Exhibit 10.203

 

 

 

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

BELL BR WATERFORD CROSSING JV, LLC

 

A DELAWARE LIMITED LIABILITY COMPANY

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page Section 1. Definitions 1 Section 2. Organization of the Company 6 2.1
Name 6 2.2 Place of Registered Office; Registered Agent 7 2.3 Principal Office 7
2.4 Filings 7 2.5 Term 7 2.6 Expenses of the Company 7 Section 3. Purpose 7
Section 4 Reserved 7 Section 5. Capital Contributions, Loans, Percentage
Interests and Capital Accounts 7 5.1 Capital Contributions 7 5.2 Additional
Capital Contributions 7 5.3 Percentage Ownership Interest 10 5.4 Return of
Capital Contribution 10 5.5 No Interest on Capital. 10 5.6 Capital Accounts 10
5.7 New Members 11 Section 6. Distributions 11 6.1 Distribution of Distributable
Funds  11

 

 

 

  

Section 7. Allocations 12 7.1 Allocation of Net Income and Net Losses Other than
in Liquidation 12 7.2 Allocation of Net Income and Net Losses in Liquidation 12
7.3 U.S. Tax Allocations 12 Section 8. Books, Records, Tax Matters and Bank
Accounts 13 8.1 Books and Records 13 8.2 Reports and Financial Statements 13 8.3
Tax Matters Member 14 8.4 Bank Accounts 14 8.5 Tax Returns 14 8.6 Expenses 14
Section 9. Management 14 9.1 Management 14 9.2 Affiliate Transactions 15 9.3
Other Activities 15 9.4 Operation in Accordance with REOC/REIT Requirements 15
9.10 FCPA 17 Section 10. Confidentiality 18 Section 11. Representations and
Warranties 19 11.1 In General 19

 

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11.2 Representations and Warranties 19 Section 12. Sale, Assignment, Transfer or
other Disposition 22 12.1 Prohibited Transfers 22 12.2 Affiliate Transfers 22
12.3 Admission of Transferee; Partial Transfers 23 12.4 Withdrawals 25 Section
13. Dissolution 25 13.1 Limitations 25 13.2 Exclusive Events Requiring
Dissolution 25 13.3 Liquidation 25 13.4 Continuation of the Company 26 Section
14. Indemnification 26 14.1 Exculpation of Members 26 14.2 Indemnification by
Company 26 14.3 General Indemnification by the Members 27 Section 15. Mediation
and Arbitration of Disputes 27 15.1 Events Giving Rise to Mediation or
Arbitration 27 15.2 Selection of Arbitrators 28 15.3 Arbitration Hearing 28 15.4
Decision of the Arbitrators/Binding Effect 28

 

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Section 16. Miscellaneous 28 16.1 Notices 28 16.2 Governing Law 29 16.3
Successors 30 16.4 Pronouns 30 16.5 Table of Contents and Captions Not Part of
Agreement. 30 16.6 Severability 30 16.7 Counterparts 30 16.8 Entire Agreement
and Amendment 30 16.9 Further Assurances 30 16.10 No Third Party Rights 30 16.11
Incorporation by Reference 30 16.12 Limitation on Liability 31 16.13 Remedies
Cumulative 31 16.14 No Waiver 31 16.15 Limitation On Use of Names 31 16.16
Publicly Traded Partnership Provision 31 17.17 Uniform Commercial Code 32 16.18
No Construction Against Drafter. 32

 

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BELL BR WATERFORD CROSSING JV, LLC

AMENDED AND RESTATED LIMITED

LIABILITY COMPANY AGREEMENT

 

This Amended and Restated Limited Liability Company Agreement (this "Agreement")
is adopted, executed, and agreed to effective on December 3, 2014, by and among
BR Waterford JV Member, LLC, a Delaware limited liability company ("BR I") and
BR Waterford JV Minority Member, LLC, a Delaware limited liability company ("BR
II"), as Members (together, the "Members"), and BR I, as Manager (the
"Manager").

