Exhibit 10.3

 

TENANTS IN COMMON AGREEMENT

 

This TENANTS IN COMMON AGREEMENT (“Agreement”) dated March 26, 2015, by and
among BR FOX HILLS TIC-1, LLC, a Delaware limited liability company (“TIC-1”),
and BR FOX HILLS TIC-2, LLC, a Delaware limited liability company (“TIC-2”)
(together with any other persons or parties who acquire an interest and assume
the rights and obligations hereunder by written instrument, each sometimes
referred to as a “Tenant in Common” or collectively as the “Tenants in Common”),
with reference to the facts set forth below.

 

RECITALS

 

A.           The Tenants in Common own real property and improvements thereon,
located at 8800 Highway 290 West, Austin, Texas, and more particularly described
in Exhibit A attached hereto and incorporated herein (“Property”). The notice
addresses for the Tenants in Common, and percentage interest held by each Tenant
in Common in the Property, are set forth on Exhibit B attached hereto and
incorporated herein.

 

B.           The Tenants in Common desire to enter into this Agreement to (a)
provide for the orderly administration of their rights and responsibilities as
to each other and as to others and (b) delegate authority and responsibility for
the intended further operation and management of the Property.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
agree as set forth below.

 

1.             Nature of Relationship Between Co-Tenants.

 

1.1           Tenants in Common Relationship; No Partnership. The Tenants in
Common each shall hold their respective undivided tenancy in common interests in
the Property (the “Interests”) as tenants-in-common. The Tenants in Common do
not intend by this Agreement to create a partnership or joint venture among
themselves, but merely to set forth the terms and conditions upon which each of
them shall hold their respective Interests. In addition, the Tenants in Common
do not intend to create a partnership or joint venture with the Property Manager
(as defined below). Therefore, each Tenant in Common hereby elects to be
excluded from the provisions of Subchapter K of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the “Code”), with respect to the tenancy in
common ownership of the Property. The exclusion elected by the Tenants in Common
hereunder shall commence with the execution of this Agreement.

 

1.2           Reporting as Direct Owners and Not a Partnership. Each Tenant in
Common hereby covenants and agrees to report on such Tenant in Common’s
respective federal and state income tax returns all items of income, deduction
and credits that result from its Interests. All such reporting shall be
consistent with the exclusion of the Tenants in Common from Subchapter K of
Chapter 1 of the Code, commencing with the first taxable year following the
execution of this Agreement. Further, each Tenant in Common covenants and agrees
not to notify the Commissioner of Internal Revenue (“Commissioner”) that it
desires that Subchapter K of Chapter 1 of the Code apply to the Tenants in
Common.

 

1.3           Indemnity. Each Tenant in Common hereby agrees to indemnify,
protect, defend and hold the other Tenant in Common free and harmless from all
costs, liabilities, tax consequences and expenses (for example, taxes, interest
and any penalties), including, without limitation, attorneys’ fees and costs,
which may result from any Tenant in Common so notifying the Commissioner in
violation of this Agreement or otherwise taking a contrary position on any tax
return, report or other document.

 

1.4           No Agency. No Tenant in Common is authorized to act as agent for,
to act on behalf of, or to do any act that will bind, any other Tenant in
Common, or to incur any obligations with respect to the Property.

 

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2.             Management. The Tenants in Common are currently parties to (or
are concurrently herewith becoming parties to) a Property Management Agreement
with respect to the Property (as amended, the “Property Management Agreement”)
with Bluerock Property Management, LLC, a Michigan limited liability company
(which in turn with subcontract management services with Bell Partners, Inc. a
North Carolina corporation (“Bell”)) (the “Property Manager”). Pursuant to the
Property Management Agreement, the Property Manager shall be the sole and
exclusive manager of the Property to act on behalf of the Tenants in Common with
respect to the management, operation, maintenance and leasing of the Property
during the term of the Property Management Agreement. The Property Management
Agreement (and the subcontract between Property Manager and Bell) is hereby
ratified and reconfirmed by the Tenants in Common, and all of the terms,
covenants and conditions of the Property Management Agreement are hereby
incorporated herein as if set forth in full herein.

 

3.             Income and Liabilities. Except as otherwise provided herein and
in the Property Management Agreement, each of the Tenants in Common shall be
entitled to all benefits and obligations of ownership of the Property.
Accordingly, each of the Tenants in Common shall (a) be entitled to all benefits
of ownership of the Property, on a gross and not a net basis, including, without
limitation, all items of income, revenue and proceeds from sale or refinance or
condemnation of the Property, in proportion to their respective Interests, and
(b) bear, and shall be liable for, payment of all expenses of ownership of the
Property, on a gross and not a net basis, including by way of illustration, but
not limitation, all operating expenses and expenses of sale or refinancing or
condemnation, in proportion to their respective Interests; except for such
amounts as may be reasonably determined by the Tenants in Common or by the
Property Manager (to the extent that the Property Manager has the authority to
make such a determination pursuant to the Property Management Agreement) to be
retained for reserves or improvements in accordance with the Property Management
Agreement or the applicable budget for the Property.

 

4.             Co-Tenant’s Obligations. The Tenants in Common each agree to
perform such acts as may be reasonably necessary to carry out the terms and
conditions of this Agreement, including, without limitation:

 

4.1           Documents. Executing documents required in connection with the
acquisition, financing, sale or refinancing of the Property approved by the
Tenants in Common in accordance with Section 5 below and such additional
documents as may be required under this Agreement or may be reasonably required
to effect the intent of the Tenants in Common with respect to the Property, the
Property Management Agreement or any loans encumbering the Property, including
that certain mortgage loan (the “Existing Loan”) evidenced by that certain
Multifamily Note (“Note”) dated March 26, 2015 in the original principal amount
of $26,705,000.00 issued by the Tenants in Common to Walker & Dunlop, LLC and
currently held by Fannie Mae (Walker & Dunlop, LLC, Fannie Mae and their
respective successors and assigns as the holder of the Note are referred to
herein as the “Mortgage Lender”).

