Subsidiary, including
the right to terminate the Management Agreement, and to solicit bids for, and
enter into any replacement Management Agreement with, any replacement manager
thereunder;

 

(xv)cause or permit any of the organizational documents, including this
Agreement, of the Company or of any Subsidiary of the Company to be amended in
any manner, other than any amendment (A) required by (1) a lender to the Company
or any Subsidiary of the Company or (2) that is required in order for a REIT
Member to qualify as a "real estate investment trust" under the Code, in each
case, to the extent such amendment referenced in clauses (1) and (2) of this
subparagraph does not result in the dilution of any Member, does not adversely
affect any Member's right to Distributions pursuant to Section 6 and does not
otherwise have a materially adverse effect on the rights of any Member, or (B)
that is solely ministerial in nature to reflect or implement this Agreement
under its express terms (such as, for example, to periodically update the
Members' respective Capital Contribution amounts, Percentage Interests or
Management Committee representatives on Exhibit A).

 

 

 

  

(xvi)make distributions to the Members, except in accordance with Section 6
hereof.

 

“Management Agreement” shall mean that certain property management agreement
attached hereto as Exhibit C to be entered into between the Company (or any
Subsidiary of the Company), as owner, and Property Manager, as manager, pursuant
to which Property Manager will provide certain management services for the
Property.

 

"Management Committee" shall have the meaning provided in Section 9.2(a).

 

"Manager" shall have the meaning provided in Section 9.1(a).

 

"Member" and "Members" shall mean Bluerock, Carroll and any other Person
admitted to the Company pursuant to this Agreement. For purposes of the Act, the
Members shall constitute a single class or group of members.

 

"Member in Question" shall have the meaning provided in Section 16.12.

 

"Member Minimum Gain" shall mean an amount, determined in accordance with
Regulations Section l.704-2(i)(3) with respect to each Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability.

 

"Member Nonrecourse Debt" shall have the meaning given the term "partner
nonrecourse debt" in Regulations Section l.704-2(b)(4).

 

"Member Nonrecourse Deductions" shall have the meaning given the term "partner
nonrecourse deductions" in Regulations Section 1.704-2(i).

 

"Net Income" shall mean the amount, if any, by which Income for any period
exceeds Loss for such period.

 

"Net Loss" shall mean the amount, if any, by which Loss for any period exceeds
Income for such period.

 

"New York UCC" shall have the meaning set forth in Section 16.17.

 

"Non-Initiating Member" shall have the meaning provided in Section l 5.2(a).
"Nonrecourse Deduction" shall have the meaning given such term in Regulations
Section l.704-2(b)(l ).

 

"Nonrecourse Liability" shall have the meaning given such term in Regulations
Section l.704-2(b)(3).

 

 

 

  

"Offer" shall have the meaning provided in Section 15.2(a).

 

"Offeror" shall have the meaning provided in Section 15.1(b).

 

"Offeree" shall have the meaning provided in Section 15.1(b).

 

"Ownership Entity" shall have the meaning provided in Section 15.2(a).

 

"Percentage Interest" shall have the meaning provided in Section 5.3.

 

"Person" shall mean any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other legal entity.

 

"Preferred Return" shall mean, with regard to both the initial Capital
Contributions of a Member set forth in Exhibit A attached hereto and all Condo
Acquisition Capital Contributions of such Member attributable to the acquisition
of additional condominium units as contemplated hereunder, the greater of (a) an
Internal Rate of Return equal to ten percent (10%) or (b) a return on such
capital contributions equal to a 1.3 multiple thereof.

 

"Project" shall mean the multi-family complex located in Palm Harbor, Florida
and commonly known as Lansbrook Village, within which the Property is located.

 

"Property" shall have the meaning provided in Section 3.

 

"Property Management Fee" shall have the meaning provided in Section 9.7.

 

"Property Manager" shall mean CMG so long as the initial Management Agreement is
in full force and effect and, thereafter, the entity performing similar services
for the Company (or any Subsidiary that owns the Property) with respect to the
Property.

 

"Property Manager Reports" shall have the meaning set forth in Section 8.2(c).

 

"Protective Capital Call" shall mean a Capital Call necessary or advisable to
(a) protect the Company's (or any Subsidiary's) interest in the Property (e.g.,
payment of taxes, repair of the Property following uninsured damage thereto,
payment of insurance premiums, etc.); (b) to prevent a default with respect to
any financing obtained by the Company or any Subsidiary (e.g., payment of debt
service following an operating shortfall, reserves required by the lender, a
reduction in principal required by the lender to meet loan to value
requirements); or (c) funds required to refinance the Property when the current
financing has matured or will mature in the near future (e.g., commitment fees,
loan application fees, equity infusions to meet market loan to value
requirements, etc.).

 

"Pursuer" shall have the meaning provided in Section 10.3.

 

"Regulations" shall mean the Treasury Regulations promulgated pursuant to the
Code, as amended from time to time, including the corresponding provisions of
any successor regulations.

 

"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.

 

"Representatives" shall have the meaning provided in Section 9.2(a).

 

"Response Period" shall have the meaning provided in Section l 5.2(b).

 

“Sale Notice" shall have the meaning provided in Section 15.2(a).

 

“Securities Act" shall mean the Securities Act of 1933, as amended.

 

"Seller" shall mean Waterton Lansbrook Venture, L.L.C., a Delaware limited
liability company

 

"SOIFs" shall mean, collectively, BR SOIF II and BR SOIF III.

 

"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which at least a
majority of the capital stock or other equity securities is owned by such
Person.

 

"Tax Matters Member" shall have the meaning provided in Section 8.3.

 

"Total Investment" shall mean the sum of the aggregate Capital Contributions
made by a Member.

 

"Transfer" means, as a noun, any transfer, sale, assignment, exchange, charge,
pledge, gift, hypothecation, conveyance, encumbrance or other disposition,
voluntary or involuntary, by operation of law or otherwise and, as a verb,
voluntarily or involuntarily, by operation of law or otherwise, to transfer,
sell, assign, exchange, charge, pledge, give, hypothecate, convey, encumber or
otherwise dispose of.

 

"Uncontrollable Expenses" shall mean the following expenses with respect to the
Company or Subsidiary: taxes and insurance; licenses; HOA assessments;
utilities; unanticipated material repairs that are essential to preserve or
protect the Property; debt service; and costs due to a change in law.

 

"Valuation Amount" shall have the meaning provided in Section 15.l(b).

 

Section 2.            Organization of the Company.

 

2.1           Name. The name of the Company shall be "BR Carroll Lansbrook JV,
LLC". The business and affairs of the Company shall be conducted under such name
or such other name as the Members deem necessary or appropriate to comply with
the requirements of law in any jurisdiction in which the Company may elect to do
business.

 

2.2           Place of Registered Office; Registered Agent. The address of the
registered office of the Company in the State of Delaware is 160 Greentree
Drive, Suite 101, Dover, Delaware 19904. The name and address of the registered
agent for service of process on the Company in the State of Delaware is National
Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
The Management Committee may at any time on five (5) days prior notice to all
Members change the location of the Company's registered office or change the
registered agent.

 

 

 

  

2.3           Principal Office. The principal address of the Company shall be
c/o Bluerock Real Estate, L.L.C., 712 Fifth Avenue, 9th Floor, New York, New
York 10019 and the principal office of Property Manager shall be c/o Carroll
Organization, LLC, 3340 Peachtree Road, Suite 1620, Atlanta, Georgia, 30326 ,
or, in each case, at such other place or places as may be determined by the
Management Committee from time to time.

 

2.4           Filings. On or before execution of this Agreement, an authorized
person within the meaning of the Act shall have duly filed or caused to be filed
the Certificate of Formation of the Company with the office of the Secretary of
State of Delaware, as provided in Section 18-201 of the Act, and the Members
hereby ratify such filing. The Manager shall use its best efforts to take such
other actions as may be reasonably necessary to perfect and maintain the status
of the Company as a limited liability company under the laws of Delaware.
Notwithstanding anything contained herein to the contrary, the Company shall not
do business in any jurisdiction that would jeopardize the limitation on
liability afforded to the Members under the Act or this Agreement.

 

2.5           Term. The Company shall continue in existence from the date hereof
until December 31, 2064, unless extended by the Members, or until the Company is
dissolved as provided in Section 13, whichever shall occur earlier.

 

2.6           Expenses of the Company. Other than the reimbursement of costs and
expenses as provided herein and the fees described in Section 9.7, no fees,
costs or expenses shall be payable by the Company to any Member (or its
Affiliates).

 

Section 3.            Purpose.

 

The purpose of the Company, subject in each case to the terms hereof, shall be
to engage, directly or through a Subsidiary, in the business of acquiring,
owning, operating, developing, renovating, repositioning, managing, leasing,
selling, financing and refinancing the real estate and any real estate related
investments (or portions thereof) consisting of an approximately 572 condominium
unit (subject to increase based on future acquisitions of additional condominium
units) multi-family complex located in Palm Harbor, Florida and commonly known
as Lansbrook Village, which will be owned by the Company or a Subsidiary of the
Company (any property acquired as aforesaid shall hereinafter be referred to as
the "Property"), and all other activities reasonably necessary to carry out such
purpose.

 

Section 4.            Conditions.

 

4.1           Bluerock Conditions. The obligation of Bluerock to consummate the
transactions contemplated herein and to make the initial Capital Contributions
under Section 5.1(a)(ii) is subject to fulfillment of all of the following
conditions on or prior to the closing date under the Purchase Agreement for the
Property:

 

(a)           Carroll shall deposit in the Company's bank account or the
designated escrow account of Old Republic Title Insurance Company ("Title
Company") the aggregate amount of its initial Capital Contribution set forth on
Exhibit A hereto;

 

(b)           The Purchase Agreement for the Property shall have been assigned
to the Company (or a Subsidiary of the Company);

 

(c)           Intentionally Omitted;

 

(d)           The Management Agreement shall have been executed by the Company
(or a Subsidiary of the Company) and Property Manager;

 

 

 

  

(e)           All of the representations and warranties of Carroll and Property
Manager contained in this Agreement and the Collateral Agreements shall be true
and correct as of the date hereof;

 

(f)            The Company (or a Subsidiary of the Company) shall have borrowed
(or be concurrently borrowing) the Loan, as contemplated by the loan documents
(the "Loan Documents"); and

 

(g)           The form of Backstop Agreement shall have been approved by, and
executed by, the applicable parties and delivered to Bluerock.

 

4.2           Carroll Conditions. The obligation of Carroll to consummate the
transactions contemplated herein and to make the initial Capital Contributions
under Section 5. l(a)(ii) is subject to fulfillment of all of the following
conditions on or prior to the closing date under the Purchase Agreement for the
Property:

 

(a)           Bluerock shall deposit into the Company's bank account or Title
Company's designated escrow account the amount of its aggregate initial Capital
Contribution set forth on Exhibit A hereto;

 

(b)           The Purchase Agreement for the Property shall have been assigned
to the Company (or a Subsidiary of the Company);

 

(c)           Intentionally Omitted;

 

(d)           The Company (or a Subsidiary of the Company) shall have borrowed
(or be concurrently borrowing) the Loan contemplated by the Loan Documents;

 

(e)           The Management Agreement shall have been executed between the
Company (or a Subsidiary of the Company) and Property Manager;

 

(f)            All of the representations and warranties of Bluerock contained
in this Agreement and the Collateral Agreements shall be true and correct as of
the date hereof; and

 

(g)           The form of Backstop Agreement shall have been approved by, and
executed by, the applicable parties and delivered to Carroll.

 

Section 5.             Capital Contributions, Loans, Percentage Interests and
Capital Accounts.

 

5.1          Initial Capital Contributions.

 

(a)          (i) Upon execution of this Agreement, Bluerock and Carroll shall
each make an initial Capital Contribution to the Company of cash in an amount
equal to $900,000.00 for Bluerock and $100,000.00 for Carroll, with such cash to
be used to fund the deposit required under the Purchase Agreement for the
Property, and (ii) subject to the conditions set forth in Section 4, Bluerock
and Carroll shall each make a supplemental, initial Capital Contribution to the
Company of cash in the amounts set forth in Exhibit A attached hereto (inclusive
of the initial Capital Contributions required under subsection (i) above and, in
the case of Carroll, inclusive of an initial Capital Contribution to the Company
of certain contractual rights and intangibles, including the assignment of the
purchase agreement to acquire the Property to the Company or its Subsidiary
valued at $225,000. The initial Capital Contribution of the Members to the
Company may include amounts for working capital.

