Exhibit 10.54

 

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

BR LANSBROOK JV MEMBER, LLC

 

A DELAWARE LIMITED LIABILITY COMPANY

 

DATED EFFECTIVE AS OF MAY 15, 2014

 

  

 

 

 

TABLE OF CONTENTS

 

    Page       Section 1. Definitions 1       Section 2. Organization of the
Company 8       2.1 Name 8       2.2 Place of Registered Office; Registered
Agent 9       2.3 Principal Office 9       2.4 Filings 9       2.5 Term 9      
2.6 Expenses of the Company 9       Section 3. Purpose 9       Section 4.
Conditions 9       4.1 BRG Conditions 9       4.2 SOIF II Conditions 10      
4.3 SOIF III Conditions 10       Section 5. Capital Contributions, Loans,
Percentage Interests and Capital Accounts 10       5.1 Base Capital
Contributions 10       5.2 Additional Capital Contributions 11       5.3
Percentage Ownership Interest 12       5.4 Return of Capital Contribution 13    
  5.5 No Interest on Capital 13       5.6 Capital Accounts 13       5.7 New
Members 13       Section 6. Distributions 14       6.1 Distribution of
Distributable Funds 14

 

 

 

 

6.2 Distributions in Kind 14       Section 7. Allocations 14       7.1
Allocation of Net Income and Net Losses Other than in Liquidation 14       7.2
Allocation of Net Income and Net Losses in Liquidation 15       7.3 U.S. Tax
Allocations 15       Section 8. Books, Records, Tax Matters and Bank Accounts 15
      8.1 Books and Records 15       8.2 Reports and Financial Statements 15    
  8.3 Tax Matters Member 16       8.4 Bank Accounts 17       8.5 Tax Returns 17
      8.6 Expenses 17       Section 9. Management 17       9.1 Management 17    
  9.2 Loans to Subsidiaries 18       9.3 Affiliate Transactions 18       9.4
Other Activities 18       9.5 Operation in Accordance with REOC/REIT
Requirements 18       9.6 FCPA 21       Section 10. Confidentiality 21      
Section 11. Representations and Warranties 22       11.1 In General 22      
11.2 Representations and Warranties 22       Section 12. Sale, Assignment,
Transfer or other Disposition 25       12.1 Prohibited Transfers 25

 

 

 

 

12.2 Affiliate Transfers 25       12.3 Admission of Transferee; Partial
Transfers 26       12.4 Withdrawals 28       Section 13. Dissolution 28      
13.1 Limitations 28       13.2 Exclusive Events Requiring Dissolution 28      
13.3 Liquidation 28       13.4 Continuation of the Company 29       Section 14.
Indemnification 29       14.1 Exculpation of Members 29       14.2
Indemnification by Company 29       14.3 General Indemnification by the Members
30       Section 15. Mediation and Arbitration of Disputes 30       15.1 Events
Giving Rise to Mediation or Arbitration 30       15.2 Selection of Arbitrators
31       15.3 Arbitration Hearing 31       15.4 Decision of the
Arbitrators/Binding Effect 31       Section 16. Miscellaneous 31       16.1
Notices 31       16.2 Governing Law 33       16.3 Successors 33       16.4
Pronouns 33       16.5 Table of Contents and Captions Not Part of Agreement 33  
    16.6 Severability 34       16.7 Counterparts 34

 

 

 

 

16.8 Entire Agreement and Amendment 34       16.9 Further Assurances 34      
16.10 No Third Party Rights 34       16.11 Incorporation by Reference 34      
16.12 Limitation on Liability 34       16.13 Remedies Cumulative 35       16.14
No Waiver 35       16.15 Limitation On Use of Names 35       16.16 Publicly
Traded Partnership Provision 35       16.17 Public Announcements 35       16.18
Uniform Commercial Code 35       16.19 No Construction Against Drafter 35

 

 

 

 

BR LANSBROOK JV MEMBER, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

This Amended and Restated Limited Liability Company Agreement (this “Agreement”)
is adopted, executed, and agreed to be effective on May 15, 2014 (the “Effective
Date”), by and among BRG Lansbrook, LLC, a Delaware limited liability company
(“BRG”), Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited
liability company (“SOIF II”), and Bluerock Special Opportunity + Income Fund
III, LLC, a Delaware limited liability company (“SOIF III”), as Members
(together, the “Members”), and BRG as Manager (the “Manager”).