 

4.2           Additional Funds. Each Tenant in Common will be responsible for a
pro rata share (based on each Tenant in Common’s respective Interests) of any
future cash needed for any purpose in connection with the ownership, operation
and maintenance of the Property as determined by the Tenants in Common
(including under any budget applicable to the Tenants in Common) or by the
Property Manager (and approved by the Tenants in Common) pursuant to the
Property Management Agreement or as required by any loan secured by the
Property, including the Existing Loan. In addition to the foregoing, in the
event that any lender under financing secured by the Property, including the
Existing Loan, elects to pursue one or more, but not all, of the Tenants in
Common based on the joint and several liability of the Tenants in Common under
such financing, then any Tenants in Common that paid (either in cash or through
foreclosure of its Interest) in excess of its allocable share of the financing
shall be entitled to reimbursement by the remaining Tenants in Common for any
excess share paid by such Tenant in Common; provided that no such reimbursement
shall be sought or enforced at any time prior to the timely repayment in full of
the Existing Loan. Further, any Tenant in Common who breaches any of the
recourse exceptions to the non-recourse nature of any such financing, including
the Existing Loan, shall be liable to reimburse any other Tenant in Common (or
party(ies) related thereto or owner(s) thereof) for any amounts paid by such
other party (or if such other party likewise was responsible for such breach,
then such Tenant in Common shall pay an amount equal to its allocable share
thereof); provided that no such liability shall be sought or enforced at any
time prior to the timely repayment in full of the Existing Loan. To the extent
any Tenant in Common fails to pay any such funds within fifteen (15) days after
its receipt of notice that such additional funds are required, any other
Tenant(s) in Common may loan any such funds to the nonpaying Tenant(s) in
Common, who shall be liable on a fully recourse basis to repay the paying
Tenant(s) in Common the amount of any such loan plus interest thereon at the
rate of eighteen percent (18%) per annum (but not more than the maximum rate
allowed by law) within thirty one (31) days of funding the loan. In addition,
the Property Manager is hereby authorized and directed to pay the Tenant(s) in
Common entitled to reimbursement the sum loaned (with interest thereon as
provided above) out of future cash from operations or from the sale or
refinancing of the Property or other distributions otherwise due the nonpaying
Tenant(s) in Common pursuant to the Property Management Agreement. The remedies
against a nonpaying Tenant in Common provided for herein are in addition to any
other remedies that may otherwise be available, including by way of
illustration, but not limitation, the right to obtain a lien against the
Interests of the nonpaying Tenant in Common to the extent allowed by law and by
any third party financing secured by the Property (including the Existing Loan).
By executing this Agreement, each Tenant in Common agrees (i) that any such
short term loan will be made on a fully recourse basis, (ii) if such Tenant in
Common is an entity that is, for federal tax purposes, disregarded, such loan
shall be recourse to the owners of such disregarded entity, and (iii) to repay
such loan within thirty-one (31) days of funding. So long as there is
outstanding any balance on the Existing Loan, the Tenants in Common each waive
any and all lien rights it holds against another Tenant in Common, including for
a failure to pay funds under this Section 4.2 or for a failure of such Tenant in
Common to perform its obligations as a Tenant in Common, whether under this
Agreement or at law.

 

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5.             Sale or Encumbrance of Property.

 

5.1           Approval. The taking of any of the Major Decisions regarding the
Property set forth in Exhibit D attached hereto and incorporated herein shall be
subject to the prior unanimous approval by the Tenants in Common. The Tenants in
Common, by their execution hereof, shall be deemed to have approved the Existing
Loan affecting the Property.

 

5.2           Distribution of Loan or Sales Proceeds. Notwithstanding any other
provisions of this Agreement, proceeds of a loan or sale shall be distributed at
the closing of the loan or the sale as set forth below.

 

5.2.1           To the extent necessary, the proceeds first shall be used to pay
in full any loans encumbering title to the Property, including the Existing
Loan.

 

5.2.2           The proceeds next shall be used to pay all outstanding costs and
expenses incurred in connection with the holding, marketing, financing and/or
sale of the Property.

 

5.2.3           To the extent necessary, the proceeds next shall be used to pay
in full any unsecured loans made or allocable to the Tenants in Common with
respect to the Property.

 

5.2.4           Any proceeds remaining shall be paid to each Tenant in Common in
accordance with their respective Interests as provided in Section 3 above.

 

5.3           Purchase Rights. In the event that the Tenants in Common are
unable to obtain unanimous approval of any Major Decision pursuant to Section
5.1, then either Tenant in Common may exercise the purchase rights set forth and
described in Exhibit E attached hereto and incorporated herein.

 

6.             Possession. The Tenants in Common intend to lease the Property at
all times. Accordingly, no Tenant in Common shall have the right to occupy or
use the Property at any time during the term of this Agreement and hereby
expressly waive any such right.

 

7.             Transfer or Encumbrance. Except as specifically provided in this
Agreement and subject to compliance with any loan (and associated loan
documents) secured by the Property, including the Existing Loan, each Tenant in
Common may sell, transfer, convey, pledge, encumber or hypothecate the Interests
or any part thereof, provided that (a) any transferee shall take such Interests
subject to this Agreement and the Property Management Agreement, (b) the
transferor and transferee shall execute and cause to be recorded an assignment
and assumption agreement whereby (i) transferor assigns to transferee, to the
extent of the Interests being transferred, all of its right, title and interest
in and to this Agreement and the Property Management Agreement; and (ii)
transferee assumes and agrees to perform faithfully and to be bound by all of
the terms, covenants, conditions, provisions and agreements of this Agreement
and the Property Management Agreement with respect to the Interests to be
transferred and (c) such transferor and transferee shall execute and cause to be
recorded any related loan assumption agreements required by the lender under any
financing secured by the Property, including the Existing Loan. Upon execution
and recordation of such assumption agreements, the transferee shall become a
party to this Agreement and the Property Management Agreement and any such
financing without further action by the other Tenants in Common.

