Document:

exhibit42

                                                                    Exhibit 4.2                            Description of Capital Stock                                             The following discussion is a summary of the material terms of our common stock, preferred  stock, Series B Junior Participating Preferred Stock, Charter and bylaws.    Authorized Capital        Our authorized capital stock currently consists of 100 million shares of common stock, par  value $0.01 per share and 5 million shares of preferred stock, par value $0.01 per share.    Common Stock        Holders of our common stock are entitled to one vote for each share held of record on all  matters on which stockholders generally are entitled to vote. Holders of our common stock vote  together as a single class on all matters presented to our stockholders for their vote or approval,  except as otherwise required by applicable law.        Holders of our common stock are entitled to receive dividends when and if declared by our  board of directors out of funds legally available therefor, subject to any statutory or contractual  restrictions on the payment of dividends and to any restrictions on the payment of dividends  imposed by the terms of any outstanding preferred stock. We do not intend to pay cash dividends  on our common stock for the foreseeable future.        In the event of our dissolution, liquidation or winding up, after payment in full of all amounts  required to be paid to creditors and to the holders of preferred stock having liquidation  preferences, if any, the holders of our common stock will be entitled to receive pro rata our  remaining assets available for distribution.        The holders of our common stock have no conversion, preemptive or other subscription  rights. There are no redemption or sinking fund provisions applicable to our common stock.    Preferred Stock        Our board of directors has the authority, subject to any limitations imposed by law or Nasdaq  rules, without further action by the stockholders, to issue up to 5 million shares of preferred stock  in one or more series and to fix the rights, preferences, privileges and restrictions of each series  of such preferred stock. These rights, preferences and privileges include, but are not limited to,  dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences,  sinking fund terms and the number of shares constituting any series or the designation of that  series, any or all of which may be greater than the rights of common stock.    Anti-Takeover Effects of Our Charter and Bylaws      Our Charter and bylaws contain certain provisions that are intended to enhance the likelihood  of continuity and stability in the composition of our board of directors. These provisions may 

 

have the effect of delaying, deferring or preventing a future takeover or change in control of our  company, even in those cases where such a transaction may be at a premium to the current  market price of our common stock.    These provisions include:    Action by Written Consent; Special Meetings of Stockholders      Our Charter provides that stockholder action (other than actions by holders of preferred stock,  if any) can be taken only at an annual or special meeting of stockholders and cannot be taken by  written consent in lieu of a meeting. Our bylaws provide that, except as otherwise required by  law, special meetings of the stockholders can only be called by the chairman of the board, the  chief executive officer or the president, or pursuant to a resolution adopted by a majority of the  board of directors. Stockholders are not permitted to call a special meeting or to require the  board of directors to call a special meeting.    Advance Notice Procedure        Our bylaws establish an advance notice procedure for stockholder proposals to be brought  before an annual meeting of our stockholders, including proposed nominations of candidates for  election to the board of directors. Stockholders at an annual meeting will be able to consider only  proposals or nominations specified in the notice of meeting or brought before the meeting by or  at the direction of the board of directors or by a stockholder who was a stockholder of record on  the record date for the meeting, who is entitled to vote at the meeting and who has given our  secretary timely written notice, in proper form, of the stockholder’s intention to bring that  business before the meeting. Although the bylaws do not give the board of directors the power to  approve or disapprove stockholder nominations of candidates or proposals regarding other  business to be conducted at a special or annual meeting, the bylaws may have the effect of  precluding the conduct of certain business at a meeting if the proper procedures are not followed  or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect  its own slate of directors or otherwise attempting to obtain control of the Company.    Authorized but Unissued Shares        Subject to Nasdaq listing requirements, our authorized but unissued shares of common stock  and preferred stock will be available for future issuance without stockholder approval. These  additional shares may be utilized for a variety of corporate purposes, including future public  offerings to raise additional capital, corporate acquisitions and employee benefit plans. The  existence of authorized but unissued shares of common stock and preferred stock may also have  the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or  management of our company.   

 

 Certain Other Provisions of Our Charter and Bylaws and Delaware Law      Board of Directors       Our Charter provides that the number of directors will be fixed in the manner provided in our  bylaws. Our bylaws provide that the number of directors will be fixed from time to time solely  pursuant to a resolution adopted by the board. Our board of directors currently has seven  members.      Section 203 of the DGCL          Our Charter expressly states that we have elected not to be subject to the provisions of   Section 203 of the Delaware General Corporation Law. Subject to exceptions specified therein,   Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a   “business combination” with an “interested stockholder,” including general mergers or   consolidations or acquisitions of additional shares of the corporation, for a three-year period  following the time that such stockholder became an interested stockholder.          Except as otherwise specified in Section 203, an “interested stockholder” is defined to  include:      •  any person that is the owner of 15% or more of the outstanding voting stock of the        corporation, or is an affiliate or associate of the corporation and was the owner of 15% or        more of the outstanding voting stock of the corporation at any time within the three years        immediately prior to the date of determination; and         •  the affiliates and associates of any such person.     The statute is intended to prohibit or delay mergers or other takeover or change in control   attempts. Although we have elected to opt out of the statute’s provisions, we could elect to be   subject to Section 203 in the future.exhibit102

                                                                    Exhibit 10.2                                                                                             SECOND AMENDED AND RESTATED COMPANY AGREEMENT                             CB JENI HOMES DFW LLC                                                                                       This SECOND AMENDED AND RESTATED COMPANY AGREEMENT (this “Agreement”),   dated to be effective as of January 1, 2018 (the “Effective Date”), is executed by and between   JBGL Ownership LLC, a Delaware limited liability company (“JBGL”), and BHCP Homes,   LLC, a Texas limited liability company (“BHCP”), and Bruno H. Pasquinelli, not individually   but solely as Trustee of the BHCP Family Trust (the “Trust”) whose respective addresses are set   forth on Schedule A of this Agreement. JBGL, BHCP, and the Trust are sometimes collectively   referred to herein as the “Initial Members” of CB JENI Homes DFW LLC, a Texas limited   liability company (the “Company”) (formerly known as CBJ JBGL LLC).                                      WITNESSETH           WHEREAS, on March 27, 2012, the Company was organized under the name of CBJ   JBGL LLC pursuant to a Certificate of Formation (as the same may be amended from time to   time, the “Certificate of Formation”) filed in the office of the Secretary of State of the State of   Texas (the “Secretary of State”) [as amended on May 14, 2012 to change the name of the entity   to CB JENI Homes DFW LLC], and JBGL as the sole member entered into the Company’s   Company Agreement dated to be effective as of March 27, 2012 (the “Initial Agreement”); and            WHEREAS, on April 1, 2012, the parties hereto entered into the Company’s Amended   and Restated Company Agreement [as amended by the First Amendment entered into as of   November 5, 2013, by the Second Amendment entered into as of March 25, 2015, by the Third   Amendment entered into as of May 23, 2016, and by the Fourth Amendment entered into as of   June 6, 2017, the “First Amended and Restated Company Agreement”]; and               WHEREAS, the parties hereto desire to and do hereby amend and restate the First   Amended and Restated Company Agreement on the terms set forth herein in order to regulate   and establish the manner in which the business and affairs of the Company shall be managed and   conducted.           NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants   herein contained and other good and valuable consideration, the receipt and sufficiency of which   are hereby acknowledged, the parties hereto hereby agree as follows:                                       ARTICLE I     DEFINITIONS; FORMATION; NAME; PRINCIPAL OFFICE; PURPOSE; TERM            Section 1.1  Definitions.           (a)     In addition to terms defined elsewhere in this Agreement, the following  capitalized terms generally used in this Agreement shall have the meanings defined or referenced  below.          Affiliate: shall mean (i) with respect to any Person who is an individual, a spouse, child,   sibling, aunt, uncle, cousin or parent of such first Person, or any trust established for the benefit                                         1 

 

 of any such Person or any such affiliated Persons, (ii) with respect to any trust, any trustee or   beneficiary of such trust or any Person who would be an Affiliate of such trustee or beneficiary,   and (iii) with respect to any Person (including an individual or trust), a Person, directly or   indirectly, through one or more intermediaries, controlling, controlled by, or under common   control with the Person in question. The term “control,” as used in the immediately preceding   sentence, means, with respect to an entity that is a corporation, the right to exercise, directly or   indirectly, more than fifty percent (50%) of the voting rights attributable to the shares of such   corporation and, with respect to a Person that is not a corporation, the possession, directly or   indirectly, of the power to direct or cause the direction of the management or policies of such   Person.           Bankruptcy: shall have the meaning ascribed to such term in Section 6.l(b) hereof.                 Board of Managers:  shall have the meaning ascribed to such term in Section 4.1(a)   hereof.           Book Value: shall mean, with respect to any Company asset at any time, the adjusted  basis of such asset for federal income tax purposes, except that (i) the initial Book Value of any   asset contributed by a Member to the Company shall be the fair market value of such asset, and  (ii) the Book Value of all Company assets shall be adjusted to equal their fair market values, as   determined in good faith by the Board of Managers, upon the occurrence of certain events as   described below. In either case, the Book Value of Company assets shall thereafter be adjusted   for book depreciation taken into account with respect to such asset. The Book Value of the   Company assets shall be adjusted in accordance with Treasury Regulation Section 1.704-   1(b)(2)(iv)(f) to equal their fair market value as of the following times: (1) the admission of a   new member to the Company or acquisition by an existing member of an additional interest in   the Company, provided that the consideration contributed to the Company upon such admission   or acquisition is more than a de minimis amount of money or property, (2) the liquidation of the   Company within the meaning of Treasury Regulation Section 1.704-l(b)(2)(ii)(g) or the   distribution by the Company to a Member of more than a de minimis amount of money or other   property as consideration for a Member’s interest in the Company, and (3) in connection with the   grant of an interest in the Company as consideration for the provision of services to or for the   benefit of the Company.            The Book Value of all Company assets shall also be increased (or decreased) to the   extent that adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or   Code Section 743(b) have been taken into account for purposes of determining Capital Accounts   in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(m), unless such adjustments   have already been accounted for pursuant to the preceding paragraph. If the Book Value of an   asset has been determined or adjusted pursuant to this definition of “Book Value,” such value   shall thereafter be the basis for, and be adjusted by, the depreciation taken into account with   respect to, such asset for purposes of computing profits and losses. Moreover, notwithstanding   the foregoing, the Book Value of any Company asset distributed to any Member shall be the   gross fair market value of such asset on the date of distribution.           BP: shall mean Bruno H. Pasquinelli, an individual resident of Dallas County, Texas.                Business Day(s): shall mean all calendar days except Saturdays, Sundays and United   States federal legal holidays. Any other reference to “days” shall mean calendar days.                                            2 

 

      Buy-Sell Event: shall have the meaning ascribed to such term in Section 5.1(c) hereof.            Buy-Sell Notice: shall have the meaning ascribed to such term in Section 5.1(c) hereof.                 Capital Account: shall have the meaning ascribed to such term in Section 2.4 hereof.                Capital Contributions: shall have the meaning ascribed to such term in Section 2.2(a)   hereof.           Certificate of Formation: shall have the meaning ascribed to such term in the second   paragraph hereof.           Closing Fee: shall have the meaning ascribed to such term in Section 2.8 hereof.                Code: shall have the meaning ascribed to such term in Section 2.4 hereof.                Company: shall have the meaning ascribed to such term in the initial paragraph hereof.                Competing Builders: shall mean any builder of residential property within the Primary   Business Area.            Contribution Agreement: shall collectively mean any and all Contribution Agreements by   and among the Company, JBGL Builder Finance, BP (in certain cases), and CB JENI Homes,  LLC, a Texas limited liability company ("CB JENI").            Contribution Agreement Loans: Any loan made by or purchased by JBGL Builder   Finance or any other JBGL Entity related to the obligations of the Company and JBGL Builder   Finance in the Contribution Agreement.            Covered Person: shall have the meaning ascribed to such term in Section 4.6(c) hereof.            Current Company Budget and Plan: shall mean, at any given time, the then approved   overall budget and plan for the Company and its Subsidiaries approved by the Board of  Managers. The Current Company Budget and Plan shall be revised annually commencing  effective as of January 1 of each year, as provided in Section 4.8 hereof, subject to modification   by the Board of Managers.            Default Buy-Sell Event: shall mean the occurrence of a Buy-Sell Event pursuant to   Section 5.1(c)(viii) hereof.            Discretion: shall have the meaning ascribed to such term in Section 4.6(e) hereof.                  Dissolution Event: shall have the meaning ascribed to such term in Section 6.1(a) hereof.                   Effective Date: shall have the meaning ascribed to such term in the initial paragraph         hereof.            Excluded LLCs: shall mean those entities that have contracted with the Company under   the Management Agreements.                                            3 

 

       Funding Amount: shall mean the gross amount of all outstanding investments made, and   commitments for investments to be made, by all JBGL Entities and all Affiliates of any JBGL  Entities in connection with or related to the acquisition, ownership, management, development,  construction and sale of residential lots, houses and other residential properties constructed  and/or developed by the Company, any Subsidiaries of the Company, BHCP, BP, the Trust, the  Pasquinelli Member Group or any Affiliate of BHCP, BP, the Trust or the Pasquinelli Member  Group (but not the Excluded LLCs), including all of the following: (i) the remaining cost basis of  the total amount invested by the JBGL Entities and their Affiliates in connection with any notes  and loans acquired by any JBGL Entity and/or any Affiliate of a JBGL Entity which are  obligations of the Company, any of its Subsidiaries, the Pasquinelli Member Group, or any  Affiliate of the Pasquinelli Member Group, or any party to any of the Management Agreements,  including the purchase price for all such notes and loans and all costs and expenses incurred in  connection with the purchase, ownership and servicing of such notes and loans, plus (ii) the total  outstanding principal balance, plus all accrued but unpaid interest, with respect to all loans  (including the Contribution Agreement Loans) made by any JBGL Entity or any Affiliate of any  JBGL Entity, to the Company, any of its Subsidiaries, the Pasquinelli Member Group, or any  Affiliate of the Pasquinelli Member Group, or any party to any of the Management Agreements,  plus (iii) the total amount which any JBGL Entities or any Affiliates of any JBGL Entity has  agreed or committed to loan or otherwise invest in or for the benefit of the Company, any of its  Subsidiaries, the Pasquinelli Member Group, or any Affiliate of the Pasquinelli Member Group,  or any party to any of the Management Agreements, plus (iv) the amount of any Unreturned  Capital Contributions of JBGL under this Agreement, plus (v) the remaining cost basis of the  total amounts invested (including purchase price and all costs and expenses incurred in  connection with the acquisition, ownership, management, development and sale) with respect to  any real property and related assets and properties (including residential lots and constructed  homes) acquired by any JBGL Entity or any Affiliate of any JBGL Entity on behalf of the  Company or any of its Subsidiaries. Notwithstanding the foregoing, for purposes of this  definition of “Funding Amount,” the Company and its Subsidiaries shall not be deemed to be   Affiliates of any JBGL Entity.            Good Faith: shall have the meaning ascribed to such term in Section 4.6(e) hereof.            Initial Members: shall have the meaning ascribed to such term in the initial paragraph   hereof.                  JBGL Entity: shall mean JBGL and JBGL Builder Finance, LLC, a Texas limited   liability company (“JBGL Builder Finance”), and any entity (other than the Company or its   Subsidiaries) in which JBGL or JBGL Builder Finance has a controlling interest.                  JBGL Managers: shall have the meaning ascribed to such term in Section 4.3(a) hereof.                   JBGL Member Group: shall mean JBGL and any of its successors or assigns which are   Affiliates of JBGL.           Loan Agreement: shall mean that certain Line of Credit Note by and between JBGL   Builder Finance, as lender, and the Company, as borrower, dated May 11, 2012, together with   any affiliated documents executed in connection therewith, as any of the same may be amended   from time to time, intended to provide operating capital to the Company.           Lot Contracts: shall have the meaning ascribed to such term in Section 4.1(c) hereof.                                         4 