 

 

 

  

(b)          In addition to the initial Capital Contributions set forth on
Exhibit A, the Company intends to require additional Capital Contributions from
the Members in order for the Company to directly or indirectly acquire
additional condominium units at the Property (the "Additional Condo Units") as
such units become available for acquisition and are approved by the lender under
the Loan for inclusion as additional collateral for, and for additional advances
under, the Loan Documents (any such capital contributions, the "Condo
Acquisition Capital Contributions"). If the purchase price for any particular
Additional Condo Unit does not exceed $100.00 per square foot, the Management
Committee shall have the authority to approve the acquisition of any such
Additional Condo Units. However, if the purchase price for any Additional Condo
Unit exceeds $100.00 per square foot, the Members must unanimously approve the
acquisition of any such Additional Condo Units, unless the price in excess of
$100.00 per square foot is (i) applicable to no more than ten (10) Additional
Condo Units and (ii) if purchased, would allow the Company to directly or
indirectly own at least ninety percent (90%) of the condominium units in the
Project, in which case, if subsections (i) and (ii) are both satisfied, then the
Management Committee shall have the sole authority to approve the acquisition of
those Additional Condo Units. Upon approval of the acquisition of any such
additional condominium units by the Members or the Management Committee as
required in accordance with this Section 5.1(b), and receipt of the applicable
approvals under the Loan Documents, the Manager shall issue a call to the
Members for the Condo Acquisition Capital Contributions in an amount necessary
to acquire such additional units and to pay all applicable lender and
acquisition related expenses. Upon receipt of any such demands, the Members
shall be obligated to remit their share of the Condo Acquisition Capital
Contributions to the Company, 90% by Bluerock and 10% by Carroll.

 

5.2           Additional Capital Contributions.

 

(a)           Additional Capital Contributions may be called for from the
Members (i) by either Member if the same is a Protective Capital Call, or (ii)
as reasonably determined by the Management Committee, by written notice to the
Members from time to time as and to the extent capital is necessary to effect an
investment or expenditures for the Property or the Company other than with
respect to Condo Acquisition Capital Contributions described in Section 5.l(b)
or (iii) in accordance with the requirements of Section 5.l (b) above. Except as
otherwise agreed by the Members (including with respect to the alternative
percentages set forth for the Condo Acquisition Capital Contributions described
in Section 5.l (b) above), such additional Capital Contributions shall be in an
amount for each Member equal to the product of the amount of the aggregate
Capital Contribution called multiplied by each Member's then current Percentage
Interest. Such additional Capital Contributions shall be payable by the Members
to the Company upon the earlier of (i) twenty (20) days after written request
from the Company, or (ii) the date when the Capital Contribution is required, as
set forth in a written request from the Company.

 

(b)           If a Member (a "Defaulting Member") fails to make a Capital
Contribution that is required as provided in Section 5.2(a) within the time
frame required therein (the amount of the failed contribution and related loan
shall be the "Default Amount"), the other Member, provided that it has made the
Capital Contribution required to be made by it, in addition to any other
remedies it may have hereunder or at law, shall have one or more of the
following remedies:

 

 

 

  

(1) to advance to the Company on behalf of, and as a loan to the Defaulting
Member, an amount equal to the Default Amount to be evidenced by a promissory
note in form reasonably satisfactory to the non-failing Member (each such loan,
a "Default Loan"). The Capital Account of the Defaulting Member shall be
credited with the amount of such Default Amount attributable to a Capital
Contribution and the aggregate of such amounts shall constitute a debt owed by
the Defaulting Member to the non-failing Member. Any Default Loan shall bear
interest at the rate of twenty percent (20%) per annum, but in no event in
excess of the highest rate permitted by applicable laws (the "Default Loan
Rate"), and shall be payable by the Defaulting Member on demand from the
non-failing Member and from any Distributions due to the Defaulting Member
hereunder. Interest on a Default Loan, to the extent unpaid, shall accrue and
compound on a quarterly basis. A Default Loan shall be prepayable, in whole or
in part, at any time or from time to time without penalty. Any such Default
Loans shall be with full recourse to the Defaulting Member and shall be secured
by the Defaulting Member's interest in the Company including, without
limitation, such Defaulting Member's right to Distributions. In furtherance
thereof, upon the making of such Default Loan, the Defaulting Member hereby
pledges, assigns and grants a security interest in its Interest to the
non-failing Member and agrees to promptly execute such documents and statements
reasonably requested by the non-failing Member to further evidence and secure
such security interest. Any advance by the non-failing Member on behalf of a
Defaulting Member pursuant to this Section 5.2(b)(1) shall be deemed to be a
Capital Contribution made by the Defaulting Member except as otherwise expressly
provided herein. All Distributions to the Defaulting Member hereunder shall be
applied first to payment of any interest due under any Default Loan and then to
principal until all amounts due thereunder are paid in full. While any Default
Loan is outstanding, the Company shall be obligated to pay directly to the
non-failing Member, for application to and until all Default Loans have been
paid in full, the amount of (x) any Distributions payable to the Defaulting
Member, and (y) any proceeds of the sale of the Defaulting Member's Interest in
the Company;

   

(2)           subject to any applicable thin capitalization limitations on
indebtedness of the Company for U.S. federal income tax purposes, to treat the
non-failing Member's portion of such Capital Contribution as a loan to the
Company (rather than a Capital Contribution) and to advance to the Company as a
loan to the Company an amount equal to the Default Amount, which loan shall be
evidenced by a promissory note in form reasonably satisfactory to the
non-failing Member and which loan shall bear interest at the Default Loan Rate
and be payable on a first priority basis by the Company from available Cash Flow
and prior to any Distributions made to any Member. If each Member has loans
outstanding to the Company under this provision, such loans shall be payable to
each Member in proportion to the outstanding balances of such loans to each
Member at the time of payment. Any advance to the Company pursuant to this
Section 5.2(b)(2) shall not be treated as a Capital Contribution made by the
Defaulting Member;

 

(3)           to make an additional Capital Contribution to the Company equal to
the Default Amount whereupon the Percentage Interests of the Members shall be
recalculated to (i) increase the non-defaulting Member's Percentage Interest by
the percentage ("Applicable Adjustment Percentage") determined by dividing one
hundred fifty percent (150%) of the Default Amount by the sum of the Members'
Total Investment (taking into account the actual amount of such additional
Capital Contribution) and by increasing its Total Investment solely for purposes
of determining the Member's Percentage Interest, by one and one-half of the
amount of the Default Amount, and (ii) to reduce the Defaulting Member's
Percentage Interest by the Applicable Adjustment Percentage and by decreasing
its Total Investment solely for purposes of determining the Member's Percentage
Interest by one-half of the amount of the Default Amount; or

 

(4)           in lieu of the remedies set forth in subparagraphs (1), (2) or
(3), revoke its portion of such additional Capital Contribution, whereupon the
portion of the Capital Contribution made by the non-failing Member shall be
returned within ten (10) days.

 

 

 

  

(c) Notwithstanding the foregoing provisions of this Section 5.2, no additional
Capital Contributions shall be required from any Member if (i) the Company or
any other Person shall be in default (or with notice or the passage of time or
both, would be in default) in any material respect under any loan, indenture,
mortgage, lease, agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company (or any of its Subsidiaries) or
any of its properties or assets is or may be bound, (ii) any other Member, the
Company or any of its Subsidiaries shall be insolvent or bankrupt or in the
process of liquidation, termination or dissolution, (iii) any other Member, the
Company or any of its Subsidiaries shall be subjected to any pending litigation
(x) in which the amount in controversy exceeds $500,000, (y) which litigation is
not being defended by an insurance company who would be responsible for the
payment of any judgment in such litigation, and (z) which litigation if
adversely determined could have a material adverse effect on such other Member
and/or the Company or any of its Subsidiaries and/or could interfere with their
ability to perform their obligations hereunder or under any Collateral
Agreement, or (iv) there has been a material adverse change in (including, but
not limited to, the financial condition of) any other Member (and/or its
Affiliates) which, in such Member's reasonable judgment, prevents such other
Member (and/or its Affiliates from performing, or substantially interferes with
their ability to perform, their obligations hereunder or under any Collateral
Agreement. If any of the foregoing events shall have occurred and any Member
elects not to make a Capital Contribution on account thereof, then any other
Member which has made its pro rata share of such Capital Contribution shall be
entitled to a return of such Capital Contribution from the Company.

 

5.3           Percentage Ownership Interest. The Members shall have the initial
percentage ownership interests (as the same are adjusted as provided in this
Agreement, a "Percentage Interest") in the Company set forth on Exhibit A
immediately following the Capital Contributions provided for in Section 5.1 (a).
The Percentage Interests of the Members in the Company shall be adjusted
monthly, and if appropriate to reflect any pending adjustments that have been
determined but not yet effected, prior to any request for Additional Capital
Contributions pursuant to Section 5.2 or any distributions to Members pursuant
to Section 6.1, so that the respective Percentage Interests of the Members at
any time shall be in proportion to their respective cumulative Total Investment
made (or deemed to be made) pursuant to Sections 5.1 and 5.2, as the same may be
further adjusted pursuant to Section 5.2(b)(3). Percentage Interests shall not
be adjusted by distributions made (or deemed made) to a Member.

 

5.4           Return of Capital Contribution. Except as approved by each of the
Members, no Member shall have any right to withdraw or make a demand for
withdrawal of the balance reflected in such Member's Capital Account (as
determined under Section 5.6) until the full and complete winding up and
liquidation of the business of the Company.

 

5.5           No Interest on Capital. Interest earned on Company funds shall
inure solely to the benefit of the Company, and no interest shall be paid upon
any Capital Contributions nor upon any undistributed or reinvested income or
profits of the Company.

 

5.6           Capital Accounts. A separate capital account (the "Capital
Account") shall be maintained for each Member in accordance with Section
1.704-1(b)(2)(iv) of the Regulations. Without limiting the foregoing, the
Capital Account of each Member shall be increased by (i) the amount of any
Capital Contributions made by such Member, (ii) the amount of Income allocated
to such Member and (iii) the amount of income or profits, if any, allocated to
such Member not otherwise taken into account in this Section 5.6. The Capital
Account of each Member shall be reduced by (i) the amount of any cash and the
fair market value of any property distributed to the Member by the Company (net
of liabilities secured by such distributed property that the Member is
considered to assume or take subject to), (ii) the amount of Loss allocated to
the Member and (iii) the amount of expenses or losses, if any, allocated to such
Member not otherwise taken into account in this Section 5.6. The Capital
Accounts of the Members shall not be increased or decreased pursuant to
Regulations Section 1.704-l(b)(2)(iv)(f) to reflect a revaluation of the
Company's assets on the Company's books in connection with any contribution of
money or other property to the Company pursuant to Section 5.2 by existing
Members. If any property other than cash is distributed to a Member, the Capital
Accounts of the Members shall be adjusted as if such property had instead been
sold by the Company for a price equal to its fair market value, the gain or loss
allocated pursuant to Section 7, and the proceeds distributed in the manner set
forth in Section 6.1 or Section 13.3(d)(3). No Member shall be obligated to
restore any negative balance in its Capital Account. No Member shall be
compensated for any positive balance in its Capital Account except as otherwise
expressly provided herein. The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended to
comply with the provisions of Regulations Section 1.704-1(b)(2) and shall be
interpreted and applied in a manner consistent with such Regulations.

 

 

 

  

5.7           New Members. Upon approval by Bluerock and Carroll, the Company
may issue additional Interests and thereby admit a new Member or Members, as the
case may be, to the Company, only if such new Member (i) has delivered to the
Company its Capital Contribution, (ii) has agreed in writing to be bound by the
terms of any Collateral Agreements (including the Backstop Agreement) and this
Agreement by becoming a party hereto, and (iii) has delivered such additional
documentation as the Company shall reasonably require to so admit such new
Member to the Company. Without the prior written consent of each then-current
Member, a new Member may not be admitted to the Company if the Company would, or
may, have in the aggregate more than one hundred (100) members. For purposes of
determining the number of members under this Section 5.7, a Person (the
"beneficial owner") indirectly owning an interest in the Company through a
partnership, grantor trust or S corporation (as such terms are used in the Code)
(the "flow-through entity") shall be considered a member, but only if (i)
substantially all of the value of the beneficial owner's interest in the
flow-through entity is attributable to the flow-through entity's interest
(direct or indirect) in the Company and (ii) in the sole discretion of the
Management Committee, a principal purpose of the use of the flow-through entity
is to permit the Company to satisfy the 100-member limitation.