 

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8.             Right of Partition.

 

8.1           General. The Tenants in Common agree generally that any Tenant in
Common (and any of its successors-in-interest) shall have the right, while this
Agreement remains in effect, to have the Property partitioned, and to file a
complaint or institute any proceeding at law or in equity to have the Property
partitioned, in accordance with, and to the extent provided by, applicable law.
The Tenants in Common acknowledge and agree that partition of the Property may
result in a forced sale by all of the Tenants in Common. To avoid the inequity
of a forced sale and the potential adverse effect on the investment by the other
Tenants in Common, the Tenants in Common agree that, as a condition precedent to
filing a partition action, the Tenant in Common intending to file such action
shall follow the buy-sell procedure set forth in Section 10.

 

8.2           Lender Mandate. Notwithstanding the general provision of Section
8.1, as a condition of the Mortgage Lender making the Existing Loan to the
Tenants in Common to acquire the Property or, if required by any subsequent
lender in connection with the refinancing of the Existing Loan or any subsequent
loan secured by the Property, the Tenants in Common shall be deemed to have
waived, for the entire term of any such loan (including, without limitation, the
Existing Loan), their right to partition the Property or to file a complaint or
institute any proceeding at law or in equity to have the Property partitioned in
accordance with local law.

 

9.             Bankruptcy. To avoid the inequity of a forced sale and the
potential adverse effect on the investment of the other Tenants in Common, the
Tenants in Common agree that, as a condition precedent to entering into this
Agreement, the Tenant in Common causing an Event of Bankruptcy (as defined
below) shall follow the buy-sell procedure set forth in Section 10. The Tenants
in Common agree that the following shall constitute an “Event of Bankruptcy”
with respect to any Tenant in Common (and any of its successors-in-interests):
if a receiver, liquidator or trustee is appointed for any Tenant in Common, if
any Tenant in Common becomes insolvent, makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as they
become due if any petition for bankruptcy, reorganization, liquidation or
arrangement pursuant to federal bankruptcy law, or similar federal or state law,
shall be filed by or against, consented to, or acquiesced in by, any Tenant in
Common; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by such Tenant in Common then,
upon the same not being discharged, stayed or dismissed within thirty (30) days
thereof.

 

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10.           Buy-Sell Procedure. Prior to the filing of a partition action in
accordance with Section 8 or upon the occurrence of an Event of Bankruptcy in
accordance with Section 9, the Tenant in Common filing such action or the
subject of the Event of Bankruptcy (hereinafter, “Seller”) shall first make a
written offer (“Offer”) to sell its Interest to the other Tenant in Common at a
price equal to (a) the Fair Market Value (as defined below) of Seller’s
undivided Interest minus (b) Seller’s proportionate share of any selling,
prepayment or other costs that would apply in the event the Property was sold on
the date of the offer. The other Tenant in Common shall be entitled to purchase
the selling Tenant in Common’s Interest in the Property. “Fair Market Value”
shall mean the fair market value of Seller’s undivided Interest in the Property
(reduced by liabilities secured by the Property or liabilities taken subject to)
on the date the Offer is made as determined in accordance with the procedures
set forth below. The other Tenant in Common shall have twenty (20) days after
delivery of the Offer to accept the Offer. If the other Tenant in Common (the
Tenant in Common electing to accept the Offer, “Purchaser”) accepts the Offer,
Seller and Purchaser shall commence negotiation of the Fair Market Value within
fifteen (15) days after the Offer is accepted. If the parties do not agree,
after good faith negotiations, within ten (10) days, then each party shall
submit to the other a proposal containing the Fair Market Value the submitting
party believes to be correct (each a “Proposal”). If either Purchaser or Seller
fails to timely submit a Proposal, the other party’s submitted Proposal shall
determine the Fair Market Value. If both Purchaser and Seller timely submit
Proposals, then the Fair Market Value shall be determined by final and binding
arbitration in accordance with the procedures set forth below. Purchaser and
Seller shall meet, telephonically or at a mutually agreeable location, within
seven (7) days after delivery of the last Proposal and make a good faith attempt
to mutually appoint a certified MAI real estate appraiser who shall have been
active full-time over the previous five (5) years in the appraisal of comparable
properties located in Austin, Texas to act as the arbitrator. If Purchaser and
Seller are unable to agree upon a single arbitrator, then Purchaser and Seller
each, within five (5) days after the meeting, shall select an arbitrator that
meets the foregoing qualifications. The two (2) arbitrators so appointed, within
fifteen (15) days after their appointment, shall appoint a third arbitrator
meeting the foregoing qualifications; provided, however, if one party fails to
appoint an arbitrator in such period, then the one appointed arbitrator shall
make such determination itself without the need for an additional, or third,
arbitrator to be appointed or chosen. The determination of the arbitrator(s)
shall be limited solely to the issue of whether Seller’s or Purchaser’s Proposal
most closely approximates the Fair Market Value. The decision of the single
arbitrator or of the arbitrator(s) shall be made within thirty (30) days after
the appointment of a single arbitrator or the third arbitrator, as applicable.
The arbitrator(s) shall have no authority to create an independent structure of
fair market value or prescribe or change any or several of the components or the
structure thereof; the sole decision to be made shall be which of the parties’
Proposals most closely corresponds to the Fair Market Value. The decision of the
single arbitrator or majority of the three (3) arbitrators shall be binding upon
Purchaser and Seller. If Purchaser or Seller fails to appoint an arbitrator
within the time period specified above, the arbitrator appointed by one of them
shall reach a decision that shall be binding upon the parties. The cost of the
arbitrators shall be paid equally by Seller and Purchaser. The arbitration shall
be conducted in New York City, New York, in accordance with applicable Texas
law, as modified by this Agreement. The parties agree that Federal Arbitration
Act, Title 9 of the United States Code, shall not apply to any arbitration
hereunder. The parties shall have no discovery rights in connection with the
arbitration. The decision of the arbitrator(s) may be submitted to any court of
competent jurisdiction by the party designated in the decision (i.e., New York,
Delaware or Texas, as applicable). Such party shall submit to the applicable
court having subject matter jurisdiction a form of judgment incorporating the
decision of the arbitrator(s), and such judgment, when signed by a judge of such
court, shall become final for all purposes and shall be entered by the clerk of
the court on the judgment roll of the court. If either Purchaser or Seller
refuses to arbitrate an arbitrable dispute and the party demanding arbitration
obtains a court order directing the other to arbitrate, the party demanding
arbitration shall be entitled to all of its reasonable attorneys’ fees and costs
in obtaining such order, regardless of which party ultimately prevails in the
matter. BY EXECUTING THIS AGREEMENT, EACH TENANT IN COMMON AGREES TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ARBITRATION OF DISPUTES
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY TEXAS LAW AND EACH
TENANT IN COMMON KNOWINGLY GIVES UP ANY RIGHTS IT MIGHT POSSESS TO HAVE THE
DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY EXECUTING THIS AGREEMENT EACH
TENANT IN COMMON GIVES UP ITS JUDICIAL RIGHTS TO APPEAL. IF YOU REFUSE TO SUBMIT
TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF TEXAS LAW. EACH TENANT IN COMMON’S AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARY. Once the Fair Market Value is
determined, the Purchaser shall be obligated to acquire the Seller’s Interest.
The closing of the purchase shall occur at or through a mutually agreeable title
company where the Property is located within thirty (30) days from the date a
Fair Market Value is determined, whether by agreement or arbitration. Closing
costs and prorations shall be allocated as is standard practice where the
Property is located.