 

        Management Agreements: shall mean, collectively, the property management agreements  by and between the Company and a Subsidiary of the Company.          Managers: shall have the meaning ascribed to such term in Section 4.1(a) hereof.          Management Right(s): shall mean the right of a Member to vote and participate in  management, and to receive information concerning the business and affairs of the Company.                Member(s): shall have the meaning ascribed to such term in Section 2.1(b) hereof.                 Member Economic Interest: shall mean all of the right, title and interest of a Member in,  to and against the Company as to the profits, losses, credits, capital and distributions of the  Company, but shall not include any Management Rights.          Member Group: shall mean the JBGL Member Group or the Pasquinelli Member Group,  as the case may be.          Membership Interest: shall mean a Member’s entire interest in the Company, including  the Member Economic Interest and the Management Rights of such Member.         Minimum Funding Amount: From the date through the end of the term of this Agreement  such amount shall be $25,000,000.          Net Operating Profits: shall mean, for any period, the positive amount obtained by  subtracting Operating Losses (determined as provided in Schedule C hereto) for such period  from Operating Profit (determined as provided in Schedule C hereto) for such period.          Offeree Member Group: shall have the meaning ascribed to such term in Section 5.1(c)  hereof.          Offeror Member Group: shall have the meaning ascribed to such term in Section 5.1(c)  hereof.                Officer(s): shall have the meaning ascribed to such term in Section 4.2(a) hereof.          Overall Purchase Price: shall have the meaning ascribed to such term in Section 5.1(c)  hereof.                Pasquinelli Manager: shall have the meaning ascribed to such term in Section 4.3(a)  hereof.                Pasquinelli Member Group: shall have the meaning ascribed to such term in Section 9.4  hereof.          Percentage Interest: shall mean, as to each Member, such Member’s Membership  Interest, expressed as a percentage, in the income, gains, losses, deductions, tax credits, and  distributions of the Company, subject however to, and as may be affected and adjusted by, the  provisions of this Agreement. The initial Percentage Interest of each Member is set forth on  Schedule A hereto.                                        5 

 

        Person: shall mean a natural person, corporation, limited partnership, general partnership,  business trust, limited liability company or other form of association or entity.                     Preferred Return: shall have the meaning ascribed to such term in Section 3.2 hereof.                 Primary Business: shall have the meaning ascribed to such term in Section 1.3(a) hereof.                Primary Business Area: shall have the meaning ascribed to such term in Section 1.3(a)  hereof.          Removal Event: shall have the meaning ascribed to such term in Section 4.3(a) hereof.                 Retained Cash: shall have the meaning ascribed to such term in Section 3.2 hereof.                Secretary of State: shall have the meaning ascribed to such term in the second paragraph  hereof.          Sole Discretion: shall have the meaning ascribed to such term in Section 4.6(e) hereof.          Subsidiaries: shall mean all entities in which the Company has a direct or indirect  controlling interest either now or in the future.         Subsidiary: shall mean any one of the Subsidiaries.         Subsidiary Agreement: shall mean the operating agreement, bylaws, or other like  governing document of any Subsidiary.         Texas Act: shall have the meaning ascribed to such term in Section 1.2 hereof.               Transfer: shall have the meaning ascribed to such term in Section 5.1(a) hereof.              Undistributed Preferred Return: shall have the meaning ascribed to such term in Section  3.2 hereof.         Unreturned Capital Contributions: shall have the meaning ascribed to such term in  Section 2.2(a) hereof.          Voting Percentage Interest: shall mean, as to each Member, such Member’s Membership  Interest, expressed as a percentage, in the voting rights of the Company, subject however to, and  as may be affected and adjusted by, the provisions of this Agreement. The Voting Percentage  Interest of each Member is set forth on Schedule A hereto.          (b)   As used herein, the following terms shall have the following meanings:                (i)   “Hereof,” “hereby,” “herein,” “hereto,” “hereunder,” “herewith,” and        similar terms mean of, by, to, under and with respect to, this Agreement or to the other        documents or matters being referenced.                     (ii)   “Heretofore” means before, “hereafter” means after, and “herewith”                                        6 

 

       means concurrently with, the date of this Agreement.                       (iii)   All pronouns, whether in masculine, feminine or neuter form, shall be         deemed to refer to the object of such pronoun whether same is masculine, feminine or         neuter in gender, as the context may suggest or require.                        (iv)   All terms used herein, whether or not defined in Section 1.1 hereof, and         whether used in singular or plural form, shall be deemed to refer to the object of such         term whether such is singular or plural in nature, as the context may suggest or require.           (c)    All exhibits, schedules or other items attached hereto or referred to herein are   hereby incorporated into this Agreement by such reference or attachment for all purposes.            Section 1.2  Formation.            The Company has been formed as a limited liability company under the Texas Limited  Liability Company Law (or corresponding provision(s) of any succeeding law) (the “Texas   Act”), and shall be governed in accordance with the provisions set forth in this Agreement.            Section 1.3  Purpose and Powers.            (a)   The purpose for which the Company is formed shall be to engage in any    business or activity which is lawful for a Texas limited liability company.  Without limitation    of the foregoing, the “Primary Business” of the Company shall mean to directly, or indirectly    through one or more Subsidiaries, (i) develop, build, own, sell and otherwise deal with houses    and other residential property in the counties of Collin, Cooke, Dallas, Denton, Ellis, Grayson,    Hood, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant, and Wise, each within the State of    Texas and any other county within the State of Texas in which the Company or any of its    Subsidiaries does business and has had a cumulative investment of $1 million or more (such $1    million to include the cumulative total principal amounts of all loans made by any JBGL Entity    or any Affiliate of such JBGL Entity and any of its affiliates to the Company and any of its    Subsidiaries with respect to properties in such county) (the “Primary Business Area”); (ii)    borrow money in furtherance of any or all of the foregoing business ventures described in    Subpart (i) above, subject to Section 4.9(e) hereof, for the benefit of the Company or any    Subsidiary of the Company, and guaranty the obligations of the Company or any Subsidiary of    the Company in furtherance of the purposes of the Company or any Subsidiary of the    Company, and secure any such indebtedness by any security instrument, pledge, liens or other    encumbrance of all or any of the assets of the Company; and (iii) take any and all other actions    that may be incidental, necessary or appropriate to carry on the business of the Company as    contemplated by Subparts (i) and (ii) above.            (b)    The Company shall have the power to do any and all acts necessary or    convenient to or for the furtherance of the purposes stated in this Section 1.3.            Section 1.4  Existence and Good Standing.            The Officers and Managers shall take all necessary action to maintain the Company in  good standing as a limited liability company under the Texas Act and to qualify (and maintain  the qualification of) the Company to do business in any state or other jurisdiction in which the  nature of the Company’s business requires. Without limitation of the authority of any Officer of                                         7 

 

 the Company, each Manager and Officer is authorized to sign any documents, instruments and   agreements and take any other action to effect or maintain the existence, good standing and   qualification to do business of the Company in Texas or any other jurisdiction.            Section 1.5  Term.            The Company shall have perpetual existence beginning on the date that the Certificate of  Formation was filed with the Secretary of State: provided, however, that the Company may be   dissolved in accordance with Section 6.1 of this Agreement. The existence of the Company as a   separate legal entity shall continue until the cancellation of the Certificate of Formation as   provided in the Texas Act.            Section 1.6  Principal Office and Registered Agent.            The address of the registered office of the Company in the State of Texas and the name   and address of the registered agent of the Company in the State of Texas are as set forth in the   Certificate of Formation. The principal office of the Company is located at the place set forth as   such on Schedule A hereto. The principal office of the Company and the registered office may be   relocated, and the registered agent replaced, from time to time as determined by the Members,  the Board of Managers or the President of the Company.          Section 1.7   Intentionally Deleted.                                      ARTICLE II       MEMBERS; INTERESTS IN THE COMPANY; CAPITAL CONTRIBUTIONS            Section 2.1  Members.            (a)    JBGL, BHCP, and the Trust are Members of the Company.            (b)    One or more Persons may be admitted to the Company from time to time as  additional equity members (each, including the Initial Members, a “Member” and collectively,   the “Members”) upon such terms and subject to such conditions as may be determined by the   unanimous consent of the Board of Managers, unless such Person or Person(s) shall become   Members pursuant to Section 5.2 hereof in which event such unanimous consent of the Board of   Managers shall not be required. A Person may be admitted to the Company as a Member without  the requirement of becoming a party to this Agreement if all required approvals are obtained and   such Person evidences the intent to become a Member in writing by accepting and agreeing to be   bound by the provisions of this Agreement and complies with any other conditions for becoming   a Member established by the Board of Managers.            (c)   No Member shall have the right to withdraw.            Section 2.2  Capital Contributions.            (a)    INITIAL CONTRIBUTIONS.  Each Member has made contributions to the   capital of the Company.  The initial Capital Contributions for each Member are described in   Schedule A hereto.  All contributions to the capital made by any Member under this Section   2.2(a) and Section 2.2(b) shall be referred to herein as “Capital Contributions”. As used herein,   the term “Unreturned Capital Contributions” shall mean, as to each Member, the aggregate                                         8 

 

 Capital Contributions made to the Company by such Member minus the aggregate distributions   of such Capital Contributions made to such Member from the Company pursuant to Sections   3.2(b) and 6.2(a)(ii) hereof.           (b)     ADDITIONAL CAPITAL CONTRIBUTIONS. If approved by the Board of   Managers, any Member may make additional Capital Contributions in amounts and for purposes   approved by the Board of Managers. Further, if approved by unanimous consent of all Members,   the Members may require each Member to contribute to the Company, in cash, such Member’s   Percentage Interest of all monies that in the judgment of the Members (by unanimous consent)   are necessary or appropriate for the Company to operate its business. In no event shall any   additional Capital Contribution increase the Percentage Interest of any Member making such  additional Capital Contribution, nor dilute the Percentage Interest of any Member not making an  additional Capital Contribution.           (c)    INTENTIONALLY DELETED.            (d)   MEMBER LOANS. A Member or an Affiliate of a Member may, but is not   obligated to, loan or cause to be loaned to the Company such additional sums as the Board of   Managers deems appropriate or necessary for the conduct of the Company’s business. Loans  made by a Member, or an Affiliate of a Member, shall be upon such terms and for such  maturities, and with such Member(s), as the Board of Managers determines, subject to the  consent rights in Section 4.1(c) hereof; provided, however, that the Members herein consent to   and agree to the terms and conditions of the Loan Agreement, the Contribution Agreement   Loans, and any other loan commitments or loans made by JBGL or an Affiliate of JBGL   consistent with the Current Company Budget and Plan.            (e)   NO EFFECT ON COMPANY STATUS. The Company shall be formed and   existing and this Agreement shall be effective regardless of whether any Member fails to make   any capital contribution hereunder.            Section 2.3  Issuance and Classification of Membership Interests.           Each Member’s voting powers shall be in proportion to their respective Voting   Percentage Interest.            Section 2.4  Capital Accounts.            A separate capital account (the “Capital Account”) shall be maintained for each Member.   The Capital Account of a Member shall be increased by (i) the amount of cash contributed by   such Member; (ii) the agreed fair market value of any property contributed by such Member (net   of any liabilities assumed by the Company and any liabilities to which such property is subject)   and (iii) the amount of all profits (and any item thereof) allocated to such Member. Each   Member’s capital account shall be decreased by (i) the amount of all cash distributions to such   Member; (ii) the fair market value of property distributed to such Member (net of any liabilities   assumed by the Company and any liabilities to which such property is subject); and (iii) the  amount of all losses (and any item thereof) allocated to such Member. The Capital Accounts  shall be determined, maintained and adjusted in accordance with the Internal Revenue Code of  1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder, including   the capital account maintenance rules in Treasury Regulations §1.704-(1)(b)(2)(iv).                                            9 

 