 

WITNESSETH:

 

WHEREAS, BR Lansbrook JV Member, LLC, a Delaware limited liability company (the
“Company”), was formed on February 4, 2014, pursuant to the Act;

 

WHEREAS, the Members initially entered into the Limited Liability Company
Agreement of the Company on February 4, 2014 (the “LLC Agreement”); and

 

WHEREAS, the parties now desire to amend and restate the LLC Agreement to admit
BRG as a member of the Company and to amend the LLC Agreement in certain
respects.

 

NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

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 Capital Contributions” shall have the meaning provided in Section
5.2(a).

 

“Affiliate” shall mean as to any Person any other Person that directly or
indirectly controls, is controlled by, or is under common control with such
first Person. For the purposes of this Agreement, a Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management, policies and/or
decision making of such other Person, whether through the ownership of voting
securities, by contract or otherwise. In addition, “Affiliate” shall include as
to any Person any other Person related to such Person within the meaning of Code
Sections 267(b) or 707(b)(1). Notwithstanding the foregoing, BRG, SOIF II and
SOIF III shall not be considered to be “Affiliates” of one another.

 

 

 

 

“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 Amended and Restated Limited Liability Company
Agreement, as amended from time to time.

 

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

 

“Base Capital Contributions” shall mean, with respect to any Member, the Capital
Contributions shown for that Member on the Exhibit A attached to this Agreement
as of the Effective Date (which has taken into account the Capital Contributions
made pursuant to Section 5.1 or otherwise accounted for by the provisions of
Section 5.1) and which may be updated from time to time to reflect Capital
Contributions as of a particular date.

 

“Beneficial Owner” shall have the meaning provided in Section 5.7.

 

“BR Affiliate” shall have the meaning provided in Section 9.5(a).

 

“BR Carroll Lansbrook JV LLC Agreement” means the Limited Liability Company
Agreement for BR Carroll Lansbrook JV, LLC dated as of February 12, 2014.

 

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

 

“BRG Transferee” shall have the meaning provided in Section 12.2(b)(iii).

 

“BR REIT” shall have the meaning provided in Section 12.2(b)(i).

 

“Capital Account” shall have the meaning provided in Section 5.6.

 

“Capital Contribution” shall mean, with respect to any Member, the aggregate
amount of: (A) cash contributed or deemed contributed in the form of Base
Capital Contributions; (B) cash contributed or deemed contributed in the form of
Additional Capital Contributions; and (C) 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.

 

“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, (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 (and other loans by Members to the Company), (iii)
all sums expended by the Company for capital expenditures, (iv) all prepaid
expenses of the Company, and (v) all sums expended by the Company which are
otherwise capitalized.

 

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

 

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“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.

 

“Company” shall have the meaning provided in the Recitals to this Agreement.

 

“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(a).

 

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

 

“Default Loan” shall have the meaning provided in Section 5.2(b)(i).

 

“Default Loan Rate” shall have the meaning provided in Section 5.2(b)(i).

 

“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 the sum of 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, the amounts of which shall be
reasonably determined from time to time by the Manager.

 

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

 

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

 

“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.

 

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“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.

 

“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 14.3(a).

 

“Indemnifying Party” shall have the meaning provided in Section 14.3(a).

 

“Inducement Agreements” shall have the meaning provided in Section 14.3(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.

 

“LLC Agreement” shall have the meaning provided in the Recitals to this
Agreement.

 

“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), including in the
Company’s capacity as a member of BR Carroll Lansbrook JV, LLC with respect to
making or refraining to make a decision on the following matters to the extent
the vote or approval of the Company is required:

 

(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 any Subsidiary’s assets or
all of the Interests of the Members in the Company or of the Company’s interest
in any Subsidiary, in one or a series of related transactions;

 

(ii)except as expressly provided in Section 12.2(b) hereof with respect to
Transfers by SOIF II or a SOIF II Transferee to a SOIF II Transferee and with
respect to Transfers by SOIF III or a SOIF III Transferee to a SOIF III
Transferee and with respect to Transfers by BRG or a BRG Transferee to a BRG
Transferee as permitted hereunder (or in Section 12 of the Limited Liability
Company of BR Carroll Lansbrook JV, LLC, and with respect to Transfers by
Carroll as permitted under the Limited Liability Company Agreement for BR
Carroll Lansbrook JV, LLC, as such defined terms are defined therein), each as
permitted thereunder, the admission or removal of any Member to the Company or
to any Subsidiary or the Company’s or any Subsidiary’s issuance to any third
party of any equity interest in the Company or in such Subsidiary (including
interests convertible into, or exchangeable for, equity interests in the Company
or such Subsidiary);

 