 

11.           General Provisions.

 

11.1         Mutuality; Reciprocity; Runs With the Land. All provisions,
conditions, covenants, restrictions, obligations and agreements contained herein
or in the Property Management Agreement are made for the direct, mutual and
reciprocal benefit of each and every part of the Property; shall be binding upon
and shall inure to the benefit of each of the Tenants in Common and their
respective heirs, executors, administrators, successors, assigns, devisees,
representatives, lessees and all other persons acquiring any undivided interest
in the Property or any portion thereof whether by operation of law or any manner
whatsoever (collectively, “Successors”); shall create mutual, equitable
servitudes and burdens upon the undivided Interest in the Property of each
Tenant in Common in favor of the Interest of every other Tenant in Common; shall
create reciprocal rights and obligations between the respective Tenants in
Common, their Interests in the Property, and their Successors; and shall, as to
each of the Tenants in Common and their Successors operate as covenants running
with the land, for the benefit of the other Tenants in Common pursuant to
applicable law. It is expressly agreed that each covenant contained herein or in
the Property Management Agreement (i) is for the benefit of and is a burden upon
the undivided Interests in the Property of each of the Tenants in Common, (ii)
runs with the undivided Interest in the Property of each Tenant in Common, and
(iii) benefits and is binding upon each Successor owner during its ownership of
any undivided Interest in the Property, and each owner having any interest
therein derived in any manner through any Tenant in Common or Successor. Every
person or entity who now or hereafter owns or acquires any right, title or
interest in or to any portion of the Property is and shall be conclusively
deemed to have consented and agreed to every restriction, provision, covenant,
right and limitation contained herein or in the Property Management Agreement,
whether or not such person or entity expressly assumes such obligations or
whether or not any reference to this Agreement or the Property Management
Agreement is contained in the instrument conveying such interest in the Property
to such person or entity. The Tenants in Common agree that, subject to the
restrictions on transfer contained herein, any Successor shall become a party to
this Agreement and the Property Management Agreement upon acquisition of an
undivided interest in the Property as if such person was a Tenant in Common
initially executing this Agreement.

 

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11.2         Binding Arbitration. Any controversy arising out of or related to
this Agreement or the breach thereof or an investment in the interests shall be
settled by arbitration in New York City, New York, in accordance with the rules
of The American Arbitration Association, and judgment entered upon the award
rendered may be enforced by appropriate judicial action pursuant to Texas law.
The arbitration panel shall consist of one member, which shall be the mediator
if mediation has occurred or shall be a person agreed to by each party to the
dispute within 30 days following notice by one party that it desires that a
matter be arbitrated. If there was no mediation and the parties are unable
within such 30 day period to agree upon an arbitrator, then the panel shall be
one arbitrator selected by the New York City, New York office of The American
Arbitration Association, which arbitrator shall be experienced in the area of
real estate and who shall be knowledgeable with respect to the subject matter
area of the dispute. The losing party shall bear any fees and expenses of the
arbitrator, other tribunal fees and expenses, reasonable attorneys’ fees of both
parties, any costs of producing witnesses and any other reasonable costs or
expenses incurred by it or the prevailing party or such costs shall be allocated
by the arbitrator. The arbitration panel shall render a decision within thirty
(30) days following the close of presentation by the parties of their cases and
any rebuttal. The parties shall agree within thirty (30) days following
selection of the arbitrator to any prehearing procedures or further procedures
necessary for the arbitration to proceed, including interrogatories or other
discovery; provided, in any event each Tenant in Common shall be entitled to
discovery in accordance with Texas law.

 

11.3         Attorneys’ Fees. If any action or proceeding is instituted between
all or any of the Tenants in Common arising from or related to or with this
Agreement, the Tenant in Common or Tenants in Common prevailing in such action
or arbitration shall be entitled to recover from the other Tenant in Common or
Tenants in Common all of its or their costs of action or arbitration, including,
without limitation, reasonable attorneys’ fees and costs as fixed by the court
or arbitrator therein.

 

11.4         Entire Agreement. This Agreement, together with the Property
Management Agreement, constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereof and all prior and contemporaneous
agreements, representations, negotiations and understandings of the parties
hereto, oral or written, are hereby superseded and merged herein.

 

11.5         Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of Texas without regard to choice of law
rules.