       Section 2.5  General Rules Relating to Capital of the Company.            (a)   No Member shall be personally liable for the return of the capital contributions  of the Members, or any portion thereof, it being expressly understood that any such return of   contributions shall be made solely from the Company assets.           (b)     No Member shall have the right to withdraw or receive a return of all or any part   of that Member’s capital contributions, or to demand or receive property (other than cash) of the   Company or any distribution in return for that Member’s capital contributions.            Section 2.6  Liability of the Members.                  To the fullest extent permitted by law, no Member shall be liable under a judgment,   decree or order of a court, or in any other manner for the debts or any other obligations or   liabilities of the Company solely by reason of being a Member of the Company. A Member shall   be liable only to make the contributions described in Section 2.2(a) hereof and Section 2.2(b)   hereof, if any, and a Member shall not be required to lend any funds to the Company or to make   any other contributions, assessments or payments to the Company.            Section 2.7  Meetings of Members.            (a)    ANNUAL MEETING. The Company may hold an annual meeting of its   Members to elect Managers and transact any other business within its powers at such time and   place as the Board of Managers shall determine. Failure to hold an annual meeting does not   invalidate the Company’s existence or affect any otherwise valid limited liability company acts.            (b)    SPECIAL MEETING. At any time in the interval between annual meetings, a   special meeting of the Members may be called by the President of the Company or by Members   entitled to cast at least twenty-four percent (24%) of all the votes entitled to be cast at the   meeting. A request for a special meeting shall state the purpose of the meeting and the matters   proposed to be acted on at the meeting.                                    (c)    TIME AND PLACE OF MEETINGS. Meetings of Members shall be held at   such time and place, within or without the State of Texas, as shall be stated in the notice of the   meeting or in a duly executed waiver of notice thereof.            (d)    NOTICE OF MEETINGS; WAIVER OF NOTICE. Not less than fourteen (14)   nor more than ninety (90) days before each Members’ meeting, the Secretary shall give written   notice of the meeting to each Member entitled to vote at the meeting and each other Member   entitled to notice of the meeting. The notice shall state the time and place of the meeting and, if   the meeting is a special meeting, the purpose of the meeting. Notice is given to a Member when   it is personally delivered to him or her, left at his or her address as it appears on the records of   the Company, if delivered by hand or by overnight delivery service, or mailed to him or her at   his or her address as it appears on the records of the Company. Notwithstanding the foregoing   provisions, each person who is entitled to notice waives notice if he or she before or after the   meeting signs a waiver of notice which is filed with the records of Members’ meetings, or is   present at the meeting in person or by proxy (unless present solely for the purpose of objecting to   the calling or holding of the meeting).            (e)    QUORUM; VOTING. Unless this Agreement provides that a larger number of                                         10 

 

 votes is required to approve a particular matter (and in such case that larger number or percent  shall constitute a quorum), at a meeting of Members the presence in person or by proxy of   Members entitled to cast a majority of all the votes entitled to be cast at the meeting constitutes a   quorum, and a majority of all the votes cast at a meeting at which a quorum is present (or such   larger number of votes required in this Agreement) is sufficient to approve any matter which   properly comes before the meeting, except that a plurality of all the votes cast at a meeting at  which a quorum is present is sufficient to elect a Manager; provided, however, that so long as   any member of the JBGL Member Group is a Member of the Company, the JBGL Member   Group must be a part of any quorum.           (f)    GENERAL RIGHT TO VOTE; PROXIES. Unless this Agreement provides for   a greater or lesser number of votes or limits or denies voting rights, each holder of a Membership   Interest shall be entitled to one vote for each percent of Voting Percentage Interest held by such   holder (for the avoidance of doubt, this shall mean that there are a total of 100 votes and a   Member with a Voting Percentage Interest of 25% would be entitled to 25 votes) on each matter   submitted to a vote at a meeting of Members. Fractional Voting Percentage Interests shall be   entitled to the same pro rata fractional vote. In all elections for Managers, each holder may cast   votes for as many individuals as there are Managers to be elected and for whose election the   holder is entitled to vote upon; provided, however, that no cumulative voting shall be permitted.   A Member may vote either in person or by proxy. A Member may sign a writing authorizing   another person to act as proxy. Signing may be accomplished by the Member or the Member’s  authorized agent signing the writing or causing the Member’s signature to be affixed to the  writing by any reasonable means, including facsimile signature and a signature transmitted by  email. A Member may authorize another person to act as proxy by transmitting, or authorizing   the transmission of, a telegram, cablegram, datagram, or other means of electronic transmission   to the person authorized to act as proxy or to a proxy solicitation firm, proxy support service   organization, or other person authorized by the person who will act as proxy to receive the   transmission. Unless a proxy provides otherwise, it is not valid more than eleven (11) months   after its date. A proxy is revocable by a Member at any time without condition or qualification   unless the proxy states that it is irrevocable and is coupled with an interest. A proxy may be   made irrevocable for so long as it is coupled with an interest. The interest with which a proxy   may be coupled includes an interest in the Membership Interests to be voted under the proxy or   another general interest in the Company or its assets or liabilities.            (g)    ACTION BY WRITTEN CONSENT OF MEMBERS. Any action required or   permitted to be taken at a meeting of Members may be taken without a meeting if there is filed   with the records of Members meetings a written consent which sets forth the action and is signed   by the Members entitled to cast at least a majority of the votes, or such larger number of votes  required by this Agreement to pass the resolution contained in the consent; provided, however,   that so long as any member of the JBGL Member Group is a Member of the Company, the JBGL   Member Group must consent in writing to such action.            Section 2.8  Certain Fees to Members            The Company shall pay JBGL (or one of its Affiliates as designated by JBGL), monthly   in arrears, a closing fee (the “Closing Fee”) in an amount equal to a reasonable allocation of   actual overhead costs incurred or to be incurred by JBGL or its Affiliates, which shall not exceed   $2,000.00 for each residential property sold by the Company or any Subsidiary in any calendar   month. The Members herein agree that $2,000.00 shall be the amount of the Closing Fee; and   that as of the Effective Date such amount reflects a reasonable allocation of overhead costs                                         11 

 

 incurred or to be incurred by JBGL or its Affiliates; provided, however, that such Closing Fee   may decrease or increase (but not above $2,000.00) in the future in the event that such amount   no longer represents a reasonable allocation of the actual overhead costs incurred or to be   incurred. The Closing Fee shall cease to accrue upon the date that no member of the JBGL  Member Group, holds a Membership Interest. The Closing Fee for each calendar month shall be  payable monthly in arrears no later than the tenth (10th) day of the month immediately following  such calendar month.                                      ARTICLE III                       ALLOCATIONS AND DISTRIBUTIONS            Section 3.1  Allocations            (a)   GENERAL ALLOCATIONS OF PROFITS AND LOSSES. Except as otherwise   provided in Section 3.4 hereof, items of profit, income, gain, loss, deduction and tax credit   recognized by the Company in accordance with the method of accounting and the books and  records of the Company as in effect from time to time shall be allocated to and among the  Members, prior to any distributions of any Operating Profit attributable thereto, in a manner such  that the Capital Account of each Member, immediately after making such allocation, is as nearly  as possible equal to the excess of (a) the distributions that would be made to such Member if the  Company were dissolved, its affairs wound up and its assets sold for cash equal to their Book   Value, all Company liabilities were satisfied (limited with respect to each nonrecourse liability to  the fair market value of the assets securing such liability), and the net assets of the Company  were distributed pursuant to Section 6.2(a) of this Agreement to the Members immediately after   making such allocation, over (b) such Member’s share, if any, of items of Company profit,   income, gain, loss, deduction and tax credit specially allocated to such Member pursuant to the   provisions of Section 3.4 hereof.            (b)    TRANSFER. All items of profit, income, gain, loss, deduction, and credit   allocable to any Membership Interest that may have been transferred shall be allocated between   the transferor and the transferee based on the portion of the calendar year during which each was   recognized as owning that Membership Interest, without regard to the results of Company   operations during any particular portion of that calendar year and without regard to whether cash  distributions were made to the transferor or the transferee during that calendar year; provided,   however, that this allocation must be made in accordance with a method permissible under   Section 706 of the Code and the Treasury Regulations thereunder.            Section 3.2  Distributions of Net Operating Profits            To the extent the Company has available cash (as determined by the Board of Managers),  the Company shall distribute Net Operating Profits to the Members at such times, and in such  amounts, as may be determined by the Board of Managers; provided, that to the extent the   Company has available cash (as determined by the Board of Managers) the Company shall   distribute Net Operating Profits in accordance with this Section 3.2 not less frequently than once   per year. Notwithstanding the foregoing, the Company shall maintain and withhold from such   distributions of Net Operating Profits a cash reserve in the amount determined by the Board of   Managers to be sufficient to meet the working capital requirements of the Company (“Retained   Cash”); provided, that the Members agree that a cash reserve equal to sixty-two percent (62%) of   the amount of cumulative aggregate Net Operating Profits (determined without consideration of   such cash reserve, and calculated from the Effective Date through the date of such                                         12 

 

 determination) shall be retained unless approved unanimously by the Board of Managers, except   that the Retained Cash shall not exceed a total amount of $4,000,000.00 unless unanimously   approved by the Board of Managers. Notwithstanding the frequency or amounts of distributions,   Net Operating Profits which are distributed to the Members shall be distributed as follows:            (a)    First, to the Members pro rata in accordance with their respective then   Undistributed Preferred Return, in such amounts and until such times as each Member’s   Undistributed Preferred Return has been reduced to zero (0);            (b)    Next, to the Members pro rata in accordance with the Members’ proportionate   Unreturned Capital Contributions in such amounts, and until such time, as each Member’s   Unreturned Capital Contributions have been reduced to zero (0); and                 (c)    Thereafter, to the Members pro rata in accordance with their respective   Percentage Interests.            As used herein (i) the term “Undistributed Preferred Return” shall mean, as to each   Member, the aggregate Preferred Return accrued with respect to such Member’s Unreturned  Capital Contributions reduced by the aggregate distributions to such Member from the Company  pursuant to Sections 3.2(a) and 6.2(a)(i) hereof; and (ii) the term “Preferred Return” shall mean,   with respect to each Member, a cumulative return of thirteen and 85/100 percent (13.85%),  compounded annually, on such Member’s Unreturned Capital Contributions outstanding from   time to time.            Section 3.3  Withheld Amounts            Notwithstanding any other provision of this Article III to the contrary, each Member  hereby authorizes the Company to withhold and to pay over, or otherwise pay, any withholding   or other taxes payable by the Company with respect to the Member as a result of the Member’s   participation in the Company; if and to the extent that the Company shall be required to withhold   or pay any such taxes, such Member shall be deemed for all purposes of this Agreement to have   received a payment from the Company as of the time such withholding or tax is paid, which   payment shall be deemed to be a distribution with respect to such Member’s Membership   Interest to the extent that the Member (or any successor to such Member’s Membership Interest)   is then entitled to receive a distribution. To the extent that the aggregate amount of such   payments to a Member for any period exceeds the distributions to which such Member is entitled   for such period, the amount of such excess shall be considered a loan from the Company to such   Member. Such loan shall bear interest (which interest shall be treated as an item of income to the   Company) at the prevailing prime interest rate published from time to time by The Wall Street   Journal until discharged by such Member by repayment, which may be made by the Company  out of distributions to which such Member would otherwise be subsequently entitled. Any   withholdings authorized by this Section 3.3 shall be made at the maximum applicable statutory   rate under the applicable tax law unless the Company shall have received an opinion of counsel  or other evidence satisfactory to the Board of Managers to the effect that a lower rate is  applicable, or that no withholding is applicable.          Section 3.4   Limitations on Allocations           (a)    MINIMUM GAIN CHARGEBACK. Notwithstanding any provision of this   Article III, if there is a net decrease in Company minimum gain during any fiscal year or other                                         13 

 

 period, prior to any other allocation pursuant hereto, each Member shall be specially allocated   items of Company income and gain for such year (and, if necessary, subsequent years) in an   amount and manner required by Treasury Regulation Sections l.704-1(b)(4)(iv) and Section   1.704-2. Notwithstanding any provision of this Article III, if there is a net decrease in partner   nonrecourse debt minimum gain, any Member with a share of that partner nonrecourse debt   minimum gain as of the beginning of such year shall be allocated items of income and gain for  the year (and, if necessary, for succeeding years) equal to that Member’s share of the net  decrease in the partner nonrecourse debt minimum gain, as provided in Treasury Regulation   Section l.704-2(i)(4).           (b)    QUALIFIED INCOME OFFSET. Any Member who unexpectedly receives an   adjustment, allocation or distribution described in Treasury Regulation Section 1.704-   1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases a negative balance in its Capital Account   beyond the sum of the amount of such Member’s obligation to restore its deficit Capital Account   plus its share of minimum gain shall be allocated items of income and gain sufficient to eliminate   such increase or negative balance caused thereby, as quickly as possible, to the extent required   by such Treasury Regulation.            (c)   GROSS INCOME ALLOCATION. If any Member has a deficit Capital Account   at the end of any Company fiscal year which is in excess of the sum of (i) the amount such   Member is obligated to restore pursuant to any provision of this Agreement and (ii) the amount   such Member is deemed to be obligated to restore pursuant to Treasury Regulation Section   1.704-2, each such Member shall be specially allocated items of Company income and gain in   the amount of such excess as quickly as possible, provided that an allocation pursuant to this   Section 3.4(c) shall be made only if and to the extent that such Member would have a deficit   Capital Account in excess of such sum after all other allocations provided for in this Article III   have been made as if this Section 3.4(c) were not in this Agreement.            (d)    SECTION 704(b) LIMITATION. Notwithstanding any other provision of this   Agreement to the contrary, no allocation of any item of income or loss shall be made to a   Member if such allocation would not have “economic effect” pursuant to Treasury Regulation  Section 1.704-1(b)(2)(ii) or otherwise be in accordance with its interest in the Company within  the meaning of Treasury Regulation Sections l.704-1(b)(3) and 1.704-2. To the extent an  allocation cannot be made to a Member due to the application of this Section 3.4(d), such   allocation shall be made to the other Member(s) entitled or required to receive such allocation   hereunder.           (e)     CURATIVE ALLOCATIONS. Any allocations of items of income, gain, or loss   pursuant to Sections 3.4(a)-(d) hereof shall be taken into account in computing subsequent   allocations pursuant to this Article III, so that the net amount of any items so allocated and the   income, losses and other items allocated to each Member pursuant to this Article III shall, to the   extent possible, be equal to the net amount that would have been allocated to each Member had   no allocations ever been made pursuant to Sections 3.4(a)-(d) hereof.            Section 3.5  Intentionally Deleted.            Section 3.6  Return of Other Distributions.            Unless otherwise required by law which may not be waived or modified pursuant to such   law’s terms, it is the intent of the Company and all Members that no Member shall be obligated                                         14 