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(iii)except upon the occurrence of any Dissolution Event hereunder (or under the
Limited Liability Company Agreement for BR Carroll Lansbrook, LLC), any
liquidation, dissolution or termination of the Company or any Subsidiary;

 

(iii)doing any act which would make it impossible or unreasonably burdensome to
carry on the business of the Company;

 

(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)any material change in the strategic direction of the Company or any material
expansion of the business of the Company;

 

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

 

(vii)other than with respect to the Property, 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); and

 

(viii)      taking any action by the Company or any Subsidiary that is
reasonably likely to result in any Member or any of its Affiliates (including
any Member of BR Carroll Lansbrook JV, LLC) 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;

 

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

 

(x)          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;

 

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

 

(xii)        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 Company under the Limited Liability
Company Agreement for BR Carroll Lansbrook JV, LLC;

 

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(xiii)       make any loan to any Member (or any member of any Subsidiary),
except as expressly provided for in this Agreement or in the Limited Liability
Company Agreement for BR Carroll Lansbrook JV, LLC);

 

(xiv)      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;

 

(xv)       terminate the Property Management Agreement or issue a notice of
default pursuant to the Property Management Agreement; provided, however, that
(A) such termination shall be subject to the terms of the Property Management
Agreement and (B) in the event of a default by Property Manager under the
Property Management Agreement, which default is not cured in any available cure
period, only the Company 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 Property Management Agreement, and to solicit bids for, and enter
into any replacement Property Management Agreement with, any replacement manager
thereunder;

 

(xvi)      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 hereof or of any
member in BR Carroll Lansbrook JV, LLC, does not adversely affect any Member’s
right to Distributions pursuant to Section 6 hereof or the rights of any member
thereof to distributions payable to any member in BR Carroll Lansbrook JV, LLC
and does not otherwise have a materially adverse effect on the rights of any
Member or of any member in BR Carroll Lansbrook JV, LLC, or (B) that is solely
ministerial in nature to reflect or implement this Agreement or the Limited
Liability Company Agreement of BR Carroll Lansbrook JV, LLC under its express
terms (such as, for example, to periodically update the Members’ respective
Capital Contribution amounts, Percentage Interests or Management Committee
representatives).

 

(xvii)     make distributions to the Members (or the members of BR Carroll
Lansbrook JV, LLC), except in accordance with Section 6 of this Agreement (and
the Limited Liability Company Agreement for BR Carroll Lansbrook JV, LLC).

 

(xviii)    appointment and removal of the Company’s Representatives on the
Management Committee for BR Carroll Lansbrook JV, LLC;

 

(xix)       the amount of, whether and when to make, contributions to the
Company (other than the contributions under Section 5.1 made contemporaneously
with the execution of this Agreement) and Distributions by the Company;

 

(xx)        amendment of the Company’s Certificate of Formation or this
Agreement, except as may be required to conform this Agreement with the
commercially reasonable requirements of a third party lender; or

 

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(xxi)       to the extent not covered by the foregoing, any matter defined as a
Major Decision under the BR Carroll Lansbrook JV LLC Agreement.

 

“Management Committee” shall mean the management committee of BR Carroll
Lansbrook JV, LLC.

 

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

 

“Member” and “Members” shall mean SOIF II, SOIF III, BRG 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.

 

“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 provided in Section 16.18.

 

“Operating Partnership” shall mean Bluerock Residential Holdings, L.P., a
Delaware limited partnership.

 

“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.

 

“Property” shall have the meaning provided in the BR Carroll Lansbrook JV LLC
Agreement.

 

“Property Management Agreement” shall mean that certain management agreement
attached hereto as Exhibit B entered into between BR Carroll Lansbrook, LLC, a
Delaware limited liability company, as owner, and Property Manager, as property
manager, pursuant to which Property Manager will provide certain asset
management services for the Property.

 

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

 

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

 

“Property Owner” means BR Carroll Lansbrook, LLC, a Delaware limited liability
company.

 

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“Pursuer” shall have the meaning provided in Section 10(c).

 

“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 Prohibited Transactions” shall mean, for purposes of Section 9.5(c), any
of the actions specifically set forth in Section 9.5(c).

 

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

 

“REOC” shall have the meaning provided in Section 9.5(a).

 

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

 

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

 

“SOIF II Transferee” shall have the meaning set forth in Section 12.2(b)(i).

 

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

 

“SOIF III Transferee” shall have the meaning set forth in Section 12.2(b)(ii).

 

“Subsidiary” shall mean any corporation, partnership, limited liability company
or other entity of which least a majority of the capital stock or other equity
securities is owned, directly or indirectly, by the Company.