 

Section 6.             Distributions.

 

6.1           Distribution of Distributable Funds

 

(a)           The Management Committee shall calculate and determine the amount
of Distributable Funds for each applicable period. Except as provided in
Sections 5.2(b), 6.1 or 13.3 or otherwise provided hereunder, Distributable
Funds, if any, shall be distributed to the Members, on a monthly basis based on
a calendar year, so long as the Loan is outstanding. Thereafter, such
distributions shall be made on the 15th day of each month or from time to time
as determined by the Management Committee.

 

(b)           Any distributions otherwise payable to a Member under this
Agreement shall be applied first to satisfy amounts due and payable on account
of the indemnity and/or contribution obligations of such Member under this
Agreement and/or any other agreement delivered by such Member to the Company or
any other Member but shall be deemed distributed to such Member for purposes of
this Agreement.

 

(c)           Distributable Funds shall be distributed in the following order
and priority:

 

(1)           First, to the Members in proportion to their respective Percentage
Interests until each Member shall realize through Distributions and actually
receive the Preferred Return; and

 

(2)           Second, the balance, if any, of such Distributable Funds remaining
after the distributions pursuant to (1) above shall be distributed as follows:

 

a. if a Carroll Change Event has occurred, such Distributable Funds shall be
distributed to the Members in proportion to their Percentage Interests; and

 

b. if a Carroll Change Event has not occurred, such Distributable Funds shall be
distributed as follows: (A) first, an amount equal to thirty percent (30%) of
such Distributable Funds shall be distributed to Carroll and an amount equal to
seventy percent (70%) of such Distributable Funds shall be distributed to
Bluerock until Bluerock shall have actually realized and received through
Distributions a fifteen percent (15%) Internal Rate of Return and (B)
thereafter, an amount equal to forty percent (40%) of such Distributable Funds
shall be distributed to Carroll and an amount equal to sixty percent (60%) of
such Distributable Funds shall be distributed to Bluerock.

 

 

 

  

6.2           Distributions in Kind. In the discretion of the Management
Committee, Distributable Funds may be distributed to the Members in cash or in
kind and Members may be compelled to accept a distribution of any asset in kind
even if the percentage of that asset distributed to it exceeds a percentage of
that asset that is equal to the percentage in which such Member shares in
distributions from the Company. In the case of all assets to be distributed in
kind, the amount of the distribution shall equal the fair market value of the
asset distributed as determined by the Management Committee. In the case of a
distribution of publicly traded property, the fair market value of such property
shall be deemed to be the average closing price for such property for the thirty
(30) day period immediately prior to the distribution, or if such property has
not yet been publicly traded for thirty (30) days, the average closing price of
such property for the period prior to the distribution in which the property has
been publicly traded.

 

Section 7.             Allocations.

 

7.1           Allocation of Net Income and Net Losses Other than in Liquidation.
Except as otherwise provided in this Agreement, Net Income and Net Losses of the
Company for each Fiscal Year shall be allocated among the Members in a manner
such that, as of the end of such Fiscal Year and taking into account all prior
allocations of Net Income and Net Losses of the Company and all distributions
made by the Company through such date, the Capital Account of each Member is, as
nearly as possible, equal to the distributions that would be made to such Member
pursuant to Section 6.1 if the Company were dissolved, its affairs wound up and
assets sold for cash equal to their tax basis (or book value in the case of
assets that have been revalued in accordance with Section 704(b) of the Code),
all Company liabilities were satisfied, and the net assets of the Company were
distributed in accordance with Section 6.1 immediately after such allocation.

 

7.2           Allocation of Net Income and Net Losses in Liquidation. Net Income
and Net Losses realized by the Company in connection with the liquidation of the
Company pursuant to Section 13 shall be allocated among the Members in a manner
such that, taking into account all prior allocations of Net Income and Net
Losses of the Company and all distributions made by the Company through such
date, the Capital Account of each Member is, as nearly as possible, equal to the
amount which such Member is entitled to receive pursuant to Section 13.3(d)(3).

 

7.3           U.S. Tax Allocations.

 

(a)           Subject to Section 704(c) of the Code, for U.S. federal and state
income tax purposes, all items of Company income, gain, loss, deduction and
credit shall be allocated among the Members in the same manner as the
corresponding item of income, gain, loss, deduction or credit was allocated
pursuant to the preceding paragraphs of this Section 7.

 

(b)           In accordance with Code Section 704(c) and the Treasury
regulations promulgated thereunder, income and loss with respect to any property
contributed to the capital of the Company (including, if the property so
contributed constitutes a partnership interest, the applicable distributive
share of each item of income, gain, loss, expense and other items attributable
to such partnership interest whether expressly so allocated or reflected in
partnership allocations) shall, solely for U.S. federal income tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such property to the Company for U.S. federal income tax
purposes and its Agreed Upon Value at the time of contribution. Such allocation
shall be made in accordance with the "traditional method" set forth in
Regulations Section l.704-3(b) unless the Members unanimously agree to another
permissible method under such Regulations.

 

 

 

  

(c)           Any elections or other decisions relating to such allocations
shall be made by the Members in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Section 7.3 are
solely for purposes of U.S. federal, state and local income taxes and shall not
affect, or in any way be taken into account in computing, any Member's share of
Net Income, Net Loss, other items or distributions pursuant to any provisions of
this Agreement.

 

Section 8.             Books, Records, Tax Matters and Bank Accounts.

 

8.1           Books and Records. The books and records of account of the Company
shall be maintained in accordance with industry standards and shall be based on
the Property Manager Reports. The books and records shall be maintained at the
Company's principal office or at a location designated by the Management
Committee, and all such books and records (and the dealings and other affairs of
the Company and its Subsidiaries) shall be available to any Member at such
location for review, investigation, audit and copying, at such Member's sole
cost and expense, during normal business hours on at least twenty-four (24)
hours prior notice. In connection with such review, investigation or audit, such
Member (and its representatives and agents) shall have the unfettered right to
meet and consult with any and all employees of Property Manager (or any of their
respective Affiliates) and to attend meetings and independently meet and consult
with any and all third parties having dealings or any other relationship with
the Company or any of its Subsidiaries or with Property Manager in respect of
the Company or any of its Subsidiaries.

 

8.2           Reports and Financial Statements.

 

(a)           Within thirty (30) days of the end of each Fiscal Year, the
Manager shall cause each Member to be furnished with two sets of the following
additional annual reports computed as of the last day of the Fiscal Year:

 

(1)           An unaudited balance sheet of the Company;

 

(2)           An unaudited statement of the Company's profit and loss; and

 

(3)           A statement of the Members’ Capital Accounts and changes therein
for such Fiscal Year.

 

(b)          Within fifteen (15) days of the end of each quarter of each Fiscal
Year, and provided that any such request was made prior to the end of the
quarter, the Property Manager shall cause to be furnished to Bluerock such
information as requested by Bluerock as is necessary for any reporting
requirements of the SOIFs or BR Growth or for any reporting requirements of 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 reasonably
requested by Bluerock. Further, the Property Manager shall cooperate in a
reasonable manner at the request of any Member 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 its 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.

 

 

 

  

(c)           The Members acknowledge that the Property Manager is obligated to
perform Property-related accounting and furnish Property-related accounting
statements under the terms of the Management Agreement (the "Property Manager
Reports"). Manager shall be entitled to rely on the Property Manager Reports
with respect to its obligations under this Section ' and the Members acknowledge
that the reports to be furnished shall be based on the Property Manager Reports,
without any duty on the part of the Manager to further investigate the
completeness, accuracy or adequacy of the Property Manager Reports.

 

8.3           Tax Matters Member. Bluerock is hereby designated as the "tax
matters partner" of the Company and the Subsidiaries, as defined in Section
6231(a)(7) of the Code (the "Tax Matters Member") and shall prepare or cause to
be prepared all income and other tax returns of the Company and its Subsidiaries
pursuant to the terms and conditions of Section 8.5. Except as otherwise
provided in this Agreement, all elections required or permitted to be made by
the Company and its Subsidiaries under the Code or state tax law shall be timely
determined and made by Bluerock after consultation with Carroll. The Members
intend that the Company be treated as a partnership for U.S. federal, state and
local tax purposes, and the Members will not elect or authorize any person to
elect to change the status of the Company from that of a partnership for U.S.
federal, state and local income tax purposes. Bluerock agrees to consult with
Carroll with respect to any written notice of any material tax elections and any
material inquiries, claims, assessments, audits, controversies or similar events
received from any taxing authority. In addition, upon the request of any Member,
the Company and each of its Subsidiaries shall make an election pursuant to Code
Section 754 to adjust the basis of the Company's property in the manner provided
in Code Sections 734(b) and 743(b). The Company hereby indemnifies and holds
harmless Bluerock from and against any claim, loss, expense, liability, action
or damage resulting from its acting or its failure to take any action as the
"tax matters partner" of the Company and its Subsidiaries, provided that any
such action or failure to act does not constitute gross negligence or willful
misconduct by Bluerock.

 

8.4           Bank Accounts. All funds of the Company are to be deposited in the
Company's name in such bank account or accounts as may be designated by the
Management Committee or in the Management Agreement and shall be withdrawn on
the signature of such Person or Persons as the Management Committee may
authorize.

 

8.5           Tax Returns. Bluerock shall cause to be prepared all income and
other tax returns of the Company and its Subsidiaries required by applicable law
and shall submit such returns to the Management Committee for its review,
comment and approval at least twenty (20) 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,
Manager 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.

 

8.6           Expenses. Notwithstanding any contrary provision of this
Agreement, the Members acknowledge and agree that the reasonable expenses and
charges incurred directly or indirectly by or on behalf of the Manager,
Bluerock, Carroll or the Property Manager in connection with its obligations
under this Section 8 will be reimbursed by the Company to the applicable party.
Further, it is expressly understood and agreed that all reasonable expenses of
Bluerock, Carroll and their principals and Affiliates associated with the
Company or the Property, along with all accounting and administrative expenses
for Carroll, shall be reimbursed by the Company, including without limitation,
filing fees, tax returns, closing costs, due diligence and travel.

 

 

 

  

Section 9.             Management and Operations.

 

9.1           Management.

 

(a)           The Company shall be managed by Bluerock ("Manager"), who shall
have the authority to exercise all of the powers and privileges granted by the
Act, any other law or this Agreement, together with any powers incidental
thereto, and to take any other action not prohibited under the Act or other
applicable law, so far as such powers or actions are necessary or convenient or
related to the conduct, promotion or attainment of the business, purposes or
activities of the Company. Manager shall manage the operations and affairs of
the Company, subject to the oversight of the Management Committee. To the extent
that Bluerock or a Bluerock Transferee Transfers all or a portion of its
Interest in accordance with Section 12 to a Bluerock Transferee, such Bluerock
Transferee may be appointed as the Manager under this Section 9. l(a) by
Bluerock or a Bluerock Transferee then holding all or a portion of an Interest
without any further action or authorization by any Member.

 

(b)           The Management Committee may appoint individuals to act on behalf
of the Company with such titles and authority as determined from time to time by
the Management Committee.

 

(c)           Notwithstanding the foregoing, all Major Decisions shall require
the consent of both Members.

 

9.2           Management Committee.

 

(a)           Bluerock and Carroll hereby establish a management committee (the
"Management Committee"). The Management Committee shall consist of four (4)
individuals appointed to act as "representatives" of the Member that appointed
him or her (the "Representatives") as follows: (i) Bluerock shall be entitled to
designate two (2) Representatives to represent Bluerock; and (ii) Carroll shall
be entitled to designate two (2) Representatives to represent Carroll. The
initial members of the Management Committee are set forth on Exhibit A. Bluerock
and Carroll each represents, warrants and covenants that the Representatives
designated by them on Exhibit A have, and shall at all times have, the full
power and authority to make decisions and vote as a member of the Management
Committee, and that such Representatives' votes as members of the Management
Committee will be binding on each of them and any transferee of all or a portion
of their Interest; unless and until such time as Bluerock or Carroll or their
transferee notifies the other Member of a change in a Representative, after
which time this sentence shall apply only with respect to the replacement
Representative.