 

 to return any distribution to or for the account of the Company or any creditor of the Company.  The payment of any money or distribution of any property to a Member shall be deemed to be a   compromise, and the Member receiving any such money or property shall not be required to   return any such money or property to the Company or any creditor of the Company. However, if   any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement,   any Member is obligated to return amounts previously wrongfully distributed to such Member,   such obligation shall be the sole responsibility of the Member who received such distributions.                                       ARTICLE IV           MANAGEMENT OF BUSINESS AND AFFAIRS OF THE COMPANY            Section 4.1  Management of Business and Affairs of the Company.            (a)    Except as specifically provided otherwise in this Agreement, and regardless of   any approval rights as may be provided in the Texas Act, the exclusive authority to manage,   control and operate the Company shall be vested collectively in the individuals, who need not be   Members, elected by the Members as managers of the Company (the “Managers”) in accordance   with this Agreement provided, that the Managers elected by the Members are the persons named   as Managers on Schedule A to this Agreement. As of the Effective Date the number of Managers   is three (3) Managers, which number may be hereafter increased or decreased by the Members.   All powers of the Company may be exercised by or under the authority of the Managers acting  collectively, and not individually (the “Board of Managers”). Except as specifically provided   otherwise in this Agreement, the Board of Managers shall have full and exclusive right, power   and authority to manage the affairs of the Company and make all decisions with respect thereto   without the requirement of any consent or approval by the Members, including, without   limitation, to the fullest extent permitted by law, authorizing or taking any actions for which the   unanimous consent of the Members is required under the Texas Act.            (b)    Each of the JBGL Member Group and the Pasquinelli Member Group, in its or  their discretion, shall be entitled to remove and replace any one or more of the Managers it   elected or appointed pursuant to Section 4.3 or this Section 4.1(b) hereof at any time, with or   without cause, during the existence of the Company; provided, that any removal or replacement   of any Manager appointed by the Pasquinelli Member Group is subject to the approval of the   JBGL Managers, and further is subject to the provisions of Section 4.3(a) hereof. The names of   the Managers of the Company who are hereby appointed to serve on and after the date of this   Agreement, and who will serve until their resignation or until their successors are appointed are   set forth on Schedule A attached hereto along with the name of the Member that elected each   Manager.            (c)    Except as expressly provided in this Agreement, and regardless of any approval   rights as may be provided in the Texas Act, the affirmative vote of a majority of the Managers   shall be considered the act of the Managers with respect to any event. Except as expressly   provided in this Agreement, no Manager shall be permitted to act without the affirmative vote of   a majority of the Managers. Notwithstanding any provision of this Agreement, and regardless of   any approval rights as may be provided the Texas Act, the consent of all of the Members shall be   required for the Company, or any other Person on behalf of the Company or any Subsidiary, as   the case may be, to do any of the following:                  (i)    do any act in contravention of this Agreement;                                                        15 

 

             (ii)   subject to Section 6.1(a)(i-ii), do any act which would make it impossible   to carry on the ordinary business or the Primary Business of the Company, or is otherwise  inconsistent with the Primary Business of the Company;                             (iii)  possess Company or Subsidiary property, or assign rights in Company or   Subsidiary property, other than for a Company purpose;                              (iv)   except as to (A) the Management Agreements, (B) any agreement by   which JBGL or one of its Affiliates provides financing or agrees to provide funding to the   Company or any of its Subsidiaries, including, without limitation, the Loan Agreement, any   construction loans, and the Contribution Agreement Loans, or (C) any agreement by which  JBGL or one of its Affiliates sells lots or agrees to sell lots to the Company or any of its   Subsidiaries (“Lot Contracts”), enter into any contracts or agreements with any Member or any   relatives or Affiliates of any Member.            Section 4.2  Officers.            (a)   EXECUTIVE AND OTHER OFFICERS. Except as provided in Section 4.2(b)   hereof, the Board of Managers shall designate one or more officers of the Company (each an   “Officer” and collectively, the “Officers”) for the purpose of managing the day-to-day operations   of the Company. The Officers shall have the powers set forth in this Agreement. The Company   shall have a President, a Secretary, and a Treasurer. The Company may also have one or more   Vice-Presidents (including, without limitation, Executive Vice Presidents and Senior Vice   Presidents), assistant officers, and subordinate officers as may be established by the Board of   Managers. A person may hold more than one office in the Company. The Officers may also be,   but do not need to be, Managers of the Company.           (b)    OFFICERS. The names of the Officers serving the Company on and after the   date of this Agreement and the capacities in which they serve, until their successors are elected   or appointed, are set forth on Schedule A attached hereto, without the need for further   designation or approval.            (c)   PRESIDENT. Unless otherwise provided by resolution of the Board of   Managers, the President of the Company shall preside at all meetings of the Board of Managers   and of the Members at which he or she shall be present. The President of the Company shall be   the chief executive officer and chief operating officer of the Company and shall perform the  duties customarily performed by chief executive officers and chief operating officers. Subject to   Section 4.9 of this Agreement, the President of the Company may execute, in the name and on   behalf of the Company, all authorized deeds, mortgages, bonds, contracts or other instruments,   except in cases in which the signing and execution thereof shall have been expressly delegated to  some other officer or agent of the Company. In general, the President of the Company shall  perform such other duties customarily performed by a president of a corporation and shall   perform such other duties and have such other powers as are from time to time assigned to him   or her by the Board of Managers.            (d)    VICE-PRESIDENTS. The Vice-President or Vice-Presidents (including, without   limitation, Executive Vice Presidents and Senior Vice Presidents), at the request of the President   of the Company, or in the President’s absence or during his or her inability to act, shall perform   the duties and exercise the functions of the President of the Company, and when so acting shall   have the powers of the President of the Company. If there be more than one Vice-President, the                                         16 

 

 Board of Managers may determine which one or more of the Vice-Presidents shall perform any   of such duties or exercise any of such functions, or if such determination is not made by the   Board of Managers, the President of the Company may make such determination; otherwise any   of the Vice-Presidents may perform any of such duties or exercise any of such functions. Each   Vice-President shall perform such other duties and have such other powers, and have such   additional descriptive designations in their titles (if any), as are from time to time assigned to   them by the Board of Managers or the President of the Company.            (e)    SECRETARY. The Secretary shall keep the minutes of the meetings of the   Members, of the Board of Managers and of any committees, in books provided for the purpose;   he or she shall see that all notices are duly given in accordance with the provisions hereof or as   required by law; he or she shall be custodian of the records of the Company; he or she may   witness any document on behalf of the Company, the execution of which is duly authorized, see  that the Company seal is affixed where such document is required or desired to be under its seal,  and, when so affixed, may attest the same. In general, the Secretary shall perform such other  duties customarily performed by a secretary of a corporation, and shall perform such other duties  and have such other powers as are from time to time assigned to him or her by the Board of  Managers or the President of the Company.           (f)   TREASURER. The Treasurer shall have charge of and be responsible for all   funds, securities, receipts and disbursements of the Company, and shall deposit, or cause to be   deposited, in the name of the Company, all moneys or other valuable effects in such banks, trust   companies or other depositories as shall, from time to time, be selected by the Board of   Managers; he or she shall render to the President of the Company and to the Board of Managers,   whenever requested, an account of the financial condition of the Company. In general, the   Treasurer shall perform such other duties customarily performed by a treasurer of a corporation,  and shall perform such other duties and have such other powers as are from time to time assigned  to him or her by the Board of Managers or the President of the Company.           (g)    ASSISTANT AND SUBORDINATE OFFICERS. The assistant and subordinate   officers of the Company are all officers below the office of Vice-President, Secretary, or   Treasurer. The assistant or subordinate officers shall have such duties as are from time to time   assigned to them by the Board of Managers or the President of the Company.            (h)    ELECTION, TENURE AND REMOVAL OF OFFICERS. The Board of   Managers shall elect the Officers of the Company; provided, that upon the execution of this   Agreement, the initial Officers of the Company shall be as set forth in Schedule A of this   Agreement. The Board of Managers may from time to time authorize any committee or Officer   to appoint assistant and subordinate officers. All Officers shall be elected or appointed to hold   their offices, respectively until their successors are elected or appointed or, if earlier, until their   death, resignation or removal from office; provided, that the Board of Managers (or, as to any   assistant or subordinate officer, any committee or Officer authorized by the Board of Managers)   may remove an Officer at any time, with or without cause. The removal of an Officer shall not  prejudice any of his or her contract rights. Election or appointment of an Officer, employee or  agent shall not of itself create contract rights. The Board of Managers (or, as to any assistant or  subordinate officer, any committee or Officer authorized by the Board of Managers) may fill a  vacancy which occurs in any office for the unexpired portion of the term.           (i)    COMPENSATION. The Board of Managers shall have power to fix the salaries   and other compensation and remuneration, of whatever kind, of all Officers of the Company. No                                         17 

 

 Officer shall be prevented from receiving such salary by reason of the fact that he or she is also a   Manager of the Company. The Board of Managers may authorize any committee or Officer,   upon whom the power of appointing assistant and subordinate officers may have been conferred  to fix the salaries, compensation and remuneration of such assistant and subordinate officers.          Section 4.3   Board of Managers Election and Meetings.           (a)    ELECTION AND TENURE OF MANAGERS. At each annual meeting, or at   each special meeting called for that purpose, the Members shall elect Managers, in the manner  hereinafter provided, to hold office until the next annual meeting and until their successors are  elected and qualify, or until their earlier death, resignation or removal from office. Managers  may, but need not, be Members of the Company. Unless otherwise unanimously approved by the  Members, (i) the Board of Managers of the Company and each Subsidiary shall consist of a total  of three (3) Managers, and (ii) two (2) of such Managers shall be elected by JBGL (the “JBGL   Managers”) and, except as otherwise provided herein, one (1) of such Managers shall be elected   by the Pasquinelli Member Group (the “Pasquinelli Manager”). Regardless of any other   provision of this Agreement to the contrary, including this Section 4.3(a) or Section 4.3(b), the   Pasquinelli Member Group shall have no right to remove the Pasquinelli Manager from the   Board of Managers of the Company or any Subsidiary without the prior written consent of the   JBGL Managers (acting on behalf of the Company as the sole member of the Subsidiary, in the   case of a Subsidiary), and any Manager appointed or elected to the Board of Managers of the   Company or any Subsidiary by the Pasquinelli Member Group is subject to the approval of the   JBGL Managers (acting on behalf of the Company as the sole member of the Subsidiary, in the   case of a Subsidiary). The Board of Managers may remove the Pasquinelli Manager from the   Board of Managers of the Company and/or any Subsidiary at any time after the occurrence of a   Removal Event (as defined below), in which event the Pasquinelli Member Group shall have   thirty (30) days to elect a new Pasquinelli Manager to the Board of Managers of the Company   and any Subsidiary (subject to the approval of JBGL), and if it fails to do so within such thirty   (30) day period the JBGL Managers may elect the Pasquinelli Manager; provided, however, that   if an Event of Dissociation (as hereinafter defined) has occurred as to any member of the  Pasquinelli Member Group or no Member is a member of the Pasquinelli Member Group, then   upon any removal of the Pasquinelli Manager from the Board of Managers of the Company or   any Subsidiary as a result of an Event of Dissociation, JBGL shall have the right to elect the   replacement Pasquinelli Manager to the Board of Managers of the Company and the JBGL   Managers (acting on behalf of the Company as the sole member of the Subsidiary, in the case of   a Subsidiary) shall have the right to elect the replacement Pasquinelli Manager to the Board of   Managers of each Subsidiary. A “Removal Event” shall mean:                        (i)    A material violation of any other provisions of this Agreement or the   company agreement of any Subsidiary by the Pasquinelli Manager or the President of the   Company or any Subsidiary which causes material economic harm to the Company or any   Subsidiary and which is not cured within thirty (30) days after written notice to such Pasquinelli   Manager by the JBGL Managers;                  (ii)   Any act of gross negligence on the part of the Pasquinelli Manager or the   President of the Company or any Subsidiary causing material damage to the Company or any   Member;                  (iii)  Any act of fraud, theft or willful misconduct committed by the   Pasquinelli Manager or the President of the Company against the Company, its Subsidiaries or                                         18 

 

 any of the other Members in connection with the operation of the Company;                  (iv)  The conviction of BP or the Pasquinelli Manager of a felony; or                              (v)   The occurrence of any Event of Dissociation.            (b)    VACANCY ON BOARD OF MANAGERS. Subject to Section 4.3(a) above,   each Member shall elect a successor to fill a vacancy on the Board of Managers that results from   the death, resignation, or removal from office of any Manager that such Member elected. Subject   to Section 4.3(a), a Manager elected by such Member to fill a vacancy which results from the   removal of a Manager shall serve for the balance of the term of the removed Manager.                  (c)    REGULAR MEETINGS. After each meeting of the Members at which   Managers shall have been elected, the Board of Managers shall meet as soon as practicable for   the purpose of organization and the transaction of other business. In the event that no time and   place are specified by resolution of the Board of Managers or the President (with notice in   accordance with Section 4.3(e) hereof), the Board of Managers shall meet immediately following   the close of, and at the place of, such Members meeting. Any other regular meeting of the Board  of Managers shall be held on such date and at any place as may be designated from time to time  by the Board of Managers.           (d)    SPECIAL MEETINGS. Special meetings of the Board of Managers may be   called at any time by the President or by any Manager. A special meeting of the Board of   Managers shall be held on such date and at any place as may be designated from time to time by   the Board of Managers. In the absence of a designation, such meeting shall be held at such place   as may be designated in the call.            (e)    NOTICE OF MEETING. Except as provided in Section 4.3(c) hereof, the   Secretary shall give notice to each Manager of each regular and special meeting of the Board of   Managers. The notice shall state the time, place and purpose of the meeting. Notice is given to a   Manager when it is delivered personally to him or her, left at his or her residence or usual place   of business, or sent by email, telephone (including voicemail), or text message, at least seventy-  two (72) hours before the time of the meeting or, in the alternative by mail to his or her address   as it shall appear on the records of the Company, at least seventy-two (72) hours before the time   of the meeting. Unless a resolution of the Board of Managers provides otherwise, the notice need   not state the business to be transacted at or the purposes of any regular meeting of the Board of   Managers. No notice of any meeting of the Board of Managers need be given to any Manager   who attends, except where a Manager attends a meeting for the express purpose of objecting to   the transaction of any business because the meeting is not lawfully called or convened, or to any   Manager who, in a writing executed and filed with the records of the meeting either before or   after the holding thereof, waives such notice. Any meeting of the Board of Managers, regular or   special, may adjourn from time to time to reconvene at the same or some other place, and no   notice need be given of any such adjourned meeting other than by announcement.            (f)    ACTION BY MANAGERS. Unless this Agreement requires a greater   proportion, the action of a majority of the Managers present at a meeting at which a quorum is   present is the action of the Board of Managers; provided, however, that so long as Jim Brickman   is one of the JBGL Managers, such majority must include Jim Brickman, or any other Manager   as may be designated by JBGL. A majority of the entire Board of Managers shall constitute a   quorum for the transaction of business. In the absence of a quorum, the Managers present by                                         19 