 

“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.

 

Organization of the Company. 

 

Name. The name of the Company shall be “BR Lansbrook JV Member, LLC”. The
business and affairs of the Company shall be conducted under such name or such
other name as the Manager deems necessary or appropriate to comply with the
requirements of law in any jurisdiction in which the Company may elect to do
business.

 

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Place of Registered Office; Registered Agent. The address of the registered
office of the Company in the State of Delaware is 2711 Centerville Road,
Wilmington, Delaware 19808. The name and address of the registered agent for
service of process on the Company in the State of Delaware is Corporation
Service Company, 2711 Centerville Road, Wilmington, Delaware 19808. The Manager
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.

 

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, or,
in each case, at such other place or places as may be determined by the Manager
from time to time.

 

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.

 

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.

 

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

 

Purpose.

 

The Company is organized for the purpose of engaging in any lawful business,
purpose or activity that may be undertaken by a limited liability company
organized under and governed by the Act. The Company shall possess and may
exercise all of the powers and privileges granted by the Act, by any other law
or by this Agreement, together with any powers incidental thereto, including
such powers and privileges as are necessary or convenient to the conduct,
promotion or attainment of the business, purposes or activities of the Company.

 

Conditions.

 

BRG Conditions. The obligation of BRG to consummate the transactions
contemplated herein and to make the initial Capital Contributions under Section
5.1 is subject to fulfillment of all of the following conditions on or prior to
the date hereof:

 

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(a)          SOIF II and SOIF III shall each execute and deliver to BRG all
assignments of interest and any other documents necessary for the consummation
of the purchase by BRG of a portion of their respective interests in the
Company, as more fully set forth in that certain Membership Interest Purchase
Agreement by and between Operating Partnership, SOIF II and SOIF III dated
effective May 15, 2014 (the “MIPA”); and

 

(b)          All of the representations and warranties of SOIF II and SOIF III
contained in this Agreement shall be true and correct as of the date hereof.

SOIF II Conditions. The obligation of SOIF II to consummate the transactions
contemplated herein is subject to fulfillment of all of the following conditions
on or prior to the date hereof:

 

(a)          BRG shall deposit into a designated escrow account the amount of
its Base Capital Contribution set forth in Section 5.1 and shall execute and
deliver to SOIF II all assignments of interest and other documents required
pursuant to the MIPA; and

 

(b)          All of the representations and warranties of BRG and SOIF III
contained in this Agreement shall be true and correct as of the date hereof.

 

4.3           SOIF III Conditions. The obligation of SOIF III to consummate the
transactions contemplated herein is subject to fulfillment of all the following
conditions on or prior to the date hereof:

 

(a)          BRG shall deposit into a designated escrow account the amount of
its Base Capital Contribution set forth in Section 5.1 and shall execute and
deliver to SOIF III all assignments of interest and other documents required
pursuant to the MIPA; and

 

(b)          All of the representations and warranties of BRG and SOIF II
contained in this Agreement shall be true and correct as of the date hereof.

 

Capital Contributions, Loans, Percentage Interests and Capital Accounts.

 

Base Capital Contributions.

 

Subject to the conditions set forth in Section 4, upon execution of this
Agreement, BRG, SOIF II and SOIF III shall each make, have made or be credited
with a Base Capital Contribution to the Company in the following amounts:

 

BRG  $14,000,000.00  SOIF II  $1,202,076.92  SOIF III  $1,202,076.92 

 

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Additional Capital Contributions.

 

Additional Capital Contributions (“Additional Capital Contributions”) may be
called for from the Members by the Manager from time to time as and to the
extent capital is necessary. Such Additional Capital Contributions shall be
requested in an amount for each Member equal to the product of the amount of the
aggregate Capital Contribution called for multiplied by that Member’s Percentage
Interest, as defined in Section 5.3. Such Additional Capital Contributions, if
payable, 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”), then the other Members, provided that they have
each made the Capital Contribution required to be made by it, in addition to any
other remedies each may have hereunder or at law, shall have one or more of the
following remedies:

 

(i)          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-defaulting 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 eighteen percent (18%) 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-defaulting 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-defaulting Member and agrees to promptly execute such documents and
statements reasonably requested by the non-defaulting Member to further evidence
and secure such security interest. Any advance by the non-defaulting Member on
behalf of a Defaulting Member pursuant to this Section 5.2(b)(i) 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-defaulting 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; or

 

11

 

 

(ii)         subject to any applicable thin capitalization limitations on
indebtedness of the Company, to treat its 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-defaulting 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 the Defaulting
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)(ii) shall not be treated
as a Capital Contribution made by the Defaulting Member; or

 

(iii)        in lieu of the remedies set forth in subparagraphs (i) or (ii),
revoke its portion of such Additional Capital Contribution, whereupon the
portion of the Additional Capital Contribution made by the non-defaulting Member
shall be returned by the Company within ten (10) days with interest computed at
the Default Loan Rate (such interest to be paid by the Defaulting Member).