 

11.6         Modification. No modification, waiver, amendment, discharge or
change of this Agreement shall be valid unless the same is in writing and signed
by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is or may be sought. The assumption of a new
Tenant in Common of this Agreement through the acquisition of an undivided
interest in the Property, whether pursuant to the execution of a new Tenants in
Common Agreement with identical terms as this Agreement, the execution of a
counterpart of this Agreement or the execution of an assignment and assumption
instrument applicable to this Agreement, shall not constitute a modification of
this Agreement requiring the consent to, or execution of, such instrument by the
other Tenants in Common under this Agreement. So long as there is outstanding
any balance on the Existing Loan, no termination, modification or waiver of the
Agreement may be made without the Mortgage Lender’s written consent.

 

11.7         Notice and Payments.

 

11.7.1   Any notice to be given or other document or payment to be delivered by
any party to any other party hereunder may be delivered in person, or may be
deposited in the United States mail, duly certified or registered, return
receipt requested, with postage prepaid, or by Federal Express or other similar
overnight delivery service, and addressed to the Tenants in Common at the
addresses specified below or in any instrument effecting an assignment and
assumption hereof. Any party hereto from time to time, by written notice to the
others (and Mortgage Lender), may designate a different address (or phone
number) that shall be substituted for the one above specified. Unless otherwise
specifically provided for herein, all notices, payments, demands or other
communications given hereunder shall be in writing and shall be deemed to have
been duly given and received (i) upon personal delivery, or (ii) as of the third
business day after mailing by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as set forth above, or (iii) the
immediately succeeding business day after deposit with Federal Express or other
similar overnight delivery system.

 

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11.7.2   For all purposes of the Existing Loan, the Tenants in Common hereby
designate Bluerock Asset Management, LLC, c/o Bluerock Real Estate, L.L.C., 712
Fifth Avenue, 9th Floor, New York, New York 10019, Attn: R. Ramin Kamfar and
Michael L. Konig, Esq., as the notice party for purposes of all communication
and correspondence by, with or on behalf of the Tenants in Common with respect
to the Mortgage Lender.

 

11.8         Successors and Assigns. All provisions of this Agreement shall
inure to the benefit of and shall be binding upon the successors-in-interest,
assigns and legal representatives of the parties hereto.

 

11.9         Term. This Agreement shall commence as of the date of recordation
and shall terminate at such time as the Tenants in Common or their
successors-in-interest or assigns no longer own the Property as
tenants-in-common. In no event shall this Agreement continue beyond December 1,
2035.

 

11.10       Waivers. No act of any Tenant in Common shall be construed to be a
waiver of any provision of this Agreement, unless such waiver is in writing and
signed by the Tenant in Common affected. Any Tenant in Common hereto may
specifically waive any breach of this Agreement by any other Tenant in Common,
but no such waiver shall constitute a continuing waiver of similar or other
breaches.

 

11.11       Counterparts. This Agreement may be executed in counterparts, each
of which, when taken together, shall be deemed one fully executed original.

 

11.12       Severability. If any portion of this Agreement shall become illegal,
null or void or against public policy, for any reason, or shall be held by any
court of competent jurisdiction to be illegal, null or void or against public
policy, the remaining portions of this Agreement shall not be affected thereby
and shall remain in full force and effect to the fullest extent permissible by
law.

 

11.13       Securities Laws. THE UNDIVIDED INTERESTS IN THE PROPERTY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR APPROVED OR DISAPPROVED BY
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, OR BY THE SECURITIES
REGULATORY AUTHORITY OF ANY STATE, NOR HAS ANY COMMISSION OR AUTHORITY PASSED
UPON OR ENDORSED THE MERITS OF ANY OFFERING OR THE ACCURACY OR ADEQUACY OF ANY
DISCLOSURE MADE IN CONNECTION THEREWITH. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

 

11.14       Time is of the Essence. Time is of the essence of each and every
provision of this Agreement.

 

11.15       Subordination.

 

11.15.1   As security for the Existing Loan, the Tenants in Common have executed
and delivered a first deed of trust in favor of the holder of the Existing Loan
(“Security Instrument”). The Security Instrument, the Note and all other
documents and instruments existing now or after the date hereof, evidencing,
securing, or otherwise relating to the Existing Loan or the Property or any
other collateral for the Existing Loan, including any assignment of leases and
rents, other assignments, security agreements, financing statements, guaranties,
indemnity agreements (including environmental indemnity agreements), letters of
credit, or escrow/holdback or similar agreements or arrangements, together with
all amendments, modifications, substitutions or replacements thereof, are herein
collectively referred to as the “Loan Documents.”

 

7

 

 

11.15.2   So long as there is outstanding any balance on the Existing Loan, the
Security Instrument, and any renewals and extensions thereof, shall
unconditionally be and remain at all times a lien on the Property prior and
superior to this Agreement and all rights, privileges, duties and obligations of
each Tenant in Common hereunder. So long as there is outstanding any balance on
the Existing Loan, this Agreement and all rights, privileges, duties and
obligations of the Tenants in Common hereunder shall be and hereby are subjected
and subordinated to the Note, the Security Instrument, and the other Loan
Documents, including, without limitation, all indebtedness, and any interest,
fees, costs or expenses thereon due or to become due to the holder thereof under
the Note, Security Instrument or any other Loan Document. In the event of a
conflict between the terms and provisions of this Agreement and the terms and
provisions of the Loan Documents, the terms and provisions of the Loan Documents
shall prevail. Nothing contained herein, however, shall obligate either Tenant
in Common with respect to any of the Loan Documents which is not applicable to
such respective party. Any holder of the Existing Loan, including, without
limitation, the Mortgage Lender, shall be an express third-party beneficiary of
this Agreement and shall have privity to enforce the provisions hereof against
any party hereto. The Tenants in Common each agree that they shall not engage in
any activity which would violate the terms of any of the Loan Documents. The
Tenants in Common each agree not to allow its Interest in the Property to become
subject to any liens from any third parties, and if a Tenant in Common’s
Interest is involuntarily liened, such lien will be discharged within thirty
(30) days. Each Tenant in Common shall promptly respond to requests for
information from the other Tenant in Common or Mortgage Lender and will promptly
make itself available for execution of documents required in connection with the
Existing Loan and the operation of the Property.