 

 majority vote and without notice other than by announcement may adjourn the meeting from   time to time until a quorum shall be present. At any such adjourned meeting at which a quorum   shall be present, any business may be transacted which might have been transacted at the   meeting as originally notified. Any action required or permitted to be taken at a meeting of the  Board of Managers may be taken without a meeting, if a written consent which sets forth the  action is signed by at least a majority of the members of the entire Board of Managers; provided,   however, that so long as Jim Brickman is one of the JBGL Managers, such majority must include   Jim Brickman, or any other Manager as may be designated by JBGL.            (g)    MEETING BY CONFERENCE TELEPHONE. Members of the Board of   Managers may participate in a meeting by means of a conference telephone or similar   communications equipment if all persons participating in the meeting can hear and speak to each   other. Participation in a meeting by these means constitutes presence in person at a meeting.            Section 4.4  No Participation of Members in Business and Affairs of the          Company.            No Member, in his or her capacity as such, shall have any authority or right to act for or   bind the Company or to participate in or have any control over Company business, except for (i)   such rights to consent to or approve of the actions and decisions of the Board of Managers as are   expressly provided for in this Agreement, and any other rights granted to the Members in this   Agreement, and (ii) such authority to act for and bind the Company as the Board of Managers   may, from time to time and in the exercise of its sole discretion, delegate to such Member in   writing.            Section 4.5  Other Business of Members and Managers.            Except as otherwise provided in Section 9.2 hereof, the Non-Competition and   Non-Disclosure Agreement dated to be effective as of April 1, 2012, by and among the   Company, CB JENI, BP, and JBGL, or as may otherwise be agreed in writing and   notwithstanding any other duty existing at law or in equity, any Member or Manager and any   Affiliate of any Member or Manager may engage in or possess an interest in other business   ventures of any nature or description (including business ventures which compete and/or conflict   with the current or future business of the Company) independently or with others, and neither the   Company nor any Member or Manager shall have any rights in or to such independent ventures   or the income or profits derived therefrom, and, to the fullest extent permitted by law, such   activities shall not be construed as a breach of any duty of loyalty or other duty to the other   Members and Managers or the Company.            Section 4.6  Indemnification and Exculpation.            (a)    The Company shall indemnify (i) its Members, Managers and Officers to the   fullest extent permitted by law, including, without limitation, the advance of expenses under the   procedures and to the fullest extent permitted by law, and (ii) other employees and agents of the  Company to such extent as shall be authorized by the Board of Managers and is permitted by   law. The foregoing rights of indemnification shall not be exclusive of any other rights to which   those seeking indemnification may be entitled. The Board of Managers may take such action as   is necessary to carry out these indemnification provisions and is expressly empowered to adopt,   approve and amend from time to time such resolutions or contracts implementing such   provisions or such further indemnification arrangements as may be permitted by law. No                                         20 

 

 amendment of this Agreement or repeal of any of the provisions thereof shall limit or eliminate   the right to indemnification provided hereunder with respect to acts or omissions occurring prior   to such amendment or repeal. The indemnification shall be payable solely from the assets of the   Company and no Member, Manager or Officer shall have any personal liability therefor.            (b)    To the fullest extent permitted by Texas statutory or decisional law, as amended   or interpreted, no Member, Manager or Officer of the Company shall be personally liable to the   Company or any Members for money damages. No amendment of this Agreement or repeal of   any of their respective provisions shall limit or eliminate the limitation on liability provided to   the Members, Managers and Officers hereunder with respect to any act or omission occurring   prior to such amendment or repeal.            (c)   No Member, Manager or Officer, nor their Affiliates, nor any of their respective   officers, directors, shareholders, partners, employees, representatives or agents (each, a “Covered   Person” and collectively, the “Covered Persons”) shall be liable to the Company or any other   Person who has an interest in the Company and is bound by this Agreement for any loss, damage   or claim incurred by reason of any act or omission performed or omitted by such Covered Person   in good faith on behalf of the Company and in a manner reasonably believed to be within the   scope of the authority conferred on such Covered Person by this Agreement, except that this   Section 4.6(c) shall not exculpate a Covered Person from liability for any such loss, damage or   claim incurred by reason of such Covered Person’s willful misconduct, bad faith or gross   negligence.            (d)    To the extent that, at law or in equity, a Covered Person has duties (including   fiduciary duties) and liabilities relating thereto to the Company or to any Member, any such   Covered Person acting under this Agreement shall not be liable to the Company or to any   Member for its good faith reliance on the provisions of this Agreement. The provisions of this   Agreement to the extent that they restrict the duties and liabilities of a Covered Person otherwise  existing at law or in equity, are agreed by the Members and Managers to replace such other  duties and liabilities of such Covered Person.           (e)    Whenever in this Agreement a Member is permitted or required to make a  decision (i) in its “sole discretion” or “discretion” or under a grant of similar authority or   latitude, the Member shall be entitled to consider only such interests and factors as it desires,   including its own interests, and shall have no duty or obligation to give any consideration to any   interest of or factors affecting the Company or any other Member, or (ii) in its “good faith” or   under another express standard, the Member shall act under such express standard and shall not   be subject to any other or different standards imposed by this Agreement or any other agreement  contemplated herein or by relevant provisions of law or in equity or otherwise.          Section 4.7 Tax Matters Member; Partnership Representative.                  (a)   Appointment. The Members hereby appoint JBGL as the “tax matters partner” (as   defined in Code Section 6231 prior to its amendment by the Bipartisan Budget Act of 2015   (“BBA”)) (the “Tax Matters Member”). For tax years beginning on or after January 1, 2018, the   Members hereby appoint the President as the “partnership representative” (the “Partnership   Representative”) as provided in Code Section 6223(a) (as amended by the BBA).                                           21 

 

                (b)   Tax Examinations and Audits. The Tax Matters Member and Partnership   Representative are each authorized and required to represent the Company (at the Company’s   expense) in connection with all examinations of the Company’s affairs by taxing authorities,  including resulting administrative and judicial proceedings, and to expend Company funds for  professional services and costs associated therewith. Each Member agrees that such Member will  not independently act with respect to tax audits or tax litigation of the Company, unless  previously authorized to do so in writing by the Tax Matters Member or Partnership   Representative, which authorization may be withheld by the Tax Matters Member or Partnership  Representative in its sole and absolute discretion. For any year in which the TEFRA audit rules  of Code Sections 6221 through 6234 (prior to amendment by the BBA) apply, the Tax Matters  Member shall take such action as is necessary to cause each Member to become a notice partner  within the meaning of Code Section 6231(a)(8) (prior to amendment by the BBA). The Tax  Matters Member or Partnership Representative shall promptly notify the Member(s) if any tax  return of the Company is audited and upon the receipt of a notice of final partnership  administrative adjustment or final partnership adjustment. Without the consent of a majority of  the Members, the Tax Matters Member or Partnership Representative shall not extend the statute  of limitations, file a request for administrative adjustment, file suit relating to any Company tax  refund or deficiency or enter into any settlement agreement relating to items of income, gain,  loss or deduction of the Company with any taxing authority.            (c)   Income Tax Elections. Except as otherwise provided herein, the Tax Matters   Member and Partnership Representative shall each have discretion to make any income tax   election it deems advisable on behalf of the Company; provided, that the Tax Matters Member or   Partnership Representative will make an election under Section 754 of the Code, if requested in   writing by the Member(s) holding a majority of the outstanding Membership Interests. All  determinations as to tax elections and accounting principles shall be made solely by the Tax  Matters Member or Partnership Representative.            (d)   BBA Elections and Procedures. In the event of an audit of the Company that is   subject to the partnership audit procedures enacted under Section 1101 of the BBA (the “BBA   Procedures”), the Partnership Representative, in its sole discretion, shall have the right to make   any and all elections and to take any actions that are available to be made or taken by the   Partnership Representative or the Company under the BBA Procedures (including any election   under Code Section 6226 as amended by the BBA). If an election under Code Section 6226(a)   (as amended by the BBA) is made, the Company shall furnish to each Member for the year under   audit a statement of the Member’s share of any adjustment set forth in the notice of final   partnership adjustment, and each Member shall take such adjustment into account as required   under Code Section 6226(b) (as amended by the BBA).            (e)   Tax Returns and Tax Deficiencies. Each Member agrees that such Member shall   not treat any Company item inconsistently on such Member’s federal, state, foreign or other   income tax return with the treatment of the item on the Company’s return. Any deficiency for   taxes imposed on any Member (including penalties, additions to tax or interest imposed with   respect to such taxes and any tax deficiency imposed pursuant to Code Section 6226 as amended   by the BBA) will be paid by such Member and if required to be paid (and actually paid) by the   Company, will be recoverable from such Member. To the extent that the Partnership   Representative does not make an election under Code Section 6221(b) or Code Section 6226   (each as amended by the BBA), the Company shall use commercially reasonable efforts to (i)                                          22 

 

 make any modifications available under Code Section 6225(c)(3), (4), and (5), as amended by   the BBA, and (ii) if requested by a Member, provide to such Member information allowing such   Member to file an amended federal income tax return, as described in Code Section 6225(c)(2)   as amended by the BBA, to the extent such amended return and payment of any related federal   income taxes would reduce any taxes payable by the Company.            (f)   Resignation. The Tax Matters Member or Partnership Representative may resign   at any time. Upon such resignation, the holders of a majority of the Membership Interests of the   Company shall appoint a new Tax Matters Member or Partnership Representative.”            Section 4.8  Current Company Budget and Plan.            (a)    Not later than November 15 of every year, or such other date as determined by   the Board of Managers, the President of the Company shall submit to the Board of Managers for   approval, a proposed Current Company Budget and Plan for the twelve (12) month period   commencing on January 1 of the next year, or such other period as may be determined by the   Board of Managers. The proposed Current Company Budget and Plan shall include, among other   matters, the projected Funding Amount to be outstanding from time to time during such year   (giving consideration to, among other things, projected construction and sales of homes). The   approval of the Current Company Budget and Plan shall not obligate JBGL or any of its   Affiliates to loan or otherwise advance any portion of such projected Funding Amount; provided,   if JBGL or any of its Affiliates elects to make any such loans to the Company or any of its   Subsidiaries, such loans shall be on terms and conditions acceptable to JBGL (or other terms and   conditions unanimously approved by the Board of Managers). Within thirty (30) days after   receipt of the proposed Current Company Budget and Plan, the Board of Managers shall   approve, reject or comment upon the proposed Current Company Budget and Plan and the   parties shall endeavor to resolve all differences within fifteen (15) days thereafter. The Board of   Managers may at any time and for any reason amend the Current Company Budget and Plan. In   the event that prior to December 31 of any year, the proposed Current Company Budget and Plan   for the next year has not been approved by the Board of Managers, the Company shall continue   to operate in compliance with the then Current Company Budget and Plan (but subject to Section   4.8(b) below and Section 5.1(c)), subject only to changes to reflect actual increases in taxes,   insurance premiums and debt service payments on any approved Company financings, until   approval of the proposed Current Company Budget and Plan.            (b)   Notwithstanding anything to the contrary contained in this Agreement, the   Company shall be entitled to make expenditures in any budget year for any line item in excess of   those contained in a Current Company Budget and Plan equal to five percent (5%) in excess of  the amount set forth in the Current Company Budget and Plan for such line item, provided (i) the  aggregate line item increases do not exceed Fifty Thousand and No/100 Dollars ($50,000) in any  budget year and the President of the Company promptly informs each Manager of such increased  expenditure, and (ii) that such excess shall in no way increase the Funding Amount. The  President of the Company, in his good faith judgment, shall also be entitled to make emergency   expenditures for items not approved in a Current Company Budget and Plan where such   expenditures are immediately (i) necessary for the preservation or the safety of any property or   assets of the Company, or to avert immediate danger to life at any property owned, leased or   operated by the Company, or (ii) required by any judicial or governmental authority having  jurisdiction over any properties or assets of the Company; provided, that in no event shall any   such expenditures be made to any member of the Pasquinelli Member Group or any Affiliate of   the Pasquinelli Member Group. If the President of the Company makes any such emergency                                         23 

 

 expenditures, it shall promptly inform each Manager of such expenditures. Additionally, the   President of the Company shall promptly report to each Manager any event, circumstance,   condition or situation which will result in or cause the Company to incur expenditures materially   different than those set forth in the Current Company Budget and Plan, and at such time, if the   Board of Managers approves such expenditures, the expenditures for such line items shall be  treated as if they had always been in the Current Company Budget and Plan, which shall be   deemed amended to include them.            Section 4.9  Operations of the Company.            The President of the Company shall have the authority to manage the ordinary day to day   business and affairs of the Company related to the Primary Business, subject to the then Current   Company Budget and Plan of the Company and in accordance with the provisions of this Section   4.9 and subject to any other limitations, restrictions or agreements set forth in this Agreement   (including, without limitation, Section 4.1(c) and Section 4.9 of this Agreement or imposed by   the Board of Managers). In furtherance of the foregoing, the President of the Company, acting on   behalf of the Company, with the authority conferred by this Agreement, and consistent with the   Current Company Budget and Plan, shall have authority and responsibility to perform or cause to   be performed the following duties and obligations to the extent applicable based on the Current   Company Budget and Plan:                  (a)    Update and recommend revisions or amendments to the Current Company   Budget and Plan for the Board of Managers’ review and approval or disapproval, including any   such revisions or amendments as may be necessary so that the Current Company Budget and   Plan sets aside adequate reserves and accurately reflects all actual and anticipated costs of   operating the Primary Business of the Company.            (b)    Notify the Board of Managers of matters material to the business of the   Company and render such reports to the Board of Managers as from time to time any Manager   may reasonably request, including at all times and in any event no less frequently than monthly,   keep each Manager informed of material information relating to the Primary Business of the   Company by (i) notifying each Manager, and delivering to each Manager written copies, of   financial statements of the Company and all material contracts and agreements entered into by   the Company or any Subsidiary, and (ii) notifying each Manager concerning any other matters   material to the Primary Business of the Company or the Current Company Budget and Plan of   which it is aware.            (c)    Manage and direct the Primary Business of the Company, including collecting   all revenues of the Company, constructing, marketing, and selling individual residential   properties to homebuyers, paying all expenses of the Company substantially in conformance   with the then Current Company Budget and Plan, advising the Board of Managers in advance of   projected cash needs of the Company, and causing the Company to operate substantially in   accordance with all applicable laws.  Notwithstanding the foregoing, unless approved by the Board of   Managers the President of the Company shall not do any act or take any action which is not part of the   ordinary, day to day operations of the Primary Business of the Company. Without limitation of the   immediately preceding sentence, the President of the Company shall not do any of the following without   the consent of the Board of Managers:                  (i)   admit any person or entity as a Member of the Company or as a member   or other equity interest holder of any Subsidiary;                                         24 