 

(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 any
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, (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 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.

 

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 as shall be set forth on Exhibit A
immediately following the Base Capital Contributions provided for in Section 5.1
having been made. The Percentage Interests of the Members in the Company shall
be adjusted monthly 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.
Percentage Interests shall not be adjusted by distributions made (or deemed
made) to a Member.

 

12

 

 

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.

 

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.

 

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 1.704-1(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 Sections 5.1 and 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)(iii). 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.

 

New Members. 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 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 Manager, a principal purpose of the use of the
Flow-Through Entity is to permit the Company to satisfy the 100-member
limitation. Notwithstanding anything herein to the contrary, contemporaneously
with this Agreement, BRG has been admitted to the Company as a Member.

 

13

 

 

Distributions.

 

Distribution of Distributable Funds

 

(a)          The Manager shall calculate and determine the amount of
Distributable Funds for each applicable period. Except as provided in Sections
5.2(b), 6.1(b) or 13.3 or otherwise provided hereunder, Distributable Funds, if
any, shall be distributed to the Members, in proportion to their Percentage
Interests, on the 15th day of each month.

 

(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.

 

Distributions in Kind. In the discretion of the Manager, 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
Manager. 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.

 

Allocations

 

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.

 

14

 

 

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)(iii).

 

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)          Code Section 704(c). 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 such method set forth in Regulations Section
1.704-3(b) as the Manager in its reasonable discretion approves.

 

Any elections or other decisions relating to such allocations shall be made by
the Manager 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.

 

Books, Records, Tax Matters and Bank Accounts.

 

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 Manager, and all
such books and records (and the dealings and other affairs of the Company and
its Subsidiaries, including BR Carroll Lansbrook JV, LLC and BR Carroll
Lansbrook, LLC) 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.

 

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:

 

15

 

 

(i)          An unaudited balance sheet of the Company;

 

(ii)         An unaudited statement of the Company’s profit and loss; and

 

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

 

(b)          Within fifteen (15) days of the end of each quarter of each Fiscal
Year, the Manager shall cause to be furnished to any REIT Member such
information as requested by any REIT Member as is necessary for any REIT Member
to determine its qualification as a REIT and its compliance with REIT
Requirements as shall be requested by any REIT Member.

 

(c)          The Members acknowledge that the Property Manager is obligated to
perform Project-related accounting and furnish Project-related accounting
statements to BR Carroll Lansbrook, LLC under the terms of the Property
Management Agreement (the “Property Manager Reports”). The Manager shall be
entitled to rely on the Property Manager Reports with respect to its obligations
under this Section 8, 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.

 

(d)          At the expense and cost of the REIT Member, the Manager will use
its commercially best efforts to obtain such financial statements (audited or
unaudited), information and attestations as may be required by the REIT Member
or any of its Affiliates in connection with public reporting, attestation,
certification and other requirements under the Securities Exchange Act of 1934,
as amended, and the Sarbanes-Oxley Act of 2002, as amended, applicable to such
entity, and work in good faith with the designated accountants or auditors of
the REIT Member or any of its Affiliates in connection therewith, including for
purposes of testing internal controls and procedures of the REIT Member or any
of its Affiliates.

 

8.3           Tax Matters Member. BRG is hereby designated as the “tax matters
partner” of the Company and any 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 any 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 any
Subsidiaries under the Code or state tax law shall be timely determined and made
by BRG. 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. BRG agrees to
consult with each other Member 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 Subsidiary 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 BRG 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 any
Subsidiaries, provided that any such action or failure to act does not
constitute gross negligence or willful misconduct.

 

16

 

 

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
Manager and shall be withdrawn on the signature of such Person or Persons as the
Manager may authorize.

 

8.5           Tax Returns. The Manager shall cause to be prepared all income and
other tax returns of the Company and any Subsidiaries required by applicable
law. No later than the due date or extended due date thereof, the 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 in
connection with its obligations under this Section 8 will be reimbursed by the
Company to the Manager.

 

Management.

 

Management.