 

WITNESSETH:

 

WHEREAS, BR I and Bell HNW Nashville Portfolio, LLC ("Bell") entered into that
certain Limited Liability Company/Joint Venture Agreement of Bell BR Waterford
Crossing JV, LLC, a Delaware limited liability company (the "Company"), on March
29, 2012, as amended pursuant to that certain First Amendment to Limited
Liability Company/Joint Venture Agreement for Bell BR Waterford Crossing JV, LLC
dated April 2, 2014 (the "Original LLC Agreement");

 

WHEREAS, BR I assigned a 0.1% Interest in the Company to BR II and BR II was
admitted as a Member of the Company on December 3, 2014;

 

WHEREAS, pursuant to that certain Redemption Agreement by and between Bell and
the Company, among other parties, dated December 3, 2014, the Interest of Bell
was redeemed in exchange for an undivided 40.0% tenant-in-common interest in the
Property distributed by the Company to Bell's wholly-owned subsidiary, Bell HNW
Waterford, LLC ("Bell SPE") and Bell withdrew and ceased to be a Member of the
Company and resigned as Manager of the Company;

 

WHEREAS, BR I and BR II desire to amend and restate the Original LLC Agreement;

 

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 Members hereby covenant and agree that the
Original LLC Agreement is hereby amended and restated in its entirety as
follows:

 

Section 1.            Definitions. As used in this Agreement:

 

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

 

"Adjusted Capital Account Deficit" shall mean, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
applicable Fiscal Year after (i) crediting such Capital Account with any amounts
which such Member is deemed to be obligated to restore pursuant to Regulations
Sections l.704-2(g)(l) and l.704-2(i)(5), and (ii) debiting such Capital Account
by the amount of the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted
Capital Account Deficit is intended to comply with the provisions of Regulations
Section 1.704- 1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

 

 

 

 

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

 

"Affiliate" shall mean 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)(l ).

 

"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.

 

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

 

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

 

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

 

"Bell SPE" shall have the meaning set forth in the recitals.

 

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"Beneficial Owner" shall have the meaning provided m Sections 5.7 and
l2.3(b)(v).

 

"BR I" shall have the meaning set forth in the recitals.

 

"BR I Transferee" shall have the meaning set forth in Section 12.2(b)(i).

 

"BR II" shall have the meaning set forth in the recitals.

 

"BR II Transferee" shall have the meaning set forth in Section 12.2(b)(ii).

 

"BRG" shall mean Bluerock Residential Growth REIT, Inc., a Maryland corporation.

 

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

 

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

 

"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.

 

"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 mean Bell BR Waterford Crossing JV, LLC a Delaware limited
liability company organized under the Act.

 

"Company Minimum Gain" shall have the meaning given to the term "partnership
minimum gain" in Regulations Sections l.704-2(b)(2) and l.704-2(d).

 

"Confidential Information" shall have the meaning provided in Section 10(a).

 

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

 

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

 

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

 

"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 (x) an amount equal to the Cash Flow of the Company for such month or
other period, as applicable, as reduced by (y) 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).

 

"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 Sections 5.7 and
12.3(b)(v).

 

"Foreign Corrupt Practices Act" shall mean the Foreign Corrupt Practices Act of
the United States, 15 U.S.C. Sections 78a, 78m, 78dd-l, 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.

 

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"Loan" shall mean that certain mortgage loan in the original principal amount of
$20,100,000 borrowed (or assumed) by the Company and Bell SPE from Walker &
Dunlop, LLC and assigned to Fannie Mae.

 

"Loan Documents" shall mean that certain Multifamily Loan and Security Agreement
and all related documents evidencing and securing the Loan.

 

"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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

"Nonrecourse Liability" shall have the meaning given such term in Regulations
Section 1.704-2(b)(3).

 

"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.

 

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"Property" shall have the meaning set forth in Section 3 hereof.

 

"Property Manager" shall mean Bell Partners, Inc..

 

"Property Management Agreement" shall mean that certain Property Management
Agreement , as amended, by and between the Company, Bell SPE and the Property
Manager.

 

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

 

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

 

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

 

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

 

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

 

"TIC Interest" shall mean the Company's undivided 60.0% tenant-in-common
interest in the Property.

 

"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.

 

Section 2.            Organization of the Company.