 

                            (ii)  consent or approve of any transfer of all or any portion of a Membership   Interest or other equity interest in the Company or any Subsidiary;                              (iii) dissolve, wind up, liquidate, or terminate the Company or any   Subsidiary;                              (iv)  except in accordance with the Current Company Budget and Plan, form,   or allow the formation of, a new Subsidiary of the Company;                              (v)   except in accordance with the Current Company Budget and Plan or   except pursuant to the Management Agreements, the Loan Agreement, the Contribution   Agreement Loans, the Lot Contracts or as expressly provided in this Agreement, pay any   compensation to any Member or Manager or any Affiliate of any Member or Manager;                              (vi)  change the number of members of the Board of Managers;                                          (vii) amend, modify, repeal, or restate this Agreement or any Subsidiary   Agreement;                              (viii) except in accordance with the Current Company Budget and Plan,   materially alter or expand the Primary Business of the Company;                              (ix)   materially change, amend or waive any of the Management Agreements or  allow any Subsidiary to materially change, amend or waive any of the Management Agreements;                              (x)   except in accordance with the Current Company Budget and Plan make   any investment or allow any Subsidiary to make any investment which is not consistent with the  Primary Business;                             (xi)   incur any debt for borrowed money, grant any liens on the assets of the   Company, or interest therein, in each case other than as expressly provided by this Agreement,   the Loan Agreement, or the Contribution Agreement Loans; provided, that the Board of   Managers shall not be required to approve any applications for credit, or the execution thereof,   with vendors in the ordinary course of business (provided, that such applications for credit shall   not include property loans), the incurring of ordinary trade payables or accounts payable on the   account of ordinary and necessary costs and expenses incurred in connection with the Company,   including salaries, fees and expenses for professional advisors and counsel, officers and   employees, which are incurred in the ordinary course of business and are generally payable   within thirty (30) days of the date incurred and which were approved in a Current Company   Budget and Plan;                                          (xii) transfer or agree to transfer all or substantially all of the assets or business   of the Company or any Subsidiary, or engage in a merger, interest exchange, conversion,   reorganization or any other form of business combination with or into any other Person;                  (xiii)   with regard to the Company or any Subsidiary (A) make a general   assignment for the benefit of creditors, (B) file a voluntary petition in bankruptcy, (C) file a   petition or answer seeking for itself, any reorganization, arrangement, composition,   readjustment, dissolution, liquidation or similar relief under any bankruptcy or debtor relief law,                                         25 

 

 (D) file an answer or other pleading admitting or failing to contest the material allegations of a   petition filed against it in any bankruptcy or insolvency proceeding brought against it, or (E)   seek, consent to or acquiescence in the appointment of a trustee, receiver or liquidator of any of  the Company, any Subsidiary or of all or any substantial portion of the Company’s or any  Subsidiary’s assets;                              (xiv) take any action that would cause the Company or any Subsidiary to   become a general partner of or with any Person, or acquire any stock, partnership interest or   other interest in any Person;                              (xv)  elect any person as a manager of any Subsidiary; or                             (xvi) operate or maintain an office or any operations in any state other than   Texas, or in any area other than the Primary Business Area.                                    (d)    Notify each Manager, in writing (i.e. email), if there are any lawsuits, claims and/or   legal proceedings that may be or have been instituted or asserted against the Company. If a claim has   been asserted, attach the claim to the notification.           Notwithstanding the foregoing provisions of this Section 4.9 or any other provision of   this Agreement, the Board of Managers may limit, restrict, remove or expand the authority   granted to the President (or any other officer of the Company) pursuant to this Agreement.           Section 4.10   Key Man Life Insurance. The Company shall apply for and use its best   efforts to obtain Key Man Life Insurance on BP with a death benefit of $1,000,000.00 (or such   other amount as may be unanimously approved by the Board of Managers). Premiums on any   such Key Man Life Insurance policies shall be paid by the Company, and the Company shall be  the beneficiary under such policies.                Section 4.11    Intentionally Deleted.                                        ARTICLE V                          RESTRICTIONS ON TRANSFERS            Section 5.1  Transfer of Membership Interest.                  (a)    Without the prior approval of the Board of Managers by unanimous consent,   which consent shall be at the Board of Managers’ sole discretion, no Member shall (i) endorse,   sell, give, pledge, encumber, assign, transfer or otherwise dispose of, voluntarily or involuntarily,  or by operation of law (excluding a merger or consolidation), (including any indirect transfer  made by BHCP or the Trust) (hereinafter referred to as a “Transfer”) all or any part of such   Member’s Membership Interest, or (ii) voluntarily withdraw or retire from the Company as a   Member; provided, however, that JBGL shall have the right to Transfer all or any part of its   Membership Interest to any other entity which is controlled directly or indirectly by Jim   Brickman or Matt Baynham or any entity which is controlled directly or indirectly by Jim   Brickman and Matt Baynham, without such consent of the Board of Managers.            (b)   Any attempted Transfer or withdrawal in contravention of this Agreement shall   be void ab initio and shall not bind or be recognized by the Company.                                         26 

 

          (c)   At any time after the occurrence of a Buy-Sell Event throughout the term of this  Agreement, unless such shorter period shall be otherwise provided herein, as to any member of  either Member Group, the Member Group that did not experience such Buy-Sell Event (the   “Offeror Member Group”) may deliver a written offer (the “Buy-Sell Notice”) to the other   Member Group which has experienced a Buy-Sell Event (the “Offeree Member Group”), to buy   from the Offeree Member Group the entire Membership Interest of each member of the Offeree   Member Group. The Buy-Sell Notice shall (i) be in writing and signed by each member of the  Offeror Member Group; (ii) specify a cash purchase price (“Overall Purchase Price”) for all of   the assets of the Company, as if free and clear of all loans and other financing; and (iii) specify   the other major economic terms and conditions upon which the Offeror Member Group would be   willing to sell to the Offeree Member Group its entire Membership Interest (and in each case,   under the circumstances described below, those same terms and conditions to apply to the sale by   the Offeree Member Group to the Offeror Member Group of its Membership Interests). The   Offeree Member Group shall have the right, exercisable by delivery of notice in writing to the   Offeror Member Group within thirty (30) days from the receipt of the Buy-Sell Notice to elect to   either:                  (i)    Sell to the Offeror Member Group the Offeree Member Group’s entire   Membership Interest for a purchase price equal to the amount that the Offeree Member Group   would receive if all Company assets were sold for the Overall Purchase Price, all existing loans   and other indebtedness of the Company were paid in full, and the remaining proceeds were   distributed to the Members and the Company was liquidated, all as provided in Section 6.2   hereof; or                              (ii)  Purchase the Offeror Member Group’s entire Membership Interest for a   purchase price equal to the amount that the Offeror Member Group would receive if all   Company assets were sold for the Overall Purchase Price, all existing loans and other   indebtedness of the Company were paid in full, and the remaining proceeds were distributed to   the Members and the Company was liquidated, all as provided in Section 6.2 hereof.            Within thirty (30) days after receipt of the Buy-Sell Notice, the Offeree Member Group   will notify the Offeror Member Group of its election either to sell its entire Membership Interest   to the Offeror Member Group or to purchase the Offeror Member Group’s entire Membership   Interest based upon the Overall Purchase Price and the other terms and conditions set forth in the   Buy-Sell Notice (as provided in subpart (i) or (ii), as applicable, of Section 5.1(c) above). If the   Offeree Member Group fails to notify the Offeror Member Group of its election within such   thirty (30) day period, the Offeree Member Group shall be deemed to have elected to sell its   entire Membership Interest upon the terms and conditions of the Buy-Sell Notice. Upon delivery   of the notice specifying such election (or a deemed election arising by the failure of the Offeree   Member Group to notify the Offeror Member Group of its election within such thirty (30) day   period), the Offeror Member Group and the Offeree Member Group will be obligated to   consummate the purchase and sale in accordance with such election and the provisions of this   Section 5.1(c).            The closing of any purchase and sale of Membership Interests under this Section 5.1(c)   will occur on or before the sixtieth (60th) day after the Offeree Member Group has elected to buy   or sell (or a deemed election has occurred as hereinabove provided). Such closing shall take   place at the Principal Office of the Company or at such other place as the purchasing Member   Group and selling Member Group may agree. At such closing, the purchase price shall be                                         27 

 

 payable by the purchasing Member Group to the selling Member Group, by wire transfer or such   other means as are acceptable to the selling Member Group, upon the execution,   acknowledgement and delivery of all documents, instruments and agreements that the purchasing   Member Group and the Board of Managers determines to be necessary or appropriate to   evidence and render fully effective the sale, assignment and transfer of the subject Membership   Interest by the selling Member Group, and each member thereof, to the purchasing Member   Group; provided, however, that such documents shall be reasonably consistent with similar   transactions. The purchasing Member Group and selling Member Group will each pay one-half   of any transfer taxes, recording fees, legal fees for preparation of agreements and instruments  and other fees and expenses (including legal and accounting fees) incurred by the Company in   connection with the Transfer of any interest in the Company under this Section 5.1(c). The   purchasing Member Group and selling Member Group will each pay their own costs and   expenses incurred in connection with any Transfer of any interest in the Company under this  Section 5.1(c).            If any Member Group brings suit to enforce its right to purchase an interest in the   Company under this Section 5.1(c), the Member Group prevailing in the suit will be entitled to   be reimbursed by the Member Group against whom an adverse determination ultimately is made   for the costs and expenses (including, without limitation, fees and disbursements of attorneys and   other professional advisors) incurred in connection with the suit. A Member Group who shall   have agreed to purchase the Membership Interest of the other Member Group under this Section   5.1(c) and subsequently fails to purchase that Membership Interest in breach of this Agreement   will be subject to suit for damages caused by his breach as well as other available remedies.           Each Member agrees and acknowledges that the purchase price for the Membership   Interest to be transferred to be determined in accordance with, and paid pursuant to, the   provisions of this Section 5.1(c) is fair as to dates used, notices, terms, price and in all other   respects. Each Member waives any right, at law or in equity that he may have to use any other  method to determine the purchase price in connection with the application of this Section 5.1(c).           It is expressly agreed that the remedy at law for breach of any of the obligations set forth   in this Section 5.1(c) is inadequate in view of (i) the complexities and uncertainties in measuring   the actual damages that would be sustained by reason of the failure of a Member to comply fully   with each of said obligations, and (ii) the uniqueness of the Company’s business. Accordingly,   each of the aforesaid obligations shall be, and is hereby expressly made, enforceable by specific   performance.                 The right to purchase or sell provided in this Section 5.1(c) shall be apportioned as   between the members of such Member Group pro rata based upon the Percentage Interest of such   Member unless otherwise agreed by the members of such Member Group.           “Buy-Sell Event” shall mean, as to each member of a Member Group, the occurrence of   any of the following:                  (i)    any member of such Member Group (or in the case of the Pasquinelli   Member Group, additionally BP), shall: (A) make an assignment for the benefit of creditors; (B)   file a voluntary petition in bankruptcy; (C) be adjudicated bankrupt or insolvent; (D) file a  petition or answer seeking for such member any reorganization, arrangement, composition,  readjustment, liquidation, dissolution, or similar relief pursuant to any statute, law, or regulation;   (E) file an answer or other pleading admitting or failing to contest the material allegations of a                                         28 

 

 petition filed against such member in any proceeding of this nature; or (F) seek, consent to, or   acquiesce in the appointment of a trustee (in the context of bankruptcy or a receivership),   receiver, or liquidator of the member or of all or any substantial part of such member’s   properties;                              (ii)   if, within one hundred twenty (120) days after the commencement of any   proceeding against any member of such Member Group seeking the reorganization, arrangement,   composition, readjustment, liquidation, dissolution, or similar relief pursuant to any statute, law,   or regulation, the proceeding shall not have been dismissed, or if within ninety (90) days after the   appointment without his consent or acquiescence of a trustee, receiver, or liquidator of such   member of a Member Group or of all or any substantial part of his properties, the appointment   shall not be vacated or stayed, or within ninety (90) days after the expiration of any stay, the   appointment shall not be vacated;                              (iii)  any member of such Member Group shall encumber or attempt to   encumber his Membership Interest or any portion thereof without the prior approval required by   Section 5.1;                              (iv)   Any member of such Member Group, (or in the case of the Pasquinelli  Member Group, additionally BP), shall die or there shall be entered an order by a court of   competent jurisdiction adjudicating such member of a Member Group (or in the case of the   Pasquinelli Member Group, additionally BP) incompetent to manage his person or his property,   or such member of a Member Group (or in the case of the Pasquinelli Member Group,   additionally BP) having a guardian appointed for his person;                              (v)    the divorce of a member of such Member Group (or in the case of the   Pasquinelli Member Group, additionally BP), which results in the direct or indirect transfer of all   or any portion of his or her interest in the Company (or in any Member of the Company) to his or   her spouse (or former spouse);                              (vi)  any member of such Member Group, if an entity, shall dissolve,   liquidate, or wind up;                              (vii) any member of such Member Group (or in the case of the Pasquinelli   Member Group, additionally BP) being convicted of a felony or other crime involving moral   turpitude;                              (viii) with respect to any member of the Pasquinelli Member group, the   material violation by BP, any entity controlled by BP, BHCP, the Trust, or any trust of which BP   is a beneficiary or trustee, of (A) the obligations of BP as President of the Company under   Section 4.9 hereof, (B) any non-compete provision of any agreement benefiting the Company or   JBGL, or (C) any of the Management Agreements (provided, however, that as to the   Management Agreements, the material violation shall be limited to the failure to pay monies due   the Company or its Subsidiaries);                                          (ix)  Intentionally Deleted;                              (x)   As to the JBGL Member Group, solely for a period of 6 months   following the date on which neither Jim Brickman nor Matt Baynham is acting as a Manager of   the Company;                                         29 

 