 

(a)          The Company shall be managed by one manager. BRG shall have the
power and authority to appoint the Manager without any further action or
approval by any Member, and BRG hereby appoints BRG as its initial Manager.
Neither SOIF II nor SOIF III shall have the power to appoint or remove any
Manager. To the extent that BRG or a BRG Transferee Transfers all or a portion
of its Interest in accordance with Section 12 to a BRG Transferee, such BRG
Transferee may be appointed as the Manager under this Section 9.1(a) by BRG or
the BRG Transferee then holding all or a portion of BRG’s Interest without any
further action or authorization by any other Member.

 

(b)          The Manager 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, except that any Major
Decision or other matter submitted by the Manager to the Members shall require
the express and unanimous approval of the Members.

 

(c)          The Manager shall substantially participate in the management of
the Property, and in all decision-making with respect to the development of the
Property, both directly and through the control Manager maintains and exercises
over Subsidiaries of the Company. In furtherance of such management and
decision-making authority, the Manager shall meet with the Property Manager on
no less than a quarterly basis to discuss issues and make decisions related to
the management and development of the Property.

 

17

 

 

(d)          The Manager may appoint individuals to act on behalf of the Company
with such titles and authority as determined from time to time by the Manager.
Each of such individuals shall hold office until his or her death, resignation
or replacement by Manager.

 

(c)          Notwithstanding any other provision herein, BRG shall have the sole
right to appoint the representatives of the Company to the Management Committee
pursuant to the BR Carroll Lansbrook JV LLC Agreement.

 

9.2           Loans to Subsidiaries. Notwithstanding anything in this Agreement
to the contrary, the Company may, but will have no obligation to, make loans to
any direct or indirect Subsidiary for development, improvement, leasing or
marketing of the Property or otherwise in furtherance of the purposes of this
Agreement to maximize the value of the Property.

 

9.3           Affiliate Transactions. Except as expressly provided in Section
9.2 with respect to loans by the Company to a Subsidiary, 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 unanimously in
writing by the Members.

 

9.4           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. 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 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.

 

18

 

 

9.5           Operation in Accordance with REOC/REIT Requirements.

 

(a)          The Members acknowledge that SOIF II and SOIF III or one or more of
their Affiliates (each, 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 SOIF II and SOIF III and such SOIF II Affiliate and/or SOIF III 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 would
result in SOIF II or SOIF III or a SOIF II Affiliate and/or a SOIF III Affiliate
from failing to qualify as a REOC. No Member shall 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". Each Member shall comply with any requirements specified by BRG in
order to ensure compliance with this Section 9.5.

 

(b)          [Reserved]

 

(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;

 

19

 

 

(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;

 

(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.

 

Notwithstanding the foregoing provisions of this Section 9.5(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 9.5(c). For
purposes of this Section 9.5(c), “REIT Prohibited Transactions” shall mean any
of the actions specifically set forth in this Section 9.5(c).

 

20

 

 

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.

 

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.

 

(b)          Each Member agrees to notify immediately the other Members 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.

 

Confidentiality. 

 

(a)          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:

 

(x)          is or hereafter becomes public, other than by breach of this
Agreement;

 

21

 

 

(y)          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

 

(z)          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, (3) as necessary or appropriate in connection
with or to prevent the audit by a governmental agency of the accounts of the
Members, (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 representative.

 

(b)          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(b).

 

(c)          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 Members 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.

 

Representations and Warranties.

 

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.

 

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

 

22

 

 

(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.

 

23

 

 

(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.

 

(h)          Securities Matters.

 

(i)          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.

 

(ii)         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.

 

(iii)        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.

  

24

 

 

(iv)        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.

 

(v)         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.

 

(vi)        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.

 

(vii)       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.

 

(viii)      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.

 

Sale, Assignment, Transfer or other Disposition.

 

Prohibited Transfers. Except as otherwise provided in this Section 12, Section
5.2(b) or as approved by the Manager, 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, any Member shall have the right, with the
consent of the other Members, 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 cause of its business and
operations.

 

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.