 

(b)           Each member of the Management Committee shall hold office until
death, resignation or removal at the pleasure of the Member that appointed him
or her. If a vacancy occurs on the Management Committee, the Person with the
right to appoint and remove such vacating Representative shall appoint his or
her successor. A Member shall lose its right to have Representatives on the
Management Committee, and its Representatives on the Management Committee shall
be deemed to be automatically removed, as of the date on which such Member
ceases to be a Member or as otherwise provided in this Agreement. If Bluerock or
a Bluerock Transferee Transfers all or a portion of its Interest to a Bluerock
Transferee pursuant to Section 12.2, such Bluerock Transferee shall
automatically, and without any further action or authorization by any Member,
succeed to the rights and powers of Bluerock under this Section 9 as may be
agreed to between Bluerock or the Bluerock Transferee which is transferring the
Interest, on the one hand, and the Bluerock Transferee to which the Interest is
being transferred, on the other hand, including the shared or unilateral right
to appoint the Representatives that Bluerock was theretofore entitled to appoint
pursuant to Section 9.2(a).

 

 

 

  

(c)           The Management Committee shall meet once every quarter (unless
waived by mutual agreement of the Members) and at such other times as may be
necessary for the conduct of the Company's business on at least five (5) days
prior written notice of the time and place of such meeting given by any
Representative. Notice of regular meetings of the Management Committee is not
required. Representatives may waive in writing the requirements for notice
before, at or after a special meeting, and attendance at such a meeting without
objection by a Representative shall be deemed a waiver of such notice
requirement.

 

(d)           The Management Committee shall have the right, but not the
obligation, to elect one of the Representatives or another person to serve as
Secretary of the Management Committee. Such person shall hold office until his
or her death, resignation or removal by a vote of the Management Committee. The
Secretary or a person designated by him or her shall take written minutes of the
proceedings of the meetings of the Management Committee, and such minutes shall
be filed with the records of the Company.

 

(e)           The only Representatives required to constitute a quorum for a
meeting of the Management Committee shall be one (1) Representative appointed by
Bluerock and one (1) Representative appointed by Carroll; provided, however,
that if Carroll has not appointed at least one (1) Representative to the
Management Committee at the time of such meeting (for example, if each Carroll
Representative has been removed and not replaced), then a quorum for a meeting
of the Management Committee shall be one (I) Representative appointed by
Bluerock. Each of the two (2) Representatives appointed by Bluerock shall be
entitled to cast two (2) votes on any matter that comes before the Management
Committee and each of the Representatives appointed by Carroll 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 shall require the affirmative
vote (including votes cast by proxy) of at least a majority of the votes of the
Representatives then in office voting at a duly held meeting of the Management
Committee.

 

(f)            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 9 shall constitute presence in person at such meeting.

 

(g)           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 the Representatives having not less than the minimum
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.

 

(h)           Except as otherwise expressly provided in this Agreement, none of
the Members or their Representatives (in their capacities as members of the
Management Committee) only, shall have any duties or liabilities to the Company
or any other Member (including any fiduciary duties), whether or not such duties
or liabilities otherwise arise or exist in law or in equity, and each Member
hereby expressly waives any such duties or liabilities; provided, however, that
this Section 9.2(h) shall not eliminate or limit the liability of such
Representatives or the Members (A) for acts or omissions that involve fraud,
intentional misconduct or a knowing and culpable violation of law, or (B) for
any transaction not permitted or authorized under or pursuant to this Agreement
from which such Representative or Member derived a personal benefit unless the
Management Committee has approved in writing such transaction in accordance with
this Agreement; provided, further, however, that the duty of care of each of
such Representatives and the Members is to not act with fraud, intentional
misconduct or a knowing and culpable violation of law. Except as provided in
this Agreement, whenever in this Agreement a Representative of a Member and/or a
Member is permitted or required to make a decision affecting or involving the
Company, any Member or any other Person, such Representative and/or such Member
shall be entitled to consider only such interests and factors as he, she or it
desires, including a particular Member's interests, and shall, to the fullest
extent permitted by applicable law, have no duty or obligation to give any
consideration to any interest of or factors affecting the Company or any Member.

 

 

 

  

9.3           Annual Business Plan. (a) No later than thirty (30) days prior to
the end of the then current Fiscal Year (except for the 2014 Annual Business
Plan, as agreed to by the Members, a copy of which is attached hereto as Exhibit
D), Property Manager shall prepare (or cause to be prepared) and shall deliver
to the Members for their unanimous approval the annual business plan for the
next Fiscal Year. A plan approved by the Members is referred to herein as the
"Annual Business Plan." If final approval of a proposed annual business plan by
all Members has not been given by the beginning of the Fiscal Year to which such
proposed annual business plan relates, Property Manager shall operate the
Property on the basis of an Annual Business Plan determined by (i) assuming that
the revenue from the Property will increase to 103% of the revenues collected in
the prior Fiscal Year, (ii) assuming that the Controllable Expenses will
increase to 103% of the amount of the actual Controllable Expenses incurred in
the prior Fiscal Year, (iii) increasing all Uncontrollable Expenses by any
anticipated or known increases in such Uncontrollable Expenses, and (iv)
including any expenses for a threatened or existing emergency event that could
cause or is causing material damage to the Property. In the event that the
number of condominium units has increased from the prior Fiscal Year, the Annual
Business Plan established pursuant to the preceding sentence would be further
adjusted as follows: (1) the amount of revenues determined in accordance with
clause (i) above in this Section 9.3 shall be calculated on a per-unit basis
based on the type of condominium unit ("Per Unit Revenue"); such Per Unit
Revenue shall be applied on a consistent basis to the newly acquired condominium
units based on the type of condominium unit; and the amount of revenues in the
Annual Business Plan shall be increased by the revenues associated with the
newly acquired condominium units as determined pursuant to this sentence; (2)
the amount of Controllable Expenses determined in accordance with clause (ii)
above in this Section 9.3 shall be calculated on a per-unit basis based on the
type of condominium unit ("Per Unit Controllable Expenses"); such Per Unit
Controllable Expenses shall be applied on a consistent basis to the newly
acquired condominium units based on the type of condominium unit; and the amount
of Controllable Expenses in the Annual Business Plan shall be increased by the
Controllable Expenses associated with the newly acquired condominium units as
determined pursuant to this sentence; (3) items referenced in clauses (iii) and
(iv) above in this Section 9.3 shall likewise apply to the newly acquired
condominium units. If a Member fails either to approve or disapprove of any
proposed annual business plan within thirty (30) days after receipt of written
request for such approval, such Member shall be deemed to have approved of such
proposed annual business plan. No material changes or departures from any item
in an Annual Business Plan approved in accordance with the terms herein shall be
made by Property Manager without the prior unanimous approval of the Members.
The Property Manager shall provide quarterly updates to the Annual Business
Plan, solely for informational purposes. Each Annual Business Plan shall include
the information set forth in Exhibit B.

 

(b) Notwithstanding subsection (a) above, (i) the Annual Business Plan may, at
any time, be amended upon unanimous approval by the Members, (ii) failure on the
part of the Members to agree on any such Annual Business Plan (or any amendment
thereto) shall not constitute the failure of a Major Decision and shall not
entitle either Member to exercise the rights under Section 15 applicable to a
failure to obtain agreement on Major Decisions, (iii) if Property Manager fails
to timely deliver a proposed annual business plan for the forthcoming Fiscal
Year, the Management Committee shall solely have the right to prepare and
propose it for review and approval solely by the Management Committee and (iv)
if the Members are unable to agree on an Annual Business Plan for two
consecutive years, the Management Committee shall solely have the right to
prepare and propose it for the third year, for review and approval solely by the
Management Committee.

 

 

 

  

9.4           Implementation of Plan by Property Manager. Property Manager
shall, subject to the limitations contained herein, the availability of
operating revenues and other cash flow and any other matters outside of the
reasonable control of Property Manager, implement and shall not vary or modify
the then applicable Annual Business Plan without the prior written approval of
the Management Committee. Property Manager shall promptly advise and inform the
Management Committee of any transaction, notice, event or proposal directly
relating to the management and operation of the Property, other assets of the
Company or the Company or any Subsidiary of the Company which does or is likely
to significantly affect, either adversely or favorably, such Property, other
assets of the Company or the Company or such Subsidiary or cause a significant
deviation from the Annual Business Plan. Nothing contained herein shall in any
way diminish the obligations or duties of Property Manager hereunder.

 

9.5           Affiliate Transactions. No agreement shall be entered into by the
Company or any Subsidiary with a Member or any Affiliate of a Member and no
decision shall be made in respect of any such agreement (including, without
limitation, the enforcement or termination thereof) unless such agreement or
related decision shall have been approved in writing by both Members. Without
limiting the foregoing, any such agreement shall be on arm's length terms and
conditions, be terminable on fifteen (15) days' notice without penalty and the
terms and conditions of such agreement shall be disclosed to all Representatives
prior to the execution and delivery thereof. Further, the written approval of
Bluerock shall be required prior to the use of the name "Bluerock" in connection
with any matter or transaction.

 

9.6           Other Activities.

 

(a)           Right to Participation in Other Member Ventures. Neither the
Company nor any Member (or any Affiliate of any Member) shall have any right by
virtue of this Agreement either to participate in or to share in any other now
existing or future ventures, activities or opportunities of any of the other
Members or their Affiliates, or in the income or proceeds derived from such
ventures, activities or opportunities.

 

(b)           Limitation on Actions of Members; Binding Authority. No Member
shall, without the prior written consent of the other Members, take any action
on behalf of, or in the name of, the Company, or enter into any contract,
agreement, commitment or obligation binding upon the Company, or, in its
capacity as a Member or Manager of the Company, perform any act in any way
relating to the Company or the Company's assets, except in a manner and to the
extent consistent with the provisions of this Agreement. Notwithstanding any
provision in this Agreement to the contrary and without the need for any
additional consent from any Person, the Company is hereby authorized to execute,
deliver and perform that certain Consent and Agreement of the Company attached
to any Pledge Agreement.

 

9.7           Management Agreement.

 

(a)           Independent Contractor. CMG, as Property Manager, has agreed to
provide management services to the Company (or a Subsidiary of the Company) on
the terms set forth in the Management Agreement; and it is agreed that Property
Manager shall provide such management services to the Company (or a Subsidiary
of the Company) as an independent contractor. In addition, the Company shall
also use good faith efforts to have CMG appointed as the manager of the
community association (on terms acceptable to the Company and the community
association) for purposes of managing the common elements related to the
Property; provided, however, that the Company's failure to accomplish such
appointment shall not constitute a breach or default under, or the failure of a
condition to the effectiveness of, this Agreement.

 

 

 

  

(b)           Management and Oversight Fees. The Company (or a Subsidiary of the
Company) has entered into the Management Agreement for the Property with
Property Manager (which Management Agreement shall be updated and supplemented
from time to time) pursuant to which Property Manager will provide the
development and management services described therein to the Company (or a
Subsidiary of the Company). Pursuant to the Management Agreement and subject to
the terms of the Loan Documents, Property Manager will be entitled to receive a
net property management fee equal to 2.75% of Gross Receipts (as defined in the
Management Agreement) (the "Property Management Fee"). CMG, as Property Manager,
shall also be entitled to a construction management fee of five percent (5.0%)
of the rehabilitation and renovation expenses for the Property, as set forth in
the Annual Business Plan. If CMG has been terminated as the Property Manager for
Cause, then Bluerock will be entitled to retain a new Property Manager and
receive an oversight fee equal to 1.0% of the Gross Receipts (the "Oversight
Fee"). It is understood that if CMG is terminated as the Property Manager
without Cause, Bluerock shall not be entitled to the Oversight Fee, unless
Bluerock purchases the Interest of Carroll pursuant to Section 15 or otherwise
by agreement of the parties. The foregoing shall not be deemed to imply that
Bluerock will have any unilateral right to purchase the Interest of Carroll
solely on account of the termination of CMG as Property Manager.

 

(c)           Termination of Management Agreement.

 

(1)           The Management Agreement shall be terminable as provided under its
terms and conditions by the Company or Bluerock or, as long as the Property
Manager is CMG, by Property Manager.