                            (xi)   As to the JBGL Member Group, in the event that the Board of Managers   determines to dissolve in accordance with Section 6.1(a)(i) without the consent of the Pasquinelli   Manager, solely for a period of sixty (60) days following such determination to dissolve.            Section 5.2  Admission of Transferee.                  If a Member transfers all or any part of such Member’s limited liability company interest   in the Company in accordance with the requirements of Section 5.1 hereof, the transferee shall   be admitted to the Company as a Member of the Company upon its execution of an instrument,   as required by the Board of Managers, signifying such transferee’s agreement to be bound by the   terms and conditions of this Agreement, which instrument may be a counterpart signature page   to this Agreement. Such admission shall be deemed effective immediately upon execution of  such instrument and, immediately following such admission, the transferor Member shall cease  to be a Member of the Company.          Section 5.3   Withdrawal of Capital or as a Member.           Except as expressly provided in this Agreement or as otherwise agreed by the Members,  no Member shall be entitled to withdraw capital or to receive distributions of or against capital  without the prior written consent of, and upon the terms and conditions agreed upon by, all  Members. The Members have (i) no right under the Texas Act, or otherwise, to withdraw or  resign and receive the fair value of their Membership Interests, and further hereby waive any  dissenters’ rights pursuant to the Texas Act, or otherwise, (ii) no right to demand or receive any  distribution from the Company in any form other than cash and in accordance with the  provisions of this Agreement concerning distributions, and (iii) no right under the Texas Act to  become a creditor of the Company with respect to distributions owed them.          Section 5.4   Dissociation of a Member.           (a)   Each of the following events shall be an “Event of Dissociation” (herein so   called) with respect to all members of the Pasquinelli Member Group:                  (i)   Any Buy-Sell Event occurs with respect to any member of the   Pasquinelli Member Group, regardless of whether the JBGL Member Group exercises its right to   send the Buy-Sell Notice pursuant to Section 5.1(c) hereof or any other rights thereunder, subject   to the right of the Pasquinelli Member Group to receive notice of a Default Buy-Sell Event and   the opportunity within thirty (30) days of such notice to cure such curable Default Buy-Sell   Event;                              (ii)  Any member of the Pasquinelli Member Group shall have a garnishment,   lien, charging order or similar device issued against its interest in the Company;                              (iii)  Any member of the Pasquinelli Member Group shall breach any other   term or condition of this Agreement which shall not be cured, with respect to monetary defaults,   within ten (10) days, and, with respect to non-monetary defaults that are curable, within thirty   (30) days, unless such curable default cannot reasonably be cured within such thirty (30) day   period, in which event, within ninety (90) days after notice to such Member of such breach;                              (iv)   Any member of the Pasquinelli Member Group shall have a judgment                                         30 

 

 awarded against it in any capacity in an amount that would threaten the solvency of such member  of the Pasquinelli Member Group, as determined by the Board of Managers in its reasonable  discretion;                            (v)     Any member of the Pasquinelli Member Group shall commit any other   act in violation of such Member’s duties of good faith and care to the Company or the other   Members; or                              (vi)   such Member shall have received the consent of the Board of Managers   to withdraw from the Company.            (b)   If any member of the Pasquinelli Member Group is subject to an Event of   Dissociation, the Pasquinelli Member Group, and each member thereof, shall lose all   Management Rights, and shall have no right to participate in the management of the business and   affairs of the Company; provided, that in such event (i) the Pasquinelli Member Group shall   remain entitled to receive allocations of profit, income, gain, loss, deduction and tax credit, and   distributions of Net Operating Profits or assets upon liquidation pursuant to Section 6.2 hereof   attributable to its Membership Interest, and (ii) shall remain obligated to pay and perform all   duties, obligations and liabilities of the Pasquinelli Member Group (or attributable to its   Membership Interest) under this Agreement but only to the extent the same can be performed   without Management Rights.            (c)   If approved by the Board of Managers, a holder of a Membership Interest   without any Management Rights, including a Member subject to dissociation pursuant to Section   5.4(b) hereof, may be admitted as a “Substitute Member” and admitted to all the rights of the   Member assigning the Membership Interest or, as the case may be, to which such Member was  entitled prior to dissociation in accordance with Section 5.4(b) hereof, with the consent of the   Board of Managers and all Members other than the Member with respect to which the Event of   Dissociation has occurred, and the execution and acknowledgment by the Substitute Member of   an instrument, as required by the Board of Managers, signifying such person’s agreement to be   bound by the terms and conditions of this Agreement, which instrument may be a counterpart   signature page to this Agreement. If so admitted, the Substitute Member shall have all of the   rights and powers, and shall be subject to all the restrictions and liabilities, of the Member   assigning the Membership Interest or, as the case may be, of such Member in the case of   dissociation pursuant to Section 5.4(b). Except as otherwise agreed to by the unanimous consent   of the Members, the admission of a Substitute Member shall not release the Member assigning   the Membership Interest from any liability to the Company which such assigning Member shall   have had prior to such admission.                                       ARTICLE VI                         DISSOLUTION OF THE COMPANY            Section 6.1  Dissolution.            (a)    The Company may be dissolved at any time upon the occurrence of any of the   following events (each, a “Dissolution Event”):                  (i)   the election by the Board of Managers to dissolve, wind-up and terminate   the Company;                                                        31 

 

             (ii)  the termination of the legal existence of the last remaining Member of the   Company or the occurrence of any other event which terminates the continued membership of   the last remaining Member of the Company in the Company unless the business of the Company   is continued in a manner permitted by this Agreement or the Texas Act; or                              (iii)  the entry of a decree of judicial dissolution under the Texas Act.            (b)    Except as and to the extent otherwise provided in Section 5.4 hereof, the   Bankruptcy of a Member shall not cause such Member to cease to be a Member of the Company   and upon the occurrence of such an event, the business of the Company shall continue without   dissolution. Notwithstanding any other provision of this Agreement, the Members waive any   right that they might have under the Texas Act to agree in writing to dissolve the Company upon  the Bankruptcy of such Members. “Bankruptcy” means, with respect to any Member, if such   Member (i) makes an assignment for the benefit of creditors generally, (ii) files a voluntary   petition in bankruptcy, (iii) is adjudged bankrupt or insolvent, or has entered against it an order   for relief, in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for   itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or   similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting   or failing to contest the material allegations of a petition filed against it in any proceeding of this   nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator   of the Member or of all or any substantial part of its properties, or (vii) one hundred twenty (120)   days after the commencement of any proceeding against the Member seeking reorganization,   arrangement, composition, readjustment, liquidation, dissolution or similar relief under any   statute, law or regulation, if the proceedings have not been dismissed, or if within ninety (90)   days after the appointment without such Member’s consent or acquiescence of a trustee, receiver   or liquidator of such Member or of all or any substantial part of its properties, the appointment is   not vacated or stayed, or within ninety (90) days after the expiration of any such stay, the   appointment is not vacated.            (c)    Upon the occurrence of any event that causes the last remaining Member of the   Company to cease to be a Member of the Company (other than upon an assignment by the   Member of all of its limited liability company interest in the Company and the admission of the   transferee pursuant to Sections 5.1 and 5.2), then to the fullest extent permitted by law, the   personal representative of such Member is hereby authorized to, and shall, within ninety (90)   days after the occurrence of the event that terminated the continued membership of such Member  in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the   personal representative or its nominee or designee, as the case may be, as a substitute Member of   the Company, effective as of the occurrence of the event that terminated the continued   membership of the last remaining Member of the Company.            Section 6.2  Liquidation and Termination.                  (a)    Subject to Section 5.1(c)(xi), upon the dissolution of the Company, the Officers   and Managers of the Company shall cause the Company to liquidate by converting the assets of   the Company to cash or its equivalent and arranging for the affairs of the Company to be wound  up with reasonable speed but with a view towards obtaining fair value for the Company’s assets,  and, after satisfaction (whether by payment or by establishment of reserves therefor) of creditors,  including Members who are creditors, shall distribute the remaining assets to and among the  Members as follows:                                           32 

 

             (i)    First, to the Members pro rata in accordance with their respective then   Undistributed Preferred Return, in such amounts and until such times as each Member’s   Undistributed Preferred Return has been reduced to zero (0);                  (ii)   Next, to the Members pro rata in accordance with the Members’  proportionate Unreturned Capital Contributions in such amounts, and until such time, as each  Member’s Unreturned Capital Contributions have been reduced to zero (0); and                (iii)   Thereafter, to the Members pro rata in accordance with their respective   Percentage Interests.            All distributions in kind to the Members shall be made subject to the liability of each   distributee for costs, expenses, and liabilities theretofore incurred or for which the Company has   committed prior to the date of termination. The distribution of cash and/or property to a Member   in accordance with the provisions of this Section 6.2(a) constitutes a complete return to the   Member of its Capital Contributions and a complete distribution to the Member of its   Membership Interest and all the Company’s property.            (b)   Each Member shall look solely to the assets of the Company for all distributions   with respect to the Company and such Member’s capital contribution thereto and share of profits,   gains and losses thereof and shall have no recourse therefor (upon dissolution or otherwise)   against any other Member.            (c)   The Company shall terminate when (i) all of the assets of the Company, after  payment of or due provision for all debts, liabilities and obligations of the Company, shall have   been distributed to the Members in the manner provided for in this Agreement, and (ii) the   Certificate of Formation shall have been terminated in the manner required by the Texas Act.                                      ARTICLE VII           BOOKS AND RECORDS; ACCOUNTING, TAX ELECTIONS, ETC.            Section 7.1  Books, Records and Reports.            (a)    The Company shall keep correct and complete books and records of its accounts   and transactions and minutes of the proceedings of its Members and Board of Managers and of   any executive or other committee when exercising any of the powers of the Board of Managers.   The books and records of the Company may be in written form or in any other form which can   be converted within a reasonable time into written form for visual inspection. The original or a   certified copy of this Agreement shall be kept at the principal office of the Company or at such   other place designated by the President of the Company. The books and records of the Company   shall be maintained by the Secretary of the Company and shall be available for examination by   any Member or Manager, or its duly authorized representatives, during regular business hours.            (b)    At the request of any Member, the President of the Company or other   appropriate Officer shall prepare or cause to be prepared and shall furnish to the Members within   ninety (90) days of the end of each fiscal year (i) a balance sheet and report of the receipts,   disbursements, profits or losses of the Company, and each Member’s share of such items for the   fiscal year, and information necessary for the Members to prepare their respective federal and   state income tax returns. The cost of such financial and tax reports shall be an expense of the  Company. The rights of any Member pursuant to this Section 7.1(b) shall be unaffected by any                                         33 

 

Dissociation pursuant to Section 5.4 hereof or the occurrence of any Buy-Sell Event.          Section 7.2  Banks Accounts, Checks, Drafts, Etc.                The bank accounts for the Company shall be maintained in accounts in the name of and  under the tax identification number for the Company in such banking institutions as the  Managers or the appropriate Officers shall determine. Any resolutions prepared by the banking  institutions in relation to the opening of such accounts are hereby adopted as the resolutions of  the Board of Managers. All checks, drafts and orders for the payment of money, notes and other  evidences of indebtedness, issued in the name of the Company, shall be signed by such Officers  or such other Persons as may be authorized by the Board of Managers from time to time.                     Section 7.3   Fiscal Year; Methods of Accounting.                      The fiscal year of the Company shall be the year ending December 31, unless otherwise  determined by the Board of Managers. The method of accounting to be used in keeping the  books of the Company shall be determined by the Board of Managers in accordance with  applicable law.          Section 7.4  Segregation of Moneys; Interest.                All moneys received by the Managers hereunder shall be kept segregated in the  Company’s accounts and may be deposited under such general conditions as may be prescribed  by law, and the Managers shall not be liable for any interest thereon. Furthermore, in no event  shall moneys of the Company be commingled with moneys of the Members or the Managers.                                    ARTICLE VIII                             GENERAL PROVISIONS          Section 8.1  Binding Provisions.         The provisions of this Agreement shall be binding upon and inure to the benefit of the  heirs, personal representatives, successors and assigns of the Members, Managers and Officers.          Section 8.2  Separability of Provisions.               Each provision of this Agreement shall be considered separable; and if for any reason any  provision or provisions herein are determined to be invalid and contrary to any existing or future  law, such invalidity shall not impair the operation of or affect any other provisions of this  Agreement.          Section 8.3  Attorney’s Fees; Waiver of Jury Trial; Arbitration.                (a)    In the event of any litigation or other proceeding, including arbitration, between  the Members to enforce or interpret any provision or right hereunder, the unsuccessful party to  such litigation or proceeding, including arbitration, covenants and agrees to pay the successful  party all costs and expenses reasonably incurred, including reasonable attorneys’ fees and  disbursements.          (b)    EACH MEMBER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION,                                        34 

 

 PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES   AGAINST THE OTHER IN CONNECTION WITH ANY MATTER WHATSOEVER   ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE   RELATIONSHIP OF THE MEMBERS OR ANY CLAIM OF INJURY OR DAMAGE   RELATING TO ANY OF THE FOREGOING, OR THE ENFORCEMENT OF ANY REMEDY   UNDER ANY STATUTE WITH RESPECT THERETO.            (c)    ANY CONTROVERSY OR CLAIM BETWEEN THE COMPANY AND ANY   OF THE MEMBERS, OR BETWEEN ANY OF THE MEMBERS, ARISING OUT OF OR   RELATING TO THIS AGREEMENT OR ANY AGREEMENTS OR INSTRUMENTS   EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR RELATED   AGREEMENTS OR INSTRUMENTS REFERRED TO IN OR WHICH PERTAIN TO THIS   AGREEMENT OR THE COMPANY, OR THE TRANSACTIONS DESCRIBED HEREIN OR   THEREIN, INCLUDING BUT NOT LIMITED TO ANY CLAIM BASED ON OR ARISING   FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN   DALLAS, TEXAS, THE ARBITRATION SHALL BE ADMINISTERED BEFORE THREE   ARBITRATORS WITH NOT LESS THAN FIFTEEN (15) YEARS EXPERIENCE AS   ATTORNEYS AND/OR JUDGES BY JAMS OR ANOTHER ARBITRATION SERVICE   ACCEPTABLE TO ALL PARTIES TO THE ARBITRATION. JUDGMENT UPON THE   AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT   HAVING JURISDICTION.            Section 8.4  Rules of Construction.            Unless the context clearly indicates to the contrary, the following rules apply to the   construction of this Agreement:                  (i)   References to the singular include the plural, and references to the plural   include the singular.                  (ii)  Words of the masculine gender include correlative words of the feminine   and neuter genders.                              (iii) The headings or captions used in this Agreement are for convenience of  reference and do not constitute a part of this Agreement, nor affect its meaning, construction, or   effect.                              (iv)  References to a person include any individual, corporation, partnership,   limited liability company, joint venture, association, joint stock company, trust, unincorporated   organization or government or agency or political subdivision thereof.                              (v)    Any reference in this Agreement to a particular “Article,” “Section” or   other subdivision shall be to such Article, Section or subdivision of this Agreement unless the   context shall otherwise require.                  (vi)   Any use of the word “including,” “include” or “includes” in this   Agreement shall not be construed as limiting the phrase so modified to the particular items or   actions enumerated, and should be interpreted in a non-exclusive manner as though the words   “but [is] not limited to” immediately followed the same.                                            35 