 

2.1           Name. The name of the Company shall be "Bell BR Waterford Crossing
JV, 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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2.2           Place of Registered Office; Registered Agent. The address of the
registered office of the Company in the State of Delaware is Corporation Trust
Center, 1209 Orange St., Wilmington, Delaware 19801. The name and address of the
registered agent for service of process on the Company in the State of Delaware
is The Corporation Trust Company, Corporation Trust Center, 1209 Orange St.,
Wilmington, Delaware 19801. 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.

 

2.3           Principal Office. The principal address of the Company shall be
c/o Bluerock Real Estate, L.L.C., 712 Fifth Avenue, 9th Floor, New York, New
York 10019, or, in each case, at such other place or places as may be determined
by the Manager from time to time.

 

2.4           Filings. The Manager shall use its best efforts to take such other
actions as may be reasonably necessary to perfect and maintain the status of the
Company as a limited liability company under the laws of Delaware.
Notwithstanding anything contained herein to the contrary, the Company shall not
do business in any jurisdiction that would jeopardize the limitation on
liability afforded to the Members under the Act or this Agreement.

 

2.5           Term. The Company shall continue in existence in perpetuity,
unless and until the Company is dissolved as provided in Section 13.

 

2.6           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).

 

Section 3.            Purpose.

 

The purpose of the Company, subject in each case to the terms hereof, shall be
to engage in the business of acquiring, owning, operating, developing,
renovating, repositioning, managing, leasing, selling, financing (including the
borrowing of the Loan) and refinancing all or any portion (including without
limitation the TIC Interest) of the real estate and any real estate related
investments known as Bell Hendersonville (f/k/a the Grove at Waterford Crossing)
which is located at 10l Spade Leaf Blvd., Hendersonville, TN, which is held by
the Company and Bell SPE, as tenants in common (any property acquired as
aforesaid shall hereinafter be referred to as the "Property"), and all other
activities reasonably necessary to carry out such purposes.

 

Section 4.            Reserved.

 

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

 

5.1           Capital Contributions. BR I and BR II have each previously made or
been attributed Capital Contributions to the Company as reflected on the
Company's books.

 

5.2           Additional Capital Contributions.

 

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(a)          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 to
effect an investment. Except as otherwise agreed by the Members, such additional
Capital Contributions shall be in an amount for each Member equal to the product
of the amount of the aggregate Capital Contribution called for multiplied by
their respective Percentage Interest. Such additional Capital Contributions
shall be payable by the Members to the Company upon the earlier of (i) twenty
(20) days after written request from the Company, or (ii) the date when the
Capital Contribution is required, as set forth in a written request from the
Company.

 

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

 

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

 

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(2)         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-failing Member and which loan shall bear interest at the
Default Loan Rate and be payable on a first priority basis by the Company from
available Cash Flow and prior to any Distributions made to 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)(2 ) shall not be treated
as a Capital Contribution made by the Defaulting Member;

 

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

 

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

 

(c)          Notwithstanding the foregoing provisions of this Section 5.2, no
additional Capital Contributions shall be required from any Member if (i) the
Company or any other Person shall be in default (or with notice or the passage
of time or both, would be in default) in any material respect under any loan,
indenture, mortgage, lease, agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company (or any of its
Subsidiaries) or any of its properties or assets is or may be bound, (ii) any
other Member, the Company or any of its Subsidiaries shall be insolvent or
bankrupt or in the process of liquidation, termination or dissolution, (iii) any
other Member, the Company or any of its Subsidiaries shall be subjected to any
pending litigation (x) in which the amount in controversy exceeds $500,000, (y)
which litigation is not being defended by an insurance company who would be
responsible for the payment of any judgment in such litigation, and (z) which
litigation if adversely determined could have a material adverse effect on such
other Member and/or the Company or any of its Subsidiaries and/or could
interfere with their ability to perform their obligations hereunder or under any
Collateral Agreement, (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.

 

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5.3           Percentage Ownership Interest. The Members shall have the initial
percentage ownership interests (as the same are adjusted as provided in this
Agreement, a "Percentage Interest") in the Company set forth on Exhibit A. 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, as the same may be further adjusted
pursuant to Section 5.2(b)(3). Percentage Interests shall not be adjusted by
Distributions made (or deemed made) to a Member.