 

(2)           Notwithstanding anything to the contrary in this Section 9.7(c),
no termination of the Management Agreement or buyout of the other party's
Interest in the Company shall be permitted unless permitted or approved under
any applicable Collateral Agreement or under the Loan Documents.

 

(d)           Delegation. Any delegation of the responsibilities of Property
Manager or the subcontracting for such services will be subject to the prior
written consent of the Management Committee. Separate agreements may also be
entered into with Carroll, Bluerock, their respective Affiliates, or with third
parties for certain services to be provided to the Company, including leasing,
construction management, property management, asset management, technology
services, etc. Such arrangements shall be at market rates, and shall be entered
into only with the prior written approval of the Management Committee,
consistent with an approved budget and business plan for each asset. Unless
otherwise agreed, all such contracts will be payable on a monthly basis and will
be terminable upon thirty (30) days' notice for any reason or no reason.

 

9.8          Operation in Accordance with REOC/REIT Requirements.

 

(a)           The Members acknowledge that Bluerock or one or more of its
Affiliates (a "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
Bluerock and such BR Affiliate to so qualify. Notwithstanding anything herein to
the contrary, the Company and its Subsidiaries shall not take, or refrain from
taking, any action that Bluerock notifies the Company would result in Bluerock
or a BR Affiliate from failing to qualify as a REOC. The Members acknowledge and
agree that Bluerock may assign any or all of its rights or powers under this
Agreement as Manager, to designate committee representatives, to provide
consents and approvals, or any other rights or powers to one or more of its BR
Affiliates as it deems appropriate, and the exercise of any such rights or
powers by a BR Affiliate shall have full force and effect under this Agreement
without the need for any further consent or approval. Except as disclosed to
Bluerock, Carroll (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", and
(b) shall comply with any reasonable requirements specified by Bluerock in order
to ensure compliance with this Section 9.8.

 

 

 

  

(b)           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 Manager 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.

 

(c)           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:

 

(i)            Entering 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);

 

(ii)           Leasing 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;

 

(iii)          Acquiring 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;

 

(iv)          Acquiring 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;

 

(v)           Entering 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);

 

 

 

  

(vi)          Entering 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;

 

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

 

(viii)        Selling 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; or

 

(ix)           Failing 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; provided, however, any such cash distributions shall
be made in accordance with the priorities set forth Section 6.1(c).

 

Notwithstanding the foregoing prov1s1ons of this Section 9.8(c), 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 9.8(c). For
purposes of this Section 9.8(c), "REIT Prohibited Transactions" shall mean any
of the actions specifically set forth in Sections 9.8(c)(i) through (c)(ix) as
well as any action of which the Company receives notice from Bluerock or a REIT
Member that such action would result in a REIT Member losing its REIT status
under IRC Section 856 or would cause such REIT Member to be subject to any
punitive taxation pursuant to IRC Section 857(b)(6). The Loan or any loan
contemplated by Section 5.2(b) shall not be considered a REIT Prohibited
Transaction.

 

9.9           FCPA.

 

(a)           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.

 

 

 

  

(b)           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.

 

(c)           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.

 

Section 10.          Confidentiality.

 

10.1         Any information relating to a Member's business, operation or
finances which are proprietary to, or considered proprietary by, a Member are
hereinafter referred to as "Confidential Information". All Confidential
Information in tangible form (plans, writings, drawings, computer software and
programs, etc.) or provided to or conveyed orally or visually to a receiving
Member, shall be presumed to be Confidential Information at the time of delivery
to the receiving Member. All such Confidential Information shall be protected by
the receiving Member from disclosure with the same degree of care with which the
receiving Member protects its own Confidential Information from disclosure. Each
Member agrees: (i) not to disclose such Confidential Information to any Person
except to those of its employees or representatives who need to know such
Confidential Information in connection with the conduct of the business of the
Company and who have agreed to maintain the confidentiality of such Confidential
Information and (ii) neither it nor any of its employees or representatives will
use the Confidential Information for any purpose other than in connection with
the conduct of the business of the Company; provided that such restrictions
shall not apply if such Confidential Information:

 

(a)           is or hereafter becomes public, other than by breach of this
Agreement; was already in the receiving Member's possession prior to any
disclosure of the Confidential Information to the receiving Member by the
divulging Member; or has been or is hereafter obtained by the receiving Member
from a third party not bound by any confidentiality obligation with respect to
the Confidential Information; provided, further, that nothing herein shall
prevent any Member from disclosing any portion of such Confidential Information
(1) to the Company and allowing the Company to use such Confidential Information
in connection with the Company's business, (2) pursuant to judicial order or in
response to a governmental inquiry, by subpoena or other legal process, but only
to the extent required by such order, inquiry, subpoena or process, and only
after reasonable notice to the original divulging Member, as necessary or
appropriate in connection with or to prevent the audit by a governmental agency
of the accounts of Carroll or Bluerock, (4) in order to initiate, defend or
otherwise pursue legal proceedings between the parties regarding this Agreement,
(5) necessary in connection with a Transfer of an Interest permitted hereunder
or (6) to a Member's respective attorneys or accountants or other
representatives.

 

10.2         The Members and their Affiliates shall each act to safeguard the
secrecy and confidentiality of, and any proprietary rights to, any non-public
information relating to the Company and its business, except to the extent such
information is required to be disclosed by law or reasonably necessary to be
disclosed in order to carry out the business of the Company. Each Member may,
from time to time, provide the other Members written notice of its non- public
information which is subject to this Section 10.2.

 

 

 

  

10.3         Without limiting any of the other terms and provisions of this
Agreement (including, without limitation, Section 9.6), to the extent a Member
(the "Pursuer") provides the other Member with information relating to a
possible investment opportunity then being actively pursued by the Pursuer on
behalf of the Company, the other Member receiving such information shall not use
such information to pursue such investment opportunity for its own account to
the exclusion of the Pursuer so long as the Pursuer is actively pursuing such
opportunity on behalf of the Company and shall not disclose any Confidential
Information to any Person (except as expressly permitted hereunder) or take any
other action in connection therewith that is reasonably likely to cause damage
to the Pursuer.

 

Section 11.          Representations and Warranties.

 

11.1         In General. As of the date hereof, each of the Members hereby makes
each of the representations and warranties applicable to such Member as set
forth in Section 11.2. Such representations and warranties shall survive the
execution of this Agreement.

 

11.2         Representations and Warranties. Each Member hereby represents and
warrants that:

 

(a)           Due Incorporation or Formation; Authorization of Agreement. Such
Member is a corporation duly organized or a partnership or limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation and has the corporate,
partnership or company power and authority to own its property and carry on its
business as owned and carried on at the date hereof and as contemplated hereby.
Such Member is duly licensed or qualified to do business and in good standing in
each of the jurisdictions in which the failure to be so licensed or qualified
would have a material adverse effect on its financial condition or its ability
to perform its obligations hereunder. Such Member has the corporate, partnership
or company power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement has been duly authorized by all necessary corporate,
partnership or company action. This Agreement constitutes the legal, valid and
binding obligation of such Member.

 

(b)           No Conflict with Restrictions; No Default. Neither the execution,
delivery or performance of this Agreement nor the consummation by such Member
(or any of its Affiliates) of the transactions contemplated hereby (i) does or
will conflict with, violate or result in a breach of (or has conflicted with,
violated or resulted in a breach of) any of the terms, conditions or provisions
of any law, regulation, order, writ, injunction, decree, determination or award
of any court, any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, applicable to such Member or any of its
Affiliates, (ii) does or will conflict with, violate, result in a breach of or
constitute a default under (or has conflicted with, violated, resulted in a
breach of or constituted a default under) any of the terms, conditions or
provisions of the articles of incorporation, bylaws, partnership agreement or
operating agreement of such Member or any of its Affiliates or of any material
agreement or instrument to which such Member or any of its Affiliates is a party
or by which such Member or any of its Affiliates is or may be bound or to which
any of its properties or assets is subject, (iii) does or will conflict with,
violate, result in (or has conflicted with, violated or resulted in) a breach
of, constitute (or has constituted) a default under (whether with notice or
lapse of time or both), accelerate or permit the acceleration of (or has
accelerated) the performance required by, give (or has given) to others any
material interests or rights or require any consent, authorization or approval
under any indenture, mortgage, lease, agreement or instrument to which such
Member or any of its Affiliates is a party or by which such Member or any of its
Affiliates or any of their properties or assets is or may be bound or (iv) does
or will result (or has resulted) in the creation or imposition of any lien upon
any of the properties or assets of such Member or any of its Affiliates.

 

(c)           Governmental Authorizations. Any registration, declaration or
filing with, or consent, approval, license, permit or other authorization or
order by, or exemption or other action of, any governmental, administrative or
regulatory authority, domestic or foreign, that was or is required in connection
with the valid execution, delivery, acceptance and performance by such Member
under this Agreement or consummation by such Member (or any of its Affiliates)
of any transaction contemplated hereby has been completed, made or obtained on
or before the date hereof.

 

 

 

  

(d)           Litigation. There are no actions, suits, proceedings or
investigations pending, or, to the knowledge of such Member or any of its
Affiliates, threatened against or affecting such Member or any of its Affiliates
or any of their properties, assets or businesses in any court or before or by
any governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator which could, if adversely determined (or, in the case
of an investigation could lead to any action, suit or proceeding which if
adversely determined could) reasonably be expected to materially impair such
Member's ability to perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition of such Member;
such Member or any of its Affiliates has not received any currently effective
notice of any default, and such Member or any of its Affiliates is not in
default, under any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental department, board, agency
or instrumentality, domestic or foreign, or any arbitrator which could
reasonably be expected to materially impair such Member's (or any of its
Affiliate's) ability to perform its obligations under this Agreement or to have
a material adverse effect on the consolidated financial condition of such
Member.

 

(e)           Investigation. Such Member is acquiring its Interest based upon
its own investigation, and the exercise by such Member of its rights and the
performance of its obligations under this Agreement will be based upon its own
investigation, analysis and expertise. Such Member is a sophisticated investor
possessing an expertise in analyzing the benefits and risks associated with
acquiring investments that are similar to the acquisition of its Interest.

 

(f)            Broker. No broker, agent or other person acting as such on behalf
of such Member was instrumental in consummating this transaction and that no
conversations or prior negotiations were had by such party with any broker,
agent or other such person concerning the transaction that is the subject of
this Agreement.

 

(g)           Investment Company Act. Neither such Member nor any of its
Affiliates is, nor will the Company as a result of such Member holding an
interest therein be, an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended.

 

(f)            Securities Matters.

 

(1)           None of the Interests are registered under the Securities Act or
any state securities laws. Such Member understands that the offering, issuance
and sale of the Interests are intended to be exempt from registration under the
Securities Act, based, in part, upon the representations, warranties and
agreements contained in this Agreement. Such Member is an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.

 

(2)           Neither the Securities and Exchange Commission nor any state
securities commission has approved the Interests or passed upon or endorsed the
merits of the offer or sale of the Interests. Such Member is acquiring the
Interests solely for such Member's own account for investment and not with a
view to resale or distribution thereof in violation of the Securities Act.

 

(3)           Such Member is unaware of, and in no way relying on, any form of
general solicitation or general advertising in connection with the offer and
sale of the Interests, and no Member has taken any action which could give rise
to any claim by any person for brokerage commissions, finders' fees (without
regard to any finders' fees payable by the Company directly) or the like
relating to the transactions contemplated hereby.

 

(4)           Such Member is not relying on the Company or any of its officers,
directors, employees, advisors or representatives with regard to the tax and
other economic considerations of an investment in the Interests, and such Member
has relied on the advice of only such Member's advisors.

 

 

 

  

(5)           Such Member understands that the Interests may not be sold,
hypothecated or otherwise disposed of unless subsequently registered under the
Securities Act and applicable state securities laws, or an exemption from
registration is available. Such Member agrees that it will not attempt to sell,
transfer, assign, pledge or otherwise dispose of all or any portion of the
Interests in violation of this Agreement.

 

(6)           Such Member has adequate means for providing for its current
financial needs and anticipated future needs and possible contingencies and
emergencies and has no need for liquidity in the investment in the Interests.