 

25

 

 

(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):

 

(i)          Any Transfer by SOIF II or a SOIF II Transferee of up to one
hundred percent (100%) of its Interest to (A) any Affiliate of SOIF II, or (B)
SOIF III or any Person that is directly or indirectly owned by SOIF III or (C)
Bluerock Residential Growth REIT, Inc. (“BR REIT”) or BRG or any Person that is
directly or indirectly owned by BR REIT or BRG (including Operating Partnership)
(collectively, a “SOIF II Transferee”);

 

(ii)         Any Transfer by SOIF III or a SOIF III Transferee of up to one
hundred percent (100%) of its Interest to (A) any Affiliate of SOIF III, or (B)
SOIF II or any Person that is directly or indirectly owned by SOIF II or (B) BR
REIT or BRG or any Person that is directly or indirectly owned by BR REIT or BRG
(including Operating Partnership) (collectively, a “SOIF III Transferee”);

 

(iii)        Any Transfer by BRG or a BRG Transferee of up to one hundred
percent (100%) of its Interest to (A) any Affiliate of BRG, or (B) BR REIT or
BRG or any Person that is directly or indirectly owned by BR REIT or BRG
(including Operating Partnership), or (C) SOIF II or any Person that is directly
or indirectly owned by SOIF II or (D) SOIF III or any Person that is directly or
indirectly owned by SOIF III (collectively, a “BRG Transferee”);

 

provided however, as to subparagraphs (b)(i), (b)(ii) or b(iii), and as to
subparagraph (a), no Transfer shall be permitted and shall be void ab initio if
it shall violate any “Transfer” provision of any applicable Collateral Agreement
with third party lenders.

 

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

 

Admission of Transferee; Partial Transfers. Notwithstanding anything in this
Section 12 to the contrary and except as provided in Section 5.2(b) and/or
Section 5.7, no Transfer of Interests in the Company shall be permitted unless
the Transfer is only a pledge of the economic interests of the transferor or the
potential transferee is admitted as a Member under this Section 12.3:

 

26

 

 

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

 

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 Manager determines in its sole
discretion that:

 

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

 

(ii)         the Transfer would result in a termination of the Company under
Code Section 708(b);

 

(iii)        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;

 

(iv)        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. 2510.3-101(f)(2)) with the result
that the assets of the Company could be deemed to be “plan assets” for purposes
of ERISA;

 

(v)         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)(v), a Beneficial Owner
indirectly owning an interest in the Company through a 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 Manager, a principal purpose of the use of the
Flow-Through Entity is to permit the Company to satisfy the 100-member
limitation; or

 

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

 

The Manager 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.

 

27

 

 

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.

 

Dissolution.

 

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.

 

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 the Manager in writing;

 

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

 

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

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 Manager 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 Manager 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.

 

28

 

 

(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:

 

(i)          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;

 

(ii)         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;

 

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

 

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.

 

Indemnification.

 

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.

 

Indemnification by Company. The Company hereby indemnifies, holds harmless and
defends the Members, the Manager, 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, representatives, Manager, 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 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, 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.

 

29

 

 

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, 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 or Property Owner
(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 14.3
shall be limited to such Indemnifying Party’s Interest in the Company.

 

(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.

 

Mediation and Arbitration of Disputes.

 

Events Giving Rise To Mediation or Arbitration. In the event that there is a
dispute between the Members as to any action or issue, or in the event of a
deadlock between the Members, then and in such event all of the Members agree,
upon the written request of any one Member, to submit to mediation within ten
(10) days of receipt of the request for mediation for the purpose of resolving
the dispute. If mediation is not successful in resolving the dispute, one or
more of the Members may elect to have the dispute submitted to binding
arbitration as provided in this Article 15 by giving written notice to each of
the Members of such Member’s election to require arbitration of such dispute.
Said written notice shall set forth (i) the action or issue in dispute and (ii)
a brief description of the position of the electing Member with respect to such
dispute.

 

30

 

 

Selection of Arbitrators. Within ten (10) days of the date upon which the notice
is sent pursuant to Section 15.1, the Members shall meet for the purpose of
selecting three (3) persons to act as arbitrators for the Company for such
dispute. In the event that the Members are unable to agree upon the selection of
the arbitrators at such meeting, then within ten (10) days following such
meeting, the Member(s) requesting such arbitration shall select one (1) person
to serve as an arbitrator and the remaining Member(s) shall select one (1)
person to serve as an arbitrator and, within five (5) days of the date of their
selection, the two persons so selected shall select a third person to serve as
the third and final arbitrator. In the event that the Member(s) requesting such
arbitration select one such person within such ten (10) day period, but the
remaining Member(s) fails to select one such person within such ten (10) day
period, or vice versa, then the person selected shall serve as the sole
arbitrator and shall make the determination required hereunder. In the event the
two selected arbitrators are unable to agree upon the identity of the person to
serve as the third and final arbitrator, such determination shall be made by the
American Arbitration Association in accordance with its then-existing rules and
regulations. No person selected by the Members and/or by the arbitrators may be
employed by, doing substantial business with or otherwise affiliated with any of
the Members (including, but not limited to, acting as an attorney or accountant
for any one or more of the Members or for the Company).