 

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

 

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

 

5.6           Capital Accounts. A separate capital account (the "Capital
Account") shall be maintained for each Member in accordance with Section
1.704-1(b)(2)(iv) of the Regulations. Without limiting the foregoing, the
Capital Account of each Member shall be increased by (i) the amount of any
Capital Contributions made by such Member, (ii) the amount of Income allocated
to such Member and (iii) the amount of income or profits, if any, allocated to
such Member not otherwise taken into account in this Section 5.6. The Capital
Account of each Member shall be reduced by (i) the amount of any cash and the
fair market value of any property distributed to the Member by the Company (net
of liabilities secured by such distributed property that the Member is
considered to assume or take subject to), (ii) the amount of Loss allocated to
the Member and (iii) the amount of expenses or losses, if any, allocated to such
Member not otherwise taken into account in this Section 5.6. The Capital
Accounts of the Members shall not be increased or decreased pursuant to
Regulations Section 1.704- 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 Section 5.2 by existing
Members. If any property other than cash .is distributed to a Member, the
Capital Accounts of the Members shall be adjusted as if such property had
instead been sold by the Company for a price equal to its fair market value, the
gain or loss allocated pursuant to Section 7, and the proceeds distributed in
the manner set forth in Section 6.1 or Section 13.3(d)(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.

 

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5.7          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.

 

Section 6.            Distributions.

 

6.1          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. l(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 or from time to time as determined by
the Manager.

 

(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.

 

6.2          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.

 

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Section 7.            Allocations.

 

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

 

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

 

7.3           U.S. Tax Allocations.

 

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

 

(b)          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.

 

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

 

8.1          Books and Records. The books and records of account of the Company
shall be maintained in accordance with industry standards and shall be based on
the Property Manager Reports. The books and records shall be maintained at the
Company's principal office or at a location designated by the Manager, and all
such books and records (and the dealings and other affairs of the Company and
its Subsidiaries) shall be available to any Member at such location for review,
investigation, audit and copying, at such Member's sole cost and expense, during
normal business hours on at least twenty-four (24) hours prior notice.

 

8.2          Reports and Financial Statements.

 

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

 

(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.

 

(c)          The Members acknowledge that the Property Manager is obligated to
perform Property-related accounting and furnish Property-related accounting
statements under the terms of the Property Management Agreement (and any future
property manager for the Property shall be required to do the same) (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)          The Manager will use its commercially best efforts to obtain such
financial statements (audited or unaudited), information and attestations as may
be required by any 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 any Member or any of its Affiliates in
connection therewith, including for purposes of testing internal controls and
procedures of any Member or any of its Affiliates.

 

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8.3          Tax Matters Member. BR I is hereby designated as the "tax matters
partner" of the Company and the Subsidiaries, as defined in Section 6231(a)(7)
of the Code (the "Tax Matters Member") and shall prepare or cause to be prepared
all income and other tax returns of the Company and the 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 the
Subsidiaries under the Code or state tax law shall be timely determined and made
by BR I. 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. BR I agrees
to consult with BR II 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 BR I 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 the Subsidiaries,
provided that any such action or failure to act does not constitute gross
negligence or willful misconduct.

 

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 the 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.

 

Section 9.            Management.

 

9.1          Management.

 

(a)          The Company shall be managed by BR I (the "Manager"). To the extent
that BR I or a BR I Transferee Transfers all or a portion of its Interest in
accordance with Section 12 to a BR I Transferee, such BR I Transferee may be
appointed as an additional Manager under this Section 9. l(a) by BR I or a BR I
Transferee then holding all or a portion of an Interest without any further
action or authorization by any Member. The Manager may not be removed by the
Members other than for an act or omission related to the Company constituting
gross negligence or fraud.

 

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(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. Notwithstanding any
provision herein to the contrary, any decision to be made by the Company, shall
only require the approval of and be subject to the direction of BR I and not any
other Member of the Company.

 

9.2          Affiliate Transactions. No agreement shall be entered into by the
Company or any Subsidiary with a Member or any Affiliate of a Member and no
decision shall be made in respect of any such agreement (including, without
limitation, the enforcement or termination thereof) unless such agreement or
related decision shall have been approved unanimously in writing by the Members.

 

9.3          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.