 

11.15.3   Standstill. So long as there is outstanding any balance on the
Existing Loan, the Tenants in Common agree: (i) that any and all rights and
remedies, including rights of indemnity or otherwise under this Agreement and
the Property Management Agreement, are fully subordinate to the lien of the
Existing Loan and all other terms and provisions of the Loan Documents; and (ii)
to stand still with respect to the enforcement of any of their rights and
remedies, including under this Agreement and the Property Management Agreement,
and shall take no enforcement action with respect thereto.

 

11.16       Memorandum. The Tenants in Common acknowledge and agree that they
will execute and record the Memorandum of Tenants in Common Agreement in the
land records of Travis County, Texas in the form of Exhibit C attached hereto,
in lieu of the recordation of this Tenants in Common Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

8

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.

 

  TENANTS IN COMMON:       BR FOX HILLS TIC-1, LLC,   a Delaware limited
liability company           By: 23Hundred, LLC,       a Delaware limited
liability company,       its sole member               By: /s/ Jordan Ruddy
(SEAL)       Jordan Ruddy, Authorized Signatory  

      BR FOX HILLS TIC-2, LLC,   a Delaware limited liability company          
By: Bell BR Waterford Crossing JV, LLC,       a Delaware limited liability
company,       its sole member               By: /s/ Jordan Ruddy (SEAL)      
Jordan Ruddy, Authorized Signatory  

 

 

 

 

EXHIBITS

 

Exhibit “A” Description of the Property     Exhibit “B” Tenants in Common and
Percentage Interests     Exhibit “C” Memorandum of Tenants in Common Agreement  
  Exhibit “D” Decisions Requiring Unanimity

 

 

 

 

EXHIBIT “A”

 

Description of Property

 

Lots 2 and 3, Block “A”, PEDERNALES ELECTRIC COOPERATIVE-CIRCLE DRIVE, AUSTIN
SUBDIVISION, a subdivision in Travis County, Texas, according to the map or plat
thereof, recorded under Document No. 200600156 or the Official Public Records of
Travis County, Texas.

 

 

 

 

EXHIBIT “B”

 

Tenants in Common and Percentage Interests

 

Tenants in Common   Percentage Interest       BR FOX HILLS TIC-1, LLC   19.07%
c/o Bluerock Real Estate, LLC     712 Fifth Avenue, 9th Floor     New York, NY
10019     Attn: Jordan Ruddy and Michael L. Konig, Esq.     Telephone: (212)
843-1601           BR FOX HILLS TIC-2, LLC   80.93% c/o Bluerock Real Estate,
LLC     712 Fifth Avenue, 9th Floor     New York, NY 10019     Attn: Jordan
Ruddy and Michael L. Konig, Esq.     Telephone: (212) 843-1601    

 

 

 

 

EXHIBIT “C”

 

FORM OF MEMORANDUM OF TENANTS IN COMMON AGREEMENT

 

RECORDING REQUESTED BY ) WHEN RECORDED MAIL TO: )     Bluerock Real Estate, LLC
) 712 Fifth Avenue, 9th Floor ) New York, NY 10019 ) Attention: Michael L.
Konig, Esq. )       Above Space for Recorder’s Use

  

MEMORANDUM OF TENANTS IN COMMON AGREEMENT

 

THIS MEMORANDUM OF TENANTS IN COMMON AGREEMENT (the “Memorandum”) is dated as of
March 26, 2015, by and between BR FOX HILLS TIC-1, LLC, a Delaware limited
liability company (“TIC-1”), and BR FOX HILLS TIC-2, LLC, a Delaware limited
liability company (“TIC-2”) (together with any other persons or parties who
acquire an interest and assume the rights and obligations hereunder by written
instrument, each sometimes referred to as a “Tenant in Common” or collectively
as the “Tenants in Common”).

 

A.           The Tenants in Common have entered into that certain Tenants in
Common Agreement dated of even date hereof (the “TIC Agreement”), pertaining to
certain real property more particularly described on Exhibit A attached hereto
(the “Property”).

 

B.           The Tenants in Common have obtained a loan in the original
principal amount of $26,705,000.00 from Walker & Dunlop, LLC, which loan has
been assigned to Fannie Mae (“Lender”) for the financing of the Property
("Loan") and, in connection therewith, entering into various documents
evidencing and securing the Loan (the “Loan Documents”), including but not
limited to a deed of trust to be recorded as a lien against the Property (the
“Security Instrument”).

 

C.           This Memorandum is made and entered into solely for the purpose of
providing notice of the TIC Agreement to all third parties.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Tenants in Common hereby declare and agree:

 

1.  The Tenants in Common hereby created a tenancy-in-common in order to
coordinate all actions taken with respect to the Property pursuant to the terms
and provisions of the TIC Agreement. The TIC Agreement is hereby incorporated by
this reference as if set forth herein in full.

 

2.  The Tenants in Common have subordinated and hereby expressly subordinate the
TIC Agreement to the Loan Documents, including the lien established pursuant to
the Security Instrument.

 

3.  All communications with the Tenants in Common under this Agreement,
including any inquiries regarding the specific terms of the TIC Agreement,
should be addressed to Bluerock Real Estate, LLC, 712 Fifth Avenue, 9th Floor,
New York, NY 10019 Attn: Michael L. Konig, Esq.

 

4.  To the extent of any inconsistency between the terms of the TIC Agreement
and this Memorandum, the terms of the TIC Agreement shall prevail and control.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

 

SIGNATURES APPEAR ON THE FOLLOWING PAGES.]

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Memorandum as of the date set
forth above.