 

Arbitration Hearing. Not later than fifteen (15) days following the selection of
the third arbitrator, a hearing shall be convened by the arbitrators at a
mutually agreeable site. At such hearing, each Member shall be entitled to
present arguments in favor of and call witnesses in support of such Member’s
position with respect to the item in dispute; provided, however, that absent a
written agreement of the Members to the contrary, presentation and/or arguments
(including the direct testimony of any witnesses called by a Member) of each
side of the dispute shall be limited to three (3) hours.

 

Decision of the Arbitrators/Binding Effect. The arbitrators shall render their
decision regarding the matter in dispute within ten (10) days following the date
of the hearing set forth in Section 15.3 hereinabove and said decision shall be
final and binding upon the Members and the Company. Each of the Members hereby
covenant and agree that they shall comply with the decision of the arbitrators.

 

Miscellaneous.

 

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:

 

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If to BRG:

 

c/o BRG Manager, LLC

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: R. Ramin Kamfar

 

With a copy to:

 

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

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: Michael L. Konig, Esquire

 

If to SOIF II:

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

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: R. Ramin Kamfar

 

With a copy to:

 

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

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: Michael L. Konig, Esquire

 

If to SOIF III:

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

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: R. Ramin Kamfar

 

With a copy to:

 

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

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: Michael L. Konig, Esquire

 

32

 

 

with a copy, in any case, to:

 

Hirschler Fleischer

2100 East Cary Street

Richmond, Virginia 23223 

Attention: S. Edward Flanagan, Esquire

 

(b)          Each such notice shall be deemed delivered (a) on the date
delivered if by hand delivery or overnight courier service or facsimile, and (b)
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.

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 agree 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.

 

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.

 

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.

 

Table of Contents and Captions Not Part of Agreement. The table of contents and
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.

 

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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.

 

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.

 

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 or such other
written agreements, the terms and provisions of this Agreement shall govern and
control.

 

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.

 

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.

 

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

 

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 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 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, 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.

 

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.

 

34

 

 

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.

 

Limitation On Use of Names. Notwithstanding anything contained in this Agreement
or otherwise to the contrary, each Member as to itself agrees 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.

 

Publicly Traded Partnership Provision. Each Member hereby severally covenants
and agrees with the other Members for the benefit of such Members, that (i) it
is not currently making a market in Interests in the Company and will not in the
future make such a market and (ii) 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 and to assign
such Interest only to such Persons who agree to be similarly bound.

 

Public Announcements. No Member nor any of its Affiliates shall, without the
prior approval of the other Members, 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 such Member or such Affiliate has used reasonable
efforts to obtain the approval of the other Members prior to issuing such press
release or making such public disclosure.

 

Uniform Commercial Code. The interest of each Member in the Company shall be a
“certificated 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 a “certificated security” thereunder.

 

No Construction Against Drafter. This Agreement has been negotiated and prepared
by the Members 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.

 

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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

36

 

 

IN WITNESS WHEREOF, the Members have executed this Amended and Restated Limited
Liability Company Agreement as of the date set forth above.

 

  MEMBERS:             BRG LANSBROOK, LLC,   a Delaware limited liability
company             By: Bluerock Residential Holdings, L.P.,     a Delaware
limited partnership,     its sole member               By: Bluerock Residential
Growth REIT, Inc.       a Maryland corporation,       its general partner      
          By: /s/ Michael L. Konig       Name: Michael L. Konig       Its:
Secretary, Chief Operating Officer         and General Counsel            
BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND II, LLC, a Delaware limited liability
company             By: BR SOIF II Manager, LLC,     a Delaware limited
liability     Its: Manager               By: /s/ Jordan B. Ruddy     Name:
Jordan B. Ruddy     Its: Authorized Signatory             BLUEROCK SPECIAL
OPPORTUNITY + INCOME FUND III, LLC, a Delaware limited liability company        
    By: BR SOIF III Manager, LLC,     a Delaware limited liability     Its:
Manager               By: /s/ Jordan B. Ruddy     Name: Jordan B. Ruddy     Its:
Authorized Signatory

 

37

 

 

Exhibit A

 

Capital Contributions and Percentage Interests

 

Member Name  Capital
Contribution   Percentage Interest            BRG Lansbrook, LLC  $14,000,000  
 85.34%             Bluerock Special Opportunity + Income Fund II, LLC 
$1,202,076.92    7.33%             Bluerock Special Opportunity + Income Fund
III, LLC  $1,202,076.92    7.33%

 

 

 

 

Exhibit B

Property Management Agreement

[SEE ATTACHED]