 

9.4          Operation in Accordance with REOC/REIT Requirements.

 

(a)          The Members acknowledge that one or more Affiliates of the Members
(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 such BR
Affiliate to so qualify . Notwithstanding anything herein to the contrary, the
Company and its Subsidiaries shall not take, or refrain from taking, any action
that would result in a BR 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.

 

15

 

 

(b)          Notwithstanding anything in this Agreement to the contrary, unless
specifically agreed to by the Manager in writing, neither the Company nor its
Subsidiaries shall hold any investment, incur any indebtedness or otherwise take
any action that would cause any Member of the Company (or any Person holding an
indirect interest in the Company through an entity or series of entities treated
as partnerships for U.S. federal income tax purposes) to realize any "unrelated
business taxable income" as such term is defined in Code Sections 511 through
514.

 

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

 

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

 

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

 

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

 

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

 

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(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 9.4(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 9.4(c). For
purposes of this Section 9.4(c), "REIT Prohibited Transactions" shall mean any
of the actions specifically set forth in this Section 9.4(c).

 

9.5          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 instnunentality, 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.

 

17

 

 

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 Member of any
request that such Member or any of its officers, directors, employees,
shareholders, members, agents or Affiliates, acting on its behalf, receives to
take any action that may constitute a violation of the Foreign Corrupt Practices
Act.

 

Section 10.           Confidentiality.

 

(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;

 

(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;

 

18

 

 

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 any
Member, (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, to the extent a Member (the "Pursuer") provides the other Member with
information relating to a possible investment opportunity then being actively
pursued by the Pursuer on behalf of the Company, the other Member receiving such
information shall not use such information to pursue such investment opportunity
for its own account to the exclusion of the Pursuer so long as the Pursuer is
actively pursuing such opportunity on behalf of the Company and shall not
disclose any Confidential Information to any Person (except as expressly
permitted hereunder) or take any other action in connection therewith that is
reasonably likely to cause damage to the Pursuer.

 

Section 11.           Representations and Warranties.

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

 

(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.

 

(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.

 

21

 

 

(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.

 

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

 

12.1        Prohibited Transfers. Except as otherwise provided in this Section
12, Sections 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, and subject in all events
to the terms of the Loan Documents, either Member shall have the right, with the
consent of the other Member, at any time to pledge to a lender or creditor,
directly or indirectly, all or any part of its Interest in the Company for such
purposes as it deems necessary in the ordinary course of its business and
operations.

 

12.2        Affiliate Transfers.

 

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

 

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(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 BR I or a BR I Transferee of up to one hundred
percent (100%) of its Interest to any Affiliate of BR I, including but not
limited to (A) BRG or any Person that is directly or indirectly owned by BRG;
(B) Bluerock Special Opportunity + Income Fund, LLC ("SOIF") or any Person that
is directly or indirectly owned by SOIF; (B) Bluerock Special Opportunity +
Income Fund II, LLC ("SOIF II") or any Person that is directly or indirectly
owned by SOIF II; (C) Bluerock Special Opportunity + Income Fund III, LLC ("SOIF
III") or any Person that is directly or indirectly owned by SOIF III; and/or (D)
Bluerock Growth Fund, LLC ("BGF") or any Person that is directly or indirectly
owned by BGF (collectively, a "BR I Transferee");

 

(ii)         Any Transfer by BR II or a BR II Transferee of up to one hundred
percent (100%) of its Interest to any Affiliate of BR II, including but not
limited to (A) BRG or any Person that is directly or indirectly owned by BRG;
(B) SOIF or any Person that is directly or indirectly owned by SOIF; (B) SOIF II
or any Person that is directly or indirectly owned by SOIF II; (C) SOIF III or
any Person that is directly or indirectly owned by SOIF III; and/or (D) BGF or
any Person that is directly or indirectly owned by BGF (collectively, a "BR II
Transferee");

 

provided however, as to subparagraphs (b)(i) and (b)(ii), 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 BR I Transferee or BR II Transferee
of such documents necessary to admit such party into the Company and to cause
the BR I Transferee or BR II Transferee (as applicable) to become bound by this
Agreement, the BR I Transferee or BR II Transferee (as applicable) shall become
a Member, without any further action or authorization by any Member.