 

(7)           Such Member has significant prior investment experience, including
investment in non-listed and non-registered securities. Such Member is
knowledgeable about investment considerations and has a sufficient net worth to
sustain a loss of such Member's entire investment in the Company in the event
such a loss should occur. Such Member's overall commitment to investments which
are not readily marketable is not excessive in view of such Member's net worth
and financial circumstances and the purchase of the Interests will not cause
such commitment to become excessive. The investment in the Interests is suitable
for such Member.

 

(8)           Such Member represents to the Company that the information
contained in this subparagraph (h) and in all other writings, if any, furnished
to the Company with regard to such Member (to the extent such writings relate to
its exemption from registration under the Securities Act) is complete and
accurate and may be relied upon by the Company in determining the availability
of an exemption from registration under federal and state securities laws in
connection with the sale of the Interests.

 

Section 12.          Sale, Assignment, Transfer or other Disposition.

 

12.1         Prohibited Transfers. Except as otherwise provided in this Section
12, Sections 5.2(b), 15.1 and 15.2, or as approved by the Management Committee,
no Member shall Transfer all or any part of its Interest, whether legal or
beneficial, in the Company, and any attempt to so Transfer such Interest (and
such Transfer) shall be null and void and of no effect. Notwithstanding the
foregoing, either Member shall have the right, with the consent of the other
Member, at any time to pledge to a lender or creditor, directly or indirectly,
all or any part of its Interest in the Company for such purposes as it deems
necessary in the ordinary course of its business and operations.

 

12.2         Affiliate Transfers.

 

(a)           Subject to the provisions of Section 12.2(b) hereof, and subject
in each case to the prior written approval of each Member (such approval not to
be unreasonably withheld), any Member may Transfer all or any portion of its
Interest in the Company at any time to an Affiliate of such Member, provided
that such Affiliate shall remain an Affiliate of such Member at all times that
such Affiliate holds such Interest. If such Affiliate shall thereafter cease
being an Affiliate of such Member while such Affiliate holds such Interest, such
cessation shall be a non-permitted Transfer and shall be deemed void ab initio,
whereupon the Member having made the Transfer shall, at its own and sole
expense, cause such putative transferee to disgorge all economic benefits and
otherwise indemnify the Company and the other Member(s) against loss or damage
under any Collateral Agreement.

 

(b)           Notwithstanding anything to the contrary contained in this
Agreement, the following Transfers shall not require the approval set forth in
Section 12.2(a):

 

 

 

  

(1)           Any Transfer by Carroll of up to one hundred percent (100%) of its
Interest to any Affiliate of Carroll Parent (a "Carroll Transferee"), it being
expressly understood and agreed that transfers of ownership interests in Carroll
shall not be prohibited as long as at least one of the Key Individuals
(collectively or individually) remains actively involved in the operation and
management of Carroll (to the extent that it continues to hold, or control, any
interest in the Company), Carroll Parent and any Carroll Transferee; and

 

(2)           Any Transfer by Bluerock or a Bluerock Transferee of up to one
hundred percent (100%) of its Interest to any Affiliate of Bluerock, including
but not limited to (A) BR Growth or any Person that is directly or indirectly
owned by BR Growth; (B) BR SOIF II or any Person that is directly or indirectly
owned by BR SOIF II; (C) BR SOIF III or any Person that is directly or
indirectly owned by BR SOIF II; (D) BR REIT or any Person that is directly or
indirectly owned by BR REIT; or (E) Bluerock Growth Fund II, LLC, or any Person
that is directly or indirectly owned by Bluerock Growth Fund II, LLC
(collectively, a "Bluerock Transferee");

 

provided however, as to subparagraphs (b)(l ) and (b)(2), and as to subparagraph
(a), no Transfer shall be permitted and shall be void ab initio if it shall
violate any "Transfer" provision of the Loan Documents or any applicable
Collateral Agreement with third party lenders.

 

(c)           Upon the execution by any such Carroll Transferee or Bluerock
Transferee of such documents necessary to admit such party into the Company and
to cause the Carroll Transferee or Bluerock Transferee (as applicable) to become
bound by this Agreement, the Carroll Transferee or Bluerock Transferee (as
applicable) shall become a Member, without any further action or authorization
by any Member.

 

(d)           The Transfer of any interest in Manager and any transferee of an
interest in Manager shall be recognized and permitted under this Agreement and
by the Members, without any further action or authorization by any Member.

 

12.3         Admission of Transferee; Partial Transfers. Notwithstanding
anything in this Section 12 to the contrary and except as provided in Section
5.2(b), no Transfer of Interests in the Company shall be permitted unless the
potential transferee is admitted as a Member under this Section 12.3:

 

(a)           If a Member Transfers all or any portion of its Interest in the
Company, such transferee may become a Member if (i) such transferee executes and
agrees to be bound by this Agreement, (ii) the transferor and/or transferee pays
all reasonable legal and other fees and expenses incurred by the Company in
connection with such assignment and substitution and (iii) the transferor and
transferee execute such documents and deliver such certificates to the Company
and the remaining Members as may be required by applicable law or otherwise
advisable; and

 

(b)           Notwithstanding the foregoing, any Transfer or purported Transfer
of any Interest, whether to another Member or to a third party, shall be of no
effect and void ab initio, and such transferee shall not become a Member or an
owner of the purportedly transferred Interest, if the Management Committee
determines in its sole discretion that:

 

(1)           the Transfer would require registration of any Interest under, or
result in a violation of, any federal or state securities laws;

 

 

 

  

(2)           the Transfer would result in a termination of the Company under
Code Section 708(b); provided, however, that any such determination under this
Section 12.3(b)(2) shall require the reasonable determination and approval of at
least one (1) Representative appointed by Carroll.

 

(3)           as a result of such Transfer the Company would be required to
register as an investment company under the Investment Company Act of 1940, as
amended, or any rules or regulations promulgated thereunder;

 

(4)           if as a result of such Transfer the aggregate value of Interests
held by "benefit plan investors" including at least one benefit plan investor
that is subject to ERISA, could be "significant" (as such terms are defined in
U.S. Department of Labor Regulation 29 C.F.R. 2510.3-10l (f)(2)) with the result
that the assets of the Company could be deemed to be "plan assets" for purposes
of ERISA;

 

(5)           as a result of such Transfer, the Company would or may have in the
aggregate more than one hundred (100) members and material adverse federal
income tax consequences would result to a Member. For purposes of determining
the number of members under this Section 12.3(b)(5), a Person (the "beneficial
owner") indirectly owning an interest in the Company through a partnership,
grantor trust or S corporation (as such terms are used in the Code) (the
"flow-through entity") shall be considered a member, but only if (i)
substantially all of the value of the beneficial owner's interest in the
flow-through entity is attributable to the flow-through entity's interest
(direct or indirect) in the Company and (ii) in the sole discretion of the
Management Committee, a principal purpose of the use of the flow-through entity
is to permit the Company to satisfy the 100-member limitation; or

 

(6)           the transferor failed to comply with the provisions of Sections
12.2(a) or (b).

 

The Management Committee may require the provision of a certificate as to the
legal nature and composition of a proposed transferee of an Interest of a Member
and from any Member as to its legal nature and composition and shall be entitled
to rely on any such certificate in making such determinations under this Section
12.3.

 

12.4         Withdrawals. Each of the Members does hereby covenant and agree
that it will not withdraw, resign, retire or disassociate from the Company,
except as a result of a Transfer of its entire Interest in the Company permitted
under the terms of this Agreement and that it will carry out its duties and
responsibilities hereunder until the Company is terminated, liquidated and
dissolved under Section 13. No Member shall be entitled to receive any
distribution or otherwise receive the fair market value of its Interest in
compensation for any purported resignation or withdrawal not in accordance with
the terms of this Agreement.

 

Section 13.          Dissolution.

 

13.1         Limitations. The Company may be dissolved, liquidated and
terminated only pursuant to the provisions of this Section 13, and, to the
fullest extent permitted by law but subject to the terms of this Agreement, the
parties hereto do hereby irrevocably waive any and all other rights they may
have to cause a dissolution of the Company or a sale or partition of any or all
of the Company's assets.

 

13.2         Exclusive Events Requiring Dissolution. The Company shall be
dissolved only upon the earliest to occur of the following events (a
"Dissolution Event"):

 

 

 

  

(a)           the expiration of the specific term set forth in Section 2.5;

 

(b)           at any time at the election of all of the Members in writing;

 

(c)           at any time there are no Members (unless otherwise continued in
accordance with the Act);

 

(d)           the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Act; or

 

(e)           the Purchase Agreement has not been closed by April 30, 2014.

 

13.3         Liquidation. Upon the occurrence of a Dissolution Event, the
business of the Company shall be continued to the extent necessary to allow an
orderly winding up of its affairs, including the liquidation of the assets of
the Company pursuant to the provisions of this Section 13.3, as promptly as
practicable thereafter, and each of the following shall be accomplished:

 

(a)           The Management Committee shall cause to be prepared a statement
setting forth the assets and liabilities of the Company as of the date of
dissolution, a copy of which statement shall be furnished to all of the Members.

 

(b)           The property and assets of the Company shall be liquidated or
distributed in kind under the supervision of the Management Committee as
promptly as possible, but in an orderly, businesslike and commercially
reasonable manner.

 

(c)           Any gain or loss realized by the Company upon the sale of its
property shall be deemed recognized and allocated to the Members in the manner
set forth in Section 7.2. To the extent that an asset is to be distributed in
kind, such asset shall be deemed to have been sold at its fair market value on
the date of distribution, the gain or loss deemed realized upon such deemed sale
shall be allocated in accordance with Section 7.2 and the amount of the
distribution shall be considered to be such fair market value of the asset.

 

(d)           The proceeds of sale and all other assets of the Company shall be
applied and distributed as follows and in the following order of priority:

 

(1)           to the satisfaction of the debts and liabilities of the Company
(contingent or otherwise) and the expenses of liquidation or distribution
(whether by payment or reasonable provision for payment), other than liabilities
to Members or former Members for distributions;

 

(2)           to the satisfaction of loans made pursuant to Section 5.2(b) in
proportion to the outstanding balances of such loans at the time of payment;

 

(3)           the balance, if any, to the Members in accordance with Section
6.1.

 

13.4         Continuation of the Company. Notwithstanding anything to the
contrary contained herein, the death, retirement, resignation, expulsion,
bankruptcy, dissolution or removal of a Member shall not in and of itself cause
the dissolution of the Company, and the Members are expressly authorized to
continue the business of the Company in such event, without any further action
on the part of the Members.

 

 

 

  

Section 14.          Indemnification.

 

14.l          Exculpation of Members. No Member, Manager, Representative or
officer of the Company shall be liable to the Company or to the other Members
for damages or otherwise with respect to any actions or failures to act taken or
not taken relating to the Company, except to the extent any related loss results
from fraud, gross negligence or willful or wanton misconduct on the part of such
Member, Manager, Representative or officer or the willful breach of any
obligation under this Agreement.

 

14.2         Indemnification by Company. The Company hereby indemnifies, holds
harmless and defends the Members, the Manager, the Representatives, the officers
and each of their respective agents, officers, directors, members, managers,
partners, shareholders and employees from and against any loss, expense, damage
or injury suffered or sustained by them (including but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim) by reason of or arising out of (i) their activities
on behalf of the Company or in furtherance of the interests of the Company,
including, without limitation, the provision of guaranties to third party
lenders in respect of financings relating to the Company or any of its assets
(but specifically excluding from such indemnity by the Company any so called
"bad boy" guaranties or similar agreements which provide for recourse as a
result of failure to comply with covenants, willful misconduct or gross
negligence), (ii) their status as Members, Managers, Representatives, employees
or officers of the Company, or (iii) the Company's assets, property, business or
affairs (including, without limitation, the actions of any officer, director,
member, manager or employee of the Company or any of its Subsidiaries), if the
acts or omissions were not performed or omitted fraudulently or as a result of
gross negligence or willful or wanton misconduct by the indemnified party or as
a result of the willful breach of any obligation under this Agreement by the
indemnified party. For the purposes of this Section 14.2, officers, directors,
members, managers, employees and other representatives of Affiliates of a Member
who are functioning as representatives of such Member in connection with this
Agreement shall be considered representatives of such Member for the purposes of
this Section 14. Reasonable expenses incurred by the indemnified party in
connection with any such proceeding relating to the foregoing matters shall be
paid or reimbursed by the Company in advance of the final disposition of such
proceeding upon receipt by the Company of (x) written affirmation by the Person
requesting indemnification of its good faith belief that it has met the standard
of conduct necessary for indemnification by the Company and (y) a written
undertaking by or on behalf of such Person to repay such amount if it shall
ultimately be determined by a court of competent jurisdiction that such Person
has not met such standard of conduct, which undertaking shall be an unlimited
general obligation of the indemnified party but need not be secured.