 

  TENANTS IN COMMON:       BR FOX HILLS TIC-1, LLC,   a Delaware limited
liability company           By: 23Hundred, LLC,       a Delaware limited
liability company,       its sole member               By:   (SEAL)       Jordan
Ruddy, Authorized Signatory  

 

STATE OF NEW YORK ) COUNTY OF NEW YORK )

 

Before me, the undersigned, a Notary Public in and for the County and State
aforesaid, personally appeared

Jordan Ruddy, with whom I am personally acquainted (or proved to me on the basis
of satisfactory evidence) and who, upon oath, acknowledged that he is the
Authorized Signatory of 23Hundred, LLC, a Delaware limited liability company, in
the limited liability company’s capacity as sole member of BR FOX HILLS TIC-1,
LLC, a Delaware limited liability company, the within named bargainor, and that
he as such Authorized Signatory, being authorized to do, executed the within
instrument for the purposes therein contained by signing the name of the company
hereto.

 

Witness my hand and seal, at office in New York, New York, this ____ day of
March, 2015.

 

          Notary Public       My Commission Expires: _________________________  
 

 

 

 

  

  BR FOX HILLS TIC-2, LLC,   a Delaware limited liability company           By:
Bell BR Waterford Crossing JV, LLC,       a Delaware limited liability company,
      its sole member               By:   (SEAL)       Jordan Ruddy, Authorized
Signatory  

 

STATE OF NEW YORK ) COUNTY OF NEW YORK )

 

Before me, the undersigned, a Notary Public in and for the County and State
aforesaid, personally appeared

Jordan Ruddy, with whom I am personally acquainted (or proved to me on the basis
of satisfactory evidence) and who, upon oath, acknowledged that he is the
Authorized Signatory of Bell BR Waterford Crossing JV, LLC, a Delaware limited
liability company, in the limited liability company’s capacity as sole member of
BR FOX HILLS TIC-2, LLC, a Delaware limited liability company, the within named
bargainor, and that he as such Authorized Signatory, being authorized to do,
executed the within instrument for the purposes therein contained by signing the
name of the company hereto.

 

Witness my hand and seal, at office in New York, New York, this ____ day of
March, 2015.

 

          Notary Public       My Commission Expires: _________________________  
 

 

 

 

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

Lots 2 and 3, Block “A”, PEDERNALES ELECTRIC COOPERATIVE-CIRCLE DRIVE, AUSTIN
SUBDIVISION, a subdivision in Travis County, Texas, according to the map or plat
thereof, recorded under Document No. 200600156 or the Official Public Records of
Travis County, Texas.

 

 

 

 

EXHIBIT “D”

 

DECISIONS REQUIRING UNANIMITY

 

DECISIONS REQUIRING UNANIMITY Notwithstanding any powers delegated to the
Property Manager, or any provision in this Agreement to the contrary, the
following powers are expressly reserved to the Tenants in Common, and the
unanimous affirmative vote of TIC-1 and TIC-2 shall be required to approve any
such action (each, a “Major Decision”):

 

(i)          any loan to be secured by the Property, including any refinancing,
material amendment, material modification or extension of the Existing Loan;

 

(ii)         any sale of the Property (as an entirety) or any action reasonably
intended to accomplish same, including but not limited to entering into any
contract of sale or binding or non-binding term sheet, marketing the Property
for sale, selecting or engaging any broker or anyone else for the purpose of
selling or marketing the Property, releasing Property information to any broker
or anyone else for the purpose of selling or marketing the Property, giving,
granting or undertaking any options, rights of first refusal, pledges, ground
leases, security or other interests in or encumbering the Property, any portion
thereof or any other material assets;

 

(iii)        enter into any transaction with an affiliate of any Tenant in
Common (except the initial entry into the Property Management Agreement).
Subject to the remaining terms of this clause (iii), the Tenants in Common shall
have equal approval rights with respect to any change in management of the
Property with respect to the property management functions (i.e., any
modification or amendment of the Property Management Agreement; provided,
however, termination of such agreement shall be solely subject to the terms
thereof);

 

(iv)         any acquisition by the Tenants in Common by purchase, ground lease
or otherwise, of 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) in
connection therewith;

 

(v)          any taking of any action by the Tenants in Common that is
reasonably likely to result in any Tenant in Common or any of its affiliates
having individual liability under any so called “bad boy” guaranties or similar
agreements provided to third party lenders in respect of financings relating to
the Property which provide for recourse as a result of willful misconduct, fraud
or gross negligence or for failure to comply with the covenants or any other
provisions of such “bad boy” guaranties (each, a “Non-Recourse Carveout
Guaranty”);

 

(vi)         any decision of “Owner” with respect to approval or amendment of
any “Budget” as those terms are defined and used in the Property Management
Agreement;

 

(vii)        any amendment, modification, or termination of this Agreement or
the Property Management Agreement;

 

(viii)      except as otherwise set forth in the approved Budget, making a call
for additional capital with respect to the Property;

 

(viii)      acquiring, modifying, amending, or terminating any insurance policy
with respect to the Property, other than in conjunction with any policies the
cost of which was included in the Budget and other than any policies necessary
to respond to any requirements of a lender under a loan, including the Existing
Loan.

 

 

 

 

EXHIBIT “E”

 

PURCHASE RIGHTS

 

(a)          Availability of Rights. At any time that the Tenants in Common are
unable to agree on a Major Decision and such failure to agree has continued for
fifteen (15) days after written notice from one Tenant in Common to the other
Tenant in Common indicating an intention to exercise rights under this Exhibit
E, either Tenant in Common has the right to initiate the provisions of this
Exhibit E. The rights provided in this Exhibit E shall not be available to any
Tenant in Common and shall be unenforceable to the extent that the exercise of
rights and attendant transfer of Interest violate any applicable document
evidencing or securing a loan, including the Existing Loan, and any such
transfer, if made, shall be void ab initio.