 

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

 

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

  

23

 

 

(b)          Notwithstanding the foregoing, any Transfer or purported Transfer
of any Interest, whether to another Member or to a third party, shall be of no
effect and void ab initio, and such transferee shall not become a Member or an
owner of the purportedly transferred Interest, if the 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 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;, 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.

 

24

 

  

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

 

Section 13.           Dissolution.

 

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

 

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

 

(a)          the expiration of any 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.

 

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

 

(a)          The 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, business like 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.

 

25

 

 

(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.

 

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

 

Section 14.           Indemnification.

 

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

 

14.2        Indemnification by Company. The Company hereby indemnifies, holds
harmless and defends the Members, the Manager, the officers and each of their
respective agents, officers, directors, members, 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,
Manager, representatives, employees or officers of the Company, or (iii) the
Company's assets, property, business or affairs (including, without limitation,
the actions of any officer, director, member 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.

 

26

 

  

14.3        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, 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, including the TIC Interest), assets, agreements, rights or other
interests conveyed, assigned, contributed or otherwise transferred to the
Company (collectively, the "Inducement Agreements").

 

(b)          Except as otherwise provided herein or in any other agreement,
recourse for the indemnity obligation of the Members under this Section 14.3
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.

 

Section 15.           Mediation and Arbitration of Disputes.

 

15.1         Events Giving Rise To Mediation or Arbitration. In the event that
there is a dispute between the Manager or 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.

 

27

 

  

15.2        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).

 

15.3        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.

 

15.4        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.

 

Section 16.           Miscellaneous.

 

16.1        Notices.

 

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

 

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If to BR I:

 

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

712 Fifth Avenue, 9th Floor New York,
New York 10019

Attn: Michael L. Konig, Esq.
Facsimile: (646) 278-4220

 

If to BR II:

 

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

712 Fifth Avenue, 9th Floor New York,
New York 10019

Attn: Michael L. Konig, Esq.

Facsimile: (646) 278-4220

 

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

 

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

 

16.2         Governing Law. This Agreement and the rights of the Members
hereunder shall be governed by, and interpreted in accordance with, the laws of
the State of Delaware. Each of the parties hereto irrevocably submits to the
jurisdiction of the New York State courts and the Federal courts sitting in the
State of New York and 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.

 

29

 

  

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

 

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

 

16.5         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.

 

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

 

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

 

16.8         Entire Agreement and Amendment. This Agreement and the other
written agreements described herein between the parties hereto entered into as
of the date hereof, constitute the entire agreement between the Members relating
to the subject matter hereof. In the event of any conflict between this
Agreement or such other written agreements, the terms and provisions of this
Agreement shall govern and control.

 

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

 

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

 

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

 

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16.12         Limitation on Liability. Except as set forth in Section 14 and
with respect to a Default Loan as set forth in Section 5.2(b), the Members shall
not be bound by, or be personally liable for, by reason of being a Member, a
judgment, decree or order of a court or in any other manner, for the expenses,
liabilities or obligations of the Company, and the liability of each Member
shall be limited solely to the amount of its Capital Contributions as provided
under Section 5. Except 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.

 

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

 

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

 

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

 

16.16         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.

 

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

 

16.18         No Construction Against Drafter. This Agreement has been
negotiated and prepared by BR I and BR II 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.

 

[Remainder of Page Intentionally Left Blank]

 

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

 

  MEMBERS:           BR Waterford JV Member, LLC,   a Delaware limited liability
company           By: /s/ Jordan Ruddy     Jordan Ruddy, Authorized signatory  
        BR Waterford JV Minority Member, LLC,   a Delaware limited liability
company           By: Bluerock Residential Growth REIT, Inc.,     a Maryland
corporation         Its: General Partner             By: /s/ Michael L. Konig  
  Name: Michael L. Konig     Its: Senior Vice President and Chief Operating
Officer

 

[Signature Page to Amended and Restated Limited Liability Company

Agreement of Bell BR Waterford Crossing JV, LLC]

 

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EXHIBIT A

 

Capital Contributions and Percentage Interests

 

Member Name   Percentage
Interest       BR Waterford JV Member, LLC   99.90%       BR Waterford JV
Minority Member, LLC   0.10%