 

14.3         Indemnification by Members for Misconduct.

 

(a)           Carroll hereby indemnifies, defends and holds harmless the
Company, Bluerock, each Bluerock Transferee and each of their subsidiaries and
their agents, officers, directors, members, managers, partners, shareholders and
employees from and against all losses, costs, expenses, damages, claims and
liabilities (including reasonable attorneys' fees) as a result of or arising out
of any fraud, gross negligence or willful or wanton misconduct on the part of,
or by, Carroll, the Key Individual, any entity controlled directly or indirectly
by the Key Individual that directly or indirectly controls Carroll, or any
Representative appointed by Carroll.

 

(b)           Bluerock hereby indemnifies, defends and holds harmless the
Company, Carroll, each Carroll Transferee and each of their subsidiaries and
their agents, officers, directors, members, managers, partners, shareholders and
employees from and against all losses, costs, expenses, damages, claims and
liabilities (including reasonable attorneys' fees) as a result of or arising out
of any fraud, gross negligence or willful or wanton misconduct on the part of,
or by, Bluerock or any entity controlled directly or indirectly by Bluerock, or
any Representative appointed by Bluerock.

 

 

 

  

14.4         General Indemnification by the Members.

 

(a)           Notwithstanding any other provision contained herein, each Member
(the "Indemnifying Party") hereby indemnifies and holds harmless the other
Members, the Company and each of their subsidiaries and their agents, officers,
directors, members, managers, partners, shareholders and employees (each, an
"Indemnified Party") from and against all losses, costs, expenses, damages,
claims and liabilities (including reasonable attorneys' fees) as a result of or
arising out of (i) any breach of any obligation of the Indemnifying Party under
this Agreement, or (ii) any breach of any obligation by or any inaccuracy in or
breach of any representation or warranty made by the Indemnifying Party or its
Affiliates, whether in this Agreement or in any other agreement with respect to
the conveyance, assignment, contribution or other transfer of the Property (or
interests therein), assets, agreements, rights or other interests conveyed,
assigned, contributed or otherwise transferred to the Company (collectively, the
"Inducement Agreements").

 

(b)           Except as otherwise provided herein or in any other agreement,
recourse for the indemnity obligation of the Members under this Section 14.4
shall be limited to such Indemnifying Party's Interest in the Company; provided,
however, that recourse against either Member under its indemnity obligations
under this Agreement or otherwise shall be further limited to an aggregate
amount equal to the value of such Member's Interest as determined by and being
limited to the then current liquidation value of such Member's Interest assuming
the Company were liquidated in an orderly fashion and all net proceeds thereof
were distributed in accordance with Section 6.

 

(c)           The indemnities, contributions and other obligations under this
Agreement shall be in addition to any rights that any Indemnified Party may have
at law, in equity or otherwise. The terms of this Section 14 shall survive
termination of this Agreement.

 

14.5         [Intentionally Omitted]

 

14.6         [Intentionally Omitted]

 

Section 15.          Sale Rights.

 

15.1         Push/Pull Rights.

 

(a)           Availability of Rights. If at any time following the second
anniversary of the date that the Property is initially acquired, the Members are
unable to agree on a Major Decision and such failure to agree has continued for
fifteen (15) days after written notice from one Member to the other Member
indicating an intention to exercise rights under this Section 15.1, either
Member may exercise its right to initiate the provisions of this Section 15.1.

 

(b)           Exercise. The Member wishing to exercise its rights pursuant to
this Section 15.1 (the "Offeror") shall do so by giving notice to the other
Member (the "Offeree") setting forth a statement of intent to invoke its rights
under this Section 15.1, stating therein the aggregate dollar amount (the
"Valuation Amount") that the Offeror would be willing to pay for the assets of
the Company as of the Closing Date (as defined below) free and clear of all
liabilities, and setting forth all oral or written offers and inquiries received
by the Offeror during the previous twelve-month period relating to the
financing, disposition or leasing of any Company property (including proposals
for the formation of a new entity for the ownership and operation of the
Property).

 

 

 

  

(c)           Offeree Response. After receipt of such notice, the Offeree shall
elect to either (i) sell its entire Interest to the Offeror for an amount equal
to the amount the Offeree would have been entitled to receive if the Company had
sold its assets for the Valuation Amount on the Closing Date and the Company had
immediately paid all Company liabilities and Imputed Closing Costs and
distributed the net proceeds of sale to the Members in satisfaction of their
Interests pursuant to Section 13.3, or (ii) purchase the entire Interest of the
Offeror for an amount equal to the amount the Offeror would have been entitled
to receive if the Company had sold all of its assets for the Valuation Amount on
the Closing Date and the Company had immediately paid all Company liabilities
and Imputed Closing Costs and distributed the net proceeds of the sale to the
Members in satisfaction of their Interests pursuant to Section 13.3. The Offeree
shall have thirty (30) days from the giving of the Offeror's notice in which to
exercise either of its options by giving written notice to the Offeror. If the
Offeree does not elect to acquire the Offeror's Interest within such time
period, the Offeree shall be deemed to have elected to sell its Interest to the
Offeror as provided in subsection (i) above.

 

(d)           Earnest Money. Within five (5) business days after an election has
been made or deemed made under Section 15.l (c), the acquiring Member shall
deposit with a mutually acceptable third-party escrow agent a non-refundable
earnest money deposit in the amount of two percent (2%) of the amount the
selling Member is entitled to receive for its Interest under this Section 15.1,
which amount shall be applied to the purchase price at closing. If the acquiring
Member should thereafter fail to consummate the transaction for any reason other
than a default by the selling Member or a refusal by any lender of the Company
who has a right under its loan documents to consent to such transfer to so
consent, (i) (A) the earnest money deposit shall be distributed from escrow to
the selling Member, free of all claims of the acquiring Member, as liquidated
damages and constituting the sole and exclusive remedy available to the selling
Member because of a default by the acquiring Member or (B) the selling Member
may, by delivering to the acquiring Member written notice thereof, elect to buy
the acquiring Member's entire Interest for an amount equal to the amount the
acquiring Member would have been entitled to receive if the Company had sold all
of its assets for the Valuation Amount and the Company had immediately paid all
Company liabilities and Imputed Closing Costs and distributed the net proceeds
of the sale to the Members in satisfaction of their Interests pursuant to
Section 13.3, in which case, the Closing Date therefor shall be the date
specified in the selling Member's notice, and (ii) if the acquiring Member was
the Offeror, the non-refundable earnest money deposit for any future election by
the acquiring Member to buy the selling Member's Interest shall be twenty
percent (20%) of the amount the selling Member is entitled to receive for its
Interest in connection with such future election.

 

(e)           Closing. The closing of an acquisition pursuant to this Section
15.1 shall be held on a mutually acceptable date (the "Closing Date") not later
than sixty (60) days (or, if the Offeree is the acquiring Member, ninety (90)
days) after an election has been made or deemed made under Section 15.l (c). At
such closing, the following shall occur:

 

(1)           The selling Member shall assign to the acquiring Member or its
designee the selling Member's Interest in accordance with the instructions of
the acquiring Member, and shall execute and deliver to the acquiring Member all
documents which may be required to give effect to the disposition and
acquisition of such interests, in each case free and clear of all liens, claims,
and encumbrances, with covenants of general warranty; and

 

(2)           The acquiring Member shall pay to the selling Member the
consideration therefor in cash.

 

(f)            Enforcement. It is expressly agreed that the remedy at law for
breach of the obligations of the Members set forth in this Section 15.1 is
inadequate in view of (i) the complexities and uncertainties in measuring the
actual damage to be sustained by reason of the failure of a Member to comply
fully with such obligations, and (ii) the uniqueness of the Company's business
and the Members' relationships. Accordingly, each of such obligations shall be,
and is hereby expressly made, enforceable by an order of specific performance.

 

 

 

  

15.2         Forced Sale Rights.

 

(a)           Offers. If, at any time following the second anniversary of the
date that the Property is initially acquired, either Member (i) desires to offer
the Property for sale on specified terms, or (ii) receives from an unaffiliated
purchaser a bonafide written cash offer (i.e., not seller financed) for the
purchase of the Property at a price in excess of the then-pending balance due
under the Loan and otherwise on terms that such Member desires for the Company,
or any Subsidiary that owns the Property (individually or collectively, the
"Ownership Entity") to accept (such specified terms or bona fide offer being
herein called the "Offer"), then the Member desiring to make or accept the Offer
(the "Initiating Member") shall provide written notice of the terms of such
Offer (the "Sale Notice") to the other Member (the "Non-Initiating Member"). For
the avoidance of doubt, Section 15.2 only applies in connection with the sale of
the entire Property, not for any portion thereof such as in connection with sale
of individual condominium units.

 

(b)           Response. The Non-Initiating Member shall have thirty (30) days
from the date of the Sale Notice (the "Response Period") to provide written
notice to the Initiating Member of whether the Ownership Entity should make or
accept the Offer; the failure to timely deliver such notice shall be deemed to
constitute an election to accept the Offer and sell such Property on the terms
of the Offer.

 

(c)           Offer Unacceptable.

 

(1)           If the Non-Initiating Member does not wish for the Company, or the
Ownership Entity, to make or accept the Offer, the Initiating Member may elect
to sell its Interest to the Non-Initiating Member, in which case the
Non-Initiating Member must purchase the Initiating Member's Interest for an
amount equal to the amount that would be distributable to the Initiating Member
if the Company had accepted the Offer, closed the sale pursuant to such Offer
and wound up its affairs pursuant to Section 13.

 

(2)           For purposes of the foregoing calculations, the purchase price for
a sale shall be reduced by Imputed Closing Costs therefor. The Initiating Member
must exercise this option, if at all, by delivering written notice thereof to
the Non-Initiating Member within twenty (20) days after the end of the Response
Period. The Non- Initiating Member shall pay the Company cash for each Ownership
Entity or the Initiating Member cash for its Interest, as the case may be.
Closing shall take place on or before the date specified in the Sale Notice, but
if the Non-Initiating Member is purchasing the Initiating Member's Interest or
one or more Ownership Entities, the Non- Initiating Member shall have until 120
days after the Sale Notice in which to close. If the Initiating Member or the
Non-Initiating Member defaults at closing, the non-defaulting party shall have
the right to bring suit for damages, for specific performance, or exercise any
other remedy available at law or in equity. Upon payment at closing, the
Initiating Member shall execute and deliver all documents reasonably required to
transfer the interest being sold.

 

(d)           Offer Acceptable. If the Non-Initiating Member consents (or is
deemed to have consented) to the Company or the Ownership Entities selling the
Property on the terms of the Offer, then the Initiating Member shall be allowed
to sell the Property for cash on the terms of the Offer for a period of up to
one hundred eighty (180) days following the expiration of the Response Period.
If the Initiating Member obtains a bona fide third party contract to sell the
Property on the terms of the offer within such one hundred eighty ( 180) day
period, the Initiating Member shall have an additional period of ninety (90)
days after the date of such contract (that is, not to exceed 270 days after the
expiration of the Response Period) in which to consummate the sale. If after
having received the consent (or deemed consent) of the Non-Initiating Member to
the sale of such Property on the terms of the Offer, the Initiating Member is
unable to obtain a bona fide contract within such one hundred eighty (180) day
period, or if after having obtained such bona fide contract, the Initiating
Member is unable to consummate such sale within 270 days after the expiration of
the Response Period, then the Initiating Member must again submit an Offer to
the Non-Initiating Member under the terms of this Section 15.2 before it may
sell such Property.

 

 

 

  

Section 16.          Miscellaneous.

 

16.1         Notices.

 

(a)           All notices, requests, approvals, authorizations, consents and
other communications required or permitted under this Agreement shall be in
writing and shall be (as elected by the Person giving such notice) hand
delivered by messenger or overnight courier service, mailed (airmail, if
international) by registered or certified mail (postage prepaid), return receipt
requested, or sent via facsimile (provided such facsimile is immediately
followed by the delivery of an original copy of same via one of the other
foregoing delivery methods) addressed to:

 

If to Bluerock:

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attention: James G. Babb, III

 

Facsimile No. (646) 278-4220 with

 

copies to:

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9th Floor

New York, New York 10022

Attention: Michael Konig, Esq.