 

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

 

(c)          Offeree Response. After receipt of such notice, the Offeree shall
elect to either (i) sell its entire Interest to the Offeror for an amount equal
to the amount the Offeree would have been entitled to receive if the Tenants in
Common had sold the Property for the Valuation Amount on the Closing Date and
the Tenants in Common had immediately paid all Property level liabilities and
Imputed Closing Costs and distributed the net proceeds of sale to the Tenants in
Common pursuant to Section 3 of the Agreement, or (ii) purchase the entire
Interest of the Offeror for an amount equal to the amount the Offeror would have
been entitled to receive if the Tenants in Common had sold the Property for the
Valuation Amount on the Closing Date and the Tenants in Common had immediately
paid all Property level liabilities and Imputed Closing Costs and distributed
the net proceeds of the sale to the Tenants in Common pursuant to Section 3 of
the Agreement. The Offeree shall have thirty (30) days from the giving of the
Offeror’s notice in which to exercise either of its options by giving written
notice to the Offeror. If the Offeree does not elect to acquire the Offeror’s
Interest within such time period, the Offeree shall be deemed to have elected to
sell its Interest to the Offeror as provided in subsection (i) above. As used
herein, “Imputed Closing Costs” means an amount (not to exceed one and one
quarter percent (1.25%) of the purchase price) that would normally be incurred
by the Tenants in Common for title insurance, premiums, survey costs, brokerage
commissions, legal fees and other commercially reasonable closing costs.

 

(d)          Earnest Money. Within five (5) business days after an election has
been made or deemed made under clause (c), the acquiring Tenant in Common shall
deposit with a mutually acceptable third-party escrow agent a non-refundable
earnest money deposit in the amount of five percent (5%) of the amount the
selling Tenant in Common is entitled to receive for its Interest under this
Exhibit E, which amount shall be applied to the purchase price at closing. If
the acquiring Tenant in Common should thereafter fail to consummate the
transaction for any reason other than a default by the selling Tenant in Common
or a refusal by any lender with respect to the Property who has a right under
its loan documents to consent to such transfer to so consent, (i) (A) the
earnest money deposit shall be distributed from escrow to the selling Tenant in
Common, free of all claims of the acquiring Tenant in Common, as liquidated
damages and constituting the sole and exclusive remedy available to the selling
Tenant in Common because of a default by the acquiring Tenant in Common or (B)
the selling Tenant in Common may, by delivering to the acquiring Tenant in
Common written notice thereof, elect to buy the acquiring Tenant in Common’s
entire Interest for an amount equal to the amount the acquiring Tenant in Common
would have been entitled to receive if the Tenants in Common had sold the
Property for the Valuation Amount and the Tenants in Common had immediately paid
all Property level liabilities and Imputed Closing Costs and distributed the net
proceeds of the sale to the Tenants in Common pursuant to Section 3, in which
case, the Closing Date therefor shall be the date specified in the selling
Tenant in Common’s notice, and (ii) if the acquiring Tenant in Common was the
Offeror, the non-refundable earnest money deposit for any future election by the
acquiring Tenant in Common to buy the selling Tenant in Common’s Interest shall
be twenty percent (20%) of the amount the selling Tenant in Common is entitled
to receive for its Interest in connection with such future election.

 

 

 

 

(e)          Closing. The closing of an acquisition pursuant to this Exhibit E
shall be held at the principal place of business of the holder of the earnest
money on a mutually acceptable date (the “Closing Date”) not later than sixty
(60) days (or, if the Offeree is the acquiring Tenant in Common, ninety (90)
days) after an election has been made or deemed made under clause (c). As a
precondition to the closing, (A) the acquiring Tenant in Common shall work in
good faith with the selling Tenant in Common to remove completely the selling
Tenant in Common or any affiliate of the selling Tenant in Common that is a
party to any Non-Recourse Carveout Guaranty (unless the selling and acquiring
Tenants in Common are under common control) (a “Selling TIC Carveout Guarantor”)
from that Non-Recourse Carveout Guaranty contemporaneously with the closing,
including by means of substituting a replacement for the Selling TIC Carveout
Guarantor, and (B) to the extent that the acquiring Tenant in Common and selling
Tenant in Common are not able to remove, where applicable, the Selling TIC
Carveout Guarantor completely from the Non-Recourse Carveout Guaranty
contemporaneously with the closing, the acquiring Tenant in Common or an
affiliate of the acquiring Tenant in Common (in either case whose financial
strength and creditworthiness shall be reasonably acceptable to the Selling TIC
Carveout Guarantor) shall provide an indemnity to the Selling TIC Carveout
Guarantor commensurate with the Selling TIC Carveout Guarantor’s remaining
exposure under the Non-Recourse Carveout Guaranty for liabilities and losses
that are the result of the acts or omissions of the acquiring Tenant in Common
or any affiliates of the acquiring Tenant in Common; provided, however, that in
any event, the Selling TIC Carveout Guarantor shall remain liable for any
liabilities or losses arising under the Non-Recourse Carveout Guaranty for acts
or omissions prior to the closing other than those liabilities or losses caused
by the acts or omissions of the acquiring Tenant in Common or its affiliates
(“Prior Acts”), and if the Selling TIC Carveout Guarantor is removed from the
Non-Recourse Carveout Guaranty with respect to Prior Acts, then the Selling TIC
Carveout Guarantor shall execute a backstop indemnity agreement acceptable to
the acquiring Tenant in Common and any affiliate of the acquiring Tenant in
Common that is a party to the Non-Recourse Carveout Guaranty (the “Acquiring
Indemnitees”) indemnifying each of the Acquiring Indemnitees from liabilities
and losses arising from Prior Acts.

 

At such closing, the following shall occur:

 

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

 

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

 

(f)          Enforcement. It is expressly agreed that the remedy at law for
breach of the obligations of the Tenants in Common set forth in this Exhibit E
is inadequate in view of (i) the complexities and uncertainties in measuring the
actual damage to be sustained by reason of the failure of a Tenant in Common to
comply fully with such obligations, and (ii) the uniqueness of the Tenants in
Common relationships. Accordingly and except as provided in clause (a), each of
such obligations shall be, and is hereby expressly made, enforceable by an order
of specific performance.