 

             (vii)  When any reference is made in this document or any of the schedules or   exhibits attached to this Agreement, it shall mean this Agreement, together with all other   schedules and exhibits attached hereto, as though one document.            Section 8.5  Entire Agreement; Amendments.            (a)   This Agreement constitutes the entire agreement with respect to the subject matter   hereof.            (b)   This Agreement and the Certificate of Formation (except as required by law) may   be modified or amended only pursuant to a written amendment adopted by the Board of   Managers and approved in writing by all Members. Once an amendment to this Agreement   and/or the Certificate of Formation has been approved, the proper Officers of the Company shall   authorize the preparation and filing, if necessary, of a written amendment to this Agreement   and/or the Certificate of Formation, as applicable.            Section 8.6  Applicable Law.           This Agreement shall be construed and enforced in accordance with the laws of the State   of Texas, without regard to conflict of law principles.            Section 8.7  Agreement Binding and Enforceable.           Notwithstanding any other provision of this Agreement, the Members agree that this   Agreement constitutes a legal, valid and binding agreement of the Members, and is enforceable   against the Members by the Managers in accordance with its terms.            Section 8.8  Confidentiality.            The parties shall not disclose the terms of this Agreement, the Management Agreements,   the involvement of Green Light Capital with the Company, or any information received pursuant   to Section 7.1 hereof, to any Person, except (i) as may otherwise be required by law, regulation   or court order, (ii) to a bona fide potential lender of the Company or its Subsidiaries and its   counsel and advisors, (iii) to its employees, officers, directors, members, managers, owners and  third parties including financial advisors, potential financing sources, potential transferees,  accountants or attorneys who are advised of the confidential nature of the terms of this   Agreement, or (iv) to the extent necessary for the parties to perform their respective duties   hereunder. Notwithstanding the foregoing, any Member (and any employee, representative or   other agent of any Member) may disclose to any and all persons, without limitation of any kind,   the tax treatment and tax structure of the transactions contemplated by this Agreement and all  materials of any kind (including opinions or other tax analyses) that are provided to any Member  relating to such tax treatment and tax structure; provided, however, that any such information   shall be kept confidential to the extent necessary to comply with any applicable securities laws.            Section 8.9  Publicity.           Neither the Company, the Members nor any of their respective Affiliates may issue any   public statement or press release regarding (a) the finances of any of (i) the Company, (ii) the   Company’s business, (iii) the Subsidiaries, or (iv) any Member, without the prior consent of all   Members, or (b) the involvement with the Company, or any of its Subsidiaries, of Green Light                                         36 

 

 Capital and the principals thereof, except as required by law or any competent governmental   authority (provided that in such event, the disclosing party shall give the other Member or the   applicable Affiliate advance notice of such disclosure).            Section 8.10  Counterparts.           To facilitate execution, this instrument may be executed in as many counterparts as may  be convenient or required. It shall not be necessary that the signature of, or on behalf of, each  party, or that the signature of all persons required to bind any party appear on each counterpart.  All counterparts shall collectively constitute a single instrument. It shall not be necessary in  making proof of this instrument to produce or account for more than a single counterpart  containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature  page to any counterpart may be detached from such counterpart without impairing the legal  effect of the signatures thereon and thereafter attached to another counterpart identical thereto  except having attached to it additional signature pages.          Section 8.11 No Effect on Loans. The Members acknowledge that JBGL Builder  Finance and certain other Affiliates of JBGL have acquired and/or made, and in the future may  acquire and/or make, loans to the Company and certain of its Subsidiaries. The Members  specifically agree that the relationship of JBGL Builder Finance and its Affiliates as a lender to  the Company or any of its Subsidiaries shall not be affected in any way by this Agreement or by  the fact that JBGL is a Member in the Company, and nothing contained herein or in any way  related to JBGL serving as a Member in the Company shall (i) limit any rights or remedies of  JBGL Builder Finance or any of its Affiliates under or pursuant to any documents, instruments or  agreements related to, evidencing or securing any such loans, or (ii) limit the duties, obligations  or liabilities of the Company or any Subsidiary or any other obligor pursuant to any such  documents, instruments or agreements related to, evidencing or securing any such loans.                                      ARTICLE IX                               Other JBGL Provisions                                                   Section 9.1  Intentionally Deleted.                  Section 9.2  Covenant Not to Make Certain Loans.            (a)    JBGL agrees that neither JBGL nor any other JBGL Entity shall provide   financing or agree to provide financing to other Competing Builders with respect to residential   lots located in the Primary Business Area, without the unanimous consent of the Board of   Managers; provided, however, that any financing, funding, loans, commitments, or agreements   to make any loans existing in a particular county at such time as such county becomes part of the   Primary Business Area as a result of the investment of the Company reaching $1 million in   investment in such county, shall in no event be deemed a violation of this Section 9.2(a) and   further that such financing may be provided to Competing Builders or any other person in the   event that it relates to a residence with an expected sales price of $550,000.00 or more or if it   relates to a project consisting of less than 7 lots. Furthermore, JBGL agrees that neither JBGL   Capital LP, a Texas limited partnership, nor any of its subsidiaries shall enter an arrangement   with any Competing Builder substantially similar to that of the Company. Notwithstanding the  foregoing, the provisions of this Section 9.2(a) shall expire and terminate on the earliest to occur   of (i) the date of the termination of this Agreement, (ii) the date of the occurrence of a   Dissolution Event, (iii) the date that no member of the Pasquinelli Member Group is a Member                                         37 

 

 of the Company, or (iv) the date that neither JBGL nor any of its Affiliates is a Member of the  Company.            (b)    In the event of any breach of the provisions of Section 9.2(a) by any JBGL   Entity, then as the sole and exclusive remedy of the Company or any Member of the Company,   JBGL shall be obligated to pay to the Company an amount equal to any net profit made by any   JBGL Entity from the financing provided in violation of Section 9.2(a).                                    (c)    Centre Living Homes, LLC or its subsidiaries or affiliates may build homes,   condominiums, or any type of residence south of the intersection of Preston Road and Northwest   Highway in Dallas County, Texas. This building will not give rise to any liability, claims or   demand for payment from the Company, BHCP or the Trust. In the event of any ambiguity with   any other provision in this Agreement this paragraph shall prevail.                                    (d)    Centre Living Homes, LLC or its subsidiaries or affiliates (including but not   limited to Centre Living Condominiums, LLC) may build approximately 32 patio homes in the   Cityline development, located near the intersection of Cityline Drive and Foxboro Drive in   Richardson, Texas. This building will not give rise to any liability, claims or demand for   payment from the Company, BHCP or the Trust. In the event of any ambiguity with any other   provision in this Agreement this paragraph shall prevail.                  (e)    Green Brick Partners, Inc., any of its subsidiaries or affiliates may construct   multifamily apartments in any location. These multifamily apartment units may later be   converted into condominium apartments. Construction of any multifamily building and the   conversion of these units into condominium homes will not give rise to any liability, claims or   demand for payment from the Company, BHCP or the Trust. In the event of any ambiguity with   any other provision in this Agreement this paragraph shall prevail.            Section 9.3  Break-up.            (a)   Intentionally Deleted.            (b)   Intentionally Deleted.                  (c)   If during the period of September 15 through November 15 (inclusive) of any   calendar year (the “Yearly Window”) JBGL and the JBGL Entities have elected not to make   loans to the Company and/or its Subsidiaries for home construction projects budgeted in the   Current Company Budget and Plan and the Funding Amount outstanding is less than the  Minimum Funding Amount in effect at such time, then at any time while such Minimum  Funding Amount is not in place during the Yearly Window, either the JBGL Member Group or  the Pasquinelli Member Group may send a Buy-Sell Notice in accordance with Section 5.1(c)   hereof. The party which shall send the first Buy-Sell Notice shall be deemed to be the Offeror   Member Group and shall have all rights and obligations of the Offeror Member Group and the   recipient of such first sent Buy-Sell Notice shall be deemed to be the Offeree Member Group and  shall have all rights and obligations of the Offeree Member Group.           (d)    Notwithstanding the foregoing, the right of either party to send the Buy-Sell  Notice pursuant to Section 9.3(c) shall expire and terminate on the earliest to occur of (i) the date   of the termination of this Agreement, (ii) the date of the occurrence of a Dissolution Event, (iii)   the date either the Pasquinelli Member Group or the JBGL Member Group is no longer a                                         38 

 

 Member of the Company, or (v) the date of the occurrence of a Buy-Sell Event as to any member   pursuant to Section 5.1(c)(i-xi).            Section 9.4  Membership Interests of BHCP Homes, LLC and BHCP Family    Trust.            Unless otherwise provided in this Agreement, the Membership Interests of BHCP and the   Trust, and each of their respective successors and assigns (collectively, the “Pasquinelli Member   Group”), shall be treated as one in the same with BP acting as the sole representative of such   parties with the sole power and authority to act on their behalf, which shall mean, among other  matters, that (i) any membership rights and obligations must be exercised by BP on behalf of all  members of the Pasquinelli Member Group, (ii) any notice received by BP shall also be deemed  received by all the members of the Pasquinelli Member Group, and (iii) the members of the  Pasquinelli Member Group are jointly and severally liable for any duties, liabilities and  obligations of any member of the Pasquinelli Member Group, and for any breach of this  Agreement by any member of the Pasquinelli Member Group; provided, however, that, unless   otherwise provided herein, any payments or distributions to be made to the Pasquinelli Member   Group shall be made to each member of such group in accordance with their Percentage Interest   in the Company.                              [SIGNATURE PAGE FOLLOWS]                                               39 

 

            IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed  to be effective as of the date first above written.                                                    MEMBERS:                                        JBGL OWNERSHIP LLC,                                      a Delaware limited liability company                                                                              By:   /s/ Richard A. Costello                                                   Richard A. Costello, President                                                                              BCHP FAMILY TRUST                                                                                                                                                        By: /s/ Bruno Pasquinelli                                                Bruno Pasquinelli, Trustee                                                                              BCHP Homes, LLC,                                      a Texas limited liability company                                                                                                                                                        By: /s/ Bruno Pasquinelli                                                Bruno Pasquinelli, Managing Member                                                 40 

 

                                SCHEDULE A       Members:                      JBGL Ownership LLC              2805 Dallas Parkway,                                                                Suite 400                                                                Plano, TX 75093                                BHCP Family Trust               2805 Dallas Parkway,                                                                Suite 400                                                                Plano, TX 75093                                BHCP Homes, LLC                 2805 Dallas Parkway,                                                                Suite 400                                                                Plano, TX 75093   Initial Capital Contributions: Agreed net value of initial capital contributions which the Initial                                Members made is as follows:                                                                JBGL $100,000.00                                BHCP Homes, LLC            $50,000.00                                BHCP Family Trust          $50,000.00   Percentage Interests:         JBGL 50%   BHCP Homes, LLC 25%  BHCP Family Trust 25%  Voting Percentage             JBGL 51%  Interests:                    BHCP Homes, LLC             25%  BHCP Family Trust 24%  Managers:                     The names of the Managers referred to in Section 4.1(b) hereof                                are as follows:                                 JBGL Managers:                                 James R. Brickman                                Jed Dolson                                                                Pasquinelli Manager:  Bruno Pasquinelli                                                                      41 

 

  Officers:                     The names of the Officers referred to in Section 4.2(b) hereof are                                as follows:                                 Name: Title:                                Bruno Pasquinelli      President, Chief Executive Officer                                                      and Chief Operating Officer                                Jed Dolson Vice President                                Richard A. Costello    Vice President                                Steve Schermerhorn     Vice President and Treasurer                                Sofia Chernylo         Secretary                                  Principal Office of the Company: 2805 Dallas Parkway                                Suite 400                                Plano, TX 75093                                                                      42 

 

  SCHEDULE B                 Intentionally Deleted.                                                                                 43 

 

                                 SCHEDULE C                   OPERATING PROFIT/ OPERATING LOSS DEFINITION          Operating Profit or Operating Loss, as applicable, is calculated based on the following   calculation:      Gross Revenue (all revenues including but not limited to closing of homes to third party   homebuyers, management agreements)     LESS: Direct Construction Costs (land, property improvements, capitalized property taxes,  capitalized interest)    LESS: Amortized Prepaid Community Costs (initial community expenses including but not  limited to first run brochures and inserts, model furniture, estimate for model conversion, initial  signage, initial marketing efforts)    LESS: Sales Commissions (internal and external as applicable)    LESS: Finance and Closing Costs (seller concessions, incentives, closing costs)     LESS: Construction Overhead (construction wages, bonus, benefits, and community expenses   including but not limited to SWPP costs, lot maintenance not paid by JBGL Builder Finance   entity, construction trailer rent, construction utilities, trash, and other community costs that are   not property improvements and not capitalized in the job costs)     LESS: Warranty Overhead (per home warranty amount accrual, any warranty personnel   wages, bonus, benefits, and any other period costs related to warranty performed)     LESS: Selling Overhead (sales personnel wages, bonuses, and benefits and including but not   limited to model home rent, utilities, repairs, maintenance, sales trailer, marketing efforts, realtor   luncheons, focus groups, brochures and inserts, website maintenance and other sales items that   were not approved to be in prepaid community costs)     LESS: Administrative Overhead (personnel wages, bonuses, benefits and including but not   limited to office rent, office supplies, copiers, utilities, meals & entertainment, and other   expenses that are not property improvements and not capitalized in job costs - also includes legal   expenditures)      LESS: Capital Charges (Other incurred interest either paid by the Company or its Subsidiaries,  paid fees, parcel profit participation related to capital received as well as monthly interest on  homes that have not closed after 12 months of start in accordance with JBGL Ownership LLC  loan docs)    EQUALS: Total Operating Profit or Operating Loss, as applicable                                            44

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