 

Facsimile No. (646) 278-4220 and

 

Hirschler Fleischer 2100

East Cary Street

Richmond, VA 23223

Attention: S. Edward Flanagan, Esq.

 

Facsimile No. (804) 644-0957

 

If to Carroll:

 

c/o Carroll Organization, LLC 3340

Peachtree Road, Suite 1620

Atlanta, Georgia 30326 Attention:

M. Patrick Carroll

 

Facsimile No. (404) 523-9372

 

 

 

  

With a copy to:

 

Morris, Manning & Martin LLP

1600 Atlanta Financial Center 3343

Peachtree Road, NE Atlanta,

Georgia 30326

Attention: Gerald V. Thomas II, Esq.

Facsimile: (404) 365-9532

 

(b)           Each such notice shall be deemed delivered (i) on the date
delivered if by hand delivery or overnight courier service or facsimile, and
(ii) on the date upon which the return receipt is signed or delivery is refused
or the notice is designated by the postal authorities as not deliverable, as the
case may be, if mailed (provided, however, if such actual delivery occurs after
5:00 p.m. (local time where received), then such notice or demand shall be
deemed delivered on the immediately following business day after the actual day
of delivery).

 

(c)           By giving to the other parties at least fifteen (15) days written
notice thereof, the parties hereto and their respective successors and assigns
shall have the right from time to time and at any time during the term of this
Agreement to change their respective addresses.

 

16.2         Governing Law. This Agreement and the rights of the Members
hereunder shall be governed by, and interpreted in accordance with, the laws of
the State of Delaware. Each of the parties hereto irrevocably submits to the
jurisdiction of the New York State courts and the Federal courts sitting in the
State of New York and agrees that all matters involving this Agreement shall be
heard and determined in such courts. Each of the parties hereto waives
irrevocably the defense of inconvenient forum to the maintenance of such action
or proceeding. Each of the parties hereto designates CT Corporation System, 1633
Broadway, New York, New York 10019, as its agent for service of process in the
State of New York, which designation may only be changed on not less than ten
(10) days' prior notice to all of the other parties.

 

16.3         Successors. This Agreement shall be binding upon, and inure to the
benefit of, the parties and their successors and permitted assigns. Except as
otherwise provided herein, any Member who Transfers its Interest as permitted by
the terms of this Agreement shall have no further liability or obligation
hereunder, except with respect to claims arising prior to such Transfer.

 

16.4         Pronouns. Whenever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine and neuter.

 

16.5         Captions Not Part of Agreement. The captions contained in this
Agreement are inserted only as a matter of convenience and in no way define,
limit or extend the scope or intent of this Agreement or any provisions hereof.

 

16.6         Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable in any jurisdiction or in any respect, then
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired, and the Members shall use
their best efforts to amend or substitute such invalid, illegal or unenforceable
provision with enforceable and valid provisions which would produce as nearly as
possible the rights and obligations previously intended by the Members without
renegotiation of any material terms and conditions stipulated herein.

 

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

 

 

 

  

16.8         Entire Agreement and Amendment. This Agreement and the other
written agreements described herein between the parties hereto entered into as
of the date hereof, constitute the entire agreement between the Members relating
to the subject matter hereof. In the event of any conflict between this
Agreement and such other written agreements, the terms and provisions of this
Agreement shall govern and control. No amendment or waiver by a party shall be
enforceable against that party unless it is in writing and duly executed by such
party.

 

16.9         Further Assurances. Each Member agrees to execute and deliver any
and all additional instruments and documents and do any and all acts and things
as may be necessary or expedient to effectuate more fully this Agreement or any
provisions hereof or to carry on the business contemplated hereunder.

 

16.10       No Third Party Rights. The provisions of this Agreement are for the
exclusive benefit of the Members and the Company, and no other party (including,
without limitation, any creditor of the Company) shall have any right or claim
against any Member by reason of those provisions or be entitled to enforce any
of those provisions against any Member.

 

16.11       Incorporation by Reference. Every Exhibit and Annex attached to this
Agreement is incorporated in this Agreement by reference.

 

16.12       Limitation on Liability. Except as set forth in Section 14 and with
respect to a Default Loan as set forth in Section 5.2(b), the Members shall not
be bound by, or be personally liable for, by reason of being a Member, a
judgment, decree or order of a court or in any other manner, for the expenses,
liabilities or obligations of the Company, and the liability of each Member
shall be limited solely to the amount of its Capital Contributions as provided
under Section 5. Except as set forth in Section 14.3 and with respect to a
Default Loan as set forth in Section 5.2(b), any claim against any Member (the
"Member in Question") which may arise under this Agreement shall be made only
against, and shall be limited to, such Member in Question's Interest, the
proceeds of the sale by the Member in Question of such Interest or the undivided
interest in the assets of the Company distributed to the Member in Question
pursuant to Section 13.3(d) hereof. Except as set forth in Section 14.3 and with
respect to a Default Loan as set forth in Section 5.2(b), any right to proceed
against (i) any other assets of the Member in Question or (ii) any agent,
officer, director, member, manager, partner, shareholder or employee of the
Member in Question or the assets of any such Person, as a result of such a claim
against the Member in Question arising under this Agreement or otherwise, is
hereby irrevocably and unconditionally waived.

 

16.13       Remedies Cumulative. The rights and remedies given in this Agreement
and by law to a Member shall be deemed cumulative, and the exercise of one of
such remedies shall not operate to bar the exercise of any other rights and
remedies reserved to a Member under the provisions of this Agreement or given to
a Member by law. In the event of any dispute between the parties hereto, the
prevailing party shall be entitled to recover from the other party reasonable
attorney's fees and costs incurred in connection therewith.

 

16.14       No Waiver. One or more waivers of the breach of any provision of
this Agreement by any Member shall not be construed as a waiver of a subsequent
breach of the same or any other provision, nor shall any delay or omission by a
Member to seek a remedy for any breach of this Agreement or to exercise the
rights accruing to a Member by reason of such breach be deemed a waiver by a
Member of its remedies and rights with respect to such breach.

 

 

 

  

16.15       Limitation On Use of Names. Notwithstanding anything contained in
this Agreement or otherwise to the contrary, each of Bluerock and Carroll as to
itself agree that neither it nor any of its Affiliates, agents, or
representatives is granted a license to use or shall use the name of the other
under any circumstances whatsoever, except such name may be used in furtherance
of the business of the Company but only as and to the extent unanimously
approved by the Members. Any change in the name of the Property must be approved
by the Management Committee.

 

16.16       Publicly Traded Partnership Provision. Each Member hereby severally
covenants and agrees with the other Members for the benefit of such Members,
that (a) it is not currently making a market in Interests in the Company and
will not in the future make such a market and (b) it will not Transfer its
Interest on an established securities market, a secondary market or an
over-the-counter market or the substantial equivalent thereof within the meaning
of Code Section 7704 and the Regulations, rulings and other pronouncements of
the U.S. Internal Revenue Service or the Department of the Treasury thereunder.
Each Member further agrees that it will not assign any Interest in the Company
to any assignee unless such assignee agrees to be bound by this Section 16.16
and to assign such Interest only to such Persons who agree to be similarly
bound.

16.17       Uniform Commercial Code. The interest of each Member in the Company
shall be an "uncertificated security" governed by Article 8 of the Delaware UCC
and the UCC as enacted in the State of New York (the "New York UCC"), including,
without limitation, (i) for purposes of the definition of a "security"
thereunder, the interest of each Member in the Company shall be a security
governed by Article 8 of the Delaware UCC and the New York UCC and (ii) for
purposes of the definition of an "uncertificated security" thereunder.

 

16.18       Public Announcements. Neither Carroll nor any of its Affiliates
shall, without the prior approval of Bluerock, issue any press releases or
otherwise make any public statements with respect to the Company or the
transactions contemplated by this Agreement, except as may be required by
applicable law or regulation or by obligations pursuant to any listing agreement
with any national securities exchange so long as Carroll or such Affiliate has
used reasonable efforts to obtain the approval of Bluerock prior to issuing such
press release or making such public disclosure.

 

16.19       No Construction Against Drafter. This Agreement has been negotiated
and prepared by Bluerock and Carroll and their respective attorneys and, should
any provision of this Agreement require judicial interpretation, the court
interpreting or construing such provision shall not apply the rule of
construction that a document is to be construed more strictly against one party.

 

Section 17. Insurance. During the Term, Property Manager, pursuant to the terms
of the Management Agreement, shall procure and maintain insurance as is
determined to be appropriate by the Management Committee (in form and with
endorsements, waivers and deductibles and with insurance companies, designated
or approved by Bluerock) naming the Company (and the Subsidiary owning the
Property), Bluerock and Carroll as insureds thereunder.

 

[SIGNATURES ON FOLLOWING PAGES]

 

 

 

  

IN WITNESS WHEREOF, this Agreement is executed by the Members, effective as of
the date first set forth above.

 

  BR LANSBROOK JV MEMBER, LLC,   a Delaware limited liability company        
By: Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited
liability company,     its co-manager

 

  By: BR SOIF II Manager, LLC,     a Delaware limited liability company, its
manager

 

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

 

  By: Bluerock Special Opportunity + Income Fund Ill, LLC, a Delaware limited
liability company,     its co-manager

 

  By: BR SOIF III Manager, LLC,     a Delaware limited liability company, its
manager

 

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

 

 

 

  

  CARROLL LANSBROOK JV MEMBER, LLC,     a Georgia limited liability company    
    By: MPC Lansbrook Investments, LLC, a Georgia limited liability company, its
Manager

 

  By: /s/ M. Patrick Carroll     Name: M. Patrick Carroll     Title: President

 

  For purposes of Sections 8.2(b), 9.3, 9.4, 9.7 and 17 only, and only for the
term Carroll Management Group, LLC is Property Manager under the Management
Agreement.       CARROLL MANAGEMENT GROUP, LLC

 

  By: /s/ M. Patrick Carroll     Name: M. Patrick Carroll     Title: President

 

 

 

  

EXHIBIT A

 

Initial Capital Contributions and Percentage Interests

 

   Capital      Member Name  Contributions   Percentage Interest            BR
Lansbrook JV Member, LLC  $16,948,579.26    90%             Carroll Lansbrook JV
Member, LLC  $1,883,175.47    10%

 

Management Committee Representatives

 

Bluerock:

 

James G. Babb, III

Jordan B. Ruddy

 

Carroll:

 

Patrick Carroll

Joshua Champion

 

 

 

  

EXHIBIT B

 

Annual Business Plan Information

 

1.a narrative description of any acquisitions or sales that are planned and any
other activities proposed to be undertaken;

 

2.a projected annual income statement (accrual basis) on a quarter-by-quarter
basis;

 

3.a projected balance sheet as of the end of the next Fiscal Year;

 

4.a schedule of projected operating cash flow (including itemized operating
revenues, project costs and project expenses) for such Fiscal Year on a quarter-
by-quarter basis, including a schedule of projected operating deficits, if any;

 

5.a marketing plan indicating the portions of the Property that Property Manager
recommends be made available for sale or lease and the proposed terms and
conditions relating thereto;

 

6.a detailed budget reflecting on a line by line basis all projected operating
expenses and any proposed construction and capital expenditures for the
Property, including projected dates for commencement and completion of the
foregoing;

 

7.a description of the proposed investment of any funds of the Company which are
(or are expected to become) available for investment;

 

8.a description, including the identity of the recipient (if known) and the
amount and purpose, of all fees and other payments proposed, expected or
projected to be paid for professional services and, if a fee or payment exceeds
$25,000, for other services rendered to or on behalf of the Company by third
parties;

 

9.a projection of the amount of any anticipated additional Capital Contributions
which may be called for pursuant to Section 5.2(a) and the purposes for which
such additional Capital Contributions may be used; and

 

10.such other information requested from time to time by any Member.

 

 

 

  

EXHIBIT C

 

Management Agreement

 

[TO COME]

 

 

 

  

Initial Annual Business Plan

 

[tex10-53_lastpage.